International Flavors & Fragrances, Inc. · NYSE:IFF
International Flavors & Fragrances — Q2 2023 Earnings Presentation
22 slides from International Flavors & Fragrances's earnings presentation, Aug 8, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
SECOND QUARTER 2023 EARNINGS CONFERENCE CALL August 8, 2023
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Statements in this presentation, 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 a
Slide 3: Non-GAAP Financials
NON-GAAP FINANCIALS We provide in this presentation 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)
Slide 4: Today's Speakers
TODAY’S SPEAKERS Frank Clyburn Glenn Richter Michael DeVeau Executive Vice President, Senior Vice President, Chief Executive Officer Chief Financial & Business Corporate Finance & Transformation Officer Investor Relations 4
Slide 5: Agenda
AGENDA Business & Strategy Update ____ Q2 2023 Review ____ Full Year Outlook ____ Q&A 5
Slide 6: Key Takeaways
TAK I N G AC T I O N KEY TAKEAWAYS Results reflects broader macroeconomic challenges facing industry, including temporary destocking, particularly in Functional Ingredients Exploring additional strategic pathways to unlock value for shareholders; Launching sale process for Lucas Meyer Cosmetics Taki
Slide 7: Operating Performance
AD AP T I N G T O M AR K E T C O N D I T I O N S OPERATING PERFORMANCE Q2 results reflect broader macroeconomic challenges facing industry; Profitability in line excluding LBK write-down; Solid cash flow generation Pace of industry recovery behind initial expectations as customer destocking continue
Slide 8: Accelerating Divestitures
D R I V I N G P O R T F O L I O O P T I M I Z AT I O N ACCELERATING DIVESTITURES Executing Our Plan OUR FOCUS OUR ACTIONS Successfully completed the divestitures of Microbial Control, Prioritize our most synergistic Savory Solutions and Flavor Specialty Ingredients and highest-value businesses Focus
Slide 9: Opportunity to Accelerate Results
AS S E S S I N G P O R T F O L I O P E R F O R M AN C E OPPORTUNITY TO ACCELERATE RESULTS Business Excluding Functional Ingredients Delivered Solid Results Nourish Food Functional Scent H&B Pharma Flavors Design2 Ingredients % of Total Sales1 ~20% ~20% ~10% ~20% ~5% ~25% Average Quarterly Volume 5%
Slide 10: Impacting Factors
D E E P - D I V E I N T O F U N C T I O N AL I N G R E D I E N T S MARKET ANALYSIS Reason Description Outlook Shift from high inventories to leaner inventories De-stocking expected to De-stocking impacting customer ordering patterns continue through 2H 2023 Impacting Factors Decline in plant-based/a
Slide 11: Clear Strategy to Improve Performance
F U N C T I O N AL I N G R E D I E N T S O P E R AT I O N AL I M P R O V E M E N T P L AN CLEAR STRATEGY TO IMPROVE PERFORMANCE 1 Improve Sales Increased commercial resources / Focus on key global accounts Execution Accelerate regional sales pipeline & win rates 2 Strengthen Increase productivity &
Slide 12: Driving Strategic Execution
S T R O N G P R O G R E S S AG A I N S T K E Y I N I T I AT I V E S DRIVING STRATEGIC EXECUTION Pillar Initiative Result Improve Customer Service ~95% ship to request; New SI&OP process implemented Growing Global Key Accounts Identified +$250M in new growth opportunities in 2024+ the Premier Partner
Slide 13: Pipeline Potential Expanding
H E I G H T E N E D E M P H AS I S O N C O M M E R C I AL E X C E L L E N C E PIPELINE POTENTIAL EXPANDING Pipeline Opportunity 1H 2023 Highlights Nourish: >50% • Strong pipeline inflow across regions/ categories Increase • Notable win: Xylitol for Bars, Cereal & Confectionery Scent: • Overall Compo
Slide 14: Maximizing Shareholder Value
S T R O N G E R F O U N D AT I O N H E AD I N G I N T O 2 0 2 4 MAXIMIZING SHAREHOLDER VALUE Growth Margin Acceleration Expansion IFF: Driving customer-centric strategy, Accelerating cost & with emphasis on highest A leader growth businesses productivity initiatives in high-value, innovative Enhance
Slide 15: Consolidated Results
Q2 2023 CONSOLIDATED RESULTS Comparable currency neutral sales1 2 declined 4% In millions / % of sales 2022 2023 C H AN G E as growth in Scent & Pharma was more than offset by softness in Nourish and H&B ____ Revenue² $3,307 $2,929 (11)% Pricing up high-single digits; Volume was pressured by destock
Slide 16: Profitability Performance: Adjusted Operating EBITDA Reconciliation
Q2 2023 PROFITABILITY PERFORMANCE AD J U S T E D O P E R AT I N G E B I T D A¹ R E C O N C I L I AT I O N Year-over-year change Comparable Currency Neutral Adjusted Operating EBITDA ex Absorption & LBK Write -down¹ ²: $700 (3)% In Millions Microbial $510 Control Divestiture Savory Comp CN Solutions
Slide 17: Segment Performance
Q2 2023 SEGMENT PERFORMANCE NET ADJUSTED SALES O P E R AT I N G EBITDA¹ SEGMENT (Comparable (Comparable HIGHLIGHTS currency neutral currency neutral vs. vs. 2Q 22) ¹ ² 2Q 22) ¹ ² $1.6 billion $181 million • Driven by decline in Ingredients; Flavors and Food Design were resilient Nourish • Price incr
Slide 18: Cash Flow & Leverage
Q2 2023 CASH FLOW & LEVERAGE Cash Flow Leverage Cash flow from operations totaled $375 million driven by core working capital improvements; Cash and cash equivalents finished at $641 million which Achieved $365M reduction in inventory vs FY 2022, includes $3 million currently in assets held for sale
Slide 19: Market Environment
N AV I G AT I N G S H O R T- T E R M P R E S S U R E S MARKET ENVIRONMENT Macro-economic challenges expected to continue into the second half of 2023 Continuation of customer destocking Limited visibility into underlying consumer demand due to customer destocking Aggressively focused on what we can
Slide 20: Consolidated Outlook
FY 2023 CONSOLIDATED OUTLOOK In millions or Modifying FY 2023 guidance to reflect macroeconomic Previous Revised as % of sales challenged impacting industry, including temporary destocking ____ Revenue ~$12.3B $11.3B – $11.6B 2-year average volume performance: • 1H 2023: (4)% Down Mid-to-High • 2H 2
Slide 21: Summary
SUMMARY Results reflects broader macroeconomic challenges facing industry, including temporary destocking, particularly in Functional Ingredients Exploring additional strategic pathways to unlock value for shareholders; Launching sale process for Lucas Meyer Cosmetics Taking action to improve Functi
Slide 22: IFF - Where science & creativity meet
iF f Where science & creativity meet
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