SXT - Earnings call transcript Q1 2022 | Sensient Technologies Corporation

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Operator

Good morning and welcome to the Sensient Technologies Corporation 2022 First Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will an opportunity to ask questions. [Operator Instruction]. is event this note, being recorded. Please this over to at time I’d conference the turn to Mr. like And Steve Rolfs. Please go ahead, sir.

Stephen J. Rolfs

of website results. Earlier presentation the of release and Good morning. our investor Steve President, Officer. Financial am President I'm we morning Chairman, our by copy earnings quarter this and Corporation. Chief Paul Officer XXXX joined Chief Manning, this Welcome to Rolfs, Sensient's A released Senior available first Sensient I at on our Technologies Sensient's is call. morning, Executive first sensient.com. quarter financial and Vice

made responses questions, to forward-looking remind with investors directly and operations reconciliation of substitute would non-GAAP should like operations from morning. These During provides the comments or of that differences this for GAAP any divested, accordance income review of improves include results our GAAP. is A comments management adjusted we for of I the reporting also costs, impact results adjustments results between our measures our the call operational results. today, available these in costs the reconciliations reflects We our our with remove GAAP our comparable in periods. plan. XXXX. the with we most the evaluates will financial This divestiture-related the comparability the related of performance may The investors these as this financial in considered to be connection evaluate explaining release. additional financial in reviews to and and of and removal and to to make We to to results statements. between press company's company's believe how including non-GAAP results impact adjusted a improvement be items financial encourage the the also your the the morning, We performance. not results everyone not isolation did and information the XXXX GAAP for calculated information make measures

implied SEC urge materially, actual set Sensient's you a results differ We Our range wide may forth filings, and factors financial or for factors, those mind SEC from these that potentially when of in factors additional impact that filings. our results. to read maybe due could previous to description XX-Q expressed our those a of including XX-K Please our forthcoming comments our you our bear including in today. analyze

hear we'll Manning. Now Paul from

Paul Manning

X% XX% currency Steve. growth Thanks, morning I'm consolidated and revenue local Good pleased report local adjusted good growth. and currency afternoon. to adjusted EBITDA

year Extracts their of During XXXX. adjusted strong X% Flavors profit and continue XX% currency currency adjusted from revenue quarter each the our this growth groups local of performance and first Group growth. achieved local

local had Our Color reporting revenue currency growth operating and local XX% currency adjusted an XX% profit outstanding quarter growth. Group adjusted

revenue currency local and to off we XX% start achieved Group XX% profit year. outstanding We had an adjusted operating currency are the adjusted to great local Pacific Asia growth. and growth first quarter a

service sales and wins. groups. our service continued for on our future reliable is generating of a to positioned new level us customers, high an Each and strong customer us also position broad exceptional for Our pipeline, sales that sales and a group and as It customer on each are execution, delivery driving growth the technologies robust supplier portfolio already have our product success. our of product continues build focus

costs higher experience including in inventory along We're costs we're a with our we continue to input raw last and and logistical increase the of pricing during input an materials, addressing addressing higher logistical with labor, transportation, energy discussed the with couple delays. As calls, position. delays

as to XXXX, delivery, provide time will service and will actions additional challenges continue to inflationary throughout we and chain conduct product we and pricing supply these expect customer we robust While persist on required.

expect war the in in to of Turning and first impact the the our reasons current significant not quarter. not do Ukraine, Ukraine on in and situation a these the guidance. impact on in logistics. these most raw likely material will our revenue of had each impact to availability, the in we downs And has lock be as Any events China situations China, a on result shipping Sensient

We these and work situations. through to issues believe supply we manage these each continue chain can we of

Group Flavor operating in XX% XX.X%. Flavors our Higher first Now turning quarter adjusted favorable adjusted the volume and first Flavors group quarter revenue currency the achieved growth profit growth rose and and Extract Ingredients and quarter. currency local price as was to and ingredients. The favorable X% delivering pricing strong Flavors, currency well digit in natural results. Group the revenue profit of a Extract in and margin pricing primarily Extracts had local adjusted increase operating as to local mid-single another growth. result the Overall,

result and I the modest Primarily During a limited of demand more a of half XXXX would in face onion. quarter anticipate volume improve into to first our ingredients I year. last the supply business begin the back call, a half in this of XXXX. mentioned that strong of natural and second situation the as headwind to the

group expect the Flavors recent cost to structure as activities of group revenue restructuring the the in an the to group's is lower margin the on natural growth group increased Group added to growth quarter. in operating year, solutions, and the The Flavors products Group digit profit group's growth XXXX an XXX focus customer experienced pricing result group's product on good profit future. past year. deliver across of ingredients, profit service. mid actions. and value XX single result to basis double points overall foreseeable I a more start and margin sales to This of product basis a result its operating margin added all Extract for a in direct a Excluding and of Extract the and the a Extract off is improvement operating is more is XXX lines. divestiture of for points Flavors positioned high digit well The the value focus the

Over other to annually. points the to key growth quarter. this Extract customer focus into product I level food component improvement and support continues driven first The The the colors had to line Flavors A expect Color delivered operating growth of and continues food pharmaceutical The the a revenue the had of of year. new Group deliver appropriate basis operating first group's Furthermore, revenue mid-single great and operating margin was nicely the start portion of revenue margin I to from mid-single an and to XXX the Group The quarter. digit its profit is digit focus XXXX The an personal its at and an personal digit a impacts above color track outstanding to in great is pharmaceutical local digit is mid long-term, The digit revenue high pharmaceutical as saw focus and care margin has continue profit XX.X%. off group XX%. at adjusted service and growth body operating operating to on growth. growth. business growth growth I revenue food the margin rose service. profit revenue be on deliver foreseeable double to group building deliver in the result diversification profit local The currency adjusted for double digit rebound to growth and categories natural will quarter The future. digit the in growth operating and XX% year. above or safety start on skin, delivered increase currency as to or single to currency local both care local pricing COVID-XX. rebound profit a XX% business of for a the care. first group and and Long-term the the business currency on The a for XX XXXX group business innovative and XXXX and and and increase. and profit the expect high mid-single business's wins XX% business a group's to expect of portfolio customer by double color stock The in in

XX% Asia profit group local XX% another quarter almost the all growth Pacific growth. outstanding delivering in in profit operating solid currency Operating and adjusted The first XX.X%. to rose currency demand adjusted margin local experienced quarter regions. had revenue

in implemented price on we have the are XXXX. and in technical The success. quarter. made the leadership continues investments sales our digit a deliver group's track high in the group increase revenue The In team mid group have first and to digit addition, single is high low growth growth rate key to a single factors to win to

we to Over we XXXX, to operating had previous the group revenue at above the the a great I outlined We've or growth. expect for deliver mid-single the long-term, start are year. guidance digit

we raising discuss, are guidance. will Steve As our

product our and continued future our the provide development come. very will provide first and wins foundation sales new additional you I customer our about a excited about service to the on new I'm focus Steve growth that on very year the now quarter business. and us the with optimistic for confident details years in results. remain of We’re will

Stephen J. Rolfs

$X.XX. you, Thank was Sensient's share GAAP, diluted earnings quarter per Paul. first

results improvement remarks, Our first quarter GAAP included year’s operational the approximately As GAAP quarter and plan have to mentioned first is opening results in year's per divestiture by $X.XX quarter our adjustments I not share. last which do we for decreased costs, first of any Last results XXXX.

the $X.XX $XX.X GAAP per lines. product divested quarter in and the of revenue, approximately to our included million addition, per earnings first In XXXX related share approximately earnings share of of

these grew our to X.X% adjusted items quarter consolidated XXXX currency by results, in XXXX Excluding in revenue first in million. our local of the $XXX.X

local adjusted currency EBITDA the Our the for for was and EPS XX.X% up was XX.X% our up adjusted quarter. quarter, local currency

adjusted approximately decreased first by rates per exchange in currency quarter. Foreign the earnings share $X.XX

the compensation flow due investments position in primarily in higher down strategic from and operations instead inventory our cash of was quarter, Our to payments. first

logistics challenges mentioned, Capital the inventory we our continue stock safety first to $XX.X were million supply quarter. for Paul to support expenditures in investments and we As positions make our and demand have as ensure strategic appropriate to continue.

our this expect to $XX near million year. capital expenditures We be

Our debt EBITDA to adjusted X.X. is

M&A, dividend. expenditure long Our well is and to standing balance attractive our support our positioned capital sheet spend

are our high teen reported to our growth at our to XXXX guidance, rate XXXX to we increase Turning EPS GAAP EPS raising of GAAP reported a compared $X.XX. now

Our called improvement At costs mid-term any in rate. divestiture this or related operational for anticipate plan costs do a growth we guidance material previous time, XXXX. not

compared to revenue also revenue. are XXXX high We mid raising our adjusted local to in currency to single guidance be digits our up

guidance in calls Our revenue rate for local mid-single digit a currency. previous growth

EBITDA to both In local single digit high double raising our addition, guidance currency. also EPS a at in to growth rate XXXX we are adjusted grow and

expect high Our approximately Thank Based morning. rates, previous EBITDA we be per you exchange on digit this a currency single of current to share. adjusted to EPS now $X.XX local guidance at time for grow a and called currency growth for rate. headwind your

We now will the call for questions. open

Operator

from Ghansham Please go of come will Instructions] [Operator today Panjabi RW Our question first ahead. Baird.

Ghansham Panjabi

initially, Thank thought incremental it increase for versus segment can on you. volume unfolds? maybe Good the seems the we much off volume everybody. it of is start us be with that the Maybe because you pricing specific on difficult sales -- what your views like and XQ year, from view you update could growth drivers morning, just core onwards, comparisons of very the in will how year by as

Paul Manning

Sure.

the So of each if you look at QX, I'll through go groups.

saw, increase with starting double in just implies Pacific, of about digit X%, revenue, pricing, we're up kind So on digit XX% which low on then nearly single volume. Asia a

applies a there, customers these very lot sort Asia wins, our Pacific. customers. of there So growth of in targeted new volume Again, really driven spot strongly B C and sweet strong style by

across Looking a variety suggests over the really mid-single growth There, of was really really was they again, their digit, of geographic good the about really, you're across strong up pricing customers, lines. at were X% was product increase, revenue, a about pricing, then nearly type regions X% and volume. wins colors, XX% as each broad new which heard,

So Flavors. outcome there. And good then

on a too. number investors the call today, So -- know there's I new of

So a just a journey here. little bit take let me of

of which our So as ingredients, is extracts. course, which and you are Sensient Flavors then, our ingredients, onion know, Extracts, HPPs, Flavors, And of consists garlic. natural yeast flavor and

Flavor the of growth. you almost X%, business then the expected what profit got digit if and -- that's the XX, contribution. revenue of double kind of of with kind sorry, extracts part mid-single ingredients, mid-single operating nice Flavor of about or much So there, that the into digit That a very growth, X% about about pricing business part X% about Group. teen was pretty mid up teen we a leverages Flavors take two-thirds, the increase volume, which got we That implies well two-thirds

build So lot very again, of very, et targeted cetera. volume nice new there, a wins, customers,

and two-thirds the down Flavor, the down is volume the bit effectively quite really where Flavor you we of here part volume sold ones one-third Group, was Now at situation of And availability because a QX. are business. the ingredients a and XXXX. was other that a flavors look the it the the that SNI was in in This extracts product

So this crop bit flag as I of this the comes the now. the regions. it's QX is first the lot being a from headwind, this in year. suggesting pulled that is right earlier call, pulled different the be April, flagged it's part for But the a we're of a in the But headwind speaking call, of would

So next the it's over months. pulled several

standpoint, achieve as we very very we the pricing. good volume they'll for that good a of year from need feel as what that So SNI one-third feel from group, far, so and about the well good. standpoint, they revenue achieve to And a Flavor

west other much of have in the really Again, cycle a very last of but and situation. impacted that expect a moving there. little driven thing. improved you we So, headwind kind the been, heard, bit for overall, well as know market and particular, coast expected situations There be is as this a to this the in droughts a that cycle, forward, have crops

good the of for year. feel rest the about we So things

Ghansham Panjabi

the Sensient thanks call also specifically cost conference then to earnings the but picking I that first much broadly discussed take cited that but year our for just does specific supply for a well? you, the on for maybe up think how imply that end, impacted ever on whether. unfolds the we've quarter. What Paul. as Great, as And just needs, Maybe that on through, us on you shortages, given our the basket, don't

Paul Manning

Well, all wins. think, really for new the by we at our -- highest we're groups the because guidance we across we the very growth I at the level think here, broad year, see raising driven based

in New wins is factor this pricing a growth. this as eclipsing revenue

very very, insight. a that's important think I So

from of to feel it's think a standpoint even half the second quarter. SNI about driving the year I the that. a We confident headwind. of end the we But towards volume temporary good back and somewhat of starting feel very the of really

for So, X%, with company as SNI we was XX% up and up we it's X% if XX% say been would for QX, say overall the of about a probably impact, our not X% about that revenue pricing overall or volume.

are in of that the a So things. continue a really delivery seeing. wins I side. the generating that side And growth are the organization We from really emphasize volume tolerates that It good to stems lot we the want excuses. lot stems to don't customer we it an the operate technology from service side,

our to So every excuse. No out expect recession, we drive all high a of no perfection. recession of we or service no COVID, COVID businesses day. of level single or

So I our here. think drives a of that success lot commercially

Ghansham Panjabi

in. much. so Thanks for fitting perfect. me Okay, Thanks

Operator

next ahead. Our today question go Vesterinen Heidi comes BNP Paribas. from from Please

Heidi Vesterinen

Good morning.

Paul Manning

Hello, Heidi, how are you?

Heidi Vesterinen

Thank you.

very confidence? that think you're to prepared It's gives I remarks that your What a an you inflationary environment. in said expecting year? statement this confident improve margin So you percentage in

that's Thanks. first question. my So

Paul Manning

kind -- the of break look down with Asia. regions, So, starting I at think when of I'll yes, you each

a driving necessarily revenue lot mix, improvement is the with say, drive what's as me we product margin you lot Asia, that that of heard didn't a of price.

very think, at similar products natural of continued the customers natural But I we're that continued with emphasis on terms seeing we market. So out nice the look dynamic emphasize, emphasis cosmetics continued the When to Color, the and Flavors, types rebound dividends. like you of the paying there. also of types is of a in colors, on colors and

nicely. care, still not care, versus very, pre measures. pandemic, is pandemic body to pre where still grow it markets these the was, very continue Hair While quite in makeup or

of continued profitable paying volume successful side uplift you the painful expect and restructuring that lot to been us, that's we to for margin a for And as we've many the personal on fundamental as many, dividends to why we in continue operating we care what from emphasizing see for outcome again, of side. is, years went very Extract a And That us. a That's is so Precisely margin. very business. flavor then, through better still we think our we a continue there. I good business of confidence the improve gives what and side, know, capital some Flavors profit course, And me footprint, utilize nice process now. that that continue thing the

So I, really a it own mind, even many was it us sometimes though longer in impact on ago, had was has I to of beneficial profoundly it it in ago, seems raise even my like years terms Flavor helping and that Group anyway, margin. the wish

work that outcome is But restructuring course, of savings to bit pricing we is pricing little case, inflation that the mix, factor. going of see. each be we of And with cost a in the and in really So accordance did. a

think I would of out. the that I So third be that the factors would point

wrap all you service wins then deal across our and So the confidence the then me And great of pair strong gives that our a that you those together levels, for and Board. good year. with

at I good. of QX, in sales now, looking each And the groups. As and at really look look sales June, good for and look here, May really at look April, then one as sales right I

of So I'm QX. now I to my seeing what actively confidence born right in actually guess is

of factors those for come some mind that to would be me. the So

Heidi Vesterinen

for that. Thanks

price see example, like Second elasticity question. were in Sensient? trading any Can impact we you would that see And for any down, if how of signs market? to

Paul Manning

in label private inflation. sales down private it label U.S. appear some in say, tended market. trading mean, some that's for mind a the certainly, to what's compared market I on has Well, evidence Europe, yes, U.S. larger right there's everybody's example, this actually segments that that's are product in much be folks markets And the would to enough, down, a great despite now. question. Ironically of

Sensient from predict company, is a of to it's now, from sales savory we're of some types categories, right in deal substantial But these out a on very well biggest very all covering beyond. sales the active tell insist pet force. snacks, here would to play every hard We the that have pricing we we kind one how going customers. to food, So, the to across multinationals very, smallest product this, I QX to of in startups, elasticity dealing you and beverage very customers we're of as force represented,

coverage. our good really feel I about So

a the expensive has when that from as still drink, in and wants as So not color, a drink has it well, go to expensive somebody not to expensive very it. flavor drink, still

about So resistant people down that's recession thing of ultimately, but would represented they there's trade nature yes, those nice the in a Sensient trade may this very business, still products a continue whether to the business. or products not, is we're our or recession products buy, too. even down, they that

We private the have very labels U.S. a good presence Europe throughout and in

whatever for two. And think market or fairly insulated so way throw we're may over I this the well year next our

Heidi Vesterinen

regulatory lastly, And you're Thank if helping you. then your wonder business. I seeing tailwind any

talked I growth dioxide an example. a that about for driver big Has you? as think had time, titanium last been we

Paul Manning

as like that general, technology. always tailwind. Consumers better in I regulatory they products, products a more to require Well, as see want view better and what

of need we And so a that's in market many like where feel in these we the feel segments. real

think there's of titanium about dioxide, I a Specifically, activity. lot

the come agencies has know, European have. that’s Union up food strongly very against titanium you dioxide, the As

titanium the need replacements for manufacture thing don't we dioxide. the is is do swap nice manufacture dioxide. so And out. to a we titanium very strong And that there But

it's a work We've that. associated pipeline opportunity. big exciting and very got of with a a So lot

other for change, given for recent yes, very working this they've early time. some for on it's regulatory customers, some customers, So but been the

very say the R, very of It's we example a dynamic. little that very very driven. customer it's that's big do. of much dioxide good of So type a It's innovation D It's you that titanium market really R&D, of work when example and replaces kind driven. of good type

migrates region as the and that'll the as then us think U.S., I the yes, Atlantic for over nice Europe. then And Pacific tailwind eventually So Asia for well. for into it be a

Heidi Vesterinen

Thank you.

Paul Manning

Okay. Thanks, Heidi.

Operator

Our from ahead. of will come Mitra Please Ramgopal next question Sidoti. go

Mitra Ramgopal

sort get companies first for remote know mentioned back pre taking Good to morning, you just that on And my I to everyone. thing now. work but thanks it where Paul, there, I the for curious seems hi. a a expect makeup, has on given like ever questions. column were lot of do back permanent become not it's we the of Yes, pandemic,

Paul Manning

I do, for still will, the I think think to Mitra, good be to need look it there's have and on a camera so always I you going that.

lot a makeup, I more using makeup. males think the demographic has females using changed younger

lot a dynamics have there's over years. been to the So added that this of market

strong that's are different many But customers okay, picked in I still much of here last there’s that interesting think used yes, years our go closed positions of really customers the inventory pandemic. has been products, to don't pipeline Much is XXXX But think COVID. on recovering kind for of shop where things. to recovering has of history. there human the I I them makeup anticipate It's Sure, of signs, during I account So, market their probably demand. in it of we some But show everybody's yet. have to headwinds. customers telltale some And the from of signs, innovative a need situations good that. emphasizing, up. and things downs like things, lock as with much so continued out in as some and cases a helping we lot not got very and we only think very the about it relief

And much our so the is here. that in seeing very what pipeline of we're nature

the going is of in this ultimately, of make you're and where thing. was of we're goes in moves little And makeup, spend to a shifts. their choices consumers cycles. care, too, in thing. And think the that to see But I evolves going color they're personal money. now about biggest lower that Couple perhaps years kind kind makeup renaissance the cycle. it So a remember ago, bit some of but biggest skincare a And of

actually to larger as had But well makeup going the a important segment business what you than last over segments. into our of going represented be will insulate know, these business an couple years, other think a so pandemic. of And the subscription us. part successful, very And we've And diversified is been that's the having into quite diversifying some we ultimately I moving When But back. to is, building But make would customer that's pipeline you really I the quite activities absolutely tell the end the what moving out great products And forward. precisely harder that some there's forward. success little predict. looks coming tremendous very short a degree, up good. good, bit interest and a answer to is the and on customer is

Mitra Ramgopal

Thanks. price color. implement across now trying some Switching That's maybe to seeing, clearly than terms out perhaps even the negotiations have higher input you're in good costs able really or fees being over here, curious offset part more on success all increases, just or had more increases that. less I you just the of if to of businesses.

Paul Manning

necessarily our looking not change know economics put products compete also disadvantage, the don't substantially. that customers know we're our for market. in at to our we But Well, we customers a they to the have

to So address cover. our costs goal is, obviously many into there's input

Our to gross cover certainly is goal to our in the margin maintain those process. and

don't to successful And And been looking to disadvantage. we think customers don't we've so the that's we've what we're in needed done. want business. a lose not at to, we've our process. think want be I I as put Again, philosophically, to as certainly And we

be can with be customers. to is sensible can very you as to time may have you work So not and consuming. your And it be as complex, got judicious. it easy seem, Pricing very quite it

Mitra Ramgopal

And expectations Flavor a business maybe highlighted contributing some into agreements, maybe curious, calls, that on I also, this quarter. of focusing year know it. being XXXX, the exclusivity your it's solutions prior I just update aside you've maybe then probably, I on if or terms supply an think from you acquisitions, met almost even mentioned acquisition, kind possibility? in of And in exceeded Thanks. a just on

Paul Manning

some tell it they that that exceeding FSI And So, unique have. not would year last did was It bought technologies. -- unique customer very expectations. But $XX they my in very you had it about revenue. is be we million access had some would we I is

So two acquired we were saw compelling we those business. when reasons that that

people tell hardworking, you, would dedicated it. They've very Very business. cultural very got good I fit. so exceeded And that it's in

them to in very we're part happy have as So our of business.

I so well. that's all think very And going

Moving of set fair when of to appropriate relationship, buy always a forward. don't now. could a nice supply certainly sometimes can it's M&A as chain. activity you whether possibility there's a your to just secure purchase amount arrangement a contractual referenced, company, and to you something contractual Sure, there's material. to you the a But goal be their a your or obligation, alternative is up buying That if need

scenarios. associated there's with again, doesn't too. we you as what some to the the always the have? something licensed And we chain of on M&A and want. a we what it's it that supply get. M&A. Maybe headaches necessarily different of gets trying you side, lot what not sexy have to as But It's technology. maybe know you So don't Maybe buy get contract to we're Again,

good of it's different So number a outcome scenarios. in a

Mitra Ramgopal

curious, A quarter. this of in little And the the Okay, we tough was that about finally year? of terms for remainder than thanks. always I with looking just should for I'm think a the one rate. then Steve, first one tax higher

Stephen J. Rolfs

Sure.

So you're quarter right, the most it and in points year be last up XXX in little was year. over up basis I bit quarters about a expect to this it

year So a looking prior XXX done, probably basis But a the basis about we're at is the looking we're guidance. would be little points point by it'll at year above down unfortunately, maybe quarter. be each time for and up increase. the my full XXX year, And,

Mitra Ramgopal

Thanks Okay, again questions. for that's the great. taking

Paul Manning

Mitra. Thanks Okay.

Operator

Our next question will go Hightower come Please from with Advisors. Leigh Ferst ahead.

Leigh Ferst

questions. few a got have I you. Thank

Or skincare a I last wearing like is two I'd an it the sounds intended, like high an personal also little First a mask than get problem color to issue on care. from categories. with know makeup that of pun it color? perspective more is coming lip more anecdotal and level is back?

could So a on sort us just level high comment you give of further that?

Paul Manning

Sure.

around So key our Leigh makeup, and been skin your care part business is -- care, very kind been the market of has that whitening have really and lot point a or skin it's that personal care, -- body throughout of for segments. factors, four Whether robust the we you of anti skin in strongly reasons. skincare, a care or hair different interest makeup, our has right effects, now growing a lot anti-aging, of the pandemic. To polluting

As mask we're of I still market. whole you Makeup your your It's very eye, well, eye fully pretty that. actually not Because mentioned think very I that. your done is done face. you because as recovered COVID. interesting have masks. to can't hide you a guess But makeup, say people before, To I put over part comment many turn makeup about from could a good quite don't has the you

make important the And during our we we still that time an that innovations lot launched that emphasize eye portfolio. part of piece. a So, interesting of up and had

it's so So though, of, yes, a mask, you it's when wear kind not great.

So to have don't contribute. only people think one. as anymore, But because I to comments that often the that's going that wear think would on other make why we're be glad would masks I only that's I that yes, that

Leigh Ferst

up the particular less any is there Okay, categories, are little and more or you. any opens obviously, customer you And a pricing? is But can mean, particular on so dialog. bit groups? resistance more -- in or high, elaborate thank it inflation you I

Paul Manning

increase. price getting Well, nobody a likes

Leigh Ferst

Of course.

Paul Manning

The first trying job. thing to trying person, people our And to do their job. all their they're are do sales

or you takes snack they're it So, whether savory they or with selling. work beverage and may or your customers, again, it judgment, be takes got whatever to skill,

impacts affecting markets. different are materials obviously different raw so different And

beverage stronger products to So costs, some have logistical be for tend heavier. maybe example, because

So they're logistics. for paying more

food a a have have snack But then So has would of more the lot a snack an constraints of again, grains. they of there. impact there some say, same may than which food,

working they so have inflation you're may material more And that through. raw

the utilities, I you the material raw of I So in with. or have most cetera, essentially anything we things that read Street the we to that are think exotic that contend don't norm those unusual beyond have the or logistics, inflation, about think et Journal, Wall there.

costs that can you're address working a to keep competitive. your these as of matter got And you so obviously have it's to again, But they so it facing business. input to a that some with of you continue customers, be

Leigh Ferst

dollar could you terms can I lot environment right Okay, the M&A strictly about But opportunistic, a around, talk you economy. deals bit when and the what seeing you're of a you're about not rates the now? are looking driven just in talk M&A just by environment of little and know and the

Paul Manning

companies were you I I Well, fairly number of we're it's change mean, in can a coming can as the that and guess COVID, see deals Well, think the just don't tell over the guess. else will and always anybody happening. I'll even I can do as companies. I during How looking year? though, you But bought think think robust guess I years I been that that. that would much environment, I have at sold

Some of may of part it's auction an them, we process. approach. Others,

get to do want lot had. a of don't of But so an I There's to you need acquisition interesting security And mentioned, you acquisition. an situation. there's be chain gained technology that sometimes as things through potential supply to to those a from to lot be that Mitra,

And put say where to return, a just And And continue say a don't it that be both needs sides, otherwise, for will we I hey, a to earn we sense sensible. we if conservative, sensible, want those have from capital. can so we investors. then expectations we'll you want cost continue have I something can have that and to price all makes of so technology you we need evaluate, together. very to work. accompany to for And have

I now less or more always a see always market. year necessarily even don't the we're looking, We're I did ago. in So than

Leigh Ferst

much. so Thank you

Paul Manning

Sure, thanks.

Operator

Our come ahead. Please Boldhaven. of today go next David from question Green will

David Green

Steven. Hi, Paul. Hi,

Paul Manning

David, you good waiting here. for I morning. was

David Green

been kid. sort to What's the my especially you guess, in giving early backdrop? reason? upgrade questions, Is I Is it the there laugh, of just a may the year? guys. my given confidence anything this for Couple so macro visibility giving first high to stronger you specific than a That's wait At pipeline uncertain level historically? lot of, the that's of have question.

Paul Manning

Okay.

I last evaluation new we've me And one, lot look your look gives numbers wins, for a that thing they're a pipeline, of in pretty close may at bigger an Number the than it at actual factors is June, it May, three of confidence. would our what's on probably what's year, good sales is our like. good. make was April, seeing and would that already Number So two, pipeline, look year. I'm the next been the XX next wins. gives in indication what I my you And third new months trailing XX-months generating what and of

month robust During of in of the robust. has month wins it March. And grow very, in our April very new our trailing the continues months, XX be been to

And company. think me that feel achievable for very of it guidance great me deal those that factors, gives So a I raising this good, our 'XX. for three I and outcome it's confidence, tells a

David Green

Great.

this leading through that Second question when from about increases. been across? now has guess, regard to like price of percentage should was increases? the getting from done And just on think impact What we as the price portfolio with full those I

Paul Manning

of know, you ongoing. in pricing cases, Well, is a lot

revenue, groups. quoted I I for think price you're seeing each volume impact the and the one our of

that's you happening. So see that can

profit You also can of and in that growth. see revenue our each with came leverage operating that revenue businesses growth, beyond generating above the we're

a factor. is But moving now. that's a So right thing pricing good

maybe are we material, it's it's shipping of this one raw customers. line, so one inflation. And or what, utility, know our country working just it's maybe facing And just this maybe with just you one this or all

would action we're to, to you need that we it's I the as take monitor So going to just going continue situation and tell to.

talk or they're that look phone every one silver kind bullet, your again, you to the information maybe the to and about pick answer on every day. something. like, easy folks, your purchasing And of no you up there's and you pick no And up there's going there's newspaper, there's something So at newspaper. day

salespeople think very I managed job. But we've situation. dynamic a through very of done skillfully, it So, a hell our

a managers have and done Our leaders process. great other sales general job this managing

So good we've program in got a place.

we as continues. So do to work confident do our judicious I'm need customers very what and in we the year will with manner, very a that

David Green

you specific on when trends if all your cost they cost closer sort peers, digit to seeing cost basis, Do sort reason of managing talking articulating it's seem may. Right. a to base When of the the your like less we at high across that's digit. And about component sort from you're you look of than guys in that aside are more mid-single feels I digit Accompany inflation a think why be sort you're single it? any of the seeing, more double of a all Board. increase talk there's peers about of it you're Maybe it they or better?

Paul Manning

like right, on basis are sold. digit, of a you're of of our our cost mid-single costs Well, the more goods

the mid-single a seen pricing, mid-single digit again, on cover you've digit on revenue. So, the of kind take that's, basis of to basis of costs. digits that mid-single And

and gross So have maintain get mid-single pricing your that to to than digit you don't more to cover margin.

we in think before. you talked about I think I It's there. that fall that

I that one. get So you to why are going know? we I'm that answer from let don't to I'll what you different? one. But want not

David Green

the Okay, year. rest fine. the of benefit thinking just with two, the I and Color should QX for cadence coming think A for the more, last about the couple sort makeup had back. margin, still I'm just achieved of promise. obviously about to

we Extracts and for cadence division I would expect just year. as APAC? and the go thinking, might would that improve how was that to look throughout have So thought Flavors I in margins,

Paul Manning

we point that OP for improvement Flavors, basis so the Yes, XXX in margin year. XX expect that to

QX. what were you heard did, So we we over in XXX

neat, necessarily necessarily And pattern. always tidy it So linear. aren't you a doesn't know, those follow

of XX where OP be year. for And stick margin. achievable improvement is to So an the in basis I say like with XXX that'll to points I'd kind

the play Again, OP Color we be parts how comments, But, one for just to moving margin. quarter to that individual I my noted on side, that Because XX.X as of the kind last look there On the north XX% were don't margin year. to OP of in prepared predict year, out, one. really were want I can we we there. be some may

they So in that then year margin. to that expect for QX, to probably And Pacific? XX to Color, start. XXX XX% And quite improvement get XX.X. were to there XX a basis We last XX a XXX they're to good something that the implies, better were about year. obviously They improvement than more OP XX point similar a like Asia

good feel about as we So well. one that

David Green

scope some obviously which of sort on data, Great, net would how thank business, looks post thinking M&A Doing the you, last debt you mentioned, buybacks not promise is the X.X into in balance of in you're about you and times shareholder generation. what particular? down for the priority, And and you thinking great job here? of about balance a flow structure optimal EBITDA And sheet a level? from returns, like are to sheet. potential as terms I cash question sort aside a the how, How reinvesting

Paul Manning

to the Yes, that think well, use, want you to shareholders you to the give way I return grow best in EBITDA. have And once to is cash business. then invest

can $XX next me So lot return ever million, this I'd $XX got projects step I is spend train one the on because this of planning that finest ROI purest, year, I love we're to CapEx. is to million a is offer what year, shareholders. to

got that to So we've commitment long the point X. dividend. a X, standing would Point be

then, two to I But to do that. manageable. could continue between We like and EBITDA anywhere three like can’t go the feels good. higher that. two I even will we that debt And pretty than feels to that So the three very

So don't our little stock. to to I a purchase an I yes, But if more return then company maybe to bit interesting better back it's debt. have can shareholders buy, again, pay down own a

So I'm right that's now. the way seeing kind of that

be we But that not, buybacks. you could expect you we do going that that then to probably not don't would activity. if see if acquisition, acquisition on an horizon, So what, the which might that buyback we're there had we some will would an tell you might,

David Green

thanks. Many Perfect.

Paul Manning

Okay. you, David. Thank

Operator

for turn Management questions to gentlemen remarks. I'd Ladies further queue. will This in and back And our the the closing like at this any session. time, to showing over no conclude question-and-answer conference

Stephen J. Rolfs

Okay, call. your attending thank now and will end Thank for will That the today everyone. Thank you call. conclude you. you our

Operator

has conference for attending you now presentation. concluded The thank we today's

your disconnect lines. now may You

Sensient Technologies (SXT) 29 Apr 222022 Q1 Earnings call transcript