IFF - Earnings call 3 2023 | International Flavors & Fragrances Inc.

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Operator

At this time, I would like to welcome everyone to the IFF Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to introduce Michael DeVeau, Head of Investor Relations.

You may begin.

Michael Deveau

Thank you. Good morning, good afternoon and good evening, everyone. Quarter Call. Third IFF's to XXXX Conference Welcome Yesterday financial results. issued a announcing our press release afternoon, we A the website at copy our ir.iff.com. on of release can found be IR be being Please review to statements. live call that forward-looking replay. Please is note and a this our will available moment for take recorded

During we'll elements see we things forward-looking and contain be statements performance the company's how the business based outlook. on uncertainty. call, of and These making about statements are today

to that contained exclude For please include differ and additional results the affect cause statement measures the Transformation forth me materially, factors Richter. Vice measures, factors is press release. With comparability. those to our risk can press we believe today Clyburn; Financial information call in cautionary our our which will and that set non-GAAP financial Business refer actual Officer, concerning measures reconciliation items A XX-K these GAAP release. Today's and non-GAAP in on presentation of our and Chief Executive financial and Glenn CEO, is President Frank respective to their our

begin with prepared at Frank. any have to may I call will end. With the then and that, turn you now the questions would take over like remarks to We

Franklin Clyburn

provide who discuss remainder results success. the long-term more financial and our will Glenn, On for I our look IFF begin hello, to thank Thank you, a on XXXX. for to strong at the will third of outlook update turn I our in joining by us. execution and third quarter position and Mike, over the for detailed then business by today's providing you performance an everyone, of will call, quarter our overview and an call

questions. call the open then will for We

X. to Slide Moving

one quarter improvement. story third sequential of Our is

improved quarter the program cash delivered This commercial top capital and flow, of cash The our from reduction a saw excellence in strong price our top continue initiatives basis, down working achieved a where in than flow third operating our million is has XXXX. was 'XX. Sequentially, the execution adjusted versus our expectations pleased we XXXX. majority particular, in improvements was business. On higher our we bottom $XXX since more same our improvement continued finished discussed, marked been which ongoing volume sales improvements second as enhanced digits, we largest decline. the have $XXX inflation reduction of adjusted volume our And free that driver company sequential of time, the net on on which in second both than XX.X%, while mid-single at priority, favorable lows we've quarter are to As to a across was improvements improvement that results. has productivity our we million focus a generation. In the strong platform quarter end XX volumes initiatives and of our to improving it the the result point drove of total with resulted R&D the double-digit versus well basis inventory our in EBITDA margin EBITDA our is QX drive inventory our the led Similarly, the line. At of as a operating a pipeline. free

portfolio. a Ingredients, targeted are operating quarter discussed we our Functional model execution, to call, as our improve in on and strengthen addition, In improvement second implementing sales operational the plan reshape

to end we will volume have to the we our EBITDA deliver versus are the of in within take high 'XX seeing XXXX. margin our are X where previously shared will ability targeting translate full and operating currency-neutral With we our mid-teens over expect in declines we confidence XX% comparable guidance low while Functional adjusted mid- we down performance, momentum, low now the of announced with range XXXX. a operating finished a time, market for single-digit line range. the year this growth in sales this Ingredients strong full QX plan in next and our improvements mid-teen we year into quarter EBITDA As And years previously, adjusted guidance improvement increased sales with XXXX in this

business. shoots As Glenn seeing across signs of are parts we will highlight, with of the improvements several stabilization green fourth quarter, in and our

we is Lastly, on Most we as optimization our equivalent notably, we've projections. company, structure. made aligned initiatives chemical owner important agreement progress teens our with sell capital a high to best specialty Lucas to to Clariant, rapidly based $XXX multiple Meyer million, against mindset, addressing which our announced are an our Cosmetics portfolio for

early complete to proceeds of expect priorities. XXXX, will We support quarter first deleveraging part the our all the the transaction of in and

Moving forward, drive long-term deleverage noncore fastest-growing divestitures continue prioritize margin-accretive to and deliver further that us enable we pursue and strategic value shareholders. to further our will for businesses

In currency-neutral basis. Slide the decline Health representing Scent Nourish and performance X. quarter, in billion the was Solutions. Pharma than third on comparable more to & strong A offset Moving $X.X softness a X% Biosciences in and IFF by in generated sales,

nearly & improved all performance particularly in Biosciences. mentioned, strong businesses Scent sequentially across with I As volumes and Health

was to Ingredients, volume year-over-year our on third $XXX comparable results, million, overall continues currency-neutral Functional the in disproportionately declined operating for quarter. Adjusted single digits basis. EBITDA impact the a down Excluding low which to quarter XX%

than manufacturing by inflation to well primarily to due gains were lower Our Adjusted lower primarily destocking customer absorption. impacted as amortization, more cost excluding productivity temporary EPS, by volumes and was favorable offset $X.XX, profitability. net as enhanced price unfavorable

to more profitability Glenn I'll turn and on over it our detail segment. business to performance by Now provide

Glenn Richter

a X. closer our evening, Thank you, at on Frank, and afternoon good Slide good morning, look performance profitability Taking good and everyone.

third we higher-than-expected the $XXX million EBITDA of in Frank quarter. mentioned, delivered As

inflation to from gains, price the our continue can from ongoing pressures you we quarter. in see and impacted as benefit productivity While to favorable slide, the volume profitability

comparable absorption program, sequential remained to look of volume manufacturing most in it primary related unfavorable performance, we improvement, inventory portfolio, adjusted improved. has we was currency-neutral course profitability absent for the volumes operating While on quarter improvement encouraged at negative pressure absorption and seen EBITDA QX. If X% by Note our that have program the are its our the year-over-year the our across inventory our as we than our in have run expected would basis. have less the a declined reduction year

We driving at good million more than through in since job inventory driving working 'XX. done program, $XXX improvement the capital reduction a inventory our reduction have of end

are further As is approximately quarter moving maximize a to also a million. absorption to P&L time, result, year, unfolds. the $XXX order full the down from at this To the to in $XXX now reiterate, we impact could fourth transitory a expecting negative flex forward. as This onetime impact from flow this profitability million cash for

closer Functional segment. In QX performance our provide X% currency-neutral business sales on the declined mainly I'll comparable by X. Slide driven look continued to a in Ingredients. basis, at weakness by Nourish, Turning a

growth fourth Ingredients and we to our Functional volumes driver the in IFF's move a of into prior adjusted expect a productivity gains in positive year results business increase comparable continue comparable While operating growth manufacturing our X% Nutrition we comparison Flavors unfavorable Good year-over-year. year-over-year and Price Personal large was did Bioscience once sales in more of adjusted decrease EBITDA Scent declined and part and and growth weakness saw volumes performer, in third again XX% operating led than a continued 'XX Consumer profitability with led in meaningful remained favorable in Nourish by comparison. improvement Fine this in Health in quarter. initiatives offset growth and more also in Cultures were Enzymes, EBITDA as the to a double-digit quarter, ongoing for led in X% pressured business adjusted high increases Like growth strongest comparison the see pricing driven and productivity Animal XXXX this neutral rate currency-neutral with adjusted single-digit main to & & actions currency-neutral declined productivity Solutions absorption. was quarter. quarter, strong and Together, currency-neutral lower sequential offset and to growth XX% increases net impact QX, in the than comparable delivering & neutral deliver Care growth this and by currency growth Home sales gains operating EBITDA productivity pricing due operating and XX% operating Fragrance. & currency gains. Pharma driven by EBITDA. Health were currency-neutral Processing, EBITDA. Scent a X% in a year-over-year Food sales lower Grain XX% growth and comparable to in of Biosciences, Fragrance leading adjusted to XX% by strong comparable comparable strong XX% by comparable Price this currency-neutral very

or improvement of on Now a from operations flow and year-to-date flow was sales. $XXX reflecting million discuss significant cash $XXX our leverage in a position. I'll X.X% inventory levels. CapEx increase, totaled Cash approximately strong million, Slide XX,

significant we greatly distributed also performance, have million working totaled cash Our of increase which inventory IFF's million, our $XXX improvements also million program reduction improved to and to the from a free second dividends shareholders. quarter. Year-to-date, flow in capital $XXX $XXX contributed

Our held cash includes cash equivalents in sale. $XXX and assets which for $XX million million, totaled

Additionally, credit gross to adjusted EBITDA billion, a debt debt quarter of for approximately the net $XX.X with totaled X.Xx.

approximately credit billion. trailing XX-month Our totaled adjusted $X.X EBITDA

down support is EBITDA levels. businesses our of are as the expected the quarter sale a we of to success into in earlier, good near-term remains business, portfolio the will credit The our further we making will are We our priority optimization to work capital down debt resources future. as first part our with our strength the in net line targets. progress focused leverage on our and in Ingredients reduce ensure which debt debt position working XXXX carry our as structure pay And Cosmetic to that mentioned Frank early on close adjusted

rest year. Now like focus on for the to Slide outlook our the XX, consolidated I on would of

which we which the momentum to foreign of through exchange expect improved macroeconomic reflects accounts persist of year. seeing the $XX.X across the reaffirming our environment end majority business revenue $XX.X billion, our and impact, range year full and First, billion the of guidance for we are will the we are

high to inflation announced $X line, of to improved productivity. EBITDA our to full to On expecting primarily deliver at the operating favorable bottom price are XXXX the $X.XX mid previously now and of by driven year billion we guidance billion, end adjusted

expect year We full interest approximately slightly also $XXX to million. at expense be higher now

tax expected we Our approximately quarter. the estimate provided for rate is projected effective last the same to XX%, year be

navigate the the look majority to continue quarter, businesses an macroeconomic to our challenges as industry. our we fourth we we in improving trend impacting the expect of as Finally,

We are with of our across the seeing fourth green stabilization several shoots parts improvements business. of signs quarter, in

questions the of have I we the know end of many year, near you on XXXX. As

While the remains low year. optimistic are into heading volatile new the with macroeconomic environment we visibility,

in and initiatives items onetime we successful we be a initiatives. benefit done will Kernel of inventory Bean inventory restructuring a offset Also, to and compensation that on one-off execute will payments our year be reduction program partially year's largely that target. In annual destocking acceleration have by will known continue versus Locust write-down. tailwinds, will of we we program. our we the level have to where and have XXXX significant critical related the including we end, performance our These, also and to negative will of and to cost from benefit improved several high related volume productivity reset exit believe have be our absorption success, of this We transformation carryover incentive our as believe our from confidence performance reduced we be course, program will strategic

to fourth we over I'll Frank be end with of provide guidance closing to that, towards quarter remarks. our turn XXXX February. With our expect will for results, call the which the back We

Franklin Clyburn

Glenn. you, Thank

Let me stronger, advance teams last our start proud quarter saying and strategic focused have am to resilient initiatives our of that in a by accomplished more IFF. the I tremendously build what

a better our and QX, global for productivity guidance continue and to continue reaffirmed we'll performance, in growth, vision. positioned accelerate shareholders. executed gains to work expand to our long-term teams improved We of IFF, take to reflect priorities QX build the in financial against action support Our that strategic value our margins and hard deliver stronger

broadly, our our optimization at capital looking structure. more to Finally, will continue we portfolio initiatives strengthen business to pursue

through through those either for on laser-focused as highest-return positioning we're our As businesses ownership discussed are or improvement investing margin-accretive pursuing while Ingredients. plans, such focused less businesses for previously, our new we Functional success, we've in

now Our has margins expanding goal, ownership as XXXX maximizing of the for we call worldwide. With as that, is through accelerating appropriate, resources our will to returns and the we businesses our beyond and conducive innovate ensure move where to that customers up of most questions. our our and to end the growth, for long-term continue the I each open

Operator

Bernstein. [Operator Instructions] Zechmann comes first line from of Our question the Gunther with

Gunther Zechmann

recovery, the what business the part Frank, the any the business? but cost the within be you top mentioned It of a around give the great. my and talk around moving line question you're Could on Ingredients looks to like the taking that that you ramp-up, fixed parts you. V-shaped please development would could color about measures in Functional you

Franklin Clyburn

A improvement lines, when improvement. QX regards solutions, all to clearly of of it's core Ingredients, the business protein X ingredients Gunther, particular, and we across to couple Gunther, Frank. good sequential texturants, stabilizing, things. sweeteners is with Functional and business I in One, QX, good multipliers, look biggest sequential at in some saw the of

So that's categories. us. a those dairy going very into market are positive of our and And products sign some for obviously, bakery key end

adjusted those review are lines, we're professionals we've of be as efficiencies; portfolio. across better Thanks -- our three, the far our acting net at the we result Gunther for underperforming. our Functional areas: Ingredient efficiencies have urgently Functional and process since Team two, drive completed the And a with with our market can we're as announced as go-to-market to overall, rationalizing deliver reshaping same we full commercial of approach; incremental sales one, will of a operating product the that the line to next in And performance enhance grow in very mid-teen and time, investing Ingredients. we're the this model, strongest drive years. pursue behind added we're the operational over X And to process plan operating the and focused As drive in products X margin we've our targeted the we've Gunther, organization and well also question. greater is reviewed adjusting EBITDA confident our product of throughout. opportunities customers, really in

Operator

with Our Wells next question comes from Fargo. the Sison line Mike of

Michael Sison

is think strategy? an quarter. update Nice that part an deleveraging thesis I for on of there out Pharma your there's your divestiture forward. process? sale your important press maybe that is and up potentially going you fits provide And Frank, how can in

Glenn Richter

start Why Frank it. it, into I don't of to can attempt Glenn. it's add Mike, and sort then

just sale So refine the for to our announce portfolio, getting of net quarters many, million quarter to about many of in were future leverage $XXX it million we enabler goals. We for the enhance That Cosmetics been Lucas have $XXX key transparent should very the continue that is the gross to proceeds. pleased i.e., net. Meyers

a on for divestitures. will the forecast And went circa based earnings. XX year's that of multiple used company for All be this

So we're pleased by that.

of portfolio number underway. We have actions a other additional

as We noted, you in that publicly it's have press not Pharma, from but the mentioned standpoint.

less will that terms limited Pharma which a We Xx business. in need healthy in are to, confident these we very actions candidly, sticky your or Pharma get us to customers. a terms a business. It's It's sector question very Pharma. business. But where overlap of ratio. Relative good end a it to relatively in leverage around is has the of is

framework. with are our the overall limited And other complex into regarding the how of Pharma. across Pharma For answer rest there IFF, revenue to your question synergies fits or

reminder, the business a of business, lower pack was has relatively middle has that high-return then excipients, sort a and Pharma XX% the which of on terms ROIC. a in the is It As more return, of industrial all that. in

that think know, -- else I add I want do So to you don't to Frank, that? anything

Franklin Clyburn

No, we can I Yes. think go.

Operator

Our BNP next Paribas. of line question with comes Tang from the Nicola

Ming Tang

shoots. commented of Frank sequentially pointed Actually, you performance both you improved that through green and QX, to and signs volume Glenn,

think end do what's assessment you by where color customer in is latest behind could if overall, by wondering that improvement? destocking of you either was seeing I division markets of now inventory So give or that your specific more levels you're terms us? And

Glenn Richter

improvement Nourish, literally in single to question. within Scent sub-business the and from a interesting volumes QX. to It QX had every for H&B see essentially was sequential Thanks

very note, we down. of general, the incredibly a though, bev, a the an had it They terms terms was of than broad-based XX% given in I standpoint. Pharma year. volumes had volumes. an was absolute in strong So the would last third plus surprising from from happening performance consumer one saw. stronger HPC actually exception. Pharma quarter I'd improvements say, in they had were of demand food the is not which categories standpoint what's and volume

So there's converted overlap. system QX bit a last in of an We had a year. of

was up a cleared which orders, bit were there in So of QX. backlog of a

So difficult question to destocking, very a standpoint. Relative the se. of from your on little bit to per normalization it's a say

our However, would be of the business by we quarter. point from or is, are the our the feedback end majority that say fourth either of at down this done to winding the customers expected

a customers little a of clearly as a Pharma industrial I the meaningful one little I component the a reflected that's has side. the segment and also that's business And The the been well. very side think well bit business of of lagger think destocking competitive distributor Pharma terms later. is in bit started for as the in business the It Pharma. also

broad sort business. knock on are things So wood, based entire very of moving across the

Operator

comes question from line next Mizuho. John with Our of the Roberts

John Roberts

from are Was you benefited favorable versus and about you price Are getting Scent sequentially? that year-over-year? how thinking more both And sequential price raws. XXXX?

Glenn Richter

the again. is new this John, By Glenn home. welcome to way, your

So in the more price less neutral, versus QX relatively terms moving, it of although to relative is cost. it's sequentially, QX to net and less Scents, cost, price

deflation second seeing basically third versus now slightly of we're quarter And the more higher So quarter. moving the in so. year-over-year, through effects the the

and the beginning Fine in As implemented a of Fragrance, markets the were our reminder, pricing year. core this actions our being consumer final at

the we're know, neutrality more fully a standpoint, now cost -- of we're was year reduction. One the beginning of which Galaxolide, turpentine what year, of there from such products what About and sort as There's that's you of quarter used and for and basically have so seeing do really sold. XX% a is second commodity to an So example, implementation commoditized. our XX% production is in now is we be own as somewhat some as a we'll last component the last overlapped sells important business, our asterisk, percent ingredients.

a on Scent bit the very given in in general, a downward more cycle dynamic stable pricing the the business. is is So categories. generally But little net price those cost

question. the for thanks So

Operator

with Mark Our next question of comes Astrachan Stifel. from line the

Mark Astrachan

then suppose I bigger peers all. performance So to they're outgrowing maybe about how to contributor volumes? question, back was pricing just when together, guess that relative like volume think your last algorithm? you still related think sales tied go I'm appears factor but think you sequentially. into much can a I it as smaller And lastly, to the long-term you it Does curious looks picture, how about that do you the your about somewhat

Franklin Clyburn

Mark, it's Frank.

Let me And question. that I of really a couple one. that to things highlight on take wanted this

of our dynamics first, with the we spent to and could at you positioned. competitive we a a lot highlight, are maybe key to time, the and if quarter at end through business looking of And some obviously, our teams So give our minute of throughout quarter, lines. the walk just me how

So our above quarter perspective in grew good Enzymes, Cultures this as growth then performance, market, Biosciences, Mark. And very against Nutrition. Grain Flavors, Processing, our actually fact, you for Greater growth the I business Scent Asia and versus Care if sales a actually Consumer & well good feel America growth Scent & saw prior Personal Animal in for Fragrance quarter. you competitive Home in above grew saw was a very market. Mark, at Mark, our a business, very was instance, in And business look and good And positioned from we set. Health which actually our particular, encouraging. about growth well. & North us. year, Food

had Fine And growing also So performance. share there. business market our clearly good Fragrance then

business year. And versus across So I also highlighted improvement. of lines, already Scent all about as good just this about good sequential performance we've feel really prior our then

improvement. we've that the business, feel is when look volume So good our area Functional about our highlighted overall I as at do really Ingredients. we The I disproportionate declines versus have one sequential competitors

volume If would you single were to digits. our exclude low Functional Mark, down Ingredients, be

Pharma, Mark, set we're a and how quarter that good very was with have there. we as as business then And highlighted, the I like Pharma. But feel year. of said, well our we feel we've other to mentioned, regards our we're very had within we peer about So competitive majority the performing. And strong last though one

business position of that's in issue is competitive we So as year. compared of But quarter the all, XXXX. as a in a to us last more for really this head overall though Mark, and is sequentially feel all into we last improving quarter good in

Operator

question David comes line Bank. of with Our the Begleiter next Deutsche from

David Begleiter

Pharma Solutions, And you sequential for mean on on this can Frank, more for you what think do margins and decline? costs? next Pharma? Was mix QX does in it for year you, margin comment more the or

Franklin Clyburn

Yes, David.

SAP the was then was as highlighted, QX lot of we versus EBITDA comparison year year, some XX% a as Pharma, last of prior as catch-up a 'XX. shipment in So XX%. growth. that mentioned, implemented went we Last we And growth with shipments into year

line versus down So that because of that And can on the comparator year. was year see X% you obviously, we're this top last the comparator. that

That QX. If overall continue. And go Mark, some business, earlier. concerns of are sequentially, see Glenn choppiness, rightsize that for business. in are about something business. we we a have into highlighted think I destocking ended sticky is you the temporary you see we we Pharma said, outlook QX, this the destocking to With will we as it's more kind as There in that inventory nature. look very anticipate some distributors the of that starting no do inventory as that

Our core customers. is core our I Pharma business is -- should Pharma what our with say, position positioned well

in So our potential we and nature, the we feel about 'XX distributors, beyond. by as temporary into inventory, good go growth rightsizing and destocking performance

Operator

Our comes Sachs. with line of Adam the next Samuelson from question Goldman

Adam Samuelson

they as second today charges, in write-off prepared So the Obviously, just versus you and remarks inventory XXXX. quarter. elaborate of absence XXXX the could around stand some in maybe the there's little EBITDA puts a and hoping the your bit of the high-level inventory for Glenn, takes absorption

we tailwinds? impact. a kind It this be incentive us if going there, on And really But there lot of basis? kind savings you quantify be that? of leverage have that? Or you going can and you swing XXXX You're kind divestiture think cost headwinds point, is got major -- year-over-year on You've price else anything help should at can productivity like thinking a of highlight? sound about the comp, lot the thinking about to and that that of associated operating the would volumes into doesn't a we is should there's about just then with from

Glenn Richter

Adam. you, Thank

So normalizing, let me into One, onetime from year of kind the break this X a that about components. XXXX. into just say, little talk and I'll down then bit year items next

In terms of normalizing this year, first thing related you EBITDA do is of you have to to take out $XX million divestitures.

So And that's full or million basically business. Solutions roughly LMC, FSI, Savory and of X Specialty then earnings. Fragrance year months $XX a for then that's Ingredients in directionally about

to That goes In impact which add the the back you addition, is related inventory of to absorption reduction. absorption have away.

of of inventory nearly the out associated So at of million truing normal million. terms benefit. sort to up year. Offsetting items, they'll was lastly, I the year, That's benefit LBK given our $XX lower On you this mentioned, this $XX is that, headcount mentioned, as write-off basically pay incentive million taken of additional about million-ish million is our a challenging about $XXX top a in XXX% would $XX of of volume-related percentage. then we've this roughly with add we've annualization as the of program that, out And plans second year. add $XXX in quarter back reduction

deflation, Candidly, to we -- fulsome a relative very prepared have the are XXXX we'll those 'XX, items I the sort discussion are normalized of would So to results. be the take baseline mid-planning We're in process of with their now. February the cetera. terms programs, right businesses on volume, in We're call. all from productivity procurement plans net price, at working the et

detailed components to you, about we this but those in little have promise a February. a we'll very it's So early point, talk at discussion

Operator

from question comes Patrick the Our of line Citi. with next Cunningham

Patrick Cunningham

Just are towards of absorption is businesses build-to-stock? skewed positive portfolio or one on absorption year. that other? the What next any just there build-to-order or a where the follow-up off split specific And versus coming is percentage

Glenn Richter

question, to roughly build-to-order I And don't the of do. absorption terms say that they your answer are impact overall XX% But we're that Yes. XX% have those build-to-stock, portfolio. because built-to-order in wouldn't

versus DuPont So or a the more legacy build-to-order. is for build-to-stock FNF the portfolio the N&B legacy

that of H&B probably Pharma Flavors a business, Scent the and the businesses the then business and largely the combination Ingredients is largely slightly result, and as build-to-stock So more the -- business, but are is split, a build-to-order. Nourish the food build-to-order, build-to-stock obviously, and systems

Operator

from comes the question Lauren Lieberman next of line Barclays. Our with

Lauren Lieberman

you could I in talk if pricing. think, guys we was stronger, a anticipated. a bit about quarter bit little the Pricing through came I than had curious

And I so think pricing there was any just that incremental that curious about because through. didn't going

So of detail some it was sort maybe stickiness, but that. on would just love

Glenn Richter

related of pricing It's than year. Pricing -- per implementing Yes. earlier any not se. to more this more price implemented all have deflation our really been actually, was this actions We pricing year.

been our associated really that expectations. favorability the enhance it's with earnings deflation So versus

Operator

Our the next question comes Spector from line of Josh with UBS.

Joshua Spector

for inventory, more given I this update back Or to there on free What cash flow. are And just done? does So you flow year further? your your I opportunistic your reduction you're headwind manufacturing was from give up is guess shore now? free just wondering mean could that adjustments, expectations an cash if to inventory do you inventory scaled

Glenn Richter

Josh, -- is second Glenn. the this part So

So Relative reductions. we quarter. for previous with be largely versus question, largely part done year, your are flatlined for basically the the flow We're are to they of of estimates balance the inventory our cash unchanged the to second our the going free year.

$XXX million includes cash it, reported of call Reg I flow circa will G that again, the items. note, million-ish $XXX will about on once year. We free be, for

year. million $XXX for around the cash free of flow adjusted right we're So

with surprisingly. they're literally divestitures. A about not are taxes, associated of G Just over our big as half it, down items, Reg $XXX a portion those million into a little reminder are broken of of those about them, call

the We from That's $XX with about integration changes related million-ish the also restructure. then systems this associated sort this all DuPont. year, legal will implementation expenses. have from final related And million-ish are year. call to another completed of conversion roughly and costs. $XX other $XX there's Those million of and of be then, entity Those it,

a Reg So of G of the breakdown items. sort that's

Operator

come line will question with next the Jefferies. of from The Alexander Laurence

Laurence Alexander

ex business threshold, improve your Pharma mean is in like of average target I be what a And for or aggregate the category? but your happy on to how much shift might it? how be? it fix minimum update or you Can just needs you not to X-year to like X- with much like in

Glenn Richter

you're fix that business, When correct? you so is I'm shift, assuming about or Ingredients talking the reference

Laurence Alexander

Most putting I'm that of you if that anything else I it, but fishing have now for you're category? guess in

Glenn Richter

total That's major largely time the mentioned, we previously, portfolio. XX% call as implement to our to some It initiatives. XX% of the will Frank on initiatives. take businesses the is it's of And that total of XX% about fully -- it. business those And outlined

So in we're improvement to historical But away both some of ways of seeing are from getting and the sort full back sort of growth. the profile earnings we business. progression level

Our to in a margin to to and basically historically the from mid-teens of a level on largely EBITDA basis, business to been has X% go which basically sort get line the is growing high single-digit target X% a volume with industry year.

Franklin Clyburn

been been today good And But a of improvement sequential as I so year. we've What versus prior that's I highlighted. really we and have earlier, number continue Frank. And improvement have and our seen number of sight businesses of to then of -- actually want XX% down are we've in this is mentioned, of lose and portfolio the Ingredients, a area path the those within we've be. has highlighting grew Glenn that is Functional that the assets optimizing to I progress, or that as disposed mentions needs making majority where also businesses good highlighted on don't XX% add we of the the as would

Operator

from JPMorgan. of comes the Our next line Silke Kueck with question

Silke Kueck

XXX basis that? gross And up there's the Do points did headwind million Is compensation if And most SG&A next achieve as points base your third from this volume to order which benefit XXX in basis from manufacturing million there need changes? occur do the margin margin. absorption, case, of a be by quarter? you secondly, headwind unfavorable And $XXX gross a growth in is to to year expect year? a that you $XX

Glenn Richter

we'll ultimately, which mix, for ultimate more combination should dynamics inflationary question, second the to pressures. and volume in definitely in of year, of as point. discuss think February, The additional the a I any absorption sort growth a be you starting price will margin detail normalize next

a So it's straight can improvement. just don't you line think complex. the I

the of margin driving reset variables for all you but the next of through can to then you year. gross think have I the baseline, what's think rate sort

we'll this that, referenced year. to back park million come we've are $XX reductions in really implemented February. The that So the savings that headcount from we've

be So reminder, year impact. that that so of million, million $XX It's been a $XXX million will the reduction, roughly and of about annualized as targeted then we've annualized $XX cost this a was implemented. all where million there $XX program

So done. it's all

that. it's just And timing a quarter-to-quarter So of choppiness of really lastly, around accruals then variable incentives. element some there's always because

get up be little choppy. and trued on down, can depending up things can a or So bit

So RSA well. as that quarter-to-quarter does affect the

Operator

of comes Tiano the question America. Salvator next of line from with Our Bank

Salvator Tiano

oils? vegetable to -- Yes. key a oil key I of wanted in previously some well, to well bit ask of recent price oils edible seeds, the the -- 'XX little remind if contributor you us meaningful EBITDA? some sorry, as can whether a to soybean these exposure can your And be to as to decline the soybean

Glenn Richter

I would X things. say

very, very a large have of basket raws. We

So there's in deflation direction. general, lots the trends our of favor. things or are working either in In trends moving cost

statement. general period. for that's do a We in hedge we to time. lock typically So over Relative actually soy, a out

immediate downside, decline, as obviously, arc, So we or longer capture but we capture over always necessarily upside those don't the it. either prices the

Operator

Barclays. the Our from next question of comes Andrew line with Keches

Andrew Keches

Congrats on the quarter.

level past, confirm, the plan you mentioned a in to in X.Xx to as XXXX. Just the hit you've debt-to-EBITDA net

So have I covenant out the early that I year next was know asset still sale about year? gets that you into in guess visibility the do achieving there horizon a are that, just 'XX. Or extended? pushed is confidence level to you some risk based on discussions, and where

So any great. help on be the time line would

Glenn Richter

This separation, by goal year. of a of the We activity changes, timing transactions is always are be able normal -- we should of in shape end to legal the -- year. great confident accomplish be in or say, question, should current our closing it always, end it We're given the next I'll But by of less. element the those things. there's barring sort relative path, a next good to that entity a allow should very to M&A sort be us it Xx we market, relative of accomplish will Andrew. to our And --

Operator

for That question-and-answer closing over Frank remarks. now conclude the the call will session. turn I to will

Franklin Clyburn

start work all to want tremendous FERC are I world help innovate. they of first, focused all colleagues the and that thanking our by continue to the IFF our So around really of to on and customers to

and and making very thank I this progress forward of 'XX our Our is proud leader guidance that full And our call. well, everyone quarter. and we're quarter to the we're call. essential year vision also wish our I the innovative to for as through want to be truly for for company a February, solutions, in update joining everyone fourth in look update We and thanks joining

Operator

call. conference That of participation. hope today's day. rest you for you a wonderful Thank have your I concludes your

International Flavors & Fragrances (IFF) 7 Nov 232023 Q3 Earnings call transcript