Regulatory News:
International Flavors & Fragrances Inc. (NYSE: IFF)
(Euronext Paris: IFF) reported financial results and strategic
achievements for the second quarter ended July 1, 2016.
Second Quarter 2016 Consolidated Summary: Change vs. Prior
Year
Reported
(GAAP) Adjusted (Non-GAAP)¹ Currency Neutral
(Non-GAAP)¹ Sales Operating Profit
EPS Sales Operating Profit
EPS Sales Operating Profit
EPS Consolidated 3% 11% 13% 3% 7% 8% 4% 7% 5% Acquisition
Impact 2% 3% 3% 2% 3% 3% 2% 3%
3%
¹ Schedules at the end of this release contain reconciliations
of reported GAAP to non-GAAP metrics.
Second Quarter 2016 Consolidated Financial Highlights
- Reported net sales for the second
quarter totaled $793.5 million, an increase of 3% from $767.5
million in the second quarter of 2015. Excluding the impact of
currency, currency neutral sales increased 4%, including a 2
percentage point contribution related to the acquisition of IFF |
Ottens Flavors and IFF | Lucas Meyer Cosmetics.
- Reported operating profit totaled
$164.5 million, an increase of 11% from $148.8 million in the
second quarter of 2015. Adjusted operating profit and currency
neutral adjusted operating profit both increased 7% to $165.7
million in the second quarter of 2016, driven primarily by volume
growth, benefits associated with cost and productivity initiatives,
and the contribution of acquisitions.
- Reported earnings per share (EPS)
increased 13% to $1.46 per diluted share compared with $1.29 per
diluted share in the prior year second quarter. Adjusted EPS
increased 8% to $1.47 per diluted share compared with $1.36 per
diluted share in the prior year second quarter. Excluding the
impact of foreign exchange, adjusted currency neutral EPS increased
5% driven by lower year-over-year shares outstanding, offset by
higher interest expense and a higher effective tax rate.
Second Quarter 2016 Strategic Highlights: Currency Neutral
Performance
Innovating Firsts: strengthen position and drive
differentiation in priority R&D platforms
- Sweetness and savory modulation
portfolio continued to grow strong double-digits
- Encapsulation-related sales increased
double-digits led by Fabric Care and Personal Wash
- Launched new natural flavor modulator
and new natural flavor molecule
- Debuted first-ever Cradle to Cradle
Certified™ fragrance: PuraVita™
Win Where We Compete: achieve market leadership position
in key markets, categories & customers
- North America sales +5% driven
primarily by the contribution of acquisitions
- Middle East & Africa up
mid-single-digits with strong growth in Flavors
- Home Care grew mid-single-digits led by
double-digit growth in North America & EAME
Become Our Customers’ Partner of Choice: attain
commercial excellence
- Launched enhanced sustainability
strategy focused on positive transformational changes toward a
regenerative, healthy and abundant world
- Achieved core list status with key
customer
- Partnered with Unilever to improve the
lives of vetiver farming communities in Haiti
- Deployed industry-first on-site wind
turbine at Tilburg, Netherlands facility
Strengthen and Expand the Portfolio: pursue value
creation through collaborations & acquisitions
- IFF | Lucas Meyer Cosmetics achieved
double-digit growth on a standalone basis
- IFF | Ottens Flavors posted solid
growth on a standalone basis led by regional customers
- IFF | Lucas Meyer Cosmetics invested in
Bio ForeXtra to Expand Raw Material Access
Management Commentary
“As we celebrate the first anniversary of the launch of Vision
2020, we are proud of the performance we made relative to our
strategic priorities,” said Chairman and CEO Andreas Fibig. “Since
inception, we’ve seen strong currency neutral sales growth across
all of our key platforms – modulation, encapsulation, delivery
systems and naturals – proof that we are executing our plan and
delivering industry-leading innovation to our customers. We also
made strong in-roads in improving our market position in key
countries, strengthening our relationships with many of our
customers and actively pursuing value creation opportunities
through collaborations and acquisitions.
“With respect to the second quarter of 2016, we are pleased to
report our performance was consistent with our expectations for all
of our key financial metrics. Currency neutral sales growth of 4%
was driven by new wins across both businesses and the benefits
associated with our strategic acquisitions. Adjusted operating
profit and adjusted EPS, on a currency neutral basis, both grew
faster than sales led by volume growth, cost and productivity
initiatives and acquisitions. We achieved these financial results
as we continued to strategically reinvest in the business to drive
long-term growth.
“As we have started the year well – first half currency neutral
sales grew 5% and currency neutral adjusted operating profit and
adjusted EPS were up 7% and 8% respectively – we remain cautiously
optimistic in achieving our previously stated currency neutral
guidance given the continued macroeconomic uncertainty.”
Second Quarter 2016 Segment Summary: Growth vs. Prior
Year
Reported (GAAP) Currency
Neutral (Non-GAAP) Sales Segment Profit
Sales Segment Profit Fragrances: 5% 10%
5% 7% Acquisition Impact 3% 5% 3% 5%
Flavors: 2% 8%
3% 9% Acquisition Impact 1% 1% 1% 1%
Fragrances Business Unit
- On a reported basis, sales increased
5%, or $18.9 million, to $414.0 million. Reported Fragrances
segment profit increased 10%, or $7.7 million, to $87.6 million and
reported segment profit margin expanded 100 basis points to
21.2%.
- Currency neutral sales improved 5%,
including approximately 3 percentage points related to the
acquisition of IFF | Lucas Meyer Cosmetics.
- Fine Fragrances decreased 1% on a
reported and currency neutral basis as strong double-digit growth
in Latin America was offset by softness in North America and
EAME.
- Consumer Fragrances grew 4% on a
reported and currency neutral basis driven by broad- based growth
across all sub-categories led by a double-digit increase in
Personal Wash and strong contributions from Fabric and Home Care.
On a geographic basis, growth was led by a double-digit increase in
Greater Asia and high-single-digit growth in North America.
- Fragrance Ingredients grew 15% on a
reported basis and 14% on a currency neutral basis, inclusive of
sales related to the IFF | Lucas Meyer Cosmetics acquisition.
- Fragrances segment profit improved
approximately 7% on a currency neutral basis as a result of volume
growth, benefits from cost and productivity initiatives, and the
acquisition of IFF | Lucas Meyer Cosmetics. Segment profit margin
expanded 40 basis points to 21.2% on a currency neutral basis.
Flavors Business Unit
- On a reported basis, sales increased
2%, or $7.0 million, to $379.5 million. Reported Flavors segment
profit increased 8% to $90.3 million from $84.0 million, and
reported segment profit margin improved 120 basis points to
23.8%.
- Currency neutral sales grew 3%,
including approximately 1 percentage point related to the
acquisition of IFF | Ottens Flavors, as all categories improved
year-over-year.
- EAME increased 3% on a reported basis
and 4% on a currency neutral basis led by high-single-digit
currency neutral growth in the Middle East and Africa and
broad-based growth across Western Europe and Eastern Europe.
- North America improved 4%, principally
reflecting the contribution of additional sales related to the
acquisition of IFF | Ottens Flavors.
- Latin America decreased 10% on a
reported basis and 7% on a currency neutral basis. Mexico grew
strong double-digits on a currency neutral basis; however;
performance was offset by challenges related to customers reducing
their inventory positions due to the softening of import
restrictions in Argentina.
- Greater Asia increased 4% on a reported
basis and 6% on a currency neutral basis led by strong growth in
Indonesia, India and Asean.
- Flavors segment profit grew
approximately 9% on a currency neutral basis primarily resulting
from volume growth and the benefits from cost and productivity
initiatives. Segment profit margin expanded 120 basis points to
23.8% on a currency neutral basis.
FY 2016 Guidance: Percent Change vs. Prior Year
The Company’s full year 2016 guidance:
Currency
Neutral FX Impact1 GAAP2 Organic
M&A Total
Sales 2.0 - 3.0% ~1.5% 3.5 -
4.5% ~(2)% 1.5 - 2.5%
Operating Profit 3.5 - 5.5% ~1.5% 5.0
- 7.0% ~(3)% 2.0 - 4.0%
EPS 5.0 - 7.0% ~1.5% 6.5 - 8.5%
~(2)% 4.5 - 6.5%
1 See Use of Non-GAAP Financial Measures2 Excludes items
impacting comparability
A copy of the Company’s Quarterly Report on Form 10-Q will be
available on its website at www.iff.com or at sec.gov by August 10, 2016.
Audio Webcast
A live webcast to discuss the Company’s second quarter 2016
financial results will be held on August 9, 2016, at 10:00 a.m.
EDT. Investors may access the webcast and accompanying slide
presentation 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
This press release includes “forward-looking statements” under
the Federal Private Securities Litigation Reform Act of 1995,
including statements regarding our outlook for fiscal year 2016.
These forward-looking statements are qualified in their entirety by
cautionary statements and risk factor disclosures contained in the
Company’s Securities and Exchange Commission filings, including the
Company’s Annual Report on Form 10-K filed with the Commission on
March 1, 2016. The Company wishes to caution readers that certain
important factors may have affected and could in the future affect
the Company’s actual results and could cause the Company’s actual
results for subsequent periods to differ materially from those
expressed in any forward-looking statements made by or on behalf of
the Company. With respect to the Company’s expectations regarding
these statements, such factors include, but are not limited to: (1)
the Company’s ability to implement its Vision 2020 strategy; (2)
the Company’s ability to successfully identify and complete
acquisitions in line with its Vision 2020 strategy, and to realize
the anticipated benefits of those acquisitions; (3) the Company’s
ability to effectively compete in its market, and to successfully
develop new and competitive products that appeal to its customers
and consumers; (4) changes in consumer preferences and demand for
the Company’s products or a decline in consumer confidence and
spending; (5) the Company’s ability to benefit from its investments
and expansion in emerging markets; (6) the impact of currency
fluctuations or devaluations in the principal foreign markets in
which it operates, including the devaluation of the Euro; (7) the
economic and political risks associated with the Company’s
international operations, including challenging economic conditions
in China and Latin America; (8) the impact of any failure of the
Company’s key information technology systems or a breach of
information security; (9) the Company’s ability to attract and
retain talented employees; (10) the Company’s ability to comply
with, and the costs associated with compliance with U.S. and
foreign environmental protection laws; (11) the Company’s ability
to realize expected cost savings and efficiencies from its
profitability improvement initiative and other optimization
activities; (12) volatility and increases in the price of raw
materials, energy and transportation; (13) fluctuations in the
quality and availability of raw materials; (14) the impact of a
disruption in the Company’s supply chain or its relationship with
its suppliers; (15) any adverse impact on the availability,
effectiveness and cost of the Company’s hedging and risk management
strategies; (16) the Company’s ability to successfully manage its
working capital and inventory balances; (17) uncertainties
regarding the outcome of, or funding requirements related to
litigation or settlement of pending litigation uncertain tax
positions or other contingencies; (18) the effect of legal and
regulatory developments, as well as restrictions or costs that may
be imposed on the Company or its operations by U.S. and foreign
governments; (19) adverse changes in federal, state, local and
international tax legislation or policies, including with respect
to transfer pricing and state aid, and adverse results of tax
audits, assessments, or disputes; and (19) changes in market
conditions or governmental regulations relating to our pension and
postretirement obligations. New risks emerge from time to time and
it is not possible for management to predict all such risk factors
or to assess the impact of such risks on the Company’s business.
Accordingly, the Company undertakes no obligation to publicly
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Use of Non-GAAP Financial
Measures
We provide in this press release (1) Currency Neutral Sales, (2)
Adjusted Operating Profit and Currency Neutral Adjusted Operating
Profit and (3) Adjusted EPS and Currency Neutral Adjusted EPS,
which exclude restructuring costs and other significant items of a
non-recurring and/or nonoperational nature such as operational
improvement initiatives and acquisition related costs (often
referred to as “Items Impacting Comparability”) and, with respect
to the currency neutral items, the impact of foreign currency
movements. We provide these metrics as we believe that they are
useful in providing period to period comparisons of the results of
our operational performance. When we provide our expectations for
our currency neutral metrics in our full year 2016 guidance, we
estimate the anticipated FX impact by comparing prior year results
to the prior year results restated at exchange rates in effect for
the current year based on the currency of the underlying
transaction. When we provide our expectations for our Adjusted
Operating Profit and our Adjusted EPS in our full year 2016
guidance, the closest corresponding GAAP measures (expected
reported Operating Profit and EPS) and a reconciliation of the
differences between the non-GAAP expectation and the corresponding
GAAP measure generally are not available without unreasonable
effort due to inherent difficulty of forecasting the timing and
amount of reconciling items that would be excluded from the GAAP
measure in the relevant future period and the relevant tax impact
of such reconciling items on EPS. The variability of the excluded
items may have a significant, and potentially unpredictable, impact
on our future GAAP results. Currency Neutral Sales, Adjusted
Operating Profit, Currency Neutral Adjusted Operating Profit,
Adjusted EPS and Currency Neutral Adjusted EPS 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.
Meet IFF
International Flavors & Fragrances Inc. (NYSE:IFF) (Euronext
Paris: IFF) is a leading innovator of sensorial experiences that
move the world. At the heart of our company, we are fueled by a
sense of discovery, constantly asking “what if?”. That passion for
exploration drives us to co-create unique products that consumers
taste, smell, or feel in fine fragrances and beauty, detergents and
household goods, as well as beloved foods and beverages. Our 6,700
team members globally take advantage of leading consumer insights,
research and development, creative expertise, and customer intimacy
to develop differentiated offerings for consumer products. Learn
more at www.iff.com, Twitter , Facebook, Instagram, and
LinkedIn.
International Flavors & Fragrances
Inc.
Consolidated Income Statement
(Amounts in thousands except per
diluted share data)
(Unaudited)
Three Months Ended June 30, Six Months Ended
June 30, 2016 2015 % Change 2016 2015 % Change
Net sales $ 793,478 $ 767,541 3 % $ 1,576,789 $ 1,542,448 2
% Cost of goods sold 427,837 422,501 1
% 850,940 851,131 (0 )% Gross profit
365,641 345,040 6 % 725,849 691,317 5 % Research and development
expenses 63,252 62,514 1 % 126,637 125,976 1 % Selling and
administrative expenses 132,784 131,023 1 % 256,327 250,018 3 %
Amortization of acquisition-related intangibles 5,130 3,040 69 %
11,191 4,880 129 % Restructuring and other charges, net —
(358 ) (100 )% — (170 ) (100 )%
Operating profit 164,475 148,821 11 % 331,694 310,613 7 % Interest
expense 15,060 11,407 32 % 27,539 22,502 22 % Other (income)
expense, net (2,635 ) 436 (704 )%
(2,792 ) (5,275 ) (47 )% Income before taxes 152,050 136,978
11 % 306,947 293,386 5 % Taxes on income 35,317
31,604 12 % 71,610 59,754
20 % Net income $ 116,733 $ 105,374 11 % $ 235,337
$ 233,632 1 % Earnings per share
- basic $ 1.46 $ 1.30 $ 2.94 $ 2.88 Earnings per share - diluted $
1.46 $ 1.29 $ 2.93 $ 2.86 Average shares outstanding Basic
79,764 80,790 79,809 80,729 Diluted 80,040 81,192 80,141 81,201
International Flavors & Fragrances
Inc.
Condensed Consolidated Balance
Sheet
(Amounts in thousands)
(Unaudited)
June 30, December 31, 2016 2015 Cash & cash
equivalents $ 539,992 $ 181,988 Receivables 621,164 537,896
Inventories 584,489 572,047 Other current assets 183,789
145,178 Total current assets 1,929,434 1,437,109
Property, plant and equipment, net 737,353 732,794 Goodwill and
other intangibles, net 1,229,381 1,247,393 Other assets
258,460 284,714 Total assets $ 4,154,628 $ 3,702,010
Bank borrowings and overdrafts, and current portion of long-term
debt $ 133,473 $ 132,349 Other current liabilities 554,778
592,807 Total current liabilities 688,251 725,156
Long-term debt 1,357,684 935,373 Non-current liabilities 430,761
446,492 Shareholders' equity 1,677,932
1,594,989 Total liabilities and shareholders' equity $ 4,154,628 $
3,702,010
International Flavors & Fragrances
Inc.
Consolidated Statement of Cash
Flows
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30, 2016 2015
Cash flows
from operating activities: Net income $ 235,337 $ 233,632
Adjustments to reconcile to net cash provided by operating
activities: Depreciation and amortization 49,743 41,041 Deferred
income taxes 16,543 17,891 (Gain) loss on disposal of assets (2,910
) 14 Stock-based compensation 13,774 12,860 Pension contributions
(39,510 ) (57,493 ) Changes in assets and liabilities, net of
acquisitions: Trade receivables (70,361 ) (92,329 ) Inventories
(7,271 ) (9,834 ) Accounts payable (29,167 ) 27,334 Accruals for
incentive compensation (2,001 ) (21,191 ) Other current payables
and accrued expenses 18,800 21,305 Other assets (1,346 ) (12,417 )
Other liabilities (27,081 ) 5,505 Net cash
provided by operating activities 154,550
166,318
Cash flows from investing activities:
Cash paid for acquisitions, net of cash received — (188,835 )
Additions to property, plant and equipment (43,236 ) (37,937 )
Proceeds from life insurance contracts — 548 Maturity of net
investment hedges (641 ) 9,735 Proceeds from disposal of assets
3,630 1,515 Net cash used in investing
activities (40,247 ) (214,974 )
Cash flows
from financing activities: Cash dividends paid to shareholders
(89,463 ) (75,927 ) Net change in revolving credit facility
borrowings and overdrafts (138,142 ) (30,283 ) Deferred financing
costs (4,796 ) — Proceeds from issuance of long-term debt 555,559
86,162 Loss on pre-issuance hedges (3,244 ) — Proceeds from
issuance of stock under stock plans 494 286 Excess tax benefits on
stock-based payments 4,431 11,608 Purchase of treasury stock
(71,714 ) (38,813 ) Net cash provided by (used in) financing
activities 253,125 (46,967 ) Effect of
exchange rates changes on cash and cash equivalents (9,424 ) (5,696
)
Net change in cash and cash equivalents 358,004 (101,319 )
Cash and cash equivalents at beginning of year
181,988 478,573
Cash and cash equivalents
at end of period $ 539,992 $ 377,254
International Flavors & Fragrances
Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
Net Sales Flavors $
379,504 $ 372,478 $ 752,012 $ 749,586 Fragrances 413,974
395,063 824,777 792,862
Consolidated 793,478 767,541 1,576,789 1,542,448
Segment Profit Flavors 90,337 84,015 182,151 176,743
Fragrances 87,596 79,924 176,833 161,522 Global Expenses (12,232 )
(8,629 ) (26,141 ) (20,194 ) Restructuring and other charges, net
(182 ) 358 (283 ) 170 Acquisition and related costs (213 ) (6,566 )
(1,249 ) (7,066 ) Operational improvement initiative costs (831 )
(281 ) (1,099 ) (562 ) Spanish capital tax settlement —
— 1,482 —
Operating profit 164,475 148,821 331,694 310,613
Interest Expense (15,060 ) (11,407 ) (27,539 ) (22,502 ) Other
income, net 2,635 (436 ) 2,792
5,275
Income before taxes $ 152,050 $
136,978 $ 306,947 $ 293,386
Operating Margin Flavors 23.8 % 22.6 % 24.2 % 23.6 %
Fragrances 21.2 % 20.2 % 21.4 % 20.4 % Consolidated 20.7 % 19.4 %
21.0 % 20.1 %
International Flavors & Fragrances
Inc.
Sales Performance by Region and
Category
(Unaudited)
Second Quarter
2016 vs. 2015 Percentage Change in Sales by Region of
Destination Fine Consumer Fragrances
Ingredients Total Frag.
Flavors Total North
America Reported -5% 8% 17%
7% 4% 5% EAME Reported
-3% 3% 23% 5% 3% 5%
Currency Neutral -5% 1% 21% 3%
4% 4% Latin America Reported
9% -5% -14% -3% -10% -5%
Currency Neutral 15% -4% -14%
-1% -7% -3% Greater Asia
Reported 0% 10% 9% 9% 4%
6% Currency Neutral 1% 11% 8%
11% 6% 8% Total Reported
-1% 4% 15% 5% 2% 3%
Currency Neutral -1% 4%
14% 5% 3% 4%
First Six Months 2016 vs. First Six Months 2015
Percentage Change in Sales by Region of Destination
Fine Consumer Fragrances
Ingredients Total Frag. Flavors
Total North America Reported
5% 7% 23% 10% 6% 8%
EAME Reported -2% -1% 13%
2% -3% 0% Currency Neutral 0%
1% 15% 4% 1% 3% Latin
America Reported -1% 0% -10%
-1% -6% -2% Currency Neutral 9%
3% -9% 3% 1% 2%
Greater Asia Reported -3% 6% 12%
7% 1% 3% Currency Neutral -1%
8% 12% 8% 4% 6%
Total Reported 0% 3% 13%
4% 0% 2% Currency Neutral 3%
5% 15% 6%
4% 5%
Currency neutral growth is calculated by translating prior year
sales at the exchange rates used for the corresponding 2016
period.
International Flavors & Fragrances
Inc.
GAAP to Non-GAAP Reconciliation
Foreign Exchange Impact
(Unaudited)
Q2
Consolidated
Sales Operating Profit EPS %
Change - Reported (GAAP) 3% 11%
13% Items Impacting Comparability 0% -4% -5%
% Change -
Adjusted (Non-GAAP) 3% 7% 8% Currency
Impact 1% 0% -3%
% Change - Currency Neutral (Adjusted)
4% 7% 5%
Q2
Flavors
Sales Segment Profit % Change - Reported
(GAAP) 2% 8% Currency Impact 1% 1%
% Change -
Currency Neutral 3% 9%
Q2
Fragrances
Sales Segment Profit % Change - Reported
(GAAP) 5% 10% Currency Impact 0% -3%
% Change
- Currency Neutral 5% 7%
1H
Consolidated
Sales Operating Profit EPS %
Change - Reported (GAAP) 2% 7% 2% Items
Impacting Comparability 0% -2% 3%
% Change - Adjusted
(Non-GAAP) 2% 5% 5% Currency Impact 3% 2%
3%
% Change - Currency Neutral (Adjusted) 5%
7% 8%
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Second Quarter 2016 Items Impacting
Comparability Adjusted Operating Income
Reported
(GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition Related Costs (c)
Adjusted (Non-GAAP)
Operating profit
164,475
182
831
213
165,701 (a)
Accelerated depreciation costs related to
restructuring initiatives.
(b)
Accelerated depreciation and severance
costs in Asia.
(c) Additional transaction costs related to acquisition of Lucas
Meyer. * The Company tracks the amount of amortization recorded on
recent acquisitions in order to monitor its progress with respect
to its Vision 2020 goals. The following amounts were recorded with
respect to recent acquisitions: $1.7M related to Lucas Meyer and
$1.6M related to Ottens Flavors.
Second Quarter 2015 Items Impacting Comparability
Adjusted Operating Income
Reported (GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition related costs (c)
Adjusted (Non-GAAP)
Operating profit 148,821 (358) 281 6,566
155,310
(a) Costs related to the Fragrance Ingredients
Rationalization. (b) Related to a partial plant closing in Asia.
(c) Transaction costs related to acquisitions (Ottens Flavors and
Lucas Meyer Cosmetics) as well as expense related to the fair value
step up of inventory on the Ottens Flavors acquisition. * The
Company tracks the amount of amortization recorded on recent
acquisitions in order to monitor its progress with respect to its
Vision 2020 goals. The following amounts were recorded with respect
to recent acquisitions: $1.2M.
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Second Quarter 2016 Items Impacting
Comparability Adjusted Net Income and EPS
Reported
(GAAP) Restructuring and Other Charges (a)
Operational Improvement Initiative Costs (b)
Acquisition Related Costs (c) Adjusted
(Non-GAAP) Income before taxes 152,050 182 831 213
153,276 Taxes on income (d) 35,317 35
208 (102 )
35,458 Net income 116,733
147 623 315
117,818 Earnings per share - diluted $ 1.46 $ —
$ 0.01 $ —
$ 1.47 Refer to Adjusted Operating
Income table for footnotes (a), (b) and (c). (d) The tax effects
are calculated based upon the specific rate of the applicable
jurisdiction of the items.
Second Quarter 2015
Items Impacting Comparability Adjusted Net Income and
Adjusted EPS
Reported (GAAP) Restructuring and
Other Charges (a) Operational Improvement Initiative
Costs (b) Acquisition Related Costs (c)
Adjusted (Non-GAAP) Income before taxes 136,978 (358) 281
6,566
143,467 Taxes on income 31,604 (125) 70 875
32,424 Net income 105,374 (233)
211 5,691
111,043
Earnings per share - diluted $ 1.29 $ — $ — $ 0.07
$ 1.36 Refer to Adjusted Operating Income
table for footnotes (a), (b) and (c).
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Second Quarter Year-to-Date 2016 Items Impacting
Comparability Adjusted Operating Income
Reported (GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition Related Costs (c)
Tax Settlements (d)
Adjusted (Non-GAAP)
Operating profit 331,694 283 1,099 1,249 (1,482)
332,843 (a) Accelerated depreciation costs related to
restructuring initiatives. (b) Accelerated depreciation and
severance costs in Asia. (c) Expense related to the fair value step
up of inventory and additional transaction costs related to
acquisition of Lucas Meyer. (d) Settlements due to favorable tax
rulings in jurisdictions for which reserves were previously
recorded for ongoing tax disputes.
*
The Company tracks the amount of
amortization recorded on recent acquisitions in order to monitor
its progress with respect to its Vision 2020 goals. The following
amounts were recorded with respect to recent acquisitions: $4.3M
related to Lucas Meyer and $3.2M related to Ottens Flavors.
Second Quarter Year-to-Date 2015 Items Impacting
Comparability Adjusted Operating Income
Reported
(GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition Related Costs (c)
Adjusted (Non-GAAP)
Operating profit 310,613 (170) 562 7,065
318,070
(a) Costs related to the Fragrance Ingredients
Rationalization. (b) Related to plant closings in Europe and
partial closing in Asia. (c) Transaction costs related to
acquisitions (Ottens Flavors and Lucas Meyer Cosmetics) as well as
expense related to the fair value step up of inventory on the
Ottens Flavors acquisitions. * The Company tracks the amount of
amortization recorded on recent acquisitions in order to monitor
its progress with respect to its Vision 2020 goals. The following
amounts were recorded with respect to recent acquisitions: $1.2M.
International Flavors & Fragrances
Inc.GAAP to Non-GAAP Reconciliation(Amounts in
thousands)(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.
Second Quarter Year-to-Date 2016 Items Impacting
Comparability Adjusted Net Income and EPS
Reported (GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition Related Costs (c)
Tax Settlements (d) Adjusted (Non-GAAP)
Income before taxes 306,947 283 1,099 1,249 (1,482 )
308,096
Taxes on income (e) 71,610 54 275 266
(411 )
71,794 Net income 235,337 229
824 983 (1,071 )
236,302 Earnings per share - diluted
$ 2.93 $ — $ 0.01 $ 0.01 $ (0.01 )
$ 2.94
Refer to Adjusted Operating Income table for footnotes (a), (b),
(c) and (d). (e) The tax effects are calculated based upon the
specific rate of the applicable jurisdiction of the items.
Second Quarter Year-to-Date 2015 Items Impacting
Comparability Adjusted Net Income and Adjusted EPS
Reported (GAAP)
Restructuring and Other Charges
(a)
Operational Improvement Initiative
Costs (b)
Acquisition Related Costs (c)
Tax Settlements (d)
Adjusted (Non-GAAP)
Income before taxes 293,386 (170 ) 562 7,065 -
300,843 Taxes
on income 59,754 (60 ) 140 1,050 10,478
71,362 Net
income 233,632 (110 ) 422
6,015 (10,478 )
229,481 Earnings per share - diluted $ 2.86 $
— $ 0.01 $ 0.07 $ (0.13 )
$ 2.81 Refer to
Adjusted Operating Income table for footnotes (a), (b) and (c). (d)
Settlements due to favorable tax rulings in jurisdictions for which
reserves were previously recorded for ongoing tax disputes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160808006190/en/
International Flavors & Fragrances Inc.Michael DeVeau,
212-708-7164VP, Global Corporate Communications & Investor
RelationsMichael.DeVeau@iff.com
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