International Flavors & Fragrances, Inc. · NYSE:IFF
International Flavors & Fragrances — Q3 2020 Earnings Presentation
18 slides from International Flavors & Fragrances's earnings presentation, Nov 10, 2020
Slide 1: Q3 2020 Earnings Conference Call
Q3 2020 EARNINGS CONFERENCE CALL November 10, 2020
Slide 2: Cautionary Statement
C A U T I O N A RY S TAT E M E N T This presentation includes “forward-looking statements” under the Federal Private Securities Litigation Reform Act of 1995, including statements regarding the expected impact of the COVID-19 pandemic on the Company’s near term results; expectations regarding sales
Slide 3: Cautionary Statement: Use of Non-GAAP Financial Measures
C A U T I O N A RY S TAT E M E N T Use of Non-GAAP Financial Measures We provide in this presentation non-GAAP financial measures, including: (i) currency neutral sales; (ii) adjusted operating profit ex amortization; (iii) currency neutral adjusted operating profit ex amortization; (iv) adjusted op
Slide 4: Today's Speakers
Andreas Fibig Rustom Jilla Michael DeVeau Chairman and Executive Vice Vice President, Chief Executive Officer President, Chief Investor Relations Financial Officer & Communications TODAY’S SPEAKERS 4
Slide 5: Agenda
AGENDA 1. Performance Assessment 2. Detailed Financial Review 3. Outlook Ahead 4. IFF & Dupont N&B Progress 5. Q&A 5
Slide 6: Sales Dynamics
SALES DYNAMICS Returned to growth in Q3 2020 Y E AR - O V E R - Y E AR C U R R E N C Y Q 3 2 0 2 0 C O M M E N TARY N E U T R AL P E R F O R M AN C E * Q1 2020: Q2 2020: Q3 2020: • Delivered 1% currency neutral growth* in Q3 as +6% (4)% +1% expected, a sequential improvement vs. Q2 10% • Business ex
Slide 7: Year-to-Date Performance
Y E A R - TO - D AT E 2 0 2 0 P E R F O R M A N C E Insight into the drivers of year-over-year change CONTINUED S U P P LY M AR K E T STRENGTH C H AL L E N G E PRESSURE Taste Ex Consumer Fragrance Food Fine Food Service Fragrances Ingredients Service Fragrances 7
Slide 8: Q3 2020 Financial Performance
Q3 2020 FINANCIAL PERFORMANCE Sequential improvement across all financial metrics R E S U LT S COMMENTARY • Currency neutral sales* increased 1% in Q3 $1.3B • Growth was strongest in Scent led by a double-digit SALES increase in Consumer Fragrance; Taste pressured by Food Service challenges • Adjust
Slide 9: Q3 2020 Currency Neutral Sales Growth
Q3 2020 CURRENCY NEUTRAL SALES GROWTH* Impact of emerging market pricing on currency neutral growth* rates IFF FX IFF Reporting Change vs. Prior Year With Emerging Market Impact 3 Countries Represent <10% of Sales Devaluation +3% Argentina Peso: 37% Brazil Real: 27% +1% Turkey Lira: 18% Q3 2020 Q3 2
Slide 10: Q3 2020 Profitability Dynamics
Q 3 2 0 2 0 P R O F I TA B I L I T Y D Y N A M I C S Synergies & productivity more than offset price/mix & COVID-19 costs Currency Neutral Adjusted Operating Profit Ex Amortization* +1% Incremental Q3 2019 Price / Mix COVID-19 Volume Synergies Productivity Other Q3 2020 Costs 10 * Non-GAAP metric; p
Slide 11: Scent Results
S C E N T R E S U LT S Q3 2020 performance review C U R R E N C Y N E U T R AL S AL E S G R O W T H * SEGMENT PROFIT Q3 2020: 4% Segment Profit • Double-digit performance in Consumer Fragrance $101M led by robust growth in Fabric, Home, Hair Care & Personal Wash • Fine Fragrance down 14% primarily d
Slide 12: Taste Results
TA S T E R E S U LT S Q3 2020 performance review C U R R E N C Y N E U T R AL S AL E S G R O W T H * SEGMENT PROFIT Q3 2020: (1)% Segment Profit • Food Service improved sequentially vs. Q2 2020 yet $102M** experienced continued pressure, declining double- digits compared to prior year due to COVID-1
Slide 13: Cash Flow Dynamics
CASH FLOW DYNAMICS Strong improvement in operating cash flow & free cash flow 9 M 2 0 2 0 C AS H F L O W C O M M E N TARY $244 $(115) Operating Cash Flow • Operating cash flow +8% led by core working capital* $(15) $415 ($124) • Core working capital* improvement driven by Days $301 $291 Payable Outs
Slide 14: Looking Ahead
LOOKING AHEAD Continued volatility & uncertainty remains Y E AR - O V E R - Y E AR C U R R E N C Y C O M M E N TARY N E U T R AL P E R F O R M AN C E * Q1 2020: Q2 2020: Q3 2020: • Majority of the IFF portfolio remains essential; Fine +6% (4)% +1% Fragrance & Food Service will remain under pressure
Slide 15: IFF Integration Calendar
I F F I N T E G R AT I O N C A L E N D A R Expect to be substantially complete with Frutarom prior to N&B transaction close ✓ ✓ H1 2020: Q3 2020: Q1 2021: Procurement Business 90% Sites Savings Completed Integration Consolidated Completed FRUTAROM INTEGRATION DUPONT N&B INTEGRATION Q1 2020: Q1 2021:
Slide 16: N&B Integration Planning
N & B I N TEG R AT I O N P L A N N I N G Strong progress in pre-integration phase; On-track with post-closing execution timeline Q4 FIRSTHALF SECONDHALF Q1 POST 2 0 19 2020 2020 2 0 21 CLOSE Purpose, Integration Revenue Cleared U.S. Initial Vision, IFF Permanent $7.3B Cash Agreement Management Antic
Slide 17: Summary
S U M M A RY Delivered 1% currency neutral growth* in Q3 as expected, a sequential improvement versus Q2 Year-to-date growth, excluding Fine Fragrance & Food Service, strong at +4% on currency neutral basis*, with growth across nearly all categories Made significant advancements in N&B integration p
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