8-K
Sensient Technologies Corp (SXT)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
July 17, 2020
(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) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | 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 17, 2020 disclosing its results of operations for its quarter ended June 30, 2020, and its financial condition at that date. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in this Item 2.02 (including Exhibit 99.1) is intended to be furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 7.01 | Regulation FD Disclosure. |
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On July 17, 2020, the Company also posted an updated investor presentation for its quarter ended June 30, 2020 on the “Investor Information” section of its website. A copy of the investor presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information contained in this Item 7.01 (including Exhibit 99.2) is intended to be furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
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| (d) | Exhibits. The following exhibits are furnished with this Current Report on Form 8-K: |
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EXHIBIT INDEX
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Sensient Technologies Corporation Earnings Press Release for the Quarter Ended June 30, 2020. |
| 99.2 | Sensient Technologies Corporation Investor Presentation – Q2 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SENSIENT TECHNOLOGIES CORPORATION | |
|---|---|
| By: | /s/ John J. Manning |
| Name: | John J. Manning |
| Title: | Senior Vice President, General Counsel, and Secretary |
| Date: | July 17, 2020 |
Exhibit 99.1
| Contact: | Amy Agallar<br><br> <br>(414) 347-3706 |
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Sensient Technologies Corporation
Reports Results for the Quarter Ended June 30, 2020
Flavors & Fragrances Group reports Strong Revenue Growth and Profit Growth
Cash Provided by Operating Activities Increased 34% in the Quarter
Sensient Completes the Sale of its Inks product line
MILWAUKEE—July 17, 2020 — Sensient Technologies Corporation (NYSE: SXT) reported diluted earnings per share of 72 cents in the second quarter of 2020 compared to diluted earnings per share of 81 cents in the second quarter of 2019. Revenue was $323.1 million in this year’s second quarter compared to $339.2 million in the comparable period last year. Operating income was $42.1 million in the second quarter of 2020 compared to operating income of $47.4 million in last year’s second quarter. Foreign currency translation decreased revenue, operating income, and earnings per share by approximately 3% in the quarter.
The 2020 second quarter reported results include a gain related to the reclassification of accumulated foreign currency translation as a result of the sale of the Inks business and other divestiture related costs, which primarily consist of non-cash impairment charges. The combination of these items are included within the divestiture & other related costs, which increased second quarter net earnings by $1.0 million ($0.02 per diluted share). The 2020 and 2019 second quarter results also include the operations of the product lines divested and to be divested, which were not significant to net earnings or diluted earnings per share. These adjustments are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 2 |
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BUSINESS REVIEW
| Reported | ||||
|---|---|---|---|---|
| Revenue | Quarter | Year-to-date | ||
| Flavors & Fragrances | 1.9% | 1.8% | ||
| Color | -12.7% | -6.4% | ||
| Asia Pacific | -3.9% | 1.4% | ||
| Total Revenue | -4.7% | -1.9% | ||
| Adjusted<br><br> <br>Local Currency ^(1)^ | ||||
| --- | --- | --- | --- | --- |
| Revenue | Quarter | Year-to-date | ||
| Flavors & Fragrances | 5.7% | 4.6% | ||
| Color | -5.1% | -1.1% | ||
| Asia Pacific | -1.4% | 3.5% | ||
| Total Revenue | 0.0% | 1.6% | ||
| ^(1)^ Adjusted local currency percentage changes are described in more detail<br><br> <br>in the “Reconciliation of Non-GAAP Amounts” at the end of this release. |
The reported results include the impact of foreign currency, which is described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release. In contrast, the non-GAAP amounts eliminate the impact of currency movements, depreciation and amortization, non-cash share-based compensation, divestiture & other related costs, and the results of the operations divested and to be divested 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.
The Flavors & Fragrances Group reported second quarter revenue of $183.6 million compared to $180.1 million reported in the comparable period last year. Adjusted local currency revenue increased 5.7% in the quarter. The higher revenue was primarily the result of continued growth in finished flavors and extracts and natural ingredients during the quarter. Segment operating income was $22.8 million in the second quarter compared to $20.0 million reported in the second quarter of 2019. The Group’s higher profit was primarily a result of higher volumes and the favorable impact of the Group’s cost reduction initiatives, offset by higher raw material costs, mainly in natural ingredients. Foreign currency translation decreased segment revenue by approximately 2% and operating income by approximately 1% in the quarter.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 3 |
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The Color Group reported revenue of $121.3 million in the quarter compared to $138.9 million in last year’s second quarter. Adjusted local currency revenue decreased 5.1% in the quarter. Segment operating income was $22.3 million in the quarter compared to $27.9 million in last year’s comparable period. Continued growth in natural food and beverage colors and higher revenue in the pharmaceutical business was offset by lower volumes in the Personal Care and Inks businesses. Color Group operating income was lower in the quarter as higher profit in the Food & Beverage Colors business was offset by significantly lower profit in the Personal Care and Inks businesses, primarily as a result of the lower demand during COVID-19. Foreign currency translation decreased segment revenue and operating income each by approximately 4% in the quarter.
The Asia Pacific Group reported revenue of $27.9 million in the quarter compared to $29.0 million in the second quarter of 2019. Adjusted local currency revenue decreased 1.4% in the quarter. The lower segment revenue was primarily due to the impact of COVID-19 regulatory restrictions in certain countries. Segment operating income was $4.8 million in the quarter compared to $4.2 million in last year’s second quarter. Adjusted local currency operating income increased 16.4% in the quarter. The higher profit was primarily a result of the favorable impact of the Group’s cost reduction initiatives and favorable product mix. Foreign currency translation decreased segment revenue by approximately 3% and operating income by approximately 1% in the quarter.
Corporate & Other reported operating costs of $7.7 million in the current quarter compared to $4.8 million in the second quarter of 2019. The higher costs are primarily due to an increase in non-cash performance-based compensation, partially offset by the divestiture & other related impacts in the current period.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 4 |
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During the second quarter, the Company completed the sale of its Inks product line within the Color Group. The Company also signed a definitive agreement for the sale of its yogurt fruit preparations product line within the Flavors & Fragrances Group, which is expected to close in the third quarter.
2020 OUTLOOK
Based upon current trends, the Company’s current diluted earnings per share guidance for 2020 is $2.10 to $2.35. This guidance now includes 35 to 40 cents per share of divestiture & other related costs and the results of the operations divested and to be divested. The Company’s previously issued diluted earnings per share guidance for 2020 was $1.85 to $2.15, which included 55 to 65 cents per share of divestiture & other related costs and the results of the operations divested and to be divested. The Company’s guidance continues to include approximately 10 cents of foreign currency headwinds based on current exchanges rates.
Based upon current trends, the Company reconfirms its previously issued guidance of $2.60 to $2.80 for adjusted diluted earnings per share^(2)^, which excludes divestiture & other related costs, the results of the operations divested and to be divested, and foreign currency impacts.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 5 |
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The following table summarizes the Company’s 2020 Outlook:
| Previous Guidance | Current Guidance | |||||||
|---|---|---|---|---|---|---|---|---|
| Diluted Earnings Per Share (GAAP) | $ | 1.85 | $ | 2.15 | $ | 2.10 | $ | 2.35 |
| Divestiture & Other Costs and Results of Operations Divested and to be Divested | 0.65 | 0.55 | 0.40 | 0.35 | ||||
| Foreign Currency Headwinds | 0.10 | 0.10 | 0.10 | 0.10 | ||||
| Adjusted Diluted Earnings Per Share in Local Currency | $ | 2.60 | $ | 2.80 | $ | 2.60 | $ | 2.80 |
The Company is also confirming, based upon current trends, its previously issued guidance, which calls for low to mid-single digit revenue growth in 2020 on a local currency basis, excluding the revenues of the product lines divested and to be divested. The Company also continues to expect 2020 Adjusted EBITDA^(2)^ to grow at a low to mid-single digit rate and Adjusted Operating Income^(2)^ to be flat to down at a low-single digit rate, in each case on a local currency basis. Adjusted Operating Income will be impacted by higher non-cash performance-based compensation.
The full impact of COVID-19 remains unknown and continues to create uncertainty. The Company will continue to monitor the impact of COVID-19 and will update the outlook at each of the quarterly calls this year, as appropriate.
| ^(2)^ | See “Reconciliation of Non-GAAP Amounts” at the end of this release for more information. |
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CONFERENCE CALL
The Company will host a conference call to discuss its 2020 second quarter financial results at 8:30 a.m. CDT on Friday, July 17, 2020. 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.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 6 |
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A replay of the call will be available one hour after the end of the conference call through July 24, 2020, by calling (877) 344-7529 and referring to conference identification number 10144621. 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 July 21, 2020.
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2020 Outlook” above. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers and suppliers, the availability and cost of raw materials and other supplies, logistics and transportation, governmental regulations and restrictions and general economic conditions; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts and acquisition and divestiture activities; the success of the Company’s efforts to explore strategic alternatives for certain non-core product lines; the effectiveness of the Company’s past restructuring activities; changes in costs of raw materials, including energy; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
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| Sensient Technologies Corporation<br><br> <br>Earnings Release – Quarter Ended June 30, 2020<br><br> <br>July 17, 2020 | Page 7 |
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ABOUT SENSIENT TECHNOLOGIES
Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. Sensient uses advanced technologies and robust global supply chain capabilities to develop specialized solutions for food and beverages, as well as products that serve the pharmaceutical, nutraceutical, cosmetic, and personal care industries. Sensient’s customers range in size from small entrepreneurial businesses to major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.
www.sensient.com
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| Sensient Technologies Corporation<br><br> <br>(In thousands, except percentages and per share amounts)<br><br> <br>(Unaudited) | Page 8 | |||||||||||||||||
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| Consolidated Statements of Earnings | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Revenue | $ | 323,090 | $ | 339,186 | (4.7 | %) | $ | 673,767 | $ | 686,699 | (1.9 | %) | ||||||
| Cost of products sold | 220,876 | 227,418 | (2.9 | %) | 459,660 | 459,706 | (0.0 | %) | ||||||||||
| Selling and administrative expenses | 60,089 | 64,400 | (6.7 | %) | 137,421 | 130,205 | 5.5 | % | ||||||||||
| Operating income | 42,125 | 47,368 | (11.1 | %) | 76,686 | 96,788 | (20.8 | %) | ||||||||||
| Interest expense | 3,608 | 5,200 | 7,915 | 10,602 | ||||||||||||||
| Earnings before income taxes | 38,517 | 42,168 | 68,771 | 86,186 | ||||||||||||||
| Income taxes | 7,897 | 7,837 | 17,378 | 19,048 | ||||||||||||||
| Net earnings | $ | 30,620 | $ | 34,331 | (10.8 | %) | $ | 51,393 | $ | 67,138 | (23.5 | %) | ||||||
| Earnings per share of common stock: | ||||||||||||||||||
| Basic | $ | 0.72 | $ | 0.81 | $ | 1.22 | $ | 1.59 | ||||||||||
| Diluted | $ | 0.72 | $ | 0.81 | $ | 1.21 | $ | 1.59 | ||||||||||
| Average common shares outstanding: | ||||||||||||||||||
| Basic | 42,305 | 42,270 | 42,294 | 42,255 | ||||||||||||||
| Diluted | 42,322 | 42,300 | 42,315 | 42,287 | ||||||||||||||
| Results by Segment | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||
| Flavors & Fragrances | $ | 183,611 | $ | 180,134 | 1.9 | % | $ | 370,109 | $ | 363,687 | 1.8 | % | ||||||
| Color | 121,296 | 138,912 | (12.7 | %) | 264,791 | 282,791 | (6.4 | %) | ||||||||||
| Asia Pacific | 27,873 | 29,002 | (3.9 | %) | 58,322 | 57,521 | 1.4 | % | ||||||||||
| Intersegment elimination | (9,690 | ) | (8,862 | ) | (19,455 | ) | (17,300 | ) | ||||||||||
| Consolidated | $ | 323,090 | $ | 339,186 | (4.7 | %) | $ | 673,767 | $ | 686,699 | (1.9 | %) | ||||||
| Operating Income | ||||||||||||||||||
| Flavors & Fragrances | $ | 22,752 | $ | 20,050 | 13.5 | % | $ | 43,623 | $ | 43,175 | 1.0 | % | ||||||
| Color | 22,263 | 27,877 | (20.1 | %) | 51,927 | 58,076 | (10.6 | %) | ||||||||||
| Asia Pacific | 4,849 | 4,201 | 15.4 | % | 9,908 | 8,419 | 17.7 | % | ||||||||||
| Corporate & Other | (7,739 | ) | (4,760 | ) | (28,772 | ) | (12,882 | ) | ||||||||||
| Consolidated | $ | 42,125 | $ | 47,368 | (11.1 | %) | $ | 76,686 | $ | 96,788 | (20.8 | %) | ||||||
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| Sensient Technologies Corporation<br><br> <br>(In thousands)<br><br> <br>(Unaudited) | Page 9 | |||
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| Consolidated Condensed Balance Sheets | June 30,<br><br> <br>2020 | December 31,<br><br> <br>2019 | ||
| --- | --- | --- | --- | --- |
| Cash and cash equivalents | $ | 20,876 | $ | 21,153 |
| Trade accounts receivable (net) | 229,635 | 213,201 | ||
| Inventories | 388,647 | 422,517 | ||
| Prepaid expenses and other current assets | 40,525 | 40,049 | ||
| Assets held for sale | 58,633 | 91,293 | ||
| Total Current Assets | 738,316 | 788,213 | ||
| Goodwill & intangible assets (net) | 415,111 | 418,844 | ||
| Property, plant, and equipment (net) | 423,294 | 437,179 | ||
| Other assets | 96,544 | 95,915 | ||
| Total Assets | $ | 1,673,265 | $ | 1,740,151 |
| Trade accounts payable | $ | 97,296 | $ | 94,653 |
| Short-term borrowings | 18,304 | 20,612 | ||
| Other current liabilities | 78,094 | 66,925 | ||
| Liabilities held for sale | 19,543 | 19,185 | ||
| Total Current Liabilities | 213,237 | 201,375 | ||
| Long-term debt | 537,680 | 598,499 | ||
| Accrued employee and retiree benefits | 26,023 | 25,822 | ||
| Other liabilities | 35,609 | 32,866 | ||
| Shareholders’ Equity | 860,716 | 881,589 | ||
| Total Liabilities and Shareholders’ Equity | $ | 1,673,265 | $ | 1,740,151 |
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| Sensient Technologies Corporation<br><br> <br>(In thousands, except per share amounts)<br><br> <br>(Unaudited) | Page 10 |
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Consolidated Statements of Cash Flows
Six Months Ended June 30,
| 2020 | 2019 | |||||
|---|---|---|---|---|---|---|
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 51,393 | $ | 67,138 | ||
| Adjustments to arrive at net cash provided by operating activities: | ||||||
| Depreciation and amortization | 24,522 | 27,741 | ||||
| Share-based compensation expense (income) | 2,662 | (1,155 | ) | |||
| Net loss (gain) on assets | 50 | (75 | ) | |||
| Loss on divestitures | 6,634 | - | ||||
| Deferred income taxes | 1,075 | (909 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Trade accounts receivable | (20,494 | ) | (17,131 | ) | ||
| Inventories | 24,816 | 29,201 | ||||
| Prepaid expenses and other assets | (3,975 | ) | (3,395 | ) | ||
| Accounts payable and other accrued expenses | 9,961 | (21,401 | ) | |||
| Accrued salaries, wages and withholdings from employees | 6,483 | (2,598 | ) | |||
| Income taxes | 3,899 | (2,631 | ) | |||
| Other liabilities | 588 | 1,428 | ||||
| Net cash provided by operating activities | 107,614 | 76,213 | ||||
| Cash flows from investing activities: | ||||||
| Acquisition of property, plant, and equipment | (21,417 | ) | (16,606 | ) | ||
| Proceeds from sale of assets | 6 | 91 | ||||
| Proceeds from divesture of businesses | 11,255 | - | ||||
| Other investing activity | 4,395 | (454 | ) | |||
| Net cash used in investing activities | (5,761 | ) | (16,969 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from additional borrowings | 38,670 | 25,003 | ||||
| Debt payments | (98,849 | ) | (55,182 | ) | ||
| Dividends paid | (33,018 | ) | (30,453 | ) | ||
| Other financing activity | (414 | ) | (1,028 | ) | ||
| Net cash used in financing activities | (93,611 | ) | (61,660 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | (8,519 | ) | 397 | |||
| Net decrease in cash and cash equivalents | (277 | ) | (2,019 | ) | ||
| Cash and cash equivalents at beginning of period | 21,153 | 31,901 | ||||
| Cash and cash equivalents at end of period | $ | 20,876 | $ | 29,882 | ||
| Supplemental Information<br><br> <br>Six Months Ended June 30, | 2020 | 2019 | ||||
| --- | --- | --- | --- | --- | ||
| Dividends paid per share | $ | 0.78 | $ | 0.72 | ||
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| Sensient Technologies Corporation<br><br> <br>(In thousands, except percentages and per share amounts)<br><br> <br>(Unaudited) | Page 11 |
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Reconciliation of Non-GAAP Amounts
The Company’s results for the three months ended June 30, 2020 and 2019 include adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted EPS, which exclude divestiture & other related costs and the results of operations divested or to be divested.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Revenue (GAAP) | $ | 323,090 | $ | 339,186 | (4.7 | %) | $ | 673,767 | $ | 686,699 | (1.9 | %) | ||||||
| Revenue of the product lines divested or to be divested | (28,217 | ) | (36,356 | ) | (64,802 | ) | (75,377 | ) | ||||||||||
| Adjusted revenue | $ | 294,873 | $ | 302,830 | (2.6 | %) | $ | 608,965 | $ | 611,322 | (0.4 | %) | ||||||
| Operating income (GAAP) | $ | 42,125 | $ | 47,368 | (11.1 | %) | $ | 76,686 | $ | 96,788 | (20.8 | %) | ||||||
| Divestiture & other related costs – Cost of products sold | 1,749 | - | 1,939 | - | ||||||||||||||
| Divestiture & other related costs (income) – Selling and administrative expenses | (3,276 | ) | - | 8,377 | - | |||||||||||||
| Operating income of the product lines divested or to be divested | (331 | ) | (345 | ) | (1,716 | ) | (377 | ) | ||||||||||
| Adjusted operating income | $ | 40,267 | $ | 47,023 | (14.4 | %) | $ | 85,286 | $ | 96,411 | (11.5 | %) | ||||||
| Net earnings (GAAP) | $ | 30,620 | $ | 34,331 | (10.8 | %) | $ | 51,393 | $ | 67,138 | (23.5 | %) | ||||||
| Divestiture & other related costs (income), before tax | (1,527 | ) | - | 10,316 | - | |||||||||||||
| Tax impact of divestiture & other related costs | 509 | - | (425 | ) | - | |||||||||||||
| Net earnings of the product lines divested or to be divested, before tax | (331 | ) | (345 | ) | (1,716 | ) | (377 | ) | ||||||||||
| Tax impact of the product lines divested or to be divested | 203 | 105 | 500 | 116 | ||||||||||||||
| Adjusted net earnings | $ | 29,474 | $ | 34,091 | (13.5 | %) | $ | 60,068 | $ | 66,877 | (10.2 | %) | ||||||
| Diluted earnings per share (GAAP) | $ | 0.72 | $ | 0.81 | (11.1 | %) | $ | 1.21 | $ | 1.59 | (23.9 | %) | ||||||
| Divestiture & other related costs (income), net of tax | (0.02 | ) | - | 0.23 | - | |||||||||||||
| Result of operations of the product lines divested or to be divested, net of tax | - | (0.01 | ) | (0.03 | ) | (0.01 | ) | |||||||||||
| Adjusted diluted earnings per share | $ | 0.70 | $ | 0.81 | (13.6 | %) | $ | 1.42 | $ | 1.58 | (10.1 | %) |
Note: Earnings per share calculations may not foot due to rounding differences.
| Results by Segment | Three Months Ended June 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 2020 | Product Lines<br><br> <br>divested or<br><br> <br>to be divested | Adjusted<br><br> <br>2020 | 2019 | Product Lines<br><br> <br>divested or<br><br> <br>to be divested | Adjusted<br><br> <br>2019 | ||||||||||||
| Flavors & Fragrances | $ | 183,611 | $ | (24,742 | ) | $ | 158,869 | $ | 180,134 | $ | (27,295 | ) | $ | 152,839 | ||||
| Color | 121,296 | (3,501 | ) | 117,795 | 138,912 | (9,134 | ) | 129,778 | ||||||||||
| Asia Pacific | 27,873 | (213 | ) | 27,660 | 29,002 | (218 | ) | 28,784 | ||||||||||
| Intersegment elimination | (9,690 | ) | 239 | (9,451 | ) | (8,862 | ) | 291 | (8,571 | ) | ||||||||
| Consolidated | $ | 323,090 | $ | (28,217 | ) | $ | 294,873 | $ | 339,186 | $ | (36,356 | ) | $ | 302,830 | ||||
| Operating Income | ||||||||||||||||||
| Flavors & Fragrances | $ | 22,752 | $ | (1,619 | ) | $ | 21,133 | $ | 20,050 | $ | (195 | ) | $ | 19,855 | ||||
| Color | 22,263 | 1,347 | 23,610 | 27,877 | (95 | ) | 27,782 | |||||||||||
| Asia Pacific | 4,849 | (59 | ) | 4,790 | 4,201 | (55 | ) | 4,146 | ||||||||||
| Corporate & Other | (7,739 | ) | (1,527 | ) | (9,266 | ) | (4,760 | ) | - | (4,760 | ) | |||||||
| Consolidated | $ | 42,125 | $ | (1,858 | ) | $ | 40,267 | $ | 47,368 | $ | (345 | ) | $ | 47,023 | ||||
| Results by Segment | Six Months Ended June 30, | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | 2020 | Product Lines<br><br> <br>divested or<br><br> <br>to be divested | Adjusted<br><br> <br>2020 | 2019 | Product Lines<br><br> <br>divested or<br><br> <br>to be divested | Adjusted<br><br> <br>2019 | ||||||||||||
| Flavors & Fragrances | $ | 370,109 | $ | (52,187 | ) | $ | 317,922 | $ | 363,687 | $ | (56,101 | ) | $ | 307,586 | ||||
| Color | 264,791 | (12,573 | ) | 252,218 | 282,791 | (19,414 | ) | 263,377 | ||||||||||
| Asia Pacific | 58,322 | (334 | ) | 57,988 | 57,521 | (326 | ) | 57,195 | ||||||||||
| Intersegment elimination | (19,455 | ) | 292 | (19,163 | ) | (17,300 | ) | 464 | (16,836 | ) | ||||||||
| Consolidated | $ | 673,767 | $ | (64,802 | ) | $ | 608,965 | $ | 686,699 | $ | (75,377 | ) | $ | 611,322 | ||||
| Operating Income | ||||||||||||||||||
| Flavors & Fragrances | $ | 43,623 | $ | (2,837 | ) | $ | 40,786 | $ | 43,175 | $ | (88 | ) | $ | 43,087 | ||||
| Color | 51,927 | 1,214 | 53,141 | 58,076 | (205 | ) | 57,871 | |||||||||||
| Asia Pacific | 9,908 | (93 | ) | 9,815 | 8,419 | (84 | ) | 8,335 | ||||||||||
| Corporate & Other | (28,772 | ) | 10,316 | (18,456 | ) | (12,882 | ) | - | (12,882 | ) | ||||||||
| Consolidated | $ | 76,686 | $ | 8,600 | $ | 85,286 | $ | 96,788 | $ | (377 | ) | $ | 96,411 | |||||
| - MORE - | ||||||||||||||||||
| --- |
| Sensient Technologies Corporation<br><br> <br>(In thousands, except percentages)<br><br> <br>(Unaudited) | Page 12 |
|---|
Reconciliation of Non-GAAP Amounts - Continued
The following table summarizes the percentage change in the 2020 results compared to the 2019 results for the corresponding periods.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Product<br><br> <br>Lines<br><br> <br>Divested or<br><br> <br>to be<br><br> <br>Divested | Adjusted<br><br> <br>Local<br><br> <br>Currency | Total | Foreign<br><br> <br>Exchange<br><br> <br>Rates | Product<br><br> <br>Lines<br><br> <br>Divested or<br><br> <br>to be<br><br> <br>Divested | Adjusted<br><br> <br>Local<br><br> <br>Currency | ||||||||||||||||
| Flavors & Fragrances | 1.9 | % | (2.0 | %) | (1.8 | %) | 5.7 | % | 1.8 | % | (1.5 | %) | (1.3 | %) | 4.6 | % | ||||||||
| Color | (12.7 | %) | (4.4 | %) | (3.2 | %) | (5.1 | %) | (6.4 | %) | (3.3 | %) | (2.0 | %) | (1.1 | %) | ||||||||
| Asia Pacific | (3.9 | %) | (2.5 | %) | 0.0 | % | (1.4 | %) | 1.4 | % | (2.1 | %) | 0.0 | % | 3.5 | % | ||||||||
| Total Revenue | (4.7 | %) | (2.9 | %) | (1.8 | %) | 0.0 | % | (1.9 | %) | (2.3 | %) | (1.2 | %) | 1.6 | % | ||||||||
| Operating Income | ||||||||||||||||||||||||
| Flavors & Fragrances | 13.5 | % | (1.3 | %) | 6.8 | % | 8.0 | % | 1.0 | % | (1.1 | %) | 6.2 | % | (4.1 | %) | ||||||||
| Color | (20.1 | %) | (3.7 | %) | (4.5 | %) | (11.9 | %) | (10.6 | %) | (3.0 | %) | (2.1 | %) | (5.5 | %) | ||||||||
| Asia Pacific | 15.4 | % | (0.9 | %) | (0.1 | %) | 16.4 | % | 17.7 | % | 0.0 | % | (0.1 | %) | 17.8 | % | ||||||||
| Corporate & Other | 62.6 | % | 0.0 | % | (32.1 | %) | 94.7 | % | 123.4 | % | 0.0 | % | 80.1 | % | 43.3 | % | ||||||||
| Total Operating Income | (11.1 | %) | (2.9 | %) | 3.6 | % | (11.8 | %) | (20.8 | %) | (2.3 | %) | (9.1 | %) | (9.4 | %) | ||||||||
| Diluted Earnings Per Share | (11.1 | %) | (2.5 | %) | 1.3 | % | (9.9 | %) | (23.9 | %) | (2.5 | %) | (13.8 | %) | (7.6 | %) | ||||||||
| Adjusted EBITDA | (6.7 | %) | (2.4 | %) | N/A | (4.3 | %) | (6.3 | %) | (1.9 | %) | N/A | (4.4 | %) |
The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and six months ended June 30, 2020 and 2019.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Operating income (GAAP) | $ | 42,125 | $ | 47,368 | (11.1 | %) | $ | 76,686 | $ | 96,788 | (20.8 | %) | ||||||
| Depreciation and amortization | 12,118 | 14,069 | 24,522 | 27,741 | ||||||||||||||
| Depreciation and amortization, product lines divested or to be divested | (16 | ) | (1,526 | ) | (96 | ) | (3,022 | ) | ||||||||||
| Share-based compensation expense (income) | 1,485 | (1,842 | ) | 2,662 | (1,155 | ) | ||||||||||||
| Divestiture & other related costs (income), before tax | (1,527 | ) | - | 10,316 | - | |||||||||||||
| Results of operations of the product lines divested or to be divested, before tax | (331 | ) | (345 | ) | (1,716 | ) | (377 | ) | ||||||||||
| Adjusted EBITDA | $ | 53,854 | $ | 57,724 | (6.7 | %) | $ | 112,374 | $ | 119,975 | (6.3 | %) |
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
Second Quarter 2020 Investor Presentation
2 sensient.com FORWARD-LOOKING STATEMENTS This document contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results. Forward-looking statements include statements in the future tense, statements referring to any period after June 30, 2020, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or conditions. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers and suppliers, the availability and cost of raw materials and other supplies, logistics and transportation, governmental regulations and restrictions and general economic conditions; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respondto changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; theoutcome of the Company’s various productivity-improvement and cost-reduction efforts and acquisition and divestiture activities; the success of the Company’s efforts to explore strategic alternatives for certain non-core product lines; the effectiveness of the Company’s past restructuring activities; changes in costs of raw materials, including energy; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
3 sensient.com NON-GAAP FINANCIAL MEASURES Within this document, the Company reports certain non-GAAP financial measures, including (1) adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted EPS (which exclude the results of the product lines divested or to be divested and the divestiture and other related costs), (2) percentage changes in revenue, operating income, diluted earnings per share, and adjusted EBITDA on an adjusted local currency basis (which eliminate the effects that result from translating its international operations into U.S. dollars, the results of product lines divested or to be divested, and the divestiture and other related costs), and (3) adjusted EBITDA (which excludes depreciation and amortization expense, non-cash share based compensation expense, the results of the product lines divested or to be divested and the divestiture and other related costs). 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. 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 document and on our website at www.sensient.com for reconciliations and additional information.
4 sensient.com Over 135 years of Industry Leadership Established in 1882 as Meadow Springs DistilleryEvolved into Universal Foods as a diversified food and ingredients companyName changed to Sensient Technologies Corporation in 2000Today, we are a provider of advanced technologies, serving markets with strong growth profiles through delivery of customized solutions for food and beverages, pharmaceutical, personal care, and other applications.
5 sensient.com Innovative Technologies Creating Unique Solutions Applications expertise and solutions-based sellingHigh impact relative to costTechnically-driven products that are difficult to replaceStrong consumer trendsOpportunities to grow organically and through M&A
6 sensient.com Focusing our portfolio and strengthening our commitment to the end markets Investing in core focus areas of Flavors and Extracts, NaturalIngredients, Food and Pharmaceutical Colors, and Personal CareDivesting non-core product lines (inks, fragrances, and fruit prep product lines) where Sensient lacks scale to competeThe sale of these product lines solidifies our focus on core strategic businesses and improves the Company’s future growth profile
7 sensient.com Global Revenue by Group * 2019 Global Revenues include intercompany sales which are eliminated on a consolidated basis. Color Group2019 Revenue: $535MCore Areas of Focus: Food and Pharmaceutical Colors and Personal CareFlavors and Fragrances Group2019 Revenue: $700MCore Areas of Focus: Flavors and Extracts, Natural Ingredients, and Other Flavor IngredientsAsia Pacific Group2019 Revenue: $118MCore Areas of Focus: Flavors and Colors for food and beverage
8 sensient.com Global market leaderNatural color innovatorUnmatched innovation & applications expertise Color Group
9 sensient.com Color Overview Food & Beverage(includes Pharmaceutical)Personal CareInks 63% of 2019 Segment Revenue LC Revenue Change Q2 ’20 +2.4%YTD ’20 +3.4%30% of 2019 SegLC Revenue Change Q2 ’20 (21.4%)YTD ’20 (10.3%)7% of 2019 SegLC Revenue ChangeQ2 ’20 (55.0%)YTD ’20 (31.1%) Market trend toward natural colors in food and beverageUnique value proposition for Pharmaceutical customers includes colors, flavors, coatings, and extractsment RevenueDemand for innovative products with multiple benefitsProduct line includes formulation aides and ingredients for color cosmetics, hair care, and skin carement RevenueCompleted divestiture in June 2020 2019 Revenue $535 Million * Local-currency (LC) revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of this document.
10 sensient.com Flavors and Fragrances Group Broad product offeringUnique ability to service global,regional, and local customersLeading technology platformsUnmatched applicationsexpertise
11 sensient.com Flavors and Fragrances Overview Flavors, Extracts, and Flavor Ingredients 54% of 2019 Segment Revenue LC Revenue Change Q2 ’20 +3.8%YTD ’20 +1.5% Opportunities for on trend products with extracts, taste modulation and natural flavors 2019 Revenue $700 Million Natural Ingredients 31% of 2019 Segment Revenue LC Revenue Change Q2 ’20 +9.2%YTD ’20 +10.8% Leading provider of dehydrated onion, garlic, and other products Fragrances 12% of 2019 Segment Revenue LC Revenue Change Q2 ’20 +3.6%YTD ’20 +1.1% Targeted for divestiture Yogurt Fruit Prep 3% of 2019 Segment Revenue LC Revenue ChangeQ2 ’20 (40.2%)YTD ’20 (24.3%) Targeted for divestitureDefinitive agreement signed in June 2020; anticipated closing in Q3 of 2020 * Local-currency (LC) revenue is a Non-GAAP metric. Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
12 sensient.com Asia Pacific Group Sensient’s sales of flavors and colors for Food & Beverage in the Asia Pacific markets are reported as a separate segment since they are managed on a geographic basisManufacturing capabilities in Australia, New Zealand, China, Japan, Philippines, Thailand, and India; R&D capabilities in Singapore, Thailand, and ChinaAnnual revenues of $118 million and operating income of $19 million in 2019Strong long-term growth potential
13 sensient.com 2020 Q2 Highlights Flavors & Fragrances Group sales were up solidly, driven by strong sales inNatural Ingredients and continued growth in finished flavors and extractsFood & Beverage Color sales were up 2.4% in the quarter and 3.4% year-to- date in local currencyColor Group sales were down in the quarter due to lower demand for makeup in the Personal Care business, which is in line with the marketAsia Pacific Group revenue declined due to COVID-19; however, profit grew double-digitsDivested Inks business in June and signed a definitive agreement for the sale of the yogurt fruit prep product line in June (anticipated closing Q3 of 2020) * Local-currency revenue is a Non-GAAP metric. Please see our GAAP to Non-GAAP Reconciliation at the end of this document and on our website at www.sensient.com.
14 sensient.com 2020 Segment Results Local Currency Adjusted Revenue* Q2 YTD Color (5.1%) (1.1%) Flavors & Fragrances 5.7% 4.6% Asia Pacific (1.4%) 3.5% Color Group second quarter revenue decreased due to lower volume in makeup in Personal Care offsetting continued growth in Food & Beverage Colors. Operating income declined as COVID impacts resulted in substantially lower volumes in Personal Care.Flavors & Fragrances Group reported higher revenue in the quarter as a result of solid sales in Natural Ingredients and a continued increase in sales of finished flavors and extracts.Operating income was up as a result of the higher volumes and the realization of the benefits from ongoing cost control efforts.Asia Pacific Group second quarter revenue declined due to COVID impacts in certain geographies. Operating income improved substantially due to product mix and the Group’s cost control plans yielding results. Local Currency Adjusted Operating Income* Q2 YTD Color (11.9%) (5.5%) Flavors & Fragrances 8.0% (4.1%) Asia Pacific 16.4% 17.8% * Local-currency adjusted revenue and adjusted operating income are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document.
15 sensient.com 2020 Q2 Consolidated Results Q2 YTD Local Currency Adjusted Revenue* Flat +1.6% Local Currency Adjusted OperatingIncome* (11.8%) (9.4%) Local Currency Adjusted Diluted EPS* (9.9%) (7.6%) Local Currency Adjusted EBITDA* (4.3%) (4.4%) Q2 consolidated revenue decreased due to lower sales in makeup in Personal Care. COVID also impacted sales in LATAM, Europe, and Asia. The sales declines were offset by continued strength in Natural Ingredients, Food & Beverage Colors, and finished flavors and extracts.Q2 consolidated operating income was down versus prior year due to the significantly lower volume in makeup in Personal Care and higher year-over-year Corporate expenses. * Local-currency adjusted revenue, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document and on our website at www.sensient.com.
16 sensient.com Capital Allocation Prioritize ROI capital projects Maintain dividend payout ratio Debt reduction to maintain targeted leverage Maintain financial flexibility to pursue M&A Excess capital returned to shareholdersthrough opportunistic share repurchases $137 $177 $50 $87 $77 $48 $48 $50 $54 $57 $62 $79 $80 $81 $56 $51 $39 $8 $31 $25 $9 $87 $- $50 $100 $150 $200 $250 $300 $350 2014 2015 2016 2017 2018 2019 DOLLARS
IN MILLIONS Share Repurchase Acquisitions Dividends Debt Repayments Capital Expenditures
17 sensient.com 2020 Financial Outlook * Local-currency adjusted revenue, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document and on www.sensient.com. The 2020 outlook, on an adjusted basis, provided above excludes the results of operations for the product lines we have divested or are planning to divest. Because it is uncertain when these divestitures will be consummated, it is difficult to predict their impact to our full year results.For reference, the product lines identified divested or to be divested represented approximately $140 million in 2019 annual revenue and approximately $2 million of 2019 annual operating income. Previous Guidance Current Guidance Diluted EPS (GAAP) $1.85 $2.15 $2.10 $2.35 Divestiture & Other Costs and Operational Result of Divested Operations 0.65 0.55 0.40 0.35 Foreign Currency Impact 0.10 0.10 0.10 0.10 Adjusted Diluted EPS in Local Currency $2.60 $2.80 $2.60 $2.80 Metric Guidance Adjusted Local Currency Revenue Low to mid-single digit growth Excludes revenue of product lines divested or to be divested Adjusted Operating Income Flat to down low-single digits Excludes divestiture and other related costsExcludes results of operations of product lines divested or to be divestedLower than prior year due to higher non-cash stock compensation expense Adjusted EBITDA Low to mid-single digit growth Excludes divestiture and other related costsExcludes results of operations of product lines divested or to be divested
18 sensient.com Why Invest? Strong competitive position‘Sticky’ business (& low portion of customer costs) Global presenceExposure to stable and growing markets Focused on improving returns and on growth
19 sensient.com Non-GAAP Financial Measures EPS Calculations may not foot due to roundingdifferences Non-GAAP Financial MeasuresWithin the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted EPS (which exclude the results of the product lines divested or to be divested and the divestiture and other related costs), (2) percentage changes in revenue, operating income, diluted earnings per share, and adjusted EBITDA on an adjusted local currency basis (which eliminate the effects that result from translating its international operations into U.S. dollars, the results of product lines divested or to be divested, and the divestiture and other related costs), and (3) adjusted EBITDA (which excludes depreciation and amortization expense, non-cash share based compensation expense, the results of the product lines divested or to be divested and the divestiture and other related costs)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 report and the Company’s SEC filings. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and the Company believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Revenue (GAAP) $ 323,090 $ 339,186 $ 673,767 $ 686,699 Revenue of the product lines divested or to be divested (28,217) (36,356) (64,802) (75,377) Adjusted revenue $ 294,873 $ 302,830 $ 608,965 $ 611,322 Operating income (GAAP) $ 42,125 $ 47,368 $ 76,686 $ 96,788 Divestiture & other related costs – Cost of products sold 1,749 - 1,939 - Divestiture & other related costs (income) – Selling and administrative expenses (3,276) - 8,377 - Operating income of the product lines divested or to be divested (331) (345) (1,716) (377) Adjusted operating income $ 40,267 $ 47,023 $ 85,286 $ 96,411 Net earnings (GAAP) $ 30,620 $ 34,331 $ 51,393 $ 67,138 Divestiture & other related costs (income), before tax (1,527) - 10,316 - Tax impact of divestiture & other related costs 509 - (425) - Net earnings of the product lines divested or to be divested, before tax (331) (345) (1,716) (377) Tax impact of the product lines divested or to be divested 203 105 500 116 Adjusted net earnings $ 29,474 $ 34,091 $ 60,068 $ 66,877 Diluted earnings per share (GAAP) $ 0.72 $ 0.81 $ 1.21 $ 1.59 Divestiture & other related costs, net of tax (0.02) - 0.23 - Result of operations of the product lines divested or to be divested, net of tax - (0.01) (0.03) (0.01) Adjusted diluted earnings per share $ 0.70 $ 0.81 $ 1.42 $ 1.58
20 sensient.com Non-GAAP Financial Measures (Cont’d) * Local-currency adjusted revenue, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document and on our website at www.sensient.com. Revenue Total Foreign Exchange Rates Product Lines Divested or to be Divested Adjusted Local Currency Total Foreign Exchange Rates Product Lines Divested or to be Divested Adjusted Local Currency Flavors & Fragrances 1.9% (2.0%) (1.8%) 5.7% 1.8% (1.5%) (1.3%) 4.6% Color (12.7%) (4.4%) (3.2%) (5.1%) (6.4%) (3.3%) (2.0%) (1.1%) Asia Pacific (3.9%) (2.5%) 0.0% (1.4%) 1.4% (2.1%) 0.0% 3.5% Total Revenue (4.7%) (2.9%) (1.8%) 0.0% (1.9%) (2.3%) (1.2%) 1.6% Operating Income Flavors & Fragrances 13.5% (1.3%) 6.8% 8.0% 1.0% (1.1%) 6.2% (4.1%) Color (20.1%) (3.7%) (4.5%) (11.9%) (10.6%) (3.0%) (2.1%) (5.5%) Asia Pacific 15.4% (0.9%) (0.1%) 16.4% 17.7% 0.0% (0.1%) 17.8% Corporate & Other 62.6% 0.0% (32.1%) 94.7% 123.4% 0.0% 80.1% 43.3% Total Operating Income (11.1%) (2.9%) 3.6% (11.8%) (20.8%) (2.3%) (9.1%) (9.4%) Diluted Earnings Per Share (11.1%) (2.5%) 1.3% (9.9%) (23.9%) (2.5%) (13.8%) (7.6%) Adjusted EBITDA (6.7%) (2.4%) N/A (4.3%) (6.3%) (1.9%) N/A (4.4%) The following table summarizes the percentage change in the 2020 results compared to the 2019 results for the corresponding periods: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
21 sensient.com Non-GAAP Financial Measures (Cont’d) Revenue Total Foreign Exchange Rates Local Currency Total Foreign Exchange Rates Local Currency Flavors, Extracts and Flavor Ingredients 1.2% (2.6%) 3.8% (0.4%) (1.9%) 1.5% Natural Ingredients 9.2% 0.0% 9.2% 10.8% 0.0% 10.8% Fragrances (0.4%) (4.0%) 3.6% (2.4%) (3.5%) 1.1% Yogurt Fruit Prep (40.2%) 0.0% (40.2%) (24.3%) 0.0% (24.3%) Flavors & Fragrances Group 1.9% (2.0%) 3.9% 1.8% (1.5%) 3.3% Food & Beverage and Pharmaceutical (2.0%) (4.4%) 2.4% 0.1% (3.3%) 3.4% Personal Care (24.8%) (3.4%) (21.4%) (13.2%) (2.9%) (10.3%) Inks (62.1%) (7.1%) (55.0%) (35.2%) (4.1%) (31.1%) Color Group (12.7%) (4.4%) (8.3%) (6.4%) (3.3%) (3.1%) Asia PacificTotal revenue including product lines divested or to be divested (3.9%)(4.7%) (2.5%)(2.9%) (1.4%)(1.8%) 1.4%(1.9%) (2.1%)(2.3%) 3.5%0.4% The following table summarizes the percentage change in the 2020 results compared to the 2019 results for the corresponding periods: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 * Local-currency revenue is a Non-GAAP metric. Please see our GAAP to Non-GAAP Reconciliation at the end of this document and on our website at www.sensient.com.
22 sensient.com Q2 Divested Operations Results by Segment Revenue 2020 Product Linesdivested or to be divested Adjusted 2020 2019 Product Linesdivested or to be divested Adjusted 2019 Flavors & Fragrances $ 183,611 $ (24,742) $ 158,869 $ 180,134 $ (27,295) $ 152,839 Color 121,296 (3,501) 117,795 138,912 (9,134) 129,778 Asia Pacific 27,873 (213) 27,660 29,002 (218) 28,784 Intersegment elimination (9,690) 239 (9,451) (8,862) 291 (8,571) Consolidated $ 323,090 $ (28,217) $ 294,873 $ 339,186 $ (36,356) $ 302,830 Operating Income Flavors & Fragrances $ 22,752 $ (1,619) $ 21,133 $ 20,050 $ (195) $ 19,855 Color 22,263 1,347 23,610 27,877 (95) 27,782 Asia Pacific 4,849 (59) 4,790 4,201 (55) 4,146 Corporate & Other (7,739) (1,527) (9,266) (4,760) - (4,760) Consolidated $ 42,125 $ (1,858) $ 40,267 $ 47,368 $ (345) $ 47,023 Three Months Ended June 30,
23 sensient.com YTD Divested Operations Results by Segment Revenue 2020 Product Linesdivested or to be divested Adjusted 2020 2019 Product Linesdivested or to be divested Adjusted 2019 Flavors & Fragrances $ 370,109 $ (52,187) $ 317,922 $ 363,687 $ (56,101) $ 307,586 Color 264,791 (12,573) 252,218 282,791 (19,414) 263,377 Asia Pacific 58,322 (334) 57,988 57,521 (326) 57,195 Intersegment elimination (19,455) 292 (19,163) (17,300) 464 (16,836) Consolidated $ 673,767 $ (64,802) $ 608,965 $ 686,699 $ (75,377) $ 611,322 Operating Income Flavors & Fragrances $ 43,623 $ (2,837) $ 40,786 $ 43,175 $ (88) $ 43,087 Color 51,927 1,214 53,141 58,076 (205) 57,871 Asia Pacific 9,908 (93) 9,815 8,419 (84) 8,335 Corporate & Other (28,772) 10,316 (18,456) (12,882) - (12,882) Consolidated $ 76,686 $ 8,600 $ 85,286 $ 96,788 $ (377) $ 96,411 Six Months Ended June 30,
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