Slide 1: 2014 Shareholder Discussion Materials
2014 Shareholder Discussion Materials
Slide 2: Cautionary Note on Forward-Looking Statements
* Cautionary Note on Forward-Looking Statements This document contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertaintie
Slide 3: Overview
Overview Sensient is executing a clear strategy to create sustainable, long-term shareholder value Sensient’s efforts have delivered record revenue and earnings each of the past 4 years The Company’s stock price is at a record high Sensient’s Board has a consistent record of implementing changes to
Slide 4: A Well-Positioned Leader in Flavors, Fragrances and Colors
A Well-Positioned Leader in Flavors, Fragrances and Colors Leading global developer, manufacturer and marketer of advanced color, flavor and fragrance systems Serves food, beverage, cosmetic, digital printing, pharmaceutical and other consumer and industrial applications Well-positioned to capitaliz
Slide 5: Global Market Leader
* Global Market Leader Sensient is the global market leader in the food & beverage color market We also hold market leading positions in: Flavors Fragrances Cosmetic colors and ingredients Digital inks Pharma colors & coatings Industrial colors Global success a result of Board leadership & managemen
Slide 6: Sensient's Segment Business Performance
—_—_"“=~ SENSIENT° Sensient’s Segment Business Performance exe) | Flavors & Fragrances 2013 sales (mm) $494 $881 09-13 CAGR 7.1% 3.3% 2013 EBIT (mm) $104 $122 % margin 21.0% 13.9% 21.0% 2= EBIT margin 18.17% 13.9% 13.7% comparison with iso ax other industry players Sensient ‘Chr. Hansen Sensient IFF
Slide 7: Players in the Flavors and Fragrances Industry Have a Different Product Mix and Margin Profile
Players in the Flavors and Fragrances Industry Have a Different Product Mix and Margin Profile * Ingredients Systems Full flavor house Players in the ingredients industry have a diverse product mix with lower profitability Sensient is implementing a strategy to transform its business into a full fla
Slide 8: A Clear Strategy for Creating Value
A Clear Strategy for Creating Value Expanding in higher-margin, value-added products Leveraging technology platform to deliver innovative new solutions Continue implementing Flavors transformation following successful roadmap from Colors Group Transformation of Flavors & Fragrances Group into a prov
Slide 9: We Have Begun Implementing the Colors Blueprint in Flavors & Fragrances
We Have Begun Implementing the Colors Blueprint in Flavors & Fragrances * Completed initial restructuring in 2013, generating annualized savings of $12mm Additional efforts announced in 2014 to reduce costs by $20mm to $25mm by 2015 and drive efficiencies across the company Reducing Costs Aligning w
Slide 10: Our Strategy Has Proven Successful
Our Strategy Has Proven Successful Execution of plan in Colors provides clear roadmap for success * 15% compound annual growth in operating income and 400 basis point improvement in return on assets in Colors
Slide 11: We Have Successfully Demonstrated Our Ability to Execute a Value Added Strategy in Colors
We Have Successfully Demonstrated Our Ability to Execute a Value Added Strategy in Colors * EBIT margin (%) Margin expansion accomplished by effectively pursuing strategic initiatives in the following categories: Product development Investment in customer coverage Price Mix Cost cutting
Slide 12: Our Colors Business Has Outperformed Its Main Competitor During the Last 5 Years
Our Colors Business Has Outperformed Its Main Competitor During the Last 5 Years * Source: Company filings 1 Represents EBIT margin for colors & blends division given previous reporting segments EBIT margin (%) 1
Slide 13: We Will Continue to Roll Out This Margin Improvement Strategy in Flavors & Fragrances
We Will Continue to Roll Out This Margin Improvement Strategy in Flavors & Fragrances over the Next 4 Years * EBIT margin (%) High-Teens% Beginning in 2013, Sensient began to implement strategic initiatives in Flavors & Fragrances similar to those successfully deployed in Colors Margin expansion wil
Slide 14: Multi-Pronged Approach to Improving Margins in Flavors & Fragrances
We Have a Multi-Pronged Approach to Improving Margins in the Flavors & Fragrances Business * Focus on innovation and sales of value-added, differentiated products Expand margins by improving product mix and new product development More effective utilization of installed base of industry-leading skil
Slide 15: Experience and Track Record to Complete Flavors & Fragrances Strategy
We Have the Experience and Track Record to Successfully Complete the Implementation of the Flavors & Fragrances Strategy We will enhance returns in Flavors & Fragrances The solution requires a nuanced, comprehensive strategy Simple cost cutting is not the answer for Sensient, just as it has not been
Slide 16: Committed to Returning Capital to Shareholders
—_—_"“=~ SENSIENT° Committed to Returning Capital to Shareholders * Since the beginning of 2013 - — Declared dividend increases of 14% — Committed to 2mm share buyback in next 12 months Expect to return ~$160mm to shareholders in next 12 months 1s
Slide 17: Sensient's Strong Balance Sheet More Levered than Many Peers
Sensient’s Strong Balance Sheet More Levered than Many Peers Maintaining investment-grade rating provides financial flexibility for CAPEX, buybacks, dividends and acquisitions Minimizes refinancing risk in volatile capital markets Sensient net debt-to-EBITDA in line with other ingredient firms servi
Slide 18: Efficient Capital Allocation Drives Long-term Shareholder Value
Efficient Capital Allocation Drives Long-term Shareholder Value Reinvest in high-ROIC projects within the Company Maintain a healthy dividend Keep debt levels in line with an investment-grade profile Opportunistic stock buybacks Evaluate potential highly accretive acquisition opportunities * Sensien
Slide 19: Commitment to Best-in-Class Corporate Governance
Commitment to Best-in-Class Corporate Governance Consistent Record of Shareholder-Friendly Actions and Responsiveness to Shareholder Concerns * Board declassification Elimination of poison pill Long-term incentive compensation 100% performance based Director resignation policy Independent director a
Slide 20: Strong, Independent Board
ec, SENSIENT Strong, Independent Board ¢ 7 Independent Directors — Independent Lead Director as of April 24, 2014 « Board members possess relevant experience: — Food-science and other technical skills — Industry knowledge — Deep knowledge of the Company — Significant corporate leadership experience
Slide 21: Sensient Has Outperformed Its Peers over the Last Years
Sensient Has Outperformed Its Peers over the Last 7 Years Source: FactSet and Bloomberg market data as of 03/21/14; returns adjusted for dividends Sensient 163% IFF 129% Russell 2000 48% Givaudan 51% Symrise 119% S&P Midcap Spec. Chem. Index 121% * Historical 7-year dividend-adjusted returns (rebase
Slide 22: Sensient Outperformed Peers Through the Downturn and over the Long Term
Sensient Outperformed Peers Through the Downturn and over the Long Term * March 2007 March 2009 Today Sensient $100 $95 $263 IFF $100 $63 $229 Givaudan $100 $63 $151 Symrise $100 $47 $219 Russell 2000 $100 $50 $148 S&P Midcap Specialty Chemical Index $100 $44 $221 Source: FactSet and Bloomberg as of
Slide 23: Sensient Outperformed Peers Through the Downturn and over the Long Term
ec, SENSIENT° Sensient Outperformed Peers Through the Downturn and over the Long Term March 2007 March 2009 Sensient IFF Givaudan Symrise Russell 2000 S&P Midcap Specialty Chemical Index ‘Source: FactSet and Bloomberg as of 03/21/14 Note: Assumes $100 invested on 03/21/07; returns adjusted for divid
Slide 24: Adding a FrontFour-Nominated Director Would Be Detrimental to Sensient and its Shareholders
Adding a FrontFour-Nominated Director Would Be Detrimental to Sensient and its Shareholders FrontFour chose 3 nominees without industry experience to help catalyze our Flavors business FrontFour’s lone industry nominee lied to a major food & beverage company, prompting a high-profile lawsuit over tr
Slide 25: FrontFour Chose Nominees Without Industry Experience
* FrontFour Chose 3 Nominees Without Industry Experience to Catalyze Our Flavors Business Our Flavors business segment provides custom-crafted flavor and fragrance innovations to the food, beverage, pharmaceutical, personal-care and household-products industries Three of FrontFour’s hand-picked nomi
Slide 26: FrontFour's Lone Industry Nominee Was Once Deemed a Risk as to Industry Trade Secrets
* FrontFour’s Lone Industry Nominee Was Once Deemed a Risk as to Industry Trade Secrets PepsiCo, Inc. obtained a federal injunction against Mr. Redmond to prevent him from misappropriating trade secrets and confidential information in connection with his career move from PepsiCo to Quaker Oats The t
Slide 27: Poor Operational Performance and Destruction of Shareholder Value
• Poor Operational Performance and Destruction of Shareholder Value Messrs. Henderson and Redmond led at least 4 companies into bankruptcy1 • Messrs. Henderson and Loukas have been associated with 63-75% destruction of shareholder value at 4 other companies2 – Xinergy Ltd. (Loukas, 63% decline in in
Slide 28: FrontFour's Principals and Nominees Have Appeared to Disregard Other Shareholder Interests
* FrontFour’s Principals and Nominees Have Appeared to Disregard Other Shareholder Interests Before FrontFour’s principals, including Mr. Loukas, worked together at Pirate Capital, LLC, a notoriously brash and abrasive activist hedge fund that we believe informed their current attitudes toward compa
Slide 29: Four Nominees That FrontFour Has Targeted Are Highly Qualified
Four Nominees That FrontFour Has Targeted Are Highly Qualified – and All Have Deep Knowledge of Sensient’s Businesses * James A.D. Croft Former senior partner in the London-based real estate consulting firm of Richard Ellis Established Richard Ellis’s international Hotels and Leisure division Extens
Slide 30: Kenneth P. Manning and Essie Whitelaw
* Kenneth P. Manning Over 33 years of dedicated specialty-chemical and food-technology experience leading Sensient’s businesses as former CEO Transformed Sensient from a commodities food business into a global leader in specialty chemicals Total shareholder return of over 800% during the 25 years Mr
Slide 31: Sensient Plan vs. FrontFour Proposal
Sensient Plan vs. FrontFour Proposal * Sensient FrontFour Plan of Action Reinvest in business Specific, realistic cost reductions Prudent buyback Dividend increase Collaborative approach Cut internal investment Unspecified, unrealistic cost reductions1 Unrealistic buyback Disruptive approach Credit
Slide 32: Creating Shareholder Value
Creating Shareholder Value Proven track record Board holding management accountable for creating value Sensient is focused on: Operational improvements Optimizing capital structure Prudent capital allocation Maintaining best-in-class corporate governance Consistent, continued and proactive sharehold
Slide 33: Appendix
—— SENSIENT’ Appendix
Slide 34: Pirate Capital and the Link to FrontFour
A-1 Pirate Capital and the Link to FrontFour Pirate Capital, LLC was an aggressive activist fund known for taking a confrontational stance toward management Future FrontFour founders Zachary George, David Lorber, Andrew Stotland and Carl Klien were colleagues at Pirate in roughly the 2004-2006 time
Slide 35: Seeming Favoritism at Shareholder Expense
A-2 Seeming Favoritism at Shareholder Expense Future FrontFour founder Mr. George helped Mr. Hyman become CEO of Cornell Companies and then both served on the board New York magazine prominently featured Mr. George claiming to have interviewed, in Pirate’s offices, candidates to replace Mr. Hyman’s
Slide 36: Seeming Board-level Conflicts of Interest
A-3 Seeming Board-level Conflicts of Interest In December 2010, Huntingdon REIT made a hostile-takeover bid for Fisher Communications, Inc. Mr. George was CEO of Huntingdon and a principal of FrontFour at this time Mr. Lorber was a sitting Fisher director and a principal of FrontFour at this time Fr
Slide 37: Seeming Disregard for Facts and Rules
—_—_"“=~ SENSIENT° Seeming Disregard for Facts and Rules + In January 2014, Renegade Petroleum Ltd. declared a “decisive victory” when FrontFour withdrew its request for a special meeting to elect new directors in the face of majority shareholder support for the company* — FrontFour’s special-meetin