Good morning. This is Joyce Brooks, Vice President of Investor Relations. Thank you for joining today’s call for a discussion of McCormick’s Third Quarter Financial Results and our Latest Outlook for 2016. To accompany this call, we have posted a set of slides at ir.mccormick.com. [Operator Instructions] We’ll begin with remarks from Lawrence Kurzius, President and CEO; and Mike Smith Executive Vice President and CFO, and then open the lines for questions. [Operator Instructions] 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 discussion over to Lawrence.

Thank you, Joyce. Good morning, everyone. Thanks for joining us. McCormick’s third quarter results continued the strong performance we delivered in the first half of 2016 with adjusted earnings per share of $1.03. In constant currency, we grew sales 6%, with increases in both segments in each of our three regions, and grew adjusted operating income 15%. These results demonstrate the effective execution of our strategy, designed to drive both top line sales and significant productivity improvements. This balanced approach is being managed by McCormick leaders and employees around the world and I thank them for their effort and engagement. For the year-to-date financial results and momentum heading into the fourth quarter, we’re well positioned to deliver record results in 2016. Taking a look at the third quarter, we were pleased with the performance of both our consumer and industrial segments. On a constant currency basis, we grew consumer segment sales 7% and increased adjusted operating income 12%. As those who follow McCormick know we're driving sales with increases in our base business, new products and acquisitions. All three of these drivers contributed to consumer segment sales increase this quarter. Our base business growth was particularly strong in the Americas region and led by sales of core McCormick and Lawry's brand spices and seasonings. Also our sales of recipe mixes including wet recipe mixes have picked up in the US and we gained category share this quarter. China was another major driver of the consumer segment sales increase this quarter, with double-digit growth in constant currency and category share gains for both herbs and spices and recipe mixes. As for innovation we shared with you at our June earnings call a great lineup of new products we are launching in the second half of our fiscal year. These include the…

Thanks, Lawrence and good morning, everyone. As Lawrence indicated our third quarter results continued the strong performance we achieved in the first half. I’ll provide some added perspective on the financial results and then discuss the details of our latest 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 12. Both our consumer and industrial segments delivered solid top-line growth with increases in each of our three regions. On Slide 13, consumer segment sales in the Americas rose 8% in constant currency, with 3 percentage points of the increase from acquisitions, both Stubb’s and Gourmet Garden. The balance of sales growth this period was in the U.S. and led by McCormick and Lawry’s brand spices and seasonings, Zatarain's brand items and Kitchen Basics products. These sales increases were offset in part by a slight decline in our sales of private label and economy brands. EMEA consumer segment sales rose 1% in constant currency. We’ve continued to drive sales growth in Poland and Russia that includes the benefit of new distribution and we delivered another strong sales quarter along with category share gains in France with new products and brand marketing. These gains were offset impart by weakness in the UK where a number of food companies have been challenged by difficult retail environment. We grew consumer sales in the Asia Pacific region 11% in constant currency. Sales from Gourmet Garden added 7 percentage points of this growth. In China, we return to a strong sales increase this quarter following some moderation in the second quarter that related to a successful SAP implementation in our Wuhan facility. Third quarter sales in China were mainly…

Thanks, Mike. As we move to your questions let me leave you with our key takeaways for the quarter. First we had great results, in constant currency, we grew sales 6% with growth in both segments in each region and adjusted operating income was up 15%. We're executing on an effective strategy to drive sales and lower cost. Our CCI program is driving higher margins and profit and generating feel for growth. And based on our year-to-date results and business momentum, we expect 2016 to be a record year for McCormick. So operator let's take the first question.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question today comes from the line of David Driscoll with Citigroup. Please proceed with your questions.

Good morning and thank you.

Good morning, David.

I had two questions I was hoping to ask. The first question is I just like to hear your thoughts on U.S. food trends and just kind of what you're seeing from the consumer. Specifically it's been pretty strong growth within the spice category, but yet the overall grocery stores have been deflationary. So just like to hear your thoughts about kind of the differential between these two and does it have any implications to your category going forward? And then a follow up if I may.

So thanks David. I think that the food generally still continues to be relatively flat and the spice category -- herbs and spices is one of the strongest categories in the store. If you look at a heat map for the entire store you would see that the herb and spice category is about the hottest spot in the store.

Yeah, I totally understand that. Do you think that there is anything to be worried about in terms of the deflation that we see more broadly in the store versus this exceptional growth or in fact did lower prices in the meat category have maybe a positive linkage to what’s going in spices, that’s really where I'm trying to drive at.

We just see the spice category being driven by a number of long-term trends David. There is increased interest in cooking from scratch as Millennials come to be a larger and larger part of the shopping universe, we’ve talked about this a couple of times and we just think that that’s a real advantage for our core category. I'm not so sure that I can speak to change in the trend for the whole center of the store, there does seem to be a shift away from more prepared foods and a move towards closer to fresh more scratch type foods, I think that bodes well for the perimeter of the store and for companies that have businesses that involve scratch cooking and again I think that that’s a positive for our category. There’s also a trend towards greater interest in health and wellness and healthier eating and again I think that’s supportive of the herb and spice category, particularly in the U.S. where herbs and spices are in the dietary guidelines for Americans really for the first time ever as a strategy for reducing things like added salt, added sugar in foods.

Just one fast follow-up on the…

By the way as we see this also on the industrial side of our business, almost left that out. Many of our industrial customers are working with us to change the formulations of their products to make them more natural, to take out things that sound artificial, to make them sound fresher and less processed.

A quick follow-up on inflation in pricing, I believe that you said but I just want to confirm that you’ve had a tremendous period here where you’ve actually had price increases on the portfolio, you had I believe it’s been net deflation where you’ve had low single-digit raw material inflation, but this incredible CCI program so on balance net deflation, but it sounds like in your script you’re telling us that going forward if it’s not going to be as good, the inflation is really going to start to pick up for as I think you called out a couple of particular items. But it just sounded like there was a real material change here in the trajectory of inflation. Is that correct, and is that the message?

Well there has been a lot of volatility in raw materials over the last couple of years; we’ve had to deal with a long and sustained increase in the cost of one of our iconic raw materials in particular that being pepper. We did this year experienced low single-digit inflation so I wouldn’t say that there was deflation in our cost. CCI doesn’t just go to the cost of the raw material inputs, but looks at every line of the P&L. So a portion of that CCI was in our fixed cost structure and SG&A and so on. We do see a higher rate of inflation for next year, but we’re really not ready to give guidance on 2017 just yet. We are seeing cost increases that are quite well publicized in a couple of key raw materials, vanilla and garlic. But we also anticipate that we’re going to be able to take pricing actions that will -- between pricing action and CCI, we’ll be up to mitigate those costs. What we’re really talking about in the fourth quarter is that some of the pricing actions that we took were against raw material cost increases that occurred in the market but where we may have had some strategic positions. And so as the cost of those materials as they flow through, begin to catch up with the price increases the margin improvement that we’ve been experiencing will begin to narrow. Mike do you want to comment?

No, we’ve seen this trend coming and we’ve taken pricing actions for things like vanilla this year in the U.S. a couple of times; in China we’re taking the garlic action right now. So we’ve been ahead of the curve here and we’re monitoring very closely, but through pricing and CCI upping the level there we feel comfortable we’ll cover the costs going into next year. We’ll provide more guidance in our January earnings call.

Thank you so much.

Our next question is from the line of Ken Goldman with JPMorgan. Please go ahead with your question.

Hi good morning and thanks for the questions.

Good morning, Ken.

Just one follow-up as you guys think about the gross margin growth into 4Q, I think you talked about it decelerating, you mentioned garlic and vanilla. Are there any headwinds we should be thinking about as we model the fourth quarter's gross margin or is it really that that you're focused on and you want us to focus on as we think about our models?

Well in terms of gross margin those are the really I'd say those are the right things to be focused on. I want to be clear that we're talking about lower rate of margin improvement. So we're not talking about a margin decline. The other thing though as that reads through to EPS that's actually the minority of the, kind of the -- what I’ll call the gap between our beat in third quarter and the amount that we're raising our guidance by. The larger impact items is that we are expecting more FX impact particularly on our JV income. That's below the operating profit line that comes through on the unconsolidated line. The big part of that JV income is from a joint venture in Mexico. We’ve seen substantial softening in the peso and just so, while they’re having great results, the translations of those great results back into U.S. dollars is less than we had anticipated when we had our last call. The other major factor is just the lower rate of share repurchase. As you know we curtail our share repurchases when we have an acquisition between actually completed acquisition activity and for activity around deals that we did not complete there was a curtailment of share repurchase and we end up -- it looks like our share repurchases are going to be more closer to 1% than 2% and that's a substantial factor also. Mike you want to?

Yeah, I think the other factor we talked about the material cost rising during the year. And the industrial business had a great third quarter, real good mix, we had strong branded food service business, which is high margin for us. And the timing of some of those promotions and some of our customers were basically the same with fourth quarter. For the full year we're very happy with performance, but I wouldn't expect them to grow at the 23% adjusted operating income again in that fourth quarter.

Okay, that's helpful. One quick follow-up from me if I can. There was some comment and I may have misheard, I really asking for a clarification, about the relationship with raw material savings and CCI. Could you repeat that and let us know what you meant by that? Because I was hearing it, but I wasn't quite sure exactly what you were saying about whether raw material savings were included in how you calculate CCI and so forth. That would be helpful.

Definitely, when we renegotiate with vendors or have raw material savings, they are included in CCI.

When Garlic prices go up or down you're talking about more active…

More active reformulations, vendor consolidations things like that with market moves [indiscernible].

Perfect, thank you so much.

Thank you. The next question is coming from the line of Rob Moskow with Credit Suisse. Please proceed with your questions.

Hi, thank you. Lawrence I think you said that your advertising efficiencies are helping you save about $5 million versus your prior expectations. And it sounds like you're dropping it to the bottom-line, but you're also keeping your operating income guidance for the year unchanged as far as I can tell. So is the $5 million in savings kind of offsetting some of this narrower gross margin trend that you're talking about in fourth quarter owing to costs and I think you also said timing of purchases of customers?

No the change in the guidance on advertising really relates to being more efficient with digital and more efficient with our -- the non-working portion of advertising. We're running all of the programs that we intended to. We frankly to spend the $5 million we’d have to waste it. A portion of that change in outlook actually is already captured in Q3. And so this is a change in guidance for the full year and not really specific to the fourth quarter.

Okay. I think my question then is that the $5 million benefitted third quarter you could have taken it to the year and raised your op income guidance for the year. But instead fourth quarter is going to be a little bit lower than at least what I thought -- what I had modeled. So is this is a comment about a more challenging gross margin environment in the fourth quarter than you thought? Or maybe there is a potential for upside in 4Q?

No. Again, I know I point to the fourth quarter, I know you’re talking about operating income specifically. I’m thinking the whole P&L all the way down, but the three headwinds that we talked about, the FX impact, the lower share repurchases, summarize and raw material cost are really the factors that we want to overcome. Also, I got to say that we are a bit conservative when we look at guidance as we get to the fourth quarter, because it’s our largest quarter. October and November are our highest shipping months. One big order from one customer or one odd shipping day in the last week of the year can swing the number a bit. And so we tend to be careful on the guidance that we give that can be interpreted specific to fourth quarter.

Okay.

And to put in perspective our first half of the year, our adjusted operating income was up between 5% and 6%. We had a really good third quarter at 12% for a variety of reasons. And fourth quarter is about really our earnings per share so it’s a big quarter for us. So there is a lot of moving parts as Lawrence said.

Okay. Just one more question. You have rising cost garlic and vanilla. I was a little unclear, are you considering taking -- you are going to take more pricing, it sounded like you were proactive and already taking some pricing. When will U.S. customers be notified of the pricing? And how do you think the category will respond? You had issues with private label or just really more like lower cost brands couple of years ago. Do you need to expect everyone else to follow?

Yeah I don’t want to get too specific about the exact timing of pricing actions, but I know that we will be taking pricing action. And we’ve moved on vanilla twice already this year and expect that that will be one of the areas, where we go up. Vanilla in particular is in a situation where there is a worldwide shortage. We don’t believe that any competitor the advantage versus McCormick in their -- in that particular commodity. And indeed, we believe that we’re actually in advantaged supply position compared to some of our competitors. We’ve by customers have competitors, who are experiencing defaults and are having difficulty getting vanilla at any price. The raw material and the shortage of that raw material is going to dictate a higher price across the whole market. And we’re confident that we won’t be moving alone.

Right.

The other thing through these category management tools, we’ve invested in over the past couple of years. We’ve shown when we took the pricing action earlier this year in the U.S. our volume rate of share gain in volume was positive. So we grew volume while taking a price increase. So we’re doing our pricing much smarter than we used to. So we feel when we need to take pricing again, we’ll do that with a minimal impact of volume.

Great, thank you so much.

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

Hi, good morning.

Good morning, Mario.

So I wanted to follow-up on the U.S. business. You mentioned that at least in terms of the scanner data, we’re seeing market share down, you attributed most of that to the shift to the gourmet organic product line. If we set that aside, can you comment on how some of your other key product lines were performing in terms of market share?

If we set that aside, we’d essentially be flat on market share. Earlier was the disruption at the shelf due to the transition from the kind of conventional spices that were in gourmet to the new organic spices that really cause -- that disruption really accounted for nearly all of the share gap. The -- what else I going to say about that, that’s really, I mean that’s really the whole story there Mario. We’re pretty pleased with our progress overall. And that the gourmet was the one thing. I should add that it really wasn't a surprise when we had our call back -- last call back in June. We were in the middle of it we knew what was happening and we said on the call that this was going to happen and there would be some disruption at the shelf. I'm pretty encouraged that we'll have the work I'm pretty optimistic that we have completely work through it by the time the real holiday season starts. The shipments that we experienced on gourmet don't really line up with the consumption they were very strong at the end of the quarter as our customers were restocking their shelves. So I'm pretty encouraged throughout that. But again if I could just going back to your original question the scanner data it's really a story about gourmet.

Okay, thanks for that color. One other question, if I could shift to China on the industrial business, you've mentioned recently that there was a partial loss from a customer that was diversifying. Has there been any progress in terms of sourcing that business to other customers or finding some ways to offset some of the deleverage that might have happened there? Thanks.

Well we certainly have a broad customer base in China. And we continue to work to build our business with local Chinese based customers both on the restaurant food service side and on the consumer food manufacturer. But this is a very large customer, and so their diversification of their supply base is going to have an impact on our business. It's not something that can just be immediately made up. I expect that we will grow into it, but this customer had a problem with the supplier that put them in a bad business position. And they've made a strategic decision that they're not going to be sole sourced on anything. And in the products that we supply we were very close to the exclusive supplier. So as that customer diversifies its supplier base it does have an impact on us as well due to their strategy.

Okay, thank you very much.

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

Hi good morning this is actually Lubi filling in for Akshay. So you mentioned in your press release that your Kohinoor business in India saw better results this quarter versus last year. I'm just wondering if you can provide a bit more color on sort of what's driving that and how you expect trends in that business to develop over the course of the near future?

Sure I'm just going to say a few words about it. Last year we exited a portion of the business that was very low margin and frankly exceptionally complicated. And so we were able to simplify the business, improve the margin and let this with a business that was smaller than it was. And I think that's what the nature of the comments and the script were. We are not going to elaborate a lot on Kohinoor just because it is so small relative to the rest of our business. The Kohinoor business is less than 1% it's approximately 0.5% of our business. And so we're just not going to get too specific comment on a business unit that is that size.

Our strategy there longer term is to rollout more spices and seasonings and recipe mixes and that's still on track as we talked about in the past. So long-term this is a great market for us.

And this is just one of three businesses that we have in India. The other two are on the unconsolidated line they're non-consolidated joint ventures.

Okay, thank you. That's helpful. And then you mentioned in your prepared remarks that you guys are expecting a near-term slowdown in the rate of margin improvement. And I'm assuming that leads into fiscal '17 as well. Now I know you're not providing guidance for fiscal '17 yet, but are there any other sort of high level puts and takes that we should be thinking about that might impact the earnings growth for next year? Thank you.

We’re really going to give some pretty robust earnings guidance for 2017 on our January call as we always do, we’re in the middle of putting together budgets right now. So any guidance that we could give would be probably incomplete and too soon. We are giving some visibility that we’re experiencing an increase in the commodity costs on those two particular commodities and we expect our pricing actions to cover that increase. But I don’t think we’re ready to give guidance on margins, other than to the extent that we’re talking about Q4 right now.

Thank you I’ll pass it on.

Thank you. [Operator Instructions] the next question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.

Good morning, everybody.

Good morning, Andrew.

I just wanted to make sure I understand what I should expect around the U.S. consumer business in the fourth quarter, is it that you have incremental visibility now that you’ve got a lot of this shelf reset worked its way through, is it that you have visibility to an acceleration in consumption in the fourth quarter or is it that the over shipment in 3Q could result in a bit of an under shipment in the fiscal fourth quarter?

Sure, well first of all that over shipment that you just referred to is just on gourmet and it was really a restocking it’s actually making up an under shipment in Q2 and Q3, when we talk about this at the end of Q2 Andrew, I think we said that we had actually restrained our shipments on gourmet at the end of Q2 to manage the transition, we didn’t wanted to get a lot of returns of the old product as we wanted to transition. So we were rationing it out a bit and then in Q3 there were some disruption at the shelf and it was really just a refilling of the shelves. And no I don’t expect that we’re going to see a slowdown actually we’re quite encouraged by the strength of our holiday program in the U.S. business as we look into the holiday season. We’re actually pretty optimistic that we’re going to have both strong shipments and strong consumption.

Great, thanks for the…

We’re going to go back on air with the purity campaign, we got a tremendous lift from that campaign when we ran it earlier this year. So our holiday advertising will include purity. When we ran that purity campaign we not only got an immediately lift from it, but we also increased our penetration with Millennials, which kind of builds the franchise for the long-term. I think that we’re feeling pretty good about Q4 in the U.S.

Great, that’s helpful clarification there. And then one just last one just more to check my memory, I could remember this incorrectly, but I remember years ago when there was vanilla issue I think coming out of Madagascar there might have been some efforts to try and expand or diversify the sourcing of vanilla into some other markets in growing regions I know it’s kind of hard to do and it takes time for that to develop. But whether it be areas like in Vietnam and others. I guess whatever became of that is it still happening, but it’s just not big enough to really make up the difference in terms of Madagascar sourcing or it’s more of curiosity on my part.

Hey that’s the advantage of having a long memory there Andrew. We did have a vanilla shortage back in 2003-2004 and 2005 and that it’s probably time I came to the company so some of this when happened then is old lore for me. But subsequently there was quite a big market decline and many of the sources dried up due to market pricing and we are ourselves working actively to develop the growth of vanilla in a number of regions of the world then including a pilot operation that we have to grow our own. But those are efforts that will take a little bit of time to bring on stream and right now 85% of the world’s vanilla comes from Madagascar and that’s where the shortages. A lot of the changes not so much around supply, but around demand as consumers want to move to more natural flavors there is a shift in the market demand away from artificial vanilla and vanillin to being able to label the product straight up vanilla or vanilla bean. So there we do have an effort underway to develop those alternate sources. Again, I’ll just emphasize that, we believe that nobody has an advantage position right now in the market versus us. And we know just from the customer enquiries that we’re getting, that in fact, we currently have an advantage position versus a number of our competitors.

Great, thank you very much.

Thank you. At this time, I will turn the floor back to Lawrence Kurzius for closing remarks.

Well, I’d like to thank everyone for your questions and for participating on today’s call. Through our growth strategies and our people, our experienced leaders and engaged employees we’re driving strong performance at McCormick. We’re executing on a strategy design to build long-term value for our shareholders, and we look forward to reporting to you on our continued progress.

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