At ir.mccormick.com. Currently, all participants are in a 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 star zero. We will 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 2018, transaction and integration expenses related to the acquisition of our Frank's and French's brands, as well as the net non-recurring income tax benefit associated with the December 2017 U.S. tax reform legislation. 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. In addition, please note that all comparisons discussed today, both for results and outlook, are calculated from a 2018 base that has been recapped for the two accounting standards updates we adopted on a retrospective basis in the first quarter of 2019, as well as for certain other reclassifications noted in this morning's first quarter results press release. Please refer to the recapped 2018 financials section of the press release and the Form 8-K we furnished on March 11th for further details, as well as the filing of our Form 10-Q later today, which reflects all the changes to our previously reported 2018 results and the historical financial information that has been recapped. 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 statement, whether because of new information, future events, or other factors. As seen on slide two, our forward-looking statements also provide information on risk factors 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. Our first quarter results were a great start to the year, delivering sales, operating income, and adjusted earnings per share growth, as well as margin expansion. Our successful execution of our strategies and engagement of employees around the world has driven strong performance across both of our segments, and we are confident they will continue to drive our momentum and success as we go through the year. Starting on slide four, our broad and advantaged global flavor portfolio continues to position us to meet the demand for flavor around the world and grow our business. Among our first quarter highlights across our portfolio, we drove growth in our Consumer segment with strength, particularly in U.S. spices and seasonings, recipe mixes, and new Frank's and Zatarain's frozen products, as well as in China sauces and chicken bouillon.
In our Flavor Solutions segment, our Americas and EMEA regions drove significant growth in flavors, branded food service, and condiments with strong contributions from both new products and the base business. We are confident our breadth and reach will continue to differentiate McCormick and be the foundation of our sales growth as consumer demand for flavor continues to rise. No matter where or what you choose to eat or drink, you are probably enjoying something flavored by McCormick every day. Now let me go into more detail on our first quarter performance, as seen on slide five, 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 the details of our 2019 outlook.
As we said on our year-end earnings call in January and at CAGNY in February, we have confidence in our strategies and are well-positioned to deliver strong results in 2019. You can see this beginning with our first quarter performance with strong sales growth, operating profit growth, margin growth, and EPS growth. Starting with our top-line for the first quarter. Versus the year ago period, we grew sales 1%, and in constant currency, sales grew 4% for the total company with strength in both segments. This growth was due to higher volume and product mix and was entirely organic, driven by the base business and new products as we had no acquisition impact in the quarter. In our Consumer segment, sales were flat, including an unfavorable impact from currency, and grew 3% in constant currency. In our Flavor Solutions segment, sales grew 3%, and in constant currency, grew 6%.
In addition to our top-line growth, we grew adjusted operating income and expanded our adjusted operating margin. With our higher sales and cost savings led by our comprehensive continuous improvement program or CCI, we grew the first quarter's adjusted operating income 4% or 6% in constant currency and expanded our adjusted operating margin 40 basis points. At the bottom line, our first quarter adjusted earnings per share of $1.12 was 12% higher than $1 in the first quarter of 2018, driven primarily by our adjusted operating income growth and a lower adjusted tax rate. This 12% adjusted earnings per share growth includes an unfavorable impact from currency.
Our solid first quarter results were in line with our expectations and our outlook for our 2019 performance, which we shared on our January earnings call, continues to be strong. I'd like to turn now to a business update with a focus this morning on highlights from our Consumer and Flavor Solutions segments, our exciting new products for the first half of 2019, and finally, touch on some of our recent announcements. Starting on slide six with our Consumer segment. As I just mentioned, we grew constant currency sales 3% with increases in each of our three regions. In the Americas, we grew constant currency sales 3%, driven by higher volume and product mix. In the U.S., the unusual impacts we had in the fourth quarter, as we previously indicated on our January earnings call and at CAGNY, are behind us.
Our IRI data indicates U.S. spice and seasoning scanner sales through multi-outlets grew 4% for the category and 5% for McCormick branded, reflecting a continuation of the strong consumption and share of trend improvement realized in the fourth quarter. In fact, we grew spice and seasoning share in the first quarter. Our performance in the market is being driven by new products and expanded distribution, together with our strong marketing programs and merchandising execution. Additionally, we again had strong growth in unmeasured channels, including club, e-commerce, and Hispanic retail chains. Overall, combining strong consumption growth in other parts of our U.S. branded portfolio with spices and seasonings, we continued to see an acceleration in our consumption trends, which shows we are winning with consumers across our portfolio. McCormick branded dry recipe mixes continued their momentum of consumption and share growth, and Stubb's barbecue sauce consumption growth again outpaced its category.
Frank's RedHot sauce, Grill Mates, and Lawry's marinades all grew consumption, partially driven by leveraging Super Bowl marketing and promotional programs across our condiment portfolio. New products, including Frank's RedHot frozen wings and Zatarain's frozen items, are also gaining momentum and contributed to first quarter growth. As I mentioned, our strong marketing programs contributed to driving our growth. We have also increased our effectiveness and are getting more value out of each marketing dollar. In the first quarter, we funded increases in our working media with decreases in our non-working spend. Our newly formed marketing excellence organization, which I discussed at CAGNY, is optimizing our brand marketing spend and driving greater speed and effectiveness. For instance, with our innovative approach for Frank's brand support, we had a big win on Super Bowl Sunday.
We spent significantly less than the cost of a Super Bowl commercial and leveraged the power of social media with a strong creative idea. With our playful splat, Frank's garnered over 250 million consumer impressions and was awarded Twitter's Brand Interception Award for driving the highest percentage of branded conversations during the big game without a national television ad. Not only did we win the award, we won with significant Frank's consumption growth. Now turning to Europe, Middle East, and Africa, the EMEA region, constant currency growth was driven by new products as well as expanded distribution and successful promotional activity.
New product launches in the U.K. in the second half of the year, First Choice, our brand renovation initiative, and street food seasonings, which are adventurous flavors for millennials, continue to do well, and we're excited to build on strong early results with continued expansion to additional markets in 2019. In the Asia-Pacific region, our constant currency growth was led by China, driven by new products as well as the base business growth due to successful merchandising execution and expanded distribution. We're also excited by the momentum we're gaining on Frank's and French's. At the end of the first quarter, products with localized Chinese labels are beginning to be listed in retail stores, and we expect distribution to build over the year. Turning now to slide seven. In our Flavor Solutions segment, our sales performance was excellent.
Our constant currency sales growth was 6%, driven by higher volume and product mix on base business, as well as new products in the Americas and EMEA regions. We're continuing to win with our customers through new products, expanded distribution, and promotional activities. In the Americas, we drove constant currency sales growth of 7%. We had strong sales growth to quick service restaurants, as well as in our flavor product category. Our flavor sales were driven by snack seasonings, particularly due to new products and our customers' promotions, and by products that deliver the clean label and better for you attributes our customers are seeking. We also had strong branded foodservice growth driven by an increased distribution with national and regional customers, promotional activity with operators, and expansion in emerging channels.
In branded foodservice, we continued to realize the benefit of leveraging our full portfolio of McCormick spices and seasonings and Frank's, French's, and Cattlemen's products across operators. Our sales growth in EMEA was outstanding, 9% in constant currency. It was broad-based across the portfolio, both from a product category and customer perspective. The momentum we built in this region last year carried into the first quarter. We drove sales growth to quick service restaurants, partially due to their strong promotional activities, and to packaged food companies, with new products being a key driver. Our new products are an important way to differentiate our brands and drive growth. I am happy to share with you our Consumer segment's robust plans for new products in the first half of 2019, as seen on slide eight.
We're delivering against consumer demand for healthy options and transparency in the quality and source of ingredients. In the U.S., we have launched the Zatarain's Garden District Kitchen range. These meal solutions, inspired by the rich culinary heritage of New Orleans, are plant-based and high in both protein and fiber. We continue to renovate our dry recipe mixes for simple and clean ingredient statements that still deliver delicious flavor. We're continually improving our portfolio to strengthen our relevance with consumers. In the U.S., we're expanding our McCormick Gourmet line with a range of premium salts and peppers. In France, we launched a range of Ducros grown in France herbs for the French consumer, who values provenance and local sourcing. In China, we are relaunching our packaging with new graphics that drive premium perception and better shelf visibility.
With ease and convenience remaining a key driver of consumer trends, we are offering consumers convenience with flavor. In the U.S., we've launched new Grill Mates marinade flavors, which provide a convenient way to introduce bold flavors to grilling, and French's dipping sauces, which deliver fantastic taste with the convenience of ready-to-eat. We've also launched Zatarain's frozen entree rice bowls, made with clean ingredients, and leverage the popularity of cilantro lime with shrimp and chicken. We'll be launching our ONE product platform, a set of one-dish recipe mix flavors to make dinners easy, which includes new flavors created using the combination of artificial intelligence and our consumer insights. Finally, we continue to introduce new flavors and varieties to drive flavor exploration and experimentation. In Canada, we are renovating our line of La Grille barbecue sauces with a new bottle and reformulated flavors.
In the U.K., we're targeting the millennial consumer with the launch of a new range of rapid recipe mixes, which capitalize on the sandwich wraps trend at home and on restaurant menus. Also targeting the millennial consumer, we are launching a new range of co-branded Tasty/McCormick recipe mix blends in the U.S., Canada, and the U.K., which I will expand on further in a few minutes. Turning to Flavor Solutions on slide nine. While we do not get specific with our product developments in this segment, we're continuing to capitalize on our culinary foundation and customer collaboration, both of which differentiate us with customers. This unique combination allows us to continue our new product momentum as our customers continue to move their portfolios to on-trend flavors and more natural and better-for-you products, while ensuring that taste is not compromised.
We have a broad portfolio of product platforms and technologies to deliver a range of natural solutions for our customers. Along the natural flavor spectrum, clean flavor is the next emerging space. We're excited to have relaunched our new clean and natural platform, FlavorReal. McCormick is setting the benchmark for development of on-trend, organic, non-GMO, and better-for-you products with our unparalleled natural ingredient supply chain and technologies enabling clean label transparency. To support the consumer movement to healthier and more natural, our proprietary modulation technology, called FlavorFull, solves common flavor challenges, including masking bitter or sour notes and enhancing sweet, salt or fat. We can solve for any low or no challenge without sacrificing iconic flavor. Finally, our two flavor delivery technologies deliver optimal flavor experiences.
Our patented FlavorCell is a controlled release encapsulation technology designed to deliver flavor where and when and how you need it, while our FlavorSpice technology delivers flexible natural replacements for ground spices and herbs for increased concentration and solubility. Our strategy to begin with understanding real food and beverage to create authentic flavors, combined with the breadth of our product platforms and technologies, is driving our new product wins with our customers, with sales from product launches a key growth driver in our first quarter results. Now I'd like to highlight some recent news on slide 10. As announced in early February, McCormick has partnered with IBM to pioneer the application of artificial intelligence, or AI, for flavor and product development. We're entering in the new era of flavor innovation.
This proprietary cutting-edge technology, which we have previously discussed as computational creativity, sets McCormick apart across our Consumer and Flavor Solutions segments. Our product developers are now able to explore flavor territories across the globe more quickly and efficiently, utilizing technology to extract key insights from millions of data points across sensory science, consumer preference, and flavor palettes. As we've continued to expand the use of this system, we've launched our first AI-enabled consumer product platform, ONE, which I mentioned a few moments ago in my new product comments. I also mentioned earlier a new range of co-branded Tasty products, which I'd like to expand on further. During the first quarter, we launched a global partnership with BuzzFeed Tasty, the number one cooking video website in the world for millennials and Gen Z, with over 2 billion views a month.
This partnership allows us to gain significant reach, as we are now the official spice in the videos and recipes these generations use while seeking recipe inspiration through social media. In the second quarter, we will be launching our seasoning blends range, which will be available both through the direct-to-consumer channel and retail. We're thrilled with this new partnership, which will deliver substantial incremental impressions and reach to an audience primarily under 35 years of age, and further accelerate our digital platform. In February, we were recognized on Barron's 2019 100 Most Sustainable Companies list for the second straight year. At McCormick, we're driven to do the right thing for people, communities, and our planet, and as such, we're recognized as a leader in sustainability. On a final note, I'd like to acknowledge Mike Fitzpatrick, who is retiring from our board of directors after serving as a director since 2001.
We sincerely appreciate Mike's contributions to our success over the last 18 years and thank him for his service. Now I'd like to provide a few summary comments as seen on slide 11 before turning it over to Mike. At the foundation of our sales growth is the rising consumer demand for flavor. We are 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 drive strong results. We have a solid foundation and an environment that continues to be dynamic and fast-paced. We're ensuring we remain agile, relevant, and focused on sustainable growth.
Our experienced leaders and employees are executing against our strategies, which are designed to build long-term value for our shareholders. Our first quarter financial results across both our Consumer and Flavor Solutions segments were a great start to the year. We delivered these results according to our plans and are excited by our momentum. Our fundamentals are strong, and we are confident the initiatives we have underway position us to continue our growth trajectory. We're balancing our resources and efforts to drive sales with our work to lower cost to build fuel for growth and higher margins. We have confidence in our fiscal year outlook and are well positioned to deliver another strong year in 2019. Around the world, McCormick employees are driving our momentum and our success, and I thank them for their efforts and engagement.
Thank you for your attention, it is now my pleasure to turn it over to Mike for additional remarks on our first quarter financial results and 2019 outlook.
Thanks, Lawrence, good morning, everyone. As Lawrence indicated, we delivered strong growth with our first quarter results. I'll begin with a discussion of our results and then follow with details of our full year 2019 financial outlook. Starting on slide 13, we grew sales 4% in constant currency. As Lawrence mentioned earlier, this was entirely organic growth driven by the base business and new products, as we had no acquisition impact in the quarter. Both our Consumer and Flavor Solutions segments delivered strong top-line constant currency growth driven by volume and product mix. The Consumer segment grew sales 3% in constant currency, with growth in all three regions. On slide 14, Consumer segment sales in the Americas rose 3% in constant currency versus the first quarter of 2018.
As Lawrence described earlier, this increase was primarily driven by higher volume and product mix across several product lines, spices and seasonings, dry recipe mixes, and frozen products. Pricing related to the incremental impact of 2018 actions also contributed to the increase. In EMEA, constant currency Consumer sales were up 1% from a year ago. Higher volume and product mix were driven by new products, distribution gains, and promotional activities. This growth was partially offset by pricing actions, including those related to planned trade promotional activity for new products and the holiday season. We grew Consumer sales in the Asia Pacific region 4% in constant currency, led by China growth, with strength in new world flavor sauces and chicken bouillon, as well as herbs and spices.
Turning to our Flavor Solutions segment and slide 17, we grew first quarter constant currency sales 6%, attributable to a strong growth in the EMEA and Americas region. In the Americas, Flavor Solutions constant currency sales increased 7%, with broad-based growth across the portfolio, driven by quick service restaurants and continued flavors momentum. New products, expanded distribution, and our customers' promotional activities all contributed to the sales increase. In EMEA, we grew Flavor Solutions sales 9% in constant currency, driven by new products and volume growth on the base business. Sales increased to both packaged food companies and quick service restaurants, partially due to their promotional activity, and spanned across all categories. In the Asia Pacific region, Flavor Solutions sales in constant currency were flat to the year ago period due to the timing of our quick service restaurant customers' promotional activities.
Across both segments, adjusted operating income, which excludes special charges, and for 2018, the transaction and integration costs related to the acquisition of our Frank's and French's brands, rose 4% in the first quarter versus the year ago period. Excluding the impact of unfavorable currency, rose 6%. Adjusted operating income in the Consumer segment rose to $135 million. In the Flavor Solutions segment, we rose to $64 million, both of which were a 4% increase. In constant currency, adjusted operating income increased 6% in the Consumer segment and 7% in the Flavor Solutions segment. For each segment, the increase was driven by higher sales and CCI-led cost savings. As seen on slide 22, in the first quarter, we expanded adjusted operating margin 40 basis points.
This expansion was driven by leverage from sales growth, CCI-led cost savings, and lower brand marketing, partially offset by investments to drive future growth. Turning to income taxes on slide 23, our first quarter adjusted effective income tax rate was 13.9% as compared to 18.9% in the year-ago period. Our first quarter adjusted rate was favorably impacted by discrete tax items, primarily one related to our entity structure, as we mentioned in our January earnings call. We continue to project our full year 2019 adjusted effective tax rate to approximate 22%. Income from unconsolidated operations was $10 million, compared to $8 million in the first quarter of 2018, with the increase led by our joint venture in Mexico. For 2019, we continue to expect a low single-digit increase in our income from unconsolidated operations.
At the bottom line, as shown on slide 25, first quarter 2019 adjusted earnings per share was $1.12, up 12% from $1 for the year-ago period. Mainly due to higher adjusted operating income and a lower adjusted income tax rate. This increase included an unfavorable impact from currency. On slide 26, we summarize highlights for cash flow and the quarter end balance sheet. Our cash flow provided from operations was $104 million in the first quarter of 2019, compared to an outflow of $21 million in the first quarter of 2018. This increase was driven by higher operating income and working capital improvements. As we execute against programs to achieve working capital reductions, such as extending supplier payment terms and inventory management programs, we continue to see improvements in our cash conversion cycle, finishing the first quarter down four days versus our fiscal year end.
We returned $75 million of cash to shareholders through dividends and used $25 million for capital expenditures this period. We expect 2019 to be another year of strong cash flow, driven by profit and working capital initiatives, 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. Let's now move to our current financial outlook for 2019 on slide 27. We are reaffirming our 2019 outlook for another year of strong performance with our broad and advantaged flavor portfolio, effective growth strategies, and focus on profit realization. We continue to estimate, based on prevailing rates, a two percentage point unfavorable impact from currency rates on net sales, adjusted operating income and adjusted earnings per share.
We expect the unfavorable currency impact will be greater in the first half of the year than in the second half. At the top line, we reaffirm our guidance to grow sales 1%-3%, which in constant currency is a 3%-5% projected growth rate. As a reminder, this will be entirely organic growth driven primarily by higher volume and product mix, as well as the impact of pricing to offset any anticipated low single-digit cost increase. We continue to project our 2019 gross profit margin to be 25-75 basis points higher than in 2018, in part driven by our CCI-led cost savings. We reaffirm our adjusted operating income growth of 7%-9% from $930 million in 2018, which in constant currency is a 9%-11% projected growth rate and reflects our continued focus on profit realization.
Our cost savings target is approximately $110 million. We expect brand marketing to be comparable to 2018. As I previously mentioned, we continue to expect our 2019 adjusted effective income tax rate to approximate 22% based upon our estimated mix of earnings by country, in addition to our state tax rates. This projection is lower than our underlying effective tax rate of 24% due to the favorable first quarter discrete impact I mentioned a few moments ago. Our full year 22% outlook versus our 2018 adjusted effective tax rate of 19.6% is approximately a 300 basis point headwind to our 2019 adjusted earnings per share growth. We reaffirm our guidance for the adjusted earnings per share in 2019 of $5.17 to $5.27.
This compares to $4.97 of adjusted earnings per share in 2018 and represents a 4% to 6% increase, which in constant currency is a 6% to 8% increase. This increase includes the expected tax headwind I just mentioned. In summary, we are projecting strong growth in our 2019 constant currency outlook for sales, adjusted operating profit and adjusted earnings per share, following record double-digit performance across each objective in 2018. I'd like to now turn it back to Lawrence for some additional remarks before we move to your questions.
Thank you, Mike. Now that Mike has shared our financial results and outlook in more detail, I'd like to recap the key takeaways as seen on slide 28. With the first quarter results, we have a strong start to the year. We're delivering against our plans for both sales and profit realization and are confident in the momentum of our business. We are reaffirming our strong 2019 outlook for sales, adjusted operating income and adjusted earnings per share growth. This outlook reflects strong operating performance driven by our solid foundation and continued momentum. We are confident 2019 will be another successful year. We are sustainably positioned for growth and are continuing to deliver differentiated results while also investing to build the McCormick of the future. I'd like to turn to your questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press *1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is coming from the line of Andrew Lazar with Barclays. Please proceed with your question.
Morning, everybody.
Morning, Andrew.
Morning.
Hi. Lawrence, you'd mentioned that Flavor Solutions sales in EMEA benefited from new product activity from packaged food companies, and I'm curious if you've seen any of this trend develop yet in the U.S. as so many packaged food companies do seem more committed, at least versus the past few years, to getting back to top line growth and seem to be thus far reinvesting to get there.
Thanks, Andrew. We have seen improvement in that part of our Flavor Solutions business in the U.S., really through the second half of last year even, and continuing into this year. It's hard to tell whether it's their trends improving or whether it's us gaining share. One of our advantages is that we are very strong in the whole area of creating natural flavors, clean flavor systems, and a huge amount of the work that we do with our customers involves making their ingredient statement more consumer-friendly and more in line with the trend towards consumers not wanting to see anything unnatural or artificial sounding on the label. A lot of our work is in that area, and we think we're advantaged there. We actually think that part of the strength that we're having there is gaining share.
I'll say the European part is also partially driven by the acquisition of a couple of years ago, which gave us some greater capabilities in the area of developing fresh and natural flavors, in Europe in particular.
That's helpful. I appreciate that.
Mike, you want to add to that?
Yeah, thank you for that. Just one last one would be, typically, in your fiscal first quarter, there's always a little bit of retailer inventory reduction that's typical, that you typically even budget for each year. I'm curious if any of that sort of normal type of inventory reduction might have taken place, such that maybe you expect your Consumer Americas organic sales to perhaps accelerate more in keeping with what you see in terms of consumption maybe going forward. Thanks so much.
Yeah, that's a great point, Andrew. If you look at the consumption data, you can see that we, although I'm sort of not going to apologize for the organic sales growth in the Americas on the Consumer side, which is really strong, if we did ship below consumption. Our consumption rate as measured through the scan channels was higher. We know that from unscanned, unmeasured channels, that they would've been additive about another percentage point of growth over what the scanner would suggest. Our underlying consumption is quite a bit stronger than shipments. We always see some inventory reduction in the first quarter. As we've said, we planned for it. I'd say what happened in the first quarter was really in line with what would be normal activity. Nothing like the extraordinary activity we saw in the fourth quarter of last year, which is well behind us.
Great. Thank you.
Yes, it was an impact in the first quarter.
Yeah. Thanks so much.
Our next question comes from the line of David Driscoll with Citi. Please proceed with your question.
Danny, thank you and good morning.
Hey, David.
Good morning.
I had two Flavor Solutions questions and just a little quick one on pricing. On Flavor Solutions, margins were flat in the quarter, but there was a 6% increase in constant currency sales growth, a terrific number, and it's volume led. I'm just curious about the effects of volume leverage through the facilities, and it was two of the bigger pieces of Flavor Solutions that seem to have it. Can you just maybe bridge the gap and maybe why we didn't see more margin expansion within the segment? Just related to Flavor Solutions, is there anything to be learned about the very strong constant currency growth this quarter in terms of what it might mean for the next several quarters?
Is there anything quirky in the year-ago comparison or, I'm just asking questions like that so I can understand maybe the cadence of sales growth within Flavor Solutions.
Hey, David, this is Mike. I'll answer the margin question. We're really happy with the performance. It is the first quarter, which is the smallest quarter of the year for us, but 6% constant currency sales growth and 7% operating profit growth as you said. We're basically flat, slightly up on our margin. We had some unfavorable product mix. We talked about this, some of the QSR sales we had, we mentioned this specifically regarding Asia, where the limited time offers, which we generally make higher margin on, were a little bit down this quarter, a little bit similar to last quarter, and the base business was up. That's where we were growing. There was a little bit of a product mix within that segment for the first quarter, but for the full year, we feel real good about the margin opportunities there.
From a growth perspective, we've used the term lumpy for sales with Flavor Solutions because you're relying on promotions and new product launches from customers. We're really happy after some of the, if you remember in the fourth quarter, we got a lot of questions about Americas sales growth, which I think in that quarter was 2%, and that rebounded nicely. You're going to have some variability throughout the year, but still comfortable with our general 4%-6%, or excuse me, 3%-5% constant currency growth.
Overall.
Overall. Yeah.
One quick follow-up on pricing. I think what you said is that you indicated on the sales guidance that it is also expected to include the impact of pricing to be taken to offset anticipated low single-digit increases in the costs. However, first quarter pricing was flat. Does this mean that there is some more significant pricing coming later in the year? Can you give us any sense on scope or timing?
Hey, David, this is Mike again. Yeah, you really got to look at the segment and the regional level. While you are right for the total company, it was flat. If you look at it by region, for example, Consumer Americas was up almost 1%, which was the same as it was last year. Same with Flavor Solutions.
The other segments and regions are similar. The one area that was down was EMEA Consumer, where we had some significant trade promotions around the holiday season as we launched a lot of new products in the first quarter. We see that moderating the rest of the year.
Yeah, we've got a complete relaunch of our core business over there behind the First Choice initiative. There's some costs associated with that in terms of promotional dollars and listing fees that run through the difference between gross and net that's reflected as pricing.
Thank you so much.
The next question is from the line of Alexia Howard with AllianceBernstein. Please proceed with your question.
Good morning, everyone.
Alexia.
Great to see the improvement in the Consumer Americas business this quarter. I'm curious about the slowdown on the Asia Pacific side. It sounds as though China is still doing very strongly over there, but we did see a slowdown in the constant currency sales growth, I think from 10%-4% this time around. Maybe a little bit of color on what's doing well in China, and can you quantify how quickly that segment or that country is growing? Then maybe what is slowing down elsewhere in there. Thank you.
Sure, Alexia. First of all, I'm not going to apologize for the 4% sales growth in Asia Pacific, which I still think is pretty good. China continues to be strong.
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Oh, good. Well, sorry about that. I'm not sure what you heard, so I'll just start from the beginning. China's growth continues to be strong. We had some softness in a couple of the other minor markets around the region that dampened the result for overall Asia Pacific. I think at 4%, it's a little bit lower than we've been reporting, but it's still pretty solid. We really don't have any concern over there that there's any kind of meaningful change in the trend line for that region. If there's any part that might be a bit slow, it's the foodservice portion of the China business, where I think there is a bit of a slowdown in the economic growth in China. I think that that is impacting foodservice more than anything. The pure Consumer part of that business is still rock solid.
Great. Then as a follow-up, can I just ask about where the leverage is at the moment? You're obviously paying down the debt from the RB Foods acquisition pretty quickly, but wondering what the number is right there. How actively are you looking out for other either bolt-ons or possibly eventually broader M&A or larger scale M&A opportunities? Thank you, and I'll pass it on.
Hey, Alexia, it's Mike. We're right now at four at the end of the first quarter, and we still plan, as we said, to be at three times in 2020, so we're still very confident. We had really strong cash flow for the first quarter, and we think that's gonna happen for the rest of the year, so we're still bullish on that. I'll turn it to Lawrence for the second part.
Yeah, as we start to get below four and into the 3s, and we're pretty optimistic that we're gonna be in the low 3s by the end of the year, it is time for us to start taking a look at opportunities again. While I will continue to say that our priority is paying down debt, we are starting to look at some acquisition opportunities.
Great. Thank you very much. I'll pass it on.
Thank you. Our next question is from the line of Jonathan Feeney with Consumer Edge. Please proceed with your questions.
Good morning. Thanks very much.
Hey, Jonathan.
You commented about some low single-digit input cost pressure, and I guess I'm wondering how those, beyond what you've said, if any detail you could give within the commodities, how that's trending and how that input pressure specifically is shaped over the course of the year, because obviously there's some expectation for improved margin realization over the course of the year. I'd like to see how that plays in.
Yeah. Obviously, we have a huge market basket of different commodities. Some of the major ones, like pepper, have come down. Vanilla stayed very high. We've talked about that in the past couple of years. There's a lot of other items that have gone up, and that kind of builds into the low single-digit cost inflation. We also have in there freight costs, which, as you know, last year for most of the industry were way up. We see those have stabilized or to be up, but that's included within that low single-digit guidance. What I'd say from a margin perspective throughout the year, early in the year, and we've talked about this before, with the first half of the year, we're getting hit from a currency perspective in the first quarter with 3%.
If you look at last year, we were getting a benefit of foreign currency in that same range in the first half of the year. That's a translational impact on our P&Ls. If you look at just the transactional cost, that is an underlying headwind early in the year for us, which we see reversing in the second half. That's a little bit of the color why we think margins will improve throughout the year.
Okay. Thank you very much.
Thanks.
The next question is from the line of Robert Moskow with Credit Suisse. Please proceed with your question.
Hi, good morning. This is actually Jake Nivosh on for Rob. Just a couple quick questions for you guys. One, due to the late Easter, is there going to be any impact for you guys this year?
If it is, it's going to be washed within the quarter because our second quarter is March, April, May, so as Easter moves around in there, I would expect there's some impact on our month-to-month timing, but within a quarter, it's not going to matter. Whatever difference there is not going to be material.
Got you. Okay. Just one more, just quick one. For the margin expansion, is that going to be more Q4 loaded than Q3, or is this going to be evenly split in the back half? Organic growth as well?
We're not going to get into kind of quarterly guidance or anything, but I would just keep it in halves at this point.
Got you. Okay.
I would expect it to be stronger in the second half. Again, one of the drivers is that transactional impact on our cost, which we expect to moderate in the second half. We also did see, as you know, some of the challenges we had in the fourth quarter in the Consumer business of our high margin products. That will reverse hopefully in the fourth quarter and be positive too.
Got you. Okay. Well, thank you very much. I'll pass it off.
The next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.
Yes, thanks. Good morning, everyone. Maybe going back into the Flavor Solutions side, just want to think about the organic growth side and the pieces there. Sounds like this quarter had some outsized benefit, especially in Asia, from some of the lower margin seasonings business. Any way to characterize the growth by the different kind of businesses that you have, more of the legacy seasonings business versus the foodservice supply business versus the flavor side, just the growth between those different buckets?
Well, I'm going to say that in this quarter, we did have strong growth in some of our really Quick Service Restaurant customers, on their core business items and less on their promotional items. That was the mix that Mike was talking about that had the impact on margin. It wasn't the Consumer food manufacturers, it's really Quick Service Restaurants. Those are mostly condiment products, not seasonings. We're a huge supplier of condiments globally to the restaurant industry well beyond what we do on the Consumer side of the business. Our performance on Flavor Solutions overall was pretty broad-based with both branded foodservice and Quick Service Restaurants showing strength, and the packaged food manufacturers, or not just food and beverage manufacturers showing strength. I'd say it was pretty broad-based.
The margin story there was around a mix within QSR, quick service restaurants that it was meaningful enough that it kept our margins flat during the quarter. Mike, do you want to add anything to that? Okay. No, I think it was broad-based. Hope that was clear. Yeah, when you get over 6% growth in Flavor Solutions in the U.S. and 9% almost in the EMEA. Across all the categories, we were positive, but there was a little bit of a mix issue with margin.
Okay, just maybe more, not-
I would almost not call it a mix issue, by the way.
Okay. Taking a step back from this quarter specifically, though, I would look at the mix of businesses within the Flavor Solutions side and the opportunity in flavors, both from a margin opportunity as well as a growth, given where you are in the evolution of that business. Do you have a target on the long-term kind of opportunity or growth side on the flavors piece specifically versus branded food service and condiments and ingredients?
Well, first of all, I completely agree with you that the opportunity is to increase the proportion of our business and to grow most quickly the most value-added parts of that portfolio. That is indeed our strategy and has been over time that's generated both an improvement in operating margin for this part of our business, particularly over the last three years where the strategy's been in place, and has enabled us to grow faster because the wins that we get tend to be stickier and longer lasting. That is our strategy. We have not put a specific target out there for our final goal for margin, but we have said, and I'll say again, that there's a very long runway for margin expansion. Our margins for this segment of the business are quite a bit lower than some of the pure play flavor companies.
Within those segments, our margins are very comparable to theirs. As that part of the business comes to be a bigger portion of our Flavor Solutions business, I would expect to see our margins. We not only expect, we're driving to have our margins move in that direction. I think there's still quite a long runway of margin growth ahead of us, not just for this year, but for years to come.
Okay. I appreciate the color. I'll pass it on. Thanks.
The next question is from the line of Akshay Jagdale with Jefferies. Please proceed with your questions.
Good morning. I wanted to ask about the impact of the retailer disruption. Can you help quantify that, be there top line margin, be good to know what that was.
Hey, Akshay, I'm not sure I understand the question when you talk about the impact of retailer disruption.
Yeah. Sorry. Yes, I'm talking about the issues that you had with one specific retailer on the inventory system, et cetera, that you talked about the last quarter, and you said it's behind you now, but it did have an impact on the quarter. That's what I'm asking about. Sorry I wasn't more clear.
Well, it had an impact on our last quarter. I will disagree that it had an impact on this quarter. We did get our customers back in stock. The out-of-stock situations that occurred last quarter were resolved. It's not as if we got it back. Retailers don't need the same level of inventory in the first quarter, which is the lowest seasonality period, as they do in the fourth quarter, which is the highest. The mix of products that they need on hand is different in the first quarter than the fourth quarter as well. The shelves are restocked, but Thanksgiving isn't gonna come again until fourth quarter. While the situation at retail has recovered, all that meant was that we didn't have an ongoing impact from the out-of-stock situation into the first quarter. Did you want to add anything?
That-
You can see the underlying consumption was really strong.
Yeah. Just to follow up on gross margin, can you give us some sort of puts and takes? I know you said more stronger in the back half when we talked about the FX impact being less in the back half, but to get to 25-75, I think this quarter was flat with the accounting restatement. Can you give us some sense, like what are the other big pieces that are going to accelerate in the back half? Maybe how much of that is dependent on mix in the fourth quarter? Thanks.
This is Mike, Akshay. At a high level, our pricing and cost expectations are in line for the year is what we've said, we're comfortable there. As you highlighted some of the unfavorable transactional effects, which is going to be a timing issue, as is a little bit of a recovery of some of that fourth quarter challenge we had. We talked about some of the product mix. There was also, in the first quarter, a little bit of segment mix because as the Flavor Solutions segment grew at about 6% constant currency sales and Consumer was 3%, the margins are slightly higher within Consumer. You get some mix there. I will remind you, though, that ROIC, return on invested capital, for Flavor Solutions is comparable to Consumer. It's really just on the P&L you see that impact.
Those are kind of the factors I'd think about as you model.
Great. I will pass it on. Thank you.
The next question is from the line of Rob Dickerson with Deutsche Bank. Please proceed with your question.
Great, thank you. I just want to go back quickly to just the conversation around retail trends, consumption, which continue to accelerate and very strong, obviously, relative to what we saw in the reported results, just really more specifically to the Americas Consumer division. What I want to ask is not just the how it's a shift and the inventory and what happened in Q1 relative to Q4, but really more specifically around pricing. It seems like the guidance for the year, total company, is more volume driven. The results we saw in the quarter in that region were more volume driven, so that's a great positive.
At the same time, we did see a little bit of a deceleration in the region, even relative to Q4 on a two-year stack basis, because just the compare in the year ago and Q4 relative to Q1 was massive. What's driving the deceleration is really pricing, right? There's less pricing year-over-year. I am just trying to get a sense as to why is that pricing kind of a little bit softer than we've seen before, and then why is the reported results more volume driven versus price driven, which is what we're seeing in the retail trends, if that makes sense. Thanks.
Okay. Well, that was the longest question.
Let me take the first part, I think. You are focusing on Americas Consumer and our pricing. I don't know that the numbers you are looking at reflect what we have actually reported. The first quarter of 2019, we have recorded about 1% pricing positive. In the first quarter of 2018, it was the same number. We are not seeing an increase in pricing activities year-over-year for the Americas region.
Or a decrease.
Or a decrease, yeah. It is the same number. Yeah, no, I was referring to the compare. In Q4 2017, you were at 3%. In Q4 2018, you were at 0.6%, so 3.6%. Q1 2018, you are at 1%, you are right. Q1 2019, you are at 0.9%. It is 1.9% relative to 3.6%. The way I look at it is I have to compare, I have to think about the year ago, and that is a deceleration. You are going back to 2017.
Well, we had vanilla. There were some commodities I mentioned before that were really spiking up at that point. As I mentioned, we'll take pricing when we need to cover commodity cost increases. The last 2 years, we've had low single-digit commodity cost inflation.
Okay, there's nothing that's in there, you're paying more to the retailers, et cetera. Because if I'm seeing 4%+ pricing in the scanner data, I'm seeing less than one in the reported results.
We are troubled by this. Rob, we're a bit perplexed ourselves by what we're seeing in the scanner, which is a further continuation of the disconnect that we've been experienced with the scanner data services in some regards. Clearly, we're reporting strong volume and mix with only 1% pricing, whereas some of the scanner services are reporting huge price increases and actually declining volume and mix. I can't reconcile it to Nielsen, but I've seen the data. I can safely say we did not take a 5% price increase.
Okay. Fair enough. I'm sorry. We all look at the data, I have that.
Right. Oh, no. We all look at it, too.
Okay. Fair enough.
We do have really strong underlying volume growth, and I think that's what the key is. We've had strong consumption, as we've talked about, across all of our brands. Fourth quarter was very strong. That strength has continued in Q1. We've focused on the dollar volume growth. If you look at units in herbs and spices, we're up 4% as well. That's really solid growth.
Fair enough. Totally agreed. A quick question, too, for Mike. Just in terms of the other income line this year, I don't think, I may have missed it before or today, if there's guidance, just given the recast. Is kind of what we saw last year, plus or minus about what you think you come in this year, or just any incremental color would obviously be helpful. That's it.
I'd say all those other items below the line, like interest expense and other income would, to your point, kind of mash together and be approximately the same at this point.
Okay, great. Thanks a lot. Pass it on.
Thank you. Our final question this morning is from the line of Ken Goldman with JP Morgan. Please proceed with your questions.
Hi, good morning.
Good morning.
Morning.
One question for you, then I'll let it go. Some of your biggest customers, they're openly talking about their desire to drive revenue in alternative sources, right? They'll mention in-store advertising, data analytics, things like that. I think the idea is from these retailers, they can convince vendors like McCormick, like other CPG companies, to spend more of their marketing budgets directly with their customers rather than on more traditional areas.
I know obviously every CPG company is shifting away from traditional, but I'm just curious specifically, what McCormick's appetite is to sort of meaningfully ramp up its marketing budget, directly spending with its customers to buy things like analytics or in-store advertising from them, or whether it's more a sort of share game where you might say, "All right, we'll give a little bit here and take away a little bit there." I'm just trying to get a sense of how important that is to you, because some of your customers are talking as though vendors will start spending a lot more with them over the next couple of years.
Yeah. Let me comment on that. I may ask Mike to join in as well. We're hearing some funny noises, so are we still connected?
I can still hear you.
Okay, that's great. Okay. I'm gonna ignore that.
It might just be us.
In terms of our overall spending, first of all, we're comfortable with the overall level of A&P spend that we have as a business. That said, we've guided to our spend being comparable to last year. We're very comfortable with the overall level of support that we have behind the brands. We've been one of those companies that never really disinvested in marketing. We've increased our A&P expenses year-over-year pretty consistently. Last year, with the tremendous growth that we experienced at the top and bottom line through RB, we took it as an opportunity to make a significant ramp-up of our expense, up over 25% last year. We don't view the level of spending as an issue for us, as a core issue for us at all.
The mix of that spending has driven more and more towards digital spending, the same is less visible but true on our trade promotional expenses as well. This is an area where we have done what I will call more advertising-like promotion activity with our customers, really repurposing funds that might have previously been spent on price promotion and such to much more efficient and effective vehicles that they offer. In particular, those customers who have developed strong omni-channel and digital marketing programs of their own. These programs we've seen can have a tremendous ROI, particularly compared to traditional trade promotion, which I think everybody knows is ROI negative. We have made some of those changes. Some of the retailers do have programs that we believe are legitimate advertising vehicles.
I don't want to name names, but if you think about your pure play E-commerce providers, I think that they make a pretty good case that consumers make some of their brand choices looking at their site. We do have some of that going on. Generally, it's a shift from traditional trade promotion to digital and social programs that are offered by the customers. All of that's in the context of us being comfortable with our overall spending levels. Mike, you want to-
No, I think, [Jimmy], I can tell you from a personal experience, we've been doing this a long time. Five years ago in EMEA, we were using trade funds to work with our brick and mortar customers to be more efficient on our trade spend. I think you're right, Ken, it's continuing to move in that direction.
Great. Thanks so much.
Thank you. At this time, I'll turn the floor to Lawrence Kurzius for closing remarks.
I just want to say that this was a solid, no drama quarter for us. We had good sales growth at over 4% that tracked a bit behind consumption and aligned with our expectations. Our operating margin expansion is right in line with our algorithm. Our EPS growth of 12% included a tax benefit that we expected and signaled and the underlying EPS was strong, too. It's a solid start to 2019, and we're confident in our outlook. I'd like to thank you all for your questions and for participating in today's call. McCormick's a global leader in flavor, and we're differentiated with a broad and advantaged portfolio, which continues to drive growth. We have a growing and profitable business and operate in an environment that is changing at an ever faster pace, responding readily to changes in our industry with new ideas, innovation and purpose.
With our relentless focus on growth, performance and people, we continue to perform strong globally and build shareholder value. I am pleased with the strong results to start the year, and I'm confident in delivering our 2019 outlook while continuing to make investments and fuel our growth to build both the McCormick of the future and shareholder value.
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 good day.