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 posted a set of slides at ir.mccormick.com. Currently, all participants are in a listen-only mode. Following our remarks, we will begin a question-and-answer session. [Operator Instructions] 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 information in constant currency, as well as adjusted operating income, adjusted income tax rate and adjusted earnings per share that exclude the impact of special charges, and for 2019 the net non-recurring benefit associated with the U.S. Tax Act. Reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. In addition, as a reminder, today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or other factors. It is important to note, these statements include expectations and assumptions which will be shared related to the impact of the COVID-19 pandemic. As seen on Slide 2, our forward-looking statement also provides information on risk factors including the impacts of COVID-19 that could affect our financial results. It is now my pleasure to turn the discussion over to Lawrence.

Thank you, Kasey. Good morning, everyone. Thanks for joining us. The last few months have been an extraordinary period, and the COVID-19 situation continues to evolve daily. I'm incredibly proud the way McCormick performed in this unprecedented operating environment. Starting on Slide 4, let me highlight a few points on the current condition that we're seeing and their potential impacts. First, in our consumer segments around the world, we are experiencing strong sustained consumer demand, which has real incremental consumption and reflects the trend of consumers cooking more at home. In China, which is viewed as a leading indicator since their COVID-19 recovery is ahead of the rest of the world, the demand for food at home continues to be very strong. We see the same in Europe, and, of course, in the Americas. The significant shift to consumers eating more at home is persisting long enough that it has become a habit. Our proprietary consumer survey data supported by other research indicates a majority of consumers are cooking more from scratch, enjoying the cooking experience and adding flavor to their meal occasion. These new behaviors coupled with some consumer discomfort for dining out are driving an increased and sustained preference for cooking at home. We believe this will continue globally and thus further benefit our consumer segment. Turning to our flavor solutions segment, where we have a very diverse customer portfolio. We are seeing varying stages of recovery. Starting with the away from home portion of this segment, with our quick service restaurant customers or QSR, we are seeing strong signs of recovery. Their business models were already oriented to drive through or carry out, not dining in. In China QSR traffic has returned to near normal level, and the limited time offers and promotions are driving demand. In…

Thanks, Lawrence, and good morning, everyone. I'll begin now by providing some additional comments on our third quarter performance, and then our financial outlook for the balance of the year. Starting on Slide 14, during the third quarter sales were at 9% in constant currency. Sales growth was driven by substantially higher volume and mix in our consumer segment, partially offset by lower volume and mix in our flavor solution segment, pricing to partially offset costs inflation also contributed favorably to both segments. Consumer segment sales grew 15% in constant currency, led by the Americas and EMEA regions. The shift to at home consumption and cooking more at home, as well as consumers adding flavor at home to their restaurant carryout and delivery has driven substantial demand for consumer products, driving higher volume and mix in these regions. On Slide 15, consumer segment sales in the Americas increased 17% in constant currency, versus the third quarter of 2019. The increase was driven by significant growth across our branded portfolio, including higher volume and product mix of McCormick spices and seasonings, as well as Simply Asia, Thai Kitchen, Gourmet Garden, Frank's RedHot, Zatarain's, Stubb's, Lawry's and El Guapo products. Additionally, the pricing actions taken prior to COVID-19 in the first quarter, to partially offset increased costs also contributed to the growth. In the EMEA, constant currency consumer sales grew 23% from a year ago, with double digit volume and mix growth in all countries across the region. The most significant growth drivers were our Schwartz and Ducros brands in spices and seasonings, our Vahine homemade dessert products and our Schwartz dry recipe mixes. Consumer sales in Asia Pacific declined 6% in constant currency, driven by lower branded food service sales, as Lawrence mentioned. This decline was partially offset by increased consumer…

Thank you, Mike. Now that Mike has shared our financial results and 2020 outlook in more detail, I'd like to recap the key takeaways as seen on Slide 29. We've delivered outstanding year-to-date results during a period of great disruption, proving the strength of our business model, the value of our product and our capabilities as a company. Our foundation is solid and our strategies are effective. Our 2020 outlook reflects another year of strong operating performance while doing what is right for our employees and communities, as well as making investments for the growth we expect in both segments next year. We're confident in our ability to perform in this dynamic environment and to continue delivering differentiated results and build long-term value. And now I'd like to turn to your questions.

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

Good morning, everybody.

Hi, Andrew. Good morning. Thanks for hanging in there for a very long script.

No worries, no worries. My pleasure. So two things would be, first off, thanks for your thoughts around your expectations for organic sales into next year. I'm curious as we think about EBIT for next year, obviously, we're not in a position to give any kind of guidance. But maybe you can just cover off on a couple of the discrete items puts and takes that we kind of know about? Meaning, I know covered, Mike $40 million to $50 million of COVID-related costs this year. Is all of that expected to not repeat next year or as a portion go into next year? And then anyway you can break out what the incremental maybe incentive comp cost is expected to be this year? And just any other things that are discrete, that we kind of know now that we should take into account as we think about sort of profit growth next year? And then I've just got a follow-up. Thank you.

Hey, Andrew, it's Mike. I'll answer this, and if Lawrence has any comments, he can chime in. You referred to the COVID costs. Obviously, we talked about -- this year about $40 million to $50 million incremental costs in 2020. We expect some of those to continue, however, some of those we don't expect to continue. Some of the things like we're scaling up production, we're onboarding people, we've incremental co-packers in place now. We expect that to not impact us into next year. However, some of the things we've done like PPE and other coverage for our employees, we do expect to continue. So it's a mix of that. However, we would be really -- a lot depends on the environment and continued resurgence. So, our January guidance will give you a lot more detail on that obviously.

But there is other -- in addition to what Mike said, there are costs that we incurred for temporary plant closure, like extraordinary sanitation that we do not anticipate happening again next year. And just bringing on all of this capacity has been done very quickly. And as a result, it's been brought on somewhat inefficiently in the short-term, and we expect that efficiency rate to go up as we get into next year. Now on incentive comp, Mike mentioned the word about that. I certainly hope that it doesn't -- it's not a tailwind next year. But if it's not, it's because -- if it is at the tailwind, it's because of continued extraordinary performance. We have pay per performance philosophy. Our employees have really delivered this year, and so incentive comp, across the all levels of the organization is pretty much at the top of our program range. And so, it would take a really extraordinary performance to repeat that. So probably it's going to be a tailwind as well, but in any case, the underlying business results that we delivered this year, don't get paid for twice. Our plants pay for growth.

Yes, it makes sense. And you mentioned capacity, and I want to dig into that a little bit. I'm curious if there's a way to sort of spread out a little bit, how much of the upcoming capacity that's coming online, is sort of internal versus stepped up use of third parties? And really the reason I ask is that, I'd assume that McCormick would not be adding its own sort of internal capacity in any significant way unless it thought that some of these recently elevated trends were likely to persist somewhat longer-term, not at current levels necessarily. But, longer-term in a way that you kind of felt like you needed internal capacity, as opposed to just the more -- as opposed to just accessing the flexibility of third-party manufacturing.

So, Andrew. It's actually -- it's a mix. So some of the capacity we've gained has been by adding people and changing our shift patterns so that we have more of our facilities operating on a 24/7 or 25/7 schedule, not just on some lines, but some case on all lines. So that's one way we've added capacity. We have made some short, we've made some -- we've been able to make some investments in blending capacity that are internal. And then we have brought on quite a lot of third-party co-packing capacity that is an incremental cost that we would hope to absorb into our own facilities over the course of next year.

And that's primarily with a strategic partner that we already did co-packing with also. So we're not creating a quality risk out there at all.

Got it. Great. Thank you very much.

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

Hi, thank you. One clarification and then I have a broader question and just building on Andrew's question. You talked about no major go live for ERP in 2021. Is it fair for us to assume that obviously the costs will be delayed maybe until 2022 as well from that, or there are some costs that you'll incur in advance? Just curious on that first.

Yes. I mean, we're continuing -- even though we talked earlier about delaying the ERP, we're still incurring costs this year, we're going to spend in 2020 around the same level as we did in 2019. So you can expect that we replan this will have cost in next year. We're not prepared at this point to talk about the level of cost, but we just wanted to highlight the fact that, go lives, which are -- bring with them major costs aren't going to really happen until 2022. And we'll have more -- obviously the January guidance will sharpen the pencils for that.

Okay, that's helpful. And then I wanted to poke around a little bit on your commentary about organic growth in the consumer segment next year. The markets right now are looking for -- the streets looking for low-single-digit declines. So you're surprising to the upside, I think. And I wanted to ask, clearly, you have a very strong first quarter coming up, you should anyway, given that you don't lap against COVID. But after that there's some reasonably high bars to comp against. And I'm just curious to what extent is your confidence in this topline growth next year, informed maybe a little bit by the increase in capacity? And also the potential trade load that could bleed from this year into next. And I'm asking, because, obviously, we should continue to see great food at home trends next year. But maybe that guidance will be easier to digest, if it's built on, I guess something more than the expectation of just end demand growth. So hopefully that makes sense.

No, Ken, that makes a lot of sense. And that is a great question, because I think you've written about this. And I think that the Analysts community as a group, the consensus that's out there right now under calls, but we think the growth potential is and that's why we have commented on 2021 at this early stage, when we normally would really be focused completely on 2020. Now, even before COVID-19 hit, consumers were cooking more at home, they were using more spices and seasonings and sauces to prepare fresher, healthier meals. They're moving to trusted inherited brands, we talked about this. The pandemic accelerated these trends, and other trends like e-commerce that already underpin our strategies, and that we were already capitalizing on. And consumers haven't been doing anything that is contrary to what they have been trending to do already, they're just doing more of it. The data that we've gotten that we talked about in our prepared remarks, shows that most consumers are cooking more, they're enjoying it, they intend to cook more. And our brands have gained penetration in millions of households with a high level of repeat that shows strong satisfaction with the experiences that they're having. And we're not testing it in the U.S., we're seeing this play out globally. We've continued to invest behind our brands, and driving through the entirety of the crisis. And we've got a robust pipeline of innovation that includes some backlog from this year, but launch in 2021 too. We've added a lot of resilience and capacity in the supply chain. And the market, frankly, has taken all of it. And we're still ramping up for more just to meet the existing demand for consumption. And as you noted, we have store shelves to restock, retailer inventory to replenish and a broad range of suspended SKUs to restart. So yes, we think that there's going to be some moderation, there are going to be a couple of periods and areas where there are tough comparisons. But we absolutely expect growth in our consumer segment next year for a very good reason.

I think also to highlight the fact that we're upping our spend of brand marketing in the fourth quarter. We're going to have mid -- we've guided the mid-single digits for the year, which would imply 12% to 18% increase in the fourth quarter, because that advertising will drive growth in the first and second quarter. So we're really investing behind the brand at this opportunity.

Very clear. Thank you.

And I don't even need to talk about flavor solutions since everybody could see.

No, no. Yes. I think we expect that to be up already. Thank you.

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

Good morning, everyone.

Hi, Alexia.

Good morning.

Hi, there. So can we look out -- I think you mentioned promotional activity was reduced obviously, because of the constraints on supply over the last few months on the consumer side. As you look forward, are the retailers beginning to offer that spending back? I know spices and seasonings are not generally that heavily promoted. But I'm just wondering about the dynamic with retailers there, and whether they're likely to offer an elevated spend as we look out into the tail end of this year and into 2021?

Sure. Well, all that we've done, first of all, has been done in cooperation and collaboration with retailers. Pretty much through -- much of the third quarter and into fourth our promotional plans are actually in place. But what's different is that the product is on allocation in many cases. And so the amount that retailers can take on the promotion is limited, number one. And then number two, we had a shift in our timing of our holiday program, normally, just because of the scale of the holiday program, we actually start deliveries in August to get displays up already, just to manage the surge. And as part of managing overall demand, we pushed about half of that off into Q4. So there's a timing difference there. But, I think that for the most part, our promotional plans are back in place. Those comments are pretty specific to the U.S. and Canada. And the rest of the world, where we really haven't been constrained by supply promotional plans have gone forward as normal at this point.

Great. And as a follow-up. As you've managed to delever to a little over 3 times net debt to EBITDA. How does that adjust your thinking on acquisitions? Obviously, there's a lot that you've got on your plates just operating within this environment. But in the past, you've been particularly bullish on the idea of doing further deals. I'm just wondering how rich that set of opportunities looks right now. And how actively, you might be pursuing that and in which parts of the business?

So it has been our goal to deleverage to 3 times of EBITDA by the end of 2020. It looks like we're certainly there, that's a positive. And our goals for -- our acquisition strategy is unchanged, which is the acquisition support our growth strategies. And so, we've been signaling for a while that that we didn't feel that we actually had to literally get to report a 3.0 before we'd be back in the market. And so, we would say that we're open for business and the acquisition department.

Great, thank you very much. I'll pass it on.

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

Hi, Rob, are you there?

And Mr. Moskow back to you.

Hi, can you hear me? Sorry about that. Yes, that was me.

That’s like the cliche of our time right now.

Yes, that’s happen to many. Yes, I agree with you. But unfortunately, no dogs barking in the background. But I did have just kind of a broader question about your margin structure. You're making investments in capacity this year, that will dilute your margins in fourth quarter. And then you have this big ERP program that will probably dilute margins next year. Just big picture, like would you say that these investments are setting you up to service -- to become a bigger company to service a bigger demand? And if so, like when do you get back to a pattern of margin expansion and benefiting from all that scale that you've put out? And I guess the second part is, do you get back then to your normal pattern of market expansion that's in your long-term algo?

Hey, that's a great question, Rob. And I'll start it. No, that’s a great point. And as we went into this year, obviously when we had planned a $60 million-ish investment in ERP, that was going to be dilutive to our margin. However, we need to become a bigger company, increase our scale. ERP program drives efficiencies across the organization and really allows us to grow faster and make acquisitions faster. It's hard to pin it down to one year investment and then you get back right away. But over a three or four year period where we look at our constant currency sales growth and our margins, and we see that really as our long-term guidance. One years, you're going to have some short-term ups and downs on it. And there are stake levers we can pull to from an advertising perspective, spending more or less. CCI is a tool we've used in the past to lean into, when we've had investments to make. So I think in January you'll see a better picture for next year.

But, the investments that we've made in supply chain this year have really been extraordinary, because of the extraordinary circumstances. We've had an unprecedented increase in demand that has been sustained over time that we have really had to work and almost throw money at in order to meet. And it hasn't been done in the most efficient way. And I think that, as we've commented on the first question from Andrew, we would expect that some of those costs would come out.

And you think about earlier this year, people have already forgotten the first quarter. China was such a shock to us and everybody, and the consumers there didn't get a chance to really buy. So that was a large first quarter impact for us, which really hurt our margins. Going even in the flavor solutions business, we talked about continuing to mix up there with portfolio management, this year has been a little tough because, food service, Frank food service, which is high margin, has been hurt by this COVID situation, whereas QSRs are recovering that has first and mixed perspective. But we see that over time recovering also.

Okay. And I actually do have a follow-up question. You said that Europe had already expanded capacity sufficiently to meet the 20% plus increase in demand, but the U.S. had not. Is there any reason that the capacity expanded in one region, but not the other?

Well, sure. Over the last several years, we've been building our capacity and capabilities in Asia Pacific first and in Europe second, as an area of investment focus. And actually, we had just turned to the Americas. This year, we announced a big investment in highly automated logistics center earlier this year, pre-COVID. And so, our investment cycle has turned to the Americas, but…

It's not as we've ignored Americas. We've had investments along the way, but it’s the same region for us right.

And virtually all of our plants in Asia have been either new or renovated in the last several years. And we've made a number of big investments in expansion and automation in EMEA and we're just turning to the Americas. But even beyond that, it's just the scale of the surge of demand. I mean, the U.S. business is so big that even the same percentage growth turns into a massive amount of volume.

Got it. Okay, thank you.

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

Hi, good morning.

Good morning, Chris.

Hi, good morning. I had a -- the question just to understand, you talked earlier in the call about pushing off some new product launches and how those could benefit 2021, I think was the implication. Is that a function of the retailer sort of acceptance of new products? Are you seeing that kind of pick back up? And also just to understand how the capacity lines up for some of those new products? Are these largely third-party produced or has been new production capacity able to produce those products? Just want to get a sense of how this will play out in 2021?

Well, with the surge in demand, both we and the retailers really wanted to focus on the core items. For us, it is a certain supply and the retailers still have the challenge of bringing product in and just the logistics of the whole increase in consumer shopping in their total store. So there's been much more of a focus on core. And the new items that we actually have launched early in the year got unprecedented trial. But the items that we had planned for the second-half really have been deferred into 2021 and add to that pipeline. I don't think our experience in that area is much different than what others set up. But we also had a big shelf initiative. We had a spice aisle reinvention program that we unveiled at Cagney and had a plan to get into thousands of stores. We have made that change in thousands of stores but nowhere near the magnitude that we expected. And so that's also going to be part of the program for next year. On the flavor solution side of the business, also, our customers have tended to focus on their core items as well. And so innovation in that area has also been curtailed. Quick service restaurants trying to manage demand and their drive-through and take takeaway model have focused more on core items and are really only now getting back into limited time offers and promotional offerings. And in our consumer food manufacturing customers are also just now ramping up their innovation programs. We have a lot of projects underway in that area that I think will be a benefit in that segment next year. But really, through the crisis the focus has been on core items both for us, our customers, both on flavor solutions and its retail.

And some evidence of that, QSRs in APZ, in China and Australia are recovering faster. And more LTOs are coming out now, as we talked about this quarter. So we see that continue hopefully into next year.

Okay. Thank you for that. And I just want to quick follow-up if I could on the gross margin, and I guess to implied gross margin for the fourth quarter. It does indicate some less growth or even a bit of a decline in the fourth quarter based on the performance year-to-date. Are there residual COVID costs we have to keep in mind? Is it the co-packers? And also you have some costs around the new capacity, are those sort of the factors that play into the fourth quarter gross margin performance?

Oh, definitely, Chris. We’ve talked at the last call, you're talking about $30 million split between the second and third quarter. Now we're saying 40 to 50, of which -- and we're considering the fourth quarter because of that unprecedented demand. So yes, those costs are continuing into the fourth quarter.

I'd say that's the biggest factor.

Yes, that really is. And we're saying too early, but we've had some very favorable segment mix over the last couple of quarters. We're going to see a little bit less of that in the fourth quarter. But the primary thing is the COVID cost, as Lawrence said.

Okay, that sounds great. Thanks for your time this morning.

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

Yes. Thanks. Good morning, everyone.

Good morning, Adam.

Good morning. So I guess the first, it turns into a little bit of a question on the shifts on holiday sales into the fourth quarter in terms of the load in. But can you comment a little bit on retailer inventories and trade inventory in the U.S. right now, just given the surge in demand that we've seen? Just how do you think about that potentially being a tailwind into next year?

Yes. I think you only have to walk into a store to know that the cover is there. We have in the first sorry -- in second quarter U.S. demand was, the scanner was up 55% and in the second quarter, it was at 28%. Our latest Nielsen still has it running up over 20 -- sorry, our latest IRI still has it running up over 20% that we have struggled to keep up with that demand. You've seen that we've reported lower numbers and a lot of that gap represents inventory reduction. So let's say that the shelf stocks are low, back room stocks are low to non-existent. There's a lot to rebuild. And as we go through the fourth quarter, we're ramping up capacity, but that's really meeting demand. The real rebuild of shelf stock, retailers safety stock, inventory in the whole, the normal level of inventory and the trade pipeline, that rebuild is going to happen next year, and it's going to take well into the year to get that back up.

And that's what gives us further confidence on growth next year on the consumer side.

Okay, now that's helpful. And then I guess my second question was more on the --

And I don't think, we're not alone in that situation.

No, that's totally fair. My other questions was on the flavor solutions and especially thinking in the Americas with the volume mix that decline you reported. And maybe you can give a little bit more color by kind of your major categories branded food service, the flavors business the condiments coating, just how the different parts of your business are performing relative to that negative 5%? And where that's trending and some potential number?

Quick service restaurants are generally doing great. So they're very much in a recovery mode, depending on the geography, in some cases they're well into growth again, and other geographies, they're not quite there. But their model was already very oriented towards consumption away from premise, drive through and so on. So they've had a fast recovery, and really are irresponsible for the big swing that we saw in our EMEA, our region in particular for example or second quarter were down 31%, third quarter we're actually up 1%. The flip side of that and the slowest recovering or your traditional restaurant and food service customers, many of those are still closed or operating under capacity restrictions. In our survey data, over half of consumers still say they do not intend to eat inside at a restaurant this year. So, there's quite a path, a challenging path for them to recover. And in fact, as we get into the fall weather with cooler weather, it's going to be hard for us to -- it's going to be -- it's hard to see how it has -- that's going to be another headwind for them as we get to that time period. And so those are the ones that are there going to be more challenged. And our consumer manufacturers are pretty much back to normal that they've pretty much gotten back on track, and varies by customer, but as a group, in aggregate they're back to a more normal path. And in the Americas, I think if you were trying to dig a little bit beyond that, I think branded food service is a higher percentage of our total flavor solutions in the Americas compared to the rest of the world. That's a little bigger impact there.

Okay. That's truly helpful color. I appreciate. Thank you.

Thank you. The next question is from the line of Peter Galbo with Bank of America. Please proceed with your questions.

Hey, guys. Good morning. Thanks for taking the question. Mike, I just had a question around freight costs. We've been seeing a pretty sizable uptick. Both in the spot markets and just wondering if that's going to spill over into contract freight rates. Just can you give us a sense of either as percent of sales or COGS, what freight represents? And maybe just in history, a couple of years ago, when freight was moving up, kind of how you guys managed it through the business?

Yes. I mean, it's a good question. I mean, freight has spiked really recently, it's been up and down over the last 12 months. A couple years ago, there was a huge shortage of containers or trade and the whole industry was really hurt by that. And through our CCI program, we really manage those costs. Within the last quarter, I can't tell you specifically what programs we have, to be honest, but distribution is one of those SG&A things that has been up, primarily due to internal warehousing moves and things like that just shipping product, but freight is a relatively minor total component of our cost of goods sold.

And definitely in the scheme of other products going on right now.

I wouldn't think it's not a material impact in the quarter, but it does add a few a little bit of the headwinds. It's a good question.

Got it. Okay. No, that's helpful. And maybe just as a cleanup, the tax rate that 20% you gave, I mean, on a longer-term basis, I know you guys tend to talk about mid-20s, but it's been running in that closer to 20%, just as the stock has performed well. Just kind of help us think about that on a longer-term basis?

Yes, longer-term it’s still -- I'd say that what we said earlier this year 24% to 25%. Obviously, with the election coming up, we have no idea what's going to happen next year. So stay tuned for that one. But underlying the way the rules are written out 24% to 25%. And then periodically, we have tax planning initiatives. And then, as you said, with the stock performing very well and you get a really nice stock option favorability. Now, that is all set up in the operating expense line, just partially so that does have a little bit of a headwind up there, but generally, it's good for the tax line.

Great. Thanks very much, guys.

Thank you. The next question is from the line of David Driscoll with DD Research. Please proceed with your questions.

Great. Thank you, and good morning.

Hey there, David.

I wanted to ask you one question on the fourth quarter, and then just one follow-up on your '21 commentary. On the fourth quarter, you appear to be implying within the full year guidance, a revenue slowdown versus the third quarter. And I just wanted to hear your description as to what are the qualitative factors here? Do you expect the second wave of the virus to be impacting? Is that implied within the guidance? Or do you really just kind of take where we are today on viral impact and just extend that forward? And then are there any other key assumptions that go into that fourth quarter? And then on 2021, I'm curious about whether or not you see this as your growth comments? Are these in your control? Is it this inventory situation that's just so significant in '21, that it underpins your confidence to make these growth comments? Because, of course, nobody knows about the vaccine, how many people will take it, what that will do to consumer behavior. But I'm thinking that what you're trying to tell us today, as it doesn't really matter. There's so many underlying positives inherent to your business that are in your control, that you can still say that there would be growth in '21 in that consumer segment. Thank you.

I think for Q4, I'll start, and then I'll let Mike take it and let me come back to 2021 in a minute. For flavor solutions, we're pretty much looking at the status quo versus where we are right now, because the QSRs have largely recovered. And we see just a hard path forward for the rest of the restaurant side of the business. Given the uncertainty around resurgence, I mean, look what's happening in Europe, right now, cold weather coming in. There's probably going to be some good news on a vaccine. But the fact is, that’s probably not going to be widely available till sometime well into next year. So, there's a lot of uncertainty out there around that. For the consumer side, demand continues to be strong. We've had all these gains and penetration trial consumers seem to be having a good experience cooking at home. And cooking at home behavior has really held up in a way that frankly, we've underestimated all year long. I mean, it's been stronger than we thought and every time we look at it, it's holding up stronger and longer than we thought. So we're expecting some moderation next year, but we are also expecting quite a lot of it to stick. There are still a lot of uncertainties around 2021, which is why we don't give guidance this early. But we did see a growing disconnect between the expectations for growth of consumer that was going to be your so wide, we felt like we had to say something about it.

Yes. And regarding the fourth quarter, I mean, we wanted to give some meaningful guidance, but also wanted to be prudent in a really uncertain environment. And there's variables to the high and the low end. We think the demand is there, obviously, as we see in the scanner data, but our ability to supply especially in the U.S. is really challenged. So we wanted to at least be proven from that perspective.

I appreciate the comments. Thank you.

Great.

Thank you. At this time, I'll turn the floor back to Lawrence Kurzius for closing comments.

Great. Thank you everyone for your questions and for participating on today's call. McCormick is a global leader in flavor, differentiated with a broad and advantage portfolio. In the volatile environment in which we currently operate, this balanced portfolio drives consistency in our performance. We have a growing and profitable business, delivering flavor to all markets and channels, while responding readily to changes in the industry and in the world, with new ideas, innovation and purpose. One of the most significant risks that any company is being unprepared to respond with agility to a significant unexpected disruption. We've all been experiencing that disruption this year and McCormick continued to be well prepared, and not only manage through it but emerge stronger. With a relentless focus on growth, performance and people, we're confident our strategies continue to position us drive future growth and build long-term value for our shareholders.

Thank you, Lawrence, and thanks to everyone for joining today's call. If you have any further questions regarding today's information, please reach out to me. This now concludes this morning's conference call. Have a good day, everyone.