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IFF Reports Fourth Quarter and Full Year 2023 Results

International Flavors & Fragrances Inc. (NYSE: IFF) reported financial results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter 2023 Consolidated Summary:

Reported

(GAAP)

 

Adjusted

(Non-GAAP)1

Sales

 

Loss Before

Taxes

 

EPS

 

Operating

EBITDA

 

Operating

EBITDA Margin

 

EPS ex

Amortization

$2.7 B

 

$(2.6) B

 

$(10.21)

 

$461 M

 

17.1%

 

$0.72

Full Year 2023 Consolidated Summary:

Reported

(GAAP)

 

Adjusted

(Non-GAAP)1

Sales

 

Loss Before

Taxes

 

EPS

 

Operating

EBITDA

 

Operating

EBITDA Margin

 

EPS ex

Amortization

$11.5 B

 

$(2.5) B

 

$(10.05)

 

$2.0 B

 

17.2%

 

$3.34

Management Commentary

"I am thrilled to join IFF at such an important and dynamic time for the company and our industry," said IFF CEO Erik Fyrwald. "In the fourth quarter, IFF delivered solid results, including a sequential improvement in volume and double-digit adjusted operating EBITDA growth on a comparable currency neutral basis. In line with our commitment to strengthen our capital structure, we have updated our dividend policy to enable faster deleveraging and provide improved financial flexibility. As we look ahead, we recognize that the operating environment remains uncertain, yet we are cautiously optimistic that we can deliver improved financial results for our shareholders in 2024."

Fourth Quarter 2023 Consolidated Financial Results

  • Reported net sales for the fourth quarter were $2.70 billion, a decrease of 5% compared to the prior year period. On a comparable basis2, currency neutral sales1 increased 1% versus the prior year period, led by growth in Scent and Health & Biosciences. Volume performance continued to improve sequentially across nearly all businesses and pricing remained solid.
  • Loss before taxes on a reported basis for the fourth quarter was $2.64 billion, largely driven by a non-cash goodwill impairment charge of $2.6 billion. Adjusted operating EBITDA1 for the fourth quarter was $461 million. On a comparable basis2, currency neutral adjusted operating EBITDA1 increased 17% led by favorable net pricing and productivity gains.
  • Reported earnings (loss) per share (EPS) for the fourth quarter was $(10.21). Adjusted EPS excluding amortization1 was $0.72 per diluted share.

Fourth Quarter 2023 Segment Summary: Growth vs. Prior Year

 

Reported

(GAAP)

 

Adjusted

(Non-GAAP)1

 

Comparable

Currency Neutral

(Non-GAAP)1 2

 

Comparable

Currency Neutral

Adjusted

(Non-GAAP)1 2

 

Sales

 

Operating

EBITDA

 

Sales

 

Operating EBITDA

Nourish

(12)%

 

(15)%

 

(3)%

 

3%

Health & Biosciences

5%

 

34%

 

5%

 

35%

Scent

6%

 

14%

 

11%

 

34%

Pharma Solutions

(8)%

 

(13)%

 

(10)%

 

(13)%

Nourish Segment

  • On a reported basis, sales were $1.39 billion. On a comparable basis2, currency neutral sales1 decreased 3%, as strong growth in Flavors was primarily offset by softness in Functional Ingredients. Functional Ingredients improved sequentially, yet declined low double-digits against the year ago period.
  • Nourish adjusted operating EBITDA1 was $165 million and adjusted operating EBITDA margin1 was 11.8% in the fourth quarter. On a comparable basis2, currency neutral adjusted operating EBITDA1 grew 3% led by price increases and productivity gains.

Health & Biosciences Segment

  • On a reported basis, sales were $528 million. On a comparable basis2, currency neutral sales1 increased 5% with growth in nearly all businesses led by a double-digit performance in Health.
  • Health & Biosciences adjusted operating EBITDA1 was $162 million and adjusted operating EBITDA margin1 was 30.7% in the fourth quarter. On a comparable basis2, currency neutral adjusted operating EBITDA1 grew 35% led by volume growth, price increases and productivity gains.

Scent Segment

  • On a reported basis, sales were $578 million. On a comparable basis2, currency neutral sales1 improved 11% led by double-digit growth in Consumer Fragrance and a mid-single digit increase in Fine Fragrance.
  • Scent adjusted operating EBITDA1 was $108 million and adjusted operating EBITDA margin1 was 18.7% in the fourth quarter. On a comparable basis2, currency neutral adjusted operating EBITDA1 grew 34% led by volume growth, price increases and productivity gains.

Pharma Solutions Segment

  • On a reported basis, sales were $203 million. On a comparable basis2, currency neutral sales1 decreased 10% primarily due to a strong mid-teen year ago comparison and temporary customer destocking.
  • Pharma Solutions adjusted operating EBITDA1 was $26 million and adjusted operating EBITDA margin1 was 12.8% in the fourth quarter. On a comparable basis2, currency neutral adjusted operating EBITDA1 declined 13% as pricing and productivity gains were more than offset by lower volumes.

Full Year 2023 Consolidated Financial Results

  • Reported net sales for the full year were $11.48 billion, a decrease of 8% compared to the prior year period. On a comparable basis2, currency neutral sales1 decreased 1%, as strong growth in Scent and resiliency in Health & Biosciences was offset by softness in Nourish and Pharma Solutions.
  • Loss before taxes on a reported basis for the full year was $2.52 billion, largely driven by a non-cash goodwill impairment charge of $2.6 billion. Adjusted operating EBITDA1 for the full year was $1.98 billion. On a comparable basis2, currency neutral adjusted operating EBITDA1 decreased 10%, as strong pricing and productivity gains were more than offset primarily by lower volumes, including unfavorable manufacturing absorption related to the Company's inventory reduction program.
  • Reported earnings (loss) per share (EPS) for the full year was $(10.05). Adjusted EPS excluding amortization1 was $3.34 per diluted share.
  • Cash flow from operations for the full year was $1.44 billion, and free cash flow1 defined as cash flow from operations less capital expenditures totaled $936 million. Total debt to trailing twelve months net loss at the end of the fourth quarter was (3.9)x. Net debt to credit-adjusted EBITDA1 at the end of the fourth quarter was 4.5x.

Full Year 2023 Segment Summary: Growth vs. Prior Year

 

Reported

(GAAP)

 

Adjusted

(Non-GAAP)1

 

Comparable

Currency Neutral

(Non-GAAP)1 2

 

Comparable

Currency Neutral

Adjusted

(Non-GAAP)1 2

 

Sales

 

Operating

EBITDA

 

Sales

 

Operating EBITDA

Nourish

(11)%

 

(38)%

 

(5)%

 

(27)%

Health & Biosciences

(11)%

 

(7)%

 

0%

 

2%

Scent

4%

 

9%

 

8%

 

22%

Pharma Solutions

(3)%

 

(10)%

 

(3)%

 

(10)%

Nourish Segment

  • On a reported basis, sales were $6.06 billion. On a comparable basis2, currency neutral sales1 decreased 5% as growth in Flavors and Food Design was offset by volume pressures in Functional Ingredients.
  • Nourish adjusted operating EBITDA1 was $732 million and adjusted operating EBITDA margin1 was 12.1% for the full year. On a comparable basis2, currency neutral adjusted operating EBITDA1 declined 27% as price increases and productivity gains were more than offset by lower volumes, unfavorable manufacturing absorption related to the Company's inventory reduction program and a write-down of inventory related to Locust Bean Kernel (LBK).

Health & Biosciences Segment

  • On a reported basis, sales were $2.08 billion. On a comparable basis2, currency neutral sales1 was flat led by growth in Cultures & Food Enzymes, Home & Personal Care and Grain Processing offset by softness in Health and Animal Nutrition.
  • Health & Biosciences adjusted operating EBITDA1 was $588 million and adjusted operating EBITDA margin1 was 28.3% for the full year. On a comparable basis2, currency neutral adjusted operating EBITDA1 grew 2% led by price increases and productivity gains.

Scent Segment

  • On a reported basis, sales were $2.39 billion. On a comparable basis2, currency neutral sales1 improved 8% led by double-digit growth in both Fine Fragrance and Consumer Fragrance.
  • Scent adjusted operating EBITDA1 was $461 million and adjusted operating EBITDA margin1 was 19.3% for the full year. On a comparable basis2, currency neutral adjusted operating EBITDA1 grew 22% led by volume growth, price increases and productivity gains.

Pharma Solutions Segment

  • On a reported basis, sales were $945 million. On a comparable basis2, currency neutral sales1 decreased 3% as resiliency in Core Pharma was offset by softness in Industrial.
  • Pharma Solutions adjusted operating EBITDA1 was $199 million and adjusted operating EBITDA margin1 was 21.1% for the full year. On a comparable basis2, currency neutral adjusted operating EBITDA1 declined 10% as price increases and productivity gains were more than offset primarily by lower volumes.

2024 Financial Guidance

Full year 2024 sales are expected to be in the range of $10.8 billion to $11.1 billion and full year 2024 adjusted operating EBITDA to be in the range of $1.9 billion to $2.1 billion. In light of the continued macroeconomic uncertainty, the Company expects volume to be 0% to 3%, with improved trends across the majority of the portfolio. Pricing is expected to decline approximately 2.5%, principally driven by reductions in Functional Ingredients and Fragrance Ingredients, given lower input costs and competitive dynamics. Comparable currency neutral adjusted operating EBITDA is expected to grow at a faster rate than sales, growing 3% to 11% driven by improving volumes and productivity gains.

Based on current market foreign exchange rates, the Company expects that foreign exchange will have a 0% to 1% adverse impact to sales growth and an approximately 2% to 3% adverse impact to adjusted operating EBITDA growth in 2024.

The Company cannot reconcile its expected adjusted operating EBITDA 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 acquisition, divestiture and integration related costs, gains (losses) on business disposals, and regulatory costs.

Dividend Policy Update

The Company announced today that its Board of Directors, together with the management team, updated the company’s dividend policy, reducing the expected quarterly dividend approximately 50% to $0.40 per share (implying $1.60 per share annually). With this announcement, the Board of Directors has declared a regular quarterly cash dividend of $0.40 per share of its common stock, payable on April 10, 2024 to shareholders of record as of March 22, 2024.

The Company is right-sizing the dividend to enable faster deleveraging of the balance sheet and provide improved financial flexibility. IFF’s dividend is an important part of its capital allocation framework, and the Company is committed to providing a competitive yield.

Impairment of Goodwill

The Company has determined that for the fourth quarter of 2023 the carrying value of the Nourish reporting unit exceeded its fair value and recorded a non-cash goodwill impairment charge of $2.6 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and twelve months ended December 31, 2023. The primary drivers of the goodwill impairment are related to increases in interest rates and lower business projections due to volume declines mainly in Functional Ingredients, continued cost inflation, and unfavorable foreign exchange rate fluctuations.

A copy of the Company’s Annual Report on Form 10-K will be available on its website at www.iff.com or at www.sec.gov by February 29, 2024.

Audio Webcast

A live webcast to discuss the Company’s fourth quarter and full year 2023 financial results will be held on February 21, 2024, 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 expected impact of global supply chain challenges; expectations regarding sales and profit for the fiscal year 2024, including the impact of foreign exchange, pricing actions, raw materials, energy 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 high input costs, including commodities, raw materials, transportation and energy; our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; expectations regarding the implementation of our refreshed growth-focused strategy; expectations around our business divestitures and the progress of our portfolio optimization strategy (including the sale process for our Cosmetic Ingredients business), through non-core business divestitures and acquisitions; our combination with N&B, including the expected benefits and synergies of the N&B Transaction and future opportunities for the combined company, 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 impact of global economic uncertainty or recessionary pressures on demand for consumer products; the growth potential of the markets in which we operate, including the emerging markets; expected capital expenditures in 2024; 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; our ability to innovate and execute on specific consumer trends and demands; our ability to enhance our innovation efforts and drive cost efficiencies; 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, including in the price of our input costs, such as raw materials, transportation and energy; (2) supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war, or climate change related events (including severe weather events) that may affect our suppliers or procurement of raw materials; (3) our ability to successfully execute the next phase of our strategic transformation; (4) risks related to the integration of the N&B business, including whether we will realize the benefits anticipated from the merger in the expected time frame; (5) our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to our shareholders; (6) our ability to enter into or close strategic transactions or divestments or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships; (7) our ability to successfully market to our expanded and diverse customer base; (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) the impact of global health crises on our supply chains, global operations, our customers and our suppliers; (13) disruption in the development, manufacture, distribution or sale of our products from natural disasters, public health crises, international conflicts (such as the Russia-Ukraine war and the Israel-Hamas war), terrorist acts, labor strikes, political or economic crises (such as the uncertainty related to protracted U.S. federal debt ceiling negotiations), accidents and similar events; (14) volatility and increases in the price of raw materials, energy and transportation; (15) 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; (16) 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; (17) our ability to meet increasing customer, consumer, shareholder and regulatory focus on sustainability; (18) defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities; (19) 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; (20) our ability to benefit from our investments and expansion in emerging markets; (21) the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate; (22) economic, regulatory and political risks associated with our international operations; (23) the impact of global economic uncertainty (including increased inflation) on demand for consumer products; (24) our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; (25) our ability to successfully manage our working capital and inventory balances; (26) the impact of our or our counterparties’ failure to comply with the U.S. Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; (27) any impairment on our tangible or intangible long lived assets, including goodwill associated with the N&B merger and the acquisition of Frutarom; (28) our ability to protect our intellectual property rights; (29) the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation, related to intellectual property, product liability, competition and antitrust, environmental matters, indirect taxes or other matters; (30) changes in market conditions or governmental regulations relating to our pension and postretirement obligations; (31) 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; (32) the impact of the United Kingdom’s departure from the European Union; (33) the impact of the phase out of the London Interbank Offered Rate (LIBOR) on interest expense; and (34) the impact of any tax liability resulting from the N&B Transaction; and (35) our ability to comply with data protection laws in the U.S. and abroad.

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 27, 2023 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 operating 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 (expense) income, net, and certain non-recurring or unusual items that are not part of recurring operations such as, restructuring and other charges, impairment of goodwill, impairment of long-lived assets, acquisition, divestiture, and integration related costs, strategic initiatives costs, regulatory costs, impact of business divestitures, impact of business acquisitions and other items.

Adjusted EPS ex Amortization excludes the impact of non-operational items including, restructuring and other charges, impairment of goodwill, impairment of long-lived assets, acquisition, divestiture, and integration related costs, losses (gains) on business disposals, gain on China facility relocation, strategic initiatives costs, regulatory costs, and other items that are not a part of recurring operations.

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 agreements and defined as net debt (which is debt for borrowed money less cash and cash equivalents) divided by the trailing 12-month credit adjusted EBITDA. Credit adjusted EBITDA is defined as income (loss) before interest expense, income taxes, depreciation and amortization, specified items and non-cash items.

Comparable results for the fourth quarter and full year exclude the impact of divestitures and acquisitions.

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 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 acquisition, divestiture and integration related costs, gains (losses) on business disposals, and regulatory costs.

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.

_______________________

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 fourth quarter and full year 2023 exclude the impact of divestitures and acquisitions.

 

International Flavors & Fragrances Inc.

Consolidated Statements of Loss

(Amounts in millions except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

%

Change

 

 

2023

 

 

 

2022

 

 

%

Change

Net sales

$

2,703

 

 

$

2,844

 

 

(5

)%

 

$

11,479

 

 

$

12,440

 

 

(8

)%

Cost of goods sold

 

1,843

 

 

 

1,975

 

 

(7

)%

 

 

7,798

 

 

 

8,289

 

 

(6

)%

Gross profit

 

860

 

 

 

869

 

 

(1

)%

 

 

3,681

 

 

 

4,151

 

 

(11

)%

Research and development expenses

 

157

 

 

 

143

 

 

10

%

 

 

636

 

 

 

603

 

 

5

%

Selling and administrative expenses

 

444

 

 

 

440

 

 

1

%

 

 

1,787

 

 

 

1,768

 

 

1

%

Restructuring and other charges

 

7

 

 

 

7

 

 

%

 

 

68

 

 

 

12

 

 

NMF

Amortization of acquisition-related intangibles

 

167

 

 

 

175

 

 

(5

)%

 

 

680

 

 

 

727

 

 

(6

)%

Impairment of goodwill

 

2,623

 

 

 

 

 

NMF

 

 

2,623

 

 

 

2,250

 

 

17

%

Impairment of long-lived assets

 

 

 

 

 

 

NMF

 

 

 

 

 

120

 

 

(100

)%

Gains on sale of assets

 

(2

)

 

 

(1

)

 

100

%

 

 

(3

)

 

 

(3

)

 

%

Operating (loss) profit

 

(2,536

)

 

 

105

 

 

NMF

 

 

(2,110

)

 

 

(1,326

)

 

59

%

Interest expense

 

43

 

 

 

104

 

 

(59

)%

 

 

380

 

 

 

336

 

 

13

%

Other expense (income), net

 

62

 

 

 

6

 

 

NMF

 

 

28

 

 

 

(37

)

 

(176

)%

Loss before taxes

 

(2,641

)

 

 

(5

)

 

NMF

 

 

(2,518

)

 

 

(1,625

)

 

55

%

(Benefit from) provision for income taxes

 

(32

)

 

 

19

 

 

(268

)%

 

 

45

 

 

 

239

 

 

(81

)%

Net loss

 

(2,609

)

 

 

(24

)

 

NMF

 

 

(2,563

)

 

 

(1,864

)

 

38

%

Net income attributable to non-controlling interest

 

1

 

 

 

1

 

 

%

 

 

4

 

 

 

7

 

 

(43

)%

Net loss attributable to IFF shareholders

$

(2,610

)

 

$

(25

)

 

NMF

 

$

(2,567

)

 

$

(1,871

)

 

37

%

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic(1)

$

(10.21

)

 

$

(0.10

)

 

 

 

$

(10.05

)

 

$

(7.32

)

 

 

Net loss per share - diluted(1)

$

(10.21

)

 

$

(0.10

)

 

 

 

$

(10.05

)

 

$

(7.32

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of shares outstanding - basic

 

255

 

 

 

255

 

 

 

 

 

255

 

 

 

255

 

 

 

Average number of shares outstanding - diluted

 

255

 

 

 

255

 

 

 

 

 

255

 

 

 

255

 

 

 

(1)

Net loss per share reflects adjustments related to the redemption value of certain redeemable non-controlling interests.

NMF

Not meaningful

 

International Flavors & Fragrances Inc.

Condensed Consolidated Balance Sheets

(Amounts in millions)

(Unaudited)

 

 

December 31,

 

 

2023

 

 

2022

Cash, cash equivalents and restricted cash

$

709

 

$

493

Receivables, net

 

1,726

 

 

1,818

Inventories

 

2,477

 

 

3,151

Other current assets

 

1,381

 

 

1,970

Total current assets

 

6,293

 

 

7,432

 

 

 

 

Property, plant and equipment, net

 

4,240

 

 

4,203

Goodwill and other intangibles, net

 

18,992

 

 

22,455

Other assets

 

1,453

 

 

1,432

Total assets

$

30,978

 

$

35,522

 

 

 

 

Short-term borrowings

$

885

 

$

597

Other current liabilities

 

2,873

 

 

3,131

Total current liabilities

 

3,758

 

 

3,728

 

 

 

 

Long-term debt

 

9,186

 

 

10,373

Non-current liabilities

 

3,392

 

 

3,677

 

 

 

 

Redeemable non-controlling interests

 

 

 

59

 

 

 

 

Shareholders' equity

 

14,642

 

 

17,685

Total liabilities and shareholders' equity

$

30,978

 

$

35,522

 

International Flavors & Fragrances Inc.

Consolidated Statements of Cash Flows

(Amounts in millions)

(Unaudited)

 

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net loss

$

(2,563

)

 

$

(1,864

)

Adjustments to reconcile to net cash provided by operations:

 

 

 

Depreciation and amortization

 

1,142

 

 

 

1,179

 

Deferred income taxes

 

(369

)

 

 

(237

)

Gains on sale of assets

 

(3

)

 

 

(3

)

Losses (gains) on business divestitures

 

23

 

 

 

(11

)

Stock-based compensation

 

65

 

 

 

49

 

Pension contributions

 

(36

)

 

 

(36

)

Impairment of goodwill

 

2,623

 

 

 

2,250

 

Impairment of long-lived assets

 

 

 

 

120

 

Inventory write-down

 

72

 

 

 

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

Trade receivables

 

51

 

 

 

(117

)

Inventories

 

605

 

 

 

(893

)

Accounts payable

 

(39

)

 

 

(57

)

Accruals for incentive compensation

 

(2

)

 

 

(34

)

Other current payables and accrued expenses

 

19

 

 

 

92

 

Other assets/liabilities, net

 

(149

)

 

 

(41

)

Net cash provided by operating activities

 

1,439

 

 

 

397

 

Cash flows from investing activities:

 

 

 

Cash paid for acquisitions, net of cash received

 

 

 

 

(110

)

Additions to property, plant and equipment

 

(503

)

 

 

(504

)

Additions to intangible assets

 

 

 

 

(2

)

Proceeds from disposal of assets

 

27

 

 

 

8

 

Proceeds from unwinding of derivative instruments

 

 

 

 

173

 

Cash provided by the Merger with N&B

 

 

 

 

11

 

Net proceeds received from business divestitures

 

1,050

 

 

 

1,169

 

Net cash provided by investing activities

 

574

 

 

 

745

 

Cash flows from financing activities:

 

 

 

Cash dividends paid to shareholders

 

(826

)

 

 

(810

)

Dividends paid to redeemable non-controlling interests

 

(13

)

 

 

 

(Decrease) increase in revolving credit facility and short term borrowings

 

(99

)

 

 

104

 

Proceeds from issuance of commercial paper (maturities after three months)

 

 

 

 

225

 

Repayments of commercial paper (maturities after three months)

 

 

 

 

(421

)

Net (repayments) borrowings of commercial paper (maturities less than three months)

 

(187

)

 

 

48

 

Deferred financing costs

 

(5

)

 

 

 

Repayments of long-term debt

 

(655

)

 

 

(300

)

Purchases of redeemable non-controlling interests

 

(39

)

 

 

(47

)

Deferred consideration paid

 

(6

)

 

 

 

Employee withholding taxes paid

 

(13

)

 

 

(21

)

Other, net

 

(8

)

 

 

(7

)

Net cash used in financing activities

 

(1,851

)

 

 

(1,229

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

21

 

 

 

(77

)

Net change in cash, cash equivalents and restricted cash

 

183

 

 

 

(164

)

Cash, cash equivalents and restricted cash at beginning of year

 

552

 

 

 

716

 

Cash, cash equivalents and restricted cash at end of year

$

735

 

 

$

552

 

The following table reconciles cash, cash equivalents and restricted cash between the Company's balance sheets as of December 31, 2023 and 2022 to the amounts reported on the Company's statement of cash flows for the periods ended December 31, 2023 and 2022.

AMOUNTS IN MILLIONS

December 31, 2023

 

December 31, 2022

 

December 31, 2021

Current assets

 

 

 

 

 

Cash and cash equivalents

$

703

 

$

483

 

$

711

Cash and cash equivalents included in Assets held for sale

 

26

 

 

52

 

 

Restricted cash

 

6

 

 

10

 

 

4

Non-current assets

 

 

 

 

 

Restricted cash included in Other assets

 

 

 

7

 

 

1

Cash, cash equivalents and restricted cash

$

735

 

$

552

 

$

716

 

International Flavors & Fragrances Inc.

Reportable Segment Performance

(Amounts in millions)

(Unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net Sales

 

 

 

 

 

 

 

Nourish

$

1,394

 

 

$

1,577

 

 

$

6,060

 

 

$

6,829

 

Health & Biosciences

 

528

 

 

 

501

 

 

 

2,081

 

 

 

2,339

 

Scent

 

578

 

 

 

545

 

 

 

2,393

 

 

 

2,301

 

Pharma Solutions

 

203

 

 

 

221

 

 

 

945

 

 

 

971

 

Consolidated

$

2,703

 

 

$

2,844

 

 

$

11,479

 

 

$

12,440

 

 

 

 

 

 

 

 

 

Segment Adjusted Operating EBITDA

 

 

 

 

 

 

 

Nourish

$

165

 

 

$

195

 

 

$

732

 

 

$

1,176

 

Health & Biosciences

 

162

 

 

 

121

 

 

 

588

 

 

 

634

 

Scent

 

108

 

 

 

95

 

 

 

461

 

 

 

423

 

Pharma Solutions

 

26

 

 

 

30

 

 

 

199

 

 

 

222

 

Total

 

461

 

 

 

441

 

 

 

1,980

 

 

 

2,455

 

Depreciation & Amortization

 

(287

)

 

 

(282

)

 

 

(1,142

)

 

 

(1,179

)

Interest Expense

 

(43

)

 

 

(104

)

 

 

(380

)

 

 

(336

)

Other (Expense) Income, net

 

(62

)

 

 

(6

)

 

 

(28

)

 

 

37

 

Restructuring and Other Charges

 

(7

)

 

 

(7

)

 

 

(68

)

 

 

(12

)

Impairment of Goodwill

 

(2,623

)

 

 

 

 

 

(2,623

)

 

 

(2,250

)

Impairment of Long-Lived Assets

 

 

 

 

 

 

 

 

 

 

(120

)

Acquisition, Divestiture and Integration Related Costs

 

(56

)

 

 

(34

)

 

 

(174

)

 

 

(201

)

Strategic Initiatives Costs

 

(3

)

 

 

(7

)

 

 

(31

)

 

 

(8

)

Regulatory Costs

 

(18

)

 

 

 

 

 

(50

)

 

 

 

Other

 

(3

)

 

 

(6

)

 

 

(2

)

 

 

(11

)

Loss Before Taxes

$

(2,641

)

 

$

(5

)

 

$

(2,518

)

 

$

(1,625

)

 

 

 

 

 

 

 

 

Segment Adjusted Operating EBITDA Margin

 

 

 

 

 

 

 

Nourish

 

11.8

%

 

 

12.4

%

 

 

12.1

%

 

 

17.2

%

Health & Biosciences

 

30.7

%

 

 

24.2

%

 

 

28.3

%

 

 

27.1

%

Scent

 

18.7

%

 

 

17.4

%

 

 

19.3

%

 

 

18.4

%

Pharma Solutions

 

12.8

%

 

 

13.6

%

 

 

21.1

%

 

 

22.9

%

Consolidated

 

17.1

%

 

 

15.5

%

 

 

17.2

%

 

 

19.7

%

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

 

Fourth Quarter

(DOLLARS IN MILLIONS)

 

2023

 

 

2022

Reported (GAAP)

$

860

 

$

869

Adjusted (Non-GAAP)

$

860

 

$

869

Reconciliation of Selling and Administrative Expenses

 

Fourth Quarter

(DOLLARS IN MILLIONS)

 

2023

 

 

 

2022

 

Reported (GAAP)

$

444

 

 

$

440

 

Acquisition, Divestiture and Integration Related Costs (c)

 

(56

)

 

 

(34

)

Strategic Initiatives Costs (e)

 

(3

)

 

 

(7

)

Regulatory Costs (f)

 

(18

)

 

 

 

Other (g)

 

(5

)

 

 

(7

)

Adjusted (Non-GAAP)

$

362

 

 

$

392

 

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 (Loss) Income and EPS

 

Fourth Quarter

 

2023

 

2022

(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

(Loss)

income

before

taxes

 

Benefit

from

income

taxes (i)

 

Net (loss)

income

attributable

to IFF (j)

 

Diluted

EPS (k)

 

(Loss)

income

before

taxes

 

Provision

for (benefit

from)

income

taxes (i)

 

Net (loss)

income

attributable

to IFF (j)

 

Diluted

EPS (k)

Reported (GAAP)

$

(2,641

)

 

$

(32

)

 

$

(2,610

)

 

$

(10.21

)

 

$

(5

)

 

$

19

 

 

$

(25

)

 

$

(0.10

)

Restructuring and Other Charges (a)

 

7

 

 

 

2

 

 

 

5

 

 

 

0.02

 

 

 

7

 

 

 

1

 

 

 

6

 

 

 

0.02

 

Impairment of Goodwill (b)

 

2,623

 

 

 

38

 

 

 

2,585

 

 

 

10.11

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition, Divestiture and Integration Related Costs (c)

 

56

 

 

 

(20

)

 

 

76

 

 

 

0.30

 

 

 

34

 

 

 

(63

)

 

 

97

 

 

 

0.39

 

Losses (Gains) on Business Disposals (d)

 

(6

)

 

 

9

 

 

 

(15

)

 

 

(0.06

)

 

 

3

 

 

 

14

 

 

 

(11

)

 

 

(0.04

)

Strategic Initiatives Costs (e)

 

3

 

 

 

 

 

 

3

 

 

 

0.01

 

 

 

7

 

 

 

2

 

 

 

5

 

 

 

0.02

 

Regulatory Costs (f)

 

18

 

 

 

4

 

 

 

14

 

 

 

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (g)

 

(4

)

 

 

(2

)

 

 

(2

)

 

 

(0.01

)

 

 

6

 

 

 

 

 

 

6

 

 

 

0.03

 

Redemption value adjustment to EPS (h)

 

 

 

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted (Non-GAAP)

$

56

 

 

$

(1

)

 

$

56

 

 

$

0.22

 

 

$

52

 

 

$

(27

)

 

$

78

 

 

$

0.31

 

Reconciliation of Adjusted (Non-GAAP) EPS ex. Amortization

 

Fourth Quarter

(DOLLARS AND SHARE AMOUNTS IN MILLIONS)

 

2023

 

 

2022

Numerator

 

 

 

Adjusted (Non-GAAP) Net Income

$

56

 

$

78

Amortization of Acquisition related Intangible Assets

 

167

 

 

175

Tax impact on Amortization of Acquisition related Intangible Assets (i)

 

38

 

 

40

Amortization of Acquisition related Intangible Assets, net of tax (l)

 

129

 

 

135

Adjusted (Non-GAAP) Net Income ex. Amortization

$

185

 

$

213

 

 

 

 

Denominator

 

 

 

Weighted average shares assuming dilution (diluted)

 

256

 

 

255

Adjusted (Non-GAAP) EPS ex. Amortization

$

0.72

 

$

0.83

(a)

For 2023 and 2022, represents costs primarily related to severance as part of the Company's restructuring efforts.

(b)

Represents costs related to the impairment of goodwill in the Nourish reporting unit.

(c)

For 2023 and 2022, primarily represents costs related to the Company's actual and planned acquisitions and divestitures and integration related activities primarily for N&B. These costs primarily consisted of external consulting fees, professional and legal fees and salaries of individuals who are fully dedicated to such efforts. For 2023, acquisition costs primarily relate to earn-out adjustments. For 2022, acquisition costs primarily relate to consulting fees, legal fees and earn-out adjustments. Tax expenses for business divestiture costs included establishments of deferred tax liabilities related to planned sales of businesses.

 

For the three months ended December 31, 2023, business divestiture, integration and acquisition related costs were approximately $38 million, $17 million and $1 million, respectively. For the three months ended December 31, 2022, business divestiture, integration and acquisition related costs were approximately $19 million, $21 million and a credit of $6 million, respectively.

(d)

For 2023, primarily represents the impact of adjustments to the loss recognized related to the divestiture of the portion of the Savory Solutions business based on final settlement with the buyer. For 2022, represents adjustments to the gain recognized related to the divestiture of the Microbial Control business unit.

(e)

Represents costs related to the Company's strategic assessment and business portfolio optimization efforts and reorganizing the Global Shared Services Centers, primarily consulting fees.

(f)

Represents costs primarily related to legal fees incurred for the ongoing investigations of the fragrance businesses.

(g)

For 2023, represents gains from sale of assets, costs related to severance, including accelerated stock compensation expense, for a certain executive who will separate from the Company in 2024 and pension settlement credits recognized for various pension plans of the Company. For 2022, represents gains from sale of assets and costs related to severance, including accelerated stock compensation expense, for certain employees and executives who have been separated from the Company in 2022.

(h)

Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable non-controlling interests over their existing carrying value.

(i)

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.

(j)

For 2023 and 2022, reported net loss is increased by income attributable to non-controlling interest of $1 million, and adjusted net income is decreased by income attributable to non-controlling interest of $1 million.

(k)

The sum of these items does not foot due to rounding.

(l)

Represents all amortization of intangible assets acquired in connection with acquisitions, net of tax.

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

 

Year Ended December 31,

(DOLLARS IN MILLIONS)

2023

 

2022

Reported (GAAP)

$

3,681

 

$

4,151

Acquisition, Divestiture and Integration Related Costs (d)

 

 

 

2

Adjusted (Non-GAAP)

$

3,681

 

$

4,153

Reconciliation of Selling and Administrative Expenses

 

Year Ended December 31,

(DOLLARS IN MILLIONS)

 

2023

 

 

 

2022

 

Reported (GAAP)

$

1,787

 

 

$

1,768

 

Acquisition, Divestiture and Integration Related Costs (d)

 

(174

)

 

 

(199

)

Strategic Initiatives Costs (g)

 

(31

)

 

 

(8

)

Regulatory Costs (h)

 

(50

)

 

 

 

Other (i)

 

(5

)

 

 

(14

)

Adjusted (Non-GAAP)

$

1,527

 

 

$

1,547

 

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 (Loss) Income and EPS

 

Year Ended December 31,

 

2023

 

2022

(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

(Loss)

income

before

taxes

 

Provision

for income

taxes (k)

 

Net (loss)

income

attributable

to IFF (l)

 

Diluted

EPS (m)

 

(Loss)

income

before

taxes

 

Provision

for income

taxes (k)

 

Net (loss)

income

attributable

to IFF (l)

 

Diluted

EPS

Reported (GAAP)

$

(2,518

)

 

$

45

 

 

$

(2,567

)

 

$

(10.05

)

 

$

(1,625

)

 

$

239

 

 

$

(1,871

)

 

$

(7.32

)

Restructuring and Other Charges (a)

 

68

 

 

 

18

 

 

 

50

 

 

 

0.20

 

 

 

12

 

 

 

2

 

 

 

10

 

 

 

0.04

 

Impairment of Goodwill (b)

 

2,623

 

 

 

38

 

 

 

2,585

 

 

 

10.11

 

 

 

2,250

 

 

 

 

 

 

2,250

 

 

 

8.81

 

Impairment of Long-Lived Assets (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

120

 

 

 

24

 

 

 

96

 

 

 

0.38

 

Acquisition, Divestiture and Integration Related Costs (d)

 

174

 

 

 

(16

)

 

 

190

 

 

 

0.74

 

 

 

201

 

 

 

(41

)

 

 

242

 

 

 

0.94

 

Losses (Gains) on Business Disposals (e)

 

23

 

 

 

(2

)

 

 

25

 

 

 

0.10

 

 

 

(11

)

 

 

(96

)

 

 

85

 

 

 

0.34

 

Gain on China Facility Relocation (f)

 

(22

)

 

 

(6

)

 

 

(16

)

 

 

(0.06

)

 

 

 

 

 

 

 

 

 

 

 

 

Strategic Initiatives Costs (g)

 

31

 

 

 

6

 

 

 

25

 

 

 

0.10

 

 

 

8

 

 

 

2

 

 

 

6

 

 

 

0.02

 

Regulatory Costs (h)

 

50

 

 

 

11

 

 

 

39

 

 

 

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (i)

 

(5

)

 

 

(2

)

 

 

(3

)

 

 

(0.01

)

 

 

11

 

 

 

1

 

 

 

10

 

 

 

0.04

 

Redemption value adjustment to EPS (j)

 

 

 

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

(0.01

)

Adjusted (Non-GAAP)

$

424

 

 

$

92

 

 

$

328

 

 

$

1.28

 

 

$

966

 

 

$

131

 

 

$

828

 

 

$

3.24

 

Reconciliation of Adjusted (Non-GAAP) EPS ex. Amortization

 

Year Ended December 31,

(DOLLARS AND SHARE AMOUNTS IN MILLIONS)

 

2023

 

 

2022

Numerator

 

 

 

Adjusted (Non-GAAP) Net Income

$

328

 

$

828

Amortization of Acquisition related Intangible Assets

 

680

 

 

727

Tax impact on Amortization of Acquisition related Intangible Assets (k)

 

155

 

 

170

Amortization of Acquisition related Intangible Assets, net of tax (n)

 

525

 

 

557

Adjusted (Non-GAAP) Net Income ex. Amortization

$

853

 

$

1,385

 

 

 

 

Denominator

 

 

 

Weighted average shares assuming dilution (diluted)

 

256

 

 

255

Adjusted (Non-GAAP) EPS ex. Amortization

$

3.34

 

$

5.42

(a)

For 2023 and 2022, represents costs primarily related to severance as part of the Company's restructuring efforts.

(b)

For 2023, represents costs related to the impairment of goodwill in the Nourish reporting unit. For 2022, represents costs related to the impairment of goodwill in the Health & Biosciences reporting unit.

(c)

Represents costs related to the impairment of intangible and fixed assets of an asset group that operated primarily in Russia.

(d)

For 2023 and 2022, primarily represents costs related to the Company's actual and planned acquisitions and divestitures and integration related activities primarily for N&B. These costs primarily consisted of external consulting fees, professional and legal fees and salaries of individuals who are fully dedicated to such efforts. For 2023, acquisition costs primarily relate to earn-out adjustments. For 2022, acquisition costs primarily relate to consulting fees, legal fees and earn-out adjustments. Tax expenses for business divestiture costs included establishments of deferred tax liabilities related to planned sales of businesses.

 

For the year ended December 31, 2023, business divestiture, integration and acquisition related costs were approximately $108 million, $59 million and $7 million, respectively. For the year ended December 31, 2022, business divestiture, integration and acquisition related costs were approximately $110 million, $94 million and a credit of $3 million, respectively.

(e)

For 2023, represents losses recognized related to the liquidation of a business in Russia, for the sale of the portion of the Savory Solutions business, and divestitures of the portion of the Savory Solutions business and Flavor Specialty Ingredients business. For 2022, represents gain recognized related to the divestiture of the Microbial Control business unit.

(f)

Represents gain recognized from the completion of the relocation of a facility in China.

(g)

Represents costs related to the Company's strategic assessment and business portfolio optimization efforts and reorganizing the Global Shared Services Centers, primarily consulting fees.

(h)

Represents costs primarily related to legal fees incurred for the ongoing investigations of the fragrance businesses.

(i)

For 2023, represents gains from sale of assets, costs related to severance, including accelerated stock compensation expense, for a certain executive who will separate from the Company in 2024 and pension settlement credits recognized for various pension plans of the Company. For 2022, represents gains from sale of assets, costs related to severance, including accelerated stock compensation expense, for certain employees and executives who have been separated from the Company in 2022 and shareholder activist related costs, primarily professional fees.

(j)

Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable non-controlling interests over their existing carrying value.

(k)

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.

(l)

For 2023 and 2022, reported net loss is increased by income attributable to non-controlling interest of $4 million and $7 million, respectively, and adjusted net income is decreased by income attributable to non-controlling interest of $4 million and $7 million, respectively.

(m)

The sum of these items does not foot due to rounding.

(n)

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 Loss

(DOLLARS IN MILLIONS)

Year Ended December 31, 2023

Net loss

$

(2,567

)

Interest expense(1)

 

380

 

Income taxes

 

45

 

Depreciation and amortization

 

1,142

 

Specified items(2)

 

2,944

 

Non-cash items(3)

 

135

 

Credit Adjusted EBITDA

$

2,079

 

_______________________

(1)

Beginning in the fourth quarter of 2023, certain adjustments were made to interest expense associated with our cash pooling arrangements.

(2)

Specified items consisted of restructuring and other charges, impairment of goodwill, acquisition, divestiture and integration related costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.

(3)

Non-cash items consisted of gains on sale of assets, losses on business disposals, gain on China facility relocation, write-down of inventory related to LBK and stock-based compensation.

Net Debt to Total Debt

(DOLLARS IN MILLIONS)

December 31, 2023

Total debt(1)

$

10,096

Adjustments:

 

Cash and cash equivalents(2)

 

729

Net debt

$

9,367

_______________________

(1)

Total debt used for the calculation of net debt consisted of short-term debt, long-term debt, short-term finance lease obligations and long-term finance lease obligations.

(2)

Cash and cash equivalents included approximately $26 million currently in Assets held for sale on the Consolidated Balance Sheets.

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 December 31,

 

Year Ended December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net Sales

 

 

 

 

 

 

 

Nourish(1)

$

1,394

 

 

$

1,447

 

 

$

6,060

 

 

$

6,519

 

Health & Biosciences(2)

 

528

 

 

 

501

 

 

 

2,072

 

 

 

2,102

 

Scent(3)

 

578

 

 

 

527

 

 

 

2,393

 

 

 

2,267

 

Pharma Solutions

 

203

 

 

 

221

 

 

 

945

 

 

 

971

 

Consolidated

$

2,703

 

 

$

2,696

 

 

$

11,470

 

 

$

11,859

 

Segment Adjusted Operating EBITDA

 

 

 

 

 

 

 

Nourish(1)

$

165

 

 

$

180

 

 

$

732

 

 

$

1,135

 

Health & Biosciences(2)

 

162

 

 

 

121

 

 

 

590

 

 

 

598

 

Scent(3)

 

108

 

 

 

90

 

 

 

461

 

 

 

412

 

Pharma Solutions

 

26

 

 

 

30

 

 

 

199

 

 

 

222

 

Total

 

461

 

 

 

421

 

 

 

1,982

 

 

 

2,367

 

Depreciation & Amortization

 

(287

)

 

 

(282

)

 

 

(1,142

)

 

 

(1,179

)

Interest Expense

 

(43

)

 

 

(104

)

 

 

(380

)

 

 

(336

)

Other (Expense) Income, net

 

(62

)

 

 

(6

)

 

 

(28

)

 

 

37

 

Restructuring and Other Charges

 

(7

)

 

 

(7

)

 

 

(68

)

 

 

(12

)

Impairment of Goodwill

 

(2,623

)

 

 

 

 

 

(2,623

)

 

 

(2,250

)

Impairment of Long-Lived Assets

 

 

 

 

 

 

 

 

 

 

(120

)

Acquisition, Divestiture and Integration Related Costs

 

(56

)

 

 

(34

)

 

 

(174

)

 

 

(201

)

Strategic Initiatives Costs

 

(3

)

 

 

(7

)

 

 

(31

)

 

 

(8

)

Regulatory Costs

 

(18

)

 

 

 

 

 

(50

)

 

 

 

Other

 

(3

)

 

 

(6

)

 

 

(2

)

 

 

(11

)

Impact of Business Divestitures(4)

 

 

 

 

20

 

 

 

 

 

 

88

 

Impact of Business Acquisitions(5)

 

 

 

 

 

 

 

(2

)

 

 

 

Loss Before Taxes

$

(2,641

)

 

$

(5

)

 

$

(2,518

)

 

$

(1,625

)

 

 

 

 

 

 

 

 

Segment Adjusted Operating EBITDA Margin

 

 

 

 

 

 

 

Nourish

 

11.8

%

 

 

12.4

%

 

 

12.1

%

 

 

17.4

%

Health & Biosciences

 

30.7

%

 

 

24.2

%

 

 

28.5

%

 

 

28.4

%

Scent

 

18.7

%

 

 

17.1

%

 

 

19.3

%

 

 

18.2

%

Pharma Solutions

 

12.8

%

 

 

13.6

%

 

 

21.1

%

 

 

22.9

%

Consolidated

 

17.1

%

 

 

15.6

%

 

 

17.3

%

 

 

20.0

%

______________________

(1)

Nourish sales and segment adjusted operating EBITDA information for the three months and year ended December 31, 2022 exclude the results of the Savory Solutions business that was divested to present fully comparable scenarios of the Company. The divestiture was completed on May 31, 2023.

(2)

Health & Biosciences sales and segment adjusted operating EBITDA information for the year ended December 31, 2023 exclude the results of Health Wright Products for the first quarter of 2023. In addition, the information for the year ended December 31, 2022 exclude the results of the Microbial Control business unit for the first and second quarters of 2022. The exclusion of these results help to present fully comparable scenarios of the Company as the acquisition of Health Wright Products was completed on April 1, 2022 and the divestiture of the Microbial Control business unit was completed on July 1, 2022. As a result, there was no impact from Health Wright Products and the Microbial Control business unit for the first quarter of 2022 and the first and second quarters of 2023, respectively.

(3)

Scent sales and segment adjusted operating EBITDA information for the three months and year ended December 31, 2022 exclude the results of the Flavor Specialty Ingredients business that was divested to present fully comparable scenarios of the Company. The divestiture was completed on August 1, 2023.

(4)

Information related to the amounts exclude the results of the Microbial Control business unit, the portion of the Savory Solutions business and Flavor Specialty Ingredients business that were divested in the third quarter of 2022 (July 1, 2022), second quarter of 2023 (May 31, 2023) and third quarter of 2023 (August 1, 2023), respectively, to present fully comparable scenarios of the Company.

(5)

Information related to the amount excludes the results of Health Wright Products for the first quarter of 2023 to present fully comparable scenarios of the Company, as the acquisition of Health Wright Products was completed on April 1, 2022.

 

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

Comparable Foreign Exchange Impact

(Unaudited)

 

Q4 Nourish

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

(12)%

 

(15)%

 

(0.6)%

Portfolio Impact

 

8%

 

7%

 

0.0%

% Change - Comparable

 

(4)%

 

(8)%

 

(0.6)%

Currency Impact

 

1%

 

11%

 

1.3%

% Change - Currency Neutral

 

(3)%

 

3%

 

0.7%

 

 

 

 

 

 

 

Q4 Health & Biosciences

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

5%

 

34%

 

6.5%

Portfolio Impact

 

0%

 

0%

 

0.0%

% Change - Comparable

 

5%

 

34%

 

6.5%

Currency Impact

 

0%

 

1%

 

0.3%

% Change - Currency Neutral

 

5%

 

35%

 

6.8%

 

 

 

 

 

 

 

Q4 Scent

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

6%

 

14%

 

1.3%

Portfolio Impact

 

4%

 

6%

 

0.3%

% Change - Comparable

 

10%

 

20%

 

1.6%

Currency Impact

 

1%

 

14%

 

1.9%

% Change - Currency Neutral

 

11%

 

34%

 

3.5%

 

 

 

 

 

 

 

Q4 Pharma Solutions

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

(8)%

 

(13)%

 

(0.8)%

Portfolio Impact

 

0%

 

0%

 

0.0%

% Change - Comparable

 

(8)%

 

(13)%

 

(0.8)%

Currency Impact

 

(2)%

 

0%

 

0.4%

% Change - Currency Neutral

 

(10)%

 

(13)%

 

(0.4)%

 

 

 

 

 

 

 

Q4 Consolidated

 

Sales

 

Adjusted Operating

EBITDA

 

Adjusted Operating

EBITDA Margin

% Change - Reported

 

(5)%

 

5%

 

1.6%

Portfolio Impact

 

5%

 

5%

 

(0.1)%

% Change - Comparable

 

0%

 

10%

 

1.5%

Currency Impact

 

1%

 

7%

 

1.1%

% Change - Currency Neutral

 

1%

 

17%

 

2.6%

_______________________

Note: The sum of these items may not foot due to rounding.

 

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

Comparable Foreign Exchange Impact

(Unaudited)

 

YTD Nourish

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

(11)%

 

(38)%

 

(5.1)%

Portfolio Impact

 

4%

 

2%

 

(0.2)%

% Change - Comparable

 

(7)%

 

(36)%

 

(5.3)%

Currency Impact

 

2%

 

9%

 

1.2%

% Change - Currency Neutral

 

(5)%

 

(27)%

 

(4.1)%

 

 

 

 

 

 

 

YTD Health & Biosciences

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

(11)%

 

(7)%

 

1.2%

Portfolio Impact

 

10%

 

6%

 

(1.1)%

% Change - Comparable

 

(1)%

 

(1)%

 

0.1%

Currency Impact

 

1%

 

3%

 

0.3%

% Change - Currency Neutral

 

0%

 

2%

 

0.4%

 

 

 

 

 

 

 

YTD Scent

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

4%

 

9%

 

0.9%

Portfolio Impact

 

2%

 

3%

 

0.2%

% Change - Comparable

 

6%

 

12%

 

1.1%

Currency Impact

 

2%

 

10%

 

1.3%

% Change - Currency Neutral

 

8%

 

22%

 

2.4%

 

 

 

 

 

 

 

YTD Pharma Solutions

 

Sales

 

Segment Adjusted

Operating EBITDA

 

Segment Adjusted

Operating EBITDA Margin

% Change - Reported

 

(3)%

 

(10)%

 

(1.8)%

Portfolio Impact

 

0%

 

0%

 

0.0%

% Change - Comparable

 

(3)%

 

(10)%

 

(1.8)%

Currency Impact

 

0%

 

0%

 

0.2%

% Change - Currency Neutral

 

(3)%

 

(10)%

 

(1.6)%

 

 

 

 

 

 

 

YTD Consolidated

 

Sales

 

Adjusted Operating

EBITDA

 

Adjusted Operating

EBITDA Margin

% Change - Reported

 

(8)%

 

(19)%

 

(2.5)%

Portfolio Impact

 

4%

 

3%

 

(0.2)%

% Change - Comparable

 

(3)%

 

(16)%

 

(2.7)%

Currency Impact

 

2%

 

6%

 

1.0%

% Change - Currency Neutral

 

(1)%

 

(10)%

 

(1.7)%

_______________________

Note: The sum of these items may not foot due to rounding.

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