8-K
Sensient Technologies Corp (SXT)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 12, 2021
(Date of Report/Date of earliest event reported)
SENSIENT TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
| Wisconsin | 001-07626 | 39-0561070 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5304
(Address and zip code of principal executive offices)
(414) 271-6755
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.10 per share | SXT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
Sensient Technologies Corporation (the “Company”) issued a press release on February 12, 2021 disclosing its results of operations for its quarter and year ended December 31, 2020, and its financial condition at that date. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Item 2.02 (including Exhibit 99.1) is intended to be furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 7.01 | Regulation FD Disclosure. |
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On February 12, 2021, the Company also posted an updated investor presentation for its quarter ended December 31, 2020 on the “Investor Information” section of its website. A copy of the investor presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information contained in this Item 7.01 (including Exhibit 99.2) is intended to be furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits. The following exhibits are furnished with this Current Report on Form 8-K:
EXHIBIT INDEX
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Sensient Technologies Corporation Earnings Press Release for the Quarter and Year Ended December 31, 2020. |
| 99.2 | Sensient Technologies Corporation Investor Presentation – Q4 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SENSIENT TECHNOLOGIES CORPORATION | |
|---|---|
| By: | /s/ John J. Manning |
| Name: | John J. Manning |
| Title: | Senior Vice President, General Counsel, and Secretary |
| Date: | February 12, 2021 |
Exhibit 99.1
| Contact: | Amy Agallar |
|---|
(414) 347-3706
Sensient Technologies Corporation
Reports Results for the Quarter Ended December 31, 2020
Flavors & Extracts Group Reports Double Digit Revenue and Profit Growth
Food and Pharmaceutical Colors Reports Mid-Single Digit Revenue Growth and Strong Profit Growth
Personal Care Continues to Be Negatively Impacted by the COVID-19 Pandemic
Cash Flow from Operations increased 53%
MILWAUKEE— February 12, 2021 — Sensient Technologies Corporation (NYSE: SXT) reported consolidated revenue of $334.7 million in this year’s fourth quarter compared to $318.6 million in last year’s fourth quarter. Reported operating income in the fourth quarter of 2020 was $34.8 million compared to an operating loss of $14.5 million in the fourth quarter of 2019. Reported diluted earnings per share was 59 cents in the fourth quarter of 2020 compared to a loss per share of 40 cents in the fourth quarter of 2019. Foreign currency translation increased revenue by approximately 1% and had an immaterial impact on earnings per share in the quarter.
The 2020 fourth quarter reported results include divestiture & other related costs, operational improvement plan costs, and costs associated with a one-time COVID-19 related payment to employees, which in total decreased fourth quarter net earnings by $3.2 million ($0.07 per diluted share). The 2019 fourth quarter results include divestiture & other related costs which decreased net earnings by $43.2 million ($1.02 per diluted share). The 2020 and 2019 fourth quarter results also include the operations of the product lines divested or to be divested, which increased diluted earnings per share by $0.06 in the fourth quarter of 2020 and $0.01 in the fourth quarter of 2019. These adjustments are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.
| Sensient Technologies Corporation | Page 2 |
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| Earnings Release – Quarter Ended December 31, 2020 | |
| February 12, 2021 |
BUSINESS REVIEW
| Reported | ||
|---|---|---|
| Revenue | Quarter | Year-to-date |
| Flavors & Extracts | 11.8% | 6.0% |
| Color | -4.4% | -6.4% |
| Asia Pacific | 5.1% | 2.5% |
| Total Revenue | 5.0% | 0.7% |
| Adjusted<br><br> <br>Local Currency ^(1)^ | ||
| Revenue | Quarter | Year-to-date |
| Flavors & Extracts | 14.0% | 8.8% |
| Color | 1.1% | -0.7% |
| Asia Pacific | 2.8% | 3.0% |
| Total Revenue | 7.9% | 4.3% |
| ^(1)^ Adjusted local currency percentage changes are described in more detail in the “Reconciliation of<br> Non-GAAP Amounts” at the end of this release. |
The Flavors & Extracts Group reported fourth quarter revenue of $189.1 million compared to $169.1 million reported in the comparable period last year, an increase of 11.8%. Adjusted local currency revenue increased 14.0% in the quarter. The higher revenue was primarily the result of continued growth in natural ingredients and flavors, extracts, and flavor ingredients. Segment operating income was $23.5 million in the current quarter compared to $14.2 million reported in the comparable period last year, an increase of 65.7%. Adjusted local currency operating profit increased 54.9%. The Group’s higher profit was primarily a result of the higher volumes and the favorable impact of the Group’s cost reduction initiatives, offset by higher raw material costs in natural ingredients. Foreign currency translation increased segment revenue by approximately 1% and had an immaterial impact on operating income in the quarter.
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| Sensient Technologies Corporation | Page 3 |
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| Earnings Release – Quarter Ended December 31, 2020 | |
| February 12, 2021 |
The Color Group reported revenue of $119.8 million in the quarter compared to $125.4 million in last year’s comparable period, a decrease of 4.4%. Adjusted local currency revenue increased 1.1% in the quarter. The Group continued to experience growth in food and pharmaceutical colors; however, this growth was offset by lower volumes in the personal care business, primarily as a result of the continued lower demand for makeup during the COVID-19 pandemic. Segment operating income was $20.5 million in the quarter compared to $19.7 million in last year’s comparable period, an increase of 4.4%. Adjusted local currency operating income was up 0.5% to prior year. Despite double-digit growth rates in food and pharmaceutical colors profit, the lower volumes in personal care continued to negatively impact the Color Group’s operating income in the quarter. Foreign currency translation increased segment revenue and operating income by approximately 1% in the quarter.
The Asia Pacific Group reported revenue of $32.2 million in the quarter compared to $30.6 million in last year’s comparable period, an increase of 5.1%. Adjusted local currency revenue increased 2.8% in the quarter. Segment operating income was $6.0 million in the quarter compared to $5.6 million in last year’s comparable quarter, an increase of 8.8%. Adjusted local currency operating income increased 7.8% in the quarter. The higher profit was primarily a result of the favorable volume growth. Foreign currency translation increased segment revenue and operating income by approximately 3% and 1%, respectively, in the quarter.
Corporate & Other reported operating costs of $15.3 million in the current quarter compared to $53.9 million in last year’s comparable period. The lower costs are primarily due to lower divestiture & other costs reported in the fourth quarter of 2020 compared to the amount recorded in the fourth quarter of 2019.
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| Sensient Technologies Corporation | Page 4 |
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| Earnings Release – Quarter Ended December 31, 2020 | |
| February 12, 2021 |
Cash provided by operating activities was $75.9 million for the fourth quarter of 2020 compared to $49.6 million in the fourth quarter of 2019, an increase of 52.9%. Total debt decreased by $34.3 million during the fourth quarter of 2020.
2021 OUTLOOK
Sensient expects 2021 full year GAAP diluted earnings per share to grow at a mid to high single digit growth rate compared to the Company’s 2020 reported GAAP diluted earnings per share of $2.59. Our full year 2021 guidance includes approximately 25 to 30 cents per share of estimated divestiture & other related costs, the results of the operations to be divested, and the operational improvement plan costs.
The Company expects 2021 adjusted local currency revenue ^(2)^ to grow at a low to mid-single digit rate and adjusted local currency EBITDA ^(2)^ to grow at a mid-single digit rate. The Company also expects, on a local currency basis, 2021 adjusted diluted earnings per share^(2)^ to grow at a mid-single digit growth rate compared to the Company’s 2020 adjusted diluted earnings per share of $2.79.
The Company expects earnings per share reported on a U.S. dollar basis to benefit by approximately ten cents based on current exchange rates.
The Company’s guidance is based upon current trends and the effects of COVID-19 to date. The full impacts of the ongoing COVID-19 pandemic remain uncertain and management will continue to monitor its impacts on our business.
| ^(2)^ | See “Reconciliation of Non-GAAP Amounts” at the end of this release for more information. |
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| Sensient Technologies Corporation | Page 5 |
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| Earnings Release – Quarter Ended December 31, 2020 | |
| February 12, 2021 |
USE OF NON-GAAP FINANCIAL MEASURES
The Company’s non-GAAP financial measures eliminate the impact of certain items, which, depending on the measure, include, currency movements, depreciation and amortization, non-cash share-based compensation, divestiture & other related costs, operational improvement plan costs, COVID-19 employee payment costs, and the results of the operations divested or to be divested. These measures are provided to enhance the overall understanding of the Company’s performance when viewed together with the GAAP results. Refer to “Reconciliation of Non-GAAP Amounts” at the end of this release.
CONFERENCE CALL
The Company will host a conference call to discuss its 2020 fourth quarter and year end financial results at 8:30 a.m. CST on Friday, February 12, 2021. To participate in the conference call, contact Chorus Call Inc. at (844) 492-3726 or (412) 317-1078, and ask to join the Sensient Technologies Corporation conference call. Alternatively, the call can be accessed by using the webcast link that is available on the Investor Information section of the Company’s web site at www.sensient.com.
A replay of the call will be available one hour after the end of the conference call through February 19, 2021, by calling (877) 344-7529 and referring to conference identification number 10150402. An audio replay and written transcript of the call will also be posted on the Investor Information section of the Company’s web site at www.sensient.com on or after February 16, 2021.
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| Sensient Technologies Corporation | Page 6 |
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| Earnings Release – Quarter Ended December 31, 2020 | |
| February 12, 2021 |
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2021 Outlook” above. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, the availability and cost of raw materials and other supplies, the availability of logistics and transportation, governmental regulations and restrictions and general economic conditions; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and operational improvement plan; the effectiveness of the Company’s past restructuring activities; changes in costs of raw materials, including energy; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
ABOUT SENSIENT TECHNOLOGIES
Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. Sensient uses advanced technologies and robust global supply chain capabilities to develop specialized solutions for food and beverages, as well as products that serve the pharmaceutical, nutraceutical, cosmetic, and personal care industries. Sensient’s customers range in size from small entrepreneurial businesses to major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.
www.sensient.com
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| (In thousands, except percentages and per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Consolidated Statements of Earnings | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||
| Revenue | $ | 334,668 | $ | 318,585 | 5.0% | $ | 1,332,001 | $ | 1,322,934 | 0.7% | ||||||
| Cost of products sold | 230,674 | 233,105 | (1.0%) | 908,254 | 908,061 | 0.0% | ||||||||||
| Selling and administrative expenses | 69,179 | 99,946 | (30.8%) | 271,091 | 293,763 | (7.7%) | ||||||||||
| Operating income (loss) | 34,815 | (14,466 | ) | (340.7%) | 152,656 | 121,110 | 26.0% | |||||||||
| Interest expense | 3,399 | 4,569 | 14,811 | 20,107 | ||||||||||||
| Earnings (loss) before income taxes | 31,416 | (19,035 | ) | 137,845 | 101,003 | |||||||||||
| Income taxes (benefit) | 6,247 | (2,073 | ) | 28,373 | 18,956 | |||||||||||
| Net earnings (loss) | $ | 25,169 | $ | (16,962 | ) | (248.4%) | $ | 109,472 | $ | 82,047 | 33.4% | |||||
| Earnings per share of common stock: | ||||||||||||||||
| Basic | $ | 0.59 | $ | (0.40 | ) | $ | 2.59 | $ | 1.94 | |||||||
| Diluted | $ | 0.59 | $ | (0.40 | ) | $ | 2.59 | $ | 1.94 | |||||||
| Average common shares outstanding: | ||||||||||||||||
| Basic | 42,307 | 42,272 | 42,301 | 42,263 | ||||||||||||
| Diluted | 42,404 | 42,272 | 42,346 | 42,294 | ||||||||||||
| Results by Segment | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| Revenue | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||
| Flavors & Extracts | $ | 189,060 | $ | 169,092 | 11.8% | $ | 742,035 | $ | 700,356 | 6.0% | ||||||
| Color | 119,813 | 125,363 | (4.4%) | 501,018 | 535,159 | (6.4%) | ||||||||||
| Asia Pacific | 32,165 | 30,602 | 5.1% | 121,227 | 118,248 | 2.5% | ||||||||||
| Intersegment elimination | (6,370 | ) | (6,472 | ) | (32,279 | ) | (30,829 | ) | ||||||||
| Consolidated | $ | 334,668 | $ | 318,585 | 5.0% | $ | 1,332,001 | $ | 1,322,934 | 0.7% | ||||||
| Operating Income | ||||||||||||||||
| Flavors & Extracts | $ | 23,507 | $ | 14,186 | 65.7% | $ | 90,974 | $ | 74,961 | 21.4% | ||||||
| Color | 20,548 | 19,678 | 4.4% | 96,034 | 101,190 | (5.1%) | ||||||||||
| Asia Pacific | 6,044 | 5,557 | 8.8% | 22,075 | 19,382 | 13.9% | ||||||||||
| Corporate & Other | (15,284 | ) | (53,887 | ) | (56,427 | ) | (74,423 | ) | ||||||||
| Consolidated | $ | 34,815 | $ | (14,466 | ) | (340.7%) | $ | 152,656 | $ | 121,110 | 26.0% |
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(In thousands)
(Unaudited)
| Consolidated Condensed Balance Sheets | December 31, | December 31, | ||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Cash and cash equivalents | $ | 24,770 | $ | 21,153 |
| Trade accounts receivable (net) | 234,132 | 213,201 | ||
| Inventories | 381,346 | 422,517 | ||
| Prepaid expenses and other current assets | 48,578 | 40,049 | ||
| Assets held for sale | 52,760 | 91,293 | ||
| Total Current Assets | 741,586 | 788,213 | ||
| Goodwill & intangible assets (net) | 434,220 | 418,844 | ||
| Property, plant, and equipment (net) | 445,493 | 437,179 | ||
| Other assets | 119,561 | 95,915 | ||
| Total Assets | $ | 1,740,860 | $ | 1,740,151 |
| Trade accounts payable | $ | 107,324 | $ | 94,653 |
| Short-term borrowings | 9,247 | 20,612 | ||
| Other current liabilities | 82,045 | 66,925 | ||
| Liabilities held for sale | 17,339 | 19,185 | ||
| Total Current Liabilities | 215,955 | 201,375 | ||
| Long-term debt | 518,004 | 598,499 | ||
| Accrued employee and retiree benefits | 28,941 | 25,822 | ||
| Other liabilities | 43,624 | 32,866 | ||
| Shareholders’ Equity | 934,336 | 881,589 | ||
| Total Liabilities and Shareholders’ Equity | $ | 1,740,860 | $ | 1,740,151 |
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(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Cash Flows
Twelve Months Ended December 31,
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 109,472 | $ | 82,047 | ||
| Adjustments to arrive at net cash provided by operating activities: | ||||||
| Depreciation and amortization | 49,641 | 55,015 | ||||
| Share-based compensation expense (income) | 5,608 | (739 | ) | |||
| Net gain on assets | (252 | ) | (1,122 | ) | ||
| Net loss on divestitures and other charges | 6,904 | 44,375 | ||||
| Deferred income taxes | (8,705 | ) | (19,340 | ) | ||
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable | (11,357 | ) | 10,930 | |||
| Inventories | 46,828 | 25,238 | ||||
| Prepaid expenses and other assets | (12,868 | ) | 3,257 | |||
| Accounts payable and other accrued expenses | 15,524 | (18,251 | ) | |||
| Accrued salaries, wages and withholdings from employees | 15,140 | (3,039 | ) | |||
| Income taxes | 22 | (1,836 | ) | |||
| Other liabilities | 2,823 | 647 | ||||
| Net cash provided by operating activities | 218,780 | 177,182 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of property, plant, and equipment | (52,162 | ) | (39,100 | ) | ||
| Proceeds from sale of assets | 1,075 | 2,242 | ||||
| Proceeds from divesture of businesses | 12,595 | - | ||||
| Other investing activity | 5,071 | (553 | ) | |||
| Net cash used in investing activities | (33,421 | ) | (37,411 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from additional borrowings | 36,667 | 47,083 | ||||
| Debt payments | (154,348 | ) | (134,449 | ) | ||
| Dividends paid | (66,057 | ) | (62,190 | ) | ||
| Other financing activity | (415 | ) | (1,027 | ) | ||
| Net cash used in financing activities | (184,153 | ) | (150,583 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | 2,411 | 64 | ||||
| Net increase (decrease) in cash and cash equivalents | 3,617 | (10,748 | ) | |||
| Cash and cash equivalents at beginning of period | 21,153 | 31,901 | ||||
| Cash and cash equivalents at end of period | $ | 24,770 | $ | 21,153 | ||
| Supplemental Information | ||||||
| Twelve Months Ended December 31, | 2020 | 2019 | ||||
| Dividends paid per share | $ | 1.56 | $ | 1.47 |
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(In thousands, except percentages and per share amounts)
(Unaudited)
Reconciliation of Non-GAAP Amounts
The Company’s results for the three and twelve months ended December 31, 2020 and 2019 include adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude divestiture & other related costs, operational improvement plan costs, the results of operations divested or to be divested, and the COVID-19 employee payment.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Revenue (GAAP) | $ | 334,668 | $ | 318,585 | 5.0% | $ | 1,332,001 | $ | 1,322,934 | 0.7% | ||||||||
| Revenue of the product lines divested or to be divested | (25,163 | ) | (33,683 | ) | (113,553 | ) | (143,172 | ) | ||||||||||
| Adjusted revenue | $ | 309,505 | $ | 284,902 | 8.6% | $ | 1,218,448 | $ | 1,179,762 | 3.3% | ||||||||
| Operating income (loss) (GAAP) | $ | 34,815 | $ | (14,466 | ) | (340.7%) | $ | 152,656 | $ | 121,110 | 26.0% | |||||||
| Divestiture & other related costs – Cost of products sold | 4 | 10,567 | 1,795 | 10,567 | ||||||||||||||
| Divestiture & other related costs – Selling and administrative expenses | 1,671 | 35,313 | 10,360 | 35,313 | ||||||||||||||
| Operating income of the product lines divested or to be divested | (3,415 | ) | (745 | ) | (7,580 | ) | (1,978 | ) | ||||||||||
| Operational improvement plan - Cost of products sold | - | - | 35 | - | ||||||||||||||
| Operational improvement plan - Selling and administrative expenses | 698 | - | 3,304 | - | ||||||||||||||
| COVID-19 employee payment - Cost of products sold | 1,036 | - | 1,036 | - | ||||||||||||||
| COVID-19 employee payment - Selling and administrative expenses | 1,986 | - | 1,986 | - | ||||||||||||||
| Adjusted operating income | $ | 36,795 | $ | 30,669 | 20.0% | $ | 163,592 | $ | 165,012 | (0.9%) | ||||||||
| Net earnings (loss) (GAAP) | $ | 25,169 | $ | (16,962 | ) | (248.4%) | $ | 109,472 | $ | 82,047 | 33.4% | |||||||
| Divestiture & other related costs, before tax | 1,675 | 45,880 | 12,155 | 45,880 | ||||||||||||||
| Tax impact of divestiture & other related costs | (1,393 | ) | (2,671 | ) | (2,605 | ) | (2,671 | ) | ||||||||||
| Net earnings of the product lines divested or to be divested, before tax | (3,415 | ) | (745 | ) | (7,580 | ) | (1,978 | ) | ||||||||||
| Tax impact of the product lines divested or to be divested | 790 | 196 | 1,945 | 399 | ||||||||||||||
| Operational improvement plan costs, before tax | 698 | - | 3,339 | - | ||||||||||||||
| Tax impact of operational improvement plan | (170 | ) | - | (826 | ) | - | ||||||||||||
| COVID-19 employee payment, before tax | 3,022 | - | 3,022 | - | ||||||||||||||
| Tax impact of COVID-19 employee payment | (675 | ) | - | (675 | ) | - | ||||||||||||
| Adjusted net earnings | $ | 25,701 | $ | 25,698 | 0.0% | $ | 118,247 | $ | 123,677 | (4.4%) | ||||||||
| Diluted earnings (loss) per share (GAAP) | $ | 0.59 | $ | (0.40 | ) | (247.5%) | $ | 2.59 | $ | 1.94 | 33.5% | |||||||
| Divestiture & other related costs, net of tax | 0.01 | 1.02 | 0.23 | 1.02 | ||||||||||||||
| Results of operations of the product lines divested or to be divested, net of tax | (0.06 | ) | (0.01 | ) | (0.13 | ) | (0.04 | ) | ||||||||||
| Operational improvement plan costs, net of tax | 0.01 | - | 0.06 | - | ||||||||||||||
| COVID-19 employee payment, net of tax | 0.06 | - | 0.06 | - | ||||||||||||||
| Adjusted diluted earnings per share | $ | 0.61 | $ | 0.61 | 0.0% | $ | 2.79 | $ | 2.92 | (4.5%) | ||||||||
| Note: Earnings per share calculations may not foot due to rounding differences. | ||||||||||||||||||
| Results by Segment | Three Months Ended December 31, | |||||||||||||||||
| Adjusted | Adjusted | |||||||||||||||||
| Revenue | 2020 | Adjustments ^(1)^ | 2020 | 2019 | Adjustments ^(1)^ | 2019 | ||||||||||||
| Flavors & Extracts | $ | 189,060 | $ | (24,378 | ) | $ | 164,682 | $ | 169,092 | $ | (25,308 | ) | $ | 143,784 | ||||
| Color | 119,813 | (766 | ) | 119,047 | 125,363 | (8,412 | ) | 116,951 | ||||||||||
| Asia Pacific | 32,165 | (116 | ) | 32,049 | 30,602 | (149 | ) | 30,453 | ||||||||||
| Intersegment elimination | (6,370 | ) | 97 | (6,273 | ) | (6,472 | ) | 186 | (6,286 | ) | ||||||||
| Consolidated | $ | 334,668 | $ | (25,163 | ) | $ | 309,505 | $ | 318,585 | $ | (33,683 | ) | $ | 284,902 | ||||
| Operating Income | ||||||||||||||||||
| Flavors & Extracts | $ | 23,507 | $ | (3,214 | ) | $ | 20,293 | $ | 14,186 | $ | (1,039 | ) | $ | 13,147 | ||||
| Color | 20,548 | (158 | ) | 20,390 | 19,678 | 332 | 20,010 | |||||||||||
| Asia Pacific | 6,044 | (43 | ) | 6,001 | 5,557 | (38 | ) | 5,519 | ||||||||||
| Corporate & Other | (15,284 | ) | 5,395 | (9,889 | ) | (53,887 | ) | 45,880 | (8,007 | ) | ||||||||
| Consolidated | $ | 34,815 | $ | 1,980 | $ | 36,795 | $ | (14,466 | ) | $ | 45,135 | $ | 30,669 | |||||
| Results by Segment | Twelve Months Ended December 31, | |||||||||||||||||
| Adjusted | Adjusted | |||||||||||||||||
| Revenue | 2020 | Adjustments ^(1)^ | 2020 | 2019 | Adjustments ^(1)^ | 2019 | ||||||||||||
| Flavors & Extracts | $ | 742,035 | $ | (99,543 | ) | $ | 642,492 | $ | 700,356 | $ | (107,363 | ) | $ | 592,993 | ||||
| Color | 501,018 | (14,008 | ) | 487,010 | 535,159 | (36,002 | ) | 499,157 | ||||||||||
| Asia Pacific | 121,227 | (518 | ) | 120,709 | 118,248 | (712 | ) | 117,536 | ||||||||||
| Intersegment elimination | (32,279 | ) | 516 | (31,763 | ) | (30,829 | ) | 905 | (29,924 | ) | ||||||||
| Consolidated | $ | 1,332,001 | $ | (113,553 | ) | $ | 1,218,448 | $ | 1,322,934 | $ | (143,172 | ) | $ | 1,179,762 | ||||
| Operating Income | ||||||||||||||||||
| Flavors & Extracts | $ | 90,974 | $ | (8,292 | ) | $ | 82,682 | $ | 74,961 | $ | (1,236 | ) | $ | 73,725 | ||||
| Color | 96,034 | 871 | 96,905 | 101,190 | (562 | ) | 100,628 | |||||||||||
| Asia Pacific | 22,075 | (159 | ) | 21,916 | 19,382 | (180 | ) | 19,202 | ||||||||||
| Corporate & Other | (56,427 | ) | 18,516 | (37,911 | ) | (74,423 | ) | 45,880 | (28,543 | ) | ||||||||
| Consolidated | $ | 152,656 | $ | 10,936 | $ | 163,592 | $ | 121,110 | $ | 43,902 | $ | 165,012 |
(1) For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, adjustments consist of the results of the product lines divested or to be divested, divestitures & other related costs, operational improvement plan costs, and the one-time 2020 COVID-19 employee payment.
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| Sensient Technologies Corporation | Page 11 |
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(In thousands, except percentages)
(Unaudited)
Reconciliation of Non-GAAP Amounts - Continued
The following table summarizes the percentage change in the 2020 results compared to the 2019 results for the corresponding periods.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| Revenue | Total | Foreign Exchange Rates | Adjustments ^(2)^ | Adjusted Local Currency | Total | Foreign Exchange Rates | Adjustments ^(2)^ | Adjusted Local Currency |
| Flavors & Extracts | 11.8% | 1.1% | (3.3%) | 14.0% | 6.0% | (0.3%) | (2.5%) | 8.8% |
| Color | (4.4%) | 0.9% | (6.4%) | 1.1% | (6.4%) | (1.8%) | (3.9%) | (0.7%) |
| Asia Pacific | 5.1% | 2.5% | (0.2%) | 2.8% | 2.5% | (0.3%) | (0.2%) | 3.0% |
| Total Revenue | 5.0% | 1.1% | (4.0%) | 7.9% | 0.7% | (0.9%) | (2.7%) | 4.3% |
| Operating Income | ||||||||
| Flavors & Extracts | 65.7% | 0.0% | 10.8% | 54.9% | 21.4% | (0.7%) | 9.0% | 13.1% |
| Color | 4.4% | 0.9% | 3.0% | 0.5% | (5.1%) | (1.6%) | (1.1%) | (2.4%) |
| Asia Pacific | 8.8% | 0.9% | 0.1% | 7.8% | 13.9% | (0.2%) | (0.2%) | 14.3% |
| Corporate & Other | (71.6%) | 0.0% | (95.0%) | 23.4% | (24.2%) | 0.0% | (57.0%) | 32.8% |
| Total Operating Income | (340.7%) | (1.6%) | (358.3%) | 19.2% | 26.0% | (1.9%) | 27.5% | 0.4% |
| Diluted Earnings Per Share | (247.5%) | 0.0% | (247.5%) | 0.0% | 33.5% | (2.1%) | 39.0% | (3.4%) |
| Adjusted EBITDA | 17.6% | 0.7% | N/A | 16.9% | 2.1% | (1.1%) | N/A | 3.2% |
(2) For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, Diluted Earnings per Share, and Adjusted EBITDA adjustments consist of the results of the product lines divested or to be divested, divestitures & other related costs, operational improvement plan costs, and the one-time 2020 COVID-19 employee payment.
The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and twelve months ended December 31, 2020 and 2019.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||
| Operating income (loss) (GAAP) | $ | 34,815 | $ | (14,466 | ) | (340.7%) | $ | 152,656 | $ | 121,110 | 26.0% | |||||
| Depreciation and amortization | 12,810 | 13,309 | 49,641 | 55,015 | ||||||||||||
| Depreciation and amortization, product lines divested or to be divested | (48 | ) | (570 | ) | (193 | ) | (5,065 | ) | ||||||||
| Share-based compensation expense (income) | 1,591 | 77 | 5,608 | (739 | ) | |||||||||||
| Divestiture & other related costs, before tax | 1,675 | 45,880 | 12,155 | 45,880 | ||||||||||||
| Results of operations of the product lines divested or to be divested, before tax | (3,415 | ) | (745 | ) | (7,580 | ) | (1,978 | ) | ||||||||
| Operational improvement plan costs, before tax | 698 | - | 3,339 | - | ||||||||||||
| COVID-19 employee payment | 3,022 | - | 3,022 | - | ||||||||||||
| Adjusted EBITDA | $ | 51,148 | $ | 43,485 | 17.6% | $ | 218,648 | $ | 214,223 | 2.1% | ||||||
| The following table summarizes the reconciliation between Net cash provided by operating activities (GAAP) and Free Cash Flow for the three and twelve months ended December 31, 2020<br> and 2019. | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||
| Net cash provided by operating activities (GAAP) | $ | 75,853 | $ | 49,601 | 52.9% | $ | 218,780 | $ | 177,182 | 23.5% | ||||||
| Capital expenditures | (18,153 | ) | (13,027 | ) | (52,162 | ) | (39,100 | ) | ||||||||
| Free Cash Flow | $ | 57,700 | $ | 36,574 | 57.8% | $ | 166,618 | $ | 138,082 | 20.7% |
We have included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable period-over-period performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this release and our SEC filings. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and we believe the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.
Exhibit 99.2
Fourth Quarter 2020 Investor Presentation
2 FORWARD-LOOKING STATEMENTS This document contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2021 Financial Outlook” in this presentation. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, the availability and cost of raw materials and other supplies, the availability of logistics and transportation, governmental regulations and restrictions and general economic conditions; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and operational improvement plan; the effectiveness of the Company’s past restructuring activities; changes in costs of raw materials, including energy; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This presentation contains time-sensitive information that reflects management’s best analysis only as of the date of this presentation. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
3 NON-GAAP FINANCIAL MEASURES Within this document, the Company reports certain non-GAAP financial measures, including: (1) adjusted revenue, adjusted operating income, adjusted net earnings, adjusted EBITDA, and adjusted diluted earnings per share (which exclude divestiture & other related costs, operational improvement plan costs, the results of operations divested or to be divested, and the one-time COVID-19 employee payment), (2) adjusted results by segment (which exclude divestiture & other related costs, operational improvement plan costs, the results of operations divested or to be divested, and the one-time COVID-19 employee payment), (3) percentage changes in revenue, operating income, diluted earnings per share, and EBITDA on an adjusted local currency basis (which eliminate the effects that result from translating its international operations intoU.S. dollars and exclude divestiture & other related costs, operational improvement plan costs, the results of operations divested or to be divested, and the one-time COVID-19 employee payment), and (4) adjusted EBITDA (which excludes depreciation and amortization expense, non-cash share based compensation expense, the results of the product lines divested or to be divested, the divestiture & other related costs, operational improvement plan costs, and the one-time COVID-19 employee payment). The Company has included each of these non-GAAP measures in order to provide additional information regarding the underlying operating results and comparable period-over-period performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this presentation and the Company’s SEC filings. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and the Company believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. Refer to “Non-GAAP Financial Measures” at the end of this presentation for reconciliations and additional information.
4 Over 135 years of Industry Leadership Established in 1882 as Meadow Springs DistilleryEvolved into Universal Foods as a diversified food and ingredients companyName changed to Sensient Technologies Corporation in 2000Today, we are a provider of advanced technologies, serving markets with strong growth profiles through delivery of customized solutions for food and beverages, pharmaceutical, personal care, and other applications
5 Innovative Technologies Creating Unique Solutions Applications expertise and solutions-based sellingHigh impact relative to costTechnically-driven products that are difficult to replace Strong consumer trendsOpportunities to grow organically and through M&A
6 Focusing our portfolio and strengthening our commitment to the end markets Investing in core focus areas of Flavors and Extracts, Natural Ingredients, Food and Pharmaceutical Colors, and Personal CareDivesting non-core product lines (inks, fragrances, and yogurt fruit prep product lines) where Sensient lacks scale to competeThe sale of these product lines solidifies our focus on core strategic businesses and improves the Company’s future growth profile
7 Color Group2020 Revenue: $501M 2020 Adj. Revenue*: $487M Core Areas of Focus: Food and Pharmaceutical Colors and Personal CareFlavors & Extracts Group2020 Revenue: $742M 2020 Adj. Revenue*: $642MCore Areas of Focus: Flavors and Extracts, Natural Ingredients, and Other Flavor IngredientsAsia Pacific Group2020 Revenue: $121M 2020 Adj. Revenue*: $121M Core Areas of Focus: Flavors and Colors for food and beverage Global Revenue by Group 2020 Global Revenues include intercompany sales which are eliminated on a consolidated basis.*Adj. Revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of this document.
8 Global market leaderNatural color innovatorUnmatched innovation & applications expertise Color Group
9 Color Overview Food and Pharmaceutical 69% of Segment Revenue 71% of Adj. Segment Revenue LC Revenue Change Q4 ’20 +4.4%YTD ’20 +3.6% Market trend toward natural colors in food and beverageUnique value proposition for Pharmaceutical customers includes colors, flavors, coatings, and extracts Personal Care 28% of Segment Revenue 29% of Adj. Segment Revenue LC Revenue Change Q4 ’20 (6.4%)YTD ’20 (9.8%) Demand for innovative products with multiple benefitsProduct line includes formulation aides and ingredients for color cosmetics, hair care, and skin care2020 results impacted negatively by lower demand due to COVID Inks 3% of Segment Revenue Completed divestiture in June 2020 2020 Revenue: $501M 2020 Adj. Revenue*: $487M *Local-currency (LC) revenue and adjusted revenue are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end of this document.
10 Flavors & Extracts Group Broad product offeringUnique ability to service global, regional, and local customersLeading technology platformsUnmatched applications expertise
11 Flavors & Extracts Overview Flavors, Extracts, and Flavor Ingredients 54% of Segment Revenue 62% of Adj. Segment Revenue LC Revenue Change Q4 ’20 +11.5%YTD ’20 +6.1% Opportunities for on trend products with extracts, taste modulation, and natural flavors Natural Ingredients 33% of Segment Revenue 38% of Adj. Segment Revenue LC Revenue Change Q4 ’20 +17.8%YTD ’20 +13.6% Leading provider of dehydrated onion, garlic, and other products Fragrances 11% of Segment Revenue LC Revenue Change Q4 ’20 +2.2%YTD ’20 (1.4%) Targeted for divestiture; expected to close first half of 2021 Yogurt Fruit Prep 2% of Segment Revenue Completed divestiture in September 2020 2020 Revenue: $742M 2020 Adj. Revenue*: $642M *Local-currency (LC) revenue and adjusted revenue are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end of this document.
12 Asia Pacific Group 2020 adjusted revenue of $121 million and adjusted operating income of $22 millionSensient’s sales of flavors and colors for Food and Pharmaceutical are managed on a geographic basis and reported as a separate segmentManufacturing capabilities in Australia, New Zealand, China, Japan, Philippines, Thailand, and India; R&D capabilities in Singapore, Thailand, and ChinaQ4 2020 local currency adjusted revenue and operating profit improved 2.8% and 7.8%, respectively, and on a full year basis 3.0% and 14.3% * Adjusted revenue, adjusted local currency revenue, and adjusted operating income are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
13 2020 Highlights * Local-currency adjusted revenue is a Non- GAAP metric. Please see our GAAP to Non- GAAP Reconciliation at the end of this document. Achieved mid-single digit local currency adjusted revenue growth Delivered at the top end of EPS guidance for 2020Flavors & Extracts group delivered double digit profit growth in 2020 Completed the divestiture of the inks and yogurt fruit prep product linesSigned a definitive agreement to divest the fragrances product line with anticipated closure in the first half of 2021
14 2020 Q4 Segment Results Local Currency Adjusted Revenue* Q4 YTD Color 1.1% (0.7%) Flavors & Extracts 14.0% 8.8% Asia Pacific 2.8% 3.0% Color Group fourth quarter revenue increased due to continued growth in Food and Pharmaceutical colors, partially offset by lower volume in makeup in Personal Care due to ongoing COVID impacts. Operating income was up in the quarter due to product mix in Food and Pharmaceutical colors and impacts from cost containment actions.Flavors & Extracts Group reported higher revenue in the quarter as a result of solid sales in Natural Ingredients and a continued increase in sales of Flavors, Extracts, and Flavor Ingredients.Operating income was up as a result of the higher volumes, product mix shift to more value added solutions, and the realized benefits from ongoing cost control efforts.Asia Pacific Group fourth quarter revenue increased; however, COVID continues to impact the group in certain regions. Operating income improved substantially due to volume growth and the Group’s cost control plans yielding results. Local Currency Adjusted Operating Income* Q4 YTD Color 0.5% (2.4%) Flavors & Extracts 54.9% 13.1% Asia Pacific 7.8% 14.3% * Local-currency adjusted revenue and adjusted operating income are Non-GAAP metrics.Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
15 2020 Q4 Consolidated Results Q4 YTD Local Currency Adjusted Revenue* +7.9% +4.3% Local Currency Adjusted Operating Income* +19.2% +0.4% Local Currency Adjusted Diluted EPS* 0.0% (3.4%) Local Currency Adjusted EBITDA* +16.9% +3.2% Q4 consolidated revenue was up due to double digit growth in the Flavors & Extracts Group and Food and Pharmaceutical colors was up mid-single digits. Consolidated revenue continues to be negatively impacted by COVID, particularly in our Personal Care business and certain countries within Asia Pacific.Q4 consolidated operating income was up due to volume growth in Flavors, Extracts, and Flavor Ingredients and Food and Pharmaceutical colors, portfolio mix shift to value added product solutions in the Flavors & Extracts Group, and the realized benefits from our cost control initiatives. The operating income improvement was partially offset by lower volume in Personal Care, higher year-over-year Corporate expenses related to performance-based compensation, and higher Natural Ingredient raw material costs. * Local-currency adjusted revenue, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
16 Capital Allocation Prioritize ROI capital projects Maintain dividend payout ratio Debt reduction to maintain targeted leverage Maintain financial flexibility to pursue M&A Excess capital returned to shareholders through opportunistic share repurchases $50 $87 $50 $54 $57 $81 $56 $51 $39 $52 $31 $25 $9 $87 $118 $77 $62 $66 2017 2018 2019 2020 $- $50 $100 $150 $200 $250 2016 DOLLARS IN MILLIONS Share Repurchase Acquisitions Dividends Debt Repayments Capital Expenditures
17 2021 Financial Outlook * Local-currency adjusted revenue, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document. Metric Guidance Comments Diluted EPS (GAAP) Mid-to-high single digit growth Includes 25 to 30 cents of divestiture related costs, operational improvement plan costs, and the results of operations of the remaining business to be divestedAt current rates FX provides a 10 cent benefit Adjusted Diluted EPS in Local Currency* Mid-single digit growth Excludes divestiture and other related costs and operational improvement plan costsExcludes results of operations of product lines divested or to be divested Adjusted Local Currency Revenue* Low-to-mid-single digit growth Excludes revenue of product lines divested or to be divested Adjusted Local Currency EBITDA* Mid-single digit growth Excludes divestiture and other related costs and operational improvement plan costsExcludes results of operations of product lines divested or to be divested
18 Why Invest? Strong competitive position‘Sticky’ business (& low portion of customer costs) Global presenceExposure to stable and growing markets Focused on improving returns and on growth
19 ESG Information Click here to access our Environmental Sensient is committed to the principles of sound environmental stewardship and the responsible and sustainable use of energy and natural resources.Long-term goals to reduce Energy, Water, and Hazardous Waste intensitySeed-to-shelf program focused on sustainable supply chainEmphasis on new products and technologies that minimize waste and environmental impactsChemical Risk Strategy implemented to identify and reduce risk in our portfolio Social Sensient strives to conduct business in an ethical manner and to make a positive contribution to society through our product offerings and business activities.Sensient’s Code of Conduct and Supplier Code of Conduct require strong ethical behavior, fair employment practices, and strict human rights practices and product safety standardsRobust product, environmental, and raw material safety programs designed to exceed industry standards.Raw material traceability and sustainability programsSupport for our local communities through volunteerism, financial donations, sponsorships, and employee education opportunities Governance Sensient is committed to maintaining the highest standards of professional conduct and strong corporate governance practices through our comprehensive corporate governance framework.Board comprised of a majority of independent directors with diverse and accomplished backgroundsCommitted to board diversity and refreshment, we are a 2020 Women on Boards Winning Company for the seventh year in a row and we have added seven new directors since 2013. 40% of our Board is female.Robust Code of Conduct built on a foundation of ethics, safety and quality, and professionalism resulting in ethical and lawful conduct of our businessExecutive compensation strongly tied to performance
APPENDIX – NON-GAAP TABLES
21 Non-GAAP Financial Measures Note: EPS Calculations may not foot due to rounding differences Three Months EndedDecember 31, 2020 Three Months EndedDecember 31, 2019 Twelve Months EndedDecember 31, 2020 Twelve Months EndedDecember 31, 2019 Revenue (GAAP) $ 334,668 $ 318,585 $ 1,332,001 $ 1,322,934 Revenue of the product lines divested or to be divested (25,163) (33,683) (113,553) (143,172) Adjusted revenue $ 309,505 $ 284,902 $ 1,218,448 $ 1,179,762 Operating income (loss) (GAAP) $ 34,815 $ (14,466) $ 152,656 $ 121,110 Divestiture & other related costs – Cost of products sold 4 10,567 1,795 10,567 Divestiture & other related costs – Selling and administrative expenses 1,671 35,313 10,360 35,313 Operating income of the product lines divested or to be divested (3,415) (745) (7,580) (1,978) Operational improvement plan - Cost of products sold - - 35 - Operational improvement plan - Selling and administrative expenses 698 - 3,304 - COVID-19 employee payment - Cost of products sold 1,036 - 1,036 - COVID-19 employee payment - Selling and administrative expenses 1,986 - 1,986 - Adjusted operating income $ 36,795 $ 30,669 $ 163,592 $ 165,012 Net earnings (loss) (GAAP) $ 25,169 $ (16,962) $ 109,472 $ 82,047 Divestiture & other related costs, before tax 1,675 45,880 12,155 45,880 Tax impact of divestiture & other related costs (1,393) (2,671) (2,605) (2,671) Net earnings of the product lines divested or to be divested, before tax (3,415) (745) (7,580) (1,978) Tax impact of the product lines divested or to be divested 790 196 1,945 399 Operational improvement plan costs, before tax 698 - 3,339 - Tax impact of operational improvement plan (170) - (826) - COVID-19 employee payment, before tax 3,022 - 3,022 - Tax impact of COVID-19 employee payment (675) - (675) - Adjusted net earnings $ 25,701 $ 25,698 $ 118,247 $ 123,677 Diluted earnings (loss) per share (GAAP) $ 0.59 $ (0.40) $ 2.59 $ 1.94 Divestiture & other related costs, net of tax 0.01 1.02 0.23 1.02 Results of operations of the product lines divested or to be divested, net of tax (0.06) (0.01) (0.13) (0.04) Operational improvement plan costs, net of tax 0.01 - 0.06 - COVID-19 employee payment, net of tax 0.06 - 0.06 - Adjusted diluted earnings per share $ 0.61 $ 0.61 $ 2.79 $ 2.92
22 Non-GAAP Financial Measures (Cont’d) Revenue Total ForeignExchange Rates Adjustments* AdjustedLocal Currency Total ForeignExchange Rates Adjustments* AdjustedLocal Currency Flavors & Extracts 11.8% 1.1% (3.3%) 14.0% 6.0% (0.3%) (2.5%) 8.8% Color (4.4%) 0.9% (6.4%) 1.1% (6.4%) (1.8%) (3.9%) (0.7%) Asia Pacific 5.1% 2.5% (0.2%) 2.8% 2.5% (0.3%) (0.2%) 3.0% Total Revenue 5.0% 1.1% (4.0%) 7.9% 0.7% (0.9%) (2.7%) 4.3% Operating Income Flavors & Extracts 65.7% 0.0% 10.8% 54.9% 21.4% (0.7%) 9.0% 13.1% Color 4.4% 0.9% 3.0% 0.5% (5.1%) (1.6%) (1.1%) (2.4%) Asia Pacific 8.8% 0.9% 0.1% 7.8% 13.9% (0.2%) (0.2%) 14.3% Corporate & Other (71.6%) 0.0% (95.0%) 23.4% (24.2%) 0.0% (57.0%) 32.8% Total Operating Income (340.7%) (1.6%) (358.3%) 19.2% 26.0% (1.9%) 27.5% 0.4% Diluted Earnings Per Share (247.5%) 0.0% (247.5%) 0.0% 33.5% (2.1%) 39.0% (3.4%) Adjusted EBITDA 17.6% 0.7% N/A 16.9% 2.1% (1.1%) N/A 3.2% The following table summarizes the percentage change in the 2020 results compared to the 2019 results for the corresponding periods:Three Months Ended December 31, 2020 Twelve Months Ended December 31, 2020 * For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, Diluted Earnings per Share, and Adjusted EBITDA adjustments consist of the results of the product lines divested or to be divested, divestitures & other related costs, operational improvement plan costs, and the one-time 2020 COVID-19 employee payment.
23 Non-GAAP Financial Measures (Cont’d) 2020 2019 % Change 2020 2019 % Change Operating income (loss) (GAAP) $ 34,815 $ (14,466) (340.7%) $ 152,656 $ 121,110 26.0% Depreciation and amortization 12,810 13,309 49,641 55,015 Depreciation and amortization, product lines divested or to be divested (48) (570) (193) (5,065) Share-based compensation expense (income) 1,591 77 5,608 (739) Divestiture & other related costs, before tax 1,675 45,880 12,155 45,880 Results of operations of the product lines divested or to be divested, before tax (3,415) (745) (7,580) (1,978) Operational improvement plan costs, before tax 698 - 3,339 - COVID-19 employee payment 3,022 - 3,022 - Adjusted EBITDA $ 51,148 $ 43,485 17.6% $ 218,648 $ 214,223 2.1% Twelve Months Ended December 31, Three Months Ended December 31,
24 Non-GAAP Financial Measures (Cont’d) Note: *Inks was divested in June 2020 and Yogurt Fruit Prep was divested in September 2020. Revenue Total Foreign Exchange Rates Local Currency Total Foreign Exchange Rates Local Currency Flavors, Extracts and Flavor Ingredients 12.3% 0.8% 11.5% 5.4% (0.7%) 6.1% Natural Ingredients 17.9% 0.1% 17.8% 13.6% 0.0% 13.6% Fragrances 7.4% 5.2% 2.2% (1.2%) 0.2% (1.4%) Yogurt Fruit Prep* (52.0%) 0.0% (52.0%) (32.3%) 0.0% (32.3%) Flavors & Extracts Group 11.8% 1.1% 10.7% 6.0% (0.3%) 6.3% Food and Pharmaceutical 5.1% 0.7% 4.4% 1.7% (1.9%) 3.6% Personal Care (5.8%) 0.6% (6.4%) (11.4%) (1.6%) (9.8%) Inks* (93.1%) 3.5% (96.6%) (61.9%) (2.0%) (59.9%) Color Group (4.4%) 0.9% (5.3%) (6.4%) (1.8%) (4.6%) Asia PacificTotal revenue including product lines divested or to be divested 5.1%5.0% 2.5%1.1% 2.6%3.9% 2.5%0.7% (0.3%)(0.9%) 2.8%1.6% Three Months Ended December 31, 2020 Twelve Months Ended December 31, 2020
* For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, adjustments consist of the results of the product lines divested or to be divested, divestitures & other related costs, operational improvement plan costs, and the one-time 2020 COVID-19 employee payment.25 Q4 Divested Operations Results by Segment Three Months Ended December 31, Adjusted Adjusted Revenue 2020 Adjustments* 2020 2019 Adjustments* 2019 Flavors & Extracts $ 189,060 $ (24,378) $ 164,682 $ 169,092 $ (25,308) $ 143,784 Color 119,813 (766) 119,047 125,363 (8,412) 116,951 Asia Pacific 32,165 (116) 32,049 30,602 (149) 30,453 Intersegment elimination (6,370) 97 (6,273) (6,472) 186 (6,286) Consolidated $ 334,668 $ (25,163) $ 309,505 $ 318,585 $ (33,683) $ 284,902 Operating Income Flavors & Extracts $ 23,507 $ (3,214) $ 20,293 $ 14,186 $ (1,039) $ 13,147 Color 20,548 (158) 20,390 19,678 332 20,010 Asia Pacific 6,044 (43) 6,001 5,557 (38) 5,519 Corporate & Other (15,284) 5,395 (9,889) (53,887) 45,880 (8,007) Consolidated $ 34,815 $ 1,980 $ 36,795 $ (14,466) $ 45,135 $ 30,669
* For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, adjustments consist of the results of the product lines divested or to be divested, divestitures & other related costs, operational improvement plan costs, and the one-time 2020 COVID-19 employee payment.26 YTD Divested Operations Results by Segment Twelve Months Ended December 31, Adjusted Adjusted Revenue 2020 Adjustments* 2020 2019 Adjustments* 2019 Flavors & Extracts $ 742,035 $ (99,543) $ 642,492 $ 700,356 $ (107,363) $ 592,993 Color 501,018 (14,008) 487,010 535,159 (36,002) 499,157 Asia Pacific 121,227 (518) 120,709 118,248 (712) 117,536 Intersegment elimination (32,279) 516 (31,763) (30,829) 905 (29,924) Consolidated $ 1,332,001 $ (113,553) $ 1,218,448 $ 1,322,934 $ (143,172) $ 1,179,762 Operating Income Flavors & Extracts $ 90,974 $ (8,292) $ 82,682 $ 74,961 $ (1,236) $ 73,725 Color 96,034 871 96,905 101,190 (562) 100,628 Asia Pacific 22,075 (159) 21,916 19,382 (180) 19,202 Corporate & Other (56,427) 18,516 (37,911) (74,423) 45,880 (28,543) Consolidated $ 152,656 $ 10,936 $ 163,592 $ 121,110 $ 43,902 $ 165,012
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