International Flavors & Fragrances, Inc. · NYSE:IFF
International Flavors & Fragrances — Q4 2020 Earnings Presentation
23 slides from International Flavors & Fragrances's earnings presentation, Feb 11, 2021
Slide 1: Q4 & FY 2020 Earnings Conference Call
Q4 & FY 2020 Earnings Conference Call February 11, 2021
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 Chief Executive Officer President, Chief Chief Investor Relations Financial Officer & Communications Officer TODAY’S SPEAKERS 4
Slide 5: Agenda
AGENDA 1. Performance Assessment 2. Detailed Financial Review 3. IFF and N&B Combination 4. Outlook Ahead 5. Q&A 5
Slide 6: FY 2020 Financial Performance
FY 2020 FINANCIAL PERFORMANCE Solid financials amid unprecedented COVID-19 environment $5.1B $922M $5.70 Sales Adjusted Operating Profit Ex Amort¹ Adjusted EPS Ex Amort¹ • Currency neutral sales were +1% excluding the 53rd week, led by a strong performance in Scent • Adjusted operating margin exclud
Slide 7: Sales Dynamics Throughout 2020
SALES DYNAMICS THROUGHOUT 2020 Steady recovery from second quarter lows, with strong January 2021 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 ¹ Q1 Q2 Q3 Q4 Jan • Following a strong start in Q1 2020, COVID-19 had 2020: 2020: 2020: 2020: 2021: a signifi
Slide 8: Consolidated Results
C O N S O L I D AT E D R E S U LT S Q4 2020 performance review R E S U LT S COMMENTARY • Currency neutral sales¹ down 2%; Excluding the 53rd week impact, currency neutral sales up 2% $1.3B SALES • Adjusted operating profit ex amort decreased 10% on a currency neutral basis¹ or down 9% including $204
Slide 9: Currency Neutral Sales Growth
2 0 2 0 C U R R E N C Y N E U T R A L S A L E S G R O W T H 1,2 Impact of emerging market pricing on currency neutral growth1,2 rates Q4 2020 FY 2020 +4% +3% +2% +1% IFF Disclosure Peer Disclosure & Methodology IFF Disclosure Peer Disclosure & Methodology IFF Disclosure Peer Disclosure & Methodology
Slide 10: Q4 2020 Profitability Dynamics
Q 4 2 0 2 0 P R O F I TA B I L I T Y D Y N A M I C S Strong operational performance; Impacted by year-ago comparable & COVID costs CURRENCY NEUTRAL ADJUSTED OPERATING PROFIT EX AMORTIZATION¹ Strong operational performance: +8% Brazil Incremental Productivity/ Price / Mix AIP 53rd Week Q4 2019 RSA Vo
Slide 11: Scent Results
S C E N T R E S U LT S Q4 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 ¹ SEGMENT PROFIT Q4 2020: +3% or +7% excluding 53rd week Segment Profit • Consumer Fragrance was strongest, with robust $80M growth in Home Care & Personal Wash • Fine Fragrance returned to growth led
Slide 12: Taste Results
TA S T E R E S U LT S Q4 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 ¹ SEGMENT PROFIT Q4 2020: (5)% or (1)% excluding 53rd week Segment Profit • Food Service experienced continued pressure, $90M² declining double-digits due to COVID-19 impact • Rest of Taste excluding F
Slide 13: Cash Flow Dynamics
CASH FLOW DYNAMICS Strong improvement in free cash flow F Y 2 0 2 0 C AS H F L O W C O M M E N TARY $714 ($192) Operating Cash Flow $325 $(15) $37 • Operating cash flow +2% despite lower Net Income, which included higher year-over-year transaction- $522 related costs $367 • Cash Conversion improved
Slide 14: FY 2021 Assumptions
FY 2021 A S S U M P T I O N S Key inputs for consideration F U L L Y E A R I M PA C T O N P R O - F O R M A B A S I S ¹ • Expect COVID-19 to impact 1H 2021 results • Fine Fragrance, Food Service & Biorefinery businesses expected to grow on full year basis, yet remain below 2019 levels • Assumed Euro
Slide 15: 2021 Pro-Forma Financial Guidance
2021 PRO-FORMA FINANCIAL GUIDANCE Expect to generate strong results across key metrics ASSUMES FULL 12 MONTHS OF IFF AND N&B ~$11.5B ~23.2% SALES ADJUSTED EBITDA ¹ MARGIN 1. Non-GAAP metric; please see Non-GAAP disclosures at ir.iff.com 15
Slide 16: Reporting & Disclosure
REPORTING & DISCLOSURE Aligning our comparability with peers • Changing our currency neutral sales methodology by taking sales in the current period in local currency & applying average FX rates from the prior period to the current period • Shifted from our previous financial reporting calendar to a
Slide 17: N&B Integration Planning Complete
N & B I N TEG R AT I O N P L A N N I N G COMPLETE Pre-integration planning finished; Switching to post-close execution 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 Transaction & C
Slide 18: The New Industry-Defining Leader
T H E N E W I N D U S T RY- D E F I N I N G L E A D E R Significant value creation opportunities across all stakeholders STRATEGIC RATIONALE VALUE PROPOSITION A global leader in taste, BROADENS • Expands breadth of capabilities scent and nutrition C AT E G O R Y • #1 or #2 position across complement
Slide 19: Compelling Value Creation
COMPELLING VALUE CREATION Substantial synergy opportunities to drive growth & expand margin REVENUE SYNERGY COST SYNERGY $400M $300M $285M $300M $220M $180M $140M $145M $120M $100M $45M $40M $20M $5M 2021 2022 2023 2024 2021 2022 2023 Sales EBITDA Realized Savings Run-Rate Savings Approximately $50M
Slide 20: Actions to Deliver Synergies
ACTIONS TO DELIVER SYNERGIES Immediately executing pre-planned initiatives to accelerate synergy realization REVENUE SYNERGY COST SYNERGY • Engaged with top 100 global and regional • Final budget incorporates synergies to ensure customers to introduce joint portfolio & capabilities alignment of obje
Slide 21: Long-Term Financial Outlook
LONG-TERM FINANCIAL OUTLOOK Execution set to deliver best-in-class financial profile 4 - 5% ~26% ~$2B <3.0x Currency Neutral EBITDA Free Targeting Organic Sales Margin Cash Flow¹ Net Debt to Growth in 2023 Generation EBITDA in 24 to 36 in 2023² months post close Strong Position to Generate Sharehold
Slide 22: Summary
S U M M A RY Solid full year financials amid the COVID-19 pandemic Beyond financials, strong accomplishments achieved, including the closing of the N&B transaction IFF is a stronger company, well-positioned to deliver significant value creation for our shareholders With the strategy set & transactio
Slide 23: IFF
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