Good morning. This is Joyce Brooks, Vice President of Investor Relations. Thank you for joining today’s call for a discussion of McCormick’s Second Quarter Financial Results and our Current Outlook for 2016. To accompany this call, we have posted a set of slides at ir.mccormick.com. [Operator Instructions] With me this morning are Lawrence Kurzius, President and CEO; 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 2, our forward-looking statement also provides information on risk factors that could affect our financial results. It’s now my pleasure to turn the discussion over to Lawrence.

Thank you, Joyce and good morning everyone. Thanks for joining us. McCormick’s second quarter results continued the momentum we saw in the first quarter of 2016. We are driving this performance with our growth strategies and our people, but thanks to McCormick employees around the world for their effort and engagement for their first half financial results and business momentum. Together, we have greater confidence in our financial outlook for fiscal year 2016. The strong results this quarter started at the top line. In constant currency, we grew sales 6% for the total company. And the increase in our consumer segment sales was particularly strong with an 8% increase. Contributing factors were three acquisitions completed in the last 12 months along with growth in our base business and new products, our three drivers of long-term sales growth. Based on these results, we reaffirm our fiscal year outlook for a 4% to 6% sales increase in constant currency and with he recent acquisition of Gourmet Gardens have greater confidence in the upper end of this range. We saw sequential improvement in gross profit margin with a gain of 130 basis points following a 70 basis point increase in the first quarter. This improvement was led by our Comprehensive Continuous Improvement program, CCI, and we had a benefit this period from favorable business mix, including strong sales in our core U.S. consumer business. As a result, we are now tracking toward the higher end of our fiscal year projection for gross profit margin improvement. Back in February, we set a goal to achieve $400 million of cost savings over the next 4 years. At about 2% of sales, this is an ambitious target, but one that is backed by increased resources under Mike Smith’s leadership. Importantly, we are taking a deliberate approach…

Thanks very much for those remarks, Lawrence. Joining McCormick 28 years ago was one of the best decisions I have ever made. This is a great company. It’s only gotten better during my time here. During my years at the company, we developed our focus on flavor and led to terrific growth opportunities and strong shareholder return. We improved our productivity, generating our fuel for growth. I am so proud of our teams in finance, shared services and information technology and appreciate all of their efforts. I truly feel blessed I have had such a talented team. My decision to retire at this time is based in part on Mike’s readiness to move into this role and my confidence that Lawrence, Mike and the rest of our leadership team have the energy and vision to create a bright future for McCormick shareholders and employees. This is the right team to manage the challenges of an increasingly complex world and capture the great opportunities that are ahead for this company. For those on the call, I value the opportunity to build relationships and provide insight into our business. You have been generous in sharing your views of our business and your knowledge of the food industry and I thank you all greatly for that.

Thanks Gordon. You are with us through December so don’t say too many goodbyes just yet. In the same announcement, Mike Smith was named Executive Vice President and CFO effective September 1. Mike will serve on our management committee and assume Gordon’s responsibilities, which include oversight of the company’s global finance organization as well as McCormick’s shared services and information technology. Mike brings to this role a deep knowledge of the company and experience as a finance leader in both corporate and operational roles, including those in North America and in our EMEA region and across both Consumer and Industrial segments. In each of these roles, he has been a – he has a proven track record of creating value and growth. He is actively driving our positivity improvement and led the work behind McCormick’s recently announced goal to reduce $400 million of costs over the next 4 years to create fuel for growth. Mike, congratulations on this promotion, I look forward to working with you in this new role.

Thank you, Lawrence. I am excited about serving as CFO of McCormick and the opportunity together with McCormick’s leaders and employees throughout the company to drive our growth and performance. It’s been great to work closely with Gordon and the entire management committee for the past year to prepare for this new role. Gordon, I wanted thank you in particular, for your mentorship and offer my congratulations. Over the past few years, I have gotten to meet a number of the analysts and investors who follow McCormick and look forward to continuing to build these relationships and your knowledge of our business.

Mike, let me add my congratulations. And for those on the call, in addition to Lawrence’s remarks, I want to express my supreme confidence in Mike’s leadership and role as new CFO. I have had the privilege of working with him for many years and has watched him, his career progress and witnessed his strong financial leadership and ability to drive results. So congratulations to you, Mike. Now let’s get back to our latest financial results. As Lawrence indicated, we are pleased with our second quarter results and have good momentum heading into the second half of 2016. I will provide some additional remarks and insights on our second quarter results followed by the details of our current 2016 financial outlook. On a constant currency basis, we grew sales 6%. Acquisitions, higher volume and product mix and pricing taken in response to higher material costs each contributed to the increase, as seen on Slide 14. The growth this quarter was led by our consumer segment. On Slide 15, consumer segment sales in the Americas rose 6% in constant currency with about half of the increase from acquisitions, both Stubb’s and Gourmet Garden. The balance of sales growth this period was led by strong performance in our U.S. sales of McCormick brand spices and herbs, recipe mixes, our Lawry’s brand and Simply Asia products. These were offset in part by a lower rate of growth in our sales of private label and economy brands. Also, volume and mix declined in Canada as consumers adjust to some significant price increases related in part to currency pressure. In EMEA, we had another quarter of robust sales, up 20% in constant currency. This increase was driven by our year ago acquisition of Drogheria & Alimentari, which added 14 percentage points to the sales growth.…

Thank you. At this time we will be conducting question-and-answer session. [Operator Instructions] Our first question is from the line of David Driscoll with Citigroup. Please proceed with your questions.

Great. Thank you and good morning.

Good morning David.

I wanted to ask about the U.S. consumer performance, the Nielsen data has been just so strong, you mentioned it in your prepared comments, I think the sales in the segment were up like 3%, were you under shipping or anything like that relative to the number kind of – and I know there is more things than just spices in there, but that number just seems so strong, perhaps I thought we might even see a stronger number in the quarter, but I don’t know if there is a delay in shipment timing?

Hey David. Thanks and it’s great to hear from you this morning. First of all, I will just start by saying we are very pleased with the results in our U.S. consumer business. We are quite pleased with the shipments. We are even more pleased with the continued improvement in the off-take information and this continued sequential improvement in our performance versus the category. I know that there has been a lot of questions both from the U.S. and from others who are listening on the call about exactly when our share will turn positive and we keep saying that we are going to get there and I believe that this is evidence that that’s true. As we noted on the call, our sales increase for the U.S. consumer business includes more than just the McCormick brand. In our business, we also have economy brands and private label and the growth of the economy brands and private label were both lower than our sales of – growth in our sales of branded products. And so that is a contributing factor to the difference versus – in our shipments versus the off-take data for our brand. That’s a mix shift that has also help lift our profit margin, obviously. The second thing is that we are going through some major transitions on a couple of our product lines within herbs and spices. And in some cases, we have limited shipments to keep from having inventory of old packaging on the shelf as we go through that transition. That particularly affected the transition of our gourmet business to organic. The timing of Memorial Day also may have pushed some of our barbecue and grilling product sales into Q3. Memorial Day is a week later. It’s on the calendar. It’s on the 30 this year. It was almost the last possible day that it could be. And so we believe that that probably influenced the start of grilling. We know that’s the case with a couple of particular customers. But that wasn’t a surprise to us. We knew what the calendar look like and so that was already reflected in our thinking about both Q2 and about Q3. And then finally, in Canada, the Americas number that we reported and just for the U.S. and that includes Canada and a small Latin American operation. In Canada, we took a lot of pricing in this time period, due to the – in part, to recover the transaction cost of currency. And this has had an impact on the volume growth in that market. Gordon, Mike, do you want to comment on this any further?

No, I think you covered it very well.

Gordon, can I just think one other one and I just wanted to hear your thoughts on the pacing of input cost inflation and for the remainder of the year and then if you might just be able to give us any insight as to how it would progress beyond that, spices are very difficult for us to understand, how the input costs might change?

We are still expecting this year to be low single-digits. And I wouldn’t – low single-digit inflation on our input costs. And I would expect any material change quarter-to-quarter on that. So you may get some noise but generally, it’s pretty consistent. In terms of next year, we are in the midst of strategic plans and looking into our budgets so that we are still developing and as a result, we will be providing that guidance, as we always do in the beginning of next year. So we are still pulling all that together and looking all the puts and takes there.

Okay. Thank you.

Thanks David.

Our next question comes from the line of Akshay Jagdale of Jefferies. Please proceed with your question.

Good morning.

Good morning.

Hi.

Hi, I just wanted to follow-up on the U.S. business, can you elaborate a little bit on the economy brands and private label, I mean I don’t recall that being a call out anytime in recent history, is that – am I remembering that correctly and was that planned, is really the first question. And then, how long should we expect that to continue, so in other words, how long should we expect the – there to be sort of a gap between the Nielsen data and what you are reporting in your U.S. consumer business?

Sure, Akshay. Well, first of all, regarding the gap and off-take versus shipments, that’s – obviously, it’s not something that is sustainable. We always expect that shipments will ultimately reflect consumption. So this gives us a good bit of optimism about the course of our branded business. We are not particularly calling out economy and private label, but we have talked about certain control brands that major retailers have that they put emphasis, promotional emphasis on in the past. We are lapping that. That was a year ago. A major retailer took a very strong promotional stance on a very low priced economy brand, control brand that we manufacture for them. And that has really run its course. And I think that’s what’s coming through and maybe some softer shipments on economy and private label. I will say this is, that that change in mix is quite positive for us.

And should we expect that to continue for – I mean, on a quarterly basis, obviously you lapped it, but was this is something only to content for in this quarter or should we expect the same sort of trends going forward?

Our expectation is, as Lawrence indicated in his opening remarks, is that we will start to see the trends, start to migrate closer to the actual consumer take away numbers. We are starting to anniversary some of that heavy promotional activity from that customer. So these should start to become more in line as we go forward.

Okay. Congrats Gordon and also Mike.

Thank you.

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

Good morning everyone.

Good morning Alexia.

So first of all Gordon, it’s been great working with you. Sorry to see you go but wishing you all the best for the future and Mike, really looking forward to working with you going forward. Couple of questions, first of all, on margin goals, I just wanted to ask or make the observation that a number of other companies in this space have gone beyond just laying out, this is the $400 million of costs we are planning to get at as you have and actually gone on to set explicit operating margin goals over the next 2 years or 3 years, just wondering if that’s something you have on the radar screen and whether you would consider that. And then as a follow-up question, coming back to the U.S. consumer business, it seems as though the regular spices and herbs are doing very, very well, very aligned with cooking from scratch, definitely on a roll, it seems as though the seasoning mixes, the recipe mixes are a bit slower. Do you have a view as to why that might be? You made a loss of the GMO-free statures of a lot of the regular herbs last quarter. Are people worried about some of the additives in those recipe mixes? I mean is that something you can address? Thank you and I will pass it on.

Hey Alexia, it’s Mike. I will talk about the margin goals first and I do look forward to working with you. The margin goals, if you look at our guidance, our external guidance right now, 4% to 6% net sales growth, adjusted operating profit growth of 7% to 9%, we do have implicit in there, margin growth of about 40 basis points if you look at the middle of the range. We do think about that sometimes, but at this point, we felt very comfortable with putting up the $1 target, seeing how we progress against that and something we may consider in the future, but we feel good with our long-term guidance there.

And I will take the recipe mixes. Alexia, in the year ago period, we had some really strong performance. There was a product recall of an ingredient that was in a lot of our competitor’s products that did not impact McCormick. And so we had a bit of an advantage at the shelf for a period and we have certainly lapped that. We are quite optimistic actually about the outlook for our recipe mixes for the rest of the year. We are launching our organic recipe mixes this quarter. We think that those are going to be a significant increment to our business. We have shown that recipe mixes are quite responsive to innovation. A big part of the improvement that we have had in this business has been the launch of recipe mixes, such as the non-GMO – sorry, not non-GMO, the gluten-free recipe mixes and we have got a great incremental response to that and we expect the same for the organic recipe mixes.

Great, thank you very much. And I will pass it on.

Thank you.

Thank you.

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

Good morning. It’s Tom Palmer on for Ken. Thanks for taking my questions.

Hey, Tom.

Hey, Tom. Good morning.

From an innovation standpoint, where are we with the rollout of non-GMO and organic products? Are you still on track to reach targets of 70% non-GMO by late this year or 80% gourmet line organic? And maybe you could comment on customer reception and maybe the incremental pricing power you are seeing in these products. So, when you add the non-GMO label to spices, are you able to drive a little bit of incremental margin?

Hey, Tom. I am glad to give an update on that and probably we should have built that into our prepared remarks. First of all, on the conversion of our gourmet to organic, that is continuing on pace. We set a goal of having 80% of our gourmet sales organic by the end of the year. We still expect to achieve that. I will say that the conversion of organic has been more challenging for us than perhaps we anticipated. The supply chain and the kind of quality controls that we insist on in terms of product supply has been harder for us to develop. It’s just a less mature supply chain out there. And we have gotten such a lift from the conversion to organic that the volume has been higher than we initially anticipated, which has slowed the transition just because it’s just that much more pressure on an immature supply chain. For the non-GMO conversion, that really was more about us calling out what we already do. And so that one has gone quite a pace and actually I would characterize that one as really running ahead of – little bit ahead of pace, little bit ahead of the pace that we had anticipated. We are not really looking at either one of these as opportunities to take more pricing. Both of these moves were done to give greater transparency to the consumer, to continue to differentiate McCormick versus competition, to frankly take credit for all that we do in terms of quality and purity of product, much in line with the communication we are giving to consumers in our purity advertising campaign. We also did this in part to take away some of the reason for being for other competitive brands and some of the smaller brands in the store have gotten in because they have made claims like this and we wanted to take away the reason for being for those smaller brands as well as we thought to rebuild our share position. Gordon and Mike, you want to comment on this?

I think your pricing question, I mean some of these organic supplies do cost a little bit more, but we consider that when we did our U.S. consumer pricing increase this year, our surgical pricing, so we have that covered.

Okay, thank you for the detail. And just a quick modeling question you highlighted $5 million in acquisition-related costs on a year-over-year assuming no additional M&A activity, would this cost be non-recurring starting in the third quarter or might we anticipate some carryover?

Yes. I mean, this cost as we have said in the remarks is specifically attached to the activity we had around the Premier Foods that we were approaching. So, obviously that doesn’t occur every quarter. And to the extent that we don’t have that size or that type of an activity, we would not expect that to recur. We always have pipeline activity and year-to-year, those costs are fairly similar. You know we closed the Gourmet Garden activity in the second quarter, we had cost associated with that. But we also had cost in the prior year. So, the $5 million incremental is something that I would characterize as somewhat unique given the nature of that deal and the size of that deal.

Okay, thank you.

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

Hi, good morning.

Good morning, Chris.

Good morning. I just wanted to ask two questions, if I could. The first one would be that you are calling out more CCI cost savings and as we think about sort of outlets for that incremental cost savings, one of the obvious ones is marketing. With marketing, you are kind of keeping in place. So, a nice increase for the year, but you haven’t raised those expectations. I was just trying to think about how those incremental savings benefit you. Are you reinvesting those in some way? Are they going to help – could they help provide stronger EPS growth? How should we think about those incremental savings coming through?

Well, I think, this is Gordon, Chris, I think certainly part of our confidence in indicating the upper end of our range is in both gross margin and the EPS is a function of our confidence in seeing these CCI benefits come through. They partially gone to absorb the incremental acquisition cost that I just described. We talked about $5 million in the first quarter – I mean in the second quarter, but we had probably another additional $1 million in the first quarter as well. So, part of it has gone towards absorbing the incremental cost associated with that deal I referenced earlier. But it certainly has given us greater confidence in our outlook for the year. Hence, we are expressing confidence on the upper end of the ranges.

Okay. Yes, that’s helpful. So just really more flexibility, I guess. And then the other question I had was in relation to pricing overall. You mentioned like some incremental pricing in Canada. Is pricing in place now were you expected it? And there was a little bit of a slowdown sequentially in volume. Is that – have we seen kind of the elasticity effects in relation to that pricing? Is that pretty well embedded now in the volume performance in the quarter?

The major pricing actions that we anticipated taking this year are all in place, Chris. So, we don’t have any broad scale price increase activity. There are a couple of specific items where there is some cost pressure and were some unique, very targeted pricing actions are planned, but I would not expect that to be – it’s not going to be something we are going to be talking about particularly.

And were you comfortable with the volume effects to that pricing, Lawrence? Was that – it did weaken a little bit sequentially, but have you seen a pretty normal level of elasticity in relation to that pricing?

Actually, for – let me differentiate between the U.S. and Canada. Canada, we had to take quite substantial price increases just reflecting the change in cost and change in currency value. And so that we have seen an elasticity impact there and that was what we were, what I was calling out in the answer to that first question that David Driscoll had. But in our U.S. business, the price action that we took was quite surgical. We had a good understanding of elasticity. Our anticipation was that we would see minimal impact on volume from it and in fact that has been the case. We really don’t see any kind of volume detriment in our U.S. business. I think if you look at our unit off-take data versus our dollar off-take, the units were doing better than we are on dollars. We did take pricing, but we have also worked with retailers on category pricing recommendations, that to a great extent, has mitigated that.

Okay. Thank you for the time and good luck Gordon. Wish you all the best.

Thank you.

Thanks.

Our next question is from the line of Jonathan Feeney with Consumer Edge Research. Please proceed with your question.

Good morning. Thanks very much. And I ordinarily don’t like to get into it, but Gordon, man, it’s been forever. Congratulations and you had a great career. I have loved working with you and Mike look forward to working with you very much. Just one question, I spent some time at FMI last week talking to a lot of different people and one of the things that came up is this decline in loyal brand users. And it’s funny, it seems like food companies of all shapes and sizes are working harder to get – they are actually having success, they are telling the truth about that, doing a great job getting new customers, they just have a hard time generating repeat among all customers at least versus where we were 5 years ago, it seems like your business, at least in North America, maybe a little bit different and able to hang on to loyal customers maybe a little bit better and maybe explain some of the better results, if you could kind of comment about how that – how you think about that, do you see that trend and is – how the McCormick portfolio is better or worse than what’s going on broadly in the industry? Thanks.

Hey, Jonathan. First of all, good morning, I think we didn’t say hello when you got on there. It’s an interesting question. I think that McCormick is really advantaged in this area. There are a lot of reasons for consumers to both have their heads and their hearts behind the McCormick brand. There are good rational reasons why our product is better and it’s the story that we are telling to consumers. But there is also real heart reason. And so, we are – I am not sure that we are seeing the same kind of erosion of loyalty that perhaps some of the other food companies might be talking about. I think also, our brands are and our product – really our category is in line with the way consumers want to eat today. And as consumers cook at home more and are more ambitious about the things that they cook, our brand is a big beneficiary of that. I think that we have a bit of a natural tailwind from two sources. One is the new dietary guidelines news that came out this year. That has really encouraged consumers to make greater use of herbs and spices. That’s a positive for our category, but as the leader in the category, we are a very big beneficiary of that. And then the second thing is that we actually do better with Millennials than we do with boomers. And so as Millenials come to be a bigger part of the shopper universe, that is actually a natural tailwind for us, which is different than some of our food company peers.

Thank you. That’s very helpful.

Thanks Jonathan.

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

Hey. Thank you. Good morning everyone.

Good morning Brett.

Thanks for taking my questions. Gordon and Mike let me just offer my congratulations to you both as well. I just had two questions for you guys today. One, I just wanted to revisit raw materials real quick. Gordon, you kind of reiterated your expectations for low single-digit increases in raw material inflation this year, I am curious if we can maybe get inside that a little bit and maybe there has been a move down from – maybe there was a plus two to three to a plus one now, but just curious kind of given a slight move down in pepper, black pepper, I don’t know where exactly were your strategic reserves were, but just curious now if you would think that your net pricing actions are really in a place to fully offset expected raw material inflation as opposed to I think earlier in the year where you were kind of calling that pricing as somewhat of an offset, just wanted to get additional color from you there?

Hey Brett, this is Mike. We haven’t moved off our guidance for the year. I mean there has been, with the thousands of different raw materials we have, some things are up and some things are down. We put the pricing in place, I am talking about you U.S. consumer here, to offset that at the beginning of the year, but low to mid single-digit inflation is what we are calling for the year and we are sticking to that and the pricing actions, as Lawrence said, have been put in place. So it’s just a variety of moving parts, but our – we have a great procurement team and we have strategic supplies for some of these things as we make buys during the year and we feel good about where we are.

Okay. I appreciate that. And then just lastly Lawrence, I thought it was interesting that you brought up accelerated growth trends on the industrial side, I think you called out a move towards natural, a move towards non-GMO and certainly in our own ingredients coverage, we hear instances of industrial customers looking to replace or reduce sugar or replace or reduce sodium and I am curious if you guys kind of fit into that role nicely as well with some of the products that you offer, but really I wanted to come back to maybe exploring the type of growth or the type of lift that you could be seeing recently from this accelerated move and how it trickles down to really helped your margin profile? Thank you.

Sure, I will take the – I will start with this and maybe Gordon and Mike can pick up on the margin side of it. But about 40% of the briefs that we do for our industrial customers have some sort of health and wellness aspect to them and that’s actually been the case for several years now. All of the TPG companies are trying to improve their portfolios with cleaner labels, healthier sounding ingredients, statements. No one wants to have a flavor in there that they have to call a flavor. And many of the – of our consumer products go to customers, we are trying to reduce sodium, reduce MSG, take out sugar. And so, that’s about 40% of our briefs globally. It’s a higher percentage in the U.S. And so we believe that we fit right in. It’s a bit of a sweet spot for us. I mean part of the unique selling proposition that we take to our industrial customers is that we are not a chemical company, we are a food company. We approach their problems from a food and culinary perspective and that’s where we start. We offer unique, technical solutions that are very competitive. We have an increasing portfolio ourselves of proprietary technologies to solve their problems and this we believe is an important part of our long-term growth story.

And from a margin perspective, generally, when we engineer new products or reengineer products, we have pretty good margins. We get cost optimized later as we know as the product becomes successful, but we are really happy with the margins we can get on this new business.

Okay. Thanks so much.

Thanks Brett.

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

Hi. All of my questions have been answered, I just wanted to...

Hi, Rob.

But thank you Gordon for all the years of helping everything, Mike looking forward to working with you more. I guess one question, your growth in U.S. retail has really taken off here, the category has taken off, I don’t know if you talked more about incremental merchandising that you might be getting, is that a big driver, are you gaining shelf space outside of the traditional spice rack or is the spice rack kind of the area itself getting bigger at all, is that helping at all, too?

I think that we are improving the assortment in the price – and in the main spice section, we are, if anything actually kind of reducing assortment outside of that area. That reduction is coming at the expense of other brands. But – and I don’t really see a material change in the merchandising. If anything, I think we may be doing a better job on quality of merchandising, but there is not any kind of meaningful increment in merchandising activity. Really, the growth is being driven by the consumer. We have got a great message for the consumer, both for the category and for our brand. And there is a lot – for the category, there is this strong interest in cooking from scratch and flavorful healthy eating that that does benefit the category. And for ourselves, I believe that the moves that we have made to improve the appeal of our brand to consumers, particularly younger consumers and the stronger marketing messaging that we are doing on the A side of the marketing support versus the P side, both through traditional media and through digital media, that’s really paying off for us and a great innovation program that’s brought new news to the category as well. And in particular, with some of the recent activity, we are working to get our own brands a stronger presence in the perimeter of the store, particularly over in produce and again I think that, that’s going to be a benefit for us.

Okay. Let me ask one follow-up, Lawrence. You gave your criteria on acquisitions here. How big is the pipeline of large opportunities for you now that Premier has kind of gone away? Like are there several large ideas that you might consider or is the opportunities much more bolt-on?

I don’t want to get too specific on that, but I will say that, that we have – we have got a robust pipeline of opportunities and targets. As you would expect, we are always in dialogue with somebody or multiple somebody, but there is no – but I really can’t comment specifically on – I don’t want to get too specific on that. I would say that there are plenty of opportunities for us out there.

Okay. Thanks, again. Bye-bye.

Thanks.

Our next question is from the line of Mario Contreras with Deutsche Bank. Please proceed with your question.

Good morning.

Good morning, Mario.

I just wanted to follow-up on the increased confidence around the high end of the guidance range. So year-to-date, first couple of quarters, your EPS growth has been more in the low to mid single-digit range. Back half would be implying closer to double-digits. I know you have mentioned the incremental CCI savings that will be coming through, but you do have some additional advertising spending coming through. You are exiting the JV. There was the industrial customer that’s diversifying. So, I just wanted to drill down a little bit more on what is giving you the increased confidence that you can see that type of growth in the back half? Thanks.

Well, certainly the underlying business we see is performing quite well. So, that’s one of it, the CCI you just mentioned. I would point to just from a math perspective, the tax rate was biggest headwind in the first part of the year. And we have pretty much gone through that. So, the back half of the year, the tax rates will be more comparable to the prior year. So, the strength that you see on that operating income line growth is what will be driving a lot of it. Obviously, to that incremental marketing spend is – about half of it was in the first part of the year, that’s impacting smaller quarters. As you go into the bigger quarters in the back half of the year, it doesn’t have as much of an impact, because just by virtue of the size of the quarters that are starting to come, it will not as have as much of a negative impact on the growth rate, because it’s the same absolute dollars we are talking about. So, I just point to strength of the business, CCI, tax comparison and the relative size of A&P as it relates to the size of the quarters in the back half of the year.

And absorbing the incremental acquisition-related….

And that’s a very good point. And we absorbed the incremental acquisition cost in the first part of this year as we mentioned earlier.

Okay. And then I guess maybe just following up on that, I am just a little bit curious why you don’t break that down as sort of one-time item or something that would be excluded from the EPS that you give on a non-GAAP adjusted basis?

We are very – we have acquisition activity all the time. The one that we described earlier I would say is as unique as those of you have followed us. I would also say we are very cognizant of the financial reporting requirements as required by the SEC and there has been certain amount of guidelines put out recently. So, we certainly honor that and respect that.

Okay, thanks everyone.

Thanks, Mario.

Thank you. The next question is from the line of Erin Lash with Morningstar. Please proceed with your questions.

Good morning. Thank you for taking my question.

Hi, Erin.

Hi. I just wanted to start, I think on Slide 7 you mentioned, I know there has been a lot of discussion in the call about pricing specifically within the U.S. consumer business, but you mentioned a point about certain retailers lowering price points on the McCormick brand and I wondered if you could give some additional details surrounding that if it was related to the push for some of those economy brands by those particular retailers a year ago or what I guess more contact surrounding that point?

Sure. This has been an ongoing program that we have been talking about on calls and in conferences for the last 2 years really as we have evolved our analytic capabilities and understanding of price elasticity and worked with retailers on modeling the category in a way that really optimizes the profitability of the category for them. And as it generally works out what optimizes the category for the retailer tends to be a good news for the McCormick brand as well. So, we have been adding tools that allow us to give greater and greater precision and give fact and database guidance to retailers on pricing decisions for the category as a whole and assortment decisions for the category as a whole. Those recommendations include, in many cases, lowering the price points on McCormick brand products. Sometimes that includes our recommendations about changes in the price points for their private label, for economy brands and for other brands in the category where they may have some irrational pricing that’s happening in the store or where they may have pricing that they don’t even know about, because there maybe a rack of spices in another department of the store that the spice category buyer doesn’t even have visibility to. And category profitability is leaking out through that backdoor. So, we have made those kinds of recommendations. And those retailers who have accepted those recommendations have tended to outperform the category and we have outperformed – and we have definitely gained share in the cases where those retailers have taken our recommendations. I think in our remarks though we may have – I don’t know if we included it in our remarks, but with retailers who have taken our recommendations, I think in the first quarter, we reported that we have gained about 60 basis points of share. We can now track that to 120 basis points of share gain in those retailers who have accepted our recommendations and that set is becoming a bigger and bigger set of retailers. One of the ways that bleeds through in the syndicated data is that our unit share growth has been stronger than the category where our dollar share of growth is tracking slightly behind of the category. That’s really reflecting that shifting at the retail price points.

Thank you. That’s very, very helpful. I just had one follow-up. I realized it’s small, but you mentioned about exiting the JV in South Africa and I just wanted to get some additional insights into whether that is potentially a reflection of I guess different market dynamics than maybe what you had anticipated before or whether that was more reflective of the quality of the JV partner. Any insight you can provide will be very helpful.

Actually, we have got two businesses in South Africa. We have a fully consolidated industrial business. That’s an ongoing business that we are continuing with. We do have a JV in South Africa with a specific customer. That JV is almost captive supplying almost 100% of its volume to our JV partner. We had a 10-year supply contract that is coming to an end. And so as part of concluding that, we are working with them to wrap up that JV. So, it’s not really a reflection on the market. It’s really very specific to that one relationship.

And for clarity around the accounting treatment, it is a consolidated joint venture because of the operating control nature of it. So, it is impacting the consolidated sales results.

Thank you. That’s very helpful. And I just wanted to add my congratulations, Gordon. It’s been great working with you. And Mike, I look forward to working with you more over the coming years. Thank you.

Thank you. Thank you very much.

Thank you. I will now turn the floor to Lawrence Kurzius for closing remarks.

Well, thanks everyone for your questions and for your participation on today’s call through our growth strategies and our people, experienced leaders and engaged employees were driving performance at McCormick. We are increasing our base business, accelerating innovation, expanding the availability and footprint of our business, and excelling in customer intimacy and consumer insights and fueling this growth with cost savings led by our CCI program. 2016 is shaping up to be a very good year for the financial results in the first two quarters and great momentum heading into the second half.

Thanks, Lawrence and for everyone for joining us today. If you have further questions regarding our information, please give us a call at 410-771-7244. This concludes this morning’s conference.