Sensient Technologies Corporation Reports Results for the Quarter Ended September 30, 2024

Business Wire

Fri, Oct 25, 2024, 4:50 AM 9 min read

Reported revenue increased 7.9% to $392.6 million in the third quarter of 2024 versus last year’s third quarter results of $363.8 million. On a local currency basis⁽¹⁾, revenue increased 8.6%.
Reported operating income increased 13.4% to $50.5 million compared to $44.5 million recorded in the third quarter of 2023. In the third quarter of 2024, the Company recorded $1.2 million of costs related to its Portfolio Optimization Plan. Local currency adjusted operating income⁽¹⁾ and local currency adjusted EBITDA⁽¹⁾ increased 17.1% and 12.8%, respectively, in the third quarter.
Reported diluted earnings per share increased 2.7% to 77 cents in the third quarter of 2024 compared to 75 cents in the third quarter of 2023. Local currency adjusted diluted EPS⁽¹⁾ increased 8.0% to 80 cents in the third quarter.

"I am pleased with our results this quarter and remain confident that our solid performance and volume growth will allow the Company to achieve our 2024 guidance," said Paul Manning, Sensient’s Chairman, President, and Chief Executive Officer.

Third Quarter Group Results

	Reported		Local Currency⁽¹⁾
Revenue	Quarter	Year-to-Date	Quarter	Year-to-Date
Flavors & Extracts	6.4%	8.5%	6.8%	8.3%
Color	11.8%	5.0%	13.0%	5.2%
Asia Pacific	13.6%	6.9%	13.4%	9.4%
Total Revenue	7.9%	6.7%	8.6%	6.9%

	Reported		Adjusted Local Currency⁽¹⁾
Operating Income	Quarter	Year-to-Date	Quarter	Year-to-Date
Flavors & Extracts	12.1%	8.7%	12.8%	8.8%
Color	30.0%	10.7%	30.9%	10.8%
Asia Pacific	15.0%	4.2%	15.3%	7.5%
Total Operating Income	13.4%	1.8%	17.1%	6.4%

The Flavors & Extracts Group reported third quarter 2024 revenue of $203.3 million, an increase of $12.3 million versus the prior year’s third quarter. Segment operating income was $25.9 million in the third quarter of 2024, an increase of $2.8 million compared to the prior year’s third quarter. The Group’s higher revenue and operating income were driven by higher volumes and pricing.

The Color Group reported revenue of $162.1 million in the third quarter of 2024, an increase of $17.1 million compared to the prior year’s third quarter. Segment operating income was $29.8 million in the third quarter of 2024, an increase of $6.9 million compared to the prior year’s third quarter results. The Group’s increased revenue and operating income were primarily a result of the higher volumes across all product lines and higher pricing.

The Asia Pacific Group reported revenue of $41.8 million in the third quarter of 2024, an increase of $5.0 million compared to the prior year’s third quarter. The Group benefited from higher revenues across nearly all geographies. Segment operating income was $9.3 million in the quarter, an increase of $1.2 million compared to the prior year’s third quarter. The higher operating income is primarily a result of higher volumes.

Corporate & Other reported operating expenses of $14.5 million in the third quarter of 2024, compared to $9.6 million of operating expenses reported in the prior year’s third quarter. In the third quarter of 2024, the Company recorded $1.2 million of Portfolio Optimization Plan costs in Corporate & Other. Local currency adjusted operating expenses⁽¹⁾ for Corporate & Other increased $3.7 million compared to the prior year’s third quarter, primarily due to the higher performance-based compensation costs recorded in the third quarter of 2024 compared to the low comparable amount recorded in the third quarter of 2023.

2024 Outlook



Metric	Updated Guidance	Prior Guidance

Local Currency Revenue⁽¹⁾	High Single-Digit Growth	Mid-to High Single-Digit Growth

Local Currency Adjusted EBITDA⁽¹⁾	High Single-Digit Growth	Mid-to High Single-Digit Growth

Diluted EPS (GAAP)	Between $2.77 and $2.87*	Between $2.77 and $2.87*

Local Currency Adjusted Diluted EPS⁽¹⁾	Mid-Single-Digit Growth	Mid-Single-Digit Growth

*Includes approximately 18 cents of Portfolio Optimization Plan costs.

This 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 third quarter financial results at 8:30 a.m. CDT today, Friday, October 25, 2024. Investors may access the live webcast, including presentation slides, on the Company’s web site at investor.sensient.com. Alternatively, investors may join the conference call by contacting Chorus Call Inc. at (844) 492-3726 or (412) 317-1078.

A webcast replay will be available on the Company’s web site following the call. The call transcript will be available on the Company’s web site on or after October 29, 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 September 30,								Nine Months Ended September 30,

	2024			2023			% Change		2024			2023			% Change

Revenue	$	392,613		$	363,829		7.9	%	$	1,180,808		$	1,107,148		6.7	%

Cost of products sold		262,209			250,202		4.8	%		793,133			746,681		6.2	%
Selling and administrative expenses		79,884			69,096		15.6	%		238,092			213,507		11.5	%

Operating income		50,520			44,531		13.4	%		149,583			146,960		1.8	%
Interest expense		7,696			6,294					22,394			18,648

Earnings before income taxes		42,824			38,237					127,189			128,312
Income taxes		10,134			6,694					32,627			29,085

Net earnings	$	32,690		$	31,543		3.6	%	$	94,562		$	99,227		(4.7	%)

Earnings per share of common stock:
Basic	$	0.78		$	0.75				$	2.24		$	2.36

Diluted	$	0.77		$	0.75				$	2.23		$	2.35

Average common shares outstanding:
Basic		42,159			42,045					42,139			42,020

Diluted		42,429			42,233					42,377			42,241



Results by Segment	Three Months Ended September 30,								Nine Months Ended September 30,

Revenue	2024			2023			% Change		2024			2023			% Change

Flavors & Extracts	$	203,279		$	190,997		6.4	%	$	605,584		$	558,133		8.5	%
Color		162,080			144,939		11.8	%		489,805			466,563		5.0	%
Asia Pacific		41,778			36,774		13.6	%		120,664			112,888		6.9	%
Intersegment elimination		(14,524	)		(8,881	)				(35,245	)		(30,436	)

Consolidated	$	392,613		$	363,829		7.9	%	$	1,180,808		$	1,107,148		6.7	%

Operating Income

Flavors & Extracts	$	25,862		$	23,078		12.1	%	$	75,749		$	69,714		8.7	%
Color		29,806			22,925		30.0	%		92,987			84,027		10.7	%
Asia Pacific		9,307			8,095		15.0	%		25,963			24,911		4.2	%
Corporate & Other		(14,455	)		(9,567	)				(45,116	)		(31,692	)

Consolidated	$	50,520		$	44,531		13.4	%	$	149,583		$	146,960		1.8	%

Sensient Technologies Corporation
(In thousands)
(Unaudited)

Consolidated Condensed Balance Sheets	September 30,		December 31,
	2024		2023

Cash and cash equivalents	$	36,969	$	28,934
Trade accounts receivable		302,012		272,164
Inventories		580,847		598,399
Prepaid expenses and other current assets		38,973		37,119
Total Current Assets		958,801		936,616

Goodwill & intangible assets (net)		438,220		436,177
Property, plant, and equipment (net)		494,619		505,277
Other assets		150,972		136,437

Total Assets	$	2,042,612	$	2,014,507

Trade accounts payable	$	119,238	$	131,114
Short-term borrowings		17,811		13,460
Other current liabilities		119,406		91,732
Total Current Liabilities		256,455		236,306

Long-term debt		625,627		645,085
Accrued employee and retiree benefits		26,130		27,715
Other liabilities		53,949		52,077
Shareholders' Equity		1,080,451		1,053,324

Total Liabilities and Shareholders' Equity	$	2,042,612	$	2,014,507

Sensient Technologies Corporation
(In thousands, except per share amounts)
(Unaudited)

Consolidated Statements of Cash Flows
Nine Months Ended September 30,
		2024			2023
Cash flows from operating activities:
Net earnings	$	94,562		$	99,227
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization		45,185			43,360
Share-based compensation expense		6,980			7,285
Net gain on assets		(210	)		(81	)
Portfolio Optimization Plan costs		1,406			-
Deferred income taxes		(11,117	)		2,082
Changes in operating assets and liabilities:
Trade accounts receivable		(32,138	)		18,830
Inventories		14,902			(21,455	)
Prepaid expenses and other assets		221			842
Trade accounts payable and other accrued expenses		(4,664	)		(20,572	)
Accrued salaries, wages, and withholdings		16,769			(16,749	)
Income taxes		854			(6,536	)
Other liabilities		3,011			587

Net cash provided by operating activities		135,761			106,820

Cash flows from investing activities:
Acquisition of property, plant, and equipment		(36,088	)		(67,718	)
Proceeds from sale of assets		338			130
Other investing activities		(1,444	)		2,036

Net cash used in investing activities		(37,194	)		(65,552	)

Cash flows from financing activities:
Proceeds from additional borrowings		134,432			197,577
Debt payments		(154,219	)		(174,083	)
Dividends paid		(52,034	)		(51,900	)
Other financing activities		(3,317	)		(8,034	)

Net cash used in financing activities		(75,138	)		(36,440	)

Effect of exchange rate changes on cash and cash equivalents		(15,394	)		6,236

Net increase in cash and cash equivalents		8,035			11,064
Cash and cash equivalents at beginning of period		28,934			20,921
Cash and cash equivalents at end of period	$	36,969		$	31,985

Supplemental Information
Nine Months Ended September 30,		2024			2023

Dividends paid per share	$	1.23		$	1.23

Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)
(Unaudited)

Reconciliation of Non-GAAP Amounts
The Company's results for the three and nine months ended September 30, 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 September 30,								Nine Months Ended September 30,
	2024			2023		% Change			2024			2023		% Change
Operating income (GAAP)	$	50,520		$	44,531		13.4	%	$	149,583		$	146,960		1.8	%
Portfolio Optimization Plan costs – Cost of products sold		209			-					523			-
Portfolio Optimization Plan costs – Selling and administrative expenses		1,002			-					5,252			-
Adjusted operating income	$	51,731		$	44,531		16.2	%	$	155,358		$	146,960		5.7	%

Net earnings (GAAP)	$	32,690		$	31,543		3.6	%	$	94,562		$	99,227		(4.7	%)
Portfolio Optimization Plan costs, before tax		1,211			-					5,775			-
Tax impact of Portfolio Optimization Plan costs⁽¹⁾		(17	)		-					(586	)		-
Adjusted net earnings	$	33,884		$	31,543		7.4	%	$	99,751		$	99,227		0.5	%

Diluted earnings per share (GAAP)	$	0.77		$	0.75		2.7	%	$	2.23		$	2.35		(5.1	%)
Portfolio Optimization Plan costs, net of tax		0.03			-					0.12			-
Adjusted diluted earnings per share	$	0.80		$	0.75		6.7	%	$	2.35		$	2.35		0.0	%

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 September 30,
						Adjusted								Adjusted
Operating Income	2024			Adjustments⁽²⁾		2024			2023			Adjustments⁽²⁾		2023

Flavors & Extracts	$	25,862		$	-	$	25,862		$	23,078		$	-	$	23,078
Color		29,806			-		29,806			22,925			-		22,925
Asia Pacific		9,307			-		9,307			8,095			-		8,095
Corporate & Other		(14,455	)		1,211		(13,244	)		(9,567	)		-		(9,567	)

Consolidated	$	50,520		$	1,211	$	51,731		$	44,531		$	-	$	44,531

Results by Segment	Nine Months Ended September 30,
						Adjusted								Adjusted
Operating Income	2024			Adjustments⁽²⁾		2024			2023			Adjustments⁽²⁾		2023

Flavors & Extracts	$	75,749		$	-	$	75,749		$	69,714		$	-	$	69,714
Color		92,987			-		92,987			84,027			-		84,027
Asia Pacific		25,963			-		25,963			24,911			-		24,911
Corporate & Other		(45,116	)		5,775		(39,341	)		(31,692	)		-		(31,692	)

Consolidated	$	149,583		$	5,775	$	155,358		$	146,960		$	-	$	146,960


⁽²⁾ 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 percentage change in the 2024 results compared to the 2023 results for the corresponding periods.

	Three Months Ended September 30, 2024
Revenue	Total		Foreign Exchange Rates		Adjustments⁽³⁾		Adjusted Local Currency
Flavors & Extracts	6.4	%	(0.4	%)	N/A		6.8	%
Color	11.8	%	(1.2	%)	N/A		13.0	%
Asia Pacific	13.6	%	0.2	%	N/A		13.4	%
Total Revenue	7.9	%	(0.7	%)	N/A		8.6	%

Operating Income
Flavors & Extracts	12.1	%	(0.7	%)	0.0	%	12.8	%
Color	30.0	%	(0.9	%)	0.0	%	30.9	%
Asia Pacific	15.0	%	(0.3	%)	0.0	%	15.3	%
Corporate & Other	51.1	%	0.1	%	12.6	%	38.4	%
Total Operating Income	13.4	%	(1.0	%)	(2.7	%)	17.1	%
Diluted Earnings Per Share	2.7	%	(1.3	%)	(4.0	%)	8.0	%
Adjusted EBITDA	12.0	%	(0.8	%)	N/A		12.8	%


	Nine Months Ended September 30, 2024
Revenue	Total		Foreign Exchange Rates		Adjustments⁽³⁾		Adjusted Local Currency
Flavors & Extracts	8.5	%	0.2	%	N/A		8.3	%
Color	5.0	%	(0.2	%)	N/A		5.2	%
Asia Pacific	6.9	%	(2.5	%)	N/A		9.4	%
Total Revenue	6.7	%	(0.2	%)	N/A		6.9	%

Operating Income
Flavors & Extracts	8.7	%	(0.1	%)	0.0	%	8.8	%
Color	10.7	%	(0.1	%)	0.0	%	10.8	%
Asia Pacific	4.2	%	(3.3	%)	0.0	%	7.5	%
Corporate & Other	42.4	%	0.1	%	18.2	%	24.1	%
Total Operating Income	1.8	%	(0.7	%)	(3.9	%)	6.4	%
Diluted Earnings Per Share	(5.1	%)	(0.8	%)	(5.2	%)	0.9	%
Adjusted EBITDA	5.0	%	(0.5	%)	N/A		5.5	%

⁽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 Consolidated Operating Income (GAAP) and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

	Three Months Ended September 30,								Nine Months Ended September 30,

	2024			2023			% Change		2024		2023		% Change
Operating income (GAAP)	$	50,520		$	44,531		13.4	%	$	149,583	$	146,960	1.8	%
Depreciation and amortization		15,460			14,770					45,185		43,360
Share-based compensation expense		2,069			2,519					6,980		7,285
Portfolio Optimization Plan costs, before tax		1,211			-					5,775		-
Adjusted EBITDA	$	69,260		$	61,820		12.0	%	$	207,523	$	197,605	5.0	%


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 September 30, 2024 and 2023.

	September 30,
Debt	2024			2023
Short-term borrowings	$	17,811		$	22,807
Long-term debt		625,627			648,556
Credit Agreement adjustments⁽⁴⁾		(22,633	)		(19,463	)
Net Debt	$	620,805		$	651,900

Operating income (GAAP)	$	157,646		$	188,185
Depreciation and amortization		59,645			56,565
Share-based compensation expense		8,628			10,947
Portfolio Optimization Plan costs, before tax		33,616			-
Other non-operating gains⁽⁵⁾		(998	)		(3,783	)
Credit Adjusted EBITDA	$	258,537		$	251,914

Net Debt to Credit Adjusted EBITDA	2.4x			2.6x

⁽⁴⁾ Adjustments include cash and cash equivalents, as described in the Company's Third Amended and Restated Credit Agreement (Credit Agreement), and certain letters of credit and hedge contracts.
⁽⁵⁾ Adjustments consist of certain financing transaction costs, certain non-financing interest items, and gains and losses related to certain non-cash, non-operating, and/or non-recurring items as described in the Credit Agreement.

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.