Sensient Technologies Corporation Reports Results for the Quarter Ended September 30, 2024

Rhea-AI Summary

Sensient Technologies (NYSE: SXT) reported strong Q3 2024 financial results with revenue increasing 7.9% to $392.6 million. Operating income rose 13.4% to $50.5 million, while diluted earnings per share grew 2.7% to 77 cents. The company saw growth across all segments: Flavors & Extracts revenue increased 6.4% to $203.3 million, Color Group revenue grew 11.8% to $162.1 million, and Asia Pacific revenue rose 13.6% to $41.8 million. The company maintains its 2024 outlook, expecting high single-digit revenue growth and mid-single-digit adjusted diluted EPS growth.

Positive

• Revenue increased 7.9% to $392.6 million
• Operating income grew 13.4% to $50.5 million
• Color Group revenue increased 11.8% with operating income up 30%
• All business segments showed volume growth and improved pricing
• Company maintains positive guidance for 2024

Negative

• Corporate & Other operating expenses increased from $9.6M to $14.5M
• $1.2M costs related to Portfolio Optimization Plan
• Diluted EPS growth of 2.7% lagged behind revenue and operating income growth

Insights

Financial Analyst

Sensient Technologies delivered a strong third quarter with notable growth across all segments. $392.6M revenue represents a 7.9% YoY increase, while operating income grew 13.4% to $50.5M. Key highlights include the Color Group's exceptional performance with 30% operating income growth and 11.8% revenue increase.

The company's improved guidance for local currency revenue to high single-digit growth from previous mid-to-high single-digit shows increasing confidence in market conditions. Strong volume growth across segments and successful pricing strategies have contributed to margin expansion. The $1.2M Portfolio Optimization Plan costs indicate continued focus on operational efficiency.

Market Research Analyst

Market dynamics in food, pharmaceutical and personal care sectors are driving Sensient's growth. The Color Group's outstanding performance reflects increasing demand for natural colorants and specialized solutions. Asia Pacific's 13.6% revenue growth indicates strong market penetration in emerging markets.

The company's ability to implement pricing actions while maintaining volume growth suggests strong market positioning and product differentiation. The updated guidance reflects resilient end-market demand and successful execution of growth strategies, particularly in high-value segments.

MILWAUKEE--(BUSINESS WIRE)-- Sensient Technologies Corporation (NYSE: SXT), a leading provider of flavors and colors for the food, pharmaceutical, and personal care markets, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter Consolidated Results

• Reported revenue increased 7.9% to $392.6 million in the third quarter of 2024 versus last year’s third quarter results of $363.8 million. On a local currency basis⁽¹⁾, revenue increased 8.6%.
• Reported operating income increased 13.4% to $50.5 million compared to $44.5 million recorded in the third quarter of 2023. In the third quarter of 2024, the Company recorded $1.2 million of costs related to its Portfolio Optimization Plan. Local currency adjusted operating income⁽¹⁾ and local currency adjusted EBITDA⁽¹⁾ increased 17.1% and 12.8%, respectively, in the third quarter.
• Reported diluted earnings per share increased 2.7% to 77 cents in the third quarter of 2024 compared to 75 cents in the third quarter of 2023. Local currency adjusted diluted EPS⁽¹⁾ increased 8.0% to 80 cents in the third quarter.

“I am pleased with our results this quarter and remain confident that our solid performance and volume growth will allow the Company to achieve our 2024 guidance,” said Paul Manning, Sensient’s Chairman, President, and Chief Executive Officer.

Third Quarter Group Results

		Reported				Local Currency(1)
Revenue		Quarter		Year-to-Date		Quarter		Year-to-Date
Flavors & Extracts		6.4%		8.5%		6.8%		8.3%
Color		11.8%		5.0%		13.0%		5.2%
Asia Pacific		13.6%		6.9%		13.4%		9.4%
Total Revenue		7.9%		6.7%		8.6%		6.9%
		Reported				Adjusted Local Currency(1)
Operating Income		Quarter		Year-to-Date		Quarter		Year-to-Date
Flavors & Extracts		12.1%		8.7%		12.8%		8.8%
Color		30.0%		10.7%		30.9%		10.8%
Asia Pacific		15.0%		4.2%		15.3%		7.5%
Total Operating Income		13.4%		1.8%		17.1%		6.4%

The Flavors & Extracts Group reported third quarter 2024 revenue of $203.3 million, an increase of $12.3 million versus the prior year’s third quarter. Segment operating income was $25.9 million in the third quarter of 2024, an increase of $2.8 million compared to the prior year’s third quarter. The Group’s higher revenue and operating income were driven by higher volumes and pricing.

The Color Group reported revenue of $162.1 million in the third quarter of 2024, an increase of $17.1 million compared to the prior year’s third quarter. Segment operating income was $29.8 million in the third quarter of 2024, an increase of $6.9 million compared to the prior year’s third quarter results. The Group’s increased revenue and operating income were primarily a result of the higher volumes across all product lines and higher pricing.

The Asia Pacific Group reported revenue of $41.8 million in the third quarter of 2024, an increase of $5.0 million compared to the prior year’s third quarter. The Group benefited from higher revenues across nearly all geographies. Segment operating income was $9.3 million in the quarter, an increase of $1.2 million compared to the prior year’s third quarter. The higher operating income is primarily a result of higher volumes.

Corporate & Other reported operating expenses of $14.5 million in the third quarter of 2024, compared to $9.6 million of operating expenses reported in the prior year’s third quarter. In the third quarter of 2024, the Company recorded $1.2 million of Portfolio Optimization Plan costs in Corporate & Other. Local currency adjusted operating expenses⁽¹⁾ for Corporate & Other increased $3.7 million compared to the prior year’s third quarter, primarily due to the higher performance-based compensation costs recorded in the third quarter of 2024 compared to the low comparable amount recorded in the third quarter of 2023.

2024 Outlook

Metric		Updated Guidance		Prior Guidance
Local Currency Revenue(1)		High Single-Digit Growth		Mid-to High Single-Digit Growth
Local Currency Adjusted EBITDA(1)		High Single-Digit Growth		Mid-to High Single-Digit Growth
Diluted EPS (GAAP)		Between $2.77 and $2.87*		Between $2.77 and $2.87*
Local Currency Adjusted Diluted EPS(1)		Mid-Single-Digit Growth		Mid-Single-Digit Growth
*Includes approximately 18 cents of Portfolio Optimization Plan costs.

This guidance is based on current conditions and economic and market trends in the markets in which the Company operates and is subject to various risks and uncertainties as described below.

(1)	Please refer to “Reconciliation of Non-GAAP Amounts” at the end of this release for more information regarding our non-GAAP financial measures.

USE OF NON-GAAP FINANCIAL MEASURES

The Company’s non-GAAP financial measures eliminate the impact of certain items, which, depending on the measure, include: currency movements, depreciation and amortization, Portfolio Optimization Plan costs, and non-cash share-based compensation. These measures are provided to enhance the overall understanding of the Company’s performance when viewed together with the GAAP results. Refer to “Reconciliation of Non-GAAP Amounts” at the end of this release.

CONFERENCE CALL

The Company will host a conference call to discuss its 2024 third quarter financial results at 8:30 a.m. CDT today, Friday, October 25, 2024. Investors may access the live webcast, including presentation slides, on the Company’s web site at investor.sensient.com. Alternatively, investors may join the conference call by contacting Chorus Call Inc. at (844) 492-3726 or (412) 317-1078.

A webcast replay will be available on the Company’s web site following the call. The call transcript will be available on the Company’s web site on or after October 29, 2024.

This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2024 Outlook” above. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and Israel and Hamas and other parties in the Middle East; the availability and cost of labor, logistics, and transportation; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and Portfolio Optimization Plan; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. Sensient uses advanced technologies and robust global supply chain capabilities to develop specialized solutions for food and beverages, as well as products that serve the pharmaceutical, nutraceutical, and personal care industries. Sensient’s customers range in size from small entrepreneurial businesses to major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)
(Unaudited)
Consolidated Statements of Earnings		Three Months Ended September 30,											Nine Months Ended September 30,
		2024				2023				% Change			2024				2023				% Change
Revenue		$	392,613			$	363,829			7.9	%		$	1,180,808			$	1,107,148			6.7	%
Cost of products sold			262,209				250,202			4.8	%			793,133				746,681			6.2	%
Selling and administrative expenses			79,884				69,096			15.6	%			238,092				213,507			11.5	%
Operating income			50,520				44,531			13.4	%			149,583				146,960			1.8	%
Interest expense			7,696				6,294							22,394				18,648
Earnings before income taxes			42,824				38,237							127,189				128,312
Income taxes			10,134				6,694							32,627				29,085
Net earnings		$	32,690			$	31,543			3.6	%		$	94,562			$	99,227			(4.7	%)
Earnings per share of common stock:
Basic		$	0.78			$	0.75						$	2.24			$	2.36
Diluted		$	0.77			$	0.75						$	2.23			$	2.35
Average common shares outstanding:
Basic			42,159				42,045							42,139				42,020
Diluted			42,429				42,233							42,377				42,241
Results by Segment		Three Months Ended September 30,											Nine Months Ended September 30,
Revenue		2024				2023				% Change			2024				2023				% Change
Flavors & Extracts		$	203,279			$	190,997			6.4	%		$	605,584			$	558,133			8.5	%
Color			162,080				144,939			11.8	%			489,805				466,563			5.0	%
Asia Pacific			41,778				36,774			13.6	%			120,664				112,888			6.9	%
Intersegment elimination			(14,524	)			(8,881	)						(35,245	)			(30,436	)
Consolidated		$	392,613			$	363,829			7.9	%		$	1,180,808			$	1,107,148			6.7	%
Operating Income
Flavors & Extracts		$	25,862			$	23,078			12.1	%		$	75,749			$	69,714			8.7	%
Color			29,806				22,925			30.0	%			92,987				84,027			10.7	%
Asia Pacific			9,307				8,095			15.0	%			25,963				24,911			4.2	%
Corporate & Other			(14,455	)			(9,567	)						(45,116	)			(31,692	)
Consolidated		$	50,520			$	44,531			13.4	%		$	149,583			$	146,960			1.8	%

Sensient Technologies Corporation
(In thousands)
(Unaudited)
Consolidated Condensed Balance Sheets		September 30,			December 31,
		2024			2023
Cash and cash equivalents		$	36,969		$	28,934
Trade accounts receivable			302,012			272,164
Inventories			580,847			598,399
Prepaid expenses and other current assets			38,973			37,119
Total Current Assets			958,801			936,616
Goodwill & intangible assets (net)			438,220			436,177
Property, plant, and equipment (net)			494,619			505,277
Other assets			150,972			136,437
Total Assets		$	2,042,612		$	2,014,507
Trade accounts payable		$	119,238		$	131,114
Short-term borrowings			17,811			13,460
Other current liabilities			119,406			91,732
Total Current Liabilities			256,455			236,306
Long-term debt			625,627			645,085
Accrued employee and retiree benefits			26,130			27,715
Other liabilities			53,949			52,077
Shareholders' Equity			1,080,451			1,053,324
Total Liabilities and Shareholders' Equity		$	2,042,612		$	2,014,507

Sensient Technologies Corporation
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
			2024				2023
Cash flows from operating activities:
Net earnings		$	94,562			$	99,227
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization			45,185				43,360
Share-based compensation expense			6,980				7,285
Net gain on assets			(210	)			(81	)
Portfolio Optimization Plan costs			1,406				-
Deferred income taxes			(11,117	)			2,082
Changes in operating assets and liabilities:
Trade accounts receivable			(32,138	)			18,830
Inventories			14,902				(21,455	)
Prepaid expenses and other assets			221				842
Trade accounts payable and other accrued expenses			(4,664	)			(20,572	)
Accrued salaries, wages, and withholdings			16,769				(16,749	)
Income taxes			854				(6,536	)
Other liabilities			3,011				587
Net cash provided by operating activities			135,761				106,820
Cash flows from investing activities:
Acquisition of property, plant, and equipment			(36,088	)			(67,718	)
Proceeds from sale of assets			338				130
Other investing activities			(1,444	)			2,036
Net cash used in investing activities			(37,194	)			(65,552	)
Cash flows from financing activities:
Proceeds from additional borrowings			134,432				197,577
Debt payments			(154,219	)			(174,083	)
Dividends paid			(52,034	)			(51,900	)
Other financing activities			(3,317	)			(8,034	)
Net cash used in financing activities			(75,138	)			(36,440	)
Effect of exchange rate changes on cash and cash equivalents			(15,394	)			6,236
Net increase in cash and cash equivalents			8,035				11,064
Cash and cash equivalents at beginning of period			28,934				20,921
Cash and cash equivalents at end of period		$	36,969			$	31,985
Supplemental Information
Nine Months Ended September 30,			2024				2023
Dividends paid per share		$	1.23			$	1.23

Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)
(Unaudited)
Reconciliation of Non-GAAP Amounts
The Company's results for the three and nine months ended September 30, 2024 and 2023 include adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which, in each case, exclude Portfolio Optimization Plan costs.
		Three Months Ended September 30,											Nine Months Ended September 30,
		2024				2023			% Change				2024				2023			% Change
Operating income (GAAP)		$	50,520			$	44,531			13.4	%		$	149,583			$	146,960			1.8	%
Portfolio Optimization Plan costs – Cost of products sold			209				-							523				-
Portfolio Optimization Plan costs – Selling and administrative expenses			1,002				-							5,252				-
Adjusted operating income		$	51,731			$	44,531			16.2	%		$	155,358			$	146,960			5.7	%
Net earnings (GAAP)		$	32,690			$	31,543			3.6	%		$	94,562			$	99,227			(4.7	%)
Portfolio Optimization Plan costs, before tax			1,211				-							5,775				-
Tax impact of Portfolio Optimization Plan costs(1)			(17	)			-							(586	)			-
Adjusted net earnings		$	33,884			$	31,543			7.4	%		$	99,751			$	99,227			0.5	%
Diluted earnings per share (GAAP)		$	0.77			$	0.75			2.7	%		$	2.23			$	2.35			(5.1	%)
Portfolio Optimization Plan costs, net of tax			0.03				-							0.12				-
Adjusted diluted earnings per share		$	0.80			$	0.75			6.7	%		$	2.35			$	2.35			0.0	%
Note: Earnings per share calculations may not foot due to rounding differences.
(1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.
Results by Segment		Three Months Ended September 30,
									Adjusted											Adjusted
Operating Income		2024				Adjustments(2)			2024				2023				Adjustments(2)			2023
Flavors & Extracts		$	25,862			$	-		$	25,862			$	23,078			$	-		$	23,078
Color			29,806				-			29,806				22,925				-			22,925
Asia Pacific			9,307				-			9,307				8,095				-			8,095
Corporate & Other			(14,455	)			1,211			(13,244	)			(9,567	)			-			(9,567	)
Consolidated		$	50,520			$	1,211		$	51,731			$	44,531			$	-		$	44,531
Results by Segment		Nine Months Ended September 30,
									Adjusted											Adjusted
Operating Income		2024				Adjustments(2)			2024				2023				Adjustments(2)			2023
Flavors & Extracts		$	75,749			$	-		$	75,749			$	69,714			$	-		$	69,714
Color			92,987				-			92,987				84,027				-			84,027
Asia Pacific			25,963				-			25,963				24,911				-			24,911
Corporate & Other			(45,116	)			5,775			(39,341	)			(31,692	)			-			(31,692	)
Consolidated		$	149,583			$	5,775		$	155,358			$	146,960			$	-		$	146,960
(2) Adjustments consist of Portfolio Optimization Plan costs.

Sensient Technologies Corporation
(In thousands, except percentages)
(Unaudited)
Reconciliation of Non-GAAP Amounts - Continued
The following table summarizes the percentage change in the 2024 results compared to the 2023 results for the corresponding periods.
			Three Months Ended September 30, 2024
Revenue			Total			Foreign Exchange Rates			Adjustments(3)			Adjusted Local Currency
Flavors & Extracts			6.4	%		(0.4	%)		N/A			6.8	%
Color			11.8	%		(1.2	%)		N/A			13.0	%
Asia Pacific			13.6	%		0.2	%		N/A			13.4	%
Total Revenue			7.9	%		(0.7	%)		N/A			8.6	%
Operating Income
Flavors & Extracts			12.1	%		(0.7	%)		0.0	%		12.8	%
Color			30.0	%		(0.9	%)		0.0	%		30.9	%
Asia Pacific			15.0	%		(0.3	%)		0.0	%		15.3	%
Corporate & Other			51.1	%		0.1	%		12.6	%		38.4	%
Total Operating Income			13.4	%		(1.0	%)		(2.7	%)		17.1	%
Diluted Earnings Per Share			2.7	%		(1.3	%)		(4.0	%)		8.0	%
Adjusted EBITDA			12.0	%		(0.8	%)		N/A			12.8	%
			Nine Months Ended September 30, 2024
Revenue			Total			Foreign Exchange Rates			Adjustments(3)			Adjusted Local Currency
Flavors & Extracts			8.5	%		0.2	%		N/A			8.3	%
Color			5.0	%		(0.2	%)		N/A			5.2	%
Asia Pacific			6.9	%		(2.5	%)		N/A			9.4	%
Total Revenue			6.7	%		(0.2	%)		N/A			6.9	%
Operating Income
Flavors & Extracts			8.7	%		(0.1	%)		0.0	%		8.8	%
Color			10.7	%		(0.1	%)		0.0	%		10.8	%
Asia Pacific			4.2	%		(3.3	%)		0.0	%		7.5	%
Corporate & Other			42.4	%		0.1	%		18.2	%		24.1	%
Total Operating Income			1.8	%		(0.7	%)		(3.9	%)		6.4	%
Diluted Earnings Per Share			(5.1	%)		(0.8	%)		(5.2	%)		0.9	%
Adjusted EBITDA			5.0	%		(0.5	%)		N/A			5.5	%
(3) Adjustments consist of Portfolio Optimization Plan costs.

Sensient Technologies Corporation
(In thousands, except percentages)
(Unaudited)
Reconciliation of Non-GAAP Amounts - Continued
The following table summarizes the reconciliation between Consolidated Operating Income (GAAP) and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.
			Three Months Ended September 30,											Nine Months Ended September 30,
			2024				2023				% Change			2024			2023			% Change
Operating income (GAAP)			$	50,520			$	44,531			13.4	%		$	149,583		$	146,960		1.8	%
Depreciation and amortization				15,460				14,770							45,185			43,360
Share-based compensation expense				2,069				2,519							6,980			7,285
Portfolio Optimization Plan costs, before tax				1,211				-							5,775			-
Adjusted EBITDA			$	69,260			$	61,820			12.0	%		$	207,523		$	197,605		5.0	%
The following table summarizes the reconciliation between Debt (GAAP) and Net Debt, and Operating Income (GAAP) and Credit Adjusted EBITDA for the trailing twelve months ended September 30, 2024 and 2023.
			September 30,
Debt			2024				2023
Short-term borrowings			$	17,811			$	22,807
Long-term debt				625,627				648,556
Credit Agreement adjustments(4)				(22,633	)			(19,463	)
Net Debt			$	620,805			$	651,900
Operating income (GAAP)			$	157,646			$	188,185
Depreciation and amortization				59,645				56,565
Share-based compensation expense				8,628				10,947
Portfolio Optimization Plan costs, before tax				33,616				-
Other non-operating gains(5)				(998	)			(3,783	)
Credit Adjusted EBITDA			$	258,537			$	251,914
Net Debt to Credit Adjusted EBITDA			2.4x				2.6x
(4) Adjustments include cash and cash equivalents, as described in the Company's Third Amended and Restated Credit Agreement (Credit Agreement), and certain letters of credit and hedge contracts.
(5) Adjustments consist of certain financing transaction costs, certain non-financing interest items, and gains and losses related to certain non-cash, non-operating, and/or non-recurring items as described in the Credit Agreement.
The following table summarizes the reconciliation between Diluted Earnings Per Share (GAAP) and Adjusted Diluted Earnings Per Share for the twelve months ended December 31, 2023.
Twelve Months Ended December 31,
			2023
Diluted earnings per share (GAAP)			$	2.21
Portfolio Optimization Plan costs, net of tax				0.65
Adjusted diluted earnings per share			$	2.86
Note: Earnings per share calculations may not foot due to rounding differences.
We have included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable period-over-period performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this release and our SEC filings. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and we believe the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20241024482476/en/

Amy Agallar

(414) 347-3706

investor.relations@sensient.com

Source: Sensient Technologies Corporation

FAQ

What was Sensient Technologies (SXT) revenue growth in Q3 2024?

Sensient Technologies reported a 7.9% revenue increase to $392.6 million in Q3 2024 compared to $363.8 million in Q3 2023.

How much did Sensient Technologies (SXT) earnings per share grow in Q3 2024?

Sensient Technologies reported diluted earnings per share of 77 cents in Q3 2024, representing a 2.7% increase from 75 cents in Q3 2023.

What is Sensient Technologies (SXT) guidance for 2024?

Sensient Technologies expects high single-digit revenue growth, high single-digit adjusted EBITDA growth, and mid-single-digit adjusted diluted EPS growth for 2024.