McCormick & Company, Incorporated (MKC) Q3 2018 Earnings Conference Call Transcript

McCormick & Company, Incorporated (MKC 1.04%)
Q3 2018 Earnings Conference Call
Sept. 27, 2018, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Kasey Jenkins -- Vice President of Investor Relations

Good morning. This is Kasey Jenkins, Vice President of McCormick Investor Relations. Thank you for joining today's Third Quarter Earnings Call. To accompany this call, we've posted a set of slides at ir.mccormick.com. Now, all participants are in listen-only mode. Following our remarks, we will begin a question and answer session. If you need to reach the operator at any time during the call, please press *0. We'll begin with remarks from Lawrence Kurzius, Chairman, President, and CEO, and Mike Smith, Executive Vice President and CFO.

During our remarks, we will refer to certain non-GAAP financial measures. These include adjusted gross profit, adjusted gross profit margin, adjusted operating income, adjusted income tax rate, and adjusted earnings per share that exclude the impact of transaction and integration expenses related to the Reckitt Benckiser Foods -- or RB Foods -- acquisition, special charges, and income taxes excluding certain non-recurring impacts associated with the recently enacted U.S. tax reform, which we refer to as the U.S. Tax Act, as well as information in constant currency. 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, which includes the complete information.

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. As seen on Slide 2, our forward-looking statement also provides information on risk factors that could affect our financial results. It is now my pleasure to turn the discussion over to Lawrence.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Thank you, Casey. Good morning, everyone. Thanks for joining us. Our third-quarter results continue the strong performance we delivered in the first half of 2018, and we're well positioned to deliver strong full-year results. We've driven strong double-digit sales, operating profit, and EPS growth, as well as significant operating margin expansion in both the third quarter and year to date. These results reflect the effectiveness of our sales and profit growth strategies driven by the engagement of our employees around the world.

Starting on Slide 4, we have a broad and advantaged global flavor portfolio, which we are continuing to grow. Among the third-quarter highlights across our portfolio and our consumer segments' underlying business, we drove growth in the Americas, particularly in Recipe Mixes and Spice and Seasonings, and we continued our momentum in China. In our Flavor Solutions segment, we continued winning with customers, driving base business and new product growth in both the Americas and EMEA.

We also continue to make progress on expanding our portfolio, with additional growth in more flavors while pruning some low-margin business. The reshaping of our Flavor Solutions portfolio is a significant driver of operating margin expansion. In addition to the solid growth in our core business, we are pleased with Frank's and French's performance and their positive impact on our portfolio of condiments and sauces and branded food service. Overall, we're confident that the breadth and reach of our portfolio continues to position us to fully meet the demand for flavor around the world and grow our business.

Now, let me go into more detail on our third-quarter performance on Slide 5, as well as provide some business comments before turning it over to Mike, who will go more in depth on the quarter-end results and discuss our updated 2018 financial guidance.

Starting with our top line for the third quarter, we grew sales 14% for the total company with minimal impact from currency. This was driven by strong results from both segments, led by the Americas. Base business growth, new products, and acquisitions -- our three drivers of long-term sales growth -- are all contributing factors. Our base business and new product growth accelerated from our first-half sales growth, as we said we would in our June call. Incremental sales from our acquired Frank's and French's brands contributed 10%.

In our Consumer segment, we grew sales 14% with minimal impact from currency, and in the Flavor Solutions segment, we grew 14% in constant currency. The growth in both segments was led by incremental Frank's and French's sales, which contributed 10% to our Consumer segment and 9% to our Flavor Solutions segment.

In addition to our top-line growth, our focus on profit realization drove additional adjusted operating income growth and adjusted operating margin expansion. With our higher sales, cost savings led by our Comprehensive Continuous Improvement program, or CCI, and our portfolio shift to more value-added products, including the addition of Frank's and French's, we grew the third quarter's adjusted operating income 20% in constant currency, with both segments contributing double-digit growth.

And, we expanded our adjusted operating margin 80 basis points while making significant investments in brand marketing. We're achieving the margin accretion we expected from the Frank's and French's portfolio, and equally as important, we are driving significant margin expansion in our core business, led by CCI as well as a shift in our portfolio to more value-added products.

At the bottom line, our third-quarter adjusted earnings per share of $1.28 was 14% higher than $1.12 in the third quarter of 2017. Our strong growth and adjusted operating income and a more favorable tax rate drove this increase, partially offset by higher interest expense from debt related to the RB Foods acquisition as well as higher shares outstanding. The 14% earnings-per-share growth includes an unfavorable impact from currency.

Our third-quarter results were aligned with our expectations and are a continuation of the results we achieved in the first half of 2018. With one quarter remaining in the fiscal year, we've increased our adjusted earnings per share guidance from $4.95 to $5.00 from a previous guidance of $4.85 to $4.95. Our updated guidance reflects a 16-17% growth rate, and importantly, includes continued investments to drive growth. We're confident in our updated 2018 outlook, which Mike will provide more details on in a few minutes.

I'd like to turn now to some business updates. I'll begin with highlights from our Consumer and Flavor Solutions segments and follow with a look at our Frank's and French's portfolio. In the Consumer segment, as seen on Slide 6, we grew sales 14% with minimal impact from currency with incremental sales from Frank's and French's contributing 10% and our base business and new product growth contributing 4%, driven by the U.S. and China. In the Americas, growth was particularly strong, driven by the large impact of Frank's and French's, which contributed 14% incremental growth. Our underlying Americas business grew 4%, which was a significant sequential improvement from the growth in the first half of the year. Our third-quarter growth was driven by higher volume and mix, primarily attributable to distribution gains, growing strength, and the effectiveness of our brand marketing, as well as pricing.

In U.S. Spices and Seasonings, our IRI data indicates scanner sales through multi outlets grew for the category at 3% and McCormick branded at 1%. Our growth continues to be impacted by a large retailer's decision to convert a control label to private label, along with related promotional and merchandising actions, which we've discussed on previous earnings calls. While this decision hurt our branded spices and seasoning share performance, it drove growth in our private label sales. Additionally, we again had strong growth in unmeasured channels, including club, e-commerce, and Hispanic retail chains. Overall, we continue to see good growth in our spice and seasoning brands in our U.S. market, we narrowed the gap in market share loss, and we know we have more room to grow.

During the third quarter, we also had strong growth in other parts of our portfolio -- for instance, in grilling items, which I'll comment on further when discussing Frank's and Frenches, as well as in our Simply Asia products, Kitchen Basics stocks and broths, and McCormick-branded dry recipe mixes. Our recipe mixes are [audio cuts out], as they offer real value in terms of convenient flavor solutions. During the third quarter, dry recipe mix's IRI indicates the category grew at 4% and McCormick branded at 6%. We continue to grow both our dollar sales and market share, with brand marketing and promotional activities heavily impacting our third-quarter performance.

As we indicated in our June earnings call, our plans included a significant amount of brand marketing investment in the second half of the year. During the third quarter, we made substantial investments behind our brands across all regions, which proved to be effective. The increase, which was $21 million versus last year, was primarily driven by the Americas. A portion of this increase related to Frank's and French's, which I'll discuss in a few minutes. For the underlying Consumer business, our Americas investments include the increased spending related to our superiority campaign, primarily in television advertising, with additional support through digital banner advertising and social media activity. The campaign highlights our commitment to quality and the great lengths we go to in care of our products, spices and seasonings, and recipe mixes.

There is further development of a rapidly growing YouTube content series, Flavor Makers, with additional how-to videos with hosts that appeal to millennials using products across our portfolio in on-trend and convenience-focused recipes. We had digital media investments delivering video messages across social media and other platforms that our Stubb's barbecue sauce is made with premium, clean ingredients for authentic flavor -- a real barbecue sauce. We were the top-performing barbecue brand in the third quarter, with double-digit consumption growth.

We increased spending against our Grill Mates brand with a combination of television advertising and digital focus aimed at helping grillers elevate our game. This included a partnership with the Food Network and one of their grill masters to use our Grill Mates products in various recipes, including in a significantly viewed video on social media. In the third quarter, we grew Grill Mates Bottle Blends in the high single digits.

The effectiveness of our investment is evident in both our third-quarter consumption and sales growth and will continue to drive strong momentum behind our brand growth, and in addition to our digital marketing driving top-line results, during the third quarter, we learned we were again ranked in the top five food brands for digital IQ by L2 for the fifth year in a row.

Turning to Europe, Middle East, and Africa -- the EMEA region -- growth was tempered by unusually warm weather in Europe, which unfavorably impacted consumption. We're continuing to keep our brands relevant through marketing and new products. Organic range expansions are progressing well and our First Choice brand renovation initiative is rolling out across Europe. We're also planning on an increased level of brand marketing in support of this initiative over the balance of the year.

In the Asia/Pacific region, our strong sales in China led consumer segment growth driven by strong performance on core products, as well as e-commerce growth. China's direct-to-consumer storefront on Tmall continues to gain momentum since its launch earlier this year, particularly with innovation launched specific to the channel and targeted to millennials.

Turning now to the Flavor Solutions segment, we grew sales 14% in constant currency in the third quarter, with incremental sales from the Frank's and French's portfolio contributing 9% and the remaining 5% driven by base business and new product growth. In the Americas, constant-currency sales growth of 19% was led by 14% from Frank's and French's. Broad-based growth across the portfolio contributed 5%. Our momentum in flavor sales has continued, particularly in on-trend savory flavor's. We're growing with quick-service restaurants, due in part to the timing of our customers' promotional activities, and in branded food service, we've continued to expand distribution. Overall, across the portfolio, we are continuing to win with existing business as well as with new products and customers.

EMEA's third-quarter sales performance was driven by growth in flavors. In both our EMEA and Asia/Pacific regions, we continue to win with our customers through new products and their promotional activities. We're continuing to refine and optimize our portfolio, increasing our sales of higher-margin flavor business and exiting lower-margin business.

Across our Flavor Solutions segment, the migration of our portfolio to more technically insulated and value-added categories has continued in 2018. Our year-to-date flavor sales are up double digits in the Americas, driving further realization against this strategy. Beyond our strategies to drive sales growth, we'll continue to focus on profit realization, as continues to be evident in our results.

Now, let's move from our strong core business results and onto an update on Frank's and French's, starting on Slide 8. Just a few weeks ago, we celebrated the one-year anniversary of the Frank's and French's brands joining our global flavor portfolio, and are thrilled with the impact we've had on these brands. We've created value, achieved synergies, and are obtaining results according to our acquisition plan. Importantly, we have achieved our year-one sales and earnings per share accretion expectations. Mike will provide further comments about our delivery against the acquisition plan in a few moments.

We continue to be excited about the momentum of this business and the growth plan we are successfully executing against. Like our third quarter's sequential sales growth improvement in our U.S. consumers underlying business, growth in the Frank's and French's portfolio also accelerated during the third quarter as our efforts begin to gain business traction.

Now, I'd like to share some updates on our progress against these plans, starting with our North America Consumer business on Slide 8. We're successfully growing Frank's and French's through strengthening distribution, category management, effective brand marketing investments, and innovation. Starting with Frank's, as of the end of August, we increased our U.S. total distribution points of Original and Buffalo sauces by double digits. Our Fix the Mix initiative, focused on having the right assortment on shelf, continues to be a key driver of this growth.

By increasing our array of bottle sizes offering on the shelf, we have sizes for all consumers -- a small size perfect for consumers new to the category to drive further household penetration to a larger bottle for the most passionate of fans. Importantly, the growth of these sizes has been incremental to the brand, which is also growing distribution points through our category management efforts. From a regional perspective, we continue to increase our distribution points where Frank's is not the market leader with double-digit growth in the third quarter.

Turning to French's mustard, we are continuing to convince retailers to remove duplicative secondary brands as they work to maximize the efficiency of their shelf space, and more of our recommendations are being implemented, eliminating lower-ranking yellow mustard brands and expanding the share of shelf of French's and store brands. These efforts, combined with our merchandising and promotion, as well as our new mustard marketing campaign, have driven significant sequential improvement from past quarters. Consumption in the third quarter significantly improved from the past several quarters' experience. As we've said before, mustard will take a while to turn around, but we're pleased with our progress thus far.

As I just mentioned, our promotion and merchandising activities are driving results. Our first opportunity to leverage increased promotional scale was with grilling. As we said on our June earnings call, our U.S. grilling season was delayed because of cold and wet weather in broad parts of the country. However, the grilling season soon heated up, with both Frank's and French's mustard achieving strong consumption wins in key U.S. grilling periods.

During the July 4th week, total dollar consumption for Frank's and French's mustard grew significantly versus the year-ago period, with mustard consumption driven by displays and promotions up substantially. During Labor Day week, total consumption growth accelerated, driven by our displays and promotions. Our grilling wins were not limited to Frank's and French's, with solid consumption growth across our entire grilling portfolio -- Stubb's, Grill Mates blends, and Lawry's.

In addition to the brand marketing investments I mentioned earlier, we also increased marketing support against French's in the third quarter and are excited about our continued plans moving into the fourth quarter. Our new U.S. "Not from France" campaign, a humorous take on the French's brand name, and our dedicated digital mustard campaign have contributed to the improved trends I mentioned as well as improvement in household penetration levels. The influence we've been able to apply through category management as well as brand marketing is beginning to have impact, as you can see in the most recent scanner data.

Moving into the fourth quarter for Frank's, we're currently running a U.S. national TV ad for the first time in seven years. In addition to this, we'll be launching our Tailgate 2018 campaign, featuring Frank's and Stubb's, which are both perfect for the tailgating experience. This interactive program will allow consumers to decide which flavor profile tops their tailgate. Is it the heat with Frank's or is it the sweet with Stubb's?

Finally, turning to innovation, our third-quarter Frank's seasoning and dip mix launches are on shelf at many major retailers, and we're pleased with the initial acceptance. As I previously mentioned, there's a longer-term pipeline of new concepts developing, and I look forward to sharing the details and innovation news as we launch new products.

Building on our Zatarain's frozen food business and capabilities, I'm very pleased to announce the launch of our latest new product line, which is again going beyond liquid flavor: Frank's Red Hot Frozen Wings. Frank's Red Hot was the secret ingredient used in the original buffalo wings, created in Buffalo, New York in 1964, and earned the title of Original Buffalo Sauce. These new items are delicious and convenient products that offer the perfect blend of flavor and heat. The launch includes three top restaurant flavors: Frank's Red Hot Original, Buffalo, and Barbecue.

The fully cooked, antibiotic-free chicken is flavored with a custom blend of McCormick seasonings and marinades made with Frank's Red Hot. Consumer testing has been positive, retailer acceptance strong. We are not only excited about this new product line, but also the speed at which it was developed from concept to market since we acquired the brands. This is an example of how we've been able to leverage our consumer insights, scale, and culinary capabilities to drive growth.

Wrapping up North America Consumer for Frank's and French's, we're very pleased with our progress, particularly with the accelerated growth our plans are now driving. We're confident in our initiatives and are enthusiastic about the growth plans we're executing against.

Next, I'm excited to share some Frank's and French's updates related to our North American Flavor Solution business on Slide 9. We're driving penetration of our full portfolio across the full spectrum of the food service industry, including high-volume national and regional chain accounts. We're very pleased with our progress in executing against our growth plans and continue to have successes in key areas. During the third quarter, we had incremental sales to approximately 2,000 new restaurant locations, including national, regional, and local accounts. This brings our penetration through August to over 21,000 new restaurant locations, and we continue to deepen our penetration with existing locations.

Broadening and deepening our penetration in food service includes highly visible menu mentions and front-of-house product placement. Our successes on menu items, which include products across our full portfolio, continued in the third quarter. For example, during the quarter, we secured a new partnership with a leading U.S. pizza chain to launch menu items that feature our Frank's products. These wins have also included menu mentions, with both restaurant, print, and television media campaigns to build brand awareness beyond food service.

Our efforts in the front of the house, which is not only limited to restaurants but also includes the broader food service industry, such as business cafeterias, sports venues, and lodging, have also continued in the third quarter, with double-digit growth in French's ketchup and mustard dispenser placements and the portfolio of our tabletop items. Additionally, we continue to cross-sell our culinary line, McCormick for Chefs, alongside our Frank's and French's food service items, into restaurants. We've accelerated momentum in driving penetration and still have a long runway ahead.

The momentum of our food service promotional activity is also driving results. Wings and sports have been an inseparable combination since Frank's earned the title of the Original Buffalo Sauce. We're excited about capitalizing on the start of football season in the U.S. with new promotional activity to drive further awareness, including increased tailgating events and offering the King of Wings program for the first time in the fall. I'm excited about our food service progress with Frank's and French's and the growth we will continue to realize in this part of our portfolio.

Turning to the international markets on Slide 10, we are progressing on integrating the Frank's and French's portfolio into our global network. We're continuing to apply discipline to establish the proper foundation to manage the brands globally and enable stronger growth. During our June earnings call, we shared we had also added new distributors in 14 countries, giving us greater international presence. During the third quarter, we added another six countries to increase our total presence to 20 new countries.

We're also actively converting to McCormick's direct infrastructure where we have scale. For example, in India, we've converted from using several distributors and began selling Frank's and French's directly to our retail customers at the beginning of August, and are currently on shelf in three major cities with a wider assortment, and Frank's in particular is creating interest.

Moving forward, we're excited to build on the consumer's growing passion for Frank's and French's and remain confident we will continue to deliver our acquisition plan, meet performance expectations, and drive significant shareholder value. I would also like to thank the many employees who have made year one a strong foundation for future success.

Mike is now going to provide more details on the financial results for the quarter and on our updated financial guidance. Before I turn it over to him, let me provide a few final comments on Slide 11. Let me summarize that we have achieved strong results in the first three quarters of 2018, both on our underlying core business and against our Frank's and French's plan. We delivered our third-quarter results according to our plans and are excited by our momentum.

We are confident for our growth plans in our new products across both of our segments, strong brand marketing programs, and our opportunities to expand distribution. At the foundation of our sales growth is the rising consumer demand for flavor. We're aligned with the consumer's increased interest in bolder flavors, demand for convenience, and focus on fresh, natural ingredients as well as with emerging purchase drivers such as greater transparency around the sourcing and quality of food. With this increased interest, flavor continues to be an advantaged global category which, combined with our execution against effective strategies, will continue to drive strong results.

We're balancing our resources and efforts to drive sales with our work to lower costs to build fuel for growth and higher margins. We're differentiated by our growth platform and the results we've achieved. We have confidence in our updated 2018 outlook and are well positioned to deliver another strong and differentiated year in 2018. Our success is the work of all the McCormick employees around the world, and I want to recognize them for driving our momentum and thank them for their efforts and their engagement. Thank you for your attention, and it is now my pleasure to turn it over to Mike. Mike?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Thanks, Lawrence, and good morning, everyone. Before I begin my remarks specifically on our third-quarter performance, I would like to build upon Lawrence's comments on Frank's and French's and provide further insight about the delivery against our acquisition plan now that we've completed the first year.

Starting on Slide 13, as Lawrence already shared, we have created value by driving growth through expanded distribution, new products, and more effective marketing, and we supplemented our core McCormick margin improvement with meaningful enhancement from the Frank's and French's portfolio. We are delivering against our synergy and one-time cost estimates -- in fact, doing better than our acquisition plan. Starting with our original synergy target, we continue to be on track to achieve $50 million of cost synergies, and as we previously shared, our 2018 synergies are pacing ahead of expectations. Consequently, we now expect to fully realize the $50 million target by the end of 2020, earlier than our original 2021 estimate.

Our transaction costs and integration one-time costs are also projected to be favorable to our acquisition plan, as we shared late last year. We're well positioned to achieve our targeted debt-to-adjusted-EBITDA ratio of 3x by the end of 2020. During the third quarter, we prepaid another $180 million on our term loans to secure it as part of our acquisition financing, bringing our total prepayments to $280 million in this fiscal year and $530 million since the acquisition. We have now paid down over one third of the term loans secured as part of the acquisition financing.

We executed our year one acquisition plan in line with -- and, in some areas, better than -- our model. As a reminder, we expected the first 12 months of the acquisition to be accretive to McCormick's adjusted earnings per share, with an increase of approximately 5% excluding transaction and integration expenses as well as ongoing amortization expense. We have achieved this expectation. With the successful completion of our first year, we remain confident we will continue to deliver our acquisition plan and meet performance expectations.

Now, moving on to our overall financial results, as Lawrence already mentioned, we delivered strong growth in the third quarter. I'll begin with a discussion of our results and then follow with details on our updated full-year 2018 financial outlook. As seen on Slide 14, we grew sales 14% with minimal impact from currency. Acquisitions, higher volume and product mix, and pricing each contributed to the increase.

Both our Consumer and Flavor Solutions segments delivered strong top-line growth, driven primarily by the Americas. In addition, we have delivered significant increases in adjusted operating income and adjusted earnings per share. We also delivered adjusting operating margin expansion while increasing our brand marketing significantly during the quarter.

The Consumer segment grew sales 14% with minimal impact from currency. Our acquisition of the Frank's and French's portfolio contributed 10% of the sales growth. The remaining 4% growth was driven by base business and new product growth, primarily in the Americas and Asia/Pacific regions.

On Slide 15, Consumer segment sales in the Americas rose 18% at constant currency versus the third quarter of 2017, with 14% of the increase from Frank's and French's incremental sales. The remaining 4% increase was driven by growth from volume and pricing in the U.S. across several product lines, including recipe mixes, spices and seasonings, Asian foods, stocks and broths, and grilling items. And, as Lawrence mentioned, the underlying business growth rate was a significant sequential improvement from the first half of the year.

In EMEA, constant currency consumer sales were down 1% from the year-ago period, including 1% growth from sales of Frank's and French's. As Lawrence already mentioned, the unusually warm weather impacted sales growth in Europe. We grew Consumer sales in the Asia/Pacific region 9% in constant currency, led by China-based business growth, with strength in ketchup, sauces, recipe mixes, and chicken bouillon.

For the Consumer segment in total, we grew adjusted operating income 10% to $154 billion. The impact of sales growth and cost savings more than offset increases in freight costs and brand marketing. We increased our brand marketing 44% or $21 million in the third quarter versus the year-ago period. The increase of brand marketing, partially offset by the favorable impacts of CCI and product mix, drove an adjusted operating margin decline of 50 basis points compared to the third quarter of last year.

Turning to our Flavor Solutions segment on Slide 19, starting with sales growth, we grew constant currency sales 14% with minimal impact from currency. Our acquisition of the Frank's and French's portfolios contributed 9% of the sales growth. The remaining 5% growth was driven by both the base business and new products, primarily in the Americas and EMEA regions, partially offset by the elimination of some low-margin business.

In the Americas, third-quarter constant currency Flavor Solution sales increased 19%, including a 14% contribution from Frank's and French's and a 5% increase from base business and new products. This base and new product increase was led by double-digit growth of custom condiments and coatings to quick-service restaurants, as well as strong flavor and branded food service sales growth. Partially offsetting these increases were declining ingredient sales, attributable to both pricing and the elimination of some low-margin business, as well as the global realignment of a major customer's sales from the Americas to EMEA.

We grew Flavor Solutions sales in EMEA 7% in constant currency, with Frank's and French's contributing 1%. The remaining sales growth was driven primarily by volume growth in flavors as well as a favorable impact from the global realignment of a major customer's sales from the Americas to EMEA, as previously mentioned. In the Asia/Pacific region, Flavor Solutions sales were down 1% in constant currency. This was driven by the exit of low-margin business in the region, lower sales to quick-service restaurants due to the timing of their promotional activities, and the passthrough of certain commodity cost declines.

As shown on Slide 23, adjusted operating income for the Flavor Solutions segment ended the quarter up 37% at $88 million with a 3% unfavorable impact from currency. The increase was driven by the favorable impact of higher sales, a shift to more value-added products, and the impact of our CCI program. These impacts led to a 270-basis-point expansion of adjusted operating margin compared to last year.

Across both segments, adjusted operating income, which excludes the integration costs related to RB Foods and special charges, rose 20% in constant currency, which excluded a 1% unfavorable impact of currency. This adjusted operating income growth includes the impact of increasing our marketing in the third quarter versus the year-ago period. As Lawrence mentioned, our focus on profit realization and the reshaping of our portfolio has continued to drive margin expansion, even with increased investments.

As seen on Slide 25, in the third quarter, we increased adjusted gross profit margin 280 basis points year on year. While this expansion includes an accretion impact from the addition of the Frank's and French's portfolio, the core business was also a significant driver of the margin growth. Our portfolio shift to more value-added products and CCI-led cost savings continue to drive gross profit expansion across both our segments.

Our sales and general and administrative expense as a percentage of net sales increased by 200 basis points from the third quarter of 2017. Leverage from sales growth, as well as CCI-led cost savings, were more than offset by significant increases in both brand marketing and distribution expense, driven by freight. The net impact of the gross margin expansion and the SG&A increase resulted in an adjusted operating margin expansion of 80 basis points from the third quarter of 2017, which includes a 36% or $21 million brand marketing increase versus a year ago. Below the operating income line, interest expense increased $23 million in the third quarter from the year-ago period, primarily driven by the debt secured for the RB Foods financing.

Turning to income taxes on Slide 26, our third-quarter adjusted effective tax rate was 18.8%, which reflected the favorable impact from a lower U.S. corporate tax rate as compared to 26.8% in the year-ago period. Our third-quarter adjusted rate was lower than anticipated due to the favorable impact of discrete items, principally a higher level of stock option exercises. Because of this favorability, we now expect that our adjusted effective tax rate for the full year will approximate 21%. There can be volatility in that rate quarter to quarter due to the impact of discrete items, such as the impact of stock option exercises and changes to our forecasted mix of earnings.

Income from unconsolidated operations was $8 million in the third quarter of 2018, which was comparable to the year-ago period. Our previous 2018 income from unconsolidated operations guidance was to be comparable to 2017. We now expect our 2018 income from unconsolidated operations to decline by low single digits versus 2017, driven by an unfavorable impact from currency. At the bottom line, as shown on Slide 28, third-quarter 2018 adjusted earnings per share was $1.28, up 14% from $1.12 from the year-ago period, mainly due to higher adjusted operating income and the more favorable adjusted income tax rate, partially offset by higher interest expense and shares outstanding. This increased included an unfavorable impact from currency.

On Slide 29, we summarize highlights for cash flow and the quarter-end balance sheet. Our cash flow provided from operations was $389 million through the third quarter of 2018 compared to $303 million through the third quarter of 2017. This change was driven by the increase in our net income. We also continue to see improvements in our cash conversion cycle, finishing the third quarter at 59 days, down 17 days versus our fiscal year end, primarily driven by our extended payment terms and inventory programs. We returned $205 million of cash to shareholders through dividends and used $113 million for capital expenditures through the third quarter of 2018.

We expect 2018 to be another year of strong cash flow, and our priority is to continue to have a balanced use of cash, making investments to drive growth, returning a significant portion to our shareholders through dividends, and to pay down debt. Year to date, we have prepaid $280 million on our term loans secured as part of the RB Foods acquisition financing.

Let's now move to our current financial outlook for 2018 on Slide 30. As Lawrence mentioned, we continue to expect strong growth for the fiscal year 2018 and are updating our projections to reflect the strength of our year-to-date performance and the momentum we have heading into the fourth quarter. Additionally, our updated projections include a lower favorable impact from foreign currency exchange rates, a lower adjusted income tax rate, and a higher net favorable nonrecurring impact of the U.S. Tax Act.

Based on prevailing rates, we now estimate a favorable impact of net sales growth rate of 1%, down from our previous estimate of 2%, and minimal currency impact on adjusted operating income and adjusted earnings per share, down from our previous 1% favorable impact. As I previously mentioned, we also expect our income from unconsolidated operations to decline low single digits because of our unfavorable currency impact. Year to date, currency has been favorable with an unfavorable impact in the third quarter. We expect the remainder of the year to also be unfavorable, and, as I mentioned earlier, we now estimate that our adjusted effective tax rate for the full year will approximate 21%.

Finally, related to our GAAP earnings per share, the net impact of two nonrecurring items required by the U.S. Tax Act -- the favorable non-cash impact of the revaluation of our U.S. net deferred tax liabilities less the unfavorable impact of the transition tax. This net impact is now expected to be a tax benefit in 2018 of approximately $308 million.

Our previous sales growth guidance of 13-15% included an 8% incremental impact of the acquisition of the Frank's and French's portfolios, underlying base business and new product growth of 3-5% from higher volume, product mix, and pricing, as well as a 2-percentage-point favorable impact due to currency. We now expect to grow sales 12-14%, including our updated estimate of only a 1-percentage-point favorable impact from currency rates. We are reaffirming our constant currency expected sales growth of 11-13%.

We expect a low-single-digit cost inflation, which combines the CCI and strategy execution on shifting to a more value-added portfolio, leads to a 2018 adjusted gross profit margin that is projected to be 175-225 basis points higher than 2017. Our previous adjusted operating income growth guidance of 23-25% included a 1-percentage-point favorable impact from currency rates. We now expect to increase adjusted operating income 22-23% from $786 million in 2017 with minimal impact from currency rates. This updated guidance reflects continued increased investments to drive growth.

Our cost savings target is at least $105 million, and we're planning to increase brand marketing at a rate above our sales growth. Our recent guidance for 2018 adjusted earnings per share was $4.85 to $4.95, an increase of 14-16% versus our $4.26 adjusted earnings per share in 2017. This range of growth included an estimated 1-percentage-point impact from favorable currency rates. Based on the revisions I have just mentioned, we are now increasing our adjusted earnings per share estimate to $4.95 to $5.00, an increase of 16-17% versus 2017, which now includes minimal impact from currency. For the fiscal year, we expect our higher profit and working capital initiatives to lead to another year of strong cash flow.

In summary, we are projecting excellent growth in our 2018 constant currency outlook for sales, adjusted operating profit, and adjusted earnings per share, following record double-digit performance across each objective in 2017. Our 2018 GAAP earnings per share range is now projected to be $7.03 to $7.08, which is an increase from our previous estimate of $6.85 to $6.95. There are several projected 2018 adjustments which are expected to drive our GAAP to non-GAAP reconciliation.

First, approximately $23 million for integration related to RB Foods, which is in line with our previous estimate, second, approximately $18 million of special charges, and finally, the net impact of two nonrecurring items required by the U.S. Tax Act, currently expected to be a tax benefit in 2018 of approximately $308 million. This increase from our previous estimate of $298 million is attributable to deferred tax liability adjustments driven by the finalization of both our RB Foods purchase accounting and the impact of cash repatriation. The total net impact of these adjustments is anticipated to be a $2.08 favorable impact to our GAAP earnings per share for fiscal 2018.

Finally, before we move to your questions, let me recap the key takeaways from our remarks this morning. Our momentum has continued into the third quarter and our core business sales growth has accelerated as planned. With our excellent year-to-date results, the strength of both our core business and our Frank's and French's portfolio is evident. We are delivering against our plans for both sales and profit realization, and are confident in the effectiveness of our strategies. In light of the continued strength in our business, we are confident in our ability to achieve our updated 2018 financial outlook. Now, let's turn to your questions.

Questions and Answers:

Operator

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing *. In the interest of time and to accommodate as many participants as possible, please limit yourself to one question. One moment, please, while we poll for questions. Our first question today comes from the line of Alexia Howard with AllianceBernstein.

Alexia Howard -- AllianceBernstein -- Analyst

Good morning, everyone.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Hi, Alexia.

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Good morning.

Alexia Howard -- AllianceBernstein -- Analyst

Hi there. So, if I'm sticking with my one question, can I ask about pricing? I think last quarter, you had 0.2% pricing come through, but you were talking about a strengthening of the pricing in the back half based on the agreements or the pricing increases that you pushed through. It was up 0.5% this quarter overall. Was that a little lower than expected? Should we expect the pricing to strengthen from here on out, or are you finding that you're having to maybe dial it back a little bit more than you expected in terms of promotional spending? Just curious about that. Thank you, and I'll pass it on.

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Hi, Alexia. I'll answer this one. No, we've launched our pricing -- we talked about in the second quarter how, particularly in the U.S., our pricing is out. If you really look at Consumer versus Flavor Solutions, on the Flavor Solutions side, due to some commodity decreases, there was a small negative pricing, but if you look at the Consumer side, we did see an acceleration on the pricing line, particularly in Americas up 1.3% in the third quarter. So, the pricing has gone through.

Alexia Howard -- AllianceBernstein -- Analyst

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

Operator

Thank you. The next question is from the line of David Driscoll with Citi. Please go ahead with your question.

David Driscoll -- Citibank Research -- Managing Director

Great, thank you. I had just a quick little follow-up here, and then a real question. The follow-up is just on gross margins. Is the fourth-quarter gross margin going to expand?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Well, we've seen really great performance through the first three quarters, and we've attributed about half of that 290-basis-point expansion due to RB Foods and approximately the other half due to the underlying base business. Our guidance for the year of 175-225 basis points would suggest that the underlying business would improve in the fourth quarter.

David Driscoll -- Citibank Research -- Managing Director

All right. And then, the real question here is on Frank's, and apologies -- you guys put a lot of color on here. Did I miss it? Did you say what the organic revenue growth was in the quarter for Frank's? And then, I'd just love to hear a little bit more about Frank's international potential, and when is this going to deliver something meaningful in terms of OI dollars?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I'll start and I'll let Mike follow up. I don't think that we said what the total organic growth was on Frank's. We broke out the acquisition lap of sales from acquisition, and then, subsequently, for the period that would be organic growth -- which, by the way, was only two weeks -- that goes into our base growth. And then, going forward, Dave, we're not going to be breaking out Frank's and French's organic growth separately. As we've lapped the acquisition, all of that is going to go into our base growth, and it's going to be treated as base. As we've said, our whole expectation with Frank's is that it gives us a step change in size and performance, but going forward, we continue with the growth algorithm that we've had out there, which is 4-6% top-line growth in Frank's, and French's would be supportive of that. If there was another part to that question, I missed it.

Michael R. Smith -- Executive Vice President and Chief Financial Officer

I want to go on top of that. The other thing to think about -- we did talk about how, under our ownership in the third quarter, there has been an acceleration of sales versus the previous owner, and year to date, we've had a mid-single-digit increase for the same period compared to last year.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

That's a good point. I'll say that Frank's and French's -- and, I don't want to leave Cattleman's out of the mix as well, but that portfolio of brands that we bought from RB Foods has really performed according to our plans. It's been uncannily close. The sales growth that we expected to get, we've gotten. The EPS accretion we expected to get, we've gotten. Mike, you want to add?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Your question was about when are we going to get significant international growth. So, for international, I think we touched on this in our prepared remarks. We've converted all the distributors over to us, we've added new distributors in 20 countries where the brands were not represented previously, and where we have infrastructure, we're taking the business actually away from the distributor and converting it to our direct distribution, and management -- we highlighted India in this call because it was new and we've really just gone on the shelf with our sales organization in India.

On the last call, we mentioned in Mexico, through our JV, we have a very substantial presence at retail, a strong sales force. We didn't include it in our prepared remarks, but I'll say here that we've gained some significant retail distribution on Frank's in particular in Mexico. French's had pretty good distribution; Frank's did not. We've had some significant distribution gains there. And then, over in the U.K., we have a very strong sales organization. We actually merchandised the stores. Frank's already had some good presence in the market, and we've converted that to our sales organization where we're continuing to be able to drive it.

David Driscoll -- Citibank Research -- Managing Director

That's helpful color. Thank you guys so much.

Operator

Your next question comes from the line of Robert Moskow with Credit Suisse.

Robert Moskow -- Credit Suisse -- Analyst

Hi. I was hoping to zero in a little more on the change in the operating income guidance. You took down the high end of the guide when we exclude the currency, and I think you mentioned higher investment in branded marketing, but I didn't hear any numbers. Did you raise the investment that you're expecting for the year, or are you really just continuing to invest at the same rate that you were going to spend at originally?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Rob, you saw we had a 36% increase in the third quarter. That's pretty significant. And, our guidance has been we're going to grow our A&P above our net sales growth. We haven't given a particular how far above that will be, but we've taken the opportunity, and now we're at 23% A&P growth versus a sales growth of 17%, so we've taken the opportunity to really drive into the third quarter into the fourth some of these investments to really build -- and, this is brand-building advertising. It's not promotions, things like that between gross and net. So, these are things that are going to build into next year and really get us on a good footing.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

And, I will comment, Rob, that our underlying business is really performing according to plan. The changes that we made in guidance we're really dropping through the tax and the FX changes that were offsetting, and we've dropped the full amount of those through to the EPS line. We're not giving quarterly guidance, and there may be some timing issues that exist between market expectations and our own plans that we are letting roll. We're really confident in the guidance that we have given, and the level of A&P increase that we've planned may not be fully appreciated as we continue to invest in our business to drive growth. I'll also point out that in raising the guidance, we've also narrowed the range and taken it to the high end even with that A&P investment.

Robert Moskow -- Credit Suisse -- Analyst

Yeah, but Lawrence, it's related to a tax benefit. I don't think that repeats next year. In fact, originally, I think the tax rate was supposed to go up sequentially in 2019. Is that still the expectation?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I don't think we're going to give any guidance for 2019 until we get to our next earnings call, when we talk about the end of the year, and we'll give updated guidance -- I should say we'll give our first guidance for 2019 then.

Robert Moskow -- Credit Suisse -- Analyst

Okay. I'm going to sneak one more, if I could. I think the sales guide requires a pretty big step-up in organic sales growth now that you have RB in the core. It looks like RB grew double digits in the third quarter, probably does it again in fourth. Is that right, that organic sales would have to be up around 7% in fourth quarter for the sales guide for the year?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I think that your math is good, and I'm not signing up for 7%, but that would be within the range. We have a pretty wide range on sales growth still. Our fourth quarter is still the strongest quarter of our year. We have a strong seasonality in our business, particularly in the Americas, so we typically have maybe a wider range around sales growth outlook going into the last quarter of the year than many companies do, just because it's still such a large proportion of our total annual sales.

Michael R. Smith -- Executive Vice President and Chief Financial Officer

And, Rob, I think there was some concern going into the second half of the year that we were lapping a strong second half last year, and I think we've shown with the base business sales growth of 4% in the third quarter that we were able to lap that with strength, so we feel good about the full-year guidance of 11-13% in constant currency.

Robert Moskow -- Credit Suisse -- Analyst

Got it. Okay, thank you.

Operator

The next question comes from the line of Ken Goldman with J.P. Morgan. Please proceed with your question.

Tom Palmer -- J. P. Morgan Chase -- Vice President

Good morning. It's Tom Palmer on for Ken. Thanks for taking my question.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Sure, Tom. Go ahead.

Tom Palmer -- J. P. Morgan Chase -- Vice President

Thanks. I just wanted to ask on the consumer side -- I know a lot of the margin decline was attributable to the marketing spend, but it seems like it was down on a run rate relative to the last few quarters a bit more than just based on marketing. Are there some other items that you could highlight that maybe hit during the quarter, and then, maybe comment on their persistence as we look toward the fourth quarter and potentially beyond, if you want to address it?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I think you're talking about OP margin, not gross margin.

Tom Palmer -- J. P. Morgan Chase -- Vice President

Yeah, OP margin.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I think you'll see in the results that gross margin continues to expand and OP was down. I'd say that there was an offset to the gross margin expansion due to A&P increase and some freight distribution cost, but we're not --

Michael R. Smith -- Executive Vice President and Chief Financial Officer

A little bit of FX, too, Tom.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Right, thanks. But, the vast majority was due to the increase [audio cuts out] marketing, to your point.

Tom Palmer -- J. P. Morgan Chase -- Vice President

And so, as we look toward the fourth quarter, could it be down year over year again on the OP margin line for Consumer, or do synergies and other items start to offset that?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

We don't give quarterly guidance, especially by segment, so I think you should just look at the full year and make some assumptions there.

Tom Palmer -- J. P. Morgan Chase -- Vice President

Okay, thanks.

Operator

The next question is from the line of Rob Dickerson with Deutsche Bank. Please proceed with your question.

Rob Dickerson -- Deutsche Bank -- Director

Great, thank you so much. I think I'm going to ask the last question in a different way. There did seem to be a little bit of margin pressure in the Consumer segment in the quarter despite very impressive top-line organic sales growth. But, if you just look at the year-over-year in dollars in operating profit, I think it's up around $14 million, and if we think about what that RB contribution likely would have been off of a 9% year-over-year on the top line, it sort of implies that the base would maybe a bit flat to down in Consumer despite the top line up. So, I don't know if I'm thinking about that in the right way. Can you just provide some color around base operating profit in Consumer?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

The base was definitely up ex RB. It might be getting a little messy because of the two weeks last year and the full impact of RB this year that's causing some of the math headache in your mind, but operating profit for the base business was definitely up.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Yeah, and I'll say that your question really is around is there margin pressure on that part of the business, and I'm going to have to say no. We've gotten the pricing through that we expected to get in the second quarter, so you're seeing that come through in the third-quarter results, so that's not a pressure point. I think the freight distribution cost pressure that we've had this quarter is really not a significant change from the prior, and our outlook for it is not for any meaningful change there either, so I'll just say that we're not feeling any margin pressure in that part of the business other than the normal commercial tension that exists between the supplier and the customer.

But, I would not characterize that as being under margin pressure. We've made some decisions around spending and investing behind our brands that are different than decisions that have been made by some other CPG companies, so we've leaned into a brand marketing investment that's very consumer-directed to drive the continued growth of our business. We're confident that that spending has a strong ROI. Our holiday advertising or digital advertising are some of our highest-return items, and those are areas where we've leaned in. We're able to start holiday relatively early, we're able to up our digital spending going through the quarter, and then, of course, as we've said all year that we would, we're going to introduce marketing campaigns behind French's and Frank's, and that's what you're seeing coming through.

Rob Dickerson -- Deutsche Bank -- Director

Fair enough. Thank you so much.

Operator

The next question comes from the line of Steven Strycula with UBS. Please proceed with your question.

Steven Strycula -- UBS Investment Bank -- Analyst

Hi, good morning.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Good morning.

Steven Strycula -- UBS Investment Bank -- Analyst

So, it's good to see a food company investing in brand equity advertising, so, congratulations there.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Thank you for that.

Steven Strycula -- UBS Investment Bank -- Analyst

I'm curious, Lawrence -- what is your view when you speak, especially with bringing in new brands such as French's and Frank's, what is the temperament from a lot of the retailers right now as to whether they want to see you guys investing in your business and partnering with them between the gross to net sales line, which you were touching on in the last question, versus necessarily the brand equity advertising that you appear to be signaling and how you were spending in third quarter and fourth quarter? Any context would be helpful, and then I have a follow-up.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

I'm going to say a comment -- we've asked everyone to limit themselves to one question, but I'm going to give you a three-part answer to it, so, those of you on the call, just roll with me. We may go a minute over here. But, first of all, the initial response was terrific to us buying these brands because retailers expect that we're going to make brand-building investments, and some of the incumbent players in these categories who are more focused on rev management, taking profitability out of the category, and we're not as focused on building brands. I'm not going to name any names, but you can probably imagine who I'm talking about. So, that's the first thing.

The second thing is that as we have introduced the different brand-building ideas and our category management ideas, they've been strongly embraced by retailers, so the demeanor there has been very positive. I'll say that's true on both the retail side of the business and the food service side of the business.

And then, the third thing is that the retailers -- it's not really an A&P question, but it's an innovation point -- they are appreciating some of the innovation that we're bringing to these brands, and in particular, the launch of the frozen wings, which we mentioned for the first time on this call. I've said that we had a long pipeline of terrific innovation ideas. This is one of them coming to market. That has really been embraced pretty well by the retailers as well.

Steven Strycula -- UBS Investment Bank -- Analyst

All right, thank you.

Operator

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

Akshay Jagdale -- Jefferies Financial Group -- Analyst

Hi. Can you hear me? Thanks for taking the question.

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Yeah, can you hear us? We're using a new sound system here, Akshay, by the way, so we've had a couple of sound hiccups.

Akshay Jagdale -- Jefferies Financial Group -- Analyst

Okay. Well, I guess somehow, I knew that telepathically. But anyway, I just want to clarify one clarification, which is regarding the EBIT guidance. It sounds like to me -- and, I know you don't want to be specific for competitive reasons -- it sounds like to me, the main -- so, FX-neutral EBIT guidance is the same, so FX is one of the primary drivers of the adjusted EBIT being down, but the other one, which might be a similar amount or close to that, is your brand investments. It's a pretty significant increase that you're planning, and it looks like you're taking the opportunity to really step on the gas on that. So, I feel what you're trying to tell us is that the underlying trends are good and base momentum -- so, you're investing back in the business more than you previously expected, right? That's what I'm hearing. Is that a fair characterization of what you're trying to communicate?

Michael R. Smith -- Executive Vice President and Chief Financial Officer

I characterize it as leaning into the brand-building activities toward the end of the year. For those of you that have followed us a long time, if we overdeliver on CCI, a lot of times, we'll push into brand marketing. So, it's a kind of similar thing. We're leaning in and really setting ourselves up great for the fourth quarter of next year.

Akshay Jagdale -- Jefferies Financial Group -- Analyst

Got it. And then, just one last one on -- just one follow-up on the U.S. business. Obviously, really strong organic sales growth there and good momentum, but if you take a step back and think about the market share issues, et cetera, over a three-year period, how much closer are we to being at least share-neutral, all the noise aside? How do you feel about that?

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Well, I want to first of all say that I think the market share you're referring to is specifically in the herbs and spices category. While there's still some share erosion, we have closed the gap. I would say that in unmeasured channels we're doing, we continue to do well, and we're confident that we're on the right track there.

In other categories, like our Recipe Mix category, we are definitely gaining share, and in particular, as you look at the traction that we're gaining on the acquired brands -- and, I think the most recent data is beginning to show the distribution gains that we've gotten. You're seeing some of the best trends of the year. We've talked all year that we expect a sequential improvement as we went through the year on our Consumer business, and in particular in the Americas, and that's what you've seen, and we feel really good about the guidance that we've got for the year or just for a strong finish to the year and continued strong growth.

Akshay Jagdale -- Jefferies Financial Group -- Analyst

Thank you. I'll pass it on.

Operator

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

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Great. Thanks, everyone, for your questions and for participating on today's call. McCormick is a global leader in flavor, and we're differentiated by a broad and advantaged portfolio, which continues to drive our growth. We're responding readily to changes in the industry with new ideas, innovation, and purpose. With a keen focus on growth, performance, and people, we continue to perform strong globally and build shareholder value. I'm pleased with our strong year-to-date results and am confident in our continued momentum in our last quarter of 2018 to drive even further growth. I look forward to reporting to you on the shareholder value we will continue to create.

Kasey Jenkins -- Vice President of Investor Relations

Thank you, Lawrence, and thanks to all for joining today's call. If you have any further questions regarding today's information, you can reach us at (410) 771-7140. This concludes this morning's conference call. Have a nice day.

Duration: 65 minutes

Call participants:

Kasey Jenkins -- Vice President of Investor Relations

Lawrence E. Kurzius -- Chairman, President, and Chief Executive Officer

Michael R. Smith -- Executive Vice President and Chief Financial Officer

Alexia Howard -- AllianceBernstein -- Analyst

David Driscoll -- Citibank Research -- Managing Director

Robert Moskow -- Credit Suisse -- Analyst

Tom Palmer -- J. P. Morgan Chase -- Vice President

Rob Dickerson -- Deutsche Bank -- Director

Steven Strycula -- UBS Investment Bank -- Analyst

Akshay Jagdale -- Jefferies Financial Group -- Analyst

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