Good morning. This is Kasey Jenkins, Senior Vice President of Corporate Strategy and Investor Relations. Thank you for joining today’s Fourth Quarter Earnings Call. To accompany this call, we posted a set of slides at ir.mccormick.com. We will begin with remarks from Lawrence Kurzius, Chairman, President and CEO; and Mike Smith, Executive Vice President and CFO, and we will close with a question-and-answer session. During this call, we will refer to certain non-GAAP financial measures. The nature of these non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning’s press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. In addition, 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 because of new information, future events or other factors. Please refer to our forward-looking statements on slide two for more information. I will now turn the discussion over to Lawrence.

Thank you, Kasey. Good morning, everyone. Thanks for joining us. Starting on slide four, our fourth quarter completed another year of robust and sustained growth. In 2021, we remained focused on growth, performance and people, driving another year of strong results and continuing our momentum. We drove record sales growth by executing on our long-term strategies, actively responding to changing consumer behavior and capitalizing on new opportunities, all while remaining forward-looking in an ever-changing global environment. The profit driven by our strong sales growth in 2021, while tempered by the well-known headwinds of higher inflation and broad-based supply chain challenges was also strong. Our 2021 operating performance underscores the strength of our business model, the value of our products and capabilities, and the resilience of our employees. We have a demonstrated history of managing through short-term pressures and did so again in the fourth quarter, and we expect to do the same through this inflationary environment using pricing and other levers to fully offset cost pressures over time. The breadth and reach of our global flavor portfolio ideally position us to fully knowing demand for flavor around the world and drive continued differentiated growth. This has never been more evident than over the last two years as consumers adapted to the ever-changing environment. Our compelling offerings in our Consumer and Flavor Solutions segment for every retail and customer strategy across all channels create a balanced and diversified portfolio to drive growth and consistency in our performance. It also gives us significant flexibility to adapt to changing conditions wherever they may arise and continue on our growth trajectory. This is a significant differentiator in the dynamic environment in which we currently operate. We are delivering flavor experiences for every meal occasion regardless of whether the occasion is consumed at-home or away-from-home…

Thanks, and good morning, everyone. Before I provide additional remarks on our fourth quarter and full year results, I would like to build upon Lawrence’s comments on Cholula and FONA, and highlight how we have delivered on our acquisition plans now as we have completed the first year. Starting on slide 19, as Lawrence already shared, we have created value by driving sales growth according to our plans. In addition, Cholula was margin accretive to the gross and operating margins in both of our segments, and FONA was accretive to the margins in the Flavor Solutions segment. We are delivering against our synergy and one-time cost estimates, in fact doing better than our acquisition plan. Starting with our original synergy targets, for Cholula, we have achieved the target of $10 million to be fully realized by 2022. For FONA, we are on track to achieve our targeted $7 million by the end of 2023. We are also achieving revenue synergies as expected. Our transaction and integration costs for Cholula and FONA are both lower than our acquisition plans. Early in 2021, we took the opportunity in a low interest rate environment to optimize our long-term financing following the acquisitions, raising $1 billion through the issuance of five-year 0.9% notes and 10-year 1.85% notes, and therefore, realized lower interest expense than we originally projected. Additionally, our ongoing amortization expense is favorable to both of the acquisition models. In summary, we executed our year one acquisition plans in line with and in some areas better than our modeled, including the adjusted earnings per share accretion we expected. Successful acquisitions are a key part of our long-term growth strategy. Importantly, we have a proven track record of driving value through acquisitions and increasing the performance of acquired businesses, and Cholula and FONA are…

Now that Mike has shared our financial results and outlook in more detail, I would like to recap the key takeaways as seen on slide 35. We drove record sales growth in 2021. Our strong operating performance underscores the strength of our business model, the value of our products and capabilities, and the resilience of our employees. We achieved our one-year Cholula and FONA acquisition plans. Cholula and FONA have proven to be fantastic additions to our portfolio. We have a demonstrated history of managing through short-term pressures on driving growth, as we did in the fourth quarter. McCormick has grown and compounded that growth successfully over the years regardless of the environment. We have a strong foundation, we are in attractive categories and we’re capitalizing on the long-term consumer trends that are in our favor. We are confident that our broad and advantaged flavor portfolio, our robust operating momentum and effective growth strategies, we will drive another year of strong growth in 2022 and build value for our shareholders. Now let’s turn to your questions.

Thank you. Thank you. And our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.

Great. Thanks, everybody, and good morning.

Good morning Andrew.

Good morning. I guess to start off, McCormick, is essentially guiding to an on algorithm year in what is obviously been described as a still pretty difficult industry-wide operating environment. I was hoping you could walk us through maybe some of the really the key puts and takes in a little more detail that provide you with the visibility to achieve this. And maybe what I am getting at is more detail on the dynamics still very much at play, as you mentioned some of them in your first quarter, I think basically, investors are trying to get a better handle on sort of the achievability of the full year in light of all of the difficult dynamics that are playing out in 1Q and just trying to get a sense of just how back end loaded the year is and your level of visibility there? So any more detail on that would be helpful.

Great. Thanks, Andrew. Well, first of all, I don’t think anyone should be only surprised by the topline guidance. I think at the end of the third quarter, we indicated that we expect it to grow in 2022 and tried to indicate that we thought everyone’s outlook for us was a bit pessimistic and you can see that we have a pretty upbeat view of where our sales are going. The underlying trends that support our business that we talked about in our prepared remarks are strong. The demand for flavor is not cyclical or obsolete or pandemic related, but it’s under girded by real demographics with older generations, fueling that demand and we think that the consumption. The shift in consumption at-home that has happened in recent years is just a continuation of a long-term trend that supports our business from an underlying standpoint and all the things that we do in our strategies for brand building and so on continue to be supportive of growth. The year also includes a significant impact on the topline from pricing, which may be underestimated previously and so that’s going to factor into it. I guess the shape of the year our fourth quarter is always the strongest part of the year. The first quarter is also always the smallest part and that may be compounded a bit this year by the fact that really the full impact of our pricing actions won’t have gone into effect in the first quarter. The pricing actions that we took last year, of course, are in effect now, but the next round of pricing won’t go into effect until, as we as through the second half -- until as we go through the second quarter and that’s going to affect both the topline and the bottomline. I will pass it over to Mike now for some comments on operating profit.

Yeah. Just to highlight a little bit to getting into that on sales in the first quarter, we’re really comparing against a really strong first quarter of last year, where consumer was up really dramatically. So there’s going to be a bit of a segment mix challenge in the first quarter. Talking about the first half also cost -- as pricing will grow during the year, costs though, which we talked about in mid-teens increase will be in effect in the first quarter. There will be a tough comparison there too, because the pricing won’t offset that. If you remember back to last year, we had low single-digit inflation earlier in last year that rose to the high single-digit at the end of the year, now at mid single-teens that’s a tough comp for the first quarter primarily and a bit of the first half. The other thing we have also is the ERP spend we talked about and we can talk about that later a little bit. But the timing of that -- last year we had some minimal spending in Q1 also. So a bunch of drivers that we think the profit will be back loaded in the year would be a bit of a tough comp in Q1.

Got it. And then, I guess, lastly, with mid-teens inflation expected for the full year, sort of would suggest maybe, call it, high single-digit pricing would be needed to sort of protect profit dollars. And I guess that would imply maybe closer to maybe a mid single-digit decline in volume for the year. Is that kind of broadly the right way to think about the balance and what does that suggest in terms of elasticity and sort of comparing to historic levels? I think you mentioned, you’re building in some elasticity, of course, as more pricing kicks in, but maybe not to the extent that you’ve seen historically. If you could just give us a sense of what’s driving that thought process?

Yeah. Sure. Andrew, I think that you got the -- you’ve got the -- at a high level, the shape right, but maybe too extreme on the end. I think that characterize pricing, including the wrap from last year, to be more in the mid-to-high range and more of for the volume impact at a total company level to be more flattish to low single-digit decline. We have modeled in elasticity, but not at the rates that we have seen historically. I do think that we’re in new and uncharted territory versus all of the elasticity models, at least from the actions that we’ve taken so far. We assumed lower price elasticity and that what we seem to be experiencing, if anything, we may be seeing slightly even less elasticity than we’ve assumed. But we’re conscious that with more than one price increase coming in a relatively short timeframe that there may be a cumulative effect. So we have modeled it price elasticity. Mike, do you want to elaborate on that at all, if you have anything to add?

No. I think you covered it well.

Great. Thanks very much everybody.

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

Hi, Ken.

Good morning. Oh! Sorry, I was on mute. Thanks so much. You’re guiding to operating profit growing 200 basis points faster than sales, which is, of course, normal as per year ago. But I think typically, you might expect gross margins to be a positive driver towards that and this year, they might be a slight negative. So, I guess, the burden to grow operating profit falls harder on SG&A savings or leverage than usual this year. And I kind of just wanted to quickly go over the drivers of your confidence that SG&A can be this helpful. I mean, we do have marketing growing at a slower pace than sales, I appreciate that, and you, of course, have lower COVID costs there. But I was under the impression you would also have maybe ERP implementation cost kind of offsetting those COVID cost reductions. You did mention CCI savings will be less of a tailwind. So forgive the lengthy question, but I am just not quite sure I get why operating income will be up so much unless there’s something in the SG&A efficiencies that I am just quite not getting yet. So thank you for that.

That’s a good question, Ken. I will start off. You highlighted exactly what we’re seeing. A&P is up low-single digits, continuing to invest in the business. Other SG&A is kind of flattish if you think about it. In a high -- we gave our CCI number and in a year where CCI is down versus the previous year, because of the toughness of getting through CCI reductions and things like packaging costs and commodity costs. In SG&A, there’s -- we’re driving hard on SG&A from a CCI perspective, so you should see positives there. COVID cost didn’t only hit the gross margin line. There were COVID costs in the distribution side of things, which will go away in 2022. We’re taking discretionary actions to really in a high cost environment. We’re doing the prudent things to make sure we can make our numbers. And I would say things like incentive comp, we’ve had two really strong years of that and we budget towards hitting our targets and we would love to exceed it, but that is a part of the comparison too also.

I hope your personal…

With the…

Go ahead.

Yeah. I will step on there, too. With the high topline growth and the flattish SG&A, that even with the gross margin flat to slightly down in that range. It’s kind of -- you’re going to get operating leverage that’s going to drop through.

Yes. No. That’s helpful. Thank you. And then, quickly, I wondered if you can update us, maybe you said it and I didn’t quite hear it. But where your customer inventories stand today as you estimate them to be versus what might be considered normal. And if your outlook to any extent, it assumes that any kind of inventory refill takes place this year. I know we’ve been waiting for something like this for all of our companies for a long time.

Yeah.

I am just curious what you’re modeling there?

Well, we have not restocked our customers to the extent that we would have hoped in 2021. We have started to make some progress on that and then we run into the same kind of supply chain disruptions at many of our peers and others and other industries have talked about. And so, we actually pulled down customer inventories again in Q3, and in Q4, with the high elevated demand, even though our supply chain was in much better condition, we were really able to ship to the consumption rather than lease stocks. So we think that there’s still some restocking of customer inventories that still to be done. I mean your own experience would probably tell you that if conditions still aren’t perfect, the backrooms and distribution channels, likewise, still have some gaps. So there’s still more work to do in that area.

I live in New York City. The state of grocery stores here is always at a low level. So it’s kind of hard to tell what’s bad versus what’s normal. Thank you very much. I appreciate it.

Yeah. Right. Sure. I will say is that, I don’t want those comments to be misunderstood. I think that we saw a peak disruption of our supply chain in Q4 and we’ve seen steady improvement since then. Some of the feedback we’ve gotten from our larger customers is that we’re in much better shape than some of our peer companies.

Thank you.

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

Hi. Thanks for the question. One follow-up for Mike, is it fair to say that your COVID costs will be a benefit in 2022 of $60 million just comparing to $21 million? And then how do I compare that to ERP costs, are your ERP costs going to be higher in 2022 compared to 2021? Can you give us a rough estimate? And then, secondly, on private label, if you look back into history, private label does gain a lot of share during inflationary periods, especially in your category. Can you talk about what you’ve seen from your customers demand for private label heading into 2022 and how do you expect it to perform in 2022 in a rising price environment?

Rob, I will take the first part of that, and Lawrence, take the second. First, great question, COVID cost and ERP are big drivers on our P&L. COVID costs, we did talk about how two years ago, we spent $50 million, last year $60 million. If you remember, we highlighted a large chunk of that was co-packing cost. So as we come out, our supply chain has improved over last year in the fourth quarter. We’ve eliminated most of those costs. But we still have underlying costs that, frankly, we’re not treating as COVID cost anymore. We’re treating as an ongoing business cost of labor, premium pay, things like that. They are going to continue into the future. So, that -- I am not going to give you an exact number. It’s not $60 million. The significant part of that is going away in ‘22. Relating to ERP, if you remember from our third quarter call last year, we were talking about it at the time, a decrease in COVID costs in -- we expected a decrease in COVID costs in 2022 offset by an increase in the ERP costs. That being said, what we’re saying now is and our -- we’re still spending significant amounts on ERP in 2022. We spent -- we had talked last year about spending in 2021 around $50 million. 2021 came in a little heavier than that and in 2022, we’re going to -- it’s not a significant headwind, but it’s still a significant investment. I’d say it’s up slightly. It wasn’t big enough to mention in our guidance. Now what has changed since three months ago? One, elevated and strong demand. We’re really happy with that demand. As we went through our planning process, which we always do in the fall, the combination of that elevated demand, and as you know, our fourth quarter is really important to us and we have planned on significant go-lives in 2022. One, to protect our customer service and to make sure we are prudent. The go-lives would have slid into the fourth quarter because you have to build inventories and things like that to get ready for these major go-lives. We made the decision to slide those major go-lives out into 2023. The end result of all those moves is roughly between 2021, 2022 and 2023, it’s about the same level of spend. So it’s very smooth. It kind of eliminates that noise between years, which help you look at our underlying growth of operating profit over that time. But we’re still really excited about the ERP investment, but we just made the decision, as I just talked about.

Right. Got it. Okay.

Regarding your second question, Rob. So far, first of all, for the last couple of years, private label has actually underperformed in the category. You even heard on our remarks that although our fourth quarter was strong, the private label portion of it was actually not a contributor to that strength. And we’re really not seeing consumers move to private label in our categories, and in fact, it’s really moved more to brands than to private label. And past times when there’s been a recessionary environment and I don’t know that we’re expecting a recession in 2022. But even in tough times that were more economically tough, our products have done very well, our products contribute pennies, a fraction of the cost of the meal are actually part of the consumer’s way to manage their total inflation basket. I mean if meat is going up 40%, one way you can stretch your grocery dollar is to buy less expensive cuts and use more on spices and our recipe goes. So actually we tend to do pretty well both in good and bad economic times, and I am confident that we’ve got a portfolio of products that touches the consumer at every price point. I know in our internal discussions around pricing, we’ve been very conscious of the lower income consumers and how to make sure that we’re still able to meet their needs for flavor.

Okay. Got it. Thank you.

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

Yes. Thank you. Good morning, everyone.

Good morning, Adam.

Good morning.

So, I guess, my first question maybe is around the fourth quarter and really turning to the Flavor Solutions business. And I guess, the operating profit and margin performance in that business, it contracted pretty sharply with consumer and I know this is a big consumer quarter. But maybe if you could just talk about some of the profit and margin drivers in Flavor Solutions in the fiscal fourth quarter and maybe in the 2022 outlook, how we should think about the relative segment performance between Consumer and Flavor Solutions versus your total company earning?

Hey, Adam. This is Mike. I will take that. Yeah. In fourth quarter, Flavor Solutions did have a bit of margin pressure. I mean, similar to consumer, obviously, the cost last year came ahead of our pricing actions. So that did -- obviously that impacted Flavor Solutions. But as we catch up into the first quarter and second quarter, that should be solved. But they did increase very quickly for us. I mean there’s pass-throughs contractual agreements, so there’s timing elements to a lot of our Flavor Solutions business. That thing being said, one of the -- you’ve seen also the great volume growth and sales growth we’ve had in Flavor Solutions over the past couple of years, and we’re making strategic investments such as the U.K. flavor manufacturing plant. Those investments have costs associated with them. So in the fourth quarter, as we’re starting to bring that plant live into next year and you should expect in early 2022, also a bit of a drag early in the year of Flavor Solutions you will see a bit of that due to the strategic investments of which the U.K. flavor manufacturing plant is just one. And we did have a little bit of unfavorable mix in the quarter, even though we were pruning -- continue to prune some of our lower margin business, there was a bit of a hard comparison versus 4Q of last year.

I will say if there’s an area where we still have some ongoing, I’d say, extraordinary costs, I’d say Flavor Solutions might be a little bit more impacted by that, where we’ve had -- just because of supply chain disruption and workforce disruption where we’ve had a bit more incremental cost for things like overtime premium pay and so forth.

Okay. And then maybe just continuing in Flavor Solutions, if I am thinking about as part of the bridge in 2022, right, the company level, being tight on SG&A is clearly a key element of hitting the total company profit growth targets. In contrast in Flavor Solutions, a big part of the growth has been to remix the portfolio up into some of these higher value segments, which obviously come with higher gross margins, but also typically will have a higher SG&A burden in terms of the R&D and the technical sales associated with that. Just are you still able to make both the facility and the headcount investments necessary on the Flavor Solutions side to support those -- the growth there?

Well, definitely. I mean, I think, as I alluded, we’re making those investments and there will be timing impacts, like I said, first half a bit with some of these investments for some of our strategic things. But we recovered those things by the end of the year and we feel very good about the ability. And acquisitions like phone up continue and the growth profile of those businesses give us more confidence over time of the positivity of those investments to Flavor Solutions.

Okay.

And I will remind everybody, our Flavor Solutions tend to be a bit lumpy as well, driven by the activities of some of our large customers.

Got it. That’s all helpful. I will pass it on. Thank you.

Yeah.

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

Thank you. Good morning. I have just a couple of questions for you. I was just curious, the level of inflation that we’re seeing this year kind of mid-teens inflation was more than I expected and I just wanted to get a sense of how much was it in 2021, what were you kind of up against this past year, just to get a sense of the kind of total amount of inflation? And then also just to understand, I don’t know I’ve heard it about, is there any more inflation in Flavor Solutions versus Consumers or one that’s going to require more pricing as we move through the year?

Hi, Chris. It’s Mike. I will answer that. I mean, last year we started out the year, as you remember, low-single digits and we transitioned into mid-single digits around -- I think around the third quarter call. In the fourth quarter call, we talked about the fourth quarter costs were up high-single digits, which made the whole year high end of the mid single-digit range…

Okay.

…at least, I am saying it, so just to remind you where we were. This year is the mid-teens really driven by large commodity packaging and freight increases that we’ve all seen. From a Flavor Solutions versus Consumer, they’re both impacted by all this. I mean, ocean freight, which is a big item for us because as you think about our peers, we get a lot of our products from Asia, other parts of the world where shipping containers and things like that. That ocean cost has gone up a lot. That impacts both the Consumer and the Flavor Solutions very equitably. Other items like pepper, garlic, things like that, we use on both sides. So I’d say, it’s roughly the same overall materially.

Okay. Yeah. That’s helpful. Thank you. And the other question I had was just in -- you talked a little bit before, I think, it was to Rob’s question about third-party -- using third parties to manufacture your products and that kind of thing. It sounds like you’ve gotten out of a lot of that and I know that was a gross margin drag throughout the past couple of years and I think a lot of what you call COVID cost. So, just to be clear, that’s something that will largely go away in 2022? And I guess related to that…

Yeah.

Well, go ahead, go ahead.

Yeah. It’s the incremental portion that’s going to go away. We always have a certain example of that…

Okay.

I mean that makes sense…

Yeah.

… for our business for a variety of reasons. I would say, let’s say, more in line with the historical level of co-packing is that incremental co-packing and at a time when everybody was looking for the capacity that was -- that created all of those premium costs that we absorb ourselves and which we’ve gotten out of the business.

Okay. I guess what I am hopefully getting to is, I guess, then, is -- are you able to produce at the level of demand growth today? That’s something that every company has been struggling with and I am just curious kind of where McCormick stands on that now. I guess as you pull back on these incremental third parties are indicating, you do have the internal capacity to meet demand, is that right?

Yeah. That is right, Chris. And I would say that the challenge has always been in the Americas, first of all. So we’ve been able to meet the demand throughout the entire pandemic in the rest of the world. It’s been an Americas demand. We’re just between the scale of the business and the sheer elevation of demand. And the fact that our capital investments had for the previous number of years been directed towards building capacity overseas, that left us a little under invested in the U.S. It gave us a real challenge in the early days of the pandemic. But we’ve done an enormous amount of work to increase our U.S. manufacturing capacity and confident that we’ve got the capacity to meet that demand. That’s why that co-packing expense has gone away. That’s a root of the improvement in our service to our customers, the restoration of product on the shelf, the recovery of share. This -- our supply chain has always been a competitive advantage from global sourcing to operating excellence. And I’d say that, although, it will never be good enough to my satisfaction, has come a long way, and I’d say, it’s a competitive advantage again.

Okay.

So we continue to work with our vendors. We struggle with the same challenges that all of our peers have with supplying bottles and things like that and there will be sporadic challenges along the way, but not broad based.

Okay. That’s helpful. Thanks for all your time.

Great. Thanks.

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

Hey, guys. Good morning. Thank you for taking the questions.

Good morning.

Mike, I guess, we’re getting some questions this morning just on trying to square the gross margin guidance, just given the level of cost inflation. I know you spoke about ocean freight and commodities. I guess, one, is that cost inflation line just only pertinent to cost of goods, does it include outbound freight, which I think you guys captured in SG&A and maybe how we should think about just the cadence of gross margin throughout the course of the year?

Well, first, outbound freight is considered cost of goods sold for us. So we’re similar to our peers. I mean, if you look at our gross margin, we’re guiding comparable to down 50 basis points. The whole impact of pricing mid single-teens inflation is a big drag on that. So we’re thinking of a 250 basis point dilution just because of pricing to cover costs. From a timing -- but that’s offset, the good positives are CCI savings continuing to prove lower margin business and the COVID costs we’ve talked about previously. Next year has a little bit of a segment mix headwind as you know. And -- but I’d say from a timing perspective, as we talked about, the timing of our pricing coming in the second pricing come impact in the second quarter. It will build during the year cost, which will be with us the full year, so the first quarter will be heavily impacted as we talked about and the first half, a bit of that too, so it’s a bit of a first half, second half play as we’ve talked about from a gross margin perspective.

I will also just chime in that we have great brands that we invest behind in most of our categories in most of our markets. We’re not only the share of voice leader in terms of speaking to the consumer, but in many cases, we have close to 100% of the shareholder voice. We’ve got a great position on the shelf. We’ve done a lot to build loyalty with consumers, keep our brands relevant and we believe that we’ve got the pricing power to pass these costs through and continue to drive growth in the future beyond that.

Got it. Okay. Thanks very much. And Lawrence, maybe just a separate question, I know there’s nothing in the at least initial outlook as it relates to M&A. But I think there’s been some headlines, obviously, about some potential brands that could be nice adjacencies for you guys that could come to market. Just how you’re thinking about M&A this year, where maybe you think the target leverage ratio needs to be before you think about taking on another deal? Thanks very much guys.

Well, there have certainly been some exciting headlines in what it’s supposed to be a boring industry. So there is a lot going on out there. Yeah, I would say that, we always are alert to strategic assets and to which we apply our financial discipline. We got a great track record of buying great assets and integrating them. We’re still coming off a fairly recent acquisition of two very good assets, Cholula and FONA that have performed very well for us, but that we still got paid for and so right now our primary focus is on deleveraging and building more dry powder. I won’t -- I am not going to say never, but that’s our primary focus right now.

Thanks very much guys.

Thank you. Our final question today comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.

Hi. Great. Thanks so much. Good morning. So just to clarify, look, as we go through 2020 and obviously, fiscal 2021, rate demand has been strong for in-home baking. You benefited, obviously. I mean, it seems like, as you said, kind of in the call that, elasticity models are probably a little bit all over the place, just kind of given where we are in terms of strength in consumer and increasing prices. So, I mean, it sounds like your perspective from here is that consumption level, even with an increase in price and potentially, let’s say, an increase in our ability as we get through the year, really shouldn’t be kind of waning that much, right, like the feel demographically with the incremental purchase rate, let’s say, repeat from millennials that even if prices go up, maybe private label doesn’t take them a share and kind of overall demand seems to be somewhat stable. I just kind of want to get clarification on that demand piece just given mobility and trade down risk. That’s all.

Okay. Well, I mean taking this as the primarily very U.S.-centric question. But we do expect that the shift in consumption to more cooking at-home and that consumer behavior to stick to an extent. We’ve never said that all of it’s going to stay. But we do expect that a significant portion of that is going to stay and that this has been a step-up in our category. I mean consumers are still working from home and it looks like work from home is going to be a permanent part of the work environment. Our own proprietary research with consumers say that only a tiny fraction, I mean, less than 10% expect to cook less at-home than they do now, most expect to cook more. And so based on what we see happening in society, the -- what consumers are saying and but we are still experiencing from elevated demand and says that demand is going to continue to be strong. And I would just say also that we are in categories that we’ve chosen to be in that are strong to begin with and there’s been strong underlying growth of all of the flavor categories that we’re in over time. And the increment that has happened from the shift in consumption during the last two years really has accelerated growth by maybe a year or two of those categories. So it’s not as extraordinary as everyone thinks, I just have that much to follow on.

Okay. Yeah. That’s fair. And then, quickly, just Mike, just on free cash flow. I think, you said, you expect it to be up year-over-year kind of a good strong free cash flow year. CapEx seems to be up a little bit year-over-year however and then we sold free cash flow kind of down a little bit last year relative to the prior, call it, three years, four years. So just when you say kind of good strong free cash flow year that, obviously, you’re implying it’s up year-over-year, but maybe it’s a little bit more in line with the prior few years. Just trying to get a little bit more sense of clarity on kind of how you’re viewing free cash flow. That’s it. Thanks.

Yeah. I think that’s fair, Rob. I think, this year, with the significant build in inventories to protect our customers and sales, some of the transaction costs we talked about earlier in the year from M&A has a little drag on that. But as we see into the future, some of those things get solved, so back to previous year levels, it makes sense.

All right. Great. Thanks so much.

Thanks.

Thank you. At this time, we reached the end of the question-and-answer session. I will turn the floor back to Lawrence Kurzius for closing remarks.

Great. Thanks, everyone, for your questions and for participating on today’s call. McCormick is differentiated by the breadth and reach of our balanced portfolio, which has sustainably positioned us for growth. I am incredibly proud of McCormick’s 2021 accomplishments. We drove strong performance while remaining focused on growth, committed to people and driven by purpose during another dynamic year. We’re disciplined in our focus on the right opportunities and investing in our business. We are continuing to accelerate our momentum and drive further growth as we successfully execute on our long-term strategies, actively respond to changing consumer behavior and capitalize on opportunities from our relative strength. We are well-positioned for continued success and long-term shareholder value creation. Thank you for your time this morning.

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