Exhibit 99.1
Contact: | John Collopy |
(414) 347-3706
Sensient Technologies Corporation
Reports Results for the Quarter Ended March 31, 2016
MILWAUKEE—April 19, 2016 — Sensient Technologies Corporation (NYSE: SXT) reported earnings per share from continuing operations of 69 cents in the first quarter of 2016 compared to 65 cents in last year’s first quarter. Revenue was $342.5 million in this year’s first quarter compared to $346.2 million in the comparable period last year. Operating income was $47.5 million in the first quarter of 2016 compared to $46.4 million in last year’s first quarter. Foreign currency translation had a significant impact on the first quarter results, reducing reported revenue by 3.5%, operating income by 3.4%, and earnings per share by 4.6%, or three cents per share.
In 2014, Sensient initiated a restructuring plan to eliminate underperforming operations, consolidate manufacturing facilities, and improve operational efficiencies within the Company. The restructuring costs related to this plan are included in the reported results within the Corporate & Other segment. Restructuring costs reduced operating income by $3.3 million, or 6 cents per share, in this year’s first quarter and $7.1 million, or 12 cents per share, in the first quarter of 2015.
The adjusted results, discussed below, eliminate the impact of restructuring costs and enhance the overall understanding of the Company’s performance. Sensient’s adjusted earnings per share were 75 cents in the quarter and 76 cents in the comparable period last year. Adjusted operating income was $50.9 million and $53.6 million in the first quarters of 2016 and 2015, respectively. Foreign currency translation reduced adjusted operating income by 3.6% and adjusted earnings per share by 3.9%, or three cents per share.
- MORE -
Sensient Technologies Corporation | Page 2 |
Earnings Release – Quarter Ended March 31, 2016 | |
April 19, 2016 |
Cash provided by operating activities was $46.2 million in the quarter compared to $30.6 million in last year’s first quarter. The increase was primarily driven by improvements in working capital balances. The Company repurchased approximately 250,000 shares of its common stock in the first quarter.
“Sensient had a good quarter driven by strong results from Color and Asia Pacific,” said Paul Manning, President and CEO of Sensient Technologies Corporation. “The Color Group had strong performances from the Cosmetics and Food Colors businesses, and Asia Pacific had solid growth in several markets. Flavors & Fragrances had a challenging quarter, but I expect the Group to recover and meet its full year growth targets. Our strategy is working and I am very optimistic about the future.”
BUSINESS REVIEW
The Flavors & Fragrances Group reported first quarter revenue of $198.3 million, a decrease of 3.7% from $206.0 million reported in last year’s first quarter. Segment operating income was $27.5 million compared to $30.5 million in the first quarter of 2015. The Flavors & Fragrances Group’s operating margin was 13.9% in the quarter. Foreign currency translation reduced revenue by 2.4% and segment operating income by 2.0% in the quarter. The Flavors & Fragrances Group’s results were unfavorably impacted by several issues, including a limited supply of dehydrated garlic, order timing, and transitional issues related to restructuring.
The Color Group reported revenue of $126.0 million in the quarter, an increase of 3.1% compared to $122.2 million in last year’s first quarter. Segment operating income increased 6.0% to $27.8 million in the first quarter compared to $26.3 million in the comparable period last year. The Color Group’s operating margin was 22.1% in the first quarter. Foreign currency translation reduced revenue by 4.6%, and segment operating income by 3.7% in the quarter. The Color Group’s performance was driven by strong results from the Cosmetics and Food Color businesses. The Cosmetics business reported double-digit growth for both revenue and operating income, and the Food Color business reported high single-digit profit growth.
- MORE -
Sensient Technologies Corporation | Page 3 |
Earnings Release – Quarter Ended March 31, 2016 | |
April 19, 2016 |
The Asia Pacific Group reported revenue of $29.7 million in the quarter, an increase of 3.1% over the $28.8 million reported in the first quarter of 2015. Segment operating income was $6.0 million in the quarter, an increase of 6.3% from last year’s first quarter result of $5.7 million. Foreign currency translation reduced revenue by approximately 6% and segment operating income by approximately 7% in the quarter.
The Corporate & Other segment, which includes the restructuring costs, reported operating costs of $13.8 million in the quarter compared to $15.9 million in last year’s first quarter.
2016 OUTLOOK
Sensient is maintaining its previous guidance, and expects 2016 adjusted earnings per share from continuing operations to increase between 8% and 11%, in local currency.
- MORE -
Sensient Technologies Corporation | Page 4 |
Earnings Release – Quarter Ended March 31, 2016 | |
April 19, 2016 |
CONFERENCE CALL
The Company will host a conference call to discuss its 2016 first quarter financial results at 10:00 a.m. CDT on Wednesday, April 20, 2016. To participate in the conference call, please contact InterCall Teleconferencing at (706) 758-1089 and refer to conference identification number 85889854. A webcast of the conference call will be available on the Investor Information section of the Company’s web site at www.sensient.com.
A replay will be available beginning at 1:00 p.m. CDT on April 20, 2016, through midnight on April 27, by calling (404) 537-3406 and referring to conference identification number 85889854. A transcript of the call will also be posted on the Company’s web site at www.sensient.com after the call concludes.
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws. 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 pace and nature of new product introductions by the Company and the Company’s customers; the Company's ability to successfully implement its strategy to create sustainable, long-term shareholder value; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various restructuring, productivity-improvement and cost-reduction efforts; changes in costs or availability of raw materials, including energy; industry and economic factors related to the Company’s domestic and international business; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors, including increased intensity of competition; the loss of any customers in certain product lines in which our sales are made to a relatively small number of customers; product liability claims or product recalls; the costs of compliance, or failure to comply, with laws and regulations applicable to our industries and markets; changing consumer preferences and changing technologies; and failure to complete and integrate future acquisitions or dispositions. 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 law, 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. Additional information regarding these and other risks can be found in our Annual Report on Form 10-K for the year ended December 31, 2015.
- MORE -
Sensient Technologies Corporation | Page 5 |
Earnings Release – Quarter Ended March 31, 2016 | |
April 19, 2016 |
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 and colors, and other specialty and fine chemicals. The Company’s customers include major international manufacturers representing most of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.
www.sensient.com
- MORE -
Sensient Technologies Corporation | Page 6 |
(In thousands, except percentages and per share amounts) |
Consolidated Statements of Earnings | Three Months Ended March 31, | |||||||||||
2016 | 2015 | % Change | ||||||||||
Revenue | $ | 342,468 | $ | 346,226 | -1.1 | % | ||||||
Cost of products sold | 226,625 | 228,793 | -0.9 | % | ||||||||
Selling and administrative expenses | 68,324 | 70,987 | -3.8 | % | ||||||||
Operating income | 47,519 | 46,446 | 2.3 | % | ||||||||
Interest expense | 4,800 | 3,915 | ||||||||||
Earnings before income taxes | 42,719 | 42,531 | ||||||||||
Income taxes | 11,526 | 11,796 | ||||||||||
Earnings from continuing operations | 31,193 | 30,735 | ||||||||||
Loss from discontinued operations, net of tax | (22 | ) | (209 | ) | ||||||||
Net earnings | $ | 31,171 | $ | 30,526 | 2.1 | % | ||||||
Earnings per share of common stock: | ||||||||||||
Basic: | ||||||||||||
Continuing operations | $ | 0.70 | $ | 0.65 | ||||||||
Discontinued operations | - | - | ||||||||||
Earnings per share of common stock | $ | 0.70 | $ | 0.65 | ||||||||
Diluted: | ||||||||||||
Continuing operations | $ | 0.69 | $ | 0.65 | ||||||||
Discontinued operations | - | - | ||||||||||
Earnings per share of common stock | $ | 0.69 | $ | 0.64 | ||||||||
Average common shares outstanding: | ||||||||||||
Basic | 44,718 | 47,178 | ||||||||||
Diluted | 44,981 | 47,502 |
Reconciliation of Non-GAAP Amounts
The Company's results from continuing operations for the three months ended March 31, 2016, include pre-tax restructuring costs of $3.3 million ($2.5 million after-tax or $0.06 per share) related to eliminating underperforming operations, consolidating manufacturing facilities and improving efficiencies within the Company. The Company's results from continuing operations for the three months ended March 31, 2015, include pre-tax restructuring costs of $7.1 million ($5.5 million after-tax or $0.12 per share).
Three Months Ended March 31, | ||||||||||||
2016 | 2015 | % Change | ||||||||||
Operating income from continuing operations (GAAP) | $ | 47,519 | $ | 46,446 | 2.3 | % | ||||||
Restructuring - Cost of products sold | 644 | 141 | ||||||||||
Restructuring - Selling and administrative | 2,698 | 6,974 | ||||||||||
Adjusted operating income | $ | 50,861 | $ | 53,561 | -5.0 | % | ||||||
Net earnings from continuing operations (GAAP) | $ | 31,193 | $ | 30,735 | 1.5 | % | ||||||
Restructuring, before tax | 3,342 | 7,115 | ||||||||||
Tax impact of restructuring | (862 | ) | (1,597 | ) | ||||||||
Adjusted net earnings | $ | 33,673 | $ | 36,253 | -7.1 | % | ||||||
Diluted EPS from continuing operations (GAAP) | $ | 0.69 | $ | 0.65 | 6.2 | % | ||||||
Restructuring, net of tax | 0.06 | 0.12 | ||||||||||
Adjusted diluted EPS | $ | 0.75 | $ | 0.76 | -1.3 | % |
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.
Note: Earnings per share calculations may not foot due to rounding differences.
- MORE -
Sensient Technologies Corporation | Page 7 |
(In thousands, except per share amounts) |
Results by Segment | Three Months Ended March 31, | |||||||||||
Revenue | 2016 | 2015 | % Change | |||||||||
Flavors & Fragrances | $ | 198,339 | $ | 205,978 | -3.7 | % | ||||||
Color | 126,034 | 122,198 | 3.1 | % | ||||||||
Asia Pacific | 29,707 | 28,803 | 3.1 | % | ||||||||
Intersegment elimination | (11,612 | ) | (10,753 | ) | ||||||||
Consolidated | $ | 342,468 | $ | 346,226 | -1.1 | % |
Operating Income | ||||||||||||
Flavors & Fragrances | $ | 27,510 | $ | 30,459 | -9.7 | % | ||||||
Color | 27,844 | 26,263 | 6.0 | % | ||||||||
Asia Pacific | 6,005 | 5,651 | 6.3 | % | ||||||||
Corporate & Other | (13,840 | ) | (15,927 | ) | ||||||||
Consolidated | $ | 47,519 | $ | 46,446 | 2.3 | % |
The Company’s reportable segments consist of the Flavors & Fragrances, Color, and Asia Pacific segments. Beginning in the first quarter of 2016, the results of operations for the Company’s color business in China, South Korea and Japan, previously reported in the Asia Pacific segment, are now reported in the Color segment. The results for 2015 have been restated to reflect these changes. The 2016 and 2015 restructuring costs related to continuing operations are reported in the Corporate & Other segment.
Consolidated Condensed Balance Sheets | ||||||||
March 31, | 2016 | 2015 | ||||||
Cash and cash equivalents | $ | 24,703 | $ | 18,083 | ||||
Trade accounts receivable, net | 252,328 | 245,458 | ||||||
Inventories | 403,849 | 410,346 | ||||||
Other current assets | 72,983 | 38,730 | ||||||
Total Current Assets | 753,863 | 712,617 | ||||||
Goodwill & intangible assets (net) | 415,330 | 407,769 | ||||||
Property, plant, and equipment (net) | 477,975 | 463,583 | ||||||
Other assets | 95,809 | 96,436 | ||||||
Total Assets | $ | 1,742,977 | $ | 1,680,405 | ||||
Trade accounts payable | $ | 94,339 | $ | 84,990 | ||||
Short term debt | 21,035 | 19,467 | ||||||
Other current liabilities | 98,458 | 104,641 | ||||||
Total Current Liabilities | 213,832 | 209,098 | ||||||
Long-term debt | 629,891 | 483,856 | ||||||
Accrued employee and retiree benefits | 19,903 | 24,832 | ||||||
Other liabilities | 11,884 | 17,870 | ||||||
Shareholders' Equity | 867,467 | 944,749 | ||||||
Total Liabilities and Shareholders' Equity | $ | 1,742,977 | $ | 1,680,405 |
Beginning in the first quarter of 2016, the Company adopted Accounting Standards Update (ASU) No. 2015-07, Balance Sheet Classification of Deferred Taxes, and ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The Company restated its 2015 Consolidated Condensed Balance Sheet to reflect these new accounting standards.
- MORE -
Sensient Technologies Corporation | Page 8 |
(In thousands, except per share amounts) |
Consolidated Statements of Cash Flows | ||||||||
Three Months Ended March 31, | 2016 | 2015 | ||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 31,171 | $ | 30,526 | ||||
Adjustments to arrive at net cash provided by operating activities: | ||||||||
Depreciation and amortization | 11,612 | 12,384 | ||||||
Stock-based compensation | 2,018 | 337 | ||||||
Loss on assets | 458 | 2,488 | ||||||
Deferred income taxes | (1,349 | ) | 4,382 | |||||
Changes in operating assets and liabilities | 2,263 | (19,528 | ) | |||||
Net cash provided by operating activities | 46,173 | 30,589 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of property, plant and equipment | (14,120 | ) | (13,431 | ) | ||||
Proceeds from sale of assets | 37 | 12,593 | ||||||
Other investing activity | (18 | ) | (24 | ) | ||||
Net cash used in investing activities | (14,101 | ) | (862 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from additional borrowings | 95,562 | 51,112 | ||||||
Debt payments | (87,284 | ) | (7,037 | ) | ||||
Purchase of treasury stock | (17,920 | ) | (58,017 | ) | ||||
Dividends paid | (12,163 | ) | (11,932 | ) | ||||
Proceeds from options exercised and other | 161 | 184 | ||||||
Net cash used in financing activities | (21,644 | ) | (25,690 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 2,278 | (6,283 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 12,706 | (2,246 | ) | |||||
Cash and cash equivalents at beginning of period | 11,997 | 20,329 | ||||||
Cash and cash equivalents at end of period | $ | 24,703 | $ | 18,083 |
Supplemental Information | ||||||||
Three Months Ended March 31, | 2016 | 2015 | ||||||
Depreciation and amortization | $ | 11,612 | $ | 12,384 | ||||
Dividends paid per share | $ | 0.27 | $ | 0.25 |