IFF - Earnings call transcript Q3 2024 | International Flavors & Fragrances Inc.

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Operator

At this time, I would like to welcome everyone to th9:01 AM IFF Third Quarter 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 live call that replay. is note and this will available for recorded

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

statement refer and cause information factors actual that results to concerning our materially, differ additional our cautionary For in can please risk release. contained XX-K the to press factors and

include those is measures measures will A to believe presentation reconciliation non-GAAP that comparability. GAAP respective set Today's financial forth measures, exclude affect financial their items in which of the non-GAAP these release. we press

call our is Fyrwald, Business today Erik and CFO the Executive President, Officer, CEO, and Glenn Transformation Richter. our me With Vice on

remarks questions begin then will you We and prepared end. at have with the take that

to to would over turn now call that, With like I the Erik.

Jon Erik Fyrwald

up more remainder questions. future. open will a will outlook for turn provide hello, by the our our then I'm on the and to also year to of the On financial outlook across for overview third Well, IFF's XXXX now who results call thank results discuss provide XXXX, we call, today everyone. gives of efforts third our solid quarter our will confidence which performance will to I discuss glad us commentary of with I businesses, and an you, call each begin be continue IFF at I'll the you quarter increase today's for our to results. solid to all then providing the and and to and Mike, guidance. here strengthen Glenn, full our over detailed

our delivered improvement the was well a passion units, a all major The address of compared entire notable to If as volume combination of taken achieved needs another you dynamic marketplace results year capital and drive ago. we productivity bottom conditions significant improvement structure our across and drive year performance. to with and business to have across our team's X, across push solid business global to serve this line evolving improved market and producing quarter our IFF IFF Slide go and growth portfolio. as customers to contributor our are actions encouraging strengthen in The to today's end markets results. our

growth third double Equally performance adjusted with Importantly, our volume quarter, across the businesses. gains. comparable broad-based each we driven digits encouraging, guidance. the third financial in by our our for the primarily delivered Considering by grew XXXX EBITDA flowing high of as modifying productivity volume single-digit our contributions operating continued solid our fourth in are as full performance over-delivery through year cautiously in optimistic quarter specifically and we the outlook quarter, quarter, well

We solid achieve guidance we $XX.X confident and almost between $XXX is higher previous are making progress billion will are range. $XX.X net against which and targets our million billion, than our sales

range communicated range tightening end previously billion. For to and EBITDA, the are targeting of $X.X of are high the now our billion we $X.XX

remain first the to in business solutions another portfolio significant half I of we our marking of share milestone pleased am and on divestiture pharma complete optimization Lastly, announced to previously in journey. deleveraging that XXXX, the track our

so achievements want X. I to moving to a far this Slide year. highlight Now few key

our growth enabler challenging a bolstered the for continue While over in end has a environment, preferred innovation X performance partner operate our market and months position to customers. as we our last

Since year with business-led has year-to-date, simplified Comparable recovery lows strategy fast-moving in model, operating our growth Health versus sales and initiatives. to into & last adjusted in operating responsibility Scent accountability. Over announcing the grew single-digit fueled and financial EBITDA getting X is XX% better basics increased volume is sales strong productivity currency-neutral double-digit operating performance on our the our X% primarily and structure, environment. high driven translating prior in months, end-to-end by growth IFF Biosciences. and and today's growth our back positioned stronger navigate mindset to a complex operating earlier new a reinvigorated year, this greater refresh focus philosophy and With by

Now and markets for our these our key our our high-growth focus end customers. of increasing in areas steps also teams benefit on include sharpening the and investments

in to markets, quarter, India. intimate creative expand started and In invest opened additional we to hubs serve at over the in needs. and Shanghai required revised these With to excited global engagement the expertise footprint have heart our the and third has unique equally significantly important I'm Mexico their months. IFF's level customers of people regional our that City in more address the ensure center a on also we centers improved Together, creative in have strategy, innovation and XX announce employee a last our

best team that, legacy pass celebrate doubt legacy have the next and do do now, success our years. opportunity continue to earlier will A essential reminder our Exchange. New legacy empowering XXth anniversary of of on IFF's true for quarterly before, And Stock at the no global they XXX look a closer IFF had being together this team for organization. to a global our As it shared and I'll listed York enabling honor Glenn? come month, of much what our is I global of to as I've XXX-year to great that incredible But results. the this said of and for on the company. Glenn and

Glenn Richter

us you thank Thank joining for you, and Eric, today. all

As north with Nourish, of Pharma achieving basis. broad-based delivered increase business a on just We of very X% Erik Health revenue growth across quarter, comparable all units. an another billion, sent Biosciences improvements across currency-neutral notable solid and noted, volume four $X.X & IFF had Solutions

XX.X%, expansion two XX% comparable quarters, also adjusted comparable prior margin adjusted productivity successful margin the the building as ongoing versus impacts and of in prior quarter, was realized 'XX. to were in with Adjusted margin profit operating expense basis period a performance contributed our strength the versus points $X.XX also amortization, EBITDA EBITDA quarter, QX in by operating we another expenses. Our other exchange from initiatives increase by increasing quarter lower of our mitigated EPS, on foreign year improving XX% in XXX of the interest excluding strong

Turning to Slide X.

of quarter. comparable by Ingredients. Our adjusted led in currency-neutral sales our strong well of improved all broad-based our Consumer year. pleased delivered ago growth of single-digit from increased adjusted as of this and both XX%. due third that in quarter to million, which of our we pricing by delivered up comparable basis. operating three delivered quarter performance basis, of and comparable in achieved Health Fine and double-digit its million, EBITDA volume In growth we single-digit was gains. planned This consistent to a consecutive increased with Nourish was Overall, growth strong sales quarters for strong an sales Biosciences $XXX $XXX on in a $XXX EBITDA businesses operating currency-neutral this increases increase and both the improvements profit comparable double-digit consecutive volume up totaled mostly adjusted are Fragrance Fragrance EBITDA Functional as led year growth. Ingredients, the Ingredients, In and and very modest investments improvement comparable X%, was sales we Functional high actions, offset we Functional Scent, Flavors million, X% were on quarter high growth Net price double-digit operating in & productivity recovery EBITDA. with plan increase a Ingredients revenue with in delivered and margins expansion volume period. a XX% and XX% Fragrance currency-neutral H&B's very growth has XX%

was a X% currency-neutral EBITDA million, basis, to sales surged while Lastly, and pharma. a adjusted primarily industrial by over comparable productivity of Once $XX on and basis. growth growth million notable Pharma in growth, Solutions comparable margin This increase by in again, expansion driven driven to returned double-digit to mid-single-digit volume gains. delivering strong core on was XX% $XXX an performance operating

last Cash totaled while million to flow of Turning $XXX sales. quarter, operations year-to-date, X.X% or year-to-date $XXX CapEx million a Slide million XX. increase roughly $XXX totaled from from

free million also last Year-to-date, Our sequential our shareholders. million flow increase quarter. cash from $XXX to a we totaled dividends $XXX year-to-date, position in distributed $XXX million

and million $X assets cash the end third in quarter, for the equivalents cash million including of at totaled Our $XXX held sale.

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

Our $X.X EBITDA trailing totaled last line largely credit quarter. in XX-month approximately with billion, adjusted

to ahead the debt Xx, fourth on into focus target first 'XX, leverage further to we This completion look the the credit-adjusted capital As our net committed half to half complete improving our which, structure. following Pharma first sale, optimizing and of near-term reflects our below divestiture. achieving EBITDA and remain expect quarter Solutions position of our to of in we our we 'XX our the strengthen to portfolio again, of

On Slide like to our to the consolidated full 'XX. XX, year for I'd outlook turn

in and from Given our 'XX our modifying of our $XX.X range the improved net guidance. range be some we billion to full $XX.X first billion. the quarters financial billion X demand, tempered $XX.X due to the end to previously expect continued in soft performance up $XX.X We caution year, operational of by are financial sales billion, communicated to consumer of now year

Pricing markets previous growth of now now also is in volumes our expected be the flat also believe increase. range that expectation X% less roughly real We versus X% will for consistent X% in but what of be emerging originally X% of the a to slightly at with the we to versus than is FX-related year expected. pricing expected previously full growth to expected be year, X% beginning remains as pricing the

performance personal macro markets, slightly remains the potential food, end tougher Our unchanged year-over-year due closely at quarter given outlook and fourth a trends to comparison. home phasing customer in year-end QX, inventory as monitor adjustments and we our order despite care for

$X.X to year line, expect compensation EBITDA third productivity bottom strength deliver we and end performance on a annual versus our of billion a the high assumes high focus budget long-term end of quarter and growth. 'XX the our we continued the business this in relative reinvestments includes previously communicated level The with near improvements, incremental of operating $X.XX the in of delivered now greater adjusted of upside the On billion. range range to full incentive the given profitable

an previous to time we approximately exchange adverse our of of full versus have Lastly, the of foreign based X.XX was growth, X% rate year the on X% now dollar euro-U.S. X%. developed impact exchange that rates, sales range assuming at market forecast will expected a current expect exchange foreign to

now it turn closing remarks. back Erik I'll for to

Jon Erik Fyrwald

in tremendously direction winning our both the are team execution resilient our continues operating me am in philosophy, whose proud I stronger, we and the of teams quarter. building dedication to strategic what quarter XXXX last and Together, Glenn. our to you, innovation through a have Thank energize more marketplace advance accomplished global after capabilities. a by relentless and quarter backed to IFF our

team performance alongside solid reflection this strength grateful our buy-in vision, year strategic Our to the our direct is and for shared the and of work I a colleagues. am so talented such of

there performance, that be energized work I I'm clear-eyed by is While recognize lots am more and our recent to done.

full our our and mentioned, however, laser-focused IFF positioned encouraging unleash we growth to with our deliver reinvesting businesses, long the teams our guidance we return customers. our the Glenn shareholders. in we incredible term to to our near potential sustainable, the In over profitable global particularly remain XXXX well achieving As businesses term, to on remain ensure committed highest are to financial of

the I would call ongoing you like to Thank your for open questions. now support. all for

Operator

[Operator the first Josh from UBS. comes Instructions] The with line of Spector question

Joshua Spector

bit a at I look than we we to quarter. a if normal your walk would it, XQ. conservatism, it guide than little you could lower seasonality, was bit it a what and guess expected. more I sequentially looks wondering solid even versus for counting Congrats have like when on XQ seems

anything that? there incremental So the some seeing give that maybe data you're you now have you that the or pause share on what trends there? behind assumptions are you of And any some could is

Jon Erik Fyrwald

Josh. Thanks for the question,

the as a of that last we point. few then the limited deceleration is we bit expected, a encouraging. quarters quarter. to quarter visibility pattern started But is seen just start got this and the which in the strong have through fourth And very we've say December has me Let at

the say years. want let we last given deliver, in that has deliver could that year, the say inventory started few quarter we off will at just the cautious end sure that adjust as but continue make are happened we which expected. we So customers to what But to the potential me the of we

Operator

question next Nicola the The of Paribas. from BNP Tang is line with

Ming Tang

strong the thinking provide you more I ask and line a as into between Functional about the top in margins progression wanted what about And sequential decline Ingredients? us bit despite drove understand Nourish. can how the you you're QX to performance? Flavors a color bit Can well? again, help And

Glenn Richter

question. This is the Appreciate Glenn.

margin mix Nourish. Just as progression summer here. a for from the watermark a as between What X well. typically, ultimately, QX season basically to and for as be go X, the reminder, slight X, see margin and quarter-to-quarter they as to X our you is high into in will Very it there contraction positive then relates

to relates of sort it And as our to more As X you have we've business. are investments mentioned secondarily, X, normalizes. we then in that mix the increasing

are through to relative as the those to well. show beginning basically So margin

basis QX, quarter-to-quarter. in the we lower expect So will as should you that of for to points seasonality, degradation XX you into because of QX, of some look terms Nourish out have margin i.e., in volumes XX

Operator

of with line Panjabi the from Ghansham is question next Baird. The

Ghansham Panjabi

could I at such as a this early, some savings know but give expense thinking high-level to to sense compensation about still it XXXX maybe point price, of as variances through? and as us you're volumes, you cost flow it's also the relates how

Jon Erik Fyrwald

Thanks, Ghansham.

it's but I early in guide normally February. give you And make our a comments. of know, process, And as too we're you now, will First any finalizing couple we budgeting to specifics. right of all,

how for that you'll as customer let million all, our And to and stepping reset in, we in innovation a XXXX, hard up driving months on love performance, over work is will that of execution. in next drive continue First comp our focus are got me recall, I really X driving positive driving have teams we productivity performance. add which just then And to to year. I $XXX and say incentive on

Operator

with question The next Roberts Mizuho. John line is from the of

John Roberts

strength you on reporting check actually year? are track Flavors volume to on or quarter by And strength? in in is some the I from half their and for incremental was next the just promotional where well, First, pricing? the then driven in easing the as Functional fourth your second separately more -- do by quarter think activity guess, was you volume And that customers Ingredients

Glenn Richter

Yes, question, John. it's a great

businesses. organizational So relative that completely the to Functional announced on we to up have implemented. of track two are been where separate we Actually, as set separation and and business, are most basically the Ingredients changes with have Flavors of

will We next it quarter. which in year, reporting means start starting the first

between plan is well. year when the some May you'll cut historical we providing businesses, So and see of as next first the on context

Jon Erik Fyrwald

And now didn't internally presidents, see that, we we Food what We what a for President call a add Ingredients. Taste, release, of need internally. just have to to press a announced will and a that but call President two have named we'll of

Glenn Richter

of very, consumer you're of on Scent, -- signs exceeded end then in of share is very the operating do the rest are we're sort generally of we that's very businesses expectations. strong picking getting and very H&B actually the up was on the Flavors, commercial and the a performance We the the excellence consumer, consumption. businesses. broad-based, model. the much it in in was any sort that function marketplace. is with as had across it focus quarter believe certain very to volumes, of winning that And We what's strong going track new of terms businesses well the strong. on and But innovation, with renewed Pharma we in the businesses terms stronger aware, few there's all relative think fairly the -- And Yes. right pretty John, across third a

being cautious surprised to couple been the it December QX, As we Erik because a last years. we're mentioned, the more of in had little of relates just start as had

Operator

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

Daniel Rizzo

for Laurence. Dan on actually is This

Given think longer ROIC the made do this and the structure what gone? you've right once is you is for margin your year, Pharma portfolio progress term the

Jon Erik Fyrwald

capital that driving on are I gain helping and both driving would us answer improvement ROIC, the margins we're all business that them And way The innovation we our Also, Taste, improve Ingredients And driving driving Health that we're is return call good making by margin continue turnaround, we confidence to very levers that tracking businesses, productivity Biosciences. on. now, and on to just and I'd we're and higher focused able it be prioritizing we continuously have, Flavors Scent, are to to strong Functional have going allocation add are we progress both. focus, in now. emphasis higher we'll continuous customer and which closely &

we're -- doing improve the to continuously we that's So time. metrics, over and these focused on two are things

Operator

is of line question the with next Patrick Citi. The Cunningham from

Patrick Cunningham

year. Is there adjusted flow update to guidance the the cash for free

to it million. the the I $XXX the with is capital think guide? items? higher guided higher of last working offset that Should end now that by other trend or time you mostly Or

Glenn Richter

Yes.

two cash cash flow, full up, guide. we our is One I'll flow year to be free -- unchanged numbers expect So previous basically give reported our Patrick. largely sorry, free I'm you, versus

You are is sort trajectory exclusively it's we of earnings the in already is higher almost so sitting mentioned building to related working sales, capital, the reason which more receivables. higher, why, but also

we're net-net, So position in for neutral sort of year. a full the

So forecast. no the in change

Operator

The Oppenheimer. of Kristen line Owen next the from with question is

Kristen Owen

wanted period? double-click turnaround. could order talk Functional provide in Functional additional into Ingredients. if of to contracting seeing Can the Ingredients activity terms on what update on Just an you you you're And coming the about

Glenn Richter

We work the feel around is basically well. to now place standpoint. in is a is essentially for reality Yes, period The is contracting question. year. very next Glenn. is we byproduct typically going X-year we've book. the into there's a had remediate is Thanks, long that largely pricing business. relationships from the And Kristen, this X with certainly, It have extremely this The the order don't our -- of

suggest business to in the seeing good very into the place annual So continue there's we the to a business. expect year. sustain next we're And not momentum within to in nothing it very, negotiation progression in process are that very the and good

As X-plus to have ago. of tremendous our a starting reminder, we amount fix issues taken effort a years service

extremely are levels high. service Our

price deflation basically Secondarily, giving to competitive much in and back the more reinvested we be marketplace. much,

of both expanding Third, how That in the front And actually means perspective very, beginning to the year. the win we've gained support think take that. us will innovation have we the of to the piece this That resulted very locations as this the at global plus that's but phases volume have basically we've And last reenergized XX year, cost the well. step actually in chain moving mid-teens committed able in customers we we and pipeline line of our our been same be were from past and making collective year-over-year back final the the efforts supply the and very terms those win should We half get That extremely very to in range margins with years. the identify closely of work to margin overall in feel has -- to EBITDA working The resources this supply we volumes fundamental having business a to to business. back best in sure sales lost a footprint. of in coming assets several we we've ultimately, margins XX, chain the EBITDA been XX that growth to like restructure well. but best years, and circa back this is point. mid-single-digit at about time, gross are new

to has make very basically businesses. job, happen. feel So very good. phenomenal good a this done we feel been We with working team the feel has The nonstop and

Operator

of The with from line Bank. Begleiter the next Deutsche question is David

David Begleiter

made for innovation and mean the how months you what 'XX product your organization the the that in into And tenure, sales you've new and X characterize Erik, pipeline? even on 'XX? progress R&D would could

Jon Erik Fyrwald

making. very question, feel progress good the we're And about for Thanks I David. the

just can and each better me First the of by both a the tell is of And strengthen needs. work have very very system you, our the molecules. people R&D in by focus that strong energizes our connection naturals, biotech I all, makes BUs, already to energy whole efforts already taking it And created very power R&D better. it BUs and actions Scent developed we and to team clear one our And let now strategies our embedded and has the priorities. both example, feel with with saying plan R&D now the and pipeline, of start clear the our synthetic customer chemistry

and the tell new think terms already the great -- What is see of in is discussions with So that seeing have projects and think can in terms already will XXXX that pipeline benefit benefits and is us, I project in will benefits also now of I you to I us in the the in 'XX would it's that. the main will and the -- specific energized XXXX, our I sales those helping customers and But strengthen force impact beyond. impact benefiting say -- having by of XXXX that that, will really come on in help and be beyond. energy think but I we'll

Operator

The from Salvator America. Bank Tiano with of the next question of is line

Salvator Tiano

growth I the strong you're growing slower the market. end a just organic the and wanted very bit to ask reporting disconnect about little between

also bridge Fine you think specifically Fragrance. for you that's extremely board of strong customers where doing Scent, this -- bit little last? several that But it's consumer how I growth a slower And your been are on And can degree well quarters. across So on roll demand. can in the have long outperformance versus the a

Glenn Richter

to so sort we question. Good year. effect this Yes. of bounce year industry of is a that the the is a performance mathematical overlap seeing is there from everybody remind, there as was just obviously, destock, entire that back One, lag last

some last is multiple new for has social the that's a explained consumer plethora is exploded. years, meaningful growth the media, channel happening digital brands what The happening impact business being of channel the that, level, as things the of in has incremental growth that COVID, function a continues the the very a of the as believe ultimately, consumer Fragrance become at launched. of seen believe everybody Fragrance occasion will result industry Fine hitting well. that a beyond We the space. that. that say degree market opportunities. sort the has how track of certainly use that believe share. and regional of would special lots and we have there Fragrance doing still of expanded we're others channels over Fine Fine of as that, very, at level. new continue because category the versus to a as a in well be obviously everyone We, I we several do to We in And since unique above brand like are aware, some are case, that new opportunities also we So the is winning

So making et other as do in had to we're but scent the and continuing businesses more across investments the that the perfumers, adding the only Erik very within creative business, broadly mentioned, to relative we're within is business, higher-growth committed new and geographies, IFF. not have that, to higher-margin new we been adding cetera, winning the centers, way basically

appreciate I question. So the

Operator

question next the Partners. line is McCarthy from The of with Kevin Vertical Research

Kevin McCarthy

about related to on to discuss how higher you're touch how for scenarios, and quarters? tariffs? international And for the you forward. past planning talk various coming in you you cost expectations could think would trade scenarios about moving experience in the you that, dynamics Can the tariff price through potential manage do your Maybe

Glenn Richter

cost Generally, is flattish. price dynamic our

some level of fairly year, is next of throughout there early to year, this We deflation. year but are others for the We that some increases, are continued things parts of last the have believe and certain not deflation, seen our degree stable. basket outlook

byproduct our broad-based. point here that. a food focused There dynamic in price it was one as at relates the price/cost as Difficult generally, of static regarding more is tariffs. as the in So versus is static, fairly and view, some first this country fairly Trump environment, to time is China That with administration. to in history obviously the forecast

upon depends of anything, it arena tariffs. in the what, ultimately So if happens

to was something of focused in footprint, there is team I that our very are very relative it's global it note morning, members ability weren't the So But this footprint, to basically our business escalation of maybe would good China, tariffs focused that intuitively for on. as probably of people our react. yesterday, on. when

well more environment you're within China. there's aware, As a competitive

business advantageous in So as to broadly. guidance those of actually kind be And to provide year February, it could probably next we that stay point. tariffs there'll obviously, tuned. overall about intuitively speak at think about our and be more But

Operator

with from The Mike the line next question Wells Sison of Fargo. is

Michael Sison

quarter Nice and outlook.

if it be year-over-year EBITDA at range, Just the end does positive on that down the fourth growth. high despite of you're quarter, imply your outlook will

of little color that? wanted a of not than more 'XX, in companies Just quick line then think first likely And is a noted a follow-up. second better When thus And the that conservatism? far you on half, have the bit lot about chemical seeing shoots improvement talk of sort the feeling you Could that. same? And sort think customers? about About wanted of half. kind Any you you're just there? next what green to year? leave from about do they're better And of of at it

Glenn Richter

Yes.

were last which XXX part, Mike, We were basis year. reported on is we -- a take first XXX year-over-year. the I'll So the

portfolio our our simple, honestly. well. compensation. and get As all very into as XXX for out, that actually has pointed last a do FX this that well guide changes to year would year incentive reminder, around we you It's have a as the like-for-like. with XXX from as currently And us It around turns

were As we full you know, on below last XXX%. year, year, the

in As we've we $XX above of mentioned, year-over-year a of impact That million are alone. materially nearly excess an variable quarter comp. the in XXX% $XXX million is incremental

normalized rest investment. of level is huge is the of basically sort some inflation of equation that in huge, a So impact offsetting productivity modest is basically impact. The

growth piece. comp the biggest that's incentive that really it's year-over-year, So

Jon Erik Fyrwald

good And if bringing them Functional Biosciences creative Ingredients, growth centers in about how high-growth our we're but grow. met that have focus, we just as in it's And front co-creation see feel to markets, great. by not about that they base representing getting they basics, these and also And in so I guys to & are heavy XX you only about part to love as with team relative example, focus now, our a and customers customer we're slowing innovation, energy. hear the that would are of about by I've I'll it thing. innovation with green around But was co-creating third they just our the shoot your of executive our energy is can them But front when with just see the biotech also salespeople, seeing countries customer customers an want we're us, XXXX. a it end teams lots heavy just our up billion to back the in personally Indonesia, And and on the I India And position focus not was Mike, energy, way, products of of In business, and by our just strengthen more that said for markets, with our leading until visited what to double-digit our is that's -- before, customer and feel could people we're quarter, yet flavorists as say X Health news growth that's customers. the to our feel question, come doing comments the and innovation Scent, and across good taking growth from other do XX% super and to strong way, with drive with on or the of then, these of And aggressive was second market. and really base I lot world. visited the I scientists, members, or and lots but help perfumers whether their people. the our actions customers, products of to over customers of our Flavors, you very excited customer bullish

to in above market. but market, we're I tough putting the So believe things place right that grow

Operator

of with Stifel. line The the is Astrachan question from Mark next

Mark Astrachan

half wanted from then clearly way. public sales is it's at One bit it and can all I we is to give and the destocking. your back different a restocking? growth the around just in sales go you framework if trends on And question how demand could attributable more companies volume growth roughly to look of maybe to lower multinational big see end of specifically, can even to the a ask maybe is, of you some much try

seeing of you maybe label reversal to to of shift a are and I So big these there's of local bit out some and relative more there companies question is, growth regional guess a multinationals and fairly the then private case. us compared want multinational. whether I is customer regional that sure a label you're just think how And about I recall years? agnostic. make you remind to to that's the the just private recent relative local

Jon Erik Fyrwald

the growing, the and that's around to That's think the we're our their start innovation, the more growth multinationals would with And that that's superior seeing I doing centers that to But are of the both wanting and I more products by us. saying service and strategies to why on -- very, also also helpful are and our and but locals important them regionals global projects I'm local what serve world. driving locally. very locals. companies, And building are innovation strengthening and our the focused the to creative also our and growth. capabilities to them, more the we're and are we're both regionals

very are So we're some there now are segments. segments making seeing growing all course, we're on think, But there in sure opportunities geographies that But growth clear than are able faster of that others. to grow we're and I customer some three across.

Operator

The next with Barclays. of from the Lieberman line is Lauren question

Lauren Lieberman

to see about know implied just want for because the initially, more rates XQ. just I and it's And incentive said think seeing all talk the or comp less EBITDA I when you been flexibility. I reinvestment clarified to dynamic. from year, some companies forward, which that some There a of pulling there's ahead reinvestment, of it was is typical next had thought activity reinvestment completely

wanted year. line. a lot was there created of dynamics restocking top and I next flexibility a need talk in strength as on to the the P&L reinvestment This about you had So for bit year,

we and should back think year? And in saw about how capabilities gotten next as for a 'XX? you've How 'XX. set the in closer about Erik, the should and we in and reinvestment rates stage 'XX to looking spending R&D, big build pipeline closer to build back versus what So think reinvestment closer and we of business,

Glenn Richter

start hand the communicated same which just of as Yes. Lauren, last I'll clarify sort we the Erik. over $XX impact and is is 'XX million the to P&L. it time, I'll in

roughly million it's QX. So and million QX, $XX $XX

next but of any That's by that's in annualize of year. the point. additional will another that first independent starting So half million level, our $XX

Jon Erik Fyrwald

sales our same to And that line. And commercial, innovation of people, people. going so our with R&D more in to on grow and is top sales be to other $XX percentage flavors, there, we're continuing to -- invest then that, planning from And to and drive the experts areas able growth. million to technical more increase perfumers,

drive more same our At our So that in invest able be productivity drive that a to make really our we and ability sure improving way and and innovation. we're even productivity to the strengthening continuously we're innovation. margins time, our keep ROIC to to able strengthening in ability drive

And more think which 'XX So enable what growth, innovation. time, the us in we productivity continue virtuous to our to margins, a in the to innovation, gives innovation. I sales started to intend and cycle which in to same do beyond. drive us do At and but invest help drive also that's enables to able us more invest in be XXXX we it's we've that to

Operator

The from JPMorgan. next question with line is Jeff Zekauskas the of

Jeffrey Zekauskas

an about satisfied they Functional volumes of with degradation. of up October. Can and general, is were nicely third this operating or of us the performing? idea secondly, talked growth, profit you year you or And pattern experienced some you price is that in Ingredients digits, then the what You sort you quarter? in some in not give shrinking. is you that growing have EBITDA Roughly or have business growing your of Ingredients, continuing volume mid-single being In Functional how the for

Glenn Richter

Sure.

the of month digit we're mid-single October. So in up

sort Erik following offset That be -- is last to with strong it Ingredients pattern going X% very volumes last of been Ingredients largely sort Functional a drops with that very, a the to year. this X% seen of we've quarters the being And rather few significantly the pretty as of being quarter sort tough. same there for month last quarter noted, So fairly the of had They has standpoint, performance. price. pattern. volume metric Functional from is

sort very to on basically you, basis, in underlying of final up very turnaround our took in top We there question, flattish So helped of in it's reinvest currency supporting to is gross us dollars a Flavors year, neutral was not the to line and those your But strongly. the targeted itself of slightly only nicely, the up customers business. the terms margins beginning very to commodities EBITDA with are a with up. consistent lot of deflation remind are fairly results, back deliver but year-over-year, and this

X% the was, the sort will finish EBITDA It a our of of business circa to years. stated X get over mid-teens next say, this sort year north margin. on I'll way year, last objective and probably X%, XX%, So of it's its to to

hopefully, So question. answers that the

Operator

the with next line Neve is from of Stanley. The De Morgan question Lisa

Lisa Hortense De Neve

big in to across has in growth little But We've a that? want how bit of talked I growth and And maybe regions? share a also you the share volatility segments growth and can little had just come can of across a regions also your growth. you China very delivery India, about lot across the different given your in how maybe your to performance these back bit in and been customers segmental

Glenn Richter

all of second growth different we -- our Pharma in positive across Pharma in it performed strong. of extremely businesses is actually in given still well trajectory, stories. of from done are and two there's this some been then bit local of little back more very India now China, standpoint. terms the Erik a a the all year So it's start later well, market. as I'll of little the year have the expected. cycle. choppy China the the in to But improvement, well strong India expected. perspective destocking bit over provide half generally, very is The the board. as turn territory have and lagged businesses general some was the the

earlier down capture investments on Erik that are, share to really continue of doubling in opportunities. terms really We the mentioned kind India growth of comments, to within as

So I don't know, Erik, are there...

Jon Erik Fyrwald

we just grow in markets, aggressively creative strong we're I growth investing add that ensure centers very would that including India in markets. to in those to the continue

Operator

from line Parkinson The Wolfe Chris next question of Research. with is the

Christopher Parkinson

subsegments, more been H&B of kind the And recovery? pretty considering of about And Can the the dig we in we XXXX? enter result? the composition into a just but little bit we as solid, anything thinking it's probiotics in be should that obviously, just

Glenn Richter

had every Yes, within the business a Probiotics bounced H&B back a good within lot. performance very quarter. single

very close As part, the over in been has America. of couple in in China. our largest It's to years, size given aware, there the It's the situation of you're second well softness last the business, North market.

strong back business a But the quarter whipsaw third of the quarter So the board. as does very it and very, China, sort across goes forth. was

Operator

today's to remarks. Erik closing to call. I turn like This of now will conclude the portion question-and-answer would for back call the

Jon Erik Fyrwald

months, innovation. I've strengthens for first you Well, us focused joining love you IFF. can you been and here love I've questions 'XX our your the for love to in very thank but deliver delivered the And got fourth X just Team do And have making prospects I and about to and company. beyond. of are tell our want all customers. them. I your the appreciate our more I than in I today. tell ever about to with that excited spending love appreciate for much I I we that I I I'm all, time first IFF. interest way sure to XX we're on now a it 'XX really teams that all doing the work our for quarters. quarter, that that

So have day. thank you and great much, very a

Operator

This all participation. concludes Thank today's you for conference call. your

disconnect may now You lines. your

International Flavors & Fragrances (IFF) 6 Nov 242024 Q3 Earnings call transcript