IFF - Earnings call transcript Q4 2024 | International Flavors & Fragrances Inc.

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Operator

Good morning. At this time, I would like to welcome everyone to the IFF Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] I would like like to introduce Michael [indiscernible], Head of Investor Relations.

You may begin, Michael.

Unknown Executive

Thank you. and everyone. afternoon good morning, good evening, Good Welcome Conference Call. Fourth Quarter Year XXXX and Full to IFF's Yesterday issued afternoon, financial our we a press announcing release results. IR the found of can website our copy at A ir.iff.com. release on be

available this that recorded will is Please for note call replay. live being and be

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

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

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

Michael our With me Fyrwald; Erik on and the CEO, call DeVeau. our is CFO, today

at remarks We will prepared with begin take and the end. questions to

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

Jon Erik Fyrwald

call our our who and provide back growth. XXXX. and I'm past XXXX maintain the Then to excited year through our continue full reflect our and in turn to results DeVeau, financial we've everyone. priorities profitable fourth a Mike, I'll then to long-term discuss the look I'll made momentum Michael over progress more hello, financial year. detailed will at to XXXX come and to drive quarter the outlook for our walk go-forward Thanks, over on

to growth supported both by consistent operational XXXX. on I not I ago, got progress delivering was full the recap One potential commitment renewed businesses. questions. priorities like achieved global profit. execution the and our teams The basics that back discipline exciting improved across Starting improvement to in found when open new leadership with financial execution by with perspective for the in year, company Slide to a We'll we over our revenue IFF, then executive by past including on renewed IFF led our joined to an strong and focus on I'd and the significant its by call team, year results, X,

end-to-end of ingredients our taste and increased units new nourish customer and more global operating have greater and our to splitting faster, markets into sight accountability the be to teams dynamics. of have line into us end across more These efficient transition initiatives focused organization, while operating and business-led our to to customers. model, evolving needs business The responsive system, driven better connected food customer our the our enabling

As updated differentiator biotechnology have part our our important and on an across increased core of capability as emphasis business we strategy, segments.

we serve more that this resources customers are in to investing advantage our ensures focus leverage the This and competitive necessary effectively.

program implemented this on alongside a to Health focused effort, CapEx, scale. Now development, and also across & investments innovation at to our high-margin businesses and Taste and increase research Biosciences, capabilities drive our infrastructure enhance Scent and we commercial high-growth,

on solidify that with to continuing demonstrating our share leadership. and the XXXX, to of also promotions I'm of to key employee pleased to We our are talent success levels next the hires to return also internal strengthen compared significantly leading engagement generation our improved several IFF innovation customers. focus that bringing

Directors, for greater management stakeholders. of vision expertise support to value in proven track the members next and phase announced and we the fulfill of our with appointing Board X the backgrounds, our new unlock evolution long-term Lastly, our Board to strategic records

to We Cynthia Dr. Khan Board. Mehmood Jamison, to are and excited welcome Intrieri, our Vincent

I who Chair, XX for He Annual reelection working will forward thank the support our new not in and become his distinguished all look our succeed Meeting Roger that announced and Ferguson, to after Roger for XXXX at Shareholder with also service. Kevin new guidance stand We will decided Chair. current Kevin role. his to O'Byrne years Board of

the X% strong efforts, our currency-neutral X, broad-based businesses. Taken EBITDA, results take at these our approach. billion on growth people, profitable over improved together, destocking, our On across execution billion XXXX. excellence operational in delivered growth, of long-term representing foundation look comparable comparable adjusted all we'll all absence XXXX, across our growth by a and closer focus Slide profitability IFF $XX.X also growth. our delivered our the as drove in teams form portfolio, improvement operating XX% commercial in volume sales, $X.X customers, IFF and our of financial In innovation representing

At policy to across invest dividend areas flexibility us XXXX, our in the give financial support better efforts IFF. our of beginning growth to greater we deleveraging key also and adjusted

EBITDA X.Xx On from pharma optimization to X.Xx, which to in end at From of the half front, progress portfolio towards completing of XXXX. sale solutions, the we will improving ended leverage continue at first XXXX adjusted expect XXXX. we the of our debt standpoint, net credit the occur a

continue to in proud goal. the growth very achieve of we past year continued the be and and to further market and geopolitical We environment. deleveraging I'm sale will results Pharma dynamic our of to help that be achieved a Solutions what committed the has completed and

achieved our good performance businesses on and very progress solid initiatives. strategic delivering and financial Our operational made we've

creation the strong to more last While lot with in R&D, a over reinvest made all do. still to platform year, we as we've long-term our for and work have commercial, IFF we build and capacity technology pleased continue significant to plan I'm stakeholders. aim strategically we strengthen will sustainable to In the a progress value deliver XXXX, that

and DeVeau elevate simplifying to value and [ I his whose take moment would is to him innovation efficiency and also developing the IT created a improve process Michael we I we've our on priority. reason I IFFers thank and Financial kind mentioned on Officer. been promoting previous on of to is and And are want as talent business congratulate the effectiveness. leader for the internal like IFF's the appointment to a across have our also Chief relentless the the globe strong to we've systems achieved. slide, focus focused ] We passion and

been leadership has team a last I our the global IFF's part brings incredible an role. the and IFF Mike be understanding deep asset for an the this know of Mike finance global of over operations delivers the XX consumer will companies. value our key years, he needs finance even in more to integral continue product to world's of

to it look our now over pass to Mike? quarter I'll results. a at share fourth closer him

Michael Deveau

first and I to to than everyone. in Thank new with my working you for all look as hello, and XX of at is role. join IFF, call Erik, closely CFO, forward my kind more the it After years an words, you honor

Moving to Slide X.

continued of mid-single-digit in a fourth As currency-neutral performance generated Erik basis, solid an X% quarter growth led revenue execution comparable our volume driven through businesses and our quarter, improvement. across results. drove noted, $X.X billion of by all on fourth the broad-based IFF increase XXXX and in by strong the and

basis realize EBITDA in basis increase our We expansion consecutive and on ongoing initiatives. the adjusted their benefits million continue operating margin operating a productivity on basis. totaled quarter, third to Leading quarter $XXX a XX a points. X% Adjusted EBITDA the from comparable by to the roughly comparable expanded comparable of margin

look led year-over-year In previously performance quarter incentive Ingredients, X, reinvestment. compensation I'll a of segment. Functional fourth volume our XXXX. strategy our closer On consecutive EBITDA were This was that consistent comparable a expense our growth X%. growth sales increased for In basis. volume performance was was led Slide by by This and by also currency-neutral price X% initiatives double-digit and a pricing provide at that increased by flavors, were Nourish, the $X.X in ongoing offset by operating was increase business productivity billion, by adjusted continued with to offset a our This outperformance. Comparable partly mostly testament announced team's growth actions. mid-single-digit on

and gains came to across decreased grain well in year-ago personal care a adjusted at that we business and EBITDA productivity a gains $XX adjusted resulted growth and earlier. in X% for in basis. was comparable Fine Fragrance. strong and million, basis, year-over-year comparable basis, sales $XXX alongside quarter home by quarter operating growth segment. single-digit on EBITDA delivered as our Net comparable up Double-digit Biosciences in X% totaled currency-neutral million, in Erik a & on the Ingredients our operating X% in businesses Fragrance growth double-digit $XXX growth as of broad-based increase high largely volume by Sales processing currency-neutral another comparable all by Health due solid higher nearly Scent, In increase offset and reinvestment. mentioned on a Comparable were up million, led X% and as partially year-over-year reinvestments

basis comparable gains of a year $XX million quarter, driven margin achieving strong profitability Finally, expansion XX% Pharma on excellent Solutions volume sales Strong and also delivered year-over-year XX% comparable. a increase a productivity $XXX ago and of by growth recording to million. was favorable another while

Slide operations $XXX to flow full XX. X% CapEx billion or Turning for Cash totaled the million $X.X and sales. totaled of year from approximately

totaled expected Our to which is where for to year the free it the beginning full the $XXX million, position cash at flow we consistent be of year.

distributed also our to we $XXX in Year-to-date, dividends shareholders. million

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

of following was Our our decrease compared gross the the billion billion, $X period to approximately year-end the ago debt ingredients than of the business. more cosmetic of $X divestiture a at year completion

totaled EBITDA billion, in net with line adjusted to debt adjusted Our trailing quarter, X.Xx. our $X.X credit XX-month and improved EBITDA credit last to

our remain to adjusted half below like expect our Xx of On completion Slide I'd share debt net XX, which XXXX. to to Pharma achieving for complete following in of target our XXXX. outlook the divestiture, the Solutions We first EBITDA we committed of be credit to

the the our we year-over-year in plan our as future on we and balance a basis strong While Coming XXXX, recent we year we're as currency-neutral targeting optimistic momentum. business. XXXX build strikes are strong the on remains year improvements believe growth cautiously of environment the our for current right operating off about the ahead look we investing to dynamic, had

June year Solutions X to months of Please note the our XXXX. that guidance includes with assumed divestiture Pharma full close XX,

reflect that we a accordingly the In For we sales in point percentage EBITDA will purposes, and X approximately impact have to adjusted guidance contribution earlier, to growth event the adjust enclosed lower that percentage pharma a XXXX. expect and of business. will the X point transaction approximately the adverse we impact growth comparability our divestitures adverse

to For by to billion increases be of representing to X% ago strong the growth expect all year year will to currency-neutral a this volume comparable noted with that XXXX, the believe our be We sales of be modestly divisions, more normalized led benefit by be year-over-year. against be of in to operating continued H&B, should it the X%. comparable $XX.X to range cases, growth material absence we Scent, full remain across XXXX, we $XX.X expected billion and from driven Pricing that of increasing raw relative destocking. costs as environment did the inclusive elevated XXXX pricing favorable Taste some and, is FX-related expect which in

the to billion. XXXX On line, bottom we deliver between adjusted operating $X year EBITDA billion to $X.XX expect full

EBITDA currency-neutral XX% by a productivity. be volume margin On to translates this strong of and growth, X% basis, which result a COGS will as comparable to expansion driven leverage gross

our pressures time, of actions across will compensation businesses, year reset in we XXXX, in second a and the commercial margin What the this while and, profitability near-term strong half XXXX. a large general strong inflationary R&D, Following taken expansion double-digit creation continue reinvest innovation continue to and productivity that mitigate of our is portion in growth incentive we've means long-term the to similar we balancing opportunities same will in of capabilities our reinvest to at value to objectives. drive profitability

performance, on and that growth exchange driven down of we we XXXX. by to position XXX competitive short-term our expect average enhance operating year a growth. [ the current impact is to exchange in This strong adverse doing sales have full will only these relative the EBITDA to by full primarily euro, will X% is foreign will not so, X% impact rates, returns We the ] investments. we the strength Based rate on adverse adjusted year and approximately believe generate foreign organic further drive where

the several market as the there versus emerging are devaluation other such over the have XXXX. USD addition, a Argentine peso, Brazilian of where In the real currencies course we and sued modest

approximately XXXX. communicated, sales previously investments of to targeting As CapEx increase plan in we our X%

providing believe creative these SAP capacity center split this is of and us Scent maintenance both in investment strong growth with and while We efficiency H&B, evenly specifically in investment ingredients, digital Mexico in half and related as as Approximately as center creative investments deferred catch-up, food in transformation, such Scent rest between yield is in taste the incremental well returns opportunities. in CapEx, a upgrade. will investments, to HANA specifically our growth expansion India

business our reminder, starting into As resegmented the Scent, divisions: Taste, and we Food have H&B corporate adjusted and a allocations XXXX. X have Pharma Ingredients, in

Prior for to to the report provide first quarter earnings comparable appropriate of historical that you so first release, purposes we quarter earnings, baseline. the plan XXXX have will we when information

Let in by are XXXX. strong that with built progress close we sharing pleased and foundation me we the

Our we continue in outlook financial our as to recent our success gives confidence and us strategic execute priorities.

With like to back call that, I'd the Erik. to turn

Jon Erik Fyrwald

Mike. Thanks,

on to macro Our confidence on deliver that goals customers. outlook will we've the turn while for reach guide year. sustainable to the help for outlined growth the us continuing and returns in and be our to year continue our to In for strategy to priorities uncertainties, for reflects XXXX our capital. navigate our the businesses XXXX, will creating I our focus and our ability want

continue best-in-class We while ensuring also cost, support our competitive improve we to functions. businesses have will

this we've R&D, share deliver to profitable will the time. time, As capital drive market actions investment projects, investment. continue commercial value-enhancing will our some and discussed, over same At and in increasing require by to we returns growth growth

our our will sales to and our and visibility We innovate, teams. into better greater across formalizing expectations providing teams ways exploring pipeline keep for targets and transparency also sales

through to continuous continue as processes cost deliver culture. productivity savings execution improvement we strengthen and improvements will in throughout We businesses our initiatives and our

including the exploring first divestiture continue to addition year, Solutions value-creating bolster In acquisitions. assessment, ongoing through planned bolt-on half Pharma opportunities our completing portfolio our portfolio in to appropriate will we of of our the

we another [ you, not assure can ]. Frutarom I anything will But do like

Importantly, XXXX. we meeting consistently remain for delivering results solid committed to outlined and financial goals the we've

and us innovation of and people success. turn, developing invest serve am enhancing it we our customer our greater happen. employee are in make share This, efforts these to will and global market to talent core help drive engagement time. strengthening the with us will better over productivity. Lastly, customers to which will satisfaction, I new enable time our will And that the collective capture world-class continue our priorities growth of confident in teams

close us Slide on Now out XX. to

of on speaks performance solid focus success strategy XXXX the our Our in execution. to reinvigorated operational and our

All position strengthen to unlocking our are sustainable us are our and way of in XXXX. IFF further build solutions We for and business around to on this continuing on foundation and deliver reinforce well customers at potential market our the excited to communities our to innovative all and world. full the

questions. I'll you. your And now Thank call open the up to

Operator

Instructions] line Kristen [Operator is the first The question with of Openhimer. Owen from

may You proceed.

Kristen Owen

I wanted of wins demand volume the versus growth can to on underlying ask XXXX. if expected sources elaborate you in your

that from saying Just of many to for CAGNY, we're volume hearing getting is CPGs context, are come by. the harder

that what's expectation? understand areas volume growth to out? trying just we're call specific sustaining So relative And of strength that any would you

Jon Erik Fyrwald

I'll Erik. Kristen. take This this is Thanks, Sure. question.

Which, XXXX, was we if So it X% X% growth. destocking. first growth, we're which of be will our recall, XXXX, you had that to all, X% half for about of volumes saying in

commercial pipelines growth that winning Scent that increases mainly the Health have businesses a that's And will of normalized share important, cases. a now than believe & Taste. and see those And win in be our range that's that the in of high and rate, is many each our strong we we in that volume in We Biosciences, and drive. more So really means X%. fair and we're rate

functional X and still with Health needed, businesses good to the the XXXX, Food some really the basics, areas like selectively progress going in while in technical getting think fundamentals in by our badly upgrading aggressive fully focus service growth productivity next excuse place. by Food and capabilities we time, rates we're facilities same great but to business, Scent and that to -- really must to is, our Taste competition gap we're some years, fully what back ingredients at X And next in capacity, we're over making commercial margins to years, volume but I'll continuing and versus investing getting Ingredients sure be high and start competition. important an best-in-class And much each narrow we over investing to Those made invest get our & keep keep see volume I step increases businesses. back what increase But to particularly in of are that ingredients doing saying, we across with margin are do X program that our there. But think and the be best-in-class will want we're R&D we I Biosciences, me, our lower we we see competitive it's the to business. in food business. driving driving

as each we and then And and unit competitive, the into that then to other do driving & we fully drive continuing even capabilities we're and across our programs are biotech uniquely but Health also all entire strong across the businesses And cost application sure functions company, to strong productivity across corporate also leveraging business effective. fully make Flavors Scent our that, areas. the Biosciences we're

year-by-year. So have next X plan investing to great are going years, We're keep versus years. we going keep our so for X that we keep We're we're to best-in-class a competition. in very investing. But going strong to delivering the

Operator

is of question Spector the from next The UBS. with line Josh

You may proceed.

Joshua Spector

I to if wanted I things, could. ask X

for understanding neutral. reset and about XXXX. I just the you mean, guess the bridge comp thought to incentive First, negative the we and that or divestment volume pharma on I EBITDA FX get could

how your rest And expectations do just price secondly, something the not year obviously seasonality for which negative you versus XQ or that that the of specifically? and in a EBITDA build adding around cost for investments variance or then there's bridge? otherwise, that is else accounting So we're bridge

Michael Deveau

one. take Josh. this I'll Great. Thanks,

terms EBITDA the it's It's guidance, In around growth things. midpoint productivity. just around really XXXX the of bridge of X volume our to and

of will guidance about X of sales you around billion, yielding That's grow EBITDA X.X% of on the with XX%. incremental points an base assume you So X $XX if of range, margin to the our midpoint comparable growth.

The drive that to and of second organization. target piece is the it really within productivity trying we're

X% you're offsetting benefit, piece. the more another which productivity is about so inflationary And net getting than

we the and net terms reinvestment ] be reset of flat so epo net essentially the that and a $XXX we're pricing expected compensation incentive about to reset, or terms neutrality, to million together, of of reset [ fully costs, when offsetting you In them they're business. in in have by

about $XX And a so for and a there's million investment in million XXXX. $XX carryover XXXX incremental

So we netted to X together zero. and that's

strongest In again, if basis of half terms dollar at QX. of the completed end first assuming remember the cadence, because midpoint, stronger the of the pharma be [ take is our will year transaction will seasonally we're in you ] quarter. usually Also, QX that be EBITDA the natural just the

will XXXX. So dollar of on an highest absolute be basis, QX EBITDA in the

Operator

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

Ming Tang

wanted comments to able to volume year. I across a divisions? Would around core the your dig currency-neutral a be guess, I into X% bit or, the talk little you expectation for expect X% what more about more the to you bit little

Jon Erik Fyrwald

Yes. Nicola. Thank you,

focus be with ingredients driven. Biosciences, of Health & and in volume So will Scent Taste. volume primarily with Food all, and and driven a some by increasing be on margins it's But takes across With across primarily, that the in much geographies. more growth modest going moderate pricing first business. businesses gives will be pricing to volume

Operator

next the Emily Fusco from Deutsche line with The Bank. question of is

Unknown Analyst

to year? And are should This Begleiter inflation Bank. expect this with Emily pricing develop David Deutsche year? net input what your through Fusco for on I expectations for to the how we wanted ask is

Michael Deveau

of driven is H&B that with specifically just Ingredients, again high by parts it's is IFS in that Food continued the team remain from the on deflation by our question, an at historically modest of customers flat. start an seeing perspective, levels, and are import historical taste saying to and & working inflation, some levels. really a Scent In and In we is Thanks there Emily. standpoint ingredients. bit Maybe for generally costs this business, natural

expect sure have we work will And so our In net-net, opportunities instances, cost to basket all to make to and flat be up customers mitigate. to on we our the a input consolidated basis, to collaborate slightly. continue we with

also but reformulations includes well. price as discussions This

contribution forward. to pricing of X over of In terms we expect the we the go each consistent quarters pricing of be course XXXX, relatively as over

Operator

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

Unknown Analyst

Eric Zhang for is on This Patrick.

years. expansion mentioned Are You last and this the margin ingredients XX% for productivity growth? to cost actions? initiatives are you And underpinning savings plus functional margins about track on the getting coming quarter pricing given in this what the

Jon Erik Fyrwald

Thanks, Eric.

towards are We and we very target, this progress. on good track made

in say, leadership talked solid EBITDA If would to high you'll next we Food business single-digit EBITDA a in recall, confident about plans. our the margins the customers, In XXXX, team, I are plans Muller years. we margins driving Ingredients. with achieved productivity few serving of double in And strong a we're -- get under to XXXX, so growing digits Andy the with with margins. our combination we low attractive mid-teens aggressive And new and better of margins in doing that

Andy those are to execution making team strong this business. the further Both and has plans helping plans. background the and those is of in strengthen a progress.

on are So we track.

Operator

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

Lisa Hortense De Neve

light be first free expect cash how some to flow and the details a flow. seen which deleveraging but play for just on underlying the you and limited capital clearly helpful. second cash CapEx question that's Pharma, I this the of spend especially please have year, movements in granularity Can would required? also give the working half And more out improve in of net we've you the will concerning movements free on

slide X the set there were targets second now question you been over CEO mean, to I you've improvement. years company I'm intention your to I referring mean any keep midterm with for next a new as And year. the given driving is towards a in, small guessing a presentation

any set you financial against targets that? are willing So to

Michael Deveau

a the and with perfect. I'll pass cash to back flow, maybe first. I'll you, it start then Yes, you. start brief I'll Thank

XXXX, about impact Note include the expect does for of year terms to million. the In full related this flow free cash taxes to divestiture. $XXX that of we pharma be a significant

that's million time. our at about point So estimate this $XXX is in

is of importantly, If will years, where $XXX more flow cash improvement for XXXX. million, adjust be the kind that, consistent you an but of our about to we versus couple free last which finished

In payables outflow terms strategic we inventory working slight of this that really net And and capital, driven around a versus inflow the are in selective XXXX. we're an targeting doing by is work reductions.

As technologies we stated some CapEx be specifically increasing on moment X% spend. around this really to start expect up growth a Erik lastly, Food the call, migration about investments our is it transformation. make really to to capacity investments operations Taste we catch and and facing and And digital H&B, Also Ingredients. drive deferred Then to ago, new sales, expansion, for in of and on so Scent. mentioned commercial the some some of

it of biggest And forward. piece CapEx from a are drivers the so going those

the turn it of so I'll maybe, second question. for to Erik, over you And the part

Jon Erik Fyrwald

Yes.

and We've got with a into ingredients, clear growth clear with plan our organization productivity. and plan strategies. long-term we'll with I feel business come clarity We've got our Nourish of a we terms strong on investment company But driving me more that. X different versus are that very and the say different model. year on just in back taste both very year separated a like team, let businesses end-to-end a ago. model, So now targets, X-year absolute clarity We've strengthened later food investment in

confident I we have right that am the direction. So

very execute we think in Now we XXXX. I did need well. that And to

and we aspirations. Now it longer-term to our in need in more you'll hear the XXXX, do year later about

Operator

is of next of Thank The with Steve Bank America. Byrne question Alan you. from

Unknown Analyst

could you impact running would Thank businesses FDA, your And perhaps RFK in any think include you do curious, I investments approvals product some Yes. for cetera, the mentioned staff you. and of expression on now et that? how this? impact R&D. from RFK biotechnology that assume Eric, or the near-term use you at natural could regulatory then, new gene cuts potential levels, block and the from I'm characterize editing HHS that,

Jon Erik Fyrwald

thank see any products you, So as our first of don't all, We Steve. targets. of

we cleaner continued growth progress we fact, customers making many very which labels, may as the that strengths. our a has into working labels have and opportunity which, been a of do with is customers that our been And for see by products are going what In us forward. opportunity to great see good that way, reformulate on we've already, cleaner plays

In our current areas our right that want produced. there's want also sustainably terms lots plays wants, other we're sustainably of the into going sustainable be which world about design wants customers think we're opportunities many of and see the talk and biodegradable playing I the in biomaterials CAGNY, about R&D, DEB enzymatic are consumers in and areas heart Scent, but of world And with the in grown what and that that materials that at opportunities biotech hearing we areas, Taste, biotech, specifically having as you'll platform. more our to in

opportunity this it I as general a will So about see more direction, as happen I see uncertainty the what than bit when. But risk. in of significantly

Operator

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

John Ezekiel Roberts

materials, first, of much material issue? congrats, U.S. be that just only raw how Thanks And here? should Or materials thinking about is spend imported tariffs potentially reciprocal than it's exposed into the worry Back U.S.? raw a more so to to Michael. IFF's about we something do and you

Michael Deveau

much. that appreciate very John. Thanks, I

from to of Changes terms tariff potential expect impact not ever material we a basis. change. or the When a situations, various on constant tariff it's situation, In do situations we the assess any have evolving.

we As supply you which John, provides to us global know, in an lot expansive chain, flexibility adapt. have with of a

years this our make term. We lived customers fullest. administration's first through to working we're we change, mitigate to things sure should the in So couple ago with this that a of

surcharges And so price similar our customers, work become a to mitigation appropriate, now and methodology we're that will taken with secondary approach is it. that our as including that to going to but strategies we've

updated focus there. and things The chain in a come is nature, what in Again, our mitigate we more really of seeing lot can develop, you we'll to exposure. on as keep do material supply

Operator

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

Michael Sison

the but year, EBITDA time? congrats bit. And you over with Erik, It's with get just -- back might about. think end Mike. stepping maybe the it do wait be? N&B you're should what term for what really bit -- framework, a want talk where fit with Nice end this legacy bought a do understand bit IFF? little then with are year longer -- the But maybe IFF's or think the good expected IFF the have to and certainly parts I risks a to -- divestitures, now big you you, business on little it of about what a little a had maybe you the synergies and where but be you risks? time business -- is the with And and a tough of are number pretty N&B -- the -- could where when to well Because to business good it had just get-go, certainly,

Jon Erik Fyrwald

EBITDA Sure. being was time, A the brought company I Food there as to a of Thanks, Ingredients And with challenges. highest to XXs came the Health been and challenged being I performance companies very lot a at current complexity, question. it, & and ago, a Taste of with most the getting Scent lot over we portfolio being I of our look solid. have and low mean margin lot together. Mike, for the see us the Biosciences I year

and up lot the organization. a team to clarify a get for together to the was clean there executive lot and So

good made we've think I very progress.

very business very capabilities. businesses -- a strong Health competitive got we've with strong, team and solid Scent think & teams H&B and good very Taste very -- I and very Biosciences

next strengthen the just X years. them move along we So those to to in need and continue

make progress. to and are getting think very the margins absolutely point in single-digit low leading in team Andy EBITDA double-digit this a within his those still team turnaround of continuing happen. Ingredients as EBITDA on they'll benchmarks. significantly I'm I and And margins up is that that period And focused turnaround that Moore that with in situation Food margins confident another year low XXXX, compete favorably XXXX.

investments smart that we to in it way returns us And that deliver now So make a think delivering make deliver. and on we're happen. I focus I good and to competitive our good going that that say we're have get increasingly but right what XXXX, is a think track doing we

Operator

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

Unknown Analyst

McCarthy. on the on you to domestic is is your headwind why X% U.S. higher Hutter compared Matt FX margins? understand us EBITDA than the Can do impact Kevin international on business to This to margins help How for sales?

Michael Deveau

one. take the I'll you this Thank question. for

our incremental entirely on driven In to terms sales, the by of relative EBITDA purchases. impact

and while portion of input U.S. Our local sales dollar. in are larger costs denominated are in a Euro based currency, our

that's EBITDA the essentially, what's so it piece contribution. and of driving between the multiplier sales effect the And

I second think your it's structure constant. operations. internationally domestic margin agnostic question pretty and globally, was actually pretty around versus

category comes compare differential the The when real you exposures.

have And so example. margin just the a strongest me to while lower In geared example. as an you you'll savory EM [ an profile just margin let because fine fragrance, the profile, ], give just portfolio you given towards exposure have India, is

adjusting a to percentages within it, pretty each on the it when you the a like-for-like down you're look on of at for really, -- met aspect portfolio, category [indiscernible] the margin one the kind . comes really it agnostic of basis So of

Operator

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

Mark Astrachan

to group about faster then the Erik, growing away the as taking just you share customers to And me. a it rates sales be talk margins seems the you compared local, growth. and had private business compared about latter. Two just best-in-class and split the to One, from talked prioritizing of regional for multinationals seems and between could questions give label growth former maybe rough

the 'XX accelerating bit reinvestment. you there want if Maybe and to about about obviously grow other? to How peers? in wraparound And line how versus prioritizing at flexibility the talk early get quickly you guess, to can versus the think terms You're try manage get quickly can a margins you to with of to the growth sit run consistently with investment, in in X. rate sales one how you I least

Jon Erik Fyrwald

I'll Mike, the half. and to start do you want take second

Michael Deveau

Sure.

kind When at question. the it X/X the including labor local customers, and aspects. the So the you basically private you thanks, portfolio, X/X customers, small some global for is of categorize would way look Mark, X/X of midsized I have

local see coding growth the a and dynamics customers. when little muted so perspective, bit global of some you at across on at private regional look the of And more than kind is you label there the

example give Taste and on you for we to so I'll an forward. And customers us, really part a the go label the as the private -- of is on focus prioritize strategy big smaller

dynamic, that so And true. referenced, that growth Mark, is that you

winning The we help products or good to them that's big global more thing is preferred consumer have at that there's still much can market. the towards geared in do a What the innovation. lot of products customers, growth new opportunities

Jon Erik Fyrwald

on best-in-class work continue the of second rates. the we to yes, half want towards growth on the second and question, margins So to

In best-in-class margins had Health higher our what also how us margins and is and had additional even in more improve made Scent. beyond So particularly slower could just margins improving track we have growth capabilities. have nice particularly, commercial to and me give that planned, the and in on in in doing EBITDA EBITDA & but line Taste a let research, because of example. EBITDA would we in aggressive with XXXX, investments that wouldn't And may bit you investments investments, but rates I if Biosciences, little an and commercial what we improvements, gross have say research we are our margin investments we're delivered

investments, turn the we're EBITDA make weren't going not sure to these absolutely could but we very Food we continue & to years, making in Scent becoming businesses. we and are Health have leaders competitors. absolutely a around we'll against to fast attractive next what that as additional across on we're as making, innovation while So to is will in Biosciences us progress the but we're X these the that probably our the business. payout committed progress investments Ingredients do we Taste best-in-class if and continue And strengthen

Operator

is Grafstein Kate with question next The Barclays. line from the of

Unknown Analyst

if growth about thinking questions there's wondering some is Scent and for digits. growth any XXXX business. normalize? be for wondering a pricing what pressure we year on the business? And you're was then growth should next fragrance of to on double in Fine why strong expecting were growth was up fine Fragrances, expectation how your Just if on I And so we the this quarter, ingredients couple

Jon Erik Fyrwald

start. Mike, to want do you

Michael Deveau

business. fantastic would and this Ingredients comments. portfolio. Yes, one high-value the and job then there's to ingredients. over their team pass more it you more of portfolio, has They in kind really industry-led When say I on the Look, that at general I'll Fragrance looked start you really done a for ingredients look at

high and did, of ingredients. that bifurcate to they what so dia after go market And target the some the they they

seen course year XXXX, we've over you this what been XXXX, strong, so and the of has noted. performance in apologies And my as

And for range. actually we quarter, that the finished of mid-teens in kind

they proactive product good. very subside being to sure have for going consumption. XXXX, end I When in ship capacity And the success start see bit. good adequate really some very, be and to Obviously, they that's that's growth a that business by driven think the there XXXX. In So to had making a that. market is you'll

And in some some here, volume that market price we so some overall as have fragrance growth, good will in of team environment ingredients has I overall. reductions you go see of deflationary the forward because they the the think from but

that. working they're through But

strategy still growth long-term just of in managing be I very, It's And the driver to overall next their we very quarters it's think think going strong. I as terms growth. forward. a couple go of is

ingredients. So that's fragrance

the Fine Fragrance the very, is side, On performing business very well.

of basis, business rates. overall that access think new to areas win of lead the high single-digit factoring And kind ago so the mid-single-digit very comparable on continue to into have, will be the one XXXX. tent based terms in they that they potential the and very, expect and growth And growth. the of On I at finished kind And quarter X-year it's of growth in the year basis so strong. it a

around in America. businesses Africa and Middle the of like the East and markets that emerging core the Europe have the and And North strategy and brands of really they some big in are some winning that's

Jon Erik Fyrwald

superiority a The and superiority body that, laundry wash the for the dynamics think products, more it's and Scent consumer on only all I are favorable that's of great low that consumers -- part their cost the I as think et emphasis element -- of critical overall, the are thing for to to have I cost business Scent sent products. for cetera, going putting would sense in companies add a a of industry, is shampoo, the and their continue goods love driver is both whether their detergent, products, product the

about media expand you it's are emotional that makes whether sent, their better experiences around fragrances going Scent a she's increasingly fragrances Charlotte ages but these it's the not energy, the whether I by woman day, Tilbury on more all sexes enhance being energizing whether when people digital think find like a it's market expounded the for being the both world. the all romantic, fine an a to the day, and feel evening through upon on digital Fine Fragrance, just media have drivers that are wanting to relaxing helping of whether an people are desire talked for to stent out, it's

direction taking growth that. we're very and of general the advantage So I the see of for continuing be positive, scent industry to

Operator

JPMorgan. Si The of Ku line next the question from is from

Unknown Analyst

good size. you ingredients that's have functional there's what maybe [ question. Taste size. that's $X.X business, ] is the have onion and In And billion in business, another flavor I Hi, Nourish the then $X.X billion morning. legacy of back you call peeling your like which in like

Functional to is So which you like to something have grow one, Ingredients of which is business, organic the X% business smaller to has the maybe Taste X% get the grows if your like grow midpoint X.X%. really slowly, growth,

to I way question in fragrances. which a mid-single in closer & enzyme single and the to your think Biosciences enzymes just a have higher like growth the like you let's more similar a that I like Health digits going in business business, dynamic grow similar much end. maybe probiotics. low growth function think have where very it At for -- and about you the Is maybe very Taste, maybe XX% And is and to digits in to Is thematic probiotics. think slow

Jon Erik Fyrwald

why Mike, I'll any. add if start, don't you and

Michael Deveau

Yes. I'll start that.

maybe the with let flavors taste start just First, me or business.

billion side side, billion absolutely business I very, Food Flavors about $X.X going strong. Taste you're -- right. Taste very The running $X.X of Ingredients is to be way side. or the $X is it been billion, think has So

course of growth. double-digit quarters very so year, it's And their the at basically you the X see, over performance if of strong

growth the into go you could relative more be Taste the normalize averages say, will business historical strong. to As I XXXX, just because think comp

big company. that be going piece for it total of a terms is to growth in so the of And

Food ingredients will be a more muted. little bit

gains associated are of with a Some volume to price of offset that the little be by going reductions deflation. are bit

side the Xx to have expect business, on in to your the growth. the caveat the disproportionately taste factor we of faster grow that so And rest point, you is

a a subcategory actually in that what I'd overall And of that businesses as the probiotics years, be as all with been targeting we of of business, that's speaking, has food to are some to the so respect softness the recover offsetting area the trajectory expecting the H&B, levels, into think, XXXX very in well. to have growth of XXXX into frank, one taking The we kind us a terms point the go it over say, a total bit broadly In health growth. side in line is on modest and last little probiotic and detect better year-over-year. enzymes bit ingredient is of up making I year-over-year couple pain versus top

top So line -- that also but from will as that perspective, both well. a accretive margin a from aspect will us help it's help

Operator

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

Unknown Analyst

Rowan Dan is Laurence. for This

just wondering should you years? tariffs saying where and Just how patterns from the of was X are think margins be to your in revisit a on perspective. ROI tariff from impacts might but near-term term issues, to just of what kind bit I X and customers their about be should order little

Michael Deveau

of the repeat part not Can second. the question? heard I you sure I'm second that

Unknown Analyst

where second to X margins think X The do years? in just you in should ROIC one how is be

Michael Deveau

you've customers, you. have Yes. from lot customer a Perfect. want to I engaged know Eric, from you -- do standpoint, a

Jon Erik Fyrwald

to about is say there. would growth. I What you if conservative They're customers' -- listen volume calls the

I make think people but tariff [indiscernible] issues, it's tariff about the from not concerned -- it's economy. separate issues,

really volumes normalized But customers. think today, and cleared to which hopefully more up we're What uncertainty not-too-distant that they our that opportunity won't back us With is get their that's important hearing consumers products. with in that them the I we'll be our the excites I soft they from future, will increasing growth. to the with work get that innovation gives and expect uncertainty to for customers, that And what is therefore, to innovation. deliver think grow

their And by the way, well. drives as in products value

But positive. very anything to specifically add on that's think that, I to So tariffs, Mike?

Michael Deveau

No.

that's I think good. covered well.

X think of the On IFF both. years, simple the is evolution ROIC just margin, Erik I point for second higher. I next the the on before, addressed think answer it

making concentrated really a we for XXXX. think into go return effort us, I we're as to capital on on invested

a making about we're on every so big put reinvestment dollar And very carryover in terms diligent year. business. and return how But being are we're in we is, incrementally. the both the on investment we This we thinking of forward, reality as go

and CapEx basis. on OpEx both is This a

we'll And margin would so as We the capital. time, come but back alluded But year, formal terms in expect also it. over it, piece target and on Erik return improvements in trajectory. we invested yet, the again, have later the to of a team of, don't

Operator

with Artem of The next line Chubarov question Redburn. the from is

Artem Chubarov

Or crossing ahead, the they And for of looking see follow-up the cost some at for across I've remind review got Could & be then breakdown Health a of sales on Biosciences. businesses us [indiscernible] you do you would could future a current that just be considered potentially helpful. those by utilization? the

Jon Erik Fyrwald

anything. I'll please start, add then Mike, and

& been the I growth the had health business. we benchmark lowest business consistent would but say, growth the with growing businesses, solid our all, First very ground across still and leading is grew, solid of strong nicely. XXXX, today. on Biosciences Health growing was In It's

overall, the that start different again of alluded areas. different more the the to, all solid Mike as increase dynamics business. the we part application As we that business, into innovation expect put in areas, to all to But are

add commercialization about. enzymatic have our growth. there. and new area going first excited We get to biomaterials we're that's to to We've the started that designed this

on on more And turbocharge that, a some start. biotech in time about Scent to very, through. we've how take that is business the to focused And but with emphasis our time so Biosciences health in resources get very term, a I'm And got we X-year near and on of frame. even our solid do now lot X- Taste capabilities. will But optimistic we've got and our the

Operator

At you. take now last time, Research. Christopher Thank question we from this the Wolf will from Parkinson

Unknown Analyst

Fein Great. for This is Harris on Chris.

guess from does year. over have maybe that mentioned for what sales, been your asset bolt-ons, I of pipeline? terms of whether you the small prune when within for mean active & I more discovery could look price there the in you So are guess, to Nutrition a what's your potential you happened, little at implications Food And divestitures you M&A portfolio? what a lot past also bit

Jon Erik Fyrwald

Yes.

Ingredients around industry to business Food -- here. may actually knows He's that So spent the are the likely not the Denisco, business, in first his of before depth the our Miller very it pieces total many years Andy there and all, he He with well. fit knows with IFF. business, some long on He working of with team term. turn

breadth, in that. Biosciences But to geographic enhancing that we're Scent further related specifically which So through we're as more footprint. our that, on bolt-on and acquisitions, referred enhance technology working Taste I to, Health & looking technologies to is working to more at our

important I voids. really businesses on well make sale to only we're that today have what, that that and and we sense most to is finished and have but -- understand execute But pharmaceuticals that we returns driving And will the absolute fill bolt-ons think year. continuing the solution really getting do strategic really the good focused that this

my about joined much ago, thanks much leading today. a XX,XXX our believe, to world got stronger year even build will now, I with positive customers, it, colleagues them momentum, we excited our talk we to to customers the were momentum I you that what is say a deliver positive believe finish, us I that I'll employees, to IFF XXXX, excited than year believe on to we've a but we and and are strengthens also talk I if -- remark serving going are believe to further innovation and we're we're and And to IFF ask more the to company I'll know from beyond. for closing 'XX focused deliver drive we're in on more we going just that way suggest much around I we're now, IFF productivity. going about continue we would And and I in it be that going while stronger employees, do

you'll X-year you. the the find I very leading in benchmarks. And think period, us competitive with competitive Thank

Operator

Call. Thank appreciate We you all. FY Earnings your you conclude have this day, At wonderful QX IFF and hope a now may will lines. you disconnect your XXXX time, We this all now today's participation. Conference

International Flavors & Fragrances (IFF) 19 Feb 252024 Q4 Earnings call transcript