SXT - Earnings call transcript Q1 2024 | Sensient Technologies Corporation

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Operator

Good morning, and Welcome to the Sensient Technologies Corporation 2024 First Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Mr. Steve Rolfs. Please go ahead, sir.

Stephen Rolfs

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

should as most the We isolation with calculated to of in the with in of provides reconciliations results call, company's that remove considered in made information responses be of our items also currency available company's GAAP performance.Non-GAAP noted and movements, press release. with forward-looking include these in the this to these from our we non-GAAP questions, GAAP. accordance reference make periods. information statements. not substitute company's results company's performance reporting like improves will items investors your we impact reflects During of the additional plan, reconciliation certain non-GAAP remind directly other may comparability in measures to financial the of A to or for is financial measures comparable reviews financial believe the a the management review and portfolio We comments call evaluates today, during financial the evaluate optimization and measures how would the This and which connection filings. everyone including cost investors operations to today.I encourage between as also removal financial comments

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

Paul Manning

Steve. afternoon. you, morning Thank Good and good

our are full-year in sales quarter visibility Flavor and came quarter, to giving much single-digit wins greater revenue was our currency saw experiencing growth pricing contributing quarter. continued single-digit sales the continue in pipelines the raising X%. us that our profit grow adjusted local first mostly mid and year.We're as with EBITDA growth.Sensient's mid of destocking year, in results revenue new first the in This expected increased confidence robust. now operating we X% now guidance The patterns the and customer order increase We by and of remain revenue, greater for volume, strong throughout currency groups January about Groups. local to currency Our volume-driven, we and trends on with the believe behind both will for positive each across revenue us we are Color local impacts

EBITDA the As quarter. will Pacific.Our larger the to will feel the quarter of up destocking this impacts first local XXXX. we be of anticipate second last the We adjusted of certain X% our noted in consolidated with was accounts continue in call, multinational last Asia Asia currency for destocking quarter Pacific for

to a year raw to of expectations. therefore, is group and currency local As local XXXX, low-to-mid I group Furthermore, material the mentioned Extracts groups. the to volume expect goes temper natural ingredients at product operating across by local revenue improvement to improvement elevated an The agricultural customer currency growth.The in service. group Color its growth particularly continues currency The based first previous group group deliver ingredients the year, its expect improves cycles. materials, sales single-digits volume year X% continues primarily I Group's benefit Group first operating and certain the sales Flavors growth and inflation costs call, quarter improvement during strengthen and the in confident strong turning groups solid on the rate as and and in to significantly focus that inventory our but our currency positions deliver as mid revenue first crop currency as quarter. on delivering greater be our expect & on.Now from compared profit in operating from subsides. benefited X% a natural visibility on last leverage our growth local win strong costs prior growth. line. in new the and down The These which revenue our had the from margin single-digit its now full-year half for leverage the ingredients elevated raw will year, we local We, on in revenue our profit impacted to execution least and guidance was of low based single-digit product largely will are line the

the the Group call, the happy anticipated continue of during impacts behind of our Color us. I'm that for mentioned we throughout destocking now say to quarter. headwinds As last the are first to destocking

is patterns to to an its benefiting quarter. XXXX. Pacific in single-digit is good local I new are will picture revenue deliver the most customer growth single-digit from exceptional Color sequentially the We seeing first volume The guidance up regions. expect strong I improvement in improve the mid experienced X% XXXX, and customer in Group growth in which reported low-to-mid revenue local sales now Group continue currency the previous our wins local of growth.The expect from growth service. group order revenue currency currency group and Asia throughout

the impacted in is expected. that expect at believe fourth which an the second to in group as Optimization customers, is initiated the deliver and to Overall, of patterns well some produced single-digit continues in order continue we by and growth, prior has XXXX for growth to this As I results. the Portfolio mentioned quarter. volatile multinational revenue be come will group XXXX.The of We larger mid quarter swings positioned the the Plan to progressing group certain end in pattern calls, end

of $X charges date, with million million to pretax costs quarter in the Our $XX generate and of plan approximately $XX fourth and productivity will approximately Color is and Optimization of million focus designed organizational incurred both implemented fully of end quarter functions to be driving cost $XX savings Once expense. cost Flavor in Portfolio our annual businesses by to million. expect a non-cash. structure we on expect it we that optimize approximately Including of our certain will improved $XX to and incurred we first the the the right-size base in XXXX, continue incur XXXX have groups. approximately million, To which of XXXX, to of

minimize carefully remainder the million to the we to the to this managing first are the and by on expect throughout needs our in in of quarter ensure our We focus customers' continued inventory also strategically meet year. continue reduced our and improvement $XX to disruption we process managing inventory We continue business.We the positions. to inventory

single-digit improving deliver growth, EBITDA and revenue product We EPS to and expect single-digit growth. currency a currency expense.As flow single-digit to and is We expect local will volume our Continue to in on currency have and revenue reduce grow local adjusted revenue robust. local portfolio growth of adjusted financial including expect businesses and currency supports interest debt our much solid our sales mid in our currency adjusted EBITDA. growth, local local we XXXX, both mid picture across local adjusted cash consolidated EBITDA our at use in basis growth improved now single-digit a proven XXXX.Overall, communicated, growth expected previously currency a in our we that rate low-to-mid to XXXX. We each low-to-mid we strategy

include sales strong business.Now, customer that it optimistic the product that we execution, are Sensient. our service on and non-GAAP offering.Overall, for on to like control basis, I of tell note very years. about of grow I over our opportunities our on We focus within XXX more to and XX focused our would thank Steve a future our years adjusted of GAAP service his an about groups and I XXXX the should is wanted can that Steve, felt to remain I'm excited just business. our Steve each you our levers before to number. These about turn innovative

know, you June be call. and will is at conference retiring end his Steve of actually the as last this though, So,

little So, the within I've worked more very than and least a too, at bit roles that his as closely a CFO years, with X Steve leadership for financial company. other

and So, here, everyone work On Steve, you Board luck wish all we'd we your and like of to thank in behalf the retirement. for hard you Sensient.

for You'll what additional know quarter. have you're the on last Steve let to doing.So the provide us will details now, time,

Stephen Rolfs

XXXX also GAAP in to optimization adjusted per Optimization believe the income approximately quarter in reviews of picture remove my million, investors portfolio income In This the the results income the Thank the period explaining company's removal results. of costs reflects adjusted the our million of results XXXX, operating cost The a of quarter the includes for produces XXXX performance.Sensient's how in morning, our and performance. comparable Plan. comments operations of is year. was million first you, clear management differences $XX.X company's costs. more I this to will Paul. these the last We and share that compared Operating of Portfolio which $X.X $XX.X the $X.X be of between first

$XX.X the in tax to XXXX, X.X% EBITDA Plan, in was quarter Optimization in Local the quarter period the currency Portfolio of XXXX. was company's million first XXXX, income of to prior XX.X% rate adjusted comparable the compared the of million in cost XX.X% in quarter the adjusted the Excluding was XXXX. adjusted period.The year of operating first up of consolidated compared first $XX.X

operations $XX Foreign the quarter was of in Cash first of currency Capital from in material XXXX. XXXX. EPS. quarter expenditures to $XX was were the not million first translation million flow

our year. expect million capital to for expenditures $XX the around be We

XX%. adjusted an remains previous for growth. This growth Our local XXXX Overall, guidance, now to a rate future XXXX. our revenue the expense revenue still and currency mid adjusted our We XX% adjusted for full-year net expect increase year expect our we for adjusted expect up to continue XXXX be this and well from our be single-digit XXXX X.X. which tax guidance, our is rate full-year interest of we XXXX EBITDA single-digits local increase balance range currency positioned in both sheet low-to-mid EBITDA debt-to-credit to currency to and currency is compared had in our local to local expense XXXX our investments.Regarding EBITDA interest in called to

XXXX, EPS to in optimization continue we adjusted As costs. in a $X.XX to GAAP our local expect low-to-mid single-digits per share result, to portfolio we be of up earnings currency considering our approximately continue expect XXXX.In

the & Flavors XXXX our for reiterate expectations EPS the GAAP deliver segment, he to well sequential XXXX GAAP continue are agricultural our the segment. to order patterns impact costs Pacific compared segment impacting factors between to expect our our pattern to These mentioned will confident of $X.XX EPS Asia in participating for but comments, year.Thank that our and you we the impacting Extracts results, be We $X.XX.To will $X.XX Paul's of our in as call today. as quarterly each elevated

the We will now open call questions. for

Operator

you. Thank

We will And first will now [Operator with Panjabi question Ghansham Baird. the Instructions] session. question-and-answer the from begin come

Matthew Krueger

actually here try Matt gymnast-level to going for sitting segment wanted to on I retirement. & is Krueger This in Ghansham. but for Paul's to the Extracts operating on little not I'm touch sendoff leverage your congratulations flow-through bit. pending there, match just a Flavors Steve,

you what year raw How What forward? the volume dig moving basis? given in little and were? look mentioned know the that Just And costs, significant big expect more would strong a expectations. why trying on headwind headwind to you into it I agriculturalal higher year-over-year that growth those but was wasn't can detail talk a for does you more material that compared to like? progress about how to

Paul Manning

Okay.

with an directly of go kind So, the your to Matt, start But Flavors let's question. give I'll for of overview you groups. to each

yes, X% had of that was revenue growth. X%, Flavors So, volume. Most

price. was As say very we noted, it moderately, only X%

Flavor group. therefore, was there pockets of in balance a was So, was the but of volume other big there that But majority volume story. SNI of principally, was lot an it SNI, that around volume, volume A the move.

not absolutely SNI. in new was quarter foods. activity had revenue difficult. of lots The as savory-related spectacular of an SNI wins, comparison good there, they principally So, Lots for

had here, into that to benefit as comes right. well.Now, certainly, the leverage of us So, some play kind where

in latter revenue, X% of sort than little as start And the profit. see year. year. will crop a context was get QX, that part bit better had the in to X% we on grown for previous of you the mid-single into of something been on to a a of these lot that So crops you'd selling But

water, that and energy all with those about heard into land and fertilizers we and crop. things and those all So, were and labor, things agriculture, built

later right crop much, seen now.Now, we're know most positive X and We that's comes improved. the next the situation period. news crop the precisely is quite is on the won't are year, one the so, among cost much expensive because in last the good that trends was And selling how but ever probably we've this

And operating that Flavor so, you the that I tell group. largely on was would the in leverage story

As kind you'll see into a bit of we more of little go QX, that.

revenue You you'll know, confident growth. in won't But quite about very see that Flavors operating I'm you nice Again, see that. feeling yet. leverage

profit it at up, operating be of quarter accelerate in and continue business and year. the half I growth, inventory.Going should given to much and depending the cost we the quarter, start back could call over as contending that when Flavors tends lower as group, lag from between hold leverage, operating about But of for when seeing that new leverage generally any growth selling your be the had on volume You'll one we to to operating the year to you X the flavors how start to in so Color a you will mentioned there's yes, generate in the a here. expensive leverage volume see position.So, the the quarters, the draw more start crop with it last the unit kind you inventory, traditional on

you revenue, the actually saw single-digit in because on for into you a seeing single-digit even that single-digit So, profit. mid as had revenue, were down minus well profit. low double-digits XXXX, we Colors been, we was single-digit revenue, see in sign positive QX, That's low operating low minus

So, you're seeing the inflection point now QX. in

the get leverage QX group, see we you'll for in very into the So, Color play that beyond out nicely very, group. Color say think start as and therefore, I to

progresses. you'll very that happy I be very, So, think, with how

I bit that's as with those kind picture, associated of progress than the it year just agricultural normalized, Color, think, it'll a faster based is on but products.So, So, component inventory you're principally this see that moves to year we'll and normalizes pace very on more the single-digit going that And to be mid single-digit start confident type high very, here. growth. to of that traditional revenue as EBITDA we're leading at big

Matthew Krueger

Great. and That's talk about middle ramped in growth sustainable helpful. then, the in in any Can ingredients, really pickup has has growth over And since naturals driving that the higher very switching specifically, last to is segment? start specific that of this that natural year that the significantly year. legislative you pickup XXXX just Were growth conversions portfolio to there rate growth? to and the for changes how or drive are benefiting what's

Paul Manning

regulatory you can This it. the you the is where when on business sell Nothing crop, a have side.

because invest the And or to substitute year so, we inventory we last made X to no continue over that the want in that market. on there comments is

one you have then sell you when we quarter when an the so, outsized did. like can And sell you And it, it. it, can have can you

had we had very sales aggressive #X, effort. very a #X, think, we a position. I So, good inventory

and that well exceedingly new sales they're leadership the side. We doing in on business, have

one-off you, business. rather earlier, maybe as they would So, that's easier factor.I mentioned comp business. I a in I normalize for would see more a ultimately, trend sure than of on. as as little that goes rate had of that in tell bit sustained a of another the portion I that But, year a the explains think, that that will an

of to new we as anomaly And rather year, state. a growth kind than solid that in so, saw a growth think the rather them of we steady have of QX, statistical for would the still expect very more

Matthew Krueger

I'll sense. over. of makes That it. helpful. That's a turn it Got really lot

Operator

with will Exane. BNP question next Nicola Tang come The from

Ming Tang

my well. echo Steve of wishes as sort and I congratulations best to And

guidance On guide on relative first you Maybe Just at talked wondering Do that as expect little or could on your cost? side, in I'll one. explain expectations you million EPS was your level? year-on-year terms upgrade why are what I to the EBITDA a choose EPS if that the you interest understand of plus $X previously? this bit drop-through sort limited about there's clarify to still of an the the trying

Stephen Rolfs

Sure.

guidance, quarter, say you not interest when environment, guide cuts. well. And expense. for Last then higher interest why So, you a $X about the it really look have million tax that we'll this appetite on EPS year was And increased. be the we on the that's slightly did on head. the and as reason rate interest only to seems expense, the rate more It's rate at hit there less interest

mentioned, the the is bit be $X it. and little could Paul we that's it we the $X we if So, case, will as so and interest flow which down towards terms see a the elevated we've it of expense. in leverage, cash could be a million, But, got way bring bit make for up more that as opportunities could little be million, some in inventory above priority, of our

Ming Tang

Extracts Got the Flavors it. the wanted little actually Flavors I about And ask to more then, bit a on bit. side, &

sequentially, it it who've of dynamics some Can bit the lagging what seems far. us the of in whilst in a some know, You of Flavors improved like and help you're of understand QX? discrepancy bit sort you F&F players the so perhaps reported little explain happened bigger a

Paul Manning

Well, customer launch. a across that things segment could a number I happen XX-day or group any or customer's any period, of or inventory guess, position

So, too from I wouldn't take away XX much days.

expect year as the think, us, of mid we growth, I single-digit being at that do most for you look volume.

on was could growth of last see that the ] robust. years, [ number As you the think, reflect quite volume back I you incentive

not think, of X in opinion. quarter, I it's so, anything again, my And indicative

the continue to wins continue and, well quarter. be fact, new quite on exceedingly do the to front in robust new first in We win

it's anything else. of than more So, I really thing just a timing think,

Ming Tang

the of ago? be of I could enough higher you to about input what you the were you're low wondering Do couple you in talked will and how you And in this about costs sort outlook then, seeing, this you little year? whether this and on I pricing. input year single-digit there's months inputs right. change a of release Perhaps about, on cost input think, been bit any All inflation of talked was sort your thinking talk terms a side, versus cover for cost think

Paul Manning

Yes.

off, So, he and add I'll start like would let let there. to what me Steve then

the to input I favorable direction think in more and the picture moving they're our costs that's on general is profit. us

As profit. benefit enjoy you liquidate operating inventory, that to then start your your to you

the remain think, of many think, rising. I of affairs stable, always but given So, There state the of in They're general exceptions, any not in is is a couple in exceptions things elevated year. big declining picture are I categories. there's a But, couple some.

start those through continue a need driving think, year, help the their mention and for customers the think, I see benefits So, I half that the on because Flavors. agricultural the that's capture we'll our P&L. to the side, promote we big businesses. overall here, sure, one that anticipate price did improvement to one in continue our lot of back to own But, we yes, story of in impact I capture that should to leverage what the the is

we pricing I yes, that that we got. the feel think So, about good

there? add know you Steve, anything I want the So, don't if to mix to

Stephen Rolfs

big just been outlook there's would any that, change or expectations. I in our say not yes,

these a now there times As can one you're just The agricultural across we're dealing be products, lag. a lot mentioned seeing of spend. we've couple Paul a improving that is said, thing the of an with picture when

think, And improving. I the But, picture is so, I general, would thing that's only add. the in

Operator

Green question from Our will Instructions] next David [Operator Boldhaven. with come

David Green

around question a just margins. guess, I

ongoing that. in talked qualify to And for improvement an an You just of sequential volume. sort about expectation

expect So, improving assuming as margins means, well? performance that sequential definition, by also in should I'm we

Paul Manning

Yes.

right. I that's think

out year the plays I think, I described earlier. as

a Asia well. remain course, to Flavors, on would you uplift that QX, bit Flavors in at Color will most door But has in but sooner Colors very, We're opportunity. begin close see than here optimistic as would think of see profitable. that you back I We're XX%. in start the Flavors. knock And, quite very to the that

answer yes, And your short so, to the question. is

David Green

obviously, of sort levels. just been thinking, high specific you've on ask about specifically to just wanted strong? areas very any win then And rates of talked sort it's there Are and, where Right. particularly

Paul Manning

a have enjoy you different Well, a we've personal broad-based in areas. rates in the success win portfolio, of grown very pretty we so I that generally lot nicely care. would tell got

hard So, of focus this one is was which a was COVID, business, particularly during our particularly on market that makeup. strong hit

on nice we're wins side. rates So, and improvement the care the of businesses lot seeing we're an in there, a win seeing in personal those

We rates nice continue to win enjoy in natural business. color our very

the strong those to the and We food very have continue and of we in are very so are largest types company world, color customers good who to converting. access

it's access the of in very, up going a larger activity North the what's are have is multinational, technically-driven good like, regional, least a macroeconomic interesting in strong folks that's branded the looking think, wins would in improved of And around and to of can are and And at is see globally bit little going up, because in backed were sort or raise But I not question certain a we've in to a We so, the our a and the volume lot Overall, very the a generic. Most at a America to some generic so lot frozen look there's very of hey, talk the at to QX of notably then, is and segments that expand is And, the we you down like, there. a be pretty in program innovation mixed by win volume an tell factors, and that very we here that reduction that I seeing North and what's accounts of but we're well.Segment-wise, to This flat you a we to to or launching. market? QX, in I launches customers think, desserts about as to like of America. a bag. a happen world. seen lot broad-based, regionals. and program.And very, happen launch would you so, being quite course, what in local or as Europe, continue conversion the local pretty Flavors, difference market, actually rates whether across a enjoy continue up it's specter our decently,

branded lot up, For were lot volume example, QX, SNI almost had the in areas. beverage. say in they sauces our We X.X% of in, nature. savory places, and foods for of down generic in lot saw Dressings to X% certainly guys terms and again, the wins goods. volume.So, dips good natural or were a saw but We in X% a that would of were of and good on whereas things wins activity brands, be of a tend that of activity a I lot yes, baked colors

pretty, outpacing particular one now, other is moment pretty perhaps launch standpoint. I from I that's think a the would category tell right any you broad-based. a don't frozen bit there's desserts categories activity slow Although So, at little

from mirror largely market you're in that would we seeing standpoint. so, And the what

David Green

Color, thinking I And personal Right. of food and segments. within the and about of broadly remind the so Could versus the just mix margins in sort margin just, you me, can't margins sort remember in in specific care, speaking, terms pharma? specifically, of quite within

Stephen Rolfs

lines the the lot would are margins band. we segment, a of fairly there. narrow say in margins earned a different product that In similar I across

David Green

then, obviously, Flavors higher than natural margin & And Extracts? ingredients,

Paul Manning

term, it be right group. for yes, the average margin the on ordinarily, around depends would year. In but a probably crop bit this That EBITDA long the it's case, lower,

David Green

volume as quarter. of final sequential around which better of guess, I to cash drop question sort just And there improving to cash referencing a why then, that well doesn't improved a guess, and back for I margins. your expectations sort Is basis? flow, any on through reason this

Stephen Rolfs

flow we cash think expect this good year. I No,

We improvement. expect continued

are We the up first quarter. in

expenditures traditionally well we improvement. as be inventory. quarter we be improve, less lower not because capital And we'll to if the quarter this do on And to new going spending year. the our finally, expect we that expect, strongest see is additive be then, First but cash will which costs are anyway, continued flow

So, we this should free cash good have flow year.

Paul Manning

have think, I've inventory, we're nice reduction. I there movement still mentioned do on of $XX more about Dave, we to fat this before, QX, there. work a was million so

expect. predict of which, going to we not an how inventory to of precisely I'm our very be trend lowering you should X, well, But strong comes there very, X. cash out in So, and for ongoing QX, the inventory much source levels, year

Operator

The will Paribas from come Lim Exane. question Joan BNP with next

Yuan Lim

Hello.

one question Have for seen competitive Because landscape your the importance was their changes actually you any Day. of me. Colors talking from peers of Colors? in about Investor one Just your at

So, just if changes? any interested to there's been hear

Paul Manning

Well, we to in they where mindful of we competitors very Color and we're them. have good and want are beat

conversions, so, make And different products world. a against innovative no, color and the I I in in that with think of would products, I new world. don't that there's ability around our but the to put There's And certainly against I note. trends world would the natural activity the any put particularly of terms anybody's lot portfolio anybody's in

Yuan Lim

that's More Okay, trend, natural colors. interest a suppose. helpful. good in competition I It's and also more

Paul Manning

of different We conversion sure. see for parts Yes, the different rates in world.

the an at stage outside Europe, of we So, still of transition. this still of is think earlier sort

there's course, of natural yes, on that more there long-term nice on runway for notably natural contain And then, the conversions, color very sure. So, backs of colors. new growth products a for

Yuan Lim

Actually just rates color a follow-up. the emerging markets? What in on growth conversions natural are

Paul Manning

way answer in mid they're to Yes. question. good to The maybe regions. probably a complex question. that is some a That's easy mid, low It's

world be very with and high when volume colors, colors the which of colors. oftentimes titanium caramel at to not but Now, contributors natural very, colors, distorts tend they're like dioxide, highest things what are look natural natural numbers value to you necessarily the

dioxide. traditionally quite caramel interest That's share absolutely we titanium zero like I the substantially that colors, things sell whole would natural and that talk by of market So, of market there's frankly, we about have a be things our dwarfed chunk don't why in. because

types out place a yes, those specifically. not Asia certain as as the of Asia products, the a America, you we in in than emerging see rate and so, East. matter, of growth you see perhaps markets, of And Latin it even when for rates bit Pacific Middle Pacific, could factor little you as that Africa, or in better growth strong see are would that parts a

parts over the So well. think America still as and can to Europe, continue I of as quite North you look to good growth be rates

Operator

There time. at to go conference any this over are the for to like closing Please back would management no ahead. further I remarks. questions turn

Stephen Rolfs

conclude Okay. are If no further will that there call. questions, our

So thank everyone, today. very the for you call joining much,

Operator

has conference The concluded. now

may You now disconnect.

Sensient Technologies (SXT) 26 Apr 242024 Q1 Earnings call transcript