8-K
Sensient Technologies Corp (SXT)
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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
July 26, 2024
(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)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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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. |
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Sensient Technologies Corporation (the “Company”) issued a press release on July 26, 2024, disclosing its results of operations for its quarter ended June 30, 2024, 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 July 26, 2024, the Company also posted an updated investor presentation for its quarter ended June 30, 2024, 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: |
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EXHIBIT INDEX
| Exhibit Number | Description |
|---|---|
| 99.1 | Sensient Technologies Corporation Earnings Press Release for the Quarter Ended June 30, 2024. |
| 99.2 | Sensient Technologies Corporation Investor Presentation – Q2 2024. |
| 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: | July 26, 2024 |
Exhibit 99.1
| Contact:<br><br> <br>Amy Agallar<br><br> <br>(414) 347-3706<br><br> <br>investor.relations@sensient.com |
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Sensient Technologies Corporation
Reports Results for the Quarter Ended June 30, 2024
and Raises Full Year Guidance
MILWAUKEE— July 26, 2024 — Sensient Technologies Corporation (NYSE: SXT), a leading provider of flavors and colors for the food, pharmaceutical, and personal care markets, today reported financial results for the second quarter ended June 30, 2024.
Second Quarter Consolidated Results
| • | Reported revenue increased 7.8% to $403.5 million in the second quarter of 2024 versus last year’s second quarter results of $374.3 million. On a local currency basis^(1)^, revenue<br> increased 8.5%. |
|---|---|
| • | Reported operating income decreased 3.7% to $49.7 million compared to $51.6 million recorded in the second quarter of 2023. In the second quarter of 2024, the Company recorded $1.8 million of<br> costs related to its Portfolio Optimization Plan. Local currency adjusted operating income^(1)^ and local currency adjusted EBITDA^(1)^ increased 1.1% and 2.3%, respectively, in the second quarter. |
| --- | --- |
| • | Reported diluted earnings per share decreased 9.9% to 73 cents in the second quarter of 2024 compared to 81 cents in the second quarter of 2023. Local currency adjusted EPS^(1)^<br> decreased 2.5% in the second quarter primarily as a result of higher interest expense and a higher tax rate. |
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“Sensient’s execution and focus on business growth have resulted in solid performance across all our Groups. I continue to remain very confident about our performance in 2024,” said Paul Manning, Sensient’s Chairman, President, and Chief Executive Officer.
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| Sensient Technologies Corporation | Page 2 |
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| Earnings Release – Quarter Ended June 30, 2024 | |
| July 26, 2024 |
Second Quarter Group Results
| Reported | Local Currency^(1)^ | |||
|---|---|---|---|---|
| Revenue | Quarter | Year-to-Date | Quarter | Year-to-Date |
| Flavors & Extracts | 11.1% | 9.6% | 11.1% | 9.1% |
| Color | 4.5% | 1.9% | 5.2% | 1.7% |
| Asia Pacific | 7.1% | 3.6% | 11.1% | 7.4% |
| Total Revenue | 7.8% | 6.0% | 8.5% | 6.1% |
| Reported | Adjusted Local Currency^(1)^ | |||
| Operating Income | Quarter | Year-to-Date | Quarter | Year-to-Date |
| Flavors & Extracts | 7.2% | 7.0% | 7.4% | 6.9% |
| Color | 7.8% | 3.4% | 8.8% | 3.3% |
| Asia Pacific | 4.0% | -1.0% | 9.2% | 3.8% |
| Total Operating Income | -3.7% | -3.3% | 1.1% | 1.8% |
The Flavors & Extracts Group reported second quarter 2024 revenue of $209.2 million, an increase of $20.9 million versus the prior year’s second quarter. The Group’s increased revenue was primarily a result of higher volumes. Segment operating income was $26.2 million in the second quarter of 2024, an increase of $1.8 million compared to the prior year’s second quarter. The higher operating income was primarily due to the higher volumes.
The Color Group reported revenue of $167.7 million in the second quarter of 2024, an increase of $7.2 million compared to the prior year’s second quarter. Segment operating income was $31.5 million in the second quarter of 2024, an increase of $2.3 million compared to the prior year’s second quarter results. The Group’s increased revenue and operating income were primarily a result of the higher volumes across all product lines.
The Asia Pacific Group reported revenue of $38.6 million in the second quarter of 2024, an increase of $2.6 million compared to the prior year’s second quarter. The Group’s revenue benefited from higher volumes, partially offset by unfavorable exchange rates. Segment operating income was $7.9 million in the quarter, an increase of $0.3 million compared to the prior year’s second quarter. The higher operating income is primarily a result of the higher volumes, partially offset by unfavorable exchange rates.
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| Sensient Technologies Corporation | Page 3 |
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| Earnings Release – Quarter Ended June 30, 2024 | |
| July 26, 2024 |
Corporate & Other reported operating expenses of $15.9 million in the second quarter of 2024, compared to $9.7 million of operating expenses reported in the prior year’s second quarter. In the second quarter of 2024, the Company recorded $1.8 million of Portfolio Optimization Plan costs in Corporate & Other. Local currency adjusted operating expenses^(1)^ for Corporate & Other increased $4.5 million compared to the prior year’s second quarter, primarily due to the higher performance-based compensation costs recorded in the second quarter of 2024 compared to the low comparable amount recorded in the second quarter of 2023.
2024 Outlook
| Metric | Updated Guidance | Prior Guidance |
|---|---|---|
| Local Currency Revenue^(1)^ | Mid-to High Single-Digit Growth | Mid-Single-Digit Growth |
| Local Currency Adjusted EBITDA^(1)^ | Mid-to High Single-Digit Growth | Mid-Single-Digit Growth |
| Diluted EPS (GAAP) | Between $2.77 and $2.87* | Between $2.80 and $2.90* |
| Local Currency Adjusted Diluted EPS^(1)^ | Mid-Single-Digit Growth | Low to Mid-Single-Digit Growth |
| *The Updated Guidance includes approximately 18 cents of Portfolio Optimization Plan costs. The Prior Guidance included 15 cents of<br> Portfolio Optimization Plan costs. |
The Company’s guidance is based on current conditions and economic and market trends in the markets in which the Company operates and is subject to various risks and uncertainties as described below.
| (1) | Please refer to “Reconciliation of Non-GAAP Amounts” at the end of this release for more information regarding our non-GAAP<br> financial measures. |
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| Sensient Technologies Corporation | Page 4 |
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| Earnings Release – Quarter Ended June 30, 2024 | |
| July 26, 2024 |
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, Portfolio Optimization Plan costs, and non-cash share-based compensation. 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 2024 second quarter financial results at 8:30 a.m. CDT today, Friday, July 26, 2024. Investors may access the live webcast, including presentation slides, on the Company’s web site at investor.sensient.com. Alternatively, investors may join the conference call by contacting Chorus Call Inc. at (844) 492-3726 or (412) 317-1078.
A webcast replay will be available on the Company’s web site following the call. The call transcript will be available on the Company’s web site on or after July 30, 2024.
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2024 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 Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and Israel and Hamas and other parties in the Middle East; the availability and cost of labor, logistics, and transportation; 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 Portfolio Optimization Plan; 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; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; 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, 2023, 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.
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| Sensient Technologies Corporation | Page 5 |
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| Earnings Release – Quarter Ended June 30, 2024 | |
| July 26, 2024 |
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, 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 June 30, | Six Months Ended June 30, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||
| Revenue | $ | 403,525 | $ | 374,313 | 7.8 | % | $ | 788,195 | $ | 743,319 | 6.0 | % | ||||||
| Cost of products sold | 272,803 | 252,136 | 8.2 | % | 530,924 | 496,479 | 6.9 | % | ||||||||||
| Selling and administrative expenses | 81,065 | 70,586 | 14.8 | % | 158,208 | 144,411 | 9.6 | % | ||||||||||
| Operating income | 49,657 | 51,591 | (3.7 | %) | 99,063 | 102,429 | (3.3 | %) | ||||||||||
| Interest expense | 7,653 | 6,352 | 14,698 | 12,354 | ||||||||||||||
| Earnings before income taxes | 42,004 | 45,239 | 84,365 | 90,075 | ||||||||||||||
| Income taxes | 11,072 | 11,206 | 22,493 | 22,391 | ||||||||||||||
| Net earnings | $ | 30,932 | $ | 34,033 | (9.1 | %) | $ | 61,872 | $ | 67,684 | (8.6 | %) | ||||||
| Earnings per share of common stock: | ||||||||||||||||||
| Basic | $ | 0.73 | $ | 0.81 | $ | 1.47 | $ | 1.61 | ||||||||||
| Diluted | $ | 0.73 | $ | 0.81 | $ | 1.46 | $ | 1.60 | ||||||||||
| Average common shares outstanding: | ||||||||||||||||||
| Basic | 42,154 | 42,043 | 42,129 | 42,006 | ||||||||||||||
| Diluted | 42,398 | 42,235 | 42,351 | 42,245 | ||||||||||||||
| Results by Segment | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||
| Flavors & Extracts | $ | 209,213 | $ | 188,284 | 11.1 | % | $ | 402,305 | $ | 367,136 | 9.6 | % | ||||||
| Color | 167,700 | 160,463 | 4.5 | % | 327,725 | 321,624 | 1.9 | % | ||||||||||
| Asia Pacific | 38,580 | 36,029 | 7.1 | % | 78,886 | 76,114 | 3.6 | % | ||||||||||
| Intersegment elimination | (11,968 | ) | (10,463 | ) | (20,721 | ) | (21,555 | ) | ||||||||||
| Consolidated | $ | 403,525 | $ | 374,313 | 7.8 | % | $ | 788,195 | $ | 743,319 | 6.0 | % | ||||||
| Operating Income | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Flavors & Extracts | $ | 26,209 | $ | 24,456 | 7.2 | % | $ | 49,887 | $ | 46,636 | 7.0 | % | ||||||
| Color | 31,502 | 29,217 | 7.8 | % | 63,181 | 61,102 | 3.4 | % | ||||||||||
| Asia Pacific | 7,880 | 7,575 | 4.0 | % | 16,656 | 16,816 | (1.0 | %) | ||||||||||
| Corporate & Other | (15,934 | ) | (9,657 | ) | (30,661 | ) | (22,125 | ) | ||||||||||
| Consolidated | $ | 49,657 | $ | 51,591 | (3.7 | %) | $ | 99,063 | $ | 102,429 | (3.3 | %) | ||||||
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| Sensient Technologies Corporation | Page 7 | |||
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| (In thousands) | ||||
| (Unaudited) | ||||
| Consolidated Condensed Balance Sheets | June 30, | December 31, | ||
| --- | --- | --- | --- | --- |
| 2024 | 2023 | |||
| Cash and cash equivalents | $ | 30,339 | $ | 28,934 |
| Trade accounts receivable | 315,604 | 272,164 | ||
| Inventories | 553,415 | 598,399 | ||
| Prepaid expenses and other current assets | 44,897 | 37,119 | ||
| Total Current Assets | 944,255 | 936,616 | ||
| Goodwill & intangible assets (net) | 429,800 | 436,177 | ||
| Property, plant, and equipment (net) | 491,140 | 505,277 | ||
| Other assets | 129,672 | 136,437 | ||
| Total Assets | $ | 1,994,867 | $ | 2,014,507 |
| Trade accounts payable | $ | 107,218 | $ | 131,114 |
| Short-term borrowings | 26,995 | 13,460 | ||
| Other current liabilities | 92,822 | 91,732 | ||
| Total Current Liabilities | 227,035 | 236,306 | ||
| Long-term debt | 634,663 | 645,085 | ||
| Accrued employee and retiree benefits | 24,872 | 27,715 | ||
| Other liabilities | 50,522 | 52,077 | ||
| Shareholders' Equity | 1,057,775 | 1,053,324 | ||
| Total Liabilities and Shareholders' Equity | $ | 1,994,867 | $ | 2,014,507 |
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| (In thousands, except per share amounts) | ||||||
| (Unaudited) | ||||||
| Consolidated Statements of Cash Flows | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Six Months Ended June 30, | ||||||
| 2024 | 2023 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 61,872 | $ | 67,684 | ||
| Adjustments to arrive at net cash provided by operating activities: | ||||||
| Depreciation and amortization | 29,725 | 28,590 | ||||
| Share-based compensation expense | 4,911 | 4,766 | ||||
| Net (gain) loss on assets | (195 | ) | 81 | |||
| Portfolio Optimization Plan costs | 1,495 | - | ||||
| Deferred income taxes | 529 | (2,643 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable | (49,449 | ) | 6,062 | |||
| Inventories | 36,730 | (16,927 | ) | |||
| Prepaid expenses and other assets | (6,612 | ) | 3,534 | |||
| Trade accounts payable and other accrued expenses | (22,722 | ) | (18,329 | ) | ||
| Accrued salaries, wages, and withholdings | 7,824 | (19,713 | ) | |||
| Income taxes | (6,591 | ) | (1,998 | ) | ||
| Other liabilities | 1,429 | 595 | ||||
| Net cash provided by operating activities | 58,946 | 51,702 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of property, plant, and equipment | (22,850 | ) | (45,137 | ) | ||
| Proceeds from sale of assets | 296 | 53 | ||||
| Other investing activities | (336 | ) | 2,054 | |||
| Net cash used in investing activities | (22,890 | ) | (43,030 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from additional borrowings | 132,189 | 187,037 | ||||
| Debt payments | (120,571 | ) | (143,923 | ) | ||
| Dividends paid | (34,685 | ) | (34,577 | ) | ||
| Other financing activities | (3,016 | ) | (8,003 | ) | ||
| Net cash (used in) provided by financing activities | (26,083 | ) | 534 | |||
| Effect of exchange rate changes on cash and cash equivalents | (8,568 | ) | 6,419 | |||
| Net increase in cash and cash equivalents | 1,405 | 15,625 | ||||
| Cash and cash equivalents at beginning of period | 28,934 | 20,921 | ||||
| Cash and cash equivalents at end of period | $ | 30,339 | $ | 36,546 | ||
| Supplemental Information | ||||||
| --- | --- | --- | --- | --- | ||
| Six Months Ended June 30, | 2024 | 2023 | ||||
| Dividends paid per share | $ | 0.82 | $ | 0.82 | ||
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| Sensient Technologies Corporation | Page 9 |
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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 six months ended June 30, 2024 and 2023 include adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which, in each case, exclude Portfolio Optimization Plan costs.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||
| Operating income (GAAP) | $ | 49,657 | $ | 51,591 | (3.7 | %) | $ | 99,063 | $ | 102,429 | (3.3 | %) | ||||
| Portfolio Optimization Plan costs – Cost of products sold | 207 | - | 314 | - | ||||||||||||
| Portfolio Optimization Plan costs – Selling and administrative expenses | 1,545 | - | 4,250 | - | ||||||||||||
| Adjusted operating income | $ | 51,409 | $ | 51,591 | (0.4 | %) | $ | 103,627 | $ | 102,429 | 1.2 | % | ||||
| Net earnings (GAAP) | $ | 30,932 | $ | 34,033 | (9.1 | %) | $ | 61,872 | $ | 67,684 | (8.6 | %) | ||||
| Portfolio Optimization Plan costs, before tax | 1,752 | - | 4,564 | - | ||||||||||||
| Tax impact of Portfolio Optimization Plan costs^(1)^ | (214 | ) | - | (569 | ) | - | ||||||||||
| Adjusted net earnings | $ | 32,470 | $ | 34,033 | (4.6 | %) | $ | 65,867 | $ | 67,684 | (2.7 | %) | ||||
| Diluted earnings per share (GAAP) | $ | 0.73 | $ | 0.81 | (9.9 | %) | $ | 1.46 | $ | 1.60 | (8.8 | %) | ||||
| Portfolio Optimization Plan costs, net of tax | 0.04 | - | 0.09 | - | ||||||||||||
| Adjusted diluted earnings per share | $ | 0.77 | $ | 0.81 | (4.9 | %) | $ | 1.56 | $ | 1.60 | (2.5 | %) |
Note: Earnings per share calculations may not foot due to rounding differences.
^(1)^^^Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.
| Results by Segment | Three Months Ended June 30, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted | Adjusted | |||||||||||||||
| Operating Income | 2024 | Adjustments^(2)^ | 2024 | 2023 | Adjustments^(2)^ | 2023 | ||||||||||
| Flavors & Extracts | $ | 26,209 | $ | - | $ | 26,209 | $ | 24,456 | $ | - | $ | 24,456 | ||||
| Color | 31,502 | - | 31,502 | 29,217 | - | 29,217 | ||||||||||
| Asia Pacific | 7,880 | - | 7,880 | 7,575 | - | 7,575 | ||||||||||
| Corporate & Other | (15,934 | ) | 1,752 | (14,182 | ) | (9,657 | ) | - | (9,657 | ) | ||||||
| Consolidated | $ | 49,657 | $ | 1,752 | $ | 51,409 | $ | 51,591 | $ | - | $ | 51,591 | ||||
| Results by Segment | Six Months Ended June 30, | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Adjusted | Adjusted | |||||||||||||||
| Operating Income | 2024 | Adjustments^(2)^ | 2024 | 2023 | Adjustments^(2)^ | 2023 | ||||||||||
| Flavors & Extracts | $ | 49,887 | $ | - | $ | 49,887 | $ | 46,636 | $ | - | $ | 46,636 | ||||
| Color | 63,181 | - | 63,181 | 61,102 | - | 61,102 | ||||||||||
| Asia Pacific | 16,656 | - | 16,656 | 16,816 | - | 16,816 | ||||||||||
| Corporate & Other | (30,661 | ) | 4,564 | (26,097 | ) | (22,125 | ) | - | (22,125 | ) | ||||||
| Consolidated | $ | 99,063 | $ | 4,564 | $ | 103,627 | $ | 102,429 | $ | - | $ | 102,429 |
^(2)^^^Adjustments
consist of Portfolio Optimization Plan costs.
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| Sensient Technologies Corporation | Page 10 |
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| (In thousands, except percentages) | |
| (Unaudited) |
Reconciliation of Non-GAAP Amounts – Continued
The following table summarizes the percentage change in the 2024 results compared to the 2023 results for the corresponding periods.
| Three Months Ended June 30, 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Adjustments^(3)^ | Adjusted<br><br> <br>Local<br><br> <br>Currency | ||||||||
| Flavors & Extracts | 11.1 | % | 0.0 | % | N/A | 11.1 | % | |||||
| Color | 4.5 | % | (0.7 | %) | N/A | 5.2 | % | |||||
| Asia Pacific | 7.1 | % | (4.0 | %) | N/A | 11.1 | % | |||||
| Total Revenue | 7.8 | % | (0.7 | %) | N/A | 8.5 | % | |||||
| Operating Income | ||||||||||||
| Flavors & Extracts | 7.2 | % | (0.2 | %) | 0.0 | % | 7.4 | % | ||||
| Color | 7.8 | % | (1.0 | %) | 0.0 | % | 8.8 | % | ||||
| Asia Pacific | 4.0 | % | (5.2 | %) | 0.0 | % | 9.2 | % | ||||
| Corporate & Other | 65.0 | % | 0.0 | % | 18.1 | % | 46.9 | % | ||||
| Total Operating Income | (3.7 | %) | (1.4 | %) | (3.4 | %) | 1.1 | % | ||||
| Diluted Earnings Per Share | (9.9 | %) | (2.5 | %) | (4.9 | %) | (2.5 | %) | ||||
| Adjusted EBITDA | 1.2 | % | (1.1 | %) | N/A | 2.3 | % | |||||
| Six Months Ended June 30, 2024 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Adjustments^(3)^ | Adjusted<br><br> <br>Local<br><br> <br>Currency | ||||||||
| Flavors & Extracts | 9.6 | % | 0.5 | % | N/A | 9.1 | % | |||||
| Color | 1.9 | % | 0.2 | % | N/A | 1.7 | % | |||||
| Asia Pacific | 3.6 | % | (3.8 | %) | N/A | 7.4 | % | |||||
| Total Revenue | 6.0 | % | (0.1 | %) | N/A | 6.1 | % | |||||
| Operating Income | ||||||||||||
| Flavors & Extracts | 7.0 | % | 0.1 | % | 0.0 | % | 6.9 | % | ||||
| Color | 3.4 | % | 0.1 | % | 0.0 | % | 3.3 | % | ||||
| Asia Pacific | (1.0 | %) | (4.8 | %) | 0.0 | % | 3.8 | % | ||||
| Corporate & Other | 38.6 | % | 0.0 | % | 20.6 | % | 18.0 | % | ||||
| Total Operating Income | (3.3 | %) | (0.7 | %) | (4.4 | %) | 1.8 | % | ||||
| Diluted Earnings Per Share | (8.8 | %) | (0.7 | %) | (6.2 | %) | (1.9 | %) | ||||
| Adjusted EBITDA | 1.8 | % | (0.4 | %) | N/A | 2.2 | % |
^(3)^^^Adjustments
consist of Portfolio Optimization Plan costs.
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| (In thousands, except percentages and per share amounts) | |
| (Unaudited) |
Reconciliation of Non-GAAP Amounts – Continued
The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||
| Operating income (GAAP) | $ | 49,657 | $ | 51,591 | (3.7 | %) | $ | 99,063 | $ | 102,429 | (3.3 | %) | ||
| Depreciation and amortization | 15,016 | 14,440 | 29,725 | 28,590 | ||||||||||
| Share-based compensation expense | 2,916 | 2,499 | 4,911 | 4,766 | ||||||||||
| Portfolio Optimization Plan costs, before tax | 1,752 | - | 4,564 | - | ||||||||||
| Adjusted EBITDA | $ | 69,341 | $ | 68,530 | 1.2 | % | $ | 138,263 | $ | 135,785 | 1.8 | % |
The following table summarizes the reconciliation between Debt (GAAP) and Net Debt, and Operating Income (GAAP) and Credit Adjusted EBITDA for the trailing twelve months ended June 30, 2024 and 2023.
| June 30, | ||||||
|---|---|---|---|---|---|---|
| Debt | 2024 | 2023 | ||||
| Short-term borrowings | $ | 26,995 | $ | 15,436 | ||
| Long-term debt | 634,663 | 686,589 | ||||
| Credit Agreement adjustments^(1)^ | (18,034 | ) | (19,755 | ) | ||
| Net Debt | $ | 643,624 | $ | 682,270 | ||
| Operating income (GAAP) | $ | 151,657 | $ | 191,147 | ||
| Depreciation and amortization | 58,955 | 54,877 | ||||
| Share-based compensation expense | 9,078 | 12,213 | ||||
| Portfolio Optimization Plan costs, before tax | 32,405 | - | ||||
| Other non-operating gains^(2)^ | (872 | ) | (3,326 | ) | ||
| Credit Adjusted EBITDA | $ | 251,223 | $ | 254,911 | ||
| Net Debt to Credit Adjusted EBITDA | 2.6 | x | 2.7 | x |
^(1)^^^Adjustments
include cash and cash equivalents, as described in the Company's Third Amended and Restated Credit Agreement \(Credit Agreement\), and certain letters of credit and hedge contracts.
^(2)^^^Adjustments
consist of certain financing transaction costs, certain non-financing interest items, and gains and losses related to certain non-cash, non-operating, and/or non-recurring items as described in the Credit Agreement.
The following table summarizes the reconciliation between Diluted Earnings Per Share (GAAP) and Adjusted Diluted Earnings Per Share for the twelve months ended December 31, 2023.
| Twelve Months Ended December 31, | ||
|---|---|---|
| 2023 | ||
| Diluted earnings per share (GAAP) | $ | 2.21 |
| Portfolio Optimization Plan costs, net of tax | 0.65 | |
| Adjusted diluted earnings per share | $ | 2.86 |
Note: Earnings per share calculations may not foot due to rounding differences.
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
Sensient Technologies Corporation Second Quarter 2024 Earnings Call July 26, 2024
Non-GAAP Financial Measures 2 Within this document, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including the Portfolio Optimization Plan costs and (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA (which excludes Portfolio Optimization Plan costs and non-cash share based compensation expense). The Company has included each of these non-GAAP measures in order 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. 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 report. 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.
Forward Looking Statements This document contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2024 Financial Outlook” and "Business Initiatives and 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 Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and Israel and Hamas and other parties in the Middle East; the availability and cost of labor, logistics, and transportation; 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 Portfolio Optimization Plan; 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; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; 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, 2023, 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
Q2 2024 Consolidated Results 5 (1) See appendix for our GAAP to Non-GAAP reconciliations.
Revenue Strong volume growth due to new wins Revenue increased 11% during the quarter Operating Income Impacted by elevated costs related to certain agricultural inputs in our natural ingredients product line Flavors & Extracts Group Performance Local Currency1 Results Commentary Group Outlook2 Upgraded Mid-to high single-digit local currency revenue1 growth Operating leverage to improve sequentially 6 (1) See appendix for our GAAP to Non-GAAP reconciliations. (2) Represents outlook as of our earnings release provided on July 26, 2024, and does not constitute an update or reissuance as of any later date
Revenue Increase in revenue driven by new wins All product lines contributed to growth in the quarter Operating Income Operating leverage returned due to improved volumes and sales mix Color Group Performance Local Currency1 Results Commentary Group Outlook2 Upgraded Mid-to high single-digit local currency revenue1 growth Operating leverage to continue to improve in back half of the year 6 (1) See appendix for our GAAP to Non-GAAP reconciliations. (2) Represents outlook as of our earnings release provided on July 26, 2024, and does not constitute an update or reissuance as of any later date
Revenue Growth driven by increase in new sales win rate Growth across most regions in the second quarter Operating Income Growth driven by higher volumes in the Group in second quarter Asia Pacific Group Performance Local Currency1 Results Commentary Group Outlook2 Upgraded High single-digit local currency revenue1 growth 6 (1) See appendix for our GAAP to Non-GAAP reconciliations. (2) Represents outlook as of our earnings release provided on July 26, 2024, and does not constitute an update or reissuance as of any later date
9 Local Currency Revenue2 o Growth rate of mid-to high single-digit Local Currency Adjusted EBITDA2 Growth rate of mid-to high single-digit Local Currency Adjusted EPS2 Growth rate of mid-single-digit Business Initiatives and Outlook1 Consolidated Outlook Portfolio Optimization Plan On track to deliver $8 to $10 million in annual savings, once fully implemented, by the end of 2025 Project is progressing as expected Inventory Management Reduction of $45 million in the inventory balance in the first half of 2024 Business Initiatives Represents outlook as of our earnings release provided on July 26, 2024, and does not constitute an update or reissuance as of any later date See appendix for our GAAP to Non-GAAP reconciliations.
Innovative Natural Colors Support Growth Sensient has a portfolio of solutions to replace TiO2 and Red 3 Generally, replacements are not one-size-fits-all and require support from Sensient’s application experts Coupling our broad portfolio of replacements with our technical expertise ensures Sensient can meet our customer needs Sensient's application expertise and focus on innovation is a pillar of our growth strategy 10
Q2 2024 Financial Review 12 (dollars in thousands) Q2 2023 Q2 2024 Revenue Local Currency Revenue Growth1 $ 374,313 $ 403,525 +8.5% Operating Income (GAAP) Operating Margin $ 51,591 13.8% $ 49,657 12.3% Adjusted Operating Income1 Adjusted Operating Margin1 $ 51,591 13.8% $ 51,409 12.7% Diluted EPS (GAAP) $ 0.81 $ 0.73 Adjusted Diluted EPS1 $ 0.81 $ 0.77 Adjusted EBITDA1 $ 68,530 $ 69,341 Consolidated Commentary: Local currency revenue1 increased 8.5% Q2 2024 results included $1.8 million of Portfolio Optimization Plan costs (approximately 4 cents per share) Operating income impacted by higher year-over-year performance-based compensation Operating margin impacted by higher costs in certain agricultural inputs and higher performance-based compensation (1) See appendix for our GAAP to Non-GAAP reconciliations.
2024 Cash Flow and Debt Metrics 13 YTD Cash Flow from Operations $ 58.9 million Capital Expenditures $ 22.9 million Total Debt (as of June 30) $ 661.7 million Net debt to credit adjusted EBITDA1 2.6x Commentary: Cash flow from operations improved $7.2 million compared to 2023, primarily due to a continued focus on improving our inventory position Capital expenditures were down $22.3 million compared to prior year (1) See appendix for our GAAP to Non-GAAP reconciliations.
2024 Financial Outlook1 14 Metric Updated Guidance Prior Guidance Local Currency Revenue2 Mid-to high single-digit growth Mid-single-digit growth Local Currency Adjusted EBITDA2 Mid-to high single-digit growth Mid-single-digit growth Diluted EPS (GAAP)3 $2.77 to $2.87 $2.80 to $2.90 Local Currency Adjusted Diluted EPS2 Mid-single-digit growth Low to mid-single-digit growth Capital Expenditures $65 to $70 million ~ $65 million Adjusted Effective Tax Rate ~ 25% Between 24% and 25% Interest Expense Increase over prior year Increase over prior year Represents outlook as of our earnings release provided on July 26, 2024, and does not constitute an update or reissuance as of any later date See appendix for our GAAP to Non-GAAP reconciliations. Diluted EPS (GAAP) now includes $0.18/share of Portfolio Optimization Plan costs. Prior guidance included $0.15/share of plan costs. Total plan costs are still expected to be approximately $40M.
Appendix1 (1) Amounts in thousands, except percentages and per share amounts
Non-GAAP Financial Measures 20 2024 2023 % Change Operating income (GAAP) $ 49,657 $ 51,591 (3.7%) Portfolio Optimization Plan costs – Cost of products sold Portfolio Optimization Plan costs – Selling and administrative expenses 207 1,545 - - Adjusted operating income $ 51,409 $ 51,591 (0.4%) Net earnings (GAAP) $ 30,932 $ 34,033 (9.1%) Portfolio Optimization Plan costs, before tax 1,752 - Tax impact of Portfolio Optimization Plan costs(1) (214) - Adjusted net earnings $ 32,470 $ 34,033 (4.6%) Diluted earnings per share (GAAP) $ 0.73 $ 0.81 (9.9%) Portfolio Optimization Plan costs, net of tax 0.04 - Adjusted diluted earnings per share $ 0.77 $ 0.81 (4.9%) Note: Earnings per share calculations may not foot due to rounding differences. (1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates. Three Months Ended June 30,
Revenue Total Foreign Exchange Rates Adjustments(1) Adjusted Local Currency Flavors & Extracts 11.1% 0.0% N/A 11.1% Color 4.5% (0.7%) N/A 5.2% Asia Pacific 7.1% (4.0%) N/A 11.1% Total Revenue 7.8% (0.7%) N/A 8.5% Operating Income Flavors & Extracts 7.2% (0.2%) 0.0% 7.4% Color 7.8% (1.0%) 0.0% 8.8% Asia Pacific 4.0% (5.2%) 0.0% 9.2% Corporate & Other 65.0% 0.0% 18.1% 46.9% Total Operating Income (3.7%) (1.4%) (3.4%) 1.1% Diluted Earnings Per Share (9.9%) (2.5%) (4.9%) (2.5%) Adjusted EBITDA 1.2% (1.1%) N/A 2.3% 20 Non-GAAP Financial Measures Three Months Ended June 30, 2024 (1) Adjustments consist of Portfolio Optimization Plan costs.
Non-GAAP Financial Measures 20 Three Months Ended June 30, 2024 Revenue Total Foreign Exchange Rates Local Currency Flavors, Extracts and Flavor Ingredients 0.8% 0.0% 0.8% Natural Ingredients 36.4% 0.0% 36.4% Flavors & Extracts Group 11.1% 0.0% 11.1% Food and Pharmaceutical 4.3% (0.4%) 4.7% Personal Care 5.1% (1.5%) 6.6% Color Group 4.5% (0.7%) 5.2% Asia Pacific 7.1% (4.0%) 11.1% Total revenue 7.8% (0.7%) 8.5%
Non-GAAP Financial Measures Results by Segment Operating Income Adjusted Adjusted 2024 Adjustments(1) 2024 2023 Adjustments(1) 2023 Flavors & Extracts $ 26,209 $ - $ 26,209 $ 24,456 $ - $ 24,456 Color 31,502 - 31,502 29,217 - 29,217 Asia Pacific 7,880 - 7,880 7,575 - 7,575 Corporate & Other (15,934) 1,752 (14,182) (9,657) - (9,657) Consolidated $ 49,657 $ 1,752 $ 51,409 $ 51,591 $ - $ 51,591 Three Months Ended June 30, (1) Adjustments consist of Portfolio Optimization Plan costs. 20
Non-GAAP Financial Measures 2024 2023 % Change Operating income (GAAP) $ 49,657 $ 51,591 (3.7%) Depreciation and amortization 15,016 14,440 Share-based compensation expense 2,916 2,499 Portfolio Optimization Plan costs, before tax 1,752 - Adjusted EBITDA $ 69,341 $ 68,530 1.2% Three Months Ended June 30, 20
Non-GAAP Financial Measures 20 Debt 2024 2023 Short-term borrowings $ 26,995 $ 15,436 Long-term debt 634,663 686,589 Credit Agreement adjustments(1) (18,034) (19,755) Net Debt $ 643,624 $ 682,270 Operating income (GAAP) $ 151,657 $ 191,147 Depreciation and amortization 58,955 54,877 Share-based compensation expense 9,078 12,213 Portfolio Optimization Plan costs, before tax 32,405 - Other non-operating gains(2) (872) (3,326) Credit Adjusted EBITDA $ 251,223 $ 254,911 Net Debt to Credit Adjusted EBITDA 2.6x 2.7x (1) Adjustments include cash and cash equivalents, as described in the Company's Third Amended and Restated Credit Agreement (Credit Agreement), and certain letters of credit and hedge contracts. (2) Adjustments consist of certain financing transaction costs, certain non-financing interest items, and gains and losses related to certain non-cash, non-operating, and/or non-recurring items as described in the Credit Agreement. June 30,