International Flavors & Fragrances Inc. (NYSE: IFF) reported
financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Consolidated Summary:
Reported
(GAAP)
Adjusted
(Non-GAAP)1
Sales
Income Before
Taxes
EPS
Operating
EBITDA
Operating
EBITDA Margin
EPS ex
Amortization
$3.2 B
$285 M
$0.96
$702 M
21.8%
$1.69
Management Commentary
“We are pleased with our strong start to 2022 led by broad-based
growth across our entire portfolio,” said IFF CEO Frank Clyburn.
“Our pricing actions, in combination with our diligent focus on
cost discipline, have helped offset the inflationary pressures felt
across the global economy. Given our performance to date and
reflecting additional inflation throughout the year, we have
increased our sales expectation to include incremental pricing
actions to fully recover our cost exposure as we remain committed
to delivering our full year profit objective. At the same time, we
are also sharpening our execution rigor, enhancing our focus on
productivity, and investing to strengthen our business as we
position the company to deliver sustainable, profitable growth for
our shareholders.”
First Quarter 2022 Consolidated Financial Results
- Reported net sales for the first quarter were $3.23 billion, an
increase of 31% compared to the prior year period, driven primarily
by the incremental sales related to the merger with Nutrition &
Biosciences ("N&B"). On a comparable basis2, currency neutral
sales increased 13%, led by double-digit growth in Nourish, Health
& Biosciences and Pharma Solutions. In the first quarter,
pricing increased approximately 8% and volume grew approximately
5%.
- Income before taxes on a reported basis for the first quarter
was $285 million. Adjusted operating EBITDA for the first quarter
was $702 million, an increase of 23% from $569 million in the prior
year period principally driven by the incremental profit related to
the merger with N&B. On a comparable basis2, currency neutral
adjusted operating EBITDA increased 9%, driven by pricing actions,
volume growth and productivity gains.
- Reported earnings per share (EPS) for the first quarter was
$0.96. Adjusted EPS excluding amortization was $1.69 per diluted
share.
- Cash flow from operations for the first quarter was $(4)
million, and free cash flow defined as cash flow from operations
less capital expenditures totaled $(136) million. Net debt to
credit adjusted EBITDA at the end of the first quarter was
4.2x.
____________________
1 Schedules at the end of this release
contain reconciliations of reported GAAP to Non-GAAP metrics. See
Use of Non-GAAP Financial Measures for explanations of our Non-GAAP
metrics.
2 Comparable results for the first quarter
is defined as 3 months (January, February and March) of legacy IFF
and N&B results, in both the 2021 and 2022 periods, and exclude
the impact of divestitures in the prior year period and
acquisitions in the current year period.
First Quarter 2022 Segment Summary: Growth vs. Prior
Year
Reported
(GAAP)
Adjusted
(Non-GAAP)
Comparable
Currency
Neutral
(Non-GAAP)2
Comparable
Currency Neutral
Adjusted
(Non-GAAP)2
Sales
Operating
EBITDA
Sales
Operating
EBITDA
Nourish
32%
22%
16%
14%
Health & Biosciences
55%
50%
10%
8%
Scent
3%
(9)%
6%
(2)%
Pharma Solutions
54%
51%
10%
10%
Nourish Segment
- On a reported basis, first quarter sales were $1.73 billion. On
a comparable basis2, currency neutral sales grew 16% with
double-digit growth in Food Designs and Ingredients and high single
digit growth in Flavors.
- Nourish adjusted operating EBITDA was $329 million and adjusted
operating EBITDA margin was 19.0% in the first quarter. On a
comparable basis2, currency neutral adjusted operating EBITDA grew
14% driven by strong pricing actions, volume growth and
productivity gains.
Health & Biosciences Segment
- On a reported basis, first quarter sales were $661 million. On
a comparable basis2, currency neutral sales increased 10% with
growth across all segments led by a double-digit growth in Health,
Microbial Control and Grain Processing as well as high single digit
increases in Cultures & Food Enzymes and Animal Nutrition.
- Health & Biosciences adjusted operating EBITDA was $192
million and adjusted operating EBITDA margin was 29.0% in the first
quarter. On a comparable basis2, currency neutral adjusted
operating EBITDA grew 8% led by volume growth, price increases and
productivity gains.
Scent Segment
- On a reported basis, first quarter sales were $585 million
versus $569 million in the prior year period. Currency neutral
sales increased 6% led by double-digit growth in Fine Fragrances,
and solid growth in Cosmetic Actives and Fragrance
Ingredients.
- Scent adjusted operating EBITDA was $116 million versus $128
million in the prior year period. Adjusted operating EBITDA margin
was 19.8% in the first quarter. On a currency neutral basis,
adjusted operating EBITDA declined 2% as the Company continues to
implement price increases in collaboration with customers to fully
offset inflationary pressures.
Pharma Solutions Segment
- On a reported basis, first quarter sales were $249 million. On
a comparable basis2, currency neutral sales increased 10% with
double-digit growth in Pharma and Industrial.
- Pharma Solutions adjusted operating EBITDA was $65 million and
adjusted operating EBITDA margin was 26.1% in the first quarter. On
a comparable basis2, currency neutral adjusted operating EBITDA
grew 10% led by price increases, volume growth and productivity
gains.
Financial Guidance
The Company expects full year 2022 sales to be approximately
$12.6 billion to $13.0 billion (versus previous guidance of $12.3
billion to $12.7 billion), with an expected full year 2022 adjusted
operating EBITDA of approximately $2.5 billion to $2.6 billion (no
change). The Company's updated full year guidance reflects the
expected Microbial Control divestiture, which is anticipated to be
complete on July 1, 2022 (versus June 1, 2022 previously), as well
as the addition of the Health Wright Products acquisition, which
closed on April 1, 2022.
The Company expects to deliver comparable currency neutral sales
growth of approximately 9% to 12% (versus 6 to 9% previously) for
the full year 2022. The Company continues to expect comparable
currency neutral adjusted operating EBITDA growth for 2022 to be
approximately 4% to 8% (no change).
Based on current market foreign exchange rates, the Company
expects that foreign exchange will negatively impact sales growth
in 2022 by approximately 4 percentage points (versus 2 previously)
and adjusted operating EBITDA growth by approximately 5 percentage
points (versus 4 previously).
Audio Webcast
A live webcast to discuss the Company’s first quarter 2022
financial results will be held on May 10, 2022, at 9:00 a.m. ET.
The webcast and accompanying slide presentation may be accessed on
the Company's IR website at ir.iff.com. For those unable to listen
to the live webcast, a recorded version will be made available on
the Company's website approximately one hour after the event and
will remain available on IFF’s website for one year.
Cautionary Statement Under The Private
Securities Litigation Reform Act of 1995
Statements in this press release, which are not historical facts
or information, are “forward-looking statements” within the meaning
of The Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on management’s current
assumptions, estimates and expectations including those concerning
the impacts of COVID-19 and our plans to respond to its
implications; the expected impact of global supply chain
challenges; expectations regarding sales and profit for the fiscal
year 2022, including the impact of foreign exchange, pricing
actions, raw materials, and sourcing, logistics and manufacturing
costs; expectations of the impact of inflationary pressures and the
pricing actions to offset exposure to such impacts; the impact of
higher input costs, including raw materials and energy; our ability
to drive cost discipline measures and the ability to recover margin
to pre-inflation levels; the divestiture of our microbial control
business and the progress of our portfolio optimization strategy,
through non-core business divestitures; our combination with
N&B, including the expected cost benefits and synergies of the
N&B Transaction, the success of our integration efforts and
ability to deliver on our synergy commitments as well as future
opportunities for the combined company; the success of our
optimization of our portfolio; the growth potential of the markets
in which we operate, including the emerging markets, expected
capital expenditures, the expected costs and benefits of our
ongoing optimization of our manufacturing operations, including the
expected number of closings, expected cash flow and availability of
capital resources to fund our operations and meet our debt service
requirements; our ability to drive reductions in expenses; our
strategic investments in capacity and increasing inventory to drive
improved profitability; the impact of inflation and other
macroeconomic factors; our ability to innovate and execute on
specific consumer trends and demands; and our ability to continue
to generate value for, and return cash to, our shareholders.
These forward-looking statements should be evaluated with
consideration given to the many risks and uncertainties inherent in
our business that could cause actual results and events to differ
materially from those in the forward-looking statements. Certain of
such forward-looking information may be identified by such terms as
“expect”, “anticipate”, “believe”, “intend”, “outlook”, “may”,
“estimate”, “should”, “predict” and similar terms or variations
thereof. Such forward-looking statements are based on a series of
expectations, assumptions, estimates and projections about the
Company, are not guarantees of future results or performance, and
involve significant risks, uncertainties and other factors,
including assumptions and projections, for all forward periods. Our
actual results may differ materially from any future results
expressed or implied by such forward-looking statements.
Such risks, uncertainties and other factors include, among
others, the following: (1) inflationary trends in the price of our
input costs, such as raw materials, transportation and energy; (2)
supply chain disruptions, geopolitical developments, including the
Russia-Ukraine conflict, or climate-change related events
(including severe weather events) that may affect our suppliers or
procurement of raw materials; (3) disruption in the development,
manufacture, distribution or sale of our products from COVID-19 and
other public health crises; (4) risks related to the integration of
N&B and the Frutarom business, including whether we will
realize the synergies and benefits anticipated from the
acquisitions in the expected time frame; (5) failure to
successfully establish and manage acquisitions, collaborations,
joint ventures or partnerships, or the failure to close strategic
transactions or divestments; (6) our ability to successfully market
to our expanded and diverse customer base; (7) our substantial
amount of indebtedness and its impact on our liquidity and ability
to return capital to its shareholders; (8) our ability to
effectively compete in our market and develop and introduce new
products that meet customers’ needs; (9) our ability to retain key
employees; (10) changes in demand from large multi-national
customers due to increased competition and our ability to maintain
“core list” status with customers; (11) our ability to successfully
develop innovative and cost-effective products that allow customers
to achieve their own profitability expectations; (12) disruption in
the development, manufacture, distribution or sale of our products
from natural disasters, public health crises, international
conflicts, terrorist acts, labor strikes, political crisis,
accidents and similar events; (13) the impact of a significant data
breach or other disruption in our information technology systems,
and our ability to comply with data protection laws in the U.S. and
abroad; (14) unprecedented increases and volatility in sourcing and
logistics costs; (15) our ability to comply with, and the costs
associated with compliance with, regulatory requirements and
industry standards, including regarding product safety, quality,
efficacy and environmental impact; (16) our ability to meet
increasing customer, consumer, shareholder and regulatory focus on
sustainability; (17) defect, quality issues (including product
recalls), inadequate disclosure or misuse with respect to the
products and capabilities; (18) our ability to react in a timely
and cost-effective manner to changes in consumer preferences and
demands, including increased awareness of health and wellness; (19)
our ability to benefit from our investments and expansion in
emerging markets; (20) the impact of currency fluctuations or
devaluations in the principal foreign markets in which we operate;
(21) economic, regulatory and political risks associated with our
international operations; (22) the impact of global economic
uncertainty on demand for consumer products; (23) our ability to
comply with, and the costs associated with compliance with, U.S.
and foreign environmental protection laws; (24) our ability to
successfully manage our working capital and inventory balances;
(25) the impact of the failure to comply with U.S. or foreign
anti-corruption and anti-bribery laws and regulations, including
the U.S. Foreign Corrupt Practices Act; (26) our ability to protect
our intellectual property rights; (27) the impact of the outcome of
legal claims, regulatory investigations and litigation, including
current and future developments involving tax matters in Brazil;
(28) changes in market conditions or governmental regulations
relating to our pension and postretirement obligations; (29) the
impact of changes in federal, state, local and international tax
legislation or policies, including the Tax Cuts and Jobs Act, with
respect to transfer pricing and state aid, and adverse results of
tax audits, assessments, or disputes; (30) the impact of the United
Kingdom’s departure from the European Union; (31) the impact of the
phase out of the London Interbank Offered Rate (LIBOR) on interest
expense; and (32) risks associated with our CEO transition,
including the impact on employee hiring and retention.
The foregoing list of important factors does not include all
such factors, nor necessarily present them in order of importance.
In addition, you should consult other disclosures made by the
Company (such as in our other filings with the SEC or in company
press releases) for other factors that may cause actual results to
differ materially from those projected by the Company. Please refer
to Part I. Item 1A., Risk Factors, of the Company’s Annual Report
on Form 10-K filed with the SEC on February 28, 2022 for additional
information regarding factors that could affect our results of
operations, financial condition and liquidity.
We intend our forward-looking statements to speak only as of the
time of such statements and do not undertake or plan to update or
revise them as more information becomes available or to reflect
changes in expectations, assumptions or results. We can give no
assurance that such expectations or forward-looking statements will
prove to be correct. An occurrence of, or any material adverse
change in, one or more of the risk factors or risks and
uncertainties referred to in this press release or included in our
other periodic reports filed with the SEC could materially and
adversely impact our operations and our future financial results.
Any public statements or disclosures made by us following this
press release that modify or impact any of the forward-looking
statements contained in or accompanying this press release will be
deemed to modify or supersede such outlook or other forward-looking
statements in or accompanying this press release.
Use of Non-GAAP Financial
Measures
We provide in this press release non-GAAP financial measures,
including: (i) comparable currency neutral sales; (ii) adjusted
operating EBITDA and comparable currency neutral adjusted operating
EBITDA; (iii) adjusted EBITDA margin; (iv) adjusted EPS ex
amortization; (v) free cash flow; and (vi) net debt to credit
adjusted EBITDA.
Our non-GAAP financial measures are defined below.
Currency Neutral metrics eliminate the effects that result from
translating non-U.S. currencies to U.S. dollars. We calculate
currency neutral numbers by translating current year invoiced sale
amounts at the exchange rates used for the corresponding prior year
period. We use currency neutral results in our analysis of
subsidiary or segment performance. We also use currency neutral
numbers when analyzing our performance against our competitors.
Adjusted operating EBITDA and adjusted operating EBITDA margin
exclude depreciation and amortization expense, interest expense,
other income (expense), net, restructuring and other charges and
certain non-recurring items such as gains (losses) on sale of
assets, shareholder activism related costs, business divestiture
costs, employee separation costs, Frutarom acquisition related
costs, N&B inventory step-up costs, N&B transaction related
costs, integration related costs and the impact of the merger with
N&B.
Adjusted EPS ex Amortization excludes the impact of
non-operational items including restructuring and other charges,
gains (losses) on sale of assets, shareholder activism related
costs, business divestiture costs, employee separation costs,
Frutarom acquisition related costs, N&B inventory step-up
costs, N&B transaction related costs, integration related
costs, redemption value adjustment to EPS, the impact of the merger
with N&B and non-cash items including the amortization of
acquisition related intangible assets.
Free Cash Flow is operating cash flow (i.e. cash flow from
operations) less capital expenditures.
Net debt to credit adjusted EBITDA is the leverage ratio used in
our credit agreement and defined as Net debt (which is long-term
debt less cash and cash equivalents) divided by the trailing
12-month credit adjusted EBITDA. Credit adjusted EBITDA is defined
as income (loss) before income taxes, depreciation and amortization
expense, interest expense, specified items and non-cash items.
Comparable results for the first quarter is defined as 3 months
(January, February and March) of legacy IFF and N&B results in
the 2021 period and for the full company in the current 2022
period, and exclude the impact of divestitures in the prior year
period and acquisitions in the current year period.
These non-GAAP measures are intended to provide additional
information regarding our underlying operating results and
comparable year-over-year performance. Such information is
supplemental to information presented in accordance with GAAP and
is not intended to represent a presentation in accordance with
GAAP. In discussing our historical and expected future results and
financial condition, we believe it is meaningful for investors to
be made aware of and to be assisted in a better understanding of,
on a period-to-period comparable basis, financial amounts both
including and excluding these identified items, as well as the
impact of exchange rate fluctuations. These non-GAAP measures
should not be considered in isolation or as substitutes for
analysis of the Company’s results under GAAP and may not be
comparable to other companies’ calculation of such metrics.
The Company cannot reconcile its expected Adjusted Operating
EBITDA and expected annual effective tax rate under "Financial
Guidance" without unreasonable effort because certain items that
impact net income and other reconciling metrics are out of the
Company's control and/or cannot be reasonably predicted at this
time. These items include but are not limited to gains (losses) on
sale of assets, shareholder activism related costs, business
divestiture costs, employee separation costs, N&B inventory
step-up costs, N&B transaction related costs, integration
related costs and the impact of the merger with N&B.
Welcome to IFF
At IFF (NYSE: IFF), an industry leader in food, beverage, scent,
health and biosciences, science and creativity meet to create
essential solutions for a better world – from global icons to
unexpected innovations and experiences. With the beauty of art and
the precision of science, we are an international collective of
thinkers who partners with customers to bring scents, tastes,
experiences, ingredients and solutions for products the world
craves. Together, we will do more good for people and planet. Learn
more at iff.com, Twitter, Facebook, Instagram, and LinkedIn.
International Flavors & Fragrances
Inc. Consolidated Income (Loss) Statements (Amounts
in millions except per share data) (Unaudited)
Three Months Ended March
31,
2022
2021
% Change
Net sales
$
3,226
$
2,465
31
%
Cost of goods sold
2,081
1,711
22
%
Gross profit
1,145
754
52
%
Research and development expenses
157
143
10
%
Selling and administrative expenses
459
451
2
%
Amortization of acquisition-related
intangibles
186
152
22
%
Restructuring and other charges
2
4
(50
)%
Operating profit
341
4
NMF
Interest expense
72
65
11
%
Other income, net
(16
)
(7
)
129
%
Income (loss) before taxes
285
(54
)
NMF
Provision for (benefit from) income
taxes
39
(14
)
NMF
Net income (loss)
246
(40
)
NMF
Net income attributable to noncontrolling
interests
2
2
—
%
Net income (loss) attributable to IFF
stockholders
244
(42
)
NMF
Net income (loss) per share - basic
(1)
$
0.96
$
(0.21
)
Net income (loss) per share - diluted
(1)
$
0.96
$
(0.21
)
Average number of shares outstanding -
basic
255
206
Average number of shares outstanding -
diluted
255
206
(1)
For 2022 and 2021, net income (loss) per
share reflects adjustments related to the redemption value of
certain redeemable noncontrolling interests.
NMF
Not meaningful
International Flavors & Fragrances
Inc. Condensed Consolidated Balance Sheets (Amounts
in millions) (Unaudited)
March 31,
December 31,
2022
2021
Cash, cash equivalents, and restricted
cash
$
661
$
715
Receivables, net
2,160
1,906
Inventories
2,795
2,516
Other current assets
1,891
1,850
Total current assets
7,507
6,987
Property, plant and equipment, net
4,295
4,368
Goodwill and other intangibles, net
26,548
26,920
Other assets
1,397
1,383
Total assets
$
39,747
$
39,658
Short-term borrowings
$
939
$
632
Other current liabilities
3,093
3,001
Total current liabilities
4,032
3,633
Long-term debt
10,738
10,768
Non-current liabilities
3,911
4,035
Redeemable noncontrolling interests
101
105
Shareholders' equity
20,965
21,117
Total liabilities and shareholders'
equity
$
39,747
$
39,658
International Flavors & Fragrances
Inc. Consolidated Statements of Cash Flows (Amounts
in millions) (Unaudited)
Three Months Ended March
31,
2022
2021
Cash flows from operating
activities:
Net income (loss)
$
246
$
(40
)
Adjustments to reconcile to net cash (used
in) provided by operating activities
Depreciation and amortization
303
242
Deferred income taxes
(65
)
(86
)
Stock-based compensation
9
11
Pension contributions
(8
)
(9
)
Amortization of inventory step-up
—
182
Changes in assets and liabilities, net of
acquisitions:
Trade receivables
(272
)
(175
)
Inventories
(311
)
(64
)
Accounts payable
178
250
Accruals for incentive compensation
(101
)
(22
)
Other current payables and accrued
expenses
39
48
Other assets/liabilities, net
(22
)
21
Net cash (used in) provided by operating
activities
(4
)
358
Cash flows from investing
activities:
Additions to property, plant and
equipment
(132
)
(93
)
Additions to intangible assets
(2
)
—
Proceeds from disposal of assets
2
1
Cash provided by the Merger with
N&B
11
207
Net cash (used in) provided by investing
activities
(121
)
115
Cash flows from financing
activities:
Cash dividends paid to shareholders
(201
)
(82
)
Increase (decrease) in revolving credit
facility and short-term borrowings
1
(104
)
Proceeds from issuance of commercial paper
(maturities after three months)
155
—
Repayments of commercial paper (maturities
after three months)
(75
)
—
Net borrowings of commercial paper
(maturities less than three months)
227
—
Repayments of long-term debt
—
(12
)
Contingent consideration paid
—
(14
)
Purchases of noncontrolling interest
(6
)
—
Proceeds from issuance of stock in
connection with stock options
7
3
Employee withholding taxes paid
(13
)
(6
)
Net cash provided by (used in) financing
activities
95
(215
)
Effect of exchange rates changes on cash,
cash equivalents and restricted cash
(24
)
(37
)
Net change in cash, cash equivalents
and restricted cash
(54
)
221
Cash, cash equivalents and restricted cash
at beginning of year
716
660
Cash, cash equivalents and restricted
cash at end of period
$
662
$
881
The following table reconciles cash, cash equivalents and
restricted cash between the Company's statement of cash flows for
the periods ended March 31, 2022 and March 31, 2021 to the amounts
reported in the Company's balance sheet:
AMOUNTS IN
MILLIONS
March 31, 2022
December 31, 2021
March 31, 2021
December 31, 2020
Current assets
Cash and cash equivalents
$
657
$
711
$
872
$
650
Restricted cash
4
4
7
7
Noncurrent assets
Restricted cash included in Other
assets
1
1
2
3
Cash, cash equivalents and restricted
cash
$
662
$
716
$
881
$
660
International Flavors & Fragrances
Inc. Reportable Segment Performance (Amounts in
millions) (Unaudited)
Three Months Ended March
31,
2022
2021
Net Sales
Nourish
$
1,731
$
1,308
Health & Biosciences
661
426
Scent
585
569
Pharma Solutions
249
162
Consolidated
$
3,226
$
2,465
Segment Adjusted Operating
EBITDA
Nourish
$
329
$
270
Health & Biosciences
192
128
Scent
116
128
Pharma Solutions
65
43
Total
702
569
Depreciation & Amortization
(303
)
(242
)
Interest Expense
(72
)
(65
)
Other income, net
16
7
Restructuring and Other Charges
(2
)
(4
)
Shareholder Activism Related Costs
(3
)
(7
)
Business Divestiture Costs
(30
)
—
Employee Separation Costs
(4
)
(3
)
Frutarom Acquisition Related Costs
(1
)
—
N&B Inventory Step-Up Costs
—
(182
)
N&B Transaction Related Costs
—
(89
)
Integration Related Costs
(18
)
(38
)
Income (Loss) Before Taxes
$
285
$
(54
)
Segment Adjusted Operating EBITDA
Margin
Nourish
19.0
%
20.6
%
Health & Biosciences
29.0
%
30.0
%
Scent
19.8
%
22.5
%
Pharma Solutions
26.1
%
26.5
%
Consolidated
21.8
%
23.1
%
International Flavors & Fragrances
Inc. GAAP to Non-GAAP Reconciliation
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Gross
Profit
First Quarter
(DOLLARS IN
MILLIONS)
2022
2021
Reported (GAAP)
$
1,145
$
754
N&B Inventory Step-Up Costs
—
182
Integration Related Costs (f)
1
—
Adjusted (Non-GAAP)
$
1,146
$
936
Reconciliation of Selling and
Administrative Expenses
First Quarter
(DOLLARS IN
MILLIONS)
2022
2021
Reported (GAAP)
$
459
$
451
Shareholder Activism Related Costs (a)
(3
)
(7
)
Business Divestiture Costs (b)
(30
)
—
Employee Separation Costs (c)
(4
)
(3
)
Frutarom Acquisition Related Costs (d)
(1
)
—
N&B Transaction Related Costs (e)
—
(89
)
Integration Related Costs (f)
(17
)
(38
)
Adjusted (Non-GAAP)
$
404
$
314
International Flavors & Fragrances
Inc. GAAP to Non-GAAP Reconciliation
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Net Income
(Loss) and EPS
First Quarter
2022
2021
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
Income
before
taxes
Provision
for income
taxes (h)
Net Income
Attributable
to IFF (i)
Diluted
EPS
(Loss)
Income
before
taxes
(Benefit
from)
Provision
for income
taxes (h)
Net (Loss)
Income
Attributable
to IFF (i)
Diluted
EPS (j)
Reported (GAAP)
$
285
$
39
$
244
$
0.96
$
(54
)
$
(14
)
$
(42
)
$
(0.21
)
Restructuring and Other Charges
2
—
2
0.01
4
1
3
0.02
Shareholder Activism Related Costs (a)
3
1
2
0.01
7
2
5
0.03
Business Divestiture Costs (b)
30
7
23
0.09
—
—
—
—
Employee Separation Costs (c)
4
1
3
0.01
3
—
3
0.01
Frutarom Acquisition Related Costs (d)
1
—
1
—
—
—
—
—
N&B Inventory Step-Up Costs
—
—
—
—
182
37
145
0.70
N&B Transaction Related Costs (e)
—
—
—
—
89
18
71
0.34
Integration Related Costs (f)
18
5
13
0.05
38
9
29
0.14
Redemption value adjustment to EPS (g)
—
—
—
—
—
—
—
0.01
Adjusted (Non-GAAP)
$
343
$
53
$
288
$
1.13
$
269
$
53
$
214
$
1.03
Reconciliation of Adjusted
(Non-GAAP) EPS ex. Amortization
First Quarter
(DOLLARS AND SHARE
AMOUNTS IN MILLIONS)
2022
2021
Numerator
Adjusted (Non-GAAP) Net Income
$
288
$
214
Amortization of Acquisition related
Intangible Assets
186
152
Tax impact on Amortization of Acquisition
related Intangible Assets (h)
43
34
Amortization of Acquisition related
Intangible Assets, net of tax (k)
143
118
Adjusted (Non-GAAP) Net Income ex.
Amortization
$
431
$
332
Denominator
Weighted average shares assuming dilution
(diluted)
255
207
Adjusted (Non-GAAP) EPS ex.
Amortization
$
1.69
$
1.60
(a)
Represents shareholder activist related
costs, primarily professional fees.
(b)
Represents costs related to the Company's
planned sales of businesses, primarily legal and professional
fees.
(c)
Represents costs related to severance,
including accelerated stock compensation expense, for certain
employees and executives who have been separated or will separate
from the Company.
(d)
Represents transaction-related costs and
expenses related to the acquisition of Frutarom.
(e)
Represents transaction costs and expenses
related to the transaction with N&B, primarily includes legal
and professional fees.
(f)
Represents costs related to integration
activities since 2018, primarily for Frutarom and N&B. For
2022, represents costs primarily related to external consulting
fees and internal integration costs, including salaries. For 2021,
represents costs primarily related to performance stock awards and
consulting fees for advisory services.
(g)
Represents the adjustment to EPS related
to the excess of the redemption value of certain redeemable
noncontrolling interests over their existing carrying value.
(h)
The income tax effects of non-GAAP
adjustments are calculated based on the applicable statutory tax
rate for the relevant jurisdiction, except for those items which
are non-taxable or subject to valuation allowances for which the
tax expense (benefit) was calculated at 0%. The tax benefit for
amortization is calculated in a similar manner as the tax effects
of the non-GAAP adjustments.
(i)
For 2022, net income is reduced by income
attributable to noncontrolling interest of $2 million. For 2021,
net loss is increased by income attributable to noncontrolling
interest of $2 million.
(j)
The sum of these items does not foot due
to rounding.
(k)
Represents all amortization of intangible
assets acquired in connection with acquisitions, net of tax.
International Flavors & Fragrances
Inc. Debt Covenants (Amounts in millions)
(Unaudited)
The following information and schedules provide
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedules
are not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Reconciliation of Credit
Adjusted EBITDA to Net Income
(DOLLARS IN
MILLIONS)
Twelve Months Ended March 31,
2022
Net income
$
556
Interest expense
296
Income taxes
128
Depreciation and amortization
1,217
Specified items(1)
405
Non-cash items(2)
38
Credit Adjusted EBITDA
$
2,640
____________________
(1)
Specified items for the 12 months ended
March 31, 2022 of $405 million, consisted of restructuring and
other charges, shareholder activism related costs, business
divestiture costs, employee separation costs, pension income
adjustment, pension settlement, Frutarom acquisition related costs,
N&B inventory step-up costs, N&B transaction related costs
and integration related costs.
(2)
Non-cash items represent all other
adjustments to reconcile net income to net cash provided by
operations as presented on the Statement of Cash Flows, including
gains on disposal of assets, gains on business disposal and
stock-based compensation.
Net Debt to Total Debt
(DOLLARS IN
MILLIONS)
March 31, 2022
Total debt(1)
$
11,695
Adjustments:
Cash and cash equivalents
657
Net debt
$
11,038
____________________
(1)
Total debt used for the calculation of Net
debt consists of short-term debt, long-term debt, short-term
finance lease obligations and long-term finance lease
obligations.
International Flavors & Fragrances
Inc. Comparable Reportable Segment Performance
(Amounts in millions) (Unaudited)
The following information and schedule provides
reconciliation information between reported GAAP amounts and
non-GAAP certain adjusted amounts. This information and schedule is
not intended as, and should not be viewed as, a substitute for
reported GAAP amounts or financial statements of the Company
prepared and presented in accordance with GAAP.
Three Months Ended March
31,
2022
2021
Net Sales
Nourish(1)
$
1,731
$
1,537
Health & Biosciences
661
615
Scent
585
569
Pharma Solutions
249
233
Consolidated
$
3,226
$
2,954
Segment Adjusted Operating
EBITDA
Nourish
$
329
$
304
Health & Biosciences
192
181
Scent
116
128
Pharma Solutions
65
60
Total
702
673
Depreciation & Amortization
(303
)
(242
)
Interest Expense
(72
)
(65
)
Other income, net
16
7
Restructuring and Other Charges
(2
)
(4
)
Shareholder Activism Related Costs
(3
)
(7
)
Business Divestiture Costs
(30
)
—
Employee Separation Costs
(4
)
(3
)
Frutarom Acquisition Related Costs
(1
)
—
N&B Inventory Step-Up Costs
—
(182
)
N&B Transaction Related Costs
—
(89
)
Integration Related Costs
(18
)
(38
)
Divestiture of Businesses(2)
—
3
Impact of Merger with
N&B(3)
—
(107
)
Income (Loss) Before Taxes
$
285
$
(54
)
Segment Adjusted Operating EBITDA
Margin
Nourish
19.0
%
19.8
%
Health & Biosciences
29.0
%
29.4
%
Scent
19.8
%
22.5
%
Pharma Solutions
26.1
%
25.8
%
Consolidated
21.8
%
22.8
%
____________________
(1)
Nourish sales information for the three
months ended March 31, 2021 excludes the results of the Fruit
Preparation business to present fully comparable scenarios of the
Company due to divestiture of the business in the fourth quarter of
2021. As a result, there is no impact of the Fruit Preparation
business for the 2022 period.
(2)
Information related to the amounts exclude
the results of the Fruit Preparation business to present fully
comparable scenarios of the Company due to divestiture of the
business in the fourth quarter of 2021.
(3)
Information related to the amounts
included from merger with N&B was received directly from DuPont
and management believes such information is reliable. DuPont has
not provided the underlying adjustments for the amounts included,
but based on management's review of financial statement and other
scheduled information provided, we believe the amounts reflected
are reasonable. For the three months ended March 31, 2021, amounts
include N&B results for January to reflect the same period
N&B is included in IFF results in 2022.
The pro forma historical segment
information has been presented for informational purposes only and
is not necessarily indicative of what IFF's results of operations
actually would have been, had the N&B transaction occurred on
the date indicated below. In addition, the pro forma historical
segment information does not purport to project the future
operating results of the Company, shown below:
(DOLLARS IN
MILLIONS)
January 2021
Pro Forma Sales
Pro Forma Adjusted
Operating EBITDA
Nourish
$
247
$
37
Health & Biosciences
189
53
Scent
—
—
Pharma Solutions
71
17
International Flavors & Fragrances
Inc. GAAP to Non-GAAP Reconciliation Comparable
Foreign Exchange Impact (Unaudited)
Q1
Nourish
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Comparable
13%
8%
(0.8)%
Currency Impact
3%
6%
0.4%
% Change - Currency Neutral
16%
14%
(0.4)%
Q1 Health &
Biosciences
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Comparable
7%
6%
(0.4)%
Currency Impact
3%
2%
(0.2)%
% Change - Currency Neutral
10%
8%
(0.6)%
Q1 Scent
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Comparable
3%
(9)%
(2.7)%
Currency Impact
3%
7%
1.0%
% Change - Currency Neutral
6%
(2)%
(1.7)%
Q1 Pharma
Solutions
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Comparable
7%
8%
0.3%
Currency Impact
3%
2%
(0.3)%
% Change - Currency Neutral
10%
10%
0.0%
Q1
Consolidated
Sales
Segment Adjusted
Operating EBITDA
Segment Adjusted
Operating EBITDA
Margin
% Change - Comparable
9%
4%
(1.0)%
Currency Impact
4%
5%
0.3%
% Change - Currency Neutral
13%
9%
(0.7)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220509005714/en/
Michael DeVeau Chief Investor Relations & Communications
Officer 212.708.7164 Michael.DeVeau@iff.com
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