| | |
Contact: | | Dick Hobbs (414) 347-3836 |
Sensient Technologies Corporation
Reports Earnings for the Quarter Ended March 31, 2006
Higher Earnings Prompt Increase in 2006 EPS Guidance
MILWAUKEE—April 21, 2006 — Sensient Technologies Corporation (NYSE: SXT) reported diluted earnings per share of 34 cents for its first quarter ended March 31, 2006. Diluted earnings per share in the prior year’s first quarter were 27 cents. First quarter 2006 revenue increased 4.8%, to $262.9 million, as a result of higher sales within the Flavors & Fragrances Group.
“Our cost reductions, product mix improvement and price increases are producing results,” said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation. “Sales were up this quarter and I expect continued revenue growth to deliver improved earnings in 2006.”
In the first quarter of 2006, Sensient adopted FASB Statement No. 123(R), “Share-Based Payment.” As a result, Sensient began to record expense related to stock options this quarter. The impact of FASB Statement No. 123(R) was approximately $500,000 of additional pre-tax expense in this year’s first quarter.
Results for the prior year’s first quarter included a one-time expense of $4.5 million ($2.8 million, or six cents, after tax) related to a customer arbitration award. Last year’s results also reflected a 20.6% effective tax rate due to tax benefits of approximately two cents per share for adjustments related to foreign tax liabilities. The effective tax rate for the first
-MORE-
| | |
Sensient Technologies Corporation | | Page 2 |
Earnings Release—First quarter ended March 31, 2006 | | |
April 21, 2006 | | |
quarter of 2006 was 29.2% and included benefits of approximately one cent per share related to the settlement of prior years’ tax liabilities.
BUSINESS REVIEW
Flavors & Fragrances Group revenue increased 7.7%, to $170.5 million, for the quarter ended March 31, 2006. Quarterly operating income increased 11.5%, to $22.9 million. Group revenue benefited from strong sales of flavors in North America. Improved pricing and product mix also added to Group revenue. Sales gains from these sources were partially offset by unfavorable foreign currency translation. Higher sales volumes, favorable pricing and cost reduction efforts increased operating income in the quarter.
Color Group revenue equaled $89.2 million for the quarter ended March 31, 2006, compared to $90.1 million for the comparable period in 2005. Operating income for the first quarter grew 7.3%, to $15.8 million. Strong sales within the Company’s cosmetic product line were offset by lower sales of technical colors and by unfavorable foreign currency translation. Strong cosmetic sales, increased sales of higher margin food and beverage colors and the Company’s cost reduction program boosted quarterly operating income.
2006 OUTLOOK
Sensient now expects reported 2006 diluted earnings per share to be between $1.35 and $1.40.
CONFERENCE CALL
The Company will host a conference call to discuss its 2006 first quarter financial results at 10:00 a.m. CDT on Friday, April 21, 2006. To make a reservation for the conference call, please contact InterCall Teleconferencing at (706) 645-6973 and refer to the Sensient Technologies Corporation conference call.
-MORE-
| | |
Sensient Technologies Corporation | | Page 3 |
Earnings Release—First quarter ended March 31, 2006 | | |
April 21, 2006 | | |
A replay will be available beginning at 1:00 p.m. CDT on April 21, 2006, through midnight on April 28, 2006, by calling (706) 645-9291 and referring to passcode 7837514. A transcript of the call will also be posted on the Company’s web site atwww.sensient-tech.comafter the call concludes.
This release contains forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, company performance and financial results. A variety of factors could cause the company’s actual results and experience to differ materially from the anticipated results, including, but not limited to the factors noted in this press release and in the Management’s Discussion and Analysis in our most recently filed annual report onForm 10-K for the year ended December 31, 2005. The forward-looking statements in this press release speak only as to the date of this release. Sensient Technologies Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations upon which such statements are based.
ABOUT SENSIENT TECHNOLOGIES
Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks, display imaging chemicals, and other specialty chemicals. The company’s customers include major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.
www.sensient-tech.com
-MORE-
| | |
Sensient Technologies Corporation (In thousands, except percentages and per share amounts)
Consolidated Statements of Earnings | | Page 4 |
| | | | | | | | | | | | |
| | Three Months Ended March 31, | |
|
| | 2006 | | | 2005 | | | % Change | |
|
Revenue | | $ | 262,924 | | | $ | 250,877 | | | | 4.8 | |
| | | | | | | | | | | | |
Cost of products sold | | | 183,485 | | | | 176,185 | | | | 4.1 | |
Selling and administrative expenses | | | 48,664 | | | | 49,814 | | | | (2.3 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | |
Operating income | | | 30,775 | | | | 24,878 | | | | 23.7 | |
Interest expense | | | 8,708 | | | | 8,724 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Earnings before income taxes | | | 22,067 | | | | 16,154 | | | | 36.6 | |
Income taxes | | | 6,449 | | | | 3,323 | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Net earnings | | $ | 15,618 | | | $ | 12,831 | | | | 21.7 | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | |
Basic | | $ | 0.34 | | | $ | 0.27 | | | | 25.9 | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Diluted | | $ | 0.34 | | | $ | 0.27 | | | | 25.9 | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Average common shares outstanding: | | | | | | | | | | | | |
Basic | | | 45,805 | | | | 46,735 | | | | (2.0 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | |
Diluted | | | 45,972 | | | | 47,167 | | | | (2.5 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | |
Results by Segment | | Three Months Ended March 31, | |
|
Revenue | | 2006 | | | 2005 | | | % Change | |
Flavors & Fragrances | | $ | 170,514 | | | $ | 158,385 | | | | 7.7 | |
Color | | | 89,156 | | | | 90,060 | | | | (1.0 | ) |
Corporate & Other | | | 10,004 | | | | 10,541 | | | | (5.1 | ) |
Intersegment elimination | | | (6,750 | ) | | | (8,109 | ) | | | (16.8 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | |
Consolidated | | $ | 262,924 | | | $ | 250,877 | | | | 4.8 | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Operating Income | | | | | | | | | | | | |
| | | | | | | | | | | | |
Flavors & Fragrances | | $ | 22,893 | | | $ | 20,539 | | | | 11.5 | |
Color | | | 15,845 | | | | 14,764 | | | | 7.3 | |
Corporate & Other | | | (7,963 | ) | | | (10,425 | ) | | | (23.6 | ) |
| | | | | | | | | | |
| | | | | | | | | | | | |
Consolidated | | $ | 30,775 | | | $ | 24,878 | | | | 23.7 | |
| | | | | | | | | | |
- MORE -
| | |
Sensient Technologies Corporation | | Page 5 |
(In thousands, except percentages and per share amounts) | | |
| | | | | | | | |
Consolidated Condensed Balance Sheets | | | | | | |
March 31, | | 2006 | | | 2005 | |
Current assets | | $ | 517,970 | | | $ | 530,457 | |
Intangibles (net) | | | 437,778 | | | | 457,803 | |
Property, plant and equipment (net) | | | 371,647 | | | | 396,135 | |
Other assets | | | 60,754 | | | | 64,824 | |
| | | | | | |
| | | | | | | | |
Total Assets | | $ | 1,388,149 | | | $ | 1,449,219 | |
| | | | | | |
| | | | | | | | |
Current liabilities | | $ | 423,052 | | | $ | 239,910 | |
Long-term debt | | | 280,726 | | | | 507,885 | |
Accrued employee and retiree benefits | | | 43,038 | | | | 36,529 | |
Other liabilities | | | 9,095 | | | | 13,592 | |
Shareholders’ equity | | | 632,238 | | | | 651,303 | |
| | | | | | |
| | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 1,388,149 | | | $ | 1,449,219 | |
| | | | | | |
| | | | | | | | |
Consolidated Statements of Cash Flows | | | | | | |
Three Months Ended March 31, | | 2006 | | | 2005 | |
| | | | | | | | |
Net cash provided by operating activities | | $ | 20,782 | | | $ | 20,285 | |
| | | | | | |
|
Cash flows from investing activities: | | | | | | | | |
Acquisition of property, plant and equipment | | | (4,383 | ) | | | (6,500 | ) |
Proceeds from sale of assets | | | 64 | | | | — | |
Decrease in other assets | | | 512 | | | | 184 | |
| | | | | | |
|
Net cash used in investing activities | | | (3,807 | ) | | | (6,316 | ) |
| | | | | | |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from additional borrowings | | | 22,624 | | | | 18,767 | |
Debt and capital lease payments | | | (32,455 | ) | | | (24,110 | ) |
Purchase of treasury stock | | | (4,563 | ) | | | — | |
Dividends paid | | | (6,949 | ) | | | (7,063 | ) |
Proceeds from options exercised and other | | | — | | | | 891 | |
| | | | | | |
|
Net cash used in financing activities | | | (21,343 | ) | | | (11,515 | ) |
| | | | | | |
|
Effect of exchange rate changes on cash and cash equivalents | | | 152 | | | | (119 | ) |
| | | | | | |
|
Net (decrease) increase in cash and cash equivalents | | | (4,216 | ) | | | 2,335 | |
Cash and cash equivalents at beginning of period | | | 7,068 | | | | 2,243 | |
| | | | | | |
Cash and cash equivalents at end of period | | $ | 2,852 | | | $ | 4,578 | |
| | | | | | |
| | | | | | | | |
Supplemental Information | | | | | | |
Three Months Ended March 31, | | 2006 | | | 2005 | |
| | | | | | | | |
Depreciation and amortization | | $ | 10,973 | | | $ | 11,642 | |
| | | | | | | | |
Dividends per share | | $ | 0.15 | | | $ | 0.15 | |
# # #