Sensient Technologies Corporation (NYSE: SXT), a leading
provider of flavors and colors for the food, pharmaceutical, and
personal care markets, today reported financial results for the
first quarter ended March 31, 2024.
First Quarter Consolidated Results
- Reported revenue increased 4.2% to $384.7 million in the first
quarter of 2024 versus last year’s first quarter results of $369.0
million. On a local currency basis(1), revenue increased 3.8%.
- Reported operating income decreased 2.8% to $49.4 million
compared to $50.8 million recorded in the first quarter of 2023. In
the first quarter of 2024, the Company recorded $2.8 million of
costs related to its recently enacted Portfolio Optimization Plan.
Local currency adjusted operating income(1) and local currency
adjusted EBITDA(1) increased 2.6% and 2.2%, respectively, in the
first quarter.
- Reported diluted earnings per share decreased 8.8% to 73 cents
in the first quarter of 2024 compared to 80 cents in the first
quarter of 2023. Local currency adjusted EPS(1) decreased 1.3% in
the first quarter primarily as a result of higher interest expense
and a higher tax rate.
“I am pleased that 2024 is off to a good start. Our underlying
business and new sales wins remain strong. I am confident that our
teams will execute on our strategy and deliver on expectations for
2024,” said Paul Manning, Sensient’s Chairman, President, and Chief
Executive Officer.
First Quarter Group Results
Reported
Local Currency(1)
Revenue
Quarter
Quarter
Flavors & Extracts
8.0
%
6.9
%
Color
-0.7
%
-1.7
%
Asia Pacific
0.6
%
4.1
%
Total Revenue
4.2
%
3.8
%
Reported
Adjusted Local
Currency(1)
Operating Income
Quarter
Quarter
Flavors & Extracts
6.8
%
6.3
%
Color
-0.6
%
-1.8
%
Asia Pacific
-5.0
%
-0.6
%
Total Operating Income
-2.8
%
2.6
%
The Flavors & Extracts Group reported first quarter 2024
revenue of $193.1 million, an increase of $14.2 million versus the
prior year’s first quarter. The Group’s increased revenue was a
result of higher volumes, favorable pricing, and favorable exchange
rates. Segment operating income was $23.7 million in the first
quarter of 2024, an increase of $1.5 million compared to the prior
year’s first quarter. The higher operating income was primarily due
to the higher volumes and favorable pricing.
The Color Group reported revenue of $160.0 million in the first
quarter of 2024, a decrease of $1.1 million compared to the prior
year’s first quarter. The Group’s revenue was negatively impacted
by lower volumes in the food and pharmaceutical product line,
primarily due to market declines and modest customer destocking.
Segment operating income was $31.7 million in the first quarter of
2024, a decrease of $0.2 million compared to the prior year’s first
quarter results. The lower operating income is primarily a result
of the lower volumes in the food and pharmaceutical product lines,
partially offset by higher operating income in the personal care
product line.
The Asia Pacific Group reported revenue of $40.3 million in the
first quarter of 2024, an increase of $0.2 million compared to the
prior year’s first quarter. The Group’s revenue benefited from
higher volumes, partially offset by unfavorable exchange rates.
Segment operating income was $8.8 million in the quarter, a
decrease of $0.5 million compared to the prior year’s first
quarter. The lower operating income is primarily a result of higher
input costs and unfavorable exchange rates.
Corporate & Other reported operating expenses of $14.7
million in the first quarter of 2024, compared to $12.5 million of
operating expenses reported in the prior year’s first quarter. The
increase was primarily due to the Portfolio Optimization Plan costs
of $2.8 million recorded in the first quarter of 2024. Local
currency adjusted operating expenses(1) for Corporate & Other
decreased $0.6 million compared to the prior year’s first
quarter.
2024 OUTLOOK
Sensient continues to expect 2024 diluted earnings per share to
be between $2.80 and $2.90, which includes approximately 15 cents
of Portfolio Optimization Plan costs in 2024, compared to the
Company’s 2023 reported GAAP diluted earnings per share of
$2.21.
The Company now expects 2024 revenue and 2024 adjusted EBITDA(1)
to each grow at a mid-single-digit rate on a local currency basis
compared to the Company’s 2023 revenue and the Company’s 2023
adjusted EBITDA(1). The Company’s previous guidance called for 2024
revenue and 2024 adjusted EBITDA(1) to grow at a low to
mid-single-digit rate on a local currency basis. The Company
continues to expect 2024 adjusted diluted earnings per share(1) to
grow at a low to mid-single-digit rate on a local currency basis
compared to the Company’s 2023 adjusted diluted earnings per
share(1) of $2.86.
The Company continues to expect its 2024 diluted earnings per
share to be impacted by higher interest expense. The Company also
expects its full year 2024 adjusted tax rate to be between 24% and
25%.
The Company’s guidance is based on current conditions and
economic and market trends in the markets in which the Company
operates and is subject to various risks and uncertainties as
described below.
(1)
Please refer to “Reconciliation of
Non-GAAP Amounts” at the end of this release for more information
regarding our non-GAAP financial measures.
USE OF NON-GAAP FINANCIAL MEASURES
The Company’s non-GAAP financial measures eliminate the impact
of certain items, which, depending on the measure, include:
currency movements, depreciation and amortization, Portfolio
Optimization Plan costs, and non-cash share-based compensation.
These measures are provided to enhance the overall understanding of
the Company’s performance when viewed together with the GAAP
results. Refer to “Reconciliation of Non-GAAP Amounts” at the end
of this release.
CONFERENCE CALL
The Company will host a conference call to discuss its 2024
first quarter financial results at 8:30 a.m. CDT on Friday, April
26, 2024. To participate in the conference call, contact Chorus
Call Inc. at (844) 492-3726 or (412) 317-1078, and ask to join the
Sensient Technologies Corporation conference call. Alternatively,
the call can be accessed by using the webcast link that is
available on the Investor Information section of the Company’s web
site at www.sensient.com.
A replay of the call will be available one hour after the end of
the conference call through May 3, 2024, by calling (877) 344-7529
and using access code 3617541. 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 April 30, 2024.
This release contains statements that may constitute
“forward-looking statements” within the meaning of Federal
securities laws including under “2024 Outlook” above. Such
forward-looking statements are not guarantees of future performance
and involve known and unknown risks, uncertainties, and other
factors concerning the Company’s operations and business
environment. Important factors that could cause actual results to
differ materially from those suggested by these forward-looking
statements and that could adversely affect the Company’s future
financial performance include the following: the Company’s ability
to manage general business, economic, and capital market
conditions, including actions taken by customers in response to
such market conditions, and the impact of recessions and economic
downturns; the impact of macroeconomic and geopolitical volatility,
including inflation and shortages impacting the availability and
cost of raw materials, energy, and other supplies, disruptions and
delays in the Company’s supply chain, and the conflicts between
Russia and Ukraine and Israel and Hamas and other parties in the
Middle East; the availability and cost of labor, logistics, and
transportation; the pace and nature of new product introductions by
the Company and the Company’s customers; the Company’s ability to
anticipate and respond to changing consumer preferences and
changing technologies; the Company’s ability to successfully
implement its growth strategies; the outcome of the Company’s
various productivity-improvement and cost-reduction efforts,
acquisition and divestiture activities, and Portfolio Optimization
Plan; industry, regulatory, legal, and economic factors related to
the Company’s domestic and international business; the effects of
tariffs, trade barriers, and disputes; growth in markets for
products in which the Company competes; industry and customer
acceptance of price increases; actions by competitors; the
Company’s ability to enhance its innovation efforts and drive cost
efficiencies; currency exchange rate fluctuations; and other
factors included in “Risk Factors” in the Company's Annual Report
on Form 10-K for the year ended December 31, 2023, and in other
documents that the Company files with the SEC. The risks and
uncertainties identified above are not the only risks the Company
faces. Additional risks and uncertainties not presently known to
the Company or that it currently believes to be immaterial also may
adversely affect the Company. Should any known or unknown risks and
uncertainties develop into actual events, these developments could
have material adverse effects on our business, financial condition,
and results of operations. This release contains time-sensitive
information that reflects management’s best analysis only as of the
date of this release. Except to the extent required by applicable
laws, the Company does not undertake to publicly update or revise
its forward-looking statements even if experience or future changes
make it clear that any projected results expressed or implied
herein will not be realized.
ABOUT SENSIENT TECHNOLOGIES
Sensient Technologies Corporation is a leading global
manufacturer and marketer of colors, flavors, and other specialty
ingredients. Sensient uses advanced technologies and robust global
supply chain capabilities to develop specialized solutions for food
and beverages, as well as products that serve the pharmaceutical,
nutraceutical, and personal care industries. Sensient’s customers
range in size from small entrepreneurial businesses to major
international manufacturers representing some of the world’s
best-known brands. Sensient is headquartered in Milwaukee,
Wisconsin.
www.sensient.com
Sensient Technologies
Corporation
(In thousands, except percentages and per share amounts)
(Unaudited) Consolidated Statements of
Earnings Three Months Ended March 31,
2024
2023
% Change
Revenue
$
384,670
$
369,006
4.2
%
Cost of products sold
258,121
244,343
5.6
%
Selling and administrative expenses
77,143
73,825
4.5
%
Operating income
49,406
50,838
(2.8
%)
Interest expense
7,045
6,002
Earnings before income taxes
42,361
44,836
Income taxes
11,421
11,185
Net earnings
$
30,940
$
33,651
(8.1
%)
Earnings per share of common stock: Basic
$
0.73
$
0.80
Diluted
$
0.73
$
0.80
Average common shares outstanding: Basic
42,104
41,970
Diluted
42,305
42,255
Results by Segment Three Months
Ended March 31,
Revenue
2024
2023
% Change
Flavors & Extracts
$
193,092
$
178,852
8.0
%
Color
160,025
161,161
(0.7
%)
Asia Pacific
40,306
40,085
0.6
%
Intersegment elimination
(8,753
)
(11,092
)
Consolidated
$
384,670
$
369,006
4.2
%
Operating Income
Flavors & Extracts
$
23,678
$
22,180
6.8
%
Color
31,679
31,885
(0.6
%)
Asia Pacific
8,776
9,241
(5.0
%)
Corporate & Other
(14,727
)
(12,468
)
Consolidated
$
49,406
$
50,838
(2.8
%)
Sensient Technologies
Corporation
(In thousands) (Unaudited) Consolidated
Condensed Balance Sheets
March 31,
December 31,
2024
2023
Cash and cash equivalents
$
25,417
$
28,934
Trade accounts receivable
298,488
272,164
Inventories
568,547
598,399
Prepaid expenses and other current assets
50,391
37,119
Total Current Assets
942,843
936,616
Goodwill & intangible assets (net)
432,247
436,177
Property, plant, and equipment (net)
498,188
505,277
Other assets
132,404
136,437
Total Assets
$
2,005,682
$
2,014,507
Trade accounts payable
$
104,834
$
131,114
Short-term borrowings
19,439
13,460
Other current liabilities
94,586
91,732
Total Current Liabilities
218,859
236,306
Long-term debt
643,511
645,085
Accrued employee and retiree benefits
28,276
27,715
Other liabilities
51,100
52,077
Shareholders' Equity
1,063,936
1,053,324
Total Liabilities and Shareholders' Equity
$
2,005,682
$
2,014,507
Sensient Technologies
Corporation
(In thousands, except per share amounts) (Unaudited)
Consolidated Statements of Cash Flows Three Months
Ended March 31,
2024
2023
Cash flows from operating activities: Net earnings
$
30,940
$
33,651
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization
14,709
14,150
Share-based compensation expense
1,995
2,267
Net loss (gain) on assets
(193
)
8
Portfolio Optimization Plan costs
1,189
-
Deferred income taxes
(4
)
(2,351
)
Changes in operating assets and liabilities: Trade accounts
receivable
(28,331
)
(7,142
)
Inventories
26,624
(4,374
)
Prepaid expenses and other assets
(13,655
)
(2,062
)
Trade accounts payable and other accrued expenses
(21,993
)
(19,251
)
Accrued salaries, wages, and withholdings
29
(21,187
)
Income taxes
3,150
2,548
Other liabilities
674
698
Net cash provided by (used in) operating activities
15,134
(3,045
)
Cash flows from investing activities: Acquisition of
property, plant, and equipment
(11,030
)
(22,278
)
Proceeds from sale of assets
93
1
Other investing activities
(1
)
(602
)
Net cash used in investing activities
(10,938
)
(22,879
)
Cash flows from financing activities: Proceeds from
additional borrowings
38,053
50,827
Debt payments
(27,031
)
(1,351
)
Dividends paid
(17,312
)
(17,255
)
Other financing activities
(2,828
)
(7,669
)
Net cash (used in) provided by financing activities
(9,118
)
24,552
Effect of exchange rate changes on cash and cash equivalents
1,405
4,468
Net (decrease) increase in cash and cash equivalents
(3,517
)
3,096
Cash and cash equivalents at beginning of period
28,934
20,921
Cash and cash equivalents at end of period
$
25,417
$
24,017
Supplemental Information Three Months Ended
March 31,
2024
2023
Dividends paid per share
$
0.41
$
0.41
Sensient Technologies
Corporation
(In thousands, except percentages and per share amounts)
(Unaudited) Reconciliation of Non-GAAP Amounts
The Company's results for the three months ended March 31,
2024 and 2023 include adjusted operating income, adjusted net
earnings, and adjusted diluted earnings per share, which, in each
case, exclude Portfolio Optimization Plan costs.
Three Months Ended March
31,
2024
2023
% Change
Operating income (GAAP)
$
49,406
$
50,838
(2.8
%)
Portfolio Optimization Plan costs – Cost of products sold
107
-
Portfolio Optimization Plan costs – Selling and administrative
expenses
2,705
-
Adjusted operating income
$
52,218
$
50,838
2.7
%
Net earnings (GAAP)
$
30,940
$
33,651
(8.1
%)
Portfolio Optimization Plan costs, before tax
2,812
-
Tax impact of Portfolio Optimization Plan costs(1)
(355
)
-
Adjusted net earnings
$
33,397
$
33,651
(0.8
%)
Diluted earnings per share (GAAP)
$
0.73
$
0.80
(8.8
%)
Portfolio Optimization Plan costs, net of tax
0.06
-
Adjusted diluted earnings per share
$
0.79
$
0.80
(1.3
%)
Note: Earnings per share calculations may not foot due to rounding
differences. (1) Tax impact adjustments were determined based on
the nature of the underlying non-GAAP adjustments and their
relevant jurisdictional tax rates.
Results by Segment
Three Months Ended March
31,
Adjusted
Adjusted
Operating Income
2024
Adjustments(2)
2024
2023
Adjustments(2)
2023
Flavors & Extracts
$
23,678
$
-
$
23,678
$
22,180
$
-
$
22,180
Color
31,679
-
31,679
31,885
-
31,885
Asia Pacific
8,776
-
8,776
9,241
-
9,241
Corporate & Other
(14,727
)
2,812
(11,915
)
(12,468
)
-
(12,468
)
Consolidated
$
49,406
$
2,812
$
52,218
$
50,838
$
-
$
50,838
(2) Adjustments consist of Portfolio Optimization Plan costs.
The following table summarizes the
percentage change in the 2024 results compared to the 2023 results
for the corresponding periods.
Three Months Ended March 31, Revenue
Total
Foreign
Exchange
Rates
Adjustments(3)
Adjusted
Local
Currency
Flavors & Extracts
8.0
%
1.1
%
N/A
6.9
%
Color
(0.7
%)
1.0
%
N/A
(1.7
%)
Asia Pacific
0.6
%
(3.5
%)
N/A
4.1
%
Total Revenue
4.2
%
0.4
%
N/A
3.8
%
Operating Income Flavors & Extracts
6.8
%
0.5
%
0.0
%
6.3
%
Color
(0.6
%)
1.2
%
0.0
%
(1.8
%)
Asia Pacific
(5.0
%)
(4.4
%)
0.0
%
(0.6
%)
Corporate & Other
18.1
%
0.0
%
22.5
%
(4.4
%)
Total Operating Income
(2.8
%)
0.2
%
(5.6
%)
2.6
%
Diluted Earnings Per Share
(8.8
%)
0.0
%
(7.5
%)
(1.3
%)
Adjusted EBITDA
2.5
%
0.3
%
N/A
2.2
%
(3) Adjustments consist of Portfolio Optimization Plan costs.
Sensient Technologies Corporation
(In thousands, except percentages) (Unaudited)
Reconciliation of Non-GAAP Amounts - Continued The following
table summarizes the reconciliation between Operating Income (GAAP)
and Adjusted EBITDA for the three months ended March 31, 2024 and
2023.
Three Months Ended March
31,
2024
2023
% Change
Operating income (GAAP)
$
49,406
$
50,838
(2.8
%)
Depreciation and amortization
14,709
14,150
Share-based compensation expense
1,995
2,267
Portfolio Optimization Plan costs, before tax
2,812
-
Adjusted EBITDA
$
68,922
$
67,255
2.5
%
The following table summarizes the reconciliation between Debt
(GAAP) and Net Debt, and Operating Income (GAAP) and Credit
Adjusted EBITDA for the trailing twelve months ended March 31, 2024
and 2023.
March 31,
Debt
2024
2023
Short-term borrowings
$
19,439
$
24,849
Long-term debt
643,511
679,779
Credit Agreement adjustments(1)
(13,775
)
(11,525
)
Net Debt
$
649,175
$
693,103
Operating income (GAAP)
$
153,591
$
194,800
Depreciation and amortization
58,379
53,561
Share-based compensation expense
8,661
14,242
Portfolio Optimization Plan costs, before tax
30,653
-
Other non-operating gains(2)
(1,055
)
(3,359
)
Credit Adjusted EBITDA
$
250,229
$
259,244
Net Debt to Credit Adjusted EBITDA 2.6x 2.7x (1)
Adjustments include cash and cash equivalents, as described in the
Company's Third Amended and Restated Credit Agreement (Credit
Agreement), and certain letters of credit and hedge contracts. (2)
Adjustments consist of certain financing transaction costs, certain
non-financing interest items, and gains and losses related to
certain non-cash, non-operating, and/or non-recurring items as
described in the Credit Agreement.
The following table summarizes the reconciliation between
Diluted Earnings Per Share (GAAP) and Adjusted Diluted Earnings Per
Share for the twelve months ended December 31, 2023.
Twelve Months Ended December 31,
2023
Diluted earnings per share (GAAP)
$
2.21
Portfolio Optimization Plan costs, net of tax
0.65
Adjusted diluted earnings per share
$
2.86
Note: Earnings per share calculations may not foot due to
rounding differences.
We have included each of these non-GAAP measures in order to
provide additional information regarding our underlying operating
results and comparable period-over-period performance. Such
information is supplemental to information presented in accordance
with GAAP and is not intended to represent a presentation in
accordance with GAAP. These non-GAAP measures should not be
considered in isolation. Rather, they should be considered together
with GAAP measures and the rest of the information included in this
release and our SEC filings. Management internally reviews each of
these non-GAAP measures to evaluate performance on a comparative
period-to-period basis and to gain additional insight into
underlying operating and performance trends, and we believe the
information can be beneficial to investors for the same purposes.
These non-GAAP measures may not be comparable to similarly titled
measures used by other companies.
Category: Earnings
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version on businesswire.com: https://www.businesswire.com/news/home/20240425247743/en/
Amy Agallar (414) 347-3706 investor.relations@sensient.com
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