Sensient Technologies Corporation Reports Results for the Quarter Ended June 30, 2023
BUSINESS REVIEW |
||||||||
Reported |
||||||||
| Revenue | Quarter |
Year-to-Date |
||||||
| Flavors & Extracts | -0.6 |
% |
-1.3 |
% |
||||
| Color | 2.7 |
% |
5.6 |
% |
||||
-3.5 |
% |
3.1 |
% |
|||||
| Total Revenue | 0.7 |
% |
2.2 |
% |
||||
Local Currency(1) |
||||||||
| Revenue | Quarter |
Year-to-Date |
||||||
| Flavors & Extracts | -1.6 |
% |
-1.4 |
% |
||||
| Color | 1.6 |
% |
5.7 |
% |
||||
-0.7 |
% |
6.9 |
% |
|||||
| Total Revenue | 0.0 |
% |
2.6 |
% |
||||
| (1) Local currency percentage changes are described in more detail in the "Reconciliation of Non-GAAP Amounts" at the end of this release. | ||||||||
The Flavors & Extracts Group reported second quarter revenue of
The Color Group reported revenue of
The Asia Pacific Group reported revenue of
Corporate & Other reported an operating loss of
2023 OUTLOOK
Sensient now expects 2023 full year GAAP diluted earnings per share to be down high single digits compared to our 2022 reported GAAP diluted earnings per share of
The Company continues to expect 2023 revenue to grow at a mid-single-digit rate on a local currency basis compared to the Company’s 2022 revenue. The Company now expects 2023 adjusted EBITDA(2) to be down mid-single digits on a local currency basis compared to the Company’s 2022 adjusted EBITDA(2). The Company’s previous 2023 adjusted EBITDA(2) guidance was to grow at a mid-to high single-digit rate on a local currency basis compared to the Company’s 2022 adjusted EBITDA(2).
The Company expects its 2023 diluted earnings per share to be impacted by higher interest rates and a higher tax rate. Based on current exchange rates, the Company expects foreign exchange rates to be modestly favorable for the full year.
The Company’s 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. We do not anticipate any divestiture related costs, operational improvement plan costs, or results of divested business in 2023 at this time.
(2) See “Reconciliation of Non-GAAP Amounts” at the end of this release for more information.
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, divestiture and other related costs and income, 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 2023 second quarter financial results at 8:30 a.m. CDT on Friday, July 21, 2023. To participate in the conference call, contact Chorus Call Inc. at (844) 492-3726 or (412) 317-1078, and ask to join the Sensient Technologies Corporation conference call. Alternatively, the call can be accessed by using the webcast link that is available on the Investor Information section of the Company’s web site at www.sensient.com.
A replay of the call will be available one hour after the end of the conference call through July 28, 2023, by calling (877) 344-7529 and referring to conference identification number 8018105. An audio replay and written transcript of the call will also be posted on the Investor Information section of the Company’s web site at www.sensient.com on or after July 25, 2023.
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2023 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 economic and capital 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; the availability and cost of labor, logistics, and transportation; the impact and uncertainty created by the COVID-19 pandemic and efforts to manage it on the global economy, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, governmental regulations and restrictions, and general economic conditions; the uncertain impacts of the ongoing conflict between
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
| Sensient Technologies Corporation | ||||||||||||||||||||||||||||
| (In thousands, except percentages and per share amounts) | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Consolidated Statements of Earnings | Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||||
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
|||||||||||||||||||||||
| Revenue | $ |
374,313 |
|
$ |
371,706 |
|
0.7 |
% |
$ |
743,319 |
|
$ |
727,227 |
|
2.2 |
% |
||||||||||||
| Cost of products sold |
|
252,136 |
|
|
240,703 |
|
4.7 |
% |
|
496,479 |
|
|
471,378 |
|
5.3 |
% |
||||||||||||
| Selling and administrative expenses |
|
70,586 |
|
|
75,759 |
|
(6.8 |
%) |
|
144,411 |
|
|
147,816 |
|
(2.3 |
%) |
||||||||||||
| Operating income |
|
51,591 |
|
|
55,244 |
|
(6.6 |
%) |
|
102,429 |
|
|
108,033 |
|
(5.2 |
%) |
||||||||||||
| Interest expense |
|
6,352 |
|
|
3,083 |
|
|
12,354 |
|
|
6,076 |
|
||||||||||||||||
| Earnings before income taxes |
|
45,239 |
|
|
52,161 |
|
|
90,075 |
|
|
101,957 |
|
||||||||||||||||
| Income taxes |
|
11,206 |
|
|
13,514 |
|
|
22,391 |
|
|
26,239 |
|
||||||||||||||||
| Net earnings | $ |
34,033 |
|
$ |
38,647 |
|
(11.9 |
%) |
$ |
67,684 |
|
$ |
75,718 |
|
(10.6 |
%) |
||||||||||||
| Earnings per share of common stock: | ||||||||||||||||||||||||||||
| Basic | $ |
0.81 |
|
$ |
0.92 |
|
$ |
1.61 |
|
$ |
1.81 |
|
||||||||||||||||
| Diluted | $ |
0.81 |
|
$ |
0.92 |
|
$ |
1.60 |
|
$ |
1.80 |
|
||||||||||||||||
| Average common shares outstanding: | ||||||||||||||||||||||||||||
| Basic |
|
42,043 |
|
|
41,893 |
|
|
42,006 |
|
|
41,879 |
|
||||||||||||||||
| Diluted |
|
42,235 |
|
|
42,208 |
|
|
42,245 |
|
|
42,178 |
|
||||||||||||||||
| Results by Segment | Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||||
Revenue |
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
||||||||||||||||||||||
| Flavors & Extracts | $ |
188,284 |
|
$ |
189,337 |
|
(0.6 |
%) |
$ |
367,136 |
|
$ |
372,064 |
|
(1.3 |
%) |
||||||||||||
| Color |
|
160,463 |
|
|
156,268 |
|
2.7 |
% |
|
321,624 |
|
|
304,706 |
|
5.6 |
% |
||||||||||||
|
36,029 |
|
|
37,328 |
|
(3.5 |
%) |
|
76,114 |
|
|
73,793 |
|
3.1 |
% |
|||||||||||||
| Intersegment elimination |
|
(10,463 |
) |
|
(11,227 |
) |
|
(21,555 |
) |
|
(23,336 |
) |
||||||||||||||||
| Consolidated | $ |
374,313 |
|
$ |
371,706 |
|
0.7 |
% |
$ |
743,319 |
|
$ |
727,227 |
|
2.2 |
% |
||||||||||||
| Operating Income | ||||||||||||||||||||||||||||
| Flavors & Extracts | $ |
24,456 |
|
$ |
30,013 |
|
(18.5 |
%) |
$ |
46,636 |
|
$ |
57,592 |
|
(19.0 |
%) |
||||||||||||
| Color |
|
29,217 |
|
|
31,178 |
|
(6.3 |
%) |
|
61,102 |
|
|
61,835 |
|
(1.2 |
%) |
||||||||||||
|
7,575 |
|
|
7,721 |
|
(1.9 |
%) |
|
16,816 |
|
|
15,925 |
|
5.6 |
% |
|||||||||||||
| Corporate & Other |
|
(9,657 |
) |
|
(13,668 |
) |
|
(22,125 |
) |
|
(27,319 |
) |
||||||||||||||||
| Consolidated | $ |
51,591 |
|
$ |
55,244 |
|
(6.6 |
%) |
$ |
102,429 |
|
$ |
108,033 |
|
(5.2 |
%) |
||||||||||||
| Sensient Technologies Corporation | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Consolidated Condensed Balance Sheets | June 30, |
December 31, |
||||||
2023 |
2022 |
|||||||
| Cash and cash equivalents | $ |
36,546 |
$ |
20,921 |
||||
| Trade accounts receivable |
|
300,741 |
|
302,109 |
||||
| Inventories |
|
588,459 |
|
564,110 |
||||
| Prepaid expenses and other current assets |
|
42,945 |
|
47,640 |
||||
| Total Current Assets |
|
968,691 |
|
934,780 |
||||
| Goodwill & intangible assets (net) |
|
440,038 |
|
434,315 |
||||
| Property, plant, and equipment (net) |
|
504,981 |
|
483,193 |
||||
| Other assets |
|
132,502 |
|
129,326 |
||||
| Total Assets | $ |
2,046,212 |
$ |
1,981,614 |
||||
| Trade accounts payable | $ |
119,340 |
$ |
142,365 |
||||
| Short-term borrowings |
|
15,436 |
|
20,373 |
||||
| Other current liabilities |
|
87,870 |
|
109,415 |
||||
| Total Current Liabilities |
|
222,646 |
|
272,153 |
||||
| Long-term debt |
|
686,589 |
|
630,331 |
||||
| Accrued employee and retiree benefits |
|
27,141 |
|
26,364 |
||||
| Other liabilities |
|
55,572 |
|
53,168 |
||||
| Shareholders' Equity |
|
1,054,264 |
|
999,598 |
||||
| Total Liabilities and Shareholders' Equity | $ |
2,046,212 |
$ |
1,981,614 |
||||
Sensient Technologies Corporation |
||||||||||
(In thousands, except per share amounts) |
||||||||||
(Unaudited) |
||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| Six Months Ended June 30, | ||||||||||
2023 |
2022 |
|||||||||
| Cash flows from operating activities: | ||||||||||
| Net earnings | $ |
67,684 |
|
$ |
75,718 |
|
||||
| Adjustments to arrive at net cash provided by operating activities: | ||||||||||
| Depreciation and amortization |
|
28,590 |
|
|
26,180 |
|
||||
| Share-based compensation expense |
|
4,766 |
|
|
8,691 |
|
||||
| Net loss (gain) on assets |
|
81 |
|
|
(38 |
) |
||||
| Deferred income taxes |
|
(2,643 |
) |
|
12,244 |
|
||||
| Changes in operating assets and liabilities: | ||||||||||
| Trade accounts receivable |
|
6,062 |
|
|
(41,592 |
) |
||||
| Inventories |
|
(16,927 |
) |
|
(51,768 |
) |
||||
| Prepaid expenses and other assets |
|
3,534 |
|
|
(25,919 |
) |
||||
| Trade accounts payable and other accrued expenses |
|
(18,329 |
) |
|
20,501 |
|
||||
| Accrued salaries, wages, and withholdings |
|
(19,713 |
) |
|
(4,188 |
) |
||||
| Income taxes |
|
(1,998 |
) |
|
2,765 |
|
||||
| Other liabilities |
|
595 |
|
|
199 |
|
||||
| Net cash provided by operating activities |
|
51,702 |
|
|
22,793 |
|
||||
| Cash flows from investing activities: | ||||||||||
| Acquisition of property, plant, and equipment |
|
(45,137 |
) |
|
(32,468 |
) |
||||
| Proceeds from sale of assets |
|
53 |
|
|
92 |
|
||||
| Other investing activities |
|
2,054 |
|
|
1,571 |
|
||||
| Net cash used in investing activities |
|
(43,030 |
) |
|
(30,805 |
) |
||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from additional borrowings |
|
187,037 |
|
|
69,424 |
|
||||
| Debt payments |
|
(143,923 |
) |
|
(31,547 |
) |
||||
| Dividends paid |
|
(34,577 |
) |
|
(34,446 |
) |
||||
| Other financing activities |
|
(8,003 |
) |
|
(2,056 |
) |
||||
| Net cash provided by financing activities |
|
534 |
|
|
1,375 |
|
||||
| Effect of exchange rate changes on cash and cash equivalents |
|
6,419 |
|
|
6,168 |
|
||||
| Net increase (decrease) in cash and cash equivalents |
|
15,625 |
|
|
(469 |
) |
||||
| Cash and cash equivalents at beginning of period |
|
20,921 |
|
|
25,740 |
|
||||
| Cash and cash equivalents at end of period | $ |
36,546 |
|
$ |
25,271 |
|
||||
| Supplemental Information | ||||||||||
| Six Months Ended June 30, | 2023 |
2022 |
||||||||
| Dividends paid per share | $ |
0.82 |
|
$ |
0.82 |
|
||||
| Sensient Technologies Corporation | |||||||||||||
| (In thousands, except percentages) | |||||||||||||
| (Unaudited) | |||||||||||||
| Reconciliation of Non-GAAP Amounts | |||||||||||||
| The following table summarizes the percentage change in the 2023 results compared to the 2022 results for the corresponding periods. | |||||||||||||
Three Months Ended June 30, |
||||||||||
| Revenue | Total |
Foreign
|
Local
|
|||||||
| Flavors & Extracts | (0.6 |
%) |
1.0 |
% |
(1.6 |
%) |
||||
| Color | 2.7 |
% |
1.1 |
% |
1.6 |
% |
||||
(3.5 |
%) |
(2.8 |
%) |
(0.7 |
%) |
|||||
| Total Revenue | 0.7 |
% |
0.7 |
% |
0.0 |
% |
||||
| Operating Income | ||||||||||
| Flavors & Extracts | (18.5 |
%) |
0.6 |
% |
(19.1 |
%) |
||||
| Color | (6.3 |
%) |
1.3 |
% |
(7.6 |
%) |
||||
(1.9 |
%) |
(2.8 |
%) |
0.9 |
% |
|||||
| Corporate & Other | (29.3 |
%) |
0.0 |
% |
(29.3 |
%) |
||||
| Total Operating Income | (6.6 |
%) |
0.7 |
% |
(7.3 |
%) |
||||
| Diluted Earnings Per Share | (12.0 |
%) |
0.0 |
% |
(12.0 |
%) |
||||
| Adjusted EBITDA | (6.0 |
%) |
0.6 |
% |
(6.6 |
%) |
||||
Six Months Ended June 30, |
||||||||||
| Revenue | Total |
Foreign
|
Local
|
|||||||
| Flavors & Extracts | (1.3 |
%) |
0.1 |
% |
(1.4 |
%) |
||||
| Color | 5.6 |
% |
(0.1 |
%) |
5.7 |
% |
||||
3.1 |
% |
(3.8 |
%) |
6.9 |
% |
|||||
| Total Revenue | 2.2 |
% |
(0.4 |
%) |
2.6 |
% |
||||
| Operating Income | ||||||||||
| Flavors & Extracts | (19.0 |
%) |
0.3 |
% |
(19.3 |
%) |
||||
| Color | (1.2 |
%) |
(0.5 |
%) |
(0.7 |
%) |
||||
5.6 |
% |
(4.1 |
%) |
9.7 |
% |
|||||
| Corporate & Other | (19.0 |
%) |
0.0 |
% |
(19.0 |
%) |
||||
| Total Operating Income | (5.2 |
%) |
(0.8 |
%) |
(4.4 |
%) |
||||
| Diluted Earnings Per Share | (11.1 |
%) |
(1.1 |
%) |
(10.0 |
%) |
||||
| Adjusted EBITDA | (5.0 |
%) |
(0.6 |
%) |
(4.4 |
%) |
||||
The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022. |
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
||||||||||||||
| Operating income (GAAP) | $ |
51,591 |
$ |
55,244 |
(6.6 |
%) |
$ |
102,429 |
$ |
108,033 |
(5.2 |
%) |
|||||||
| Depreciation and amortization |
|
14,440 |
|
13,124 |
|
28,590 |
|
26,180 |
|||||||||||
| Share-based compensation expense |
|
2,499 |
|
4,528 |
|
4,766 |
|
8,691 |
|||||||||||
| Adjusted EBITDA | $ |
68,530 |
$ |
72,896 |
(6.0 |
%) |
$ |
135,785 |
$ |
142,904 |
(5.0 |
%) |
|||||||
| Sensient Technologies Corporation | |||||||||||||
| (In thousands, except percentages) | |||||||||||||
| (Unaudited) | |||||||||||||
| Reconciliation of Non-GAAP Amounts - Continued | |||||||||||||
| 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 June 30, 2023 and 2022. | |||||||||||||
June 30, |
||||||||
| Debt | 2023 |
2022 |
||||||
| Short-term borrowings | $ |
15,436 |
|
$ |
26,624 |
|
||
| Long-term debt |
|
686,589 |
|
|
498,715 |
|
||
| Credit Agreement adjustments(1) |
|
(19,755 |
) |
|
(13,744 |
) |
||
| Net Debt | $ |
682,270 |
|
$ |
511,595 |
|
||
| Operating income (GAAP) | $ |
191,147 |
|
$ |
195,411 |
|
||
| Depreciation and amortization |
|
54,877 |
|
|
52,414 |
|
||
| Share-based compensation expense |
|
12,213 |
|
|
14,076 |
|
||
| Other non-operating (gains) losses(2) |
|
(3,326 |
) |
|
200 |
|
||
| Credit Adjusted EBITDA | $ |
254,911 |
|
$ |
262,101 |
|
||
| Net Debt to Credit Adjusted EBITDA | 2.7x | 2.0x | ||||||
| (1) 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. | |||||||||||||
| (2) 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, 2022. |
| Twelve Months Ended December 31, | ||||
2022 |
||||
| Diluted earnings per share (GAAP) | $ |
3.34 |
|
|
| Divestiture & other related income, net of tax |
|
(0.04 |
) |
|
| Adjusted diluted earnings per share | $ |
3.29 |
|
|
| 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/20230720162217/en/
Amy Agallar
(414) 347-3706
Source: Sensient Technologies Corporation
