Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's Third Quarter Earnings Call. To accompany this call, we have posted a set of slides on our IR website. With me this morning are Brendan Foley, President and CEO; Mike Smith, Executive Vice President and CFO; and Kasey Jenkins, Chief Growth Officer. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. Today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or other factors. Please refer to our forward-looking statement slide for more information. I'll now turn the discussion over to Brendan.

Good morning, everyone, and thank you for joining us. Let me start by saying how pleased I am to join you today for my first earnings call as President and CEO. Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation. Let's turn to our results. We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our Consumer and Flavor Solutions segments. Our results were in line with our expectations across our business, notwithstanding challenges for our Consumer segment in Asia Pacific, or APAC, where the pace of China's economic recovery been slower than previously anticipated. Let me start with the highlights for the third quarter. We delivered solid constant currency sales growth. We continued to realize effective price realization, and importantly, volume performance, excluding China, has improved each quarter throughout the year. We continued to see top-line momentum in our business, positioning McCormick for sustained growth. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Year-to-date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements. Our performance demonstrates the strength of our business fundamentals and the effective execution of our proven strategies while leveraging the sustained demand for flavor. Turning to Slide 5. In the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio. Our constant currency growth reflected strong business performance, with an 8% contribution from pricing and a 2% decline in volume and product mix. This decline in volume was driven by two factors: a 1% volume decline attributable to the impact of a slower-than-expected economic recovery in China; and a 1%…

Thanks, Brendan, and good morning, everyone. Starting on Slide 13. Our top-line constant currency sales grew 6% compared to the third quarter of last year, reflecting 8% from pricing, partially offset with a 2% volume and mixed decline. As Brendan already mentioned, there were impacts of volume related to the slower-than-expected recovery in the China Consumer business, the divestiture of Kitchen Basics, the exit of our Consumer business in Russia, and strategic decisions we made related to optimizing the profitability of our portfolio. As a result, at the total company level, excluding these items, underlying volume performance was flat for the quarter and improved sequentially from the second quarter. In our Consumer segment, constant currency sales increased by 1%, reflecting a 5% increase in pricing actions, partially offset by a 4% volume decline. Included in this volume decline are: a 2% decline due to a lower-than-expected recovery in China; and a 2% decline attributable to the Kitchen Basics divestiture, our business exit in Russia, and the Hispanic product DSD exit to optimize margins. On Slide 14, Consumer sales in the Americas increased 2% in constant currency and included a 4% increase from pricing actions, partially offset by a 2% volume decline due to the Kitchen Basics divestiture and DSD items I just mentioned. In EMEA, constant currency Consumer sales increased 10%, with a 13% increase from pricing actions, partially offset by a 3% volume decline primarily from exiting Russia. Excluding Russia, sales growth was broad-based across all markets and categories. Constant currency Consumer sales in the APAC region decreased 11%, driven by a 15% volume decrease, primarily due to a slower-than-expected recovery in China. Also contributing to the decline was the impact of lapping strong China demand in the prior year following significant extended lockdowns during the second quarter of…

Thank you, Mike. Before we turn it over to Q&A, I would like to provide some closing comments. Global demand for flavor remains the foundation of our sales growth, and we have intentionally focused on great fast-growing categories. Our alignment with long-term consumer trends, healthy and flavorful cooking, trusted brands, increased digital engagement, and purpose-minded practices continue to create a tailwind for growth. McCormick is uniquely positioned to capitalize on this demand for great flavor. With the breadth and reach of our strong global flavor portfolio, we are end-to-end flavor for our consumers and customers. We remain a different kind of CPG company, one differentiated by our growth platform, the results that we have achieved over the last years and our culture. We play in great and fast growing categories. Our two segments, Consumer and Flavor Solutions, complement each other, reinforcing our differentiation. The scale, insights, and technology that we leverage from both segments are meaningful in driving sustainable growth. We continue to leverage the strength of our culture and the power of people to drive success. I want to thank McCormick employees worldwide as their energy and excitement for the business is coming through in our results. Now to recap the key takeaways as seen on Slide 30. Our third quarter performance was strong, reflecting sustained demand and the effective execution of our growth strategies. And our volume performance, excluding China, continued to improve. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Our year-to-date cash flow from operation results was strong, already equal to our full year 2022 results. Our reaffirmed sales and operating profit guidance, despite lower-than-expected China recovery, highlights the growing strength of the rest of the business. The strength of our business model, the value of our products and capabilities, and execution of our proven strategies bolsters our confidence in our growth trajectory over the long term. Now for your questions.

Thank you. We'll now be conducting the question-and-answer session. [Operator Instructions] Thank you. And our first question is coming from the line of Andrew Lazar with Barclays. Please proceed with your questions.

Great. Thanks very much. Good morning, everybody.

Good morning, Andrew.

Good morning.

Good morning. I guess maybe to start off with McCormick obviously as you mentioned saw some sequential volume improvement in Consumer Americas in the fiscal third quarter and you're lapping an easier -- and even easier I guess down 11% volume decline in the year-ago period in the fourth quarter. So, I guess my question is would you expect volume in the Consumer Americas segment to flip positively in the fourth quarter? And if not, I guess, what would be the key factors that would keep you from doing so, obviously all in the context of an industry volume backdrop that remains kind of subdued?

Well, thanks Andrew for your question. Just to maybe speak first to last year's fourth quarter. I think our sales growth back in 2022 was down about 1.7%, I think, on sales. And that was up without Kitchen Basics. And we were lapping the 2021 retail inventory build in a high level. I think we, as we talked about on that call, entered the 2022 holiday with just a lot stronger inventory than we were counting on or predicting or forecasting. So, the way we're looking at it is the net sales impact really was up about -- a little over 4% in the fourth quarter last year. So, we're not seeing that necessarily as an easy comparison overall, but just talking to dollars first, that's kind of our view is just we're still looking at a pretty robust fourth quarter from a year ago just knowing that we had that comparison in the fourth quarter. Now, when we look at this year's fourth quarter, as we said on the call here earlier, you will see the impact of that DSD continuation in our Hispanic bagged spices part of our business. It just tends to be -- that business tends to be heavier in the fourth quarter because of the holidays, so that will be a little bit stronger then. But to our spices and seasonings business, we continue to see improving trends in that part of our portfolio. And you should expect to see that in the fourth quarter, that sequential improvement in performance overall. And we feel like we're going to have a strong holiday. I mean, I think the reasons why we feel good about the direction of that part of our portfolio is, and you heard it on the call, we're gaining share and we're gaining…

Great, thanks. I'll pass it on and leave it there. Thanks so much.

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

Good morning, everyone.

Good morning.

Can I ask about the market share trends that we're seeing in Americas Consumer? It's obviously been under pressure for some time because of the distribution losses and so on. But I'm wondering if there is light at the end of the tunnel in terms of when either the comparables get easier or innovation helps to turn it around. I'm just wondering what the outlook is there. And then, I have a follow-up.

Thanks, Alexia. Yeah, I think as we take a look at our performance overall in terms of shares, et cetera, just talking maybe specifically to spices and seasonings, the dollars are a bit tricky because we are seeing private label and our competitors take more price right now in the last couple of months to catch up to the pricing that we've taken in the marketplace. But this is helpful obviously because it starts to close price gaps. And so, I think you're seeing some stronger dollar performance there. But from a unit standpoint, we believe we're performing even better. That lag is even less. And so, as we then look to the pipeline of activities that we have going on, much like I just mentioned on the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum, we see a strong pipeline across that part of our portfolio as well as just stronger overall marketing initiatives now that we have really a shared supply across all of our portfolio. So, when we talk about light at the end of the tunnel, we just see sequential improvement over the course of time as we fall back on distribution points, which we've grown this quarter, as well as just the pipeline of activity and renovation that we have across our portfolio. You're seeing a good view of that right now, but there's more to come. And so, we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories.

I think, too, we think some of the same things we've done in Europe, for example, where we had, as we mentioned today, a really good share performance and volume performance in markets like UK and France, which are similar to the U.S. So those types of activities we are doing, whether it's innovation, upgrading, renovating the line, have had success over there too.

Great, thank you. And just as a quick follow-up. You talked about the free cash flow allowing you to de-lever more quickly than expected. What's your level of appetite for acquisitions next year? And where are the priorities? Is it Consumer? Is it Flavor Solutions? Domestic? International? Just wondering how you're thinking about the pipeline on the M&A side. And I'll pass it on. Thank you.

Alexia, as you said, we're having really good success on our operating cash flow. We're really excited about that. As we said on the call today, we're going to de-lever faster than we thought to get back to our 3 times target. We're always looking at acquisitions. I mean, we have a corporate development team that is always working internally to look at those assets. We have an appetite as part of our long-term growth algorithm. A third of our 4% to 6% long-term growth algorithm is M&A. However, we're still in the process of paying down debt. I think the fourth quarter is our biggest cash flow quarter generally. As we get into next year though, as we get closer to our targets, I think as assets come up that are attractive, whether they're Consumer or Flavor Solutions, U.S., International, we really look for things that don't dilute our sales growth. Our top-line is really important to us. You look at the past with Cholula and FONA and RB, those are the type of assets we really like. Would we like it to be a bit more international? Yes. Flavor Solutions now also is an area where we really like that and look at FONA and Giotti as past acquisitions we're really happy with. So, sorry for the long-winded answer, but I think we're getting back to where we want to be to enter back in the M&A market. And as long as it meets those strategies in both Consumer and Flavor Solutions for attractive assets, we'll be buyers hopefully at the right price.

But right now, paying down our debt is our priority.

Thank you very much. I'll pass it on.

Our next question is from the line of Max Gumport with BNP Paribas. Please proceed with your question.

Hey, thanks for the question. A number of your broader U.S. packaged food peers have been talking about value seeking behavior, whether it's moving down to cheaper brands and private label, or channel shifting, or simply buying less units of food. You mentioned some comments earlier about the movement to larger package sizes that you're seeing, but I'm curious if you can talk more broadly about how value seeking behavior is impacting your business, particularly given you're also a large producer of private label spices and seasonings. Thanks very much.

Thanks for the question. We're seeing value play out through many different types of actions from the consumer. Some are going to larger sizes and we see that quite a bit and as an example of where we're taking an opportunity to continue growing even more quickly. In that part of our portfolio, we're definitely seeing sustainable continued trends towards larger sizes. And what's also interesting about larger sizes, at least in the categories that we have, especially spices and seasonings, is that the purchase rate is still just as fast as it was with a smaller size. So, people are going through when they have it in the household, they're going through a little bit just as fast or more quickly. But the other way value kind of presents itself too is opportunities like this opening price point. With the pricing that's happened in the market, as we talked about before, it created a price pocket that we feel like we needed to fill with a brand like Lowry's. And so that's playing a role in our portfolio that's offering a brand to consumers. And a lot of consumers still prefer brands. And it's allowing them to move towards a brand that's a lower opening price point and fills the need. And we're seeing a lot of success with that too. But the other way we're really talking a lot about value is directly to the consumer, especially if you think about a lot of our communication right now over the past year has been value oriented. And we're talking about the role that our portfolio plays in terms of providing flavor for pennies of serving. And that is really having a positive impact. Plus, a lot of our content is also focusing on how consumers continue to save money by creating, let's say, for example, just larger batch sizes of food so they can have leftovers for a couple nights in a row, or tricks and hacks like that that allow consumers to create even more value and stretch the food dollar even further. That's where we see our category really playing a role in the household, especially during this kind of -- where there's a lot of consumer concern around inflation, our categories are playing a helpful role in that. So, we're looking at it from a number of different angles, but I just illustrated three right there that we are hitting pretty hard during this period of time.

Thanks. Very helpful. I'll pass that along.

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

Yes, thank you. Good morning, everyone.

Good morning.

Good morning.

Good morning. I guess maybe trying to take Andrew's question in maybe a slightly different kind of light. Brendan, is there any way to help frame the distribution kind of gains that you're seeing and expect to see over the incoming quarters? Any way to quantify kind of how we should think about total distribution growth and where that will peak from a TDP perspective into 2024? It's harder to fully see that expansion in the scanner data. And so, I'm wondering if part of it is growth in certain unmeasured channels or value retailers that aren't captured in Nielsen.

Well, Adam, just a few things around TDPs. I'm not going to be talking about what to expect in 2024, just -- because we'll talk about that guidance as we look at early next year, but just talking a little bit more about TDP performance. It remains an important area of focus for us, and we've been taking a lot of action to restore distribution, which has really lost the supply over the last one or two years. I think it's an important reminder that about half of those TDP losses are a result of just proactive discontinuations that we made. And those are not likely to be restored. But we are starting to see TDP growth, something which we said would start to come this year in the third quarter. And we believe that performance has improved versus like the previous two quarters of the year. And I would also just share with you that our assortment on shelf now is even more productive than it was versus pre-COVID. So that velocity, those turns that we get on shelf from that assortment there is actually even more productive not only for McCormick, but also for the retailer. So that's something really important to pass along. And we'll start to see more distribution come online as retailers reset their shelves. We're seeing a bit of that happen right now as we speak going into the fourth quarter, but we expect to see even more of that as we go into 2024. So that's one, I think, context around, TDPs and distribution that we think provides context and color. We will continue to accelerate innovation, and that's something that we did in 2023. We'll continue to do that in future fiscal years. That will also build on sort of the TDP momentum and distribution growth that we see. I think those are some of the points that I think that are without calling out a specific TDP number and gain to expect. We continue to see continued improvement, sequential improvement as we look at this over time. And as we mentioned in previous calls, it will take a little bit of time to get it back, but we are still making forward progress on this.

Okay, that's helpful. And if I could just ask a separate question on the Flavor Solutions segment. And as you think about some of the different customer types that you have and geographies, how would you frame kind of recent inbound kind of bid activity in RFPs and contract win rates? Are you seeing your customers accelerate their innovation agenda to drive growth in their business? Or is activity levels slowing down? Just any color -- as you think about that pipeline of new business wins, kind of how would you frame that?

I'd point to our performance in the Americas as an example as to how to think about our current momentum on our flavor business. We had really good sales growth, but we also had some volume growth. And that's an example of what we're seeing not only through our flavors business but also branded foodservice. And we are starting to -- we are growing share in a number of the strong categories that we participate in. We talked about performance nutrition or the health end market. We see it happening there, or even in alcoholic beverages. We have been seeing some nice growth and gains in that part of our business. Is there anything particularly unique at this point in the year versus what it was like earlier in the year? No, I don't think I can point to anything that's terribly unique that we haven't already talked about before, but this has been an element of sort of continued sequential improvement of performance. We've been able to grow a little bit of volume here probably because of the strength of our products and technology that go into the categories we play in. And so that's I think some of the context there. We're happy to be growing share. We believe that we have the right plans. Now if you look at elsewhere within Flavor Solutions, our EMEA business tends to be more heavily weighted towards the QSR part of our customer base. They're not seeing the type of traffic and promotions that they have in, let's say, the prior year. So, we still see a little bit of pressure on overall volumes there. Conversely, in Asia Pacific, our QSR business there is actually doing quite well. Customers are turning back on promotions. They are trying to drive more traffic in their stores. And so, we, as a result, are also seeing some nice volume growth in that part of our portfolio at Flavor Solutions. But dialing back to sort of that flavor part of our category, we are pleased with the performance that we have made so far this year. And it's continued momentum, but nothing that there is a certain new inflection point to share with you.

Okay, I appreciate all that color. I'll pass it on. Thanks.

Our next question comes from the line of Steve Powers with Deutsche Bank. Pleased proceed with your question.

Hey, great, and good morning. Thank you.

Good morning, Steve.

Hi, Steve.

Hey. So, I wanted to ask on the incremental gross margin improvement that you see in your outlook this quarter, building on a raise that happened last quarter as well. And just, if you could put a little bit of context and detail around exactly what's driving that incremental gross margin upside? Question number one. Then, question number two is, as we've seen that gross margin tick up over the balance of the year, we haven't seen you change your reinvestment strategy in terms of brand marketing. I just want a little bit of color and context as to why that isn't a source of reinvestment as you do realize that gross margin upside.

Well, thanks, Steve. This is Mike. I'll take that one. I'm surprised it took five questions to get to gross margin, so thanks for asking that question. First of all, we're really pleased with the gross margin performance this year. We've had improvement. We had a strong third quarter. You think about the things we're doing with the cost recovery through our pricing, which we've really been successful at this year. The GOE and CCI commitments we put out at the beginning of the year, we're really happy with our performance there across those segments, that's the other thing. These margin improvements are happening both in the Consumer and Flavor Solutions side, which is really -- which is great. As far as raising for the year, as you know, we've had good performance year-to-date. And even with some of the challenges in China, our strong underlying performance has really held through. So, as to why we wouldn't raise really the A&P spent, I mean, we feel really comfortable where we are from A&P with our current guide. The third quarter was up 8% and it was the highest dollar amount we've ever spent in the third quarter. So, we feel we're very effective there. Actually, CPI is a topic, we get savings across all costs of goods sold, but we get it on SG&A too. And A&P is an area where the teams have gotten real cost savings or efficiencies in our advertising program. So, it's even higher than you see from a dollar perspective. So, I think we're confident where we are in gross margin. We're building back. If you go back to pre-'19 -- pre-COVID in 2019, our gross margins were around 40%. Using our implied guidance this year, gets you around 37%. The interesting thing is if you look at the map on the pricing dilution that has happened, it's been -- it's over 500 basis point headwind to us, which you can see, we're down 300 basis points. So during that time, through CCI and other things, we've captured some of that back, which we continue to see in the future as we get back to those pre-COVID gross margin and operating profit levels.

Now, Steve, if I could, there was a question in there about A&P too, and just to really kind of build on that. In that, we were up significantly in the third quarter [indiscernible] at 8%, but it was probably our highest historical spend, right? So, we're really putting a lot more in the A&P as we sort of called out, and we'll have a strong level again in the fourth quarter, and these are going into a lot of important campaigns right now. So, I just wanted to reinforce, I think we are seeing still an increase in spend in that part of our -- in that line of the P&L.

Okay. That's great. And so, I guess -- that's helpful. Thank you. And Mike, so just playing back the various puts and takes on gross margin, is it fair to say that the biggest sort of upside surprise for you over the course of the year has just -- has been successful price realization, or are there elements of business mix or other drivers there? Because it feels like the productivity has come in solidly, but roughly in line with, I think, original expectations. Cost inflation hasn't changed materially, so it seems like the buckets has to be pricier, or...

The way I say it, Steve, everything is going to move in the right direction. We were successful getting our cost recovery. We got some pricing earlier as you probably inferred from some of our pricing numbers. So, we got our pricing faster than last year, which was helpful. The GOE and CCI programs, like I said, have met targets. And frankly, we're a bit prudent this year. I think as we said -- as we gave guidance in January after last year, we wanted to make sure we hit our numbers. There was a lot of big assumptions going in into 2023, pricing, GOE program, things like that, and we knew the China -- we were counting on a China recovery which impacts not only gross margin but operating profit. So, we felt at this time after Q3, where we see us spending for the year, we felt it'd be a good line of sight to the commodity cost, things like that too, which gave us the comfort to get there. The other thing, too, is, as you think of it, when Brandon was talking a little bit about the strong -- our underlying performance in things like spices and seasonings, when you look at our performance in other markets, we've had really good portfolio -- really good portfolio mix, and some of the things we're doing on portfolio optimization with pruning low-margin business does help grow these margins also, and will help us as we go into the future.

Yeah. Okay. Very good. Thank you so much.

Our next questions come from the line of Matt Smith with Stifel. Please proceed with your questions.

Hi, good morning. Thank you for taking my question.

Good morning.

If I could follow up on the margin commentary and the headwind from pricing dilution, as we look at the Flavor Solutions business, you've been making margin recovery progress there. But can you talk about the factors that are keeping the current margin 400 basis points or so below historical levels? And how much of that is the mechanical pricing impact versus other factors? And then, what supports the margin recovery from here?

Yeah, it's a great question, Matt. If you think about it, pre-COVID, we were at 14.5% operating profit, which at the time we were really happy with because we came from a low of around 6% several years before. But we also did acknowledge that as we migrated our portfolio, we had higher aspirations to get higher than that as we migrated to more flavor type products. COVID has been -- and the cost related to that have really been a big challenge to us and a headwind, and also the huge cost increases that have hit Flavor Solutions. So last year, we were at 8%, as you know. This year, we're looking to build back. Year-to-date, we're around 10%. So probably around that for the end of the year. So, 200 basis point improvement this year. Back to your question on dilution, at the operating profit level, we've had about a 300 basis point dilution impact on Flavor Solutions. So theoretically, if that didn't happen, I know it did happen, but that 10% would become 13%. So, we're about 150 basis points short of that pre-COVID-19 margin improvement. And things like we've done with GOE, which we see continuing and wrapping into next year; the dual running costs, we're having it primarily in our Flavor Solutions business in the UK manufacturing facility, that goes away partially next year and the year after it's totally gone, which is great; continued TCI. So, these types of things will get us back to -- and portfolio migration, pruning the low-margin business, we talked about some of the private label foodservice business in the EMEA this call. Those types of things were focused really, really well on getting our margins up. And some of the things when Brandon talks about performance nutrition and beverage, those are the flavor type of items. They're growing faster. We really like those. They can help margin up our whole Flavor Solutions portfolio.

But we do like the progress we're making independent of price and dilution, just on overall improvement in the margin there. So, we do believe we're moving in the right direction.

Okay, thank you for that. I can pass it on.

Okay. Thanks, Matt.

Our next question comes from the line of Robert Moskow with TD Cowen. Please proceed with your question.

Hi, thanks for the question.

Hey, Rob.

Good morning. Rob.

Good morning. I wanted to know about the guide -- the implied guide for organic sales growth in fourth quarter. It looks like it's about 3% and that marks a substantial deceleration from the first three quarters. And then even when we try to look at that on a four-year basis, just using like 2019 as the base, it's again, a big decline. We're all looking at the U.S. retail data in Nielsen and IRI, it's all decelerating. Are you taking that into account in your guide? And if so, it sounds a little like a disconnect from the expectations for a very strong holiday season.

Hey, Rob, just to clarify, you just mentioned the word -- number 3%. Our implied guide is in the midpoint is 3.7% to 11.2%, which implies 7.5%.

I'm just trying to get to your -- I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of 5% to 7%, 6% for the year.

Yeah, I think -- Rob, it's Brendan. The things to keep in mind, I think for the fourth quarter, it's our largest quarter. So, we're not able to provide a precise estimate, but I think some broad concepts to consider is we do expect some growth in China in Consumer in the fourth quarter. If you recall, we're lapping over a pretty severe lockdown at that time, this time a year ago overall. We still expect to have a reasonable impact from the DSD discontinuation in the Americas, heavier because it's during the holiday season. We still expect some softness in Flavor Solutions demand that will persist, that will certainly be there, but we will also lap the impact of the Kitchen Basics divestiture, as well as the Consumer business exit in Russia. So those are just some considerations I think when we take a look at fourth quarter sales.

Yeah, I think, Rob, just a follow up on my point before, from a reported basis, our implied fourth quarter guidance is 3.7% at the low end to 11.2%. That includes about a 2% FX favorable, because FX is back-loaded favorable this year. So, constant currency is 5% to 5.5% range. So, I'm not sure where the 3% is coming from for the fourth quarter you mentioned. Make it as a follow-up with Faten and Kasey, we can make sure your model is okay.

That's fine. So, maybe that answers the question, Mike. So, you're not expecting any kind of decel in U.S. retail conditions in fourth quarter?

No, in fact -- yeah. We do believe we're having again underlying improvement. We've mentioned this the last few quarters and we continue to progress there.

Got it. Okay. Thank you.

Okay. Thanks.

Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.

Great. Thank you so much. I just wanted to ask a question about the renovated SKUs. I think I heard you say in the prepared remarks that -- I think it's 40% of the renovated SKUs, maybe our own shelf. So, maybe just as a reminder, just curious kind of when you think about total SKU selection, it sounds like maybe it's more spice and seasoning, kind of what percent is being renovated? And then kind of what's the feedback so far as to why that's driving velocity? Is it just consumers are more attracted to different packaging or -- it doesn't sound like these are different SKUs. Thanks.

Thanks for the question. Just to make sure I clarify what we said in the prepared remarks, about 40% of those SKUs are shipping and the SKUs we're talking about is part of our core herbs and spices line. These tend to be those straight fill items, meaning it's a bottle of cumin or a bottle of cinnamon, et cetera, so that's what we're calling those straight fill spices. And we have visibility to the SKUs that are being shipped. It's not as easy to track exactly what has hit shelf yet. And that's really dependent on the retailers' plans. But where we know it has, there's really been an improvement in velocity overall. And one of the drivers of that, just there's a lot of different benefits from this new package. We've talked about it before, but it is nitrogen-flushed, so there's even -- what we're providing there is just greater long-term freshness. Until you open up that package, we're really securing the freshness of that product. There's sort of a nice click and snap with the cap that really kind of tells the consumer, not only just through seeing but also listening, there's a real sort of snap to disclosure that kind of again creates to retain freshness. And the package is 50% post-consumer recycled plastic, so it also has a big sustainability benefit. It just has a great appearance on the shelf overall. And so, we knew that this was a strong packaging innovation because we've launched it in other markets around the world like in EMEA. And also, it's also going out to the Asia Pacific too. So, we have some experience with this package and how it performs. And we're seeing similar, if not better, velocity performance as we get started here on U.S. shelves. So that's a little bit of context around what we're seeing from that renovation in our product line.

Yeah, just to re-emphasize that 40% is really shipped. I mean, if you walk into a store today, it might be 10% of the items or 5% or 20% depending on the stores, but it depends sometimes on their supply chain, too. So, we see like a good tailwind into next year from this too.

Got it, Okay. Super. Thanks. And then maybe just quickly and kind of simplistically on SG&A. Q3 you ran for total SG&A about 22% of revenues. Clearly, that's up, but kind of inline-ish, right, relative to maybe the kind of prior four or five years. As we think about Q4 and then I guess kind of going forward, is like 22% of sales, is that kind of fair? Or could there be certain quarter-to-quarter movement? Thanks.

Yeah, I mean third quarter I think was a bit of a high watermark for SG&A. We had a big incentive comp. As we talked about on the call, incentive comp got billed back for a couple reasons. And remember last year's third quarter was way down. So, the incentive comp was getting adjusted then. So, the build back this year was a big part of SG&A on a smaller quarter than the fourth quarter. So, you got to think about it in makable terms too. And really then incentive comp was driven, not only by the EPS improvement, with everyone in the company, which is great. Within our regions, the mix of our regional underlying strength of Americas and EMEA region did drive it a bit more NIV -- excuse me, incentive comp, but also the great working capital performance. And people forget that sometimes, I mean we're an EVA, economic value-added company. We have a working capital charge component of our incentive compensation. So, last year when working capital wasn't great, we all got dinged for it. This year, we are doing great and coming through incentive comp. It is just another reason we are driving cash and those types of activities that help us lever down and things like that, which are really great. So, a bit more of that impact in the third quarter. And then, brand marketing, we mentioned up 8%. So really strong performance there. And for the year, we stick to our guide as low-single digit A&P.

And maybe if I could just sneak one last one in. Asia-Pac, clearly understand what you're talking about in terms of just getting a slower China recovery. And I think you called out maybe a few kind of one-off drivers, but maybe it's more EMEA-driven. Kind of net-net, right, Asia-Pac in Consumer, it was still down a quarter, but clearly Asia-Pac in Flavor Solutions is doing better, and I realize, like, part of your China business is in Consumer, but maybe it's still somewhat foodservice. So, I'm just trying to understand kind of the comparison between kind of Asia-Pac Consumer versus Asia-Pac Flavor Solutions, and what's driving the delta? That's all. Thanks.

Well, appreciate the question there, Rob, on China. It's probably worth unpacking that a little bit. I would say, though, despite the pace of recovery in this business having been slower than expected, we continue to believe in long-term growth trajectory of that business. And it's also when you step back on a constant currency basis, we are growing this business. Versus a year ago, we've grown sales in the high-single digits. So, yeah, we're disappointed that the pace of recovery wasn't what we expected it to be, but nevertheless, we are growing sales year-over-year. And even despite the volatility since 2019, we've grown our total China business at a 3% CAGR on a constant currency basis, which is kind of in line with the long-term algorithm. So, this is really an element of an economy that certainly is recovering more slowly than what we would have expected. And where we see that now, this kind of goes into sort of how we're thinking about Flavor Solutions versus Consumer. And part of that Consumer business is in the foodservice channel, but people are just simply not necessarily going out to a lot of the catering and outside dining events that we've seen in the past, and that's just been a slower recovery overall. We're also seeing that also happening in retail. Consumer spending is just soft right now overall in China, and we're seeing that play out. Where we start to see -- and this is actually more of a change in this quarter, just more of the typical promotional activity or limited time offers that we tend to see in the QSR segment have begun to come back a little bit more. So that gives us some reason to believe that this is just a slower recovery than what we planned, but the fundamentals that drive that business are still there and it's just going to take a little bit more time to get back to what we expect from this part of our business.

All right. Super. Thanks so much.

Thank you. We've reached the end of the question-and-answer session. I'll turn the call over to Faten Freiha for closing remarks.

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