IFF Reports First Quarter 2023 Results
IFF (NYSE: IFF) reported financial results for the first quarter ended March 31, 2023.
“We delivered first quarter 2023 results in line or ahead of our expectations amidst a challenging operating environment,” said IFF CEO Frank Clyburn. “Our team successfully navigated soft end-market demand and customer inventory destocking as they executed on our priorities to deliver our financial commitments. As we look ahead to the balance of the year, we continue to believe our volume performance will improve, yet acknowledge that market conditions remain uncertain. As such, we remain steadfast in our focus to control what we can control as we solidify profitability, maximize cash flow and drive portfolio optimization to generate strong returns for our shareholders.”
First Quarter 2023 Consolidated Financial Results
- Reported net sales for the first quarter were $3.03 billion, flat versus the prior-year period. On a comparable basis2, currency neutral sales increased 1% versus the prior-year period, led by Scent and Pharma Solutions.
- Income before taxes on a reported basis for the first quarter was $14 million. Adjusted operating EBITDA for the first quarter was $503 million. On a comparable basis2, currency neutral adjusted operating EBITDA declined 19% versus the prior-year period, as pricing and productivity gains were more than offset by lower volumes and unfavorable manufacturing absorption related to the Company's inventory reduction program.
- Reported earnings per share (EPS) for the first quarter was $(0.04). Adjusted EPS excluding amortization was $0.87 per diluted share.
- Cash flows from operations at the end of the first quarter was $127 million, and free cash flow defined as cash flows from operations less capital expenditures totaled $(48) million. Net debt to credit adjusted EBITDA at the end of the first quarter was 4.6x.
2 Comparable results for the first quarter exclude the impact of divestitures and acquisitions.
- On a reported basis, first quarter sales were $1.65 billion. On a comparable basis2 , currency neutral sales was flat as growth in Food Design and in Flavors was offset by declines in Ingredients.
- Nourish adjusted operating EBITDA was $208 million and adjusted operating EBITDA margin was 12.6% in the first quarter. On a comparable basis2, currency neutral adjusted operating EBITDA declined 27% as price increases and productivity gains were more than offset by lower volumes and unfavorable manufacturing absorption related to the Company's inventory reduction program.
Health & Biosciences Segment
- On a reported basis, first quarter sales were $513 million. On a comparable basis2 , currency neutral sales decreased 3% as growth in Cultures & Food Enzymes and Home & Personal Care was offset by softness in Health, Grain Processing and Animal Nutrition.
- Health & Biosciences adjusted operating EBITDA was $131 million and adjusted operating EBITDA margin was 25.5% in the first quarter. On a comparable basis2, currency neutral adjusted operating EBITDA declined 19% as price increases and productivity gains were more than offset by lower volumes and unfavorable manufacturing absorption related to the Company's inventory reduction program.
- On a reported basis, first quarter sales were $608 million. On a comparable basis2, currency neutral sales increased 8% led by double-digit growth in Fine Fragrance and Consumer Fragrance.
- Scent adjusted operating EBITDA was $105 million and adjusted operating EBITDA margin was 17.3% in the first quarter. On a comparable basis2, currency neutral adjusted operating EBITDA increased 1% led by volume growth, pricing and productivity gains.
Pharma Solutions Segment
- On a reported basis, first quarter sales were $253 million. On a comparable basis2, currency neutral sales increased 4% led by growth in Core Pharma.
- Pharma Solutions adjusted operating EBITDA was $59 million and adjusted operating EBITDA margin was 23.3% in the first quarter. On a comparable basis2, currency neutral adjusted operating EBITDA declined 6% as pricing and productivity were more than offset principally due to unfavorable manufacturing absorption related to the Company's inventory reduction program.
The Company expects full year 2023 sales to be approximately $12.3 billion (previously $12.5 billion), with an expected full year 2023 adjusted operating EBITDA of approximately $2.34 billion (no change). The change in sales guidance reflects energy and raw material pass-through price adjustments as well as unfavorable impact from foreign exchange.
The Company's full year guidance excludes approximately $335 million (previously $350 million) in sales and approximately $55 million (previously $50 million) in adjusted operating EBITDA for the anticipated Savory Solutions and Flavor Specialty Ingredients divestitures. The change in portfolio impact now reflects the anticipated close of Savory Solutions in June 2023 (previously May 2023) and the anticipated close of Flavor Specialty Ingredients in September 2023.
Comparable currency neutral sales growth for 2023 is expected to be approximately 5% (previously approximately 6%). On a comparable basis, full year 2022 sales were approximately $11.885 billion (previous $11.875 billion), excluding approximately $555 million (previously $565 million) of sales related to the impact of divestitures and acquisitions in current and prior year periods.
Comparable currency neutral adjusted operating EBITDA growth for 2023 is expected to be approximately flat versus prior year. On a comparable basis, full year 2022 adjusted operating EBITDA was approximately $2.37 billion (no change), excluding approximately $85 million (no change) of adjusted operating EBITDA related to the impact of divestitures and acquisitions in current and prior year periods.
Based on current market foreign exchange rates, the Company expects that foreign exchange will have approximately 1% (previously 0%) adverse impact to sales growth and approximately a 3% (previously 1%) adverse impact to adjusted operating EBITDA growth in 2023.
The Company issues financial guidance for the second quarter 2023, where it expects sales to be approximately $3.0 billion to $3.1 billion and adjusted operating EBITDA of approximately $540 million to $590 million.
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 (including the anticipated Savory Solutions and Flavor Specialty Ingredients divestitures) and integration related costs, gains (losses) on business disposals, and regulatory costs.
A live webcast to discuss the Company’s first quarter 2023 financial results will be held on May 9, 2023, 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 the impacts of COVID-19 and our plans to respond to its implications; the expected impact of global supply chain challenges; expectations regarding sales and profit for the fiscal year 2023, including the impact of foreign exchange, pricing actions, raw materials, energy and sourcing, logistics and manufacturing costs; 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; our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; expectations regarding the implementation of our refreshed growth-focused strategy; the expected divestitures of Savory Solutions and Flavor Specialty Ingredients and the progress of our portfolio optimization strategy, through non-core business divestitures and acquisitions, such as the Health Wright acquisition; our combination with N&B, including the expected benefits and synergies of the N&B Transaction and future opportunities for the combined company, the success of our integration efforts and ability to deliver on our synergy commitments as well as future opportunities for the combined company; the success of our optimization of our portfolio; the impact of global economic uncertainty or recessionary pressures on demand for consumer products; the growth potential of the markets in which we operate, including the emerging markets; expected capital expenditures in 2023; the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings; expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; our ability to drive reductions in expenses; our strategic investments in capacity and increasing inventory to drive improved profitability; our ability to innovate and execute on specific consumer trends and demands; our ability enhance our innovation efforts and drive cost efficiencies; and our ability to continue to generate value for, and return cash to, our shareholders.
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) inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy; (2) supply chain disruptions, geopolitical developments, including the Russia-Ukraine conflict, or climate-change related events (including severe weather events) that may affect our suppliers or procurement of raw materials; (3) our ability to successfully execute the next phase of our strategic transformation; (4) risks related to the integration of the N&B business, including whether we will realize the benefits anticipated from the merger in the expected time frame; (5) our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to its shareholders; (6) our ability to enter into or close strategic transactions or divestments or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships; (7) 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) our ability to retain key employees; (10) changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers; (11) our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations; (12) the impact of global health crises, such as the COVID-19 pandemic, on our supply chains, global operations, our customers and our suppliers; (13) disruption in the development, manufacture, distribution or sale of our products from natural disasters (such as the COVID-19 pandemic), public health crises, international conflicts (such as the Russia and Ukraine conflict), terrorist acts, labor strikes, political or economic crises (such as the uncertainty related to protracted U.S. federal debt ceiling negotiations), accidents and similar events; (14) volatility and increases in the price of raw materials, energy and transportation; (15) 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; (16) our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environmental impact; (17) our ability to meet increasing customer, consumer, shareholder and regulatory focus on sustainability; (18) defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities; (19) 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; (20) our ability to benefit from our investments and expansion in emerging markets; (21) the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate; (22) economic, regulatory and political risks associated with our international operations; (23) the impact of global economic uncertainty (including increased inflation) on demand for consumer products; (24) our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; (25) our ability to successfully manage our working capital and inventory balances; (26) 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; (27) any impairment on our tangible or intangible long lived assets, including goodwill associated with the N&B merger and the acquisition of Frutarom; (28) our ability to protect our intellectual property rights; (29) the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation, related to intellectual property, product liability, competition and antitrust, environmental matters, indirect taxes or other matters; (30) changes in market conditions or governmental regulations relating to our pension and postretirement obligations; (31) the impact of changes in federal, state, local and international tax legislation or policies, including the Tax Cuts and Jobs Act, with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes; (32) the impact of the United Kingdom’s departure from the European Union; (33) the impact of the phase out of the London Interbank Offered Rate (LIBOR) on interest expense; and (34) the impact of any tax liability resulting from the N&B Transaction; and (35) 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 27, 2023 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 currency neutral 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 expense, 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, acquisition, divestiture, and integration related costs, gains (losses) on business disposals, 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, gains (losses) on business disposals, 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 income taxes, depreciation and amortization expense, interest expense, 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 (including the anticipated Savory Solutions and Flavor Specialty Ingredients divestitures) 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.
To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230508005700/en/
About Business Wire
For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.
Subscribe to releases from Business Wire
Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Business Wire
Ilsong Educational Foundation Chairman Dai-Won Yoon Wins Linnaeus Medal as the First in Asia2.6.2023 12:00:00 EEST | Press release
On May 30, Chairman Dai-Won Yoon of Ilsong Educational Foundation received the Linnaeus Medal from Uppsala University at Hallym University. This makes him the first person from Asia to receive the award. Ilsong Educational Foundation operates Hallym University and Hallym University Medical Center. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230531005495/en/ Chairman Dai-Won Yoon (left) of Ilsong Educational Foundation received Linnaeus Medal as the 1st in Asia (Photo: Hallym University) Chairman Yoon is the honoree of 2020. The award ceremony, which had been postponed due to COVID-19, was held this year with a delegation led by Vice Chancellor Anders Hagfeldt of Uppsala University visiting Korea. The Linnaeus Medal to commemorate Carl Linnaeus, a Swedish botanist, is awarded annually by Uppsala University to a person who has made a significant contribution to the field of science. Chairman Yoon was honored for his work in
10th Annual World Patient Safety, Science & Technology Summit Begins2.6.2023 09:15:00 EEST | Press release
Day one of the 10th Annual World Patient Safety, Science & Technology Summit presented by the Patient Safety Movement Foundation (PSMF) saw global leaders across the world of patient safety call for an increased urgency in addressing the issue of preventable harm within healthcare. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230601006140/en/ Joe Kiani, founder of the Patient Safety Movement Foundation, speaks at the 10th Annual World Patient Safety, Science & Technology Summit in Newport Beach, California. (Photo: Business Wire) Celebrating the PSMF’s 10th anniversary, Dr. Michael Ramsay, chief executive officer of the PSMF, reflected on the role that the increasing availability of hospital data on medical errors could play in reducing harm. “I’m very optimistic that we’re really going to see a difference in healthcare,” he said. “Technology is changing. We’re now getting real data. We know what the outcomes are in hospit
Autel Energy Holds Partner Summit in Amsterdam, Mapping Out Europe Strategy2.6.2023 09:00:00 EEST | Press release
Autel Energy, a leading provider of EV charging products and services, successfully hosted the Autel Partner Summit at Muziekgebouw in Amsterdam from May 31 to June 1, 2023. The event not only showcased Autel’s visionary Europe strategy for the next two years but also provided partners opportunities to gain insights into the company's vision, and learn about Autel’s new products. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230525005428/en/ A quick afternoon bite with the Autel partners. (Photo: Business Wire) The Partner Summit helped Autel Energy to strengthen its partnerships in Europe and highlighted its collaborations with key clients. Notable partners in attendance included Maxicharger AC clients such as Sevadis and Deta, as well as Maxicharger DC clients such as Floading, Gasgas, and eWays. The company also partnered with CPO clients like Fastway and Powerdo, as well as energy companies like Enefit. The Summit was d
PL BioScience and Macopharma enter into a Patent License and Assignment Agreement regarding Human Platelet Lysate (HPL) cell culture supplements.2.6.2023 08:22:00 EEST | Press release
PL BioScience GmbH, a German life science company specializing in the production and development of Human Platelet Lysate (HPL) for cell expansion, today announced a Patent License and Assignment Agreement with the French company Macopharma S.A.S. As a result of the Agreement, PL BioScience will hereby accept a worldwide license under the patents filed by Macopharma, with a right to sublicense (through multiple tiers), for the duration of the license period. In addition to the Patent License and Assignment Agreement, Macopharma will introduce PL BioScience to their current HPL customers, and thanks to a comprehensive comparative evaluation showing equivalence of HPL products from PL BioScience, Macopharma HPL customers will have the opportunity to transfer their future orders to PL BioScience with minimal disruption. About PL BioScience: Located in Aachen in Germany, PL BioScience GmbH is a life science company specializing in the production and development of Human Platelet Lysate (HP
AOP Health: Completed Study Strengthens Clinical Development Program for ropeginterferon alpha 2b (Besremi®) in polycythaemia vera2.6.2023 05:00:00 EEST | Press release
With the publication of the final results from the LOW-PV study in the New England Journal of Medicine Evidence conducted by Fondazione per la Ricerca dell'Ospedale di Bergamo (FROM) under the leadership of Professor Tiziano Barbui, AOP Health announces an important advancement reinforcing its clinical development program for ropeginterferon alpha-2b (BESREMi®) in polycythaemia vera (PV), a rare blood cancer. The academic LOW-PV study supported and funded by AOP Health and public organizations in Italy complements a series of trials performed by AOP Health over more than 10 years to achieve marketing authorization in Europe and the Middle East. With these clinical studies, including PEGINVERA, PROUD-PV, and CONTINUATION-PV, AOP Health opened a new area of treatment options for patients suffering from PV. A further study (PEN-PV) was performed to develop a pen for self-injection allowing ease of self-administration, exact dosing and minimal waste of the medical product. AOP Health’s com
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.Visit our pressroom