IFF Reports Second Quarter 2015 Results
Delivered Strong Currency Neutral Operational Performance
Initiated Execution of Vision 2020
Second Quarter 2015 Consolidated Summary: Growth vs. Prior Year ¹ |
||||||||||||||||||||||||||||||||
Reported (GAAP) | Adjusted (Non-GAAP) | Adjusted Currency Neutral | ||||||||||||||||||||||||||||||
Sales |
Operating |
EPS | Sales |
Operating |
EPS | Sales |
Operating |
EPS | ||||||||||||||||||||||||
Consolidated | (3 | )% | (3 | )% | (4 | )% | (3 | )% | (1 | )% | (1 | )% | 5 | % | 7 | % | 10 | % | ||||||||||||||
Acquisition Impact | 1 | % | 0 | % | 0 | % | 1 | % | 0 | % | 1 | % | 1 | % | 0 | % | 1 | % | ||||||||||||||
¹ Schedules at the end of this release contain reconciliations of reported GAAP to non-GAAP metrics. |
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Win Where We Compete: achieve market leadership position in key markets, categories & customers
- Emerging markets +7% on a currency neutral basis
-
Middle East andAfrica currency neutral sales +22% -
Flavors North America +5% including the acquisition of Ottens Flavors - Home Care increased high-single-digits globally on a currency neutral basis
Innovating Firsts: strengthen position and drive differentiation in priority R&D platforms
- Fabric Care grew mid-teens on a currency neutral basis driven by encapsulation technology
- Encapsulation grew strong double-digits in Toiletries, Home Care, and Personal Wash
-
Flavors
Latin America continued double-digit growth trend led by proprietary delivery system - Sweetness and Savory Modulation portfolio grew strong double-digits
Become Our Customers’ Partner of Choice: attain commercial excellence
- Growth achieved across both global and regional accounts, with regionals outpacing in Flavors
- Expanded product offerings with acquisition of Lucas Meyer Cosmetics (LMC) in third quarter
-
Launched & marketed
Amber Xtreme TM for broad use within the fragrance industry
Strengthen and Expand the Portfolio: pursue value-creation through collaborations & acquisitions
- Accelerated growth potential by entering into cosmetic actives via acquisition of LMC
-
Successfully completed Ottens Flavors acquisition – increasing market
share in
North America -
Established collaboration with
Duke University for flavor modulation & theUniversity of Liverpool for delivery systems in fragrances
Management Commentary
“Strategically, we initiated the implementation of Vision 2020, which
centers on building greater differentiation, accelerating profitable
growth and increasing shareholder value,” said Chairman and CEO
“In the areas where we are targeting a market leadership position –
“Delivery systems across both flavors and fragrances continue to be a driver of results, proof that our focus on differentiating technology is correct. The strong trends in Fabric Care and Beverage continued in the second quarter, led by our encapsulation technology in fragrances and proprietary delivery system in flavors. In addition, we are very pleased that our sales of sweetness and savory modulation portfolio improved strong double-digits in the second quarter – an example that we are providing our customers with innovative solutions that win in the marketplace.
“Our continued commitment to provide our customers with in-depth local consumer understanding, superior innovation, outstanding service, and the highest quality products allowed us to capture the growth potential of faster-growing regional accounts, most noticeably in Flavors in the second quarter. We also broadened our product offerings – expanding into the more rapidly growing cosmetic actives industry with the recent acquisition of Lucas Meyer Cosmetics – offering our customers greater options to support their strategic growth initiatives.
“In line with our focus on strengthening and expanding our portfolio, we
diligently pursued value-creation opportunities in partnerships and
collaborations. We recently signed a partnership with
“Leveraging our strong cash flow generation and commitment to Vision
2020, we increased our dividend by 20% for the third quarter and
authorized an additional
“In the second quarter, we delivered financial results in line with the guidance we provided at our recent Investor Day. Currency neutral sales improved 4% on an organic basis or 5% including the acquisition of Ottens Flavors. Overall top-line performance continues to be driven by new wins – which remain solid – with growth balanced across both business units. Adjusted operating profit, on a currency neutral basis, grew 7% as a result of currency neutral gross margin expansion and lower RSA expenses. This solid operational performance, combined with a lower effective tax rate and a year-over-year decrease in average shares outstanding, drove currency neutral adjusted EPS higher by 10%.
“For the full year 2015, we expect currency neutral sales to grow about 6%, including approximately 2 percentage points related to the acquisitions of Ottens Flavors and Lucas Meyer Cosmetics. We expect this growth, combined with our continued cost control, should lead to approximately 9% adjusted operating profit growth and about 10% adjusted EPS growth, all on a currency neutral basis. Like many U.S. multinational companies, foreign exchange will continue to impact our financial results throughout the balance of the year. Based on where exchange rates are today, we would expect full year sales to be down approximately 1% and adjusted operating profit to rise 4% including the impact of currency.”
Second Quarter 2015 Segment Summary: Growth vs. Prior Year |
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Reported (GAAP) | Currency Neutral | |||||||||||||
Sales |
Segment |
Sales |
Segment |
|||||||||||
Fragrances: |
(4 | )% | (6 | )% | 4 | % | 5 | % | ||||||
Flavors: |
(1 | )% | (7 | )% | 7 | % | 1 | % | ||||||
Acquisition Impact |
3 | % | 0 | % | 3 | % | 1 | % | ||||||
Fragrances Business Unit
-
Currency neutral sales improved 4% led by double-digit growth in EAME
and mid-single-digit improvement in
Latin America . -
Fine Fragrances increased 2% led by double-digit performance in EAME.
This strong growth more than offset softness in
Latin America , where economic conditions, particularly inBrazil , have impacted discretionary spending. -
Consumer Fragrances grew 6% led by double-digit growth in Fabric Care
and high-single-digit growth in Home Care. On a geographic basis, EAME
and
Latin America each had mid-teen growth rates. - Fragrance Ingredients declined 3% primarily related to a strategic decision not to engage in lower margin businesses, and instead, utilize capacity to further strengthen the Fragrance Compounds business.
- Fragrance currency neutral segment profit improved approximately 5% driven by volume growth, cost savings initiatives and productivity programs. Segment profit margin on a currency neutral basis increased 20 basis points to 20.2%.
-
On a reported basis, sales decreased 4% to
$395.1 million in the second quarter compared with$412.9 million in the prior year quarter. Fragrances segment profit decreased 6%, or$5.6 million , to$79.9 million .
Flavors Business Unit
- Currency neutral sales grew 7%, including approximately 3 percentage points related to the acquisition of Ottens Flavors. All categories experienced broad-based growth, with the strongest results in Beverage and Savory.
-
Greater Asia increased 6% driven by mid-single-digit gains in Savory, Beverage and Dairy. On a country perspective, strong growth was achieved inIndia ,Indonesia andthe Philippines , which more than offset a slight decline inChina . -
EAME improved 6% led by a double-digit gain in Savory and
mid-single-digit growth in Beverage. The
Middle East andAfrica reported the highest growth, improving over 20%, driven by strong new win performance. -
North America grew 5% reflecting additional sales related to the acquisition ofOtten Flavors and high-double-digit growth in Dairy. As the Company explained at its Investor Day, the core business was soft principally due to underlying trends with select customers. -
Latin America increased 14% as all categories reported positive growth. The double-digit trend in Beverage continued for the seventh consecutive quarter. Savory and Dairy also grew double-digits as a result of strong new win performance. - Flavors currency neutral segment profit improved approximately 1% as the benefit of topline growth, productivity and cost control initiatives was reduced by a year-over-year increase in incentive compensation expense and the inclusion of amortization of intangibles related to the acquisition of Ottens Flavors. Segment profit margin on a currency neutral basis decreased 140 basis points to 22.6% from 23.9% in the prior year quarter.
-
On a reported basis, sales decreased 1%, or
$3.0 million , to$372.5 million from$375.5 million in the prior year quarter. Flavors segment profit decreased 7%, or$6.8 million , to$84.0 million .
A copy of the Company’s Quarterly Report on Form 10-Q will be available
on its website at www.iff.com
or at sec.gov by
Audio Webcast
A live webcast to discuss the Company’s second quarter 2015 financial
results will be held on
About IFF
Cautionary Statement Under The Private Securities Litigation Reform Act of 1995
This press release includes “forward-looking statements” under the
Federal Private Securities Litigation Reform Act of 1995, including
statements regarding our outlook for the second quarter and full year
2015, and our ability to generate shareholder returns and sustain our
long-term growth performance. These forward-looking statements are
qualified in their entirety by cautionary statements and risk factor
disclosures contained in the Company’s
International Flavors & Fragrances Inc. | ||||||||||||||||||||||||
Consolidated Income Statement | ||||||||||||||||||||||||
(Amounts in thousands except per diluted share data) |
||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2015 | 2014 |
% |
2015 | 2014 |
% |
|||||||||||||||||||
Net sales | $ | 767,541 | $ | 788,414 | (3 | )% | $ | 1,542,448 | $ | 1,558,638 | (1 | )% | ||||||||||||
Cost of goods sold | 422,501 | 435,767 | (3 | )% | 851,131 | 864,579 | (2 | )% | ||||||||||||||||
Gross profit | 345,040 | 352,647 | (2 | )% | 691,317 | 694,059 | (0 | )% | ||||||||||||||||
Research and development | 62,514 | 66,431 | (6 | )% | 125,976 | 127,934 | (2 | )% | ||||||||||||||||
Selling and administrative | 134,063 | 132,919 | 1 | % | 254,898 | 256,653 | (1 | )% | ||||||||||||||||
Restructuring and other charges | (358 | ) | 182 | (297 | )% | (170 | ) | 304 | (156 | )% | ||||||||||||||
Operating profit | 148,821 | 153,115 | (3 | )% | 310,613 | 309,168 | 0 | % | ||||||||||||||||
Interest expense | 11,407 | 11,403 | 0 | % | 22,502 | 23,080 | (3 | )% | ||||||||||||||||
Other expense (income), net | 436 | (4,641 | ) | (109 | )% | (5,275 | ) | (3,198 | ) | 65 | % | |||||||||||||
Income before taxes | 136,978 | 146,353 | (6 | )% | 293,386 | 289,286 | 1 | % | ||||||||||||||||
Taxes on income | 31,604 | 36,068 | (12 | )% | 59,754 | 72,294 | (17 | )% | ||||||||||||||||
Net income | $ | 105,374 | $ | 110,285 | (4 | )% | $ | 233,632 | $ | 216,992 | 8 | % | ||||||||||||
Earnings per share - basic | $ | 1.30 | $ | 1.35 | $ | 2.88 | $ | 2.66 | ||||||||||||||||
Earnings per share - diluted | $ | 1.29 | $ | 1.35 | $ | 2.86 | $ | 2.64 | ||||||||||||||||
Average shares outstanding | ||||||||||||||||||||||||
Basic | 80,790 | 80,949 | 80,729 | 81,003 | ||||||||||||||||||||
Diluted | 81,192 | 81,430 | 81,201 | 81,583 | ||||||||||||||||||||
International Flavors & Fragrances Inc. | ||||||||
Condensed Consolidated Balance Sheet | ||||||||
(Amounts in thousands) |
||||||||
(Unaudited) |
||||||||
June 30, | December 31, | |||||||
2015 | 2014 | |||||||
Cash & cash equivalents | $ | 377,254 | $ | 478,573 | ||||
Receivables | 566,414 | 493,768 | ||||||
Inventories | 561,715 | 568,729 | ||||||
Other current assets | 216,871 | 168,957 | ||||||
Total current assets | 1,722,254 | 1,710,027 | ||||||
Property, plant and equipment, net | 714,809 | 720,268 | ||||||
Goodwill and other intangibles, net | 908,974 | 752,041 | ||||||
Other assets | 307,591 | 312,285 | ||||||
Total assets | $ | 3,653,628 | $ | 3,494,621 | ||||
Bank borrowings and overdrafts, and | ||||||||
current portion of long-term debt | $ | 8,793 | $ | 8,090 | ||||
Other current liabilities | 514,728 | 510,718 | ||||||
Total current liabilities | 523,521 | 518,808 | ||||||
Long-term debt | 989,196 | 934,232 | ||||||
Non-current liabilities | 514,237 | 518,892 | ||||||
Shareholders' equity | 1,626,674 | 1,522,689 | ||||||
Total liabilities and shareholders' equity | $ | 3,653,628 | $ | 3,494,621 | ||||
International Flavors & Fragrances Inc. | ||||||||||
Consolidated Statement of Cash Flows | ||||||||||
(Amounts in thousands) |
||||||||||
(Unaudited) |
||||||||||
Six Months Ended June 30, | ||||||||||
2015 | 2014 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 233,632 | $ | 216,992 | ||||||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 41,041 | 49,131 | ||||||||
Deferred income taxes | 17,891 | 10,228 | ||||||||
Loss (gain) on disposal of assets | 14 | (1,569 | ) | |||||||
Stock-based compensation | 12,860 | 14,034 | ||||||||
Pension contributions | (57,493 | ) | (9,812 | ) | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||
Trade receivables | (92,329 | ) | (50,236 | ) | ||||||
Inventories | (9,834 | ) | 1,850 | |||||||
Accounts payable | 28,435 | (30,831 | ) | |||||||
Accruals for incentive compensation | (21,191 | ) | (54,970 | ) | ||||||
Other current payables and accrued expenses | 20,204 | (12,382 | ) | |||||||
Other assets/liabilities, net | (6,912 | ) | 21,595 | |||||||
Net cash provided by operating activities | 166,318 | 154,030 | ||||||||
Cash flows from investing activities: | ||||||||||
Cash paid for acquisition, net of cash received (including $15 million of contingent consideration related to the Aromor acquisition in 2014) | (188,835 | ) | (102,500 | ) | ||||||
Additions to property, plant and equipment | (37,937 | ) | (60,244 | ) | ||||||
Proceeds from life insurance contracts | 548 | 17,750 | ||||||||
Maturity of net investment hedges | 9,735 | (472 | ) | |||||||
Proceeds from disposal of assets | 1,515 | 2,074 | ||||||||
Net cash used in investing activities | (214,974 | ) | (143,392 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Cash dividends paid to shareholders | (75,927 | ) | (63,417 | ) | ||||||
Net change in revolving credit facility borrowings and overdrafts | (283 | ) | 2,106 | |||||||
Deferred financing costs | — | (1,023 | ) | |||||||
Repayments of debt | (30,000 | ) | — | |||||||
Proceeds from issuance or drawdown of long-term debt | 86,162 | — | ||||||||
Proceeds from issuance of stock under stock plans | 286 | 1,024 | ||||||||
Excess tax benefits on stock-based payments | 11,608 | 5,788 | ||||||||
Purchase of treasury stock | (38,813 | ) | (34,103 | ) | ||||||
Net cash used in financing activities | (46,967 | ) | (89,625 | ) | ||||||
Effect of exchange rates changes on cash and cash equivalents | (5,696 | ) | 335 | |||||||
Net change in cash and cash equivalents | (101,319 | ) | (78,652 | ) | ||||||
Cash and cash equivalents at beginning of year | 478,573 | 405,505 | ||||||||
Cash and cash equivalents at end of period | $ | 377,254 | $ | 326,853 | ||||||
International Flavors & Fragrances Inc. | ||||||||||||||||||
Business Unit Performance | ||||||||||||||||||
(Amounts in thousands) |
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(Unaudited) |
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net Sales | ||||||||||||||||||
Flavors | $ | 372,478 | $ | 375,513 | $ | 749,586 | $ | 742,018 | ||||||||||
Fragrances | 395,063 | 412,901 | 792,862 | 816,620 | ||||||||||||||
Consolidated | 767,541 | 788,414 | 1,542,448 | 1,558,638 | ||||||||||||||
Segment Profit | ||||||||||||||||||
Flavors | 84,015 | 90,805 | 176,743 | 178,869 | ||||||||||||||
Fragrances | 79,924 | 85,474 | 161,522 | 172,638 | ||||||||||||||
Global Expenses | (8,629 | ) | (19,869 | ) | (20,194 | ) | (36,303 | ) | ||||||||||
Restructuring and other charges, net | 358 | (182 | ) | 170 | (304 | ) | ||||||||||||
Acquisition and related costs | (6,566 | ) | — | (7,066 | ) | — | ||||||||||||
Operational improvement initiative costs | (281 | ) | (3,113 | ) | (562 | ) | (5,732 | ) | ||||||||||
Operating profit | 148,821 | 153,115 | 310,613 | 309,168 | ||||||||||||||
Interest Expense | (11,407 | ) | (11,403 | ) | (22,502 | ) | (23,080 | ) | ||||||||||
Other income, net | (436 | ) | 4,641 | 5,275 | 3,198 | |||||||||||||
Income before taxes | $ | 136,978 | $ | 146,353 | $ | 293,386 | $ | 289,286 | ||||||||||
Operating Margin | ||||||||||||||||||
Flavors | 22.6 | % | 24.2 | % | 23.6 | % | 24.1 | % | ||||||||||
Fragrances | 20.2 | % | 20.7 | % | 20.4 | % | 21.1 | % | ||||||||||
Consolidated | 19.4 | % | 19.4 | % | 20.1 | % | 19.8 | % | ||||||||||
International Flavors & Fragrances Inc. | |||||||||||||||||||||
Sales Performance by Region and Category | |||||||||||||||||||||
(Unaudited) |
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|
Second Quarter 2015 vs. 2014 | ||||||||||||||||||||
Percentage Change in Sales by Region of Destination | |||||||||||||||||||||
Fine |
Consumer |
Ingredients | Total Frag. | Flavors | Total | ||||||||||||||||
North America | Reported | -7 | % | -1 | % | -16 | % | -6 | % | 5 | % | 0 | % | ||||||||
EAME | Reported | -6 | % | -7 | % | -11 | % | -8 | % | -12 | % | -10 | % | ||||||||
Currency Neutral | 17 | % | 14 | % | 1 | % | 12 | % | 6 | % | 9 | % | |||||||||
Latin America | Reported | -19 | % | 13 | % | 2 | % | 4 | % | 6 | % | 5 | % | ||||||||
Currency Neutral | -15 | % | 15 | % | 1 | % | 6 | % | 14 | % | 9 | % | |||||||||
Greater Asia | Reported | -2 | % | -4 | % | -8 | % | -4 | % | 2 | % | -1 | % | ||||||||
Currency Neutral | -2 | % | -2 | % | -1 | % | -2 | % | 6 | % | 3 | % | |||||||||
Total | Reported | -9 | % | -1 | % | -11 | % | -4 | % | -1 | % | -3 | % | ||||||||
Currency Neutral | 2 | % | 6 | % | -3 | % | 4 | % | 7 | % | 5 | % | |||||||||
First Six Months 2015 vs. First Six Months 2014 | |||||||||||||||||||||
Percentage Change in Sales by Region of Destination | |||||||||||||||||||||
Fine |
Consumer |
Ingredients | Total Frag. | Flavors | Total | ||||||||||||||||
North America | Reported | -10 | % | 2 | % | -18 | % | -6 | % | 8 | % | 1 | % | ||||||||
EAME | Reported | -9 | % | -4 | % | -9 | % | -7 | % | -8 | % | -8 | % | ||||||||
Currency Neutral | 8 | % | 14 | % | 0 | % | 9 | % | 7 | % | 8 | % | |||||||||
Latin America | Reported | -11 | % | 13 | % | 2 | % | 6 | % | 10 | % | 8 | % | ||||||||
Currency Neutral | -7 | % | 16 | % | -2 | % | 9 | % | 18 | % | 12 | % | |||||||||
Greater Asia | Reported | 16 | % | -1 | % | -1 | % | -1 | % | 1 | % | 0 | % | ||||||||
Currency Neutral | 17 | % | 1 | % | 7 | % | 2 | % | 5 | % | 4 | % | |||||||||
Total | Reported | -9 | % | 2 | % | -10 | % | -3 | % | 1 | % | -1 | % | ||||||||
Currency Neutral | 0 | % | 8 | % | -3 | % | 4 | % | 8 | % | 6 | % | |||||||||
Currency neutral growth is calculated by translating prior year sales at the exchange rates used for the corresponding 2015 period. |
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International Flavors & Fragrances Inc. | ||||||||||
GAAP to Non-GAAP Reconciliation | ||||||||||
Foreign Exchange Impact |
||||||||||
(Unaudited) |
||||||||||
Q2 Consolidated |
Sales |
Operating |
EPS | |||||||
% Change - Reported (GAAP) | -3 | % | -3 | % | -4 | % | ||||
Items Impacting Comparability | 0 | % | 2 | % | 3 | % | ||||
% Change - Adjusted (Non-GAAP) | -3 | % | -1 | % | -1 | % | ||||
Currency Impact | 8 | % | 8 | % | 11 | % | ||||
% Change - Currency Neutral (Adjusted) | 5 | % | 7 | % | 10 | % | ||||
Q2 Flavors |
Sales |
Segment |
||||||||
% Change - Reported (GAAP) | -1 | % | -7 | % | ||||||
Currency Impact | 8 | % | 8 | % | ||||||
% Change - Currency Neutral | 7 | % | 1 | % | ||||||
Q2 Fragrances |
Sales |
Segment |
||||||||
% Change - Reported (GAAP) | -4 | % | -6 | % | ||||||
Currency Impact | 8 | % | 11 | % | ||||||
% Change - Currency Neutral | 4 | % | 5 | % | ||||||
1H Consolidated |
Sales |
Operating |
EPS | |||||||
% Change - Reported (GAAP) | -1 | % | 0 | % | 8 | % | ||||
Items Impacting Comparability | 0 | % | 1 | % | -4 | % | ||||
% Change - Adjusted (Non-GAAP) | -1 | % | 1 | % | 4 | % | ||||
Currency Impact | 7 | % | 8 | % | 7 | % | ||||
% Change - Currency Neutral (Adjusted) | 6 | % | 9 | % | 11 | % | ||||
1H Flavors |
Sales | |||||||||
% Change - Reported (GAAP) | 1 | % | ||||||||
Currency Impact | 7 | % | ||||||||
% Change - Currency Neutral | 8 | % | ||||||||
1H Fragrances |
Sales | |||||||||
% Change - Reported (GAAP) | -3 | % | ||||||||
Currency Impact | 7 | % | ||||||||
% Change - Currency Neutral | 4 | % | ||||||||
Currency neutral growth is calculated by translating prior year amounts at the exchange rates used for the corresponding 2015 period. |
||||||||||
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(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.
Second Quarter 2015 | ||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||
Reported |
Restructuring |
Operational |
Acquisition |
Adjusted |
||||||||||||||||
Net sales | 767,541 | |||||||||||||||||||
Cost of goods sold | 422,501 | (281 | ) | (b) | (844 | ) | (c) | |||||||||||||
Gross profit | 345,040 | 281 | 844 | 346,165 | ||||||||||||||||
Research and development expenses | 62,514 | |||||||||||||||||||
Selling and administrative expenses | 134,063 | (5,722 | ) | (c) | 128,341 | |||||||||||||||
RSA Expense | 196,577 | |||||||||||||||||||
Restructuring and other charges, net | (358 | ) | 358 | (a) | ||||||||||||||||
Operating profit | 148,821 | (358 | ) | 281 | 6,566 | 155,310 | ||||||||||||||
Interest expense | 11,407 | |||||||||||||||||||
Other expense (income), net | 436 | |||||||||||||||||||
Income before taxes | 136,978 | (358 | ) | 281 | 6,566 | 143,467 | ||||||||||||||
Taxes on income | 31,604 | (125 | ) | 70 | 875 | 32,424 | ||||||||||||||
Net income | 105,374 | (233 | ) | 211 | 5,691 | 111,043 | ||||||||||||||
Earnings per share - diluted | $ | 1.29 | $ | — | $ | — | $ | 0.07 | $ | 1.36 | ||||||||||
(a) Costs related to the Fragrance Ingredients Rationalization. | ||||||||||||||||||||
(b) Related to a partial plant closing in Asia. | ||||||||||||||||||||
(c) Transaction costs related to acquisitions (Ottens Flavors and Lucas Meyer Cosmetics) as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisition. | ||||||||||||||||||||
* The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $1.2M. | ||||||||||||||||||||
Second Quarter 2014 | ||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||
Reported |
Restructuring |
Operational |
Adjusted |
|||||||||||||||||
Net sales | 788,414 | |||||||||||||||||||
Cost of goods sold | 435,767 | (2,850 | ) | (a) | (263 | ) | (b) | |||||||||||||
Gross profit | 352,647 | 2,850 | 263 | 355,760 | ||||||||||||||||
Research and development expenses | 66,431 | |||||||||||||||||||
Selling and administrative expenses | 132,919 | |||||||||||||||||||
RSA Expense | 199,350 | |||||||||||||||||||
Restructuring and other charges, net | 182 | (182 | ) | |||||||||||||||||
Operating profit | 153,115 | 3,032 | 263 | 156,410 | ||||||||||||||||
Interest expense | 11,403 | |||||||||||||||||||
Other expense (income), net | (4,641 | ) | ||||||||||||||||||
Income before taxes | 146,353 | 3,032 | 263 | 149,648 | ||||||||||||||||
Taxes on income | 36,068 | 1,060 | 67 | 37,195 | ||||||||||||||||
Net income | 110,285 | 1,972 | 196 | 112,453 | ||||||||||||||||
Earnings per share - diluted | $ | 1.35 | $ | 0.02 | $ | — | $ | 1.37 | ||||||||||||
(a) Costs related to the Fragrance Ingredients Rationalization. | ||||||||||||||||||||
(b) Related to plant closing in Europe and partial closing in Asia. | ||||||||||||||||||||
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(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.
Second Quarter Year-to-Date 2015 | ||||||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||||||
Reported |
Restructuring |
Operational |
Acquisition |
Tax |
Adjusted |
|||||||||||||||||||
Net sales | 1,542,448 | |||||||||||||||||||||||
Cost of goods sold | 851,131 | (562 | ) | (b) | (843 | ) | (c) | 849,726 | ||||||||||||||||
Gross profit | 691,317 | 562 | 843 | |||||||||||||||||||||
Research and development expenses | 125,976 | |||||||||||||||||||||||
Selling and administrative expenses | 254,898 | (6,222 | ) | (c) | 248,676 | |||||||||||||||||||
RSA Expense | 380,874 | |||||||||||||||||||||||
Restructuring and other charges, net | (170 | ) | 170 | (a) | ||||||||||||||||||||
Operating profit | 310,613 | (170 | ) | 562 | 7,065 | 318,070 | ||||||||||||||||||
Interest expense | 22,502 | |||||||||||||||||||||||
Other expense (income), net | (5,275 | ) | ||||||||||||||||||||||
Income before taxes | 293,386 | (170 | ) | 562 | 7,065 | 300,843 | ||||||||||||||||||
Taxes on income | 59,754 | (60 | ) | 140 | 1,050 | 10,478 | (d) | 71,362 | ||||||||||||||||
Net income | 233,632 | (110 | ) | 422 | 6,015 | (10,478 | ) | 229,481 | ||||||||||||||||
Earnings per share - diluted | $ | 2.86 | $ | — | $ | 0.01 | $ | 0.07 | $ | (0.13 | ) | $ | 2.81 | |||||||||||
(a) Costs related to the Fragrance Ingredients Rationalization. | ||||||||||||||||||||||||
(b) Related to plant closings in Europe and partial closing in Asia. | ||||||||||||||||||||||||
(c) Transaction costs related to acquisitions (Ottens Flavors and Lucas Meyer Cosmetics) as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisitions. | ||||||||||||||||||||||||
(d) Settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. | ||||||||||||||||||||||||
* The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $1.2M. | ||||||||||||||||||||||||
Second Quarter Year-to-Date 2014 |
||||||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||||||
Reported |
Restructuring |
Operational |
Adjusted |
|||||||||||||||||||||
Net sales | 1,558,638 | |||||||||||||||||||||||
Cost of goods sold | 864,579 | (5,100 | ) |
(a) |
(632 | ) |
(b) |
858,847 | ||||||||||||||||
Gross profit | 694,059 | 5,100 | 632 | |||||||||||||||||||||
Research and development expenses | 127,934 | |||||||||||||||||||||||
Selling and administrative expenses | 256,653 | |||||||||||||||||||||||
RSA Expense | 384,587 |
|
||||||||||||||||||||||
Restructuring and other charges, net | 304 | (304 | ) | |||||||||||||||||||||
Operating profit | 309,168 | 5,404 | 632 | 315,204 | ||||||||||||||||||||
Interest expense | 23,080 | |||||||||||||||||||||||
Other expense (income), net | (3,198 | ) | ||||||||||||||||||||||
Income before taxes | 289,286 | 5,404 | 632 | 295,322 | ||||||||||||||||||||
Taxes on income | 72,294 | 1,891 | 156 | 74,341 | ||||||||||||||||||||
Net income | 216,992 | 3,513 | 476 | 220,981 | ||||||||||||||||||||
Earnings per share - diluted | $ | 2.64 | $ | 0.04 | $ | 0.01 | $ | 2.69 | ||||||||||||||||
(a) Costs related to the Fragrance Ingredients Rationalization. | ||||||||||||||||||||||||
(b) Related to plant closings in Europe and partial closing in Asia. | ||||||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20150810006273/en/
Source:
International Flavors & Fragrances Inc.
VP, Global Corporate
Communications & Investor Relations:
Michael DeVeau,
212-708-7164