IFF (NYSE: IFF) reported financial results for the first quarter
ended March 31, 2024.
First Quarter 2024 Consolidated Summary:
Reported (GAAP)
Adjusted
(Non-GAAP)1
Sales
Income Before Taxes
EPS
Operating EBITDA
Operating EBITDA
Margin
EPS ex Amortization
$2.9 B
$115 M
$0.23
$578 M
19.9%
$1.13
Management Commentary
"We have started the year well, with good results across the
majority of our business," said IFF CEO Erik Fyrwald. "In the first
quarter, we delivered volume growth and productivity gains, which
resulted in solid top-and-bottom-line results on a comparable
basis. We are off to a good start, yet recognize that it is still
early in the year and uncertainty remains. Based on our performance
to date and our outlook for the balance of the year, we believe
results will likely trend towards the higher-end of our previously
announced guidance ranges.
We also took important steps in our portfolio optimization
strategy by reaching an agreement to sell our Pharma Solutions
business and completing the previously announced divestiture of our
Cosmetic Ingredients business. These actions, along with the
rightsizing of our dividend earlier this year, represent
significant steps toward our commitment to strengthen our capital
structure and improve our debt leverage ratio."
First Quarter 2024 Consolidated Financial Results
- Reported net sales for the first quarter were $2.90 billion, a
decrease of 4% versus the prior-year period. On a comparable
basis2, currency neutral sales1 increased 5% versus the prior-year
period led by growth in Scent, Health & Biosciences and
Nourish. Volume grew mid-single digits and continued to improve
sequentially across nearly all businesses.
- Income before taxes on a reported basis for the first quarter
was $115 million. Adjusted operating EBITDA1 for the first quarter
was $578 million. On a comparable basis2, adjusted operating
EBITDA1 improved 20% versus the prior-year period, led by volume
growth and productivity gains.
- Reported earnings per share (EPS) for the first quarter was
$0.23. Adjusted EPS excluding amortization1 was $1.13 per diluted
share.
- Cash flows from operations at the end of the first quarter was
$99 million, and free cash flow1 defined as cash flows from
operations less capital expenditures totaled $(19) million. Total
debt to trailing twelve months net loss at the end of the first
quarter was (4.1)x. Net debt to credit adjusted EBITDA1 at the end
of the first quarter was 4.4x.
First Quarter 2024 Segment Summary: Growth vs. Prior
Year
Reported (GAAP)
Comparable Currency
Neutral (Non-GAAP)1 2
Adjusted
(Non-GAAP)1
Comparable Adjusted
(Non-GAAP)1 2
Sales
Sales
Operating EBITDA
Operating EBITDA
Nourish
(9)%
3%
4%
13%
Health & Biosciences
4%
6%
21%
21%
Scent
6%
16%
50%
55%
Pharma Solutions
(10)%
(11)%
(22)%
(22)%
Nourish Segment
- On a reported basis, first quarter sales were $1.50 billion. On
a comparable basis2, currency neutral sales1 increased 3% as strong
growth in Flavors was partially offset by softness in Functional
Ingredients. Functional Ingredients performance continued to
improve sequentially and returned to volume growth, yet declined
low-single digits against the year-ago period.
- Nourish adjusted operating EBITDA1 was $216 million and
adjusted operating EBITDA margin1 was 14.4% in the first quarter.
On a comparable basis2, adjusted operating EBITDA1 increased 13%
led by volume growth and productivity gains.
Health & Biosciences Segment
- On a reported basis, first quarter sales were $531 million. On
a comparable basis2, currency neutral sales1 increased 6% driven by
growth in Cultures & Food Enzymes, Grain Processing, Home &
Personal Care and Animal Nutrition.
- Health & Biosciences adjusted operating EBITDA1 was $159
million and adjusted operating EBITDA margin1 was 29.9% in the
first quarter. On a comparable basis2, adjusted operating EBITDA1
improved 21% led by volume growth and productivity gains.
Scent Segment
- On a reported basis, first quarter sales were $645 million. On
a comparable basis2, currency neutral sales1 increased 16% led by
strong double-digit growth in Consumer Fragrance and a mid-single
digit increase in Fine Fragrance, with balanced contributions from
volume and price.
- Scent adjusted operating EBITDA1 was $157 million and adjusted
operating EBITDA margin1 was 24.3% in the first quarter. On a
comparable basis2, adjusted operating EBITDA1 increased 55% led
primarily by volume growth and productivity gains.
Pharma Solutions Segment
- On a reported basis, first quarter sales were $227 million. On
a comparable basis2, currency neutral sales1 decreased 11%
primarily due to temporary customer destocking.
- Pharma Solutions adjusted operating EBITDA1 was $46 million and
adjusted operating EBITDA margin1 was 20.3% in the first quarter.
On a comparable basis2, adjusted operating EBITDA1 declined 22% as
productivity gains were more than offset primarily by lower
volumes.
Financial Guidance
The Company now expects full year 2024 results to trend towards
the higher-end of its previously announced sales guidance range of
$10.8 billion to $11.1 billion and adjusted operating EBITDA
guidance range of $1.9 billion to $2.1 billion. The Company expects
volume to trend towards the higher-end of its previously announced
0% to 3% range, with improvements across the majority of the
portfolio. Pricing is now expected to increase approximately 1%
versus a decline of approximately 2.5%, principally driven by the
impact of foreign exchange rate changes in emerging markets where
the Company has index pricing to US and/or EURO exchange rates.
Based on current market foreign exchange rates, the Company
expects that foreign exchange will have a 3% to 4% (versus 0 to 1%
previously) adverse impact to sales growth.
The Company cannot reconcile its expected adjusted operating
EBITDA without unreasonable effort because certain items that
impact net income and other reconciling metrics are out of the
Company's control and/or cannot be reasonably predicted at this
time. These items include but are not limited to acquisition,
divestiture and integration related costs, gains (losses) on
business disposals and regulatory costs.
Audio Webcast
A live webcast to discuss the Company’s first quarter 2024
financial results will be held on May 7, 2024, at 9:00 a.m. ET. The
webcast and accompanying slide presentation may be accessed on the
Company’s IR website at ir.iff.com. For those unable to listen to
the live webcast, a recorded version will be made available on the
Company’s website approximately one hour after the event and will
remain available on IFF’s website for one year.
Cautionary Statement Under The Private
Securities Litigation Reform Act of 1995
Statements in this press release, which are not historical facts
or information, are “forward-looking statements” within the meaning
of The Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on management’s current
assumptions, estimates and expectations including those concerning
expected cash flow and availability of capital resources to fund
our operations and meet our debt service requirements; our ability
to execute on our strategic and financial transformation, including
the progress and success of our portfolio optimization strategy
(including the sale process for our Pharma Solutions business),
through non-core business divestitures and acquisitions, and
expectations regarding the implementation of our refreshed
growth-focused strategy and expectations around our business
divestitures; our ability to continue to generate value for, and
return cash to, our shareholders; expectations of the impact of
inflationary pressures and the pricing actions to offset exposure
to such impacts; the impact of high input costs, including
commodities, raw materials, transportation and energy; the expected
impact of global supply chain challenges; our ability to enhance
our innovation efforts, drive cost efficiencies and execute on
specific consumer trends and demands; the growth potential of the
markets in which we operate, including the emerging markets;
expectations regarding sales and profit for the fiscal year 2024,
including the impact of foreign exchange, pricing actions, raw
materials, energy, and sourcing, logistics and manufacturing costs;
the impact of global economic uncertainty and recessionary
pressures on demand for consumer products; the success of our
integration efforts, following the N&B Transaction, and ability
to deliver on our synergy commitments as well as future
opportunities for the combined company; our strategic investments
in capacity and increasing inventory to drive improved
profitability; our ability to drive cost discipline measures and
the ability to recover margin to pre-inflation levels; expected
capital expenditures in 2024; and the expected costs and benefits
of our ongoing optimization of our manufacturing operations,
including the expected number of closings.
These forward-looking statements should be evaluated with
consideration given to the many risks and uncertainties inherent in
our business that could cause actual results and events to differ
materially from those in the forward-looking statements. Certain of
such forward-looking information may be identified by such terms as
“expect”, “anticipate”, “believe”, “intend”, “outlook”, “may”,
“estimate”, “should”, “predict” and similar terms or variations
thereof. Such forward-looking statements are based on a series of
expectations, assumptions, estimates and projections about the
Company, are not guarantees of future results or performance, and
involve significant risks, uncertainties and other factors,
including assumptions and projections, for all forward periods. Our
actual results may differ materially from any future results
expressed or implied by such forward-looking statements.
Such risks, uncertainties and other factors include, among
others, the following: (1) our substantial amount of indebtedness
and its impact on our liquidity, credit ratings and ability to
return capital to its shareholders; (2) our ability to successfully
execute the next phase of our strategic transformation; (3) our
ability to declare and pay dividends which is subject to certain
considerations; (4) the impact of the outcomes of legal claims,
disputes, regulatory investigations and litigation; (5)
inflationary trends, including in the price of our input costs,
such as raw materials, transportation and energy; (6) supply chain
disruptions, geopolitical developments, including the
Russia-Ukraine war, the Israel-Hamas war and wider Middle East
developments (including disruptions to the Red Sea passage) or
climate-change related events (including severe weather events)
that may affect our suppliers or procurement of raw materials; (7)
our ability to attract and retain key employees, and manage
turnover of top executives; (8) our ability to successfully market
to our expanded and diverse customer base; (8) our ability to
effectively compete in our market and develop and introduce new
products that meet customers’ needs; (9) changes in demand from
large multi-national customers due to increased competition and our
ability to maintain “core list” status with customers; (10) our
ability to successfully develop innovative and cost-effective
products that allow customers to achieve their own profitability
expectations; (11) disruption in the development, manufacture,
distribution or sale of our products from international conflicts
(such as the Russia-Ukraine war and the Israel-Hamas war),
geopolitical events, trade wars, natural disasters (such as the
COVID-19 pandemic), public health crises, terrorist acts, labor
strikes, political or economic crises (such as the uncertainty
related to U.S. government funding negotiations), accidents and
similar events; (12) the impact of a significant data breach or
other disruption in our information technology systems, and our
ability to comply with data protection laws in the U.S. and abroad;
(13) our ability to benefit from our investments and expansion in
emerging markets; (14) the impact of currency fluctuations or
devaluations in the principal foreign markets in which we operate;
(15) economic, regulatory and political risks associated with our
international operations; (16) the impact of global economic
uncertainty (including increased inflation) on demand for consumer
products; (17) our ability to integrate the N&B Business and
realize anticipated synergies, among other benefits; (18) our
ability to react in a timely and cost-effective manner to changes
in consumer preferences and demands, including increased awareness
of health and wellness; (19) our ability to meet increasing
customer, consumer, shareholder and regulatory focus on
sustainability; (20) our ability to successfully manage our working
capital and inventory balances; (21) any impairment on our tangible
or intangible long-lived assets; (22) our ability to enter into or
close strategic transactions or divestments, or successfully
establish and manage acquisitions, collaborations, joint ventures
or partnerships; (23) changes in market conditions or governmental
regulations relating to our pension and postretirement obligations;
(24) the impact of the phase out of the London Interbank Offered
Rate (“LIBOR”) on our variable rate interest expense; (25) our
ability to comply with, and the costs associated with compliance
with, regulatory requirements and industry standards, including
regarding product safety, quality, efficacy and environment impact;
(26) defects, quality issues (including product recalls),
inadequate disclosure or misuse with respect to the products and
capabilities; (27) our ability to comply with, and the costs
associated with compliance with, U.S. and foreign environmental
protection laws; (28) the impact of our or our counterparties’
failure to comply with the U.S. Foreign Corrupt Practices Act,
similar U.S. or foreign anti-bribery and anti-corruption laws and
regulations, applicable sanctions laws and regulations in the
jurisdictions in which we operate or ethical business practices and
related laws and regulations; (29) our ability to protect our
intellectual property rights; (30) the impact of changes in
federal, state, local and international tax legislation or policies
and adverse results of tax audits, assessments, or disputes; (31)
the impact of any tax liability resulting from the N&B
Transaction; and (32) our ability to comply with data protection
laws in the U.S. and abroad.
The foregoing list of important factors does not include all
such factors, nor necessarily present them in order of importance.
In addition, you should consult other disclosures made by the
Company (such as in our other filings with the SEC or in company
press releases) for other factors that may cause actual results to
differ materially from those projected by the Company. Please refer
to Part I. Item 1A., Risk Factors, of the Company’s Annual Report
on Form 10-K filed with the SEC on February 28, 2024 for additional
information regarding factors that could affect our results of
operations, financial condition and liquidity.
We intend our forward-looking statements to speak only as of the
time of such statements and do not undertake or plan to update or
revise them as more information becomes available or to reflect
changes in expectations, assumptions or results. We can give no
assurance that such expectations or forward-looking statements will
prove to be correct. An occurrence of, or any material adverse
change in, one or more of the risk factors or risks and
uncertainties referred to in this press release or included in our
other periodic reports filed with the SEC could materially and
adversely impact our operations and our future financial results.
Any public statements or disclosures made by us following this
press release that modify or impact any of the forward-looking
statements contained in or accompanying this press release will be
deemed to modify or supersede such outlook or other forward-looking
statements in or accompanying this press release.
Use of Non-GAAP Financial
Measures
We provide in this press release non-GAAP financial measures,
including: (i) comparable currency neutral sales; (ii) adjusted
operating EBITDA and comparable adjusted operating EBITDA; (iii)
adjusted operating EBITDA margin; (iv) adjusted EPS ex
amortization; (v) free cash flow; and (vi) net debt to credit
adjusted EBITDA.
Our non-GAAP financial measures are defined below.
Currency Neutral metrics eliminate the effects that result from
translating non-U.S. currencies to U.S. dollars. We calculate
currency neutral numbers by translating current year invoiced sale
amounts at the exchange rates used for the corresponding prior year
period. We use currency neutral results in our analysis of
subsidiary or segment performance. We also use currency neutral
numbers when analyzing our performance against our competitors.
Adjusted operating EBITDA and adjusted operating EBITDA margin
exclude depreciation and amortization, interest expense, other
expense, net, and certain non-recurring or unusual items that are
not part of recurring operations such as, restructuring and other
charges, acquisition, divestiture and integration related costs,
entity realignment costs, strategic initiatives costs, regulatory
costs and other items.
Adjusted EPS ex Amortization excludes the impact of
non-operational items including, restructuring and other charges,
acquisition, divestiture and integration related costs, losses
(gains) on business disposals, entity realignment costs, strategic
initiatives costs, regulatory costs and other items that are not a
part of recurring operations.
Free Cash Flow is operating cash flow (i.e. cash flow from
operations) less capital expenditures.
Net debt to credit adjusted EBITDA is the leverage ratio used in
our credit agreements and defined as net debt (which is debt for
borrowed money less cash and cash equivalents) divided by the
trailing 12-month credit adjusted EBITDA. Credit adjusted EBITDA is
defined as income (loss) before interest expense, income taxes,
depreciation and amortization, specified items and non-cash
items.
Comparable results for the first quarter exclude the impact of
divestitures and acquisitions.
These non-GAAP measures are intended to provide additional
information regarding our underlying operating results and
comparable year-over-year performance. Such information is
supplemental to information presented in accordance with GAAP and
is not intended to represent a presentation in accordance with
GAAP. In discussing our historical and expected future results and
financial condition, we believe it is meaningful for investors to
be made aware of and to be assisted in a better understanding of,
on a period-to-period comparable basis, financial amounts both
including and excluding these identified items, as well as the
impact of exchange rate fluctuations. These non-GAAP measures
should not be considered in isolation or as substitutes for
analysis of the Company’s results under GAAP and may not be
comparable to other companies’ calculation of such metrics.
The Company cannot reconcile its expected adjusted operating
EBITDA under "Financial Guidance" without unreasonable effort
because certain items that impact net income and other reconciling
metrics are out of the Company's control and/or cannot be
reasonably predicted at this time. These items include but are not
limited to acquisition, divestiture and integration related costs,
gains (losses) on business disposals, and regulatory costs.
Welcome to IFF
At IFF (NYSE: IFF), an industry leader in food, beverage, scent,
health and biosciences, science and creativity meet to create
essential solutions for a better world – from global icons to
unexpected innovations and experiences. With the beauty of art and
the precision of science, we are an international collective of
thinkers who partners with customers to bring scents, tastes,
experiences, ingredients and solutions for products the world
craves. Together, we will do more good for people and planet. Learn
more at iff.com, Twitter, Facebook, Instagram, and LinkedIn.
_________________ 1 Schedules at the end of this release contain
reconciliations of reported GAAP to Non-GAAP metrics. See Use of
Non-GAAP Financial Measures for explanations of our Non-GAAP
metrics. 2 Comparable results for the first quarter exclude the
impact of divestitures and acquisitions.
International Flavors &
Fragrances Inc.
Consolidated Statements of
Income (Loss)
(Amounts in millions except
per share data)
(Unaudited)
Three Months Ended March
31,
2024
2023
% Change
Net sales
$
2,899
$
3,027
(4
)%
Cost of goods sold
1,875
2,063
(9
)%
Gross profit
1,024
964
6
%
Research and development expenses
166
161
3
%
Selling and administrative expenses
490
454
8
%
Amortization of acquisition-related
intangibles
168
171
(2
)%
Restructuring and other charges
3
52
(94
)%
Gains on sale of assets
(2
)
(5
)
(60
)%
Operating profit
199
131
52
%
Interest expense
83
100
(17
)%
Other expense, net
1
17
(94
)%
Income before taxes
115
14
NMF
Provision for income taxes
54
22
145
%
Net income (loss)
61
(8
)
NMF
Net income attributable to non-controlling
interests
1
1
—
%
Net income (loss) attributable to IFF
shareholders
$
60
$
(9
)
NMF
Net income (loss) per share - basic(1)
$
0.23
$
(0.04
)
Net income (loss) per share -
diluted(1)
$
0.23
$
(0.04
)
Average number of shares outstanding -
basic
255
255
Average number of shares outstanding -
diluted
256
255
(1)
For 2023, net loss per share reflects
adjustments related to the redemption value of certain redeemable
non-controlling interests.
NMF Not meaningful
International Flavors &
Fragrances Inc.
Condensed Consolidated Balance
Sheets
(Amounts in millions)
(Unaudited)
March 31,
December 31,
2024
2023
Cash, cash equivalents, and restricted
cash
$
739
$
709
Receivables, net
1,977
1,726
Inventories
2,411
2,477
Other current assets
1,280
1,381
Total current assets
6,407
6,293
Property, plant and equipment, net
4,145
4,240
Goodwill and other intangibles, net
18,654
18,992
Other assets
1,436
1,453
Total assets
$
30,642
$
30,978
Short-term borrowings
$
1,148
$
885
Other current liabilities
2,672
2,873
Total current liabilities
3,820
3,758
Long-term debt
9,150
9,186
Non-current liabilities
3,346
3,392
Shareholders' equity
14,326
14,642
Total liabilities and shareholders'
equity
$
30,642
$
30,978
International Flavors &
Fragrances Inc.
Consolidated Statements of
Cash Flows
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities:
Net income (loss)
$
61
$
(8
)
Adjustments to reconcile to net cash
provided by operating activities
Depreciation and amortization
278
276
Deferred income taxes
(9
)
(28
)
Gains on sale of assets
(2
)
(5
)
Losses on business divestitures
—
14
Stock-based compensation
18
12
Pension contributions
(7
)
(7
)
Changes in assets and liabilities, net of
acquisitions:
Trade receivables
(290
)
(63
)
Inventories
34
219
Accounts payable
83
(144
)
Accruals for incentive compensation
(46
)
(70
)
Other current payables and accrued
expenses
(28
)
(51
)
Other assets/liabilities, net
7
(18
)
Net cash provided by operating
activities
99
127
Cash flows from investing
activities:
Additions to property, plant and
equipment
(118
)
(175
)
Proceeds from disposal of assets
3
7
Net proceeds received from business
divestitures
37
1
Net cash used in investing activities
(78
)
(167
)
Cash flows from financing
activities:
Cash dividends paid to shareholders
(207
)
(206
)
Increase (decrease) in revolving credit
facility and short-term borrowings
250
(100
)
Deferred financing costs
—
(2
)
Net borrowings of commercial paper
(maturities less than three months)
833
393
Repayments of long-term debt
(833
)
—
Employee withholding taxes paid
(1
)
(6
)
Other, net
(2
)
(1
)
Net cash provided by financing
activities
40
78
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(25
)
27
Net change in cash, cash equivalents
and restricted cash
36
65
Cash, cash equivalents and restricted cash
at beginning of year
735
552
Cash, cash equivalents and restricted
cash at end of period
$
771
$
617
The following table reconciles cash, cash equivalents and
restricted cash between the Company's statement of cash flows for
the periods ended March 31, 2024 and March 31, 2023 to the amounts
reported on the Company's balance sheet:
AMOUNTS IN MILLIONS
March 31, 2024
December 31, 2023
March 31, 2023
December 31, 2022
Current assets
Cash and cash equivalents
$
732
$
703
$
590
$
483
Cash and cash equivalents included in
Assets held for sale
32
26
4
52
Restricted cash
7
6
16
10
Non-current assets
Restricted cash included in Other
assets
—
—
7
7
Cash, cash equivalents and restricted
cash
$
771
$
735
$
617
$
552
International Flavors &
Fragrances Inc.
Reportable Segment
Performance
(Amounts in millions)
(Unaudited)
Three Months Ended March
31,
2024
2023
Net Sales
Nourish
$
1,496
$
1,653
Health & Biosciences
531
513
Scent
645
608
Pharma Solutions
227
253
Consolidated
$
2,899
$
3,027
Segment Adjusted Operating
EBITDA
Nourish
$
216
$
208
Health & Biosciences
159
131
Scent
157
105
Pharma Solutions
46
59
Total
578
503
Depreciation & Amortization
(278
)
(276
)
Interest Expense
(83
)
(100
)
Other Expense, net
(1
)
(17
)
Restructuring and Other Charges
(3
)
(52
)
Acquisition, Divestiture and Integration
Related Costs
(58
)
(31
)
Entity Realignment Costs
(1
)
—
Strategic Initiatives Costs
(4
)
(13
)
Regulatory Costs
(35
)
(5
)
Other
—
5
Income Before Taxes
$
115
$
14
Segment Adjusted Operating EBITDA
Margin
Nourish
14.4
%
12.6
%
Health & Biosciences
29.9
%
25.5
%
Scent
24.3
%
17.3
%
Pharma Solutions
20.3
%
23.3
%
Consolidated
19.9
%
16.6
%
International Flavors & Fragrances
Inc. GAAP to Non-GAAP Reconciliation
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Gross
Profit
First Quarter
(DOLLARS IN MILLIONS)
2024
2023
Reported (GAAP)
$
1,024
$
964
Acquisition, Divestiture and Integration
Related Costs (b)
1
—
Adjusted (Non-GAAP)
$
1,025
$
964
Reconciliation of Selling and
Administrative Expenses
First Quarter
(DOLLARS IN MILLIONS)
2024
2023
Reported (GAAP)
$
490
$
454
Acquisition, Divestiture and Integration
Related Costs (b)
(57
)
(31
)
Entity Realignment Costs (d)
(1
)
—
Strategic Initiatives Costs (e)
(4
)
(13
)
Regulatory Costs (f)
(35
)
(5
)
Other (g)
(2
)
—
Adjusted (Non-GAAP)
$
391
$
405
International Flavors & Fragrances
Inc. GAAP to Non-GAAP Reconciliation
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Net Income
(Loss) and EPS
First Quarter
2024
2023
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
Income before taxes
Provision for income taxes
(h)
Net income attributable to IFF
(i)
Diluted EPS
Income before taxes
Provision for income taxes
(h)
Net (loss) income attributable
to IFF (i)
Diluted EPS (j)
Reported (GAAP)
$
115
$
54
$
60
$
0.23
$
14
$
22
$
(9
)
$
(0.04
)
Restructuring and Other Charges (a)
3
1
2
0.01
52
12
40
0.15
Acquisition, Divestiture and Integration
Related Costs (b)
58
(7
)
65
0.26
31
(7
)
38
0.15
Losses (Gains) on Business Disposals
(c)
—
—
—
—
14
3
11
0.04
Entity Realignment Costs (d)
1
—
1
—
—
—
—
—
Strategic Initiatives Costs (e)
4
1
3
0.01
13
3
10
0.04
Regulatory Costs (f)
35
4
31
0.12
5
1
4
0.01
Other (g)
—
—
—
—
(5
)
(1
)
(4
)
(0.02
)
Adjusted (Non-GAAP)
$
216
$
53
$
162
$
0.63
$
124
$
33
$
90
$
0.35
Reconciliation of Adjusted
(Non-GAAP) EPS ex. Amortization
First Quarter
(DOLLARS AND SHARE AMOUNTS IN
MILLIONS)
2024
2023
Numerator
Adjusted (Non-GAAP) Net Income
$
162
$
90
Amortization of Acquisition related
Intangible Assets
168
171
Tax impact on Amortization of Acquisition
related Intangible Assets (h)
41
39
Amortization of Acquisition related
Intangible Assets, net of tax (k)
127
132
Adjusted (Non-GAAP) Net Income ex.
Amortization
$
289
$
222
Denominator
Weighted average shares assuming dilution
(diluted)
256
255
Adjusted (Non-GAAP) EPS ex.
Amortization
$
1.13
$
0.87
(a)
For 2024, represents costs related to
lease impairment and severance as part of the Company's
restructuring efforts. For 2023, represents costs primarily related
to severance as part of the Company's restructuring efforts.
(b)
For 2024 and 2023, primarily represents
costs related to the Company's actual and planned acquisitions and
divestitures and integration related activities primarily for
N&B. These costs primarily consisted of external consulting
fees, professional and legal fees and salaries of individuals who
are fully dedicated to such efforts. For 2024 and 2023, tax
expenses for business divestiture costs included establishments of
deferred tax liabilities related to planned sales of
businesses.
For the three months ended March 31, 2024,
business divestiture and integration related costs were
approximately $56 million and $2 million, respectively. For the
three months ended March 31, 2023, business divestiture and
integration related costs were approximately $21 million and $10
million, respectively.
(c)
Represents losses recognized primarily as
part of the liquidation of a business in Russia in preparation for
the sale of the portion of the Savory Solutions business.
(d)
Represents costs related to the Company's
entity realignment project to optimize the structure of holding
companies, primarily consulting fees.
(e)
Represents costs related to the Company's
strategic assessment and business portfolio optimization efforts
and reorganizing the Global Business Services Centers, primarily
consulting fees.
(f)
Represents costs primarily related to
legal fees incurred and provisions recognized for the ongoing
investigations of the fragrance businesses.
(g)
For 2024, represents the net impact of
costs related to severance, including accelerated stock
compensation expense, for a certain executive who has separated
from the Company and gains from sale of assets. For 2023,
represents gains from sale of assets.
(h)
The income tax effects of non-GAAP
adjustments are calculated based on the applicable statutory tax
rate for the relevant jurisdiction, except for those items which
are non-taxable or subject to valuation allowances for which the
tax expense (benefit) was calculated at 0%. The tax benefit for
amortization is calculated in a similar manner as the tax effects
of the non-GAAP adjustments.
(i)
For 2024, reported and adjusted net income
are each decreased by income attributable to non-controlling
interest of $1 million. For 2023, reported net loss is increased by
income attributable to non-controlling interest of $1 million, and
adjusted net income is decreased by income attributable to
non-controlling interest of $1 million.
(j)
The sum of these items does not foot due
to rounding.
(k)
Represents all amortization of intangible
assets acquired in connection with acquisitions, net of tax.
International Flavors & Fragrances
Inc. Debt Covenants (Amounts in millions)
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Credit
Adjusted EBITDA to Net Loss
(DOLLARS IN
MILLIONS)
Twelve Months Ended March 31,
2024
Net loss
$
(2,498
)
Interest expense(1)
363
Income taxes
77
Depreciation and amortization
1,144
Specified items(2)
2,946
Non-cash items(3)
130
Credit Adjusted EBITDA
$
2,162
_______________________
(1)
Certain adjustments were made to interest
expense associated with our cash pooling arrangements for the
second through fourth quarters of 2023.
(2)
Specified items consisted of restructuring
and other charges, impairment of goodwill, acquisition, divestiture
and integration related costs, entity realignment costs, strategic
initiatives costs, regulatory costs and other costs that are not
related to recurring operations.
(3)
Non-cash items consisted of losses (gains)
on sale of assets, losses on business disposals, gain on China
facility relocation, write-down of inventory related to Locust Bean
Kernel and stock-based compensation.
Net Debt to Total Debt
(DOLLARS IN
MILLIONS)
March 31, 2024
Total debt(1)
$
10,324
Adjustments:
Cash and cash equivalents(2)
764
Net debt
$
9,560
_______________________
(1)
Total debt used for the calculation of net
debt consisted of short-term debt, long-term debt, short-term
finance lease obligations and long-term finance lease
obligations.
(2)
Cash and cash equivalents included
approximately $32 million currently in Assets held for sale on the
Consolidated Balance Sheets.
International Flavors & Fragrances
Inc. Comparable Reportable Segment Performance
(Amounts in millions) (Unaudited)
The following information and schedule provides
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedule is
not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Three Months Ended March
31,
2024
2023
Net Sales
Nourish(1)
$
1,496
$
1,515
Health & Biosciences
531
513
Scent(2)
645
588
Pharma Solutions
227
253
Consolidated
$
2,899
$
2,869
Segment Adjusted Operating
EBITDA
Nourish(1)
$
216
$
192
Health & Biosciences
159
131
Scent(2)
157
101
Pharma Solutions
46
59
Total
578
483
Depreciation & Amortization
(278
)
(276
)
Interest Expense
(83
)
(100
)
Other Expense, net
(1
)
(17
)
Restructuring and Other Charges
(3
)
(52
)
Acquisition, Divestiture and Integration
Related Costs
(58
)
(31
)
Entity Realignment Costs
(1
)
—
Strategic Initiatives Costs
(4
)
(13
)
Regulatory Costs
(35
)
(5
)
Other
—
5
Impact of Business Divestitures(3)
—
20
Income Before Taxes
$
115
$
14
Segment Adjusted Operating EBITDA
Margin
Nourish
14.4
%
12.7
%
Health & Biosciences
29.9
%
25.5
%
Scent
24.3
%
17.2
%
Pharma Solutions
20.3
%
23.3
%
Consolidated
19.9
%
16.8
%
______________________
(1)
Nourish sales and segment adjusted
operating EBITDA information for the three months ended March 31,
2023 exclude the results of the portion of the Savory Solutions
business and Sonarome business that were divested to present fully
comparable scenarios of the Company. The divestitures were
completed on May 31, 2023 and December 1, 2023, respectively.
(2)
Scent sales and segment adjusted operating
EBITDA information for the three months ended March 31, 2023
exclude the results of the Flavor Specialty Ingredients business
that was divested to present fully comparable scenarios of the
Company. The divestiture was completed on August 1, 2023.
(3)
Information related to the amounts exclude
the results of the portion of the Savory Solutions business, Flavor
Specialty Ingredients business and Sonarome business that were
divested in the second quarter of 2023 (May 31, 2023), third
quarter of 2023 (August 1, 2023) and fourth quarter of 2023
(December 1, 2023), respectively, to present fully comparable
scenarios of the Company.
International Flavors &
Fragrances Inc.
GAAP to Non-GAAP
Reconciliation
Comparable Foreign Exchange
Impact
(Unaudited)
Q1
Nourish
Sales
Segment Adjusted Operating
EBITDA
Segment Adjusted Operating
EBITDA Margin
% Change - Reported
(9)%
4%
1.8%
Portfolio Impact
8%
9%
(0.1)%
% Change - Comparable
(1)%
13%
1.7%
Currency Impact
4%
% Change - Currency Neutral
3%
Q1 Health &
Biosciences
Sales
Segment Adjusted Operating
EBITDA
Segment Adjusted Operating
EBITDA Margin
% Change - Reported
4%
21%
4.4%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
4%
21%
4.4%
Currency Impact
2%
% Change - Currency Neutral
6%
Q1 Scent
Sales
Segment Adjusted Operating
EBITDA
Segment Adjusted Operating
EBITDA Margin
% Change - Reported
6%
50%
7.0%
Portfolio Impact
4%
6%
0.1%
% Change - Comparable
10%
55%
7.1%
Currency Impact
6%
% Change - Currency Neutral
16%
Q1 Pharma
Solutions
Sales
Segment Adjusted Operating
EBITDA
Segment Adjusted Operating
EBITDA Margin
% Change - Reported
(10)%
(22)%
(3.0)%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
(10)%
(22)%
(3.0)%
Currency Impact
(1)%
% Change - Currency Neutral
(11)%
Q1
Consolidated
Sales
Adjusted Operating
EBITDA
Adjusted Operating EBITDA
Margin
% Change - Reported
(4)%
15%
3.3%
Portfolio Impact
5%
5%
(0.2)%
% Change - Comparable
1%
20%
3.1%
Currency Impact
4%
% Change - Currency Neutral
5%
_______________________ Note: The sum of these items may not
foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506932231/en/
Media Relations: Paulina Heinkel 332.877.5339
Media.request@iff.com Investor Relations: Michael Bender
212.708.7263 Investor.Relations@iff.com
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