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
February 10, 2023
(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)) |
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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. |
|---|
Sensient Technologies Corporation (the “Company”) issued a press release on February 10, 2023, disclosing its results of operations for its quarter and year ended December 31, 2022, 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. |
|---|
On February 10, 2023, the Company also posted an updated investor presentation for its quarter and year ended December 31, 2022, 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<br> 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, 2022. |
| 99.2 | Sensient Technologies Corporation Investor Presentation – Q4 2022. |
| 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 10, 2023 |
Exhibit 99.1
| Contact: | Amy Agallar |
|---|---|
| (414) 347-3706 |
Sensient Technologies Corporation
Reports Results for the Quarter Ended December 31, 2022
Full Year 2022 Reported Consolidated Revenue Growth of 4.1%
Full Year 2022 Adjusted Local Currency Revenue Growth of 9.7%
Full Year 2022 Reported Operating Profit Growth of 15.7%
Full Year 2022 Adjusted Local Currency Operating Profit Growth of 12.5%
MILWAUKEE— February 10, 2023 — Sensient Technologies Corporation (NYSE: SXT) reported consolidated revenue of $348.7 million in this year’s fourth quarter compared to $340.4 million in last year’s fourth quarter. Reported operating income in the fourth quarter of 2022 was $41.2 million compared to $40.4 million in the fourth quarter of 2021. Reported diluted earnings per share was 69 cents in the fourth quarter of 2022 compared to 65 cents in the fourth quarter of 2021. Foreign currency translation decreased revenue by approximately 3% and earnings per share by approximately 6% in the current quarter.
The 2022 fourth quarter reported results included income related to an earnout payment received in connection with the divestiture of our yogurt fruit preparations business, which in total increased 2022 fourth quarter net earnings by $1.9 million ($0.04 per diluted share). The 2021 fourth quarter reported results include divestiture & other related costs and operational improvement plan costs, which in total decreased 2021 fourth quarter net earnings by $3.0 million ($0.07 per diluted share). The 2021 fourth quarter reported results also include the operations of the divested product lines, which were not material to the results in the fourth quarter of 2021. The adjustments to our reported results are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.
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| Sensient Technologies Corporation | Page 2 |
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| Earnings Release – Quarter Ended December 31, 2022 | |
| February 10, 2023 |
BUSINESS REVIEW
| Reported | ||||||
|---|---|---|---|---|---|---|
| Revenue | Quarter | Year-to-Date | ||||
| Flavors & Extracts | 0.8 | % | -0.2 | % | ||
| Color | 7.8 | % | 10.8 | % | ||
| Asia Pacific | -3.3 | % | 6.1 | % | ||
| Total Revenue | 2.4 | % | 4.1 | % | ||
| Adjusted | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Local Currency ^(1)^ | ||||||
| Revenue | Quarter | Year-to-Date | ||||
| Flavors & Extracts | 2.7 | % | 5.8 | % | ||
| Color | 11.9 | % | 15.0 | % | ||
| Asia Pacific | 6.4 | % | 14.4 | % | ||
| Total Revenue | 5.9 | % | 9.7 | % | ||
| ^(1)^ Adjusted local currency percentage changes are described in more detail in the "Reconciliation<br> of Non-GAAP Amounts" at the end of this release. |
The Flavors & Extracts Group reported fourth quarter revenue of $178.9 million compared to $177.4 million in last year’s fourth quarter, an increase of 0.8%. Adjusted local currency revenue increased 2.7% in the quarter. The Group benefited from pricing across all of its product lines. Segment operating income was $21.5 million in the current quarter compared to $21.9 million reported in the comparable period last year, a decrease of 2.0%. Adjusted local currency operating income decreased 4.1% in the quarter. The lower operating income was primarily due to higher input costs and lower volumes, partially offset by favorable pricing. Foreign currency translation decreased segment revenue by approximately 2% and was not material on segment operating income in the quarter.
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| Earnings Release – Quarter Ended December 31, 2022 | |
| February 10, 2023 |
The Color Group reported revenue of $147.8 million in the quarter compared to $137.1 million in last year’s fourth quarter, an increase of 7.8%. Adjusted local currency revenue increased 11.9% in the quarter. The Group benefited from higher pricing and higher volumes. Segment operating income was $24.6 million in the quarter compared to $24.1 million in last year’s comparable period, an increase of 2.0%. Adjusted local currency operating income increased 7.8% compared to the prior year’s fourth quarter. The higher operating income is primarily a result of the higher volumes and favorable pricing, partially offset by higher input costs. Foreign currency translation decreased segment revenue by approximately 4% and segment operating income by approximately 6% in the quarter.
The Asia Pacific Group reported revenue of $34.6 million in the quarter compared to $35.7 million in last year’s fourth quarter, a decrease of 3.3%, primarily due to foreign currency translation. Adjusted local currency revenue increased 6.4% in the quarter, primarily as a result of higher pricing. Segment operating income was $6.6 million in the quarter compared to $7.2 million in last year’s fourth quarter, a decrease of 7.9%, primarily due to foreign currency translation. Adjusted local currency operating income increased 3.6% in the quarter, primarily as a result of the higher pricing, partially offset by higher input costs. Foreign currency translation decreased segment revenue and operating income by approximately 10% and 12%, respectively, in the quarter.
Corporate & Other reported an operating loss of $11.5 million in the current quarter compared to $12.8 million in last year’s fourth quarter, a decrease of 10.5%. In the fourth quarter of 2022, the Company recorded $2.5 million of divestiture related income related to an earnout payment received in connection with the divestiture of our yogurt fruit preparations business. The fourth quarter results of 2021 include $0.8 million of divestiture and operational improvement plan costs. Adjusted local currency operating expenses for Corporate & Other increased 16.1% in the quarter primarily due to higher performance-based compensation.
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| Sensient Technologies Corporation | Page 4 |
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| Earnings Release – Quarter Ended December 31, 2022 | |
| February 10, 2023 |
2023 OUTLOOK
Sensient expects 2023 full year GAAP diluted earnings per share to be flat to low-single digit growth compared to our 2022 reported GAAP diluted earnings per share of $3.34.
The Company expects 2023 revenue to grow at a mid-single digit rate on a local currency basis compared to the Company’s 2022 revenue. The Company expects 2023 diluted earnings per share to be flat to low-single digit growth on a local currency basis compared to the Company’s 2022 adjusted diluted earnings per share^(2)^ of $3.29. The Company expects 2023 adjusted EBITDA^(2)^ to grow at a mid-to-high single digit rate on a local currency basis compared to the Company’s 2022 adjusted EBITDA^(2)^.
The Company expects its 2023 diluted earnings per share to be impacted by higher interest rates and a higher tax rate. The Company currently expects interest expense to increase by approximately $11 million ($0.20 per diluted share) in 2023 compared to the Company’s 2022 full year interest expense of $14.5 million. The Company also expects its full year 2023 tax rate to be approximately 25%.
Based on current exchange rates, the Company expects foreign exchange rates to be a headwind for the beginning of the year, and modestly favorable for the full year.
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. We do not anticipate any divestiture related costs, operational improvement plan costs, or results of divested business in 2023 at this time.
| ^(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, 2022 | |
| February 10, 2023 |
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 and income, operational improvement plan costs and income, and the results of the divested operations. 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 2022 fourth quarter financial results at 8:30 a.m. CST on Friday, February 10, 2023. 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 17, 2023, by calling (877) 344-7529 and referring to conference identification number 7722006. 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 14, 2023.
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| Sensient Technologies Corporation | Page 6 |
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| Earnings Release – Quarter Ended December 31, 2022 | |
| February 10, 2023 |
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2023 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 economic and capital 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; the availability and cost of labor, logistics, and transportation; the impact and uncertainty created by the COVID-19 pandemic and efforts to manage it on the global economy, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, governmental regulations and restrictions, and general economic conditions; the uncertain impacts of the ongoing conflict between Russia and Ukraine on our supply chain, input costs, including energy and transportation, and on 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; 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, 2021, as updated and supplemented by the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and in other documents that the Company files with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 that will be filed by March 1, 2023. 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, 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, | Year Ended December 31, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||
| Revenue | $ | 348,736 | $ | 340,448 | 2.4 | % | $ | 1,437,039 | $ | 1,380,264 | 4.1 | % | ||||||
| Cost of products sold | 237,232 | 228,065 | 4.0 | % | 947,928 | 925,603 | 2.4 | % | ||||||||||
| Selling and administrative expenses | 70,279 | 71,963 | (2.3 | %) | 292,360 | 284,633 | 2.7 | % | ||||||||||
| Operating income | 41,225 | 40,420 | 2.0 | % | 196,751 | 170,028 | 15.7 | % | ||||||||||
| Interest expense | 4,799 | 2,752 | 14,547 | 12,544 | ||||||||||||||
| Earnings before income taxes | 36,426 | 37,668 | 182,204 | 157,484 | ||||||||||||||
| Income taxes | 7,305 | 10,439 | 41,317 | 38,739 | ||||||||||||||
| Net earnings | $ | 29,121 | $ | 27,229 | 6.9 | % | $ | 140,887 | $ | 118,745 | 18.6 | % | ||||||
| Earnings per share of common stock: | ||||||||||||||||||
| Basic | $ | 0.70 | $ | 0.65 | $ | 3.36 | $ | 2.82 | ||||||||||
| Diluted | $ | 0.69 | $ | 0.65 | $ | 3.34 | $ | 2.81 | ||||||||||
| Average common shares outstanding: | ||||||||||||||||||
| Basic | 41,896 | 41,890 | 41,888 | 42,077 | ||||||||||||||
| Diluted | 42,255 | 42,173 | 42,213 | 42,258 | ||||||||||||||
| Results by Segment | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||
| Flavors & Extracts | $ | 178,893 | $ | 177,448 | 0.8 | % | $ | 738,003 | $ | 739,427 | (0.2 | %) | ||||||
| Color | 147,842 | 137,104 | 7.8 | % | 604,017 | 545,270 | 10.8 | % | ||||||||||
| Asia Pacific | 34,567 | 35,749 | (3.3 | %) | 143,581 | 135,348 | 6.1 | % | ||||||||||
| Intersegment elimination | (12,566 | ) | (9,853 | ) | (48,562 | ) | (39,781 | ) | ||||||||||
| Consolidated | $ | 348,736 | $ | 340,448 | 2.4 | % | $ | 1,437,039 | $ | 1,380,264 | 4.1 | % | ||||||
| Operating Income | ||||||||||||||||||
| Flavors & Extracts | $ | 21,495 | $ | 21,942 | (2.0 | %) | $ | 105,424 | $ | 98,660 | 6.9 | % | ||||||
| Color | 24,584 | 24,113 | 2.0 | % | 114,619 | 103,575 | 10.7 | % | ||||||||||
| Asia Pacific | 6,615 | 7,184 | (7.9 | %) | 29,492 | 26,330 | 12.0 | % | ||||||||||
| Corporate & Other | (11,469 | ) | (12,819 | ) | (52,784 | ) | (58,537 | ) | ||||||||||
| Consolidated | $ | 41,225 | $ | 40,420 | 2.0 | % | $ | 196,751 | $ | 170,028 | 15.7 | % |
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| (In thousands) | ||||
| (Unaudited) | ||||
| Consolidated Condensed Balance Sheets | December 31,<br><br> <br>2022 | December 31,<br><br> <br>2021 | ||
| --- | --- | --- | --- | --- |
| Cash and cash equivalents | $ | 20,921 | $ | 25,740 |
| Trade accounts receivable | 302,109 | 261,121 | ||
| Inventories | 564,110 | 411,635 | ||
| Prepaid expenses and other current assets | 47,640 | 42,657 | ||
| Total Current Assets | 934,780 | 741,153 | ||
| Goodwill & intangible assets (net) | 434,315 | 435,009 | ||
| Property, plant, and equipment (net) | 483,193 | 446,478 | ||
| Other assets | 129,326 | 122,853 | ||
| Total Assets | $ | 1,981,614 | $ | 1,745,493 |
| Trade accounts payable | $ | 142,365 | $ | 125,519 |
| Short-term borrowings | 20,373 | 8,539 | ||
| Other current liabilities | 109,415 | 98,247 | ||
| Total Current Liabilities | 272,153 | 232,305 | ||
| Long-term debt | 630,331 | 503,006 | ||
| Accrued employee and retiree benefits | 26,364 | 28,579 | ||
| Other liabilities | 53,168 | 43,178 | ||
| Shareholders' Equity | 999,598 | 938,425 | ||
| Total Liabilities and Shareholders' Equity | $ | 1,981,614 | $ | 1,745,493 |
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| (In thousands, except per share amounts) | ||||||
| (Unaudited) | ||||||
| Consolidated Statements of Cash Flows | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Year Ended December 31, | ||||||
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 140,887 | $ | 118,745 | ||
| Adjustments to arrive at net cash provided by operating activities: | ||||||
| Depreciation and amortization | 52,467 | 52,051 | ||||
| Share-based compensation expense | 16,138 | 9,573 | ||||
| Net loss on assets | 276 | 331 | ||||
| Net (gain) loss on divestitures and other charges | (2,532 | ) | 14,021 | |||
| Deferred income taxes | (11,010 | ) | (6,071 | ) | ||
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable | (46,086 | ) | (34,571 | ) | ||
| Inventories | (159,014 | ) | (36,323 | ) | ||
| Prepaid expenses and other assets | (5,055 | ) | (6,057 | ) | ||
| Trade accounts payable and other accrued expenses | 17,489 | 21,326 | ||||
| Accrued salaries, wages, and withholdings | 3,486 | 7,321 | ||||
| Income taxes | 4,422 | 4,275 | ||||
| Other liabilities | 602 | 597 | ||||
| Net cash provided by operating activities | 12,070 | 145,218 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of property, plant, and equipment | (79,322 | ) | (60,788 | ) | ||
| Proceeds from sale of assets | 264 | 216 | ||||
| Proceeds from divestiture of businesses | 2,532 | 37,790 | ||||
| Acquisition of new businesses | (22,714 | ) | (13,875 | ) | ||
| Other investing activities | 792 | 1,097 | ||||
| Net cash used in investing activities | (98,448 | ) | (35,560 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from additional borrowings | 328,597 | 112,194 | ||||
| Debt payments | (171,447 | ) | (110,168 | ) | ||
| Purchase of treasury stock | - | (42,511 | ) | |||
| Dividends paid | (68,915 | ) | (66,694 | ) | ||
| Other financing activities | (2,056 | ) | (582 | ) | ||
| Net cash provided by (used in) financing activities | 86,179 | (107,761 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | (4,620 | ) | (927 | ) | ||
| Net (decrease) increase in cash and cash equivalents | (4,819 | ) | 970 | |||
| Cash and cash equivalents at beginning of period | 25,740 | 24,770 | ||||
| Cash and cash equivalents at end of period | $ | 20,921 | $ | 25,740 | ||
| Supplemental Information<br><br> <br>Year Ended December 31, | 2022 | 2021 | ||||
| --- | --- | --- | --- | --- | ||
| Dividends paid per share | $ | 1.64 | $ | 1.58 |
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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, 2022 and 2021 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 and income, and the results of the divested operations.
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||
| Revenue (GAAP) | $ | 348,736 | $ | 340,448 | 2.4 | % | $ | 1,437,039 | $ | 1,380,264 | 4.1 | % | ||||||
| Revenue of the divested product lines | - | (663 | ) | - | (30,062 | ) | ||||||||||||
| Adjusted revenue | $ | 348,736 | $ | 339,785 | 2.6 | % | $ | 1,437,039 | $ | 1,350,202 | 6.4 | % | ||||||
| Operating income (GAAP) | $ | 41,225 | $ | 40,420 | 2.0 | % | $ | 196,751 | $ | 170,028 | 15.7 | % | ||||||
| Divestiture & other related costs – Cost of products sold | - | 58 | - | 86 | ||||||||||||||
| Divestiture & other related (income) costs – Selling and administrative expenses | (2,532 | ) | 579 | (2,532 | ) | 14,052 | ||||||||||||
| Operating loss (income) of the divested product lines | - | 518 | - | (1,880 | ) | |||||||||||||
| Operational improvement plan - Selling and administrative expenses (income) | - | 115 | - | (1,895 | ) | |||||||||||||
| Adjusted operating income | $ | 38,693 | $ | 41,690 | (7.2 | %) | $ | 194,219 | $ | 180,391 | 7.7 | % | ||||||
| Net earnings (GAAP) | $ | 29,121 | $ | 27,229 | 6.9 | % | $ | 140,887 | $ | 118,745 | 18.6 | % | ||||||
| Divestiture & other related (income) costs, before tax | (2,532 | ) | 637 | (2,532 | ) | 14,138 | ||||||||||||
| Tax impact of divestiture & other related costs^(1)^ | 636 | 1,809 | 636 | 2,092 | ||||||||||||||
| Net loss (earnings) of the divested product lines, before tax | - | 518 | - | (1,880 | ) | |||||||||||||
| Tax impact of the divested product lines^(1)^ | - | (130 | ) | - | 460 | |||||||||||||
| Operational improvement plan costs (income), before tax | - | 115 | - | (1,895 | ) | |||||||||||||
| Tax impact of operational improvement plan^(1)^ | - | 427 | - | 471 | ||||||||||||||
| Adjusted net earnings | $ | 27,225 | $ | 30,605 | (11.0 | %) | $ | 138,991 | $ | 132,131 | 5.2 | % | ||||||
| Diluted earnings per share (GAAP) | $ | 0.69 | $ | 0.65 | 6.2 | % | $ | 3.34 | $ | 2.81 | 18.9 | % | ||||||
| Divestiture & other related (income) costs, net of tax | (0.04 | ) | 0.06 | (0.04 | ) | 0.38 | ||||||||||||
| Results of operations of the divested product lines, net of tax | - | 0.01 | - | (0.03 | ) | |||||||||||||
| Operational improvement plan costs (income), net of tax | - | 0.01 | - | (0.03 | ) | |||||||||||||
| Adjusted diluted earnings per share | $ | 0.64 | $ | 0.73 | (12.3 | %) | $ | 3.29 | $ | 3.13 | 5.1 | % |
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.
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| (In thousands) | |
| (Unaudited) |
Reconciliation of Non-GAAP Amounts - Continued
| Results by Segment | Three Months Ended December 31, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 2022 | Adjustments^(2)^ | Adjusted<br><br> <br>2022 | 2021 | Adjustments^(2)^ | Adjusted<br><br> <br>2021 | ||||||||||||
| Flavors & Extracts | $ | 178,893 | $ | - | $ | 178,893 | $ | 177,448 | $ | (221 | ) | $ | 177,227 | |||||
| Color | 147,842 | - | 147,842 | 137,104 | (442 | ) | 136,662 | |||||||||||
| Asia Pacific | 34,567 | - | 34,567 | 35,749 | - | 35,749 | ||||||||||||
| Intersegment elimination | (12,566 | ) | - | (12,566 | ) | (9,853 | ) | - | (9,853 | ) | ||||||||
| Consolidated | $ | 348,736 | $ | - | $ | 348,736 | $ | 340,448 | $ | (663 | ) | $ | 339,785 | |||||
| Operating Income | ||||||||||||||||||
| Flavors & Extracts | $ | 21,495 | $ | - | $ | 21,495 | $ | 21,942 | $ | 491 | $ | 22,433 | ||||||
| Color | 24,584 | - | 24,584 | 24,113 | 27 | 24,140 | ||||||||||||
| Asia Pacific | 6,615 | - | 6,615 | 7,184 | - | 7,184 | ||||||||||||
| Corporate & Other | (11,469 | ) | (2,532 | ) | (14,001 | ) | (12,819 | ) | 752 | (12,067 | ) | |||||||
| Consolidated | $ | 41,225 | $ | (2,532 | ) | $ | 38,693 | $ | 40,420 | $ | 1,270 | $ | 41,690 | |||||
| Results by Segment | Year Ended December 31, | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | 2022 | Adjustments^(2)^ | Adjusted<br><br> <br>2022 | 2021 | Adjustments^(2)^ | Adjusted<br><br> <br>2021 | ||||||||||||
| Flavors & Extracts | $ | 738,003 | $ | - | $ | 738,003 | $ | 739,427 | $ | (27,837 | ) | $ | 711,590 | |||||
| Color | 604,017 | - | 604,017 | 545,270 | (2,080 | ) | 543,190 | |||||||||||
| Asia Pacific | 143,581 | - | 143,581 | 135,348 | (295 | ) | 135,053 | |||||||||||
| Intersegment elimination | (48,562 | ) | - | (48,562 | ) | (39,781 | ) | 150 | (39,631 | ) | ||||||||
| Consolidated | $ | 1,437,039 | $ | - | $ | 1,437,039 | $ | 1,380,264 | $ | (30,062 | ) | $ | 1,350,202 | |||||
| Operating Income | ||||||||||||||||||
| Flavors & Extracts | $ | 105,424 | $ | - | $ | 105,424 | $ | 98,660 | $ | (2,368 | ) | $ | 96,292 | |||||
| Color | 114,619 | - | 114,619 | 103,575 | 575 | 104,150 | ||||||||||||
| Asia Pacific | 29,492 | - | 29,492 | 26,330 | (87 | ) | 26,243 | |||||||||||
| Corporate & Other | (52,784 | ) | (2,532 | ) | (55,316 | ) | (58,537 | ) | 12,243 | (46,294 | ) | |||||||
| Consolidated | $ | 196,751 | $ | (2,532 | ) | $ | 194,219 | $ | 170,028 | $ | 10,363 | $ | 180,391 |
^(2)^ For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income.
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| (In thousands, except percentages) | |
| (Unaudited) |
Reconciliation of Non-GAAP Amounts - Continued
The following tables summarize the percentage change in the 2022 results compared to the 2021 results for the corresponding periods.
| Three Months Ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Adjustments^(3)^ | Adjusted<br><br> <br>Local<br><br> <br>Currency | ||||||||
| Flavors & Extracts | 0.8 | % | (1.8 | %) | (0.1 | %) | 2.7 | % | ||||
| Color | 7.8 | % | (3.8 | %) | (0.3 | %) | 11.9 | % | ||||
| Asia Pacific | (3.3 | %) | (9.7 | %) | 0.0 | % | 6.4 | % | ||||
| Total Revenue | 2.4 | % | (3.3 | %) | (0.2 | %) | 5.9 | % | ||||
| Operating Income | ||||||||||||
| Flavors & Extracts | (2.0 | %) | (0.1 | %) | 2.2 | % | (4.1 | %) | ||||
| Color | 2.0 | % | (5.9 | %) | 0.1 | % | 7.8 | % | ||||
| Asia Pacific | (7.9 | %) | (11.5 | %) | 0.0 | % | 3.6 | % | ||||
| Corporate & Other | (10.5 | %) | 0.0 | % | (26.6 | %) | 16.1 | % | ||||
| Total Operating Income | 2.0 | % | (5.6 | %) | 9.3 | % | (1.7 | %) | ||||
| Diluted Earnings Per Share | 6.2 | % | (6.1 | %) | 19.1 | % | (6.8 | %) | ||||
| Adjusted EBITDA | (4.3 | %) | (4.6 | %) | N/A | 0.3 | % | |||||
| Year Ended December 31, | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Adjustments^(3)^ | Adjusted<br><br> <br>Local<br><br> <br>Currency | ||||||||
| Flavors & Extracts | (0.2 | %) | (2.2 | %) | (3.8 | %) | 5.8 | % | ||||
| Color | 10.8 | % | (3.8 | %) | (0.4 | %) | 15.0 | % | ||||
| Asia Pacific | 6.1 | % | (8.0 | %) | (0.3 | %) | 14.4 | % | ||||
| Total Revenue | 4.1 | % | (3.4 | %) | (2.2 | %) | 9.7 | % | ||||
| Operating Income | ||||||||||||
| Flavors & Extracts | 6.9 | % | (0.9 | %) | (2.5 | %) | 10.3 | % | ||||
| Color | 10.7 | % | (5.1 | %) | 0.7 | % | 15.1 | % | ||||
| Asia Pacific | 12.0 | % | (10.1 | %) | (0.4 | %) | 22.5 | % | ||||
| Corporate & Other | (9.8 | %) | 0.0 | % | (29.4 | %) | 19.6 | % | ||||
| Total Operating Income | 15.7 | % | (5.2 | %) | 8.4 | % | 12.5 | % | ||||
| Diluted Earnings Per Share | 18.9 | % | (5.3 | %) | 14.3 | % | 9.9 | % | ||||
| Adjusted EBITDA | 8.7 | % | (4.1 | %) | N/A | 12.8 | % |
^(3)^ For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, Diluted Earnings per Share, and Adjusted EBITDA, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income.
The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021.
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||
| Operating income (GAAP) | $ | 41,225 | $ | 40,420 | 2.0 | % | $ | 196,751 | $ | 170,028 | 15.7 | % | |||||
| Depreciation and amortization | 13,205 | 13,223 | 52,467 | 52,051 | |||||||||||||
| Depreciation and amortization, divested product lines | - | - | - | (146 | ) | ||||||||||||
| Share-based compensation expense | 3,662 | 3,142 | 16,138 | 9,573 | |||||||||||||
| Divestiture & other related (income) costs, before tax | (2,532 | ) | 637 | (2,532 | ) | 14,138 | |||||||||||
| Results of operations of the divested product lines, before tax | - | 518 | - | (1,880 | ) | ||||||||||||
| Operational improvement plan costs (income), before tax | - | 115 | - | (1,895 | ) | ||||||||||||
| Adjusted EBITDA | $ | 55,560 | $ | 58,055 | (4.3 | %) | $ | 262,824 | $ | 241,869 | 8.7 | % |
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| (In thousands, except percentages) | |
| (Unaudited) |
Reconciliation of Non-GAAP Amounts - Continued
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| Debt | 2022 | 2021 | ||||
| Short-term borrowings | $ | 20,373 | $ | 8,539 | ||
| Long-term debt | 630,331 | 503,006 | ||||
| Credit Agreement adjustments ^(4)^ | (10,180 | ) | (14,900 | ) | ||
| Net Debt | $ | 640,524 | $ | 496,645 | ||
| Operating income (GAAP) | $ | 196,751 | $ | 170,028 | ||
| Depreciation and amortization | 52,467 | 52,051 | ||||
| Depreciation and amortization, divested product lines | - | (146 | ) | |||
| Share-based compensation expense | 16,138 | 9,573 | ||||
| Divestiture & other related (income) costs, before tax | (2,532 | ) | 14,138 | |||
| Results of operations of the divested product lines, before tax | - | (1,880 | ) | |||
| Operational improvement plan income, before tax | - | (1,895 | ) | |||
| Other non-operating (gains) losses ^(5)^ | (866 | ) | 1,027 | |||
| Credit Adjusted EBITDA | $ | 261,958 | $ | 242,896 | ||
| Net Debt to Credit Adjusted EBITDA | 2.4 | x | 2.0 | x |
^(4)^ 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.
^(5)^ 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.
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. With respect to Net Debt to Credit Adjusted EBITDA, this represents our leverage ratio as calculated for purposes of compliance with covenants under our Credit Agreement. In addition to use for these purposes, management utilizes this measure to assess leverage trends and may from time to time disclose it to investors to be used for these purposes.
Exhibit 99.2
Fourth Quarter 2022 Investor Presentation
FORWARD-LOOKING STATEMENTS 2 This document contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2023 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 Company’s ability to manage economic and capital 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; the availability and cost of labor, logistics, and transportation; the impact and uncertainty created by the COVID-19 pandemic and efforts to manage it on the global economy, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, governmental regulations and restrictions, and general economic conditions; the uncertain impacts of the ongoing conflict between Russia and Ukraine on our supply chain, input costs, including energy and transportation, and on 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; 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, 2021, as updated and supplemented by the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and in other documents that the Company files with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 that will be filed by March 1, 2023. 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.
NON-GAAP FINANCIAL MEASURES 2 Within this document, the Company reports certain non-GAAP financial measures, including: (1) adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share (which exclude divestiture & other related costs, the results of the divested product lines, and restructuring and other costs, which include operational improvement plan costs and income) (2) adjusted results by segment (which exclude divestiture & other related costs, operational improvement plan costs and income, and the results of the divested operations), (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 into U.S. dollars, divestiture & other related costs, the results of the divested product lines, and restructuring and other costs, which include operational improvement plan costs), and (4) adjusted EBITDA (which excludes depreciation and amortization expense, non-cash share based compensation expense, the results of the divested product lines, the divestiture & other related costs, and operational improvement plan costs and income). 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. The Company believes this information can be beneficial to investors for these 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.
Sensient Overview 2 Provider of customized solutions for food and beverage, pharmaceutical, and personal care customers Global market leader offering an extensive portfolio of natural flavor and color technology platforms and solutions Exceptional innovation & applications expertise with unique ability to service global, regional, and local customers
Innovative Technologies Creating Unique Solutions 2 Applications expertise and solutions-based selling High impact relative to cost Technically-driven products that are difficult to replace Strong consumer trends Opportunities to grow organically and through M&A
Focusing our portfolio and strengthening our commitment to the end markets 2 Investing in core focus areas of Flavors and Extracts, Natural Ingredients, Food and Pharmaceutical Colors, and Personal Care Divested non-core product lines (inks, fragrances, and yogurt fruit prep product lines) in 2020 and 2021 Expanded flavor portfolio and strengthened technical solutions capabilities through the acquisition of Flavor Solutions, Inc. in July 2021 Strengthened extensive natural color portfolio by acquiring Endemix, a vertically integrated natural color and extracts company, in October 2022
Natural solutions provider focused on consistent and sustainable supply chain 2 Provider of natural solutions to support health & wellness and clean label consumer trends Robust agronomy program ensures responsible procurement and traceability of sustainable ingredients Committed to delivering safe, authentic, high-quality natural products through Sensient’s CertasureTM program
8 Global Revenue by Group 2022 Global Revenues include intercompany sales which are eliminated on a consolidated basis. Color Group 2022 Revenue: $604M Core Areas of Focus: Food and Pharmaceutical Colors and Personal Care Flavors & Extracts Group 2022 Revenue: $738M Core Areas of Focus: Natural Flavors, Extracts and Natural Ingredients Asia Pacific Group 2022 Revenue: $144M Core Areas of Focus: Flavors and Colors for food and beverage
9 Global market leader Natural color innovator Excellent innovation & applications expertise Color Group
10 Color Overview Food and Pharmaceutical 73% of Segment Revenue LC Revenue Change* Q4 ’22 YTD ’22 +14.9% +16.9% Market trend toward natural colors in food and beverage Unique value proposition for Pharmaceutical customers includes colors, flavors, coatings, and extracts Personal Care 27% of Segment Revenue LC Revenue Q4 ’22 YTD ’22 Change* • Demand for innovative products with multiple benefits +4.3% • Product line includes dyes, pigments, formulation aides and +9.5% ingredients for color cosmetics, hair care, and skin care 2022 Revenue: $604M *Local-currency (LC) revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of this document.
11 Flavors & Extracts Group Broad product offering Unique ability to service global, regional, and local customers Leading technology platforms Outstanding applications expertise
12 Flavors & Extracts Overview Flavors, Extracts, and Flavor Ingredients 67% of Segment Revenue LC Revenue Change* Q4 ’22 +11.0% YTD ’22 +12.6% Opportunities for on trend products with extracts, taste modulation, and natural flavors Natural Ingredients 33% of Segment Revenue LC Revenue Change* Q4 ’22 (10.2%) YTD ’22 (6.1%) Leading provider of dehydrated onion, garlic, and other products 2022 Revenue: $738M *Local-currency (LC) revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of this document.
13 Asia Pacific Group Portfolio of food and beverage flavors and colors R&D centers in key strategic markets to support local and regional customer base Ability to deliver localized solutions and technology platforms
14 2022 revenue of $144 million and operating income of $29 million Sensient’s sales of flavors and colors for Food and Pharmaceutical are managed on a geographic basis and reported as a separate segment Manufacturing capabilities in Australia, New Zealand, China, Japan, Philippines, Thailand, and India Q4 2022 local currency adjusted revenue* and operating profit* improved 6.4% and 3.6%, respectively *Local currency adjusted revenue and local currency adjusted operating profit are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document. Asia Pacific Overview
15 2022 Q4 Segment Results Color Group reported higher revenue in the quarter due to pricing actions and volume growth. Operating income was up due to pricing actions, partially offset by higher input costs. Flavors & Extracts Group fourth quarter revenue increased as a result of pricing actions. Volume growth in Flavors, Extracts and Flavor Ingredients was offset by lower Natural Ingredient volumes primarily due to customer destocking. Operating income declined in the quarter primarily due to higher input costs and lower volumes for the Group. Asia Pacific Group fourth quarter revenue and operating income increased due to pricing actions across the Group. Local Currency Adjusted Operating Income* Q4 YTD Color +7.8% +15.1% Flavors & Extracts (4.1%) +10.3% Asia Pacific +3.6% +22.5% Local Currency Adjusted Revenue* Local Currency Adjusted* Commentary: Q4 YTD Color +11.9% +15.0% Flavors & Extracts +2.7% +5.8% Asia Pacific +6.4% +14.4% * Local-currency (LC) adjusted revenue and adjusted operating income are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
16 2022 Q4 Consolidated Results Q4 YTD Local Currency Adjusted Revenue* +5.9% +9.7% Local Currency Adjusted Operating Income* (1.7%) +12.5% Local Currency Adjusted Diluted EPS* (6.8%) +9.9% Local Currency Adjusted EBITDA* +0.3% +12.8% Q4 consolidated local currency adjusted revenue increased due to pricing actions across the groups and continued volume growth in the Color Group. Q4 consolidated local currency adjusted operating income declined despite operating profit growth in the Colors and Asia Pacific Groups. Lower volumes in the Natural Ingredients product line, and higher year-over-year input costs and Corporate expenses related to performance-based compensation contributed to the reduction in the quarter. * Local-currency (LC) 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.
Capital Allocation rs re DOLLARS IN MILLIONS $250 $200 $31 $150 $51 $87 $100 $57 $39 $50 $77 $62 $- 2018 2019 Share Repurchase Prioritize ROI capital projects $118 $14 $23 Maintain financial flexibility to pursue $61 M&A $79 $52 $67 Excess capital returned to shareholde through dividend and opportunistic sha $66 $69 $43 repurchases 2020 2021 2022 Acquisitions Dividends Debt Repayments Capital Expenditure s 17
2023 Financial Outlook 17 Metric Guidance Comments Local Currency Revenue* Mid-single digit growth Adjusted Local Currency EBITDA* Mid-to-high single digit growth Excludes the impact of share-based stock compensation Diluted EPS (GAAP) Flat to Low-single digit growth FX headwind in early 2023, but moderately favorable for the full year Interest expense headwind of $10-$12 million Tax rate of approximately 25% Local Currency Diluted EPS* Flat to Low-single digit growth The 2023 Local Currency Diluted EPS, Local Currency Revenue and Adjusted Local Currency EBITDA growth rates for 2023 are compared to 2022 Adjusted Diluted EPS, Adjusted Revenue and Adjusted EBITDA, respectively. 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.
Why Invest? Strong competitive position Defensible and ‘sticky’ business (& low portion of customer costs) Global presence Exposure to stable and growing markets Focused on improving returns and on growth 17
APPENDIX* *Amounts in thousands, except percentages and per share amounts
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 intensity Seed-to-shelf program focused on sustainable supply chain Emphasis on new products and technologies that minimize waste and environmental impacts Chemical 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 standards Robust product, environmental, and raw material safety programs designed to exceed industry standards Raw material traceability and sustainability programs Support 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 backgrounds Committed to board diversity and refreshment, we were recognized by 50/50 Women on Boards for the tenth year in a row and we have added seven new directors since 2014. Robust Code of Conduct built on a foundation of ethics, safety and quality, and professionalism resulting in ethical and lawful conduct of our business 21
22 Non-GAAP Financial Measures Note: EPS Calculations may not foot due to rounding differences Three Months Ended Three Months Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Revenue (GAAP) $ 348,736 $ 340,448 $ 1,437,039 $ 1,380,264 Revenue of the divested product lines - (663) - (30,062) Adjusted revenue $ 348,736 $ 339,785 $ 1,437,039 $ 1,350,202 Operating income (GAAP) $ 41,225 $ 40,420 $ 196,751 $ 170,028 Divestiture & other related costs – Cost of products sold - 58 - 86 Divestiture & other related (income) costs – Selling and administrative expenses (2,532) 579 (2,532) 14,052 Operating loss (income) of the divested product lines - 518 - (1,880) Operational improvement plan - Selling and administrative expenses (income) - 115 - (1,895) Adjusted operating income $ 38,693 $ 41,690 $ 194,219 $ 180,391 Net earnings (GAAP) $ 29,121 $ 27,229 $ 140,887 $ 118,745 Divestiture & other related (income) costs, before tax (2,532) 637 (2,532) 14,138 Tax impact of divestiture & other related costs * 636 1,809 636 2,092 Net loss (earnings) of the divested product lines, before tax - 518 - (1,880) Tax impact of the divested product lines * - (130) - 460 Operational improvement plan costs (income), before tax - 115 - (1,895) Tax impact of operational improvement plan * - 427 - 471 Adjusted net earnings $ 27,225 $ 30,605 $ 138,991 $ 132,131 Diluted earnings per share (GAAP) $ 0.69 $ 0.65 $ 3.34 $ 2.81 Divestiture & other related (income) costs, net of tax (0.04) 0.06 (0.04) 0.38 Results of operations of the divested product lines, net of tax - 0.01 - (0.03) Operational improvement plan costs (income), net of tax - 0.01 - (0.03) Adjusted diluted earnings per share $ 0.64 $ 0.73 $ 3.29 $ 3.13 * Tax impact adjustments were determined based on the nature of the underlying Non-GAAP adjustments and their relevant jurisdictional tax rates.
Non-GAAP Financial Measures (Cont’d) 28 Revenue Total Foreign Exchange Rates Adjustments* Adjusted Local Currency Total Foreign Exchange Rates Adjustments* Adjusted Local Currency Flavors & Extracts 0.8% (1.8%) (0.1%) 2.7% (0.2%) (2.2%) (3.8%) 5.8% Color 7.8% (3.8%) (0.3%) 11.9% 10.8% (3.8%) (0.4%) 15.0% Asia Pacific (3.3%) (9.7%) 0.0% 6.4% 6.1% (8.0%) (0.3%) 14.4% Total Revenue 2.4% (3.3%) (0.2%) 5.9% 4.1% (3.4%) (2.2%) 9.7% Operating Income Flavors & Extracts (2.0%) (0.1%) 2.2% (4.1%) 6.9% (0.9%) (2.5%) 10.3% Color 2.0% (5.9%) 0.1% 7.8% 10.7% (5.1%) 0.7% 15.1% Asia Pacific (7.9%) (11.5%) 0.0% 3.6% 12.0% (10.1%) (0.4%) 22.5% Corporate & Other (10.5%) 0.0% (26.6%) 16.1% (9.8%) 0.0% (29.4%) 19.6% Total Operating Income 2.0% (5.6%) 9.3% (1.7%) 15.7% (5.2%) 8.4% 12.5% Diluted Earnings Per Share 6.2% (6.1%) 19.1% (6.8%) 18.9% (5.3%) 14.3% 9.9% Adjusted EBITDA (4.3%) (4.6%) N/A 0.3% 8.7% (4.1%) N/A 12.8% * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, Diluted Earnings per Share, and Adjusted EBITDA, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income. Three Months Ended December 31, 2022 Year Ended December 31, 2022
Non-GAAP Financial Measures (Cont’d) 28 Note: *Fragrances was divested in April 2021, Inks was divested in June 2020, and Yogurt Fruit Prep was divested in September 2020. Revenue Total Exchange Rates Local Currency Total Exchange Rates Local Currency Flavors, Extracts and Flavor Ingredients 8.2% (2.8%) 11.0% 9.3% (3.3%) 12.6% Natural Ingredients (10.4%) (0.2%) (10.2%) (6.2%) (0.1%) (6.1%) Fragrances* (100.0%) 0.0% (100.0%) (100.0%) 0.0% (100.0%) Yogurt Fruit Prep* (100.0%) 0.0% (100.0%) (100.0%) 0.0% (100.0%) Flavors & Extracts Group 0.8% (1.8%) 2.6% (0.2%) (2.2%) 2.0% Food and Pharmaceutical 11.9% (3.0%) 14.9% 13.5% (3.4%) 16.9% Personal Care (1.2%) (5.5%) 4.3% 4.6% (4.9%) 9.5% Inks* (59.4%) 0.0% (59.4%) (17.7%) 0.0% (17.7%) Color Group 7.8% (3.8%) 11.6% 10.8% (3.8%) 14.6% Asia Pacific (3.3%) (9.7%) 6.4% 6.1% (8.0%) 14.1% Total revenue including the product lines divested 2.4% (3.3%) 5.7% 4.1% (3.4%) 7.5% Three Months Ended December 31, 2022 Year Ended December 31, 2022 Foreign Foreign
Non-GAAP Financial Measures (Cont’d) 28 Revenue 2022 Adjustments* Adjusted 2022 2021 Adjustments* Adjusted 2021 Flavors & Extracts $ 178,893 $ - $ 178,893 $ 177,448 $ (221) $ 177,227 Color 147,842 - 147,842 137,104 (442) 136,662 Asia Pacific 34,567 - 34,567 35,749 - 35,749 Intersegment elimination (12,566) - (12,566) (9,853) - (9,853) Consolidated $ 348,736 $ - $ 348,736 $ 340,448 $ (663) $ 339,785 Operating Income Flavors & Extracts $ 21,495 $ - $ 21,495 $ 21,942 $ 491 $ 22,433 Color 24,584 - 24,584 24,113 27 24,140 Asia Pacific 6,615 - 6,615 7,184 - 7,184 Corporate & Other (11,469) (2,532) (14,001) (12,819) 752 (12,067) Consolidated $ 41,225 $ (2,532) $ 38,693 $ 40,420 $ 1,270 $ 41,690 * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income. Results by Segment Three Months Ended December 31,
Non-GAAP Financial Measures (Cont’d) 28 Revenue 2022 Adjustments* Adjusted 2022 2021 Adjustments* Adjusted 2021 Flavors & Extracts $ 738,003 $ - $ 738,003 $ 739,427 $ (27,837) $ 711,590 Color 604,017 - 604,017 545,270 (2,080) 543,190 Asia Pacific 143,581 - 143,581 135,348 (295) 135,053 Intersegment elimination (48,562) - (48,562) (39,781) 150 (39,631) Consolidated $ 1,437,039 $ - $ 1,437,039 $ 1,380,264 $ (30,062) $ 1,350,202 Operating Income Flavors & Extracts $ 105,424 $ - $ 105,424 $ 98,660 $ (2,368) $ 96,292 Color 114,619 - 114,619 103,575 575 104,150 Asia Pacific 29,492 - 29,492 26,330 (87) 26,243 Corporate & Other (52,784) (2,532) (55,316) (58,537) 12,243 (46,294) Consolidated $ 196,751 $ (2,532) $ 194,219 $ 170,028 $ 10,363 $ 180,391 Results by Segment Year Ended December 31, * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income.
Non-GAAP Financial Measures (Cont’d) 2022 2021 % Change 2022 2021 % Change Operating income (GAAP) $ 41,225 $ 40,420 2.0% $ 196,751 $ 170,028 15.7% Depreciation and amortization 13,205 13,223 52,467 52,051 Depreciation and amortization, divested product lines - - - (146) Share-based compensation expense 3,662 3,142 16,138 9,573 Divestiture & other related (income) costs, before tax (2,532) 637 (2,532) 14,138 Results of operations of the divested product lines, before tax - 518 - (1,880) Operational improvement plan costs (income), before tax - 115 - (1,895) Adjusted EBITDA $ 55,560 $ 58,055 (4.3%) $ 262,824 $ 241,869 8.7% Three Months Ended December 31, Year Ended December 31, 28
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