IFF (NYSE: IFF) reported financial results for the third quarter
ended September 30, 2024.
Third 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
$95 M
$0.23
$568 M
19.4%
$1.04
First Nine Months 2024
Consolidated Summary:
Reported
(GAAP)
Adjusted
(Non-GAAP)1
Sales
Income Before Taxes
EPS
Operating EBITDA
Operating EBITDA
Margin
EPS ex Amortization
$8.7 B
$393 M
$1.13
$1.7 B
19.9%
$3.34
Management Commentary
“We are pleased to report a strong performance in the third
quarter, with growth across all business segments,” stated IFF CEO
Erik Fyrwald. “Market recovery off prior year lows and our global
team's passion to address the needs of our customers drove notable
volume recovery in every division. This achievement, coupled with
our focus on productivity, has resulted in significant bottom-line
improvement compared to the same period last year. Taking into
account our strong performance in the third quarter and our
continued cautiously optimistic outlook for the fourth quarter, we
are increasing our full year 2024 financial guidance. We are making
solid progress but have a lot of exciting work ahead of us to
unleash the full potential of IFF.”
Third Quarter 2024 Consolidated Financial Results
- Reported net sales for the third quarter were $2.93 billion, an
increase of 4% versus the prior-year period. On a comparable
basis2, currency neutral sales1 increased 9% versus the prior-year
period led by broad-based growth including double digit
performances by Health & Biosciences and Scent as well as
high-single digit increases in Nourish and Pharma Solutions. Volume
grew high-single digits and improved across all businesses.
- Income before taxes on a reported basis for the third quarter
was $95 million. Adjusted operating EBITDA1 for the third quarter
was $568 million. On a comparable basis2, adjusted operating
EBITDA1 improved 16% versus the prior-year period, led by volume
growth and productivity gains.
- Reported earnings per share (EPS) for the third quarter was
$0.23. Adjusted EPS excluding amortization1 was $1.04 per diluted
share, increasing 17% versus the prior year period as strong profit
performance and lower interest expense were mitigated by foreign
exchange impacts in other expense.
- Cash flows from operations at the end of the third quarter was
$702 million, and free cash flow1 defined as cash flows from
operations less capital expenditures totaled $399 million. Total
debt to trailing twelve months net loss at the end of the third
quarter was (3.9)x. Net debt to credit adjusted EBITDA1 at the end
of the third quarter was 3.9x.
Third 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
3%
7%
16%
18%
Health & Biosciences
10%
12%
15%
15%
Scent
0%
10%
(3)%
7%
Pharma Solutions
8%
8%
32%
32%
Nourish Segment
- On a reported basis, third quarter sales were $1.49 billion. On
a comparable basis2, currency neutral sales1 increased 7% driven by
strong double-digit growth in Flavors. Functional Ingredients sales
improved modestly as high-single digit volume growth was mostly
offset by pricing actions.
- Nourish adjusted operating EBITDA1 was $206 million and
adjusted operating EBITDA margin1 was 13.9% in the third quarter.
On a comparable basis2, adjusted operating EBITDA1 increased 18%
led by volume growth and productivity gains.
Health & Biosciences Segment
- On a reported basis, third quarter sales were $570 million. On
a comparable basis2, currency neutral sales1 increased 12% driven
by strong double-digit performances across all businesses.
- Health & Biosciences adjusted operating EBITDA1 was $173
million and adjusted operating EBITDA margin1 was 30.4% in the
third quarter. On a comparable basis2, adjusted operating EBITDA1
improved 15% led primarily by volume growth and productivity
gains.
Scent Segment
- On a reported basis, third quarter sales were $613 million. On
a comparable basis2, currency neutral sales1 increased 10% led by
double-digit growth in Consumer Fragrance and Fine Fragrance and a
high-single digit increase in Fragrance Ingredients.
- Scent adjusted operating EBITDA1 was $127 million and adjusted
operating EBITDA margin1 was 20.7% in the third quarter. On a
comparable basis2, adjusted operating EBITDA1 increased 7% led
primarily by volume growth and productivity gains.
Pharma Solutions Segment
- On a reported basis, third quarter sales were $256 million. On
a comparable basis2, currency neutral sales1 increased 8% driven by
volume growth in both Industrial and Core Pharma.
- Pharma Solutions adjusted operating EBITDA1 was $62 million and
adjusted operating EBITDA margin1 was 24.2% in the third quarter.
On a comparable basis2, adjusted operating EBITDA1 increased 32%
led by volume growth and productivity gains.
Financial Guidance
The Company is increasing its expectations for the full year
2024. It now expects sales to be in the range of $11.3 billion to
$11.4 billion versus the previously expected range of $11.1 billion
to $11.3 billion, and adjusted operating EBITDA to be at the
high-end of its previously communicated guidance range of $2.1
billion to $2.17 billion. The Company now expects volume to
increase 5% to 6% versus the previously expected range of 3% to 5%,
with improvements across the majority of the portfolio. Pricing
impact is now expected to be flat versus approximately a 1%
increase previously, 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 an approximately 3% adverse
impact to sales growth versus the previously expected range of 3%
to 4%.
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 third quarter 2024
financial results will be held on November 6, 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 disposal
group), 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 in
the U.S. and abroad) 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, public health crises (such as the COVID-19 pandemic),
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) income, net, and certain non-recurring or unusual items
that are not part of recurring operations such as, restructuring
and other charges, impairment of goodwill, gains (losses) on
business disposals, loss on assets classified as held for sale,
acquisition, divestiture and integration 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,
impairment of goodwill, (gains) losses on business disposals, loss
on assets classified as held for sale, 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 second 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 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 third quarter exclude the
impact of divestitures.
International Flavors &
Fragrances Inc.
Consolidated Statements of
Income (Loss)
(Amounts in millions except
per share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
% Change
2024
2023
% Change
Net sales
$
2,925
$
2,820
4%
$
8,713
$
8,776
(1)%
Cost of Sales
1,873
1,896
(1)%
5,569
5,955
(6)%
Gross profit
1,052
924
14%
3,144
2,821
11%
Research and development expenses
162
157
3%
501
479
5%
Selling and administrative expenses
495
444
11%
1,478
1,343
10%
Amortization of acquisition-related
intangibles
146
170
(14)%
467
513
(9)%
Impairment of goodwill
—
—
NMF
64
—
NMF
Restructuring and other charges
1
2
(50)%
6
61
(90)%
(Gains) losses on sale of assets
(1
)
1
(200)%
(11
)
(1
)
NMF
Operating profit
249
150
66%
639
426
50%
Interest expense
74
90
(18)%
236
291
(19)%
(Gains) losses on business disposals
20
10
100%
(348
)
29
NMF
Loss on assets classified as held for
sale
32
—
NMF
314
—
NMF
Other expense (income), net
28
(9
)
NMF
44
(17
)
NMF
Income before income taxes
95
59
61%
393
123
220%
Provision for income taxes
35
32
9%
100
77
30%
Net income
60
27
122%
293
46
NMF
Net income attributable to non-controlling
interests
1
2
(50)%
4
3
33%
Net income attributable to IFF
shareholders
$
59
$
25
136%
$
289
$
43
NMF
Net income per share - basic and
diluted
$
0.23
$
0.10
$
1.13
$
0.16
Average number of shares outstanding -
basic
256
255
255
255
Average number of shares outstanding -
diluted
257
256
256
255
NMF Not meaningful
International Flavors &
Fragrances Inc.
Condensed Consolidated Balance
Sheets
(Amounts in millions)
(Unaudited)
September 30,
December 31,
2024
2023
Cash, cash equivalents, and restricted
cash
$
567
$
709
Receivables, net
1,772
1,726
Inventories
2,200
2,477
Other current assets
3,884
1,381
Total current assets
8,423
6,293
Property, plant and equipment, net
3,772
4,240
Goodwill and other intangibles, net
16,119
18,992
Other assets
1,614
1,453
Total assets
$
29,928
$
30,978
Short-term borrowings
$
468
$
885
Other current liabilities
2,750
2,873
Total current liabilities
3,218
3,758
Long-term debt
8,631
9,186
Non-current liabilities
3,269
3,392
Shareholders' equity
14,810
14,642
Total liabilities and shareholders'
equity
$
29,928
$
30,978
International Flavors &
Fragrances Inc.
Consolidated Statements of
Cash Flows
(Amounts in millions)
(Unaudited)
Nine Months Ended
September 30,
2024
2023
Cash flows from operating
activities:
Net income
$
293
$
46
Adjustments to reconcile to net cash
provided by operating activities
Depreciation and amortization
772
855
Deferred income taxes
(128
)
(59
)
Loss on assets classified as held for
sale
314
—
Gains on sale of assets
(11
)
(1
)
(Gains) Losses on business disposals
(348
)
29
Stock-based compensation
59
50
Pension contributions
(17
)
(25
)
Impairment of goodwill
64
—
Inventory write-down
—
62
Changes in assets and liabilities:
Trade receivables
(276
)
(78
)
Inventories
(3
)
489
Accounts payable
(34
)
(240
)
Accruals for incentive compensation
119
(40
)
Other current payables and accrued
expenses
65
(216
)
Other assets/liabilities, net
(167
)
(77
)
Net cash provided by operating
activities
702
795
Cash flows from investing
activities:
Additions to property, plant and
equipment
(303
)
(390
)
Additions to intangible assets
(5
)
—
Proceeds from sale of assets
18
22
Net proceeds received from business
disposals
876
1,006
Net cash provided by investing
activities
586
638
Cash flows from financing
activities:
Cash dividends paid to shareholders
(411
)
(619
)
Decrease in revolving credit facility and
short-term borrowings
—
(100
)
Net borrowings of commercial paper
(maturities less than three months)
—
(187
)
Principal payments of debt
(974
)
(355
)
Deferred and contingent consideration
paid
(36
)
(6
)
Withholding tax paid on stock-based
compensation
(15
)
(12
)
Other, net
(8
)
(14
)
Net cash used in financing activities
(1,444
)
(1,293
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(10
)
(30
)
Net change in cash, cash equivalents
and restricted cash
(166
)
110
Cash, cash equivalents and restricted cash
at beginning of year
735
552
Cash, cash equivalents and restricted
cash at end of period
$
569
$
662
The following table reconciles cash, cash equivalents and
restricted cash between the Company's statement of cash flows for
the periods ended September 30, 2024 and September 30, 2023 to the
amounts reported on the Company's balance sheet:
AMOUNTS IN MILLIONS
September 30,
2024
December 31,
2023
September 30,
2023
December 31,
2022
Current assets
Cash and cash equivalents
$
567
$
703
$
629
$
483
Cash and cash equivalents included in
Assets held for sale
2
26
23
52
Restricted cash
—
6
10
10
Non-current assets
Restricted cash included in Other
assets
—
—
—
7
Cash, cash equivalents and restricted
cash
$
569
$
735
$
662
$
552
International Flavors &
Fragrances Inc.
Reportable Segment
Performance
(Amounts in millions)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net Sales
Nourish
$
1,486
$
1,449
$
4,460
$
4,666
Health & Biosciences
570
518
1,659
1,553
Scent
613
615
1,861
1,815
Pharma Solutions
256
238
733
742
Consolidated
$
2,925
$
2,820
$
8,713
$
8,776
Segment Adjusted Operating
EBITDA
Nourish
$
206
$
178
$
654
$
567
Health & Biosciences
173
150
497
426
Scent
127
131
421
353
Pharma Solutions
62
47
162
173
Total
568
506
1,734
1,519
Depreciation & Amortization
(248
)
(292
)
(772
)
(855
)
Interest Expense
(74
)
(90
)
(236
)
(291
)
Other (Expense) Income, net
(28
)
9
(44
)
17
Restructuring and Other Charges
(1
)
(2
)
(6
)
(61
)
Impairment of Goodwill
—
—
(64
)
—
Gains (Losses) on Business Disposals
(20
)
(10
)
348
(29
)
Loss on Assets Classified as Held for
Sale
(32
)
—
(314
)
—
Acquisition, Divestiture and Integration
Costs
(55
)
(42
)
(172
)
(118
)
Strategic Initiatives Costs
(6
)
(6
)
(22
)
(28
)
Regulatory Costs
(10
)
(13
)
(64
)
(32
)
Other
1
(1
)
5
1
Income Before Taxes
$
95
$
59
$
393
$
123
Segment Adjusted Operating EBITDA
Margin
Nourish
13.9
%
12.3
%
14.7
%
12.2
%
Health & Biosciences
30.4
%
29.0
%
30.0
%
27.4
%
Scent
20.7
%
21.3
%
22.6
%
19.4
%
Pharma Solutions
24.2
%
19.7
%
22.1
%
23.3
%
Consolidated
19.4
%
17.9
%
19.9
%
17.3
%
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
Third Quarter
(DOLLARS IN MILLIONS)
2024
2023
Reported (GAAP)
$
1,052
$
924
Adjusted (Non-GAAP)
$
1,052
$
924
Reconciliation of Selling and
Administrative Expenses
Third Quarter
(DOLLARS IN MILLIONS)
2024
2023
Reported (GAAP)
$
495
$
444
Acquisition, Divestiture and Integration
Costs (d)
(55
)
(42
)
Strategic Initiatives Costs (e)
(6
)
(6
)
Regulatory Costs (f)
(10
)
(13
)
Other (g)
(1
)
—
Adjusted (Non-GAAP)
$
423
$
383
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
Third Quarter
2024
2023
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
Income
before
taxes
Provision
for income
taxes
Net income
attributable
to IFF (i)
Diluted
EPS
Income
before
taxes
Provision
for income
taxes (h)
Net income
attributable
to IFF (i)
Diluted
EPS
Reported (GAAP)
$
95
$
35
$
59
$
0.23
$
59
$
32
$
25
$
0.10
Restructuring and Other Charges (a)
1
—
1
—
2
—
2
0.01
Losses on Business Disposals (b)
20
—
20
0.08
10
(6
)
16
0.06
Loss on Assets Classified as Held for Sale
(c)
32
5
27
0.11
—
—
—
—
Acquisition, Divestiture and Integration
Costs (d)
55
15
40
0.16
42
4
38
0.15
Strategic Initiatives Costs (e)
6
1
5
0.02
6
1
5
0.02
Regulatory Costs (f)
10
3
7
0.03
13
3
10
0.04
Other (g)
(1
)
—
(1
)
(0.01
)
1
1
—
—
Adjusted (Non-GAAP)
$
218
$
59
$
158
$
0.62
$
133
$
35
$
96
$
0.38
Reconciliation of Adjusted
(Non-GAAP) EPS ex. Amortization
Third Quarter
(DOLLARS AND SHARE
AMOUNTS IN MILLIONS)
2024
2023
Numerator
Adjusted (Non-GAAP) Net Income
$
158
$
96
Amortization of Acquisition related
Intangible Assets
146
170
Tax impact on Amortization of Acquisition
related Intangible Assets
36
39
Amortization of Acquisition related
Intangible Assets, net of tax (j)
110
131
Adjusted (Non-GAAP) Net Income ex.
Amortization
$
268
$
227
Denominator
Weighted average shares assuming dilution
(diluted)
257
256
Adjusted (Non-GAAP) EPS ex.
Amortization
$
1.04
$
0.89
(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, primarily represents
losses recognized as part of the sale of the Flavors & Essences
UK business. For 2023, primarily represents losses recognized as
part of the sale of the Flavors Specialty Ingredients business.
(c)
Represents the losses recognized
on assets classified as held for sale of the Pharma Solutions
disposal group and portion of the Savory Solutions business in
Turkey.
(d)
For 2024 and 2023, primarily
represents costs related to the Company's actual and planned
acquisitions and divestitures and integration 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 the three months ended
September 30, 2024, business divestiture costs were approximately
$55 million. For the three months ended September 30, 2023,
business divestiture, integration and acquisition costs were
approximately $29 million, $12 million and $1 million,
respectively.
(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)
Represents (gains) losses from
sale of assets, executive employee separation costs and costs
related to the Company's entity realignment project to optimize the
structure of holding companies, primarily consulting fees.
(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 the three months ended
September 30, 2024 and September 30, 2023, reported and adjusted
net income are each decreased by income attributable to
non-controlling interest of $1 million and $2 million,
respectively.
(j)
Represents all amortization of
intangible assets acquired in connection with acquisitions, net of
tax.
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
Third Quarter
Year-to-Date
(DOLLARS IN
MILLIONS)
2024
2023
Reported (GAAP)
$
3,144
$
2,821
Acquisition, Divestiture and Integration
Costs (e)
1
—
Adjusted (Non-GAAP)
$
3,145
$
2,821
Reconciliation of Selling and
Administrative Expenses
Third Quarter
Year-to-Date
(DOLLARS IN
MILLIONS)
2024
2023
Reported (GAAP)
$
1,478
$
1,343
Acquisition, Divestiture and Integration
Costs (e)
(171
)
(118
)
Strategic Initiatives Costs (g)
(22
)
(28
)
Regulatory Costs (h)
(64
)
(32
)
Other (i)
(6
)
—
Adjusted (Non-GAAP)
$
1,215
$
1,165
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
Third Quarter
Year-to-Date
2024
2023
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
Income
before
taxes
Provision
for income
taxes (j)
Net income
attributable
to IFF (k)
Diluted
EPS
Income
before
taxes
Provision
for income
taxes (j)
Net income
attributable
to IFF (k)
Diluted
EPS
Reported (GAAP)
$
393
$
100
$
289
$
1.13
$
123
$
77
$
43
$
0.16
Restructuring and Other Charges (a)
6
1
5
0.02
61
16
45
0.18
Impairment of Goodwill (b)
64
—
64
0.25
—
—
—
—
(Gains) Losses on Business Disposals
(c)
(348
)
(23
)
(325
)
(1.27
)
29
(11
)
40
0.15
Loss on Assets Classified as Held for Sale
(d)
314
63
251
0.98
—
—
—
—
Acquisition, Divestiture and Integration
Costs (e)
169
18
151
0.60
118
4
114
0.45
Gain on China Facility Relocation (f)
—
—
—
—
(22
)
(6
)
(16
)
(0.06
)
Strategic Initiatives Costs (g)
22
5
17
0.07
28
6
22
0.09
Regulatory Costs (h)
64
11
53
0.21
32
7
25
0.10
Other (i)
(5
)
(3
)
(2
)
(0.03
)
(1
)
—
(1
)
—
Adjusted (Non-GAAP)
$
679
$
172
$
503
$
1.96
$
368
$
93
$
272
$
1.07
Reconciliation of Adjusted
(Non-GAAP) EPS ex. Amortization
Third Quarter
Year-to-Date
(DOLLARS AND SHARE AMOUNTS IN
MILLIONS)
2024
2023
Numerator
Adjusted (Non-GAAP) Net Income
$
503
$
272
Amortization of Acquisition related
Intangible Assets
467
513
Tax impact on Amortization of Acquisition
related Intangible Assets (j)
115
117
Amortization of Acquisition related
Intangible Assets, net of tax (l)
352
396
Adjusted (Non-GAAP) Net Income ex.
Amortization
$
855
$
668
Denominator
Weighted average shares assuming dilution
(diluted)
256
255
Adjusted (Non-GAAP) EPS ex.
Amortization
$
3.34
$
2.61
(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)
Represents costs related to the
impairment of goodwill related to the Pharma Solutions disposal
group.
(c)
For 2024, primarily represents
gains recognized as part of the sale of the Cosmetic Ingredients
business and losses recognized as part of the sale of the Flavors
& Essences UK business. For 2023, primarily represents losses
recognized as part of the sale of the Flavors Specialty Ingredients
business, a portion of the Savory Solutions business, and
liquidation of a business in Russia for the sale of a portion of
the Savory Solutions business.
(d)
Represents the losses recognized
on assets classified as held for sale of the Pharma Solutions
disposal group and portion of the Savory Solutions business in
Turkey.
(e)
For 2024 and 2023, primarily
represents costs related to the Company's actual and planned
acquisitions and divestitures and integration 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 the nine months ended
September 30, 2024, business divestiture and integration costs were
approximately $167 million and $5 million, respectively. For the
nine months ended September 30, 2023, business divestiture,
integration and acquisition costs were approximately $70 million,
$42 million, and $6 million, respectively
(f)
For 2023, represents gain
recognized from the completion of the relocation of a facility in
China.
(g)
Represents costs related to the
Company's strategic assessment and business portfolio optimization
efforts and reorganizing the Global Business Services Centers,
primarily consulting fees.
(h)
Represents costs primarily
related to legal fees incurred and provisions recognized for the
ongoing investigations of the fragrance businesses.
(i)
Represents (gains) losses from
sale of assets, executive employee separation costs and costs
related to the Company's entity realignment project to optimize the
structure of holding companies, primarily consulting fees.
(j)
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.
(k)
For the nine months ended
September 30, 2024 and 2023, reported and adjusted net income are
each decreased by income attributable to non-controlling interest
of $4 million and $3 million, respectively.
(l)
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
September 30, 2024
Net loss
$
(2,321
)
Interest expense(1)
325
Income taxes
68
Depreciation and amortization
1,059
Specified items(2)
3,038
Non-cash items(3)
32
Credit Adjusted EBITDA
$
2,201
_______________________
(1)
Certain adjustments were made to
interest expense associated with our cash pooling arrangements for
the fourth quarter of 2023.
(2)
Specified items consisted of
restructuring and other charges, impairment of goodwill,
acquisition, divestiture and integration 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 (gains) on business
disposals, loss on assets classified as held for sale, write-down
of inventory related to Locust Bean Kernel and stock-based
compensation.
Net Debt to Total Debt
(DOLLARS IN
MILLIONS)
September 30, 2024
Total debt(1)
$
9,127
Adjustments:
Cash and cash equivalents(2)
569
Net debt
$
8,558
_______________________
(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 $2 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
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net Sales
Nourish(1)
$
1,486
$
1,441
$
4,460
$
4,426
Health & Biosciences
570
518
1,659
1,553
Scent(2)
613
588
1,861
1,723
Pharma Solutions
256
238
733
742
Consolidated
$
2,925
$
2,785
$
8,713
$
8,444
Segment Adjusted Operating
EBITDA
Nourish(1)
$
206
$
174
$
654
$
537
Health & Biosciences
173
150
497
426
Scent(2)
127
119
421
319
Pharma Solutions
62
47
162
173
Total
568
490
1,734
1,455
Depreciation & Amortization
(248
)
(292
)
(772
)
(855
)
Interest Expense
(74
)
(90
)
(236
)
(291
)
Other (Expense) Income, net
(28
)
9
(44
)
17
Restructuring and Other Charges
(1
)
(2
)
(6
)
(61
)
Impairment of Goodwill
—
—
(64
)
—
Gains (Losses) on Business Disposals
(20
)
(10
)
348
(29
)
Loss on Assets Classified as Held for
Sale
(32
)
—
(314
)
—
Acquisition, Divestiture and Integration
Costs
(55
)
(42
)
(172
)
(118
)
Strategic Initiatives Costs
(6
)
(6
)
(22
)
(28
)
Regulatory Costs
(10
)
(13
)
(64
)
(32
)
Other
1
(1
)
5
1
Impact of Business Divestitures(3)
—
16
—
64
Income Before Taxes
$
95
$
59
$
393
$
123
Segment Adjusted Operating EBITDA
Margin
Nourish
13.9
%
12.1
%
14.7
%
12.1
%
Health & Biosciences
30.4
%
29.0
%
30.0
%
27.4
%
Scent
20.7
%
20.2
%
22.6
%
18.5
%
Pharma Solutions
24.2
%
19.7
%
22.1
%
23.3
%
Consolidated
19.4
%
17.6
%
19.9
%
17.2
%
______________________
(1)
Nourish sales and segment
adjusted operating EBITDA for the three and nine months ended
September 30, 2023 exclude the results of a portion of the Savory
Solutions business, Sonarome business, and Flavors & Essences
UK business that were divested to present fully comparable
scenarios. The divestitures were completed on May 31, 2023,
December 1, 2023 and September 1, 2024, respectively.
(2)
Scent sales and segment adjusted
operating EBITDA for the three and nine months ended September 30,
2023 exclude the results of the Flavor Specialty Ingredients
business and Cosmetic Ingredients business that were divested to
present fully comparable scenarios. The divestitures were completed
on August 1, 2023 and April 2, 2024, respectively.
(3)
Amounts exclude the results of a
portion of the Savory Solutions business, Flavor Specialty
Ingredients business, Sonarome business, Cosmetic Ingredients
business, and Flavors & Essences UK business that were divested
in the second quarter of 2023 (May 31, 2023), third quarter of 2023
(August 1, 2023), fourth quarter of 2023 (December 1, 2023), second
quarter of 2024 (April 2, 2024), and third quarter of 2024
(September 1, 2024), respectively, to present fully comparable
scenarios.
International Flavors &
Fragrances Inc.
GAAP to Non-GAAP
Reconciliation
Comparable Foreign Exchange
Impact
(Unaudited)
Q3
Nourish
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
3%
16%
1.6%
Portfolio Impact
1%
3%
0.2%
% Change - Comparable
3%
18%
1.8%
Currency Impact
4%
% Change - Currency Neutral
7%
Q3 Health &
Biosciences
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
10%
15%
1.4%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
10%
15%
1.4%
Currency Impact
2%
% Change - Currency Neutral
12%
Q3 Scent
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
0%
(3)%
(0.6)%
Portfolio Impact
5%
10%
1.1%
% Change - Comparable
4%
7%
0.5%
Currency Impact
6%
% Change - Currency Neutral
10%
Q3 Pharma
Solutions
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
8%
32%
4.5%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
8%
32%
4.5%
Currency Impact
0%
% Change - Currency Neutral
8%
Q3
Consolidated
Sales
Adjusted Operating
EBITDA
Adjusted Operating
EBITDA Margin
% Change - Reported
4%
12%
1.5%
Portfolio Impact
1%
4%
0.3%
% Change - Comparable
5%
16%
1.8%
Currency Impact
4%
% Change - Currency Neutral
9%
_______________________ Note: The sum of
these items may not foot due to rounding.
International Flavors &
Fragrances Inc.
GAAP to Non-GAAP
Reconciliation
Comparable Foreign Exchange
Impact
(Unaudited)
YTD
Nourish
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
(4)%
15%
2.5%
Portfolio Impact
5%
6%
0.1%
% Change - Comparable
1%
22%
2.6%
Currency Impact
3%
% Change - Currency Neutral
4%
YTD Health &
Biosciences
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
7%
17%
2.6%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
7%
17%
2.6%
Currency Impact
2%
% Change - Currency Neutral
9%
YTD Scent
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
3%
19%
3.2%
Portfolio Impact
5%
13%
0.9%
% Change - Comparable
8%
32%
4.1%
Currency Impact
6%
% Change - Currency Neutral
14%
YTD Pharma
Solutions
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Reported
(1)%
(6)%
(1.2)%
Portfolio Impact
0%
0%
0.0%
% Change - Comparable
(1)%
(6)%
(1.2)%
Currency Impact
0%
% Change - Currency Neutral
(1)%
YTD
Consolidated
Sales
Adjusted Operating
EBITDA
Adjusted Operating
EBITDA Margin
% Change - Reported
(1)%
14%
2.6%
Portfolio Impact
4%
5%
0.1%
% Change - Comparable
3%
19%
2.7%
Currency Impact
4%
% Change - Currency Neutral
7%
_______________________ Note: The sum of
these items may not foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105987264/en/
Media Relations: Paulina Heinkel 332.877.5339
Media.request@iff.com
Investor Relations: Michael Bender 212.708.7263
Investor.Relations@iff.com
International Flavors an... (NYSE:IFF)
Historical Stock Chart
From Nov 2024 to Dec 2024
International Flavors an... (NYSE:IFF)
Historical Stock Chart
From Dec 2023 to Dec 2024