> ## Content Index > Fetch the complete content index at: https://www.bullished.co/llms.txt > Use this file to discover other available public pages before exploring further. # McCormick's Third-Quarter Filing Buries A $43.1 Million Malaysia Write-Off Inside A Bigger Special-Charges Line - URL: https://www.bullished.co/mccormicks-third-quarter-filing-buries-a-43-1-million-malaysia-write-off-inside-a-bigger-special-charges-line/ - Published: 2026-10-01T22:26:14.000Z - Updated: 2026-10-03T13:42:31.000Z - Description: A footnote in McCormick's quarterly filing reveals it shut down a tech-enabled pepper farm in August, taking a $43.1 million non-cash charge. - Author: Matteo Parrino - Tags: Earnings, MKC, Industry: Consumer Staples McCormick's [third-quarter filing](https://www.sec.gov/Archives/edgar/data/0000063754/000006375426000329/mkc-20260831.htm?ref=bullished.co) disclosed that the company wound down a development-stage pepper-sourcing and agricultural-technology venture in Malaysia in August 2026, recording a $43.1 million non-cash impairment charge — a write-off that management folded into a broader special-charges line alongside $95.3 million in Unilever deal fees, making it easy to miss in the earnings overview. The impairment line in that same special-charges category was zero in the [second quarter](https://www.sec.gov/Archives/edgar/data/0000063754/000006375426000274/mkc-20260531.htm?ref=bullished.co), meaning the entire $43.1 million appeared without warning. ## What The Filing Says According to the third-quarter filing, McCormick made the decision in August 2026 to cease operations at the Malaysia project, which the company described as a "long-term initiative" designed to "advance our innovation agenda by applying technology-enabled sourcing practices to help reduce costs and strengthen supply resiliency." The filing records a non-cash impairment charge of $43.1 million and exit costs of $1.8 million, both classified as special charges. Those two items sit inside total third-quarter special charges of $141.5 million — a figure dominated by $95.3 million of Unilever transaction and integration fees. The Malaysia write-off represented roughly 30% of the quarter's special charges but drew no separate management commentary in the earnings overview. The company's explanation for the exit is notably brief. The filing attributes the decision to "recent changes in the macroeconomic and supply environment" that produced "less favorable project economics," adding that the move "reflects our disciplined capital allocation strategy and allows resources to be redirected toward higher priority opportunities." The prior quarter's filing carried a zero on the asset-impairment line within special charges. The $43.1 million figure is entirely new to this quarter. ## Why Pepper Matters To McCormick Pepper is McCormick's single most strategically sensitive raw material. The company lists it among its most significant commodities alongside dairy, onion, garlic, and capsicums, according to the filing. The Malaysia venture was built around exactly the kind of vertical integration food companies have been pursuing to insulate themselves from commodity price swings — proprietary agricultural technology applied at the sourcing level to cut input costs and build supply resilience. Scrapping it means McCormick reverts to conventional procurement for a commodity it has long flagged as a key exposure. The timing adds context. McCormick is simultaneously absorbing the McCormick de Mexico integration — which added 14.6% to net sales in the most recent period — and preparing for a $15.7 billion cash payment to Unilever. That combination leaves management with limited appetite for speculative, long-horizon agricultural bets, and the filing's language about "disciplined capital allocation" and "higher priority opportunities" fits that framing directly. ## The Broader Special-Charges Picture Special charges dragged hard on reported earnings per share this quarter. The filing shows diluted earnings per share of $0.36 in the third quarter of 2026, compared to $0.84 in the same period of 2025\. Diluted earnings per share took a $0.50 hit from special charges — transaction and integration costs and impairments of long-lived assets — against only $0.01 in the third quarter of 2025. Adjusted operating income, which strips out those charges, rose 20.9% in constant currency. Gross profit for the third quarter grew $149.8 million, or 23.2%, from the same period of 2025, and for the nine months ended August 31, 2026, gross profit was up $410.1 million, or 21.9%, year over year. McCormick shares [rose about 5%](https://www.reuters.com/business/retail-consumer/mccormick-beats-quarterly-sales-estimates-steady-demand-2026-10-01/?ref=bullished.co) in premarket trading Thursday on the earnings beat, according to Reuters. At Thursday's close, the stock was down about 4.87% to $44.14, with a market cap of approximately $12.5 billion, while shares edged up about 0.4% to $44.31 in Thursday after-hours trading, an early and indicative move. ## A Second Footnote: The Distribution Lease Reclassification The Malaysia write-off was not the only structural change buried in the filing's footnotes. In August 2026, McCormick amended the synthetic lease on its largest U.S. mid-Atlantic distribution facility, pushing the expiration date from November 2027 to August 2031, revising the payment structure, and resetting the residual value guarantee to $297.9 million. The change in the residual value guarantee triggered a reclassification from an operating lease to a finance lease. On the August 31, 2026 balance sheet, the facility carries a $72.6 million finance lease right-of-use asset in property, plant and equipment and a $73.1 million finance lease liability — split between $13.1 million in current debt and $60.0 million in long-term debt. By comparison, when the same facility was classified as an operating lease as of November 30, 2025, the right-of-use asset was $34.5 million and the related lease obligation was $35.6 million. The amendment involved no cash, and because McCormick does not expect to owe anything under the residual value guarantee, the guarantee is excluded from the lease payments underpinning the right-of-use asset and liability measurements. ## What To Watch In The Fourth Quarter The preliminary purchase price allocation for the McCormick de Mexico acquisition carries $939.9 million in goodwill and $1.6 billion in intangible assets, according to the [filing](https://www.sec.gov/Archives/edgar/data/0000063754/000006375426000329/mkc-20260831.htm?ref=bullished.co). That allocation is expected to be finalized during the fiscal year ending November 30, 2026, meaning the fourth-quarter filing will reset the impairment baseline for a significant portion of McCormick's balance sheet — just as the company heads into the Unilever close. Any adjustments to the goodwill or intangible asset figures in that final allocation will determine how much cushion, or how little, sits between carrying values and future impairment triggers on the Mexico business. The fourth-quarter filing, due after the fiscal year ends November 30, 2026, will carry the finalized McCormick de Mexico purchase price allocation — and with it, the impairment baseline that will govern the balance sheet heading into the Unilever transaction. ### Sources - [10-Q Filing — McCormick & Co. (MKC)](https://www.sec.gov/Archives/edgar/data/0000063754/000006375426000329/mkc-20260831.htm?ref=bullished.co) — SEC EDGAR - [10-Q Filing — McCormick & Co. (MKC), Q2 2026 filed 2026-06-25 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0000063754/000006375426000274/mkc-20260531.htm?ref=bullished.co) — SEC EDGAR - [McCORMICK REPORTS SOLID THIRD QUARTER PERFORMANCE AND REAFFIRMS 2026 OUTLOOK](https://finance.yahoo.com/markets/stocks/articles/mccormick-reports-solid-third-quarter-103000711.html?ref=bullished.co) — finance.yahoo.com - [MKC Q3 Earnings Beat Estimates on Margin Gains and Mexico Growth](https://finance.yahoo.com/markets/stocks/articles/mkc-q3-earnings-beat-estimates-135400354.html?ref=bullished.co) — finance.yahoo.com - [McCormick beats quarterly sales estimates on steady demand | Reuters](https://www.reuters.com/business/retail-consumer/mccormick-beats-quarterly-sales-estimates-steady-demand-2026-10-01/?ref=bullished.co) — reuters.com - [McCormick: Fiscal Q3 Earnings Snapshot – WTOP News](https://wtop.com/local/2026/10/mccormick-fiscal-q3-earnings-snapshot/?ref=bullished.co) — wtop.com - [McCormick & Co Affirms FY2026 Adj EPS Guidanc...](https://www.benzinga.com/news/26/10/62100316/mccormick-co-affirms-fy2026-adj-eps-guidance-3-05-3-13-vs-3-09-est-lowers-fy2026-sales-guidance-7-73?ref=bullished.co) — benzinga.com