Sales +5%; Adjusted Operating Profit +8%; Adjusted EPS +11%, all
on a currency neutral basis
Regulatory News:
International Flavors & Fragrances Inc. (NYSE:IFF) (Euronext
Paris:IFF) reported financial results and strategic achievements
for the fourth quarter and full year ended January 1, 2016.
Management Commentary
“2015 was a successful year for IFF as we embarked on a new
chapter in our 126 year journey of discovery and pioneering
firsts,” said Chairman and CEO Andreas Fibig. “I am pleased with
the progress we’ve made in terms of our financial performance and
strategic execution. From a strategic perspective, since the
initiation of our Vision 2020 strategy we believe we have taken the
right steps in our ambition to build greater differentiation,
accelerate profitable growth and increase shareholder value. In the
Middle East & Africa, one of our targeted areas of focus in the
emerging markets, we saw a 14% increase for 2015 with strong growth
across flavors and fragrances on a currency neutral basis. In Latin
America, Flavors grew 16% on a currency neutral basis, driven in
part by key customers and our proprietary delivery system. We also
fortified our market share in North America – achieving the number
two position in Flavors – with the successful acquisition of Ottens
Flavors.
“Delivery systems across both flavors and fragrances continued
to drive solid results. In Fragrances, encapsulation-related sales
grew mid-teens, led by Fabric Care and Home Care, while in Flavors,
sweetness & savory modulation portfolio sales grew strong
double-digits, led by Savory, Dairy and Beverage. We also
commercialized four captive fragrance ingredients in 2015 –
doubling IFF’s historical annual output. These accomplishments are
a testament to our continued commitment to advance our innovation
and R&D capabilities.
“To support our goal to become our “customers’ partner of
choice” we launched a new branding initiative by unveiling our new
purpose statement, visual identity and refreshed tone of voice to
ensure all our current and future customers understand our vision,
imagination and innovative focus. We were also recognized by
several customers to be among their top performing business
partners and received several innovation awards for IFF | Lucas
Meyer Cosmetics. We also made significant progress working towards
creating a sustainable future. In 2015, we reached a series of
sustainability achievements, including surpassing our initial 2020
water reduction goal of 25%, being recognized on the CDP Climate
“A” List, receiving “For Life” social responsibility certification
for Turkish Rose, Patchouli, Basil and Vetiver, and being first in
our industry to join the Together for Sustainability sustainable
sourcing initiative.
“In terms of strengthening and expanding our portfolio, M&A,
partnerships and collaborations have become a more pronounced
element of our strategy. Over the course of the year, we
successfully completed the acquisition of Ottens Flavors and Lucas
Meyer Cosmetics. We also established collaborations with Duke
University for flavor modulation, the University of Liverpool for
delivery systems in fragrances, and announced a partnership with
Vapor Communications to pioneer the future of digital scent.
“Financially, we delivered solid growth across all our key
financial metrics with sales improving 5%, adjusted operating
profit growing 8%, and adjusted EPS increasing 11%, all on a
currency neutral basis. In the fourth quarter, we experienced
softness in our year-over-year organic top-line growth, which
included an additional week of sales in 2014. In addition, our
performance was also impacted by increased economic pressures in
key emerging markets, a more pronounced portfolio rationalization
by one of our largest Fragrance Ingredients customers, and efforts
by some of our larger customers to manage their inventories.
Despite these fourth quarter challenges, we delivered positive
currency neutral sales growth, including M&A, and solid
improvements in profitability and EPS.
“As we look ahead to 2016, we are preparing ourselves for even
more challenging conditions given a higher level of economic
uncertainty and the more cautious volume outlook of consumer
packaged goods companies. We remain confident in our ability to
navigate through these uncertain times as we strive to deliver
between 3.5% and 4.5% sales growth, between 5% and 7% adjusted
operating profit growth and between 6.5% and 8.5% adjusted EPS
growth, all on a currency neutral basis. Inclusive in our guidance
is approximately 1.5% contribution related to our two
acquisitions.”
Full Year 2015 Consolidated Summary: Growth vs. Prior Year
¹
Adjusted Currency
Neutral(Non-GAAP)
Adjusted (Non-GAAP) Reported (GAAP) Sales
OperatingProfit
EPS Sales
OperatingProfit
EPS Sales
OperatingProfit
EPS Consolidated 5% 8% 11% (2)% 2% 3% (2)% (2)% 0%
Acquisition Impact 2% 2% 2% 2% 2% 1%
¹ Schedules at the end of this release contain reconciliations
of reported GAAP to non-GAAP metrics.
Full Year 2015 Strategic Highlights: Currency Neutral
Performance
Win Where We Compete: achieve market leadership position
in key markets, categories & customers
- Middle East and Africa sales +14%
- China Fragrance compounds sales were up
high-single-digits
- Home Care grew high-single-digits
- Flavors Latin America sales +16%
- Became the #2 Flavors company in North
America with the acquisition of Ottens Flavors
Innovating Firsts: strengthen position and drive
differentiation in priority R&D platforms
- Commercialized four captive fragrance
ingredients
- Encapsulation-related sales grew
mid-teens vs. year-ago led by Fabric Care & Home Care
- Developed new capsule to expand
encapsulation technology into personal care categories
- Sweetness and savory modulation
portfolio sales grew strong double-digits
- Commercialized two natural taste
modulators to build consumer-preferred products
- Flavors proprietary delivery system
sales posted strong growth across all regions and all
categories
Become Our Customers’ Partner of Choice: attain
commercial excellence
- Completed branding initiative
showcasing IFF’s vision, imagination and innovation
- IFF recognized by several customers;
named top-performing business partner by a customer and received
several innovation awards for IFF | Lucas Meyer Cosmetics
- Surpassed initial 2020 water reduction
goal of 25%; reset goal to 50% by 2020
- Recognized on the CDP Climate “A” List
– received a perfect score of 100 in disclosure
- “For Life” social responsibility
certification received by IFF | LMR for Turkish Rose, Patchouli,
Basil, and Vetiver
- First in industry to join Together for
Sustainability sustainable sourcing initiative
- Committed to 100% renewable energy by
joining RE 100
Strengthen and Expand the Portfolio: pursue value
creation through collaborations & acquisitions
- Strengthened Flavors North America with
the acquisition of Ottens Flavors: Sales grew double-digits with
strongest growth coming from regional customers
- Expanded into Cosmetic Actives with the
acquisition of Lucas Meyer Cosmetics which achieved solid sales
growth on a standalone basis
- Established collaborations with Duke
University for flavor modulation and the University of Liverpool
for delivery systems in fragrances
Announced collaboration with Vapor Communications to pioneer the
future of digital scent
Full Year 2015 Segment Summary: Growth vs. Prior Year
Reported
(GAAP) Currency Neutral (Non-GAAP) Sales
SegmentProfit
Sales
SegmentProfit
Fragrances: (3)% (4)% 4% 6% Acquisition Impact 1% 2% 1% 2%
Flavors: (1)% (4)% 6% 4% Acquisition Impact 3%
1% 3% 2%
Fragrances Business Unit
- Currency neutral sales improved 4%,
including approximately 1 percentage point related to the
acquisition of Lucas Meyer Cosmetics. Overall growth was led by a
high-single-digit increase in EAME, a mid-single-digit improvement
in Latin America and low-single-digit growth in Greater Asia.
- Fine Fragrances increased 1% as EAME
grew 6% due to strong new wins.
- Consumer Fragrances improved 5% led by
double-digit growth in Fabric Care, high-single-digit growth in
Home Care and a mid-single-digit increase in Hair Care. On a
geographic basis, all regions delivered growth led by double-digit
growth in Latin America and high-single-digit growth in EAME, both
on a currency neutral basis.
- Fragrance Ingredients grew 2% against a
very strong 18% growth rate reported in the year-ago period.
Performance was primarily driven by the contribution of sales
related to Lucas Meyer Cosmetics.
- Fragrances currency neutral segment
profit improved approximately 6% driven by sales growth, gross
margin expansion, the benefits from cost and productivity
initiatives and lower incentive compensation expense. Segment
profit margin on a currency neutral basis increased 40 basis points
to 20.4%.
- On a reported basis, sales decreased
3%, or $51.2 million, to $1.6 billion. Fragrances segment profit
decreased 4%, or $13.7 million, to $321.8 million.
Flavors Business Unit
- Currency neutral sales grew 6%,
including approximately 3 percentage points related to the
acquisition of Ottens Flavors. All categories and regions delivered
broad-based growth, with the strongest results in Beverage and
Latin America.
- EAME improved 4% as all categories
reported growth, led by a mid-single-digit increase in Savory and
mid-single-digit growth in Beverage. Within the EAME region, the
Middle East and Africa grew fastest, improving 14%, driven by
strong new wins.
- North America improved 11%, reflecting
the contribution of additional sales related to the acquisition of
Ottens Flavors, double-digit growth in Dairy and mid-single-digit
growth in Sweet.
- Latin America increased 16% as all
categories reported growth; Beverage, Savory and Dairy all reported
double-digit growth.
- Greater Asia grew 2% led by new win
performance in Savory, Dairy and Beverage.
- Flavors currency neutral segment profit
improved approximately 4% as sales growth and productivity
initiatives more than offset higher raw material costs. Segment
profit margin on a currency neutral basis decreased 60 basis points
to 22.1% in the prior year quarter.
- On a reported basis, sales decreased
1%, or $14.1 million, to $1.44 billion. Flavors segment profit
decreased 4% to $318.5 million from $331.3 million.
Fourth Quarter 2015 Segment Summary: Growth vs. Prior
Year
Reported
(GAAP) Currency Neutral (Non-GAAP) Sales
SegmentProfit
Sales
SegmentProfit
Fragrances: (5)% (9)% 1% 1% Acquisition Impact 3% 5% 4% 5%
Flavors: (6)% (15)% 1% (9)% Acquisition Impact 4% 2%
4% 2%
Total Company: (5)% (15)% 1% 3% Acquisition
Impact 4% 4% 4% 4%
Fragrances Business Unit
- Currency neutral sales increased 1%
driven primarily by a 4 percentage point contribution from the
acquisition of Lucas Meyer Cosmetics and mid-single-digit growth in
EAME.
- Fine Fragrances posted its strongest
growth of 2015, increasing 3% versus the year-ago period. Both EAME
and Latin America delivered 5% growth, principally driven by very
strong new win performance.
- Consumer Fragrances declined 2% against
the strong 8% growth reported in the prior year period. Both EAME
and Greater Asia posted modest gains while North America was
challenged by the timing of order patterns.
- Fragrance Ingredients grew 9% driven by
the contribution of sales relating to IFF | Lucas Meyer Cosmetics.
On a standalone basis, IFF | Lucas Meyer Cosmetics continued to
grow double-digits.
- Fragrances currency neutral segment
profit increased approximately 1%, as benefits from cost and
productivity initiatives, the contribution of acquisitions and
lower incentive compensation expense drove results.
- On a reported basis, sales decreased 5%
to $381.4 million in the fourth quarter compared with $399.8
million in the prior year quarter. Fragrances segment profit
decreased 9%, or $6.8 million, to $69.3 million.
Flavors Business Unit
- Currency neutral sales grew 1%, driven
primarily by a 4 percentage point contribution related to the
acquisition of Ottens Flavors as well as solid growth in
Dairy.
- EAME decreased 4% as low-single-digit
growth in Dairy was offset by Beverage softness. Within EAME,
Africa and the Middle East improved 15%.
- North America grew 8% reflecting
additional sales related to the acquisition of Ottens Flavors as
well as low-single-digit growth in Dairy and Sweet.
- Latin America increased 8% led by
double-digit growth in Beverage, Savory and Dairy.
- Greater Asia decreased 3% as growth in
Indonesia, India, Singapore and South Korea was offset by softness
in China.
- Flavors currency neutral segment profit
decreased approximately 9% as productivity initiatives, the benefit
of acquisitions, and lower incentive compensation were more than
offset by lower sales, as well as higher manufacturing expenses and
amortization relating to acquisitions.
- On a reported basis, sales decreased 6%
going to $334.3 million from $356.3 million in the prior year
quarter. Flavors segment profit decreased 15% to $61.9 million from
$72.6 million.
Q4 2015 Profit Improvement Initiative
During the fourth quarter, the Company established a series of
initiatives that are expected to streamline our management
structure, simplify decision-making and accountability, better
leverage and align our capabilities across the organization and
improve the efficiency of our global manufacturing and operations
network. As a result, the Company recorded a pre-tax
charge of approximately $8 million to cover severance and related
costs associated with expected terminations, a portion of which are
subject to consultation processes. The Company expects
to realize pre-tax savings of $7-9 million once fully implemented
in the second half of 2017, half of which is expected to be
realized in 2016.
Separately, the Company recorded a charge of approximately $7
million associated with the acceleration from 2016 to 2015 of
contingent consideration payments from the Aromor acquisition that
were triggered by certain of the affected positions noted
above.
FY 2016 Guidance: Growth vs. Prior Year
The Company’s full year 2016 guidance:
Currency Neutral
FX Impact Reported Organic M&A
Total
Sales 2.0 - 3.0% ~1.5% 3.5 - 4.5%
~(2.5)% 1.0 - 2.0%
Operating Profit
3.5 - 5.5%
~1.5%
5.0 - 7.0%
~(5)%
0.0 - 2.0%
EPS
5.0 - 7.0%
~1.5%
6.5 - 8.5%
~(5)%
1.5 - 3.5%
A copy of the Company’s Annual Report on Form 10-K will be
available on its website at www.iff.com or at sec.gov by March 1,
2016.
Audio Webcast
A live webcast to discuss the Company’s fourth quarter and full
year 2015 financial results will be held on February 11, 2016, at
10:00 a.m. EST. Investors may access the webcast and accompanying
slide presentation 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
This press release includes “forward-looking statements” under
the Federal Private Securities Litigation Reform Act of 1995,
including statements regarding our outlook for fiscal year 2016 and
beyond, expected returns from our recent acquisitions and
partnerships, our ability to accelerate growth and maximize
shareholder value and expected impact and savings from our
profitability improvement plan. These forward-looking statements
are qualified in their entirety by cautionary statements and risk
factor disclosures contained in the Company’s Securities and
Exchange Commission filings, including the Company’s Annual Report
on Form 10-K filed with the Commission on March 2, 2015. The
Company wishes to caution readers that certain important factors
may have affected and could in the future affect the Company’s
actual results and could cause the Company’s actual results for
subsequent periods to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.
With respect to the Company’s expectations regarding these
statements, such factors include, but are not limited to: (1) the
Company’s ability to implement its Vision 2020 strategy; (2) the
Company’s ability to successfully identify and complete
acquisitions in line with its Vision 2020 strategy, and to realize
the anticipated benefits of those acquisitions; (3) the Company’s
ability to effectively complete in its market, and to successfully
develop new and competitive products that appeal to its customers
and consumers; (4) changes in consumer preferences and demand for
the Company’s products or a decline in consumer confidence and
spending; (5) the Company’s ability to benefit from its investments
and expansion in emerging markets; (6) the impact of currency
fluctuations or devaluations in the principal foreign markets in
which it operates, including the devaluation of the Euro; (7) the
economic and political risks associated with the Company’s
international operations, including current challenging economic
conditions in China and Latin America; (8) the impact of any
failure of the Company’s key information technology systems or a
breach of information security; (9) the Company’s ability to
attract and retain talented employees; (10) the Company’s
compliance with environmental protection laws; (11) the Company’s
ability to realize expected cost savings and efficiencies from its
profitability improvement initiative and other optimization
activities; (12) volatility and increases in the price of raw
materials, energy and transportation; (13) fluctuations in the
quality and availability of raw materials; (14) the impact of a
disruption in the Company’s supply chain or its relationship with
its suppliers; (15) any adverse impact on the availability,
effectiveness and cost of the Company’s hedging and risk management
strategies; (16) the Company’s ability to successfully manage it
working capital and inventory balances; (17) the effect of legal
and regulatory proceedings, as well as restrictions imposed on the
Company, its operations or its representatives by U.S. and foreign
governments; (18) adverse changes in federal, state, local and
international tax legislation or policies and adverse results of
tax audits, assessments, or disputes; and (19) changes in market
conditions or governmental regulations relating to our pension and
postretirement obligations. New risks emerge from time to time and
it is not possible for management to predict all such risk factors
or to assess the impact of such risks on the Company’s business.
Accordingly, the Company undertakes no obligation to publicly
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Meet IFF
International Flavors & Fragrances Inc. (NYSE:IFF) (Euronext
Paris: IFF) is a leading innovator of sensorial experiences that
move the world. At the heart of our company, we are fueled by a
sense of discovery, constantly asking “what if?”. That passion for
exploration drives us to co-create unique products that consumers
taste, smell, or feel in fine fragrances and beauty, detergents and
household goods, as well as beloved foods and beverages. Our 6,800
team members globally take advantage of leading consumer insights,
research and development, creative expertise, and customer intimacy
to develop differentiated offerings for consumer products. Learn
more at www.iff.com, Twitter , Facebook, Instagram, and
LinkedIn.
International Flavors & Fragrances
Inc.
Consolidated Income Statement
(Amounts in thousands except per
diluted share data)
(Unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2015
2014
%Change
2015 2014
%Change
Net sales $ 715,649 $ 756,082 (5 )% $ 3,023,189 $ 3,088,533
(2 )% Cost of goods sold 402,493 428,102 (6 )%
1,671,590 1,726,383 (3 )% Gross margin 313,156
327,980 (5 )% 1,351,599 1,362,150 (1 )% Research and development
57,376 62,005 (7 )% 246,101 253,640 (3 )% Selling and
administrative 137,527 135,027 2 % 520,087 514,891 1 %
Restructuring and other charges 7,764 386 1,911 %
7,594 1,298 485 % Operating Profit 110,489
130,562 (15 )% 577,817 592,321 (2 )% Interest expense 11,705 12,019
(3 )% 46,062 46,067 (0 )% Other (income) expense, net 6,499
954 581 % 3,184 (2,807 ) (213 )% Pretax income
92,285 117,589 (22 )% 528,571 549,061 (4 )% Income taxes
20,700 27,454 (25 )% 116,906 134,518
(13 )% Net income $ 71,585 $ 90,135 (21 )% $ 411,665 $ 414,543
(1 )% Earnings per share - basic $ 0.89 $ 1.11 $ 5.09
$ 5.09 Earnings per share - diluted $ 0.89 $ 1.10 $ 5.06 $ 5.06
Average shares outstanding Basic 79,978 80,810 80,449 80,936
Diluted 80,400 81,312 80,891 81,494
International Flavors & Fragrances
Inc.
Condensed Consolidated Balance
Sheet
(Amounts in thousands)
(Unaudited)
December 31, 2015 December 31, 2014 Cash & cash
equivalents $ 181,988 $ 478,573 Receivables 537,896 493,768
Inventories 592,703 568,729 Other current assets 136,451
168,957 Total current assets 1,449,038 1,710,027
Property, plant and equipment, net 732,794 720,268 Goodwill and
other intangibles, net 1,247,393 752,041 Other assets
284,639 312,285 Total assets $ 3,713,864 $ 3,494,621
Bank borrowings and overdrafts, and current portion of long-term
debt $ 132,349 $ 8,090 Other current liabilities 610,514
510,718 Total current liabilities 742,863 518,808
Long-term debt 937,844 934,232 Non-current liabilities 444,447
518,892 Shareholders' equity 1,588,710
1,522,689 Total liabilities and shareholders' equity $ 3,713,864 $
3,494,621
International Flavors & Fragrances
Inc.
Consolidated Statement of Cash
Flows
(Amounts in thousands)
(Unaudited)
Twelve Months Ended December 31, 2015
2014
Cash flows from operating
activities: Net income $ 411,665 $ 414,543 Adjustments
to reconcile to net cash provided by operations: Depreciation and
amortization 89,597 89,354 Deferred income taxes 13,043 23,350 Gain
on disposal of assets (622 ) (3,768 ) Stock-based compensation
23,160 22,648 Pension contributions (67,897 ) (43,982 ) Changes in
assets and liabilities, net of acquisitions Trade receivables
(91,712 ) (2,635 ) Inventories (37,628 ) (40,042 ) Accounts payable
94,522 19,403 Accruals for incentive compensation (17,399 ) (30,947
) Other current payables and accrued expenses 20,926 (30,982 )
Changes in other assets/liabilities, net (4,077 )
101,448 Net cash provided by operating activities
433,578 518,390
Cash flows from
investing activities: Cash paid for acquisition, net of
cash received (including $15 million of contingent consideration
related to the Aromor acquisition in 2014) (493,424 ) (102,500 )
Additions to property, plant and equipment (101,030 ) (143,182 )
Proceeds from disposal of assets 4,302 3,295 Maturity of net
investment hedges 12,128 3,304 Proceeds from life insurance
contracts 868 17,750 Net cash used in
investing activities (577,156 ) (221,333 )
Cash flows from financing activities: Cash dividends paid to
shareholders (158,870 ) (133,239 ) Net change in revolving credit
facility borrowings and overdrafts 136,826 8,332 Deferred financing
costs — (1,023 ) Proceeds from issuance or drawdown of long-term
debt — 3,609 Proceeds from issuance of stock under stock plans 886
1,864 Excess tax benefits on stock-based payments 12,055 6,330
Purchase of treasury stock (122,193 ) (88,203 ) Net
cash used in financing activities (131,296 ) (202,330
) Effect of exchange rates changes on cash and cash equivalents
(21,711 ) (21,659 )
Net change in cash and cash equivalents
(296,585 ) 73,068
Cash and cash equivalents at beginning of
year 478,573 405,505
Cash and
cash equivalents at end of period $ 181,988 $ 478,573
International Flavors & Fragrances
Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, Twelve
Months Ended December 31, 2015 2014
2015 2014
Net Sales
Flavors $ 334,262 $ 356,329 $ 1,442,951 $ 1,457,055 Fragrances
381,387 399,753 1,580,238
1,631,478
Consolidated 715,649 756,082 3,023,189
3,088,533
Segment Profit Flavors 61,931 72,641
318,476 331,257 Fragrances 69,348 76,194 321,764 335,447 Global
Expenses (1,115 ) (16,259 ) (28,180 ) (65,443 ) Restructuring and
other charges, net (7,764 ) (386 ) (7,594 ) (1,298 ) Operational
improvement initiative costs (274 ) (1,628 ) (1,115 ) (7,642 )
Acquisition related costs (4,445 ) — (18,342 ) — Accelerated
contingent consideration (7,192 ) —
(7,192 ) —
Operating profit 110,489 130,562
577,817 592,321 Interest Expense (11,705 ) (12,019 ) (46,062
) (46,067 ) Other (expense) income, net (6,499 ) (954
) (3,184 ) 2,807
Income before taxes $
92,285 $ 117,589 $ 528,571 $ 549,061
Operating Margin Flavors 18.5 % 20.4 % 22.1 % 22.7 %
Fragrances 18.2 % 19.1 % 20.4 % 20.6 % Consolidated 15.4 % 17.3 %
19.1 % 19.2 %
International Flavors & Fragrances
Inc.
Sales Performance by Region and
Category
(Unaudited)
Fourth Quarter
2015 vs. 2014 Percentage Change in Sales by Region of
Destination Fine
ConsumerFragrances(*)
Ingredients Total Frag.
Flavors Total North
America Reported -3% -9% 7%
-4% 8% 2% EAME Reported
-7% -11% 1% -7% -15% -10%
Currency Neutral 5% 1% 11% 4%
-4% 1% Latin America Reported
-3% -7% 7% -5% -2% -4%
Currency Neutral 5% -3% 7% -1%
8% 2% Greater Asia Reported
-14% -2% 7% -1% -9% -6%
Currency Neutral -12% 1% 10% 2%
-3% -1% Total Reported
-5% -7% 4% -5% -6% -5%
Currency Neutral 3% -2%
9% 1% 1% 1%
Full Year 2015 vs. Full Year 2014
Percentage Change in Sales by Region of Destination
Fine
ConsumerFragrances
Ingredients Total Frag.
Flavors Total North America
Reported -5% 1% -7% -2%
11% 4% EAME Reported -9%
-8% -7% -8% -11% -9% Currency
Neutral 6% 8% 4% 7% 4%
5% Latin America Reported -10%
7% 1% 2% 7% 4% Currency
Neutral -5% 10% 3% 6% 16%
9% Greater Asia Reported -2%
0% 3% 0% -3% -2% Currency
Neutral -1% 2% 8% 3% 2%
2% Total Reported -8% -1%
-5% -3% -1% -2% Currency Neutral
1% 5% 2% 4%
6% 5%
Currency neutral growth is calculated by translating prior year
sales at the exchange rates used for the corresponding 2015
period.
International Flavors & Fragrances
Inc.
GAAP to Non-GAAP Reconciliation
Foreign Exchange Impact
(Unaudited)
Q4
Consolidated
Sales
OperatingProfit
EPS % Change - Reported (GAAP) -5%
-15% -20% Items Impacting Comparability
0% 13% 18%
% Change - Adjusted (Non-GAAP) -5%
-2% -2% Currency Impact 6% 5% 11%
% Change -
Currency Neutral (Adjusted) 1% 3%
9%
Q4
Flavors
Sales
SegmentProfit
% Change - Reported (GAAP) -6% -15% Currency
Impact 7% 6%
% Change - Currency Neutral 1%
-9%
Q4
Fragrances
Sales
SegmentProfit
% Change - Reported (GAAP) -5% -9% Currency
Impact 6% 10%
% Change - Currency Neutral 1%
1%
FY
Consolidated
Sales
OperatingProfit
EPS % Change - Reported (GAAP) -2%
-2% 0% Items Impacting Comparability 0%
4% 3%
% Change - Adjusted (Non-GAAP) -2% 2%
3% Currency Impact 7% 6% 8%
% Change - Currency Neutral
(Adjusted) 5% 8% 11%
FY
Flavors
Sales
SegmentProfit
% Change - Reported (GAAP) -1% -4% Currency
Impact 7% 8%
% Change - Currency Neutral 6%
4%
FY
Fragrances
Sales
SegmentProfit
% Change - Reported (GAAP) -3% -4% Currency
Impact 7% 10%
% Change - Currency Neutral 4%
6%
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Fourth quarter 2015 Items Impacting
Comparability
Reported (GAAP)
Restructuring
and OtherCharges
Operational
ImprovementInitiativeCosts
AcceleratedContingentConsideration
AcquisitionrelatedCosts
Adjusted(Non-GAAP)
Net Sales 715,649 Cost of Goods Sold
402,493 (274 ) (b) (3,515 ) (d)
Gross Profit 313,156
274 3,515
316,945 Research and Development 57,376 Selling
and Administrative 137,527 (7,192 ) (c) (930 ) (d)
129,405
RSA Expense 194,903 Restructuring and other charges, net 7,764
(7,764 ) (a)
Operating Profit 110,489 7,764 274 7,192
4,445
130,164 Interest Expense 11,705 Other (Income)
expense, net 6,499 Income before taxes 92,285 7,764 274 7,192 4,445
111,960 Taxes on Income 20,700 2,362 69 — 4,346 27,477
Net Income 71,585
5,402 205
7,192 99
84,483 Earnings per
share - diluted $ 0.89 $ 0.07 $ — $ 0.09 $ —
$ 1.05
(a)
Restructuring costs related to Q4 2015
Profit Improvement Initiative.
(b)
Related to plant closings in Europe and
partial closing in Asia.
(c)
Represents the acceleration of the
contingent consideration payment related to the Aromor
acquisition.
(d)
Transaction costs related to acquisitions
(Ottens Flavors and Lucas Meyer Cosmetics) as well as expense
related to the fair value step up of inventory for Lucas Meyer.
*
The Company tracks the amount of
amortization recorded on recent acquisitions in order to monitor
its progress with respect to its Vision 2020 goals. The following
amounts were recorded with respect to recent acquisitions:
$2.9M.
Fourth quarter 2014 Items Impacting
Comparability
Reported(GAAP)
Restructuringand
OtherCharges
OperationalImprovementInitiativeCosts
Spanish Tax
Gain on Saleof Asset
Adjusted(Non-GAAP)
Net Sales 756,082 Cost of Goods Sold 428,102
(1,628 ) (b)
Gross Profit 327,980 1,628
329,608 Research and Development 62,005 Selling and
Administrative 135,027 RSA Expense 197,032 Restructuring and other
charges, net 386 (386 ) (a)
Operating Profit 130,562
386 1,628
132,576 Interest Expense 12,019 Other (Income)
expense, net 954 (723 ) (d) Income before taxes 117,589 386 1,628
(723 )
118,880 Taxes on Income 27,454 135 410 3,825 (c) (253
) 31,571
Net Income 90,135
251 1,218
(3,825 )
(470 )
87,309 Earnings
per share - diluted $ 1.10 $ — (e) $ 0.01 (e) $
(0.05 ) (e)
$ — (e)
$ 1.07
(a)
Costs related to the Fragrance Ingredients
Rationalization
(b)
Related to a plant closing, partial
closings and other organizational realignments, principally in
Europe and Asia
(c)
Related to favorable ruling on 2001
dividend withholding case
(d)
Represents gain on the sale of a
non-operating asset
(e)
The sum of these items do not foot due to
rounding
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Full year 2015 Items
Impacting Comparability
Reported(GAAP)
Restructuringand
OtherCharges
OperationalImprovementInitiative
Costs
AcceleratedContingentConsideration
Acquisitionrelated Costs
TaxSettlements
Adjusted(Non-GAAP)
Net Sales 3,023,189 Cost of Goods Sold
1,671,590 (1,115 ) (b) (6,825 ) (d)
Gross Profit
1,351,599 1,115 6,825
1,359,539 Research and
Development 246,101 Selling and Administrative 520,087 (7,192 ) (c)
(11,517 ) (d)
501,378 RSA Expense 766,188 Restructuring and
other charges, net 7,594 (7,594 ) (a)
Operating Profit
577,817 7,594 1,115 7,192 18,342
612,060 Interest
Expense 46,062 Other (Income) expense, net 3,184 Income before
taxes 528,571 7,594 1,115 7,192 18,342
562,814 Taxes on
Income 116,906 2,302 279 — 6,225 10,478 (e) 136,190
Net
Income 411,665 5,292
836
7,192 12,117
(10,478 )
426,624 Earnings per share - diluted
$ 5.06 $ 0.07 $ 0.01 $ 0.09 $ 0.15 $ (0.13 )
$
5.25
(a)
Restructuring costs related to Q4 2015
Profit Improvement Initiative.
(b)
Related to plant closings in Europe and
partial closing in Asia.
(c)
Represents the acceleration of the
contingent consideration payment related to the Aromor
acquisition.
(d)
Transaction costs related to acquisitions
(Ottens Flavors and Lucas Meyer Cosmetics) as well as expense
related to the fair value step up of inventory for both
acquisitions.
(e)
Settlements due to favorable tax rulings
in jurisdictions for which reserves were previously recorded for
ongoing tax disputes.
*
The Company tracks the amount of
amortization recorded on recent acquisitions in order to monitor
its progress with respect to its Vision 2020 goals. The following
amounts were recorded with respect to recent acquisitions:
$7.6M.
Full year 2014 Items Impacting
Comparability
Reported(GAAP)
Restructuringand
OtherCharges
OperationalImprovementInitiativeCosts
Spanish TaxCharges
Gain on AssetSale
Adjusted(Non-GAAP)
Net Sales 3,088,533 Cost of Goods Sold
1,726,383 (5,100 ) (a) (2,541 ) (b)
Gross Profit
1,362,150 5,100 2,541
1,369,791
Research and Development 253,640 Selling and Administrative 514,891
RSA Expense 768,531 Restructuring and other charges, net 1,298
(1,298 ) (a)
Operating Profit 592,321 6,398 2,541
601,260 Interest Expense 46,067 Other (Income) expense, net
(2,807 ) (723 ) (d) (2,084 ) Income before taxes 549,061 6,398
2,541 (723 )
557,277 Taxes on Income 134,518 2,240 636 3,825
(c) (253 ) 140,966
Net Income 414,543
4,158
1,905 (3,825 )
(470 )
416,311 Earnings per share -
diluted $ 5.06 $ 0.05 $
0.02 $ (0.05 ) $ —
$ 5.08
(a)
Costs related to the Fragrance Ingredients
Rationalization
(b)
Related to a plant closing, partial
closings and other organizational realignments, principally in
Europe and Asia
(c)
Related to favorable ruling on 2001
dividend withholding case
(d)
Represents gain on the sale of a
non-operating asset
International Flavors & Fragrances Inc.521 West 57th
StreetNew York, NY 10019
T +212.765.5500F +212.708.7132iff.com
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160210006618/en/
International Flavors & Fragrances Inc.Michael DeVeau,
212-708-7164VP, Global Corporate Communications & Investor
RelationsMichael.DeVeau@iff.com
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