IFF 10-Q Quarterly Reports

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2026

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2026

International Flavors & Fragrances Inc. reported second-quarter 2026 net sales of $1.954 billion, up from $1.919 billion in the prior-year period, with the filing stating comparable currency neutral sales rose 6%. Operating profit increased to $158 million from $142 million, while net income attributable to IFF shareholders fell to $50 million from $599 million, the prior-year quarter having benefited from a $488 million gain on debt extinguishment. Income from continuing operations before taxes was $64 million versus $438 million, and the effective tax rate rose to 48.4%, driven mainly by increased non-deductible regulatory costs. Six-month net sales declined to $3.860 billion from $3.969 billion on divestitures, and six-month net income attributable to IFF shareholders was $219 million compared with a loss of $419 million a year earlier. The company has classified its Food Ingredients business, together with the Soy Crush, Concentrates and Lecithin business, as discontinued operations. The Food Ingredients sale to funds advised by CVC Capital Partners is priced at estimated proceeds of $3.832 billion, with IFF retaining a 10% minority stake and closing expected by the end of the second quarter of 2027. The SCL divestiture closed on March 2, 2026. Subsequent to quarter-end, IFF agreed on July 20, 2026 to sell its Botanical Extracts, Vitamins & Minerals, and Food Enhancement Products portfolio, which it expects to produce a pre-tax loss of approximately $200 million to $300 million. On August 4, 2026, the Board authorized an enhanced share repurchase program totaling $2.5 billion, including a $500 million accelerated repurchase expected in the second half of 2026. The company also entered into a $1.0 billion delayed draw term loan to refinance its €800 million notes due September 2026. At June 30, 2026, net debt to credit adjusted EBITDA was 2.51 to 1.0, and cash and cash equivalents totaled $569 million.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2026

International Flavors & Fragrances Inc. (IFF) reported first-quarter 2026 net sales of $2.741 billion, down from $2.843 billion in the first quarter of 2025, a decrease the filing attributes to exchange rates being favorable by 4% offset by divestitures; on a comparable currency neutral basis, sales increased 3%. Operating profit was $273 million compared with an operating loss of $903 million a year earlier, which included a $1.153 billion goodwill impairment on the Food Ingredients reporting unit. Net income attributable to IFF shareholders was $169 million, or $0.66 per diluted share, versus a net loss of $1.018 billion, or $(3.98) per share, in the prior-year period. Total Adjusted Operating EBITDA was $568 million, and the company reported a 20.7% Adjusted Operating EBITDA margin versus 20.3% a year earlier. Cash flow from operations was $257 million, up from $127 million, and the company completed the divestiture of its Soy Crush, Concentrates & Lecithin business on March 2, 2026 for about $105 million in cash proceeds. Cash and cash equivalents were $562 million at March 31, 2026, and total debt was $5.817 billion. The company repurchased about 481,000 shares for approximately $35 million under its $500 million authorization, and it paid $0.40 per share in quarterly dividends. The filing reports a net debt to credit adjusted EBITDA ratio of 2.53 to 1.0 and states the company was in compliance with its financial covenants. The filing also describes ongoing legal and regulatory matters, including fragrance-related class actions and antitrust investigations, for which the company says it cannot predict the outcome. It reports that the DOJ closed its U.S. fragrance antitrust investigation in February 2026, and that new investigations were opened in Singapore and India. The company also recognized no asset for potential IEEPA tariff refunds as of March 31, 2026.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2025

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2025 net sales of $2.694 billion, down from $2.925 billion a year earlier, with net income attributable to IFF shareholders of $40 million versus $58 million. On a comparable currency neutral basis, third-quarter sales were flat, driven by favorable net pricing and volume increases in Scent and Taste. For the first nine months of 2025, the company reported a net loss attributable to IFF shareholders of $392 million, compared with net income of $323 million in the prior-year period, largely because of a $1.153 billion goodwill impairment on the Food Ingredients reporting unit, a $108 million loss on the held-for-sale Soy Crush, Concentrates & Lecithin business, and a $111 million net loss on business disposals, partly offset by a $488 million gain on debt extinguishment. The company completed the divestitures of its Pharma Solutions disposal group (cash proceeds of approximately $2.564 billion) and its Nitrocellulose business during 2025, and used proceeds to repay debt. Total debt fell to $6.049 billion at September 30, 2025 from $8.977 billion at December 31, 2024, and cash and cash equivalents rose to $621 million. Net cash provided by operating activities was $532 million for the nine months, versus $681 million a year earlier. The filing also revises previously issued financial statements to correct income tax-related errors, and it discloses a $500 million share repurchase program authorized August 5, 2025 and a settlement agreement in the U.S. fragrance class actions. The company reports a net debt to credit adjusted EBITDA ratio of 2.53 to 1.0 as of September 30, 2025, below the covenant levels, and states it was in compliance with all financial and other covenants. Investigations by European, UK, U.S. and other competition authorities into fragrance businesses remain ongoing, and the company states it cannot predict their outcome.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2025

International Flavors & Fragrances Inc. (IFF) reported net sales of $2.764 billion for the second quarter of 2025, down from $2.889 billion a year earlier, with net income attributable to IFF shareholders of $612 million versus $170 million. The quarterly result was helped by a $488 million gain on extinguishment of debt and a one-time tax benefit of $359 million tied to the entity realignment project. For the six months, the company posted a net loss attributable to IFF shareholders of $406 million, driven primarily by a $1.153 billion goodwill impairment related to the Food Ingredients reporting unit. Net sales for the six months were $5.607 billion, compared with $5.788 billion in the prior year period. The filing reflects significant portfolio changes. The Pharma Solutions disposal group was sold on May 1, 2025, for gross cash proceeds of approximately $2.564 billion, and the Nitrocellulose business was sold on May 9, 2025. Proceeds were largely used in May 2025 to fund tender offers for senior notes with an aggregate purchase price of $2.0 billion, and the company also repaid the remaining balance of its 2026 Term Loan Facility. Total debt fell to $6.184 billion at June 30, 2025 from $8.977 billion at December 31, 2024. Cash and cash equivalents rose to $816 million. After the quarter end, on August 5, 2025, the company announced a new $500 million share repurchase authorization and an agreement to divest its soy crush, concentrates and lecithin business, with closing expected in the fourth quarter of 2025. The filing also discloses a provision of $42 million related to U.S. class action lawsuits in the fragrance business and ongoing antitrust investigations by several regulators.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2025

International Flavors & Fragrances Inc. (IFF) reported a first-quarter 2025 net loss attributable to IFF shareholders of $1.018 billion, or $(3.98) per share, compared with net income of $60 million, or $0.23 per share, in the prior-year period. The loss was driven by a $1.153 billion goodwill impairment related to the Food Ingredients reporting unit. Net sales declined 2% on a reported basis to $2.843 billion from $2.899 billion, though currency-neutral sales rose 2% and comparable currency-neutral sales rose 3%. Segment Adjusted Operating EBITDA was flat at $578 million in total, with Taste and Pharma Solutions up and Scent down. The balance sheet shows total assets of $28.265 billion and total debt of $9.290 billion as of March 31, 2025. Cash flow from operations was $127 million, versus $99 million a year earlier. Capital expenditures rose to $179 million from $118 million, and the company expects 2025 capital spending of approximately 6.5% of sales, up from 4.0% in 2024. Shareholders' equity fell to $13.177 billion from $13.876 billion, largely due to the net loss. Subsequent to quarter-end, the Pharma Solutions disposal group sale closed on May 1, 2025, with gross cash proceeds of approximately $2.6 billion, of which a portion repaid the remaining $397 million under the 2026 Term Loan Facility. The Tobacco Flavoring business sale in North America closed April 1, 2025, for $20 million in gross proceeds, and the Nitrocellulose sale is expected to close in the second quarter of 2025. The company also announced tender offers of up to $1.8 billion for certain Senior Notes on May 2, 2025.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2024

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2024 net sales of $2.925 billion, up 4% on a reported basis and 7% on a currency neutral basis versus $2.820 billion in the prior-year quarter. Gross profit rose to $1.052 billion (36.0% of sales) from $924 million (32.8%), and operating profit increased to $249 million from $150 million. Net income attributable to IFF shareholders was $59 million, or $0.23 per diluted share, compared with $25 million, or $0.10, a year earlier. For the first nine months, net sales declined 1% to $8.713 billion, though currency neutral sales rose 3%, and net income attributable to IFF shareholders was $289 million, or $1.13 per diluted share, against $43 million a year earlier. The nine-month results were shaped by portfolio changes. The Company recorded a $365 million pre-tax gain on the April 2024 divestiture of its Cosmetic Ingredients business, and a $314 million loss on assets classified as held for sale, mainly tied to the planned sale of the Pharma Solutions disposal group, which also carried a $64 million goodwill impairment. The Pharma Solutions sale is expected to close in the second quarter of 2025, and an October 2024 agreement to sell the nitrocellulose business was disclosed as a subsequent event. Total debt was $9.099 billion at September 30, 2024, down from $10.071 billion at December 31, 2023, and the Company stated it was in compliance with its financial covenants, with a net debt to credit adjusted EBITDA ratio of 3.89 to 1.0. Cash flow from operations for the nine months was $702 million, compared with $795 million in the prior-year period, reflecting higher working capital needs. Cash dividends paid totaled $411 million, and the quarterly dividend was $0.40 per share. Segment Adjusted Operating EBITDA for the nine months was $1.734 billion versus $1.519 billion, led by Nourish and Scent.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2024

International Flavors & Fragrances Inc. (IFF) reported second-quarter 2024 net sales of $2.889 billion, down 1% on a reported basis from $2.929 billion, though up 2% on a currency neutral basis. Gross profit rose 14% to $1.068 billion (37.0% of sales) from $933 million, and operating profit increased 32% to $191 million. Net income attributable to IFF shareholders was $170 million, or $0.66 per diluted share, versus $27 million ($0.11) a year earlier. The results were heavily shaped by non-recurring items: a $368 million gain on business disposals, mainly from the Cosmetic Ingredients sale completed April 2, 2024, offset by a $282 million loss on assets classified as held for sale and a $64 million goodwill impairment, both tied to the pending Pharma Solutions sale. For the first six months of 2024, net sales were $5.788 billion, down 3% reported and flat currency neutral, and net income attributable to IFF shareholders was $230 million ($0.90 per diluted share). Cash flow from operations was $336 million versus $375 million a year earlier, reflecting higher working capital, and capital spending for 2024 is expected at about 5.0% of sales. Total debt was $9.379 billion at June 30, 2024, and the company was in compliance with its financial covenants, with a net debt to credit adjusted EBITDA ratio of 3.98 to 1.0. Under the amended credit agreements, the leverage covenant steps down to 4.50x for the quarter ending September 30, 2024, and the company is restricted from share repurchases and from cash dividends above $0.81 per share per quarter during the covenant relief period through December 31, 2025. The Pharma Solutions disposal group, expected to close in the second quarter of 2025, had a fair value of $2.686 billion net of estimated costs to sell, and a portion of its net proceeds must repay the 2026 Term Loan Facility. Also disclosed are ongoing antitrust investigations into fragrance businesses by the European Commission, UK CMA, U.S. DOJ and Swiss Competition Commission, and a €15.9 million settlement with the European Commission during the first half of 2024.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2024

International Flavors & Fragrances Inc. (IFF) reported first-quarter 2024 net sales of $2.899 billion, down from $3.027 billion in the prior-year period, a decrease the company attributes primarily to the divestitures of portions of the Savory Solutions and Flavor Specialty Ingredients businesses, partly offset by volume and price increases. Operating profit rose to $199 million from $131 million, and net income attributable to IFF shareholders was $60 million, or $0.23 per diluted share, compared with a net loss of $9 million, or $(0.04) per share, a year earlier. Gross margin improved to 35.3% from 31.8%, and interest expense fell to $83 million from $100 million due to lower debt outstanding. Segment Adjusted Operating EBITDA totaled $578 million versus $503 million, with Scent and Health & Biosciences showing the strongest gains, while Pharma Solutions declined. Cash flow from operations was $99 million compared with $127 million a year earlier, reflecting higher working capital, largely in receivables and inventories. Total debt was $10.298 billion at March 31, 2024, and cash and cash equivalents were $732 million. The company completed the divestiture of its Cosmetic Ingredients business on April 2, 2024, with gross cash proceeds of approximately $841 million, and agreed on March 19, 2024 to sell its Pharma Solutions business for up to $2.85 billion, with closing expected in the second quarter of 2025. Under the financial covenant relief period, the company is restricted to cash dividends of no more than $0.81 per share per quarter and cannot repurchase shares. The filing also discloses ongoing investigations by the European Commission, the UK Competition and Markets Authority, the U.S. Department of Justice, and the Swiss Competition Commission into the fragrance businesses, with first-quarter legal and regulatory costs of $35 million recorded in the segment reconciliation. The company states it is unable to predict the duration or outcome of these investigations or whether they will materially affect its results.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2023

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2023 net sales of $2.820 billion, down from $3.063 billion a year earlier, with volume decreases and the divestitures of portions of the Savory Solutions and FSI businesses (approximately $147 million impact) partly offset by price increases. Operating profit was $150 million versus an operating loss of $1.985 billion in the prior-year quarter, which included a $2.250 billion goodwill impairment. Net income attributable to IFF shareholders was $25 million, or $0.10 per diluted share, compared with a loss of $2.197 billion in the third quarter of 2022. Segment Adjusted Operating EBITDA fell to $506 million from $612 million, led by a $109 million decline in Nourish. For the first nine months of 2023, net sales were $8.776 billion and operating cash flow was $795 million, compared with $189 million a year earlier. Total debt was $10.301 billion and cash and cash equivalents were $629 million on the balance sheet at September 30, 2023. The company reported a net debt to credit adjusted EBITDA ratio of 4.57 to 1.0. In September 2023 IFF amended its term loan and revolving credit agreements to extend covenant relief through December 31, 2025, with a maximum leverage ratio stepping down from 5.25x to 3.75x and a dividend cap of $0.81 per share per quarter during the relief period. The company agreed in the fourth quarter of 2023 to sell its Cosmetic Ingredients business, expected to close in the first quarter of 2024. The filing also discloses ongoing antitrust investigations by the European Commission, UK Competition and Markets Authority, U.S. Department of Justice and Swiss Competition Commission relating to its fragrance businesses, along with related class action lawsuits and legal fees that increased selling and administrative expenses.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2023

International Flavors & Fragrances Inc. (IFF) reported net sales of $2.929 billion for the second quarter of 2023, down from $3.307 billion in the prior-year period, a decrease of 11% on a reported basis and 9% on a currency neutral basis. Management attributed the decline primarily to volume decreases across all businesses and the impact of divestitures of the Microbial Control business unit and a portion of the Savory Solutions business, offset in part by price increases. Operating profit fell to $145 million from $213 million, and net income attributable to IFF shareholders was $27 million, or $0.11 per diluted share, versus $107 million, or $0.43 per diluted share, a year earlier. Interest expense rose to $116 million from $77 million, and the effective tax rate for the quarter was 46.0%. For the first six months of 2023, net cash provided by operating activities was $375 million, compared with cash used in operating activities of $51 million in the prior-year period, driven mainly by lower working capital. Net cash provided by investing activities was $552 million, reflecting $821 million of net proceeds from business divestitures, and financing activities used $866 million, including $413 million of dividends paid and $300 million of long-term debt repayments. Total debt was $10.570 billion at June 30, 2023, and the company reported a net debt to credit adjusted EBITDA ratio of 4.54 to 1.0, below the relevant covenant level. The company also amended its term loan and revolving credit agreements to extend covenant relief through December 31, 2024, which prohibits share repurchases during the relief period. The filing also discloses ongoing antitrust investigations by the European Commission, UK Competition and Markets Authority, U.S. Department of Justice, and Swiss Competition Commission relating to the fragrance businesses, along with related class action lawsuits filed since March 2023 that the company cannot yet predict the outcome of. The Flavor Specialty Ingredients business was sold on August 1, 2023 for net cash proceeds of approximately $205 million.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2023

International Flavors & Fragrances Inc. reported first-quarter 2023 net sales of $3.027 billion, down $199 million, or 6% on a reported basis (2% currency neutral), from $3.226 billion a year earlier. Gross profit fell to $964 million from $1.145 billion, and the company posted a net loss attributable to IFF shareholders of $9 million, or $(0.04) per diluted share, versus net income of $244 million, or $0.96 per share, in the prior-year period. Operating profit declined to $131 million from $341 million, while interest expense rose to $111 million from $72 million. Health & Biosciences sales dropped 22% on a reported basis, and Nourish segment Adjusted Operating EBITDA fell 37%. Restructuring charges rose to $52 million under a 2023 Restructuring Program that has approximately 600 actual and planned headcount reductions. The company is divesting portions of its Savory Solutions business (Nourish) and its Flavor Specialty Ingredients business (Scent), with both sales expected to close in the second and third quarters of 2023. Cash flow from operations improved to $127 million from a $4 million use a year earlier, driven mainly by working capital reductions in inventories and receivables. Total debt was $11.291 billion at March 31, 2023, and the company was in compliance with its covenants, with a net debt to credit adjusted EBITDA ratio of 4.62 to 1.0. The filing also discloses that on March 23, 2023, the company amended its term loan and revolving credit agreements, extending covenant relief through December 31, 2024 and moving the reference rate from LIBOR to Term SOFR. The amendments prohibit share repurchases during the relief period. The company also disclosed an antitrust investigation into its fragrance businesses by the European Commission, the UK Competition and Markets Authority, the U.S. Department of Justice and the Swiss Competition Commission, following inspections and a grand jury subpoena on March 7, 2023.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2022

International Flavors & Fragrances Inc. reported a third-quarter 2022 net loss attributable to IFF shareholders of $2.197 billion, or $(8.60) per share, compared with net income of $194 million in the prior-year quarter. The loss was driven mainly by a $2.250 billion goodwill impairment in the Health & Biosciences reporting unit. Net sales were $3.063 billion, down $8 million, or 0.3% on a reported basis, but up 6% on a currency neutral basis, with exchange rates having an unfavorable impact of 6%. Adjusted operating EBITDA was $612 million, down 6% on a reported basis, with a 20.0% margin versus 21.1% a year earlier. For the first nine months, net sales rose 11% to $9.596 billion, and the net loss attributable to IFF shareholders was $1.846 billion, or $(7.22) per share. Results also included a $120 million impairment of long-lived assets in Russia and a $2.250 billion goodwill impairment. Cash flow from operations fell to $189 million from $1.126 billion, primarily due to higher working capital, largely inventories and accounts payable. The company completed the divestiture of its Microbial Control business on July 1, 2022, receiving cash proceeds of approximately $1.254 billion, and it reported goodwill of $13.305 billion at September 30, 2022, down from $16.414 billion at December 31, 2021. At September 30, 2022, cash and cash equivalents were $538 million and total debt was $10.772 billion. The company stated it was in compliance with all financial covenants, with a net debt to credit adjusted EBITDA ratio of 3.93 to 1.0. An August 2022 amendment delayed the step-downs in the maximum permitted leverage ratio, with the first step-down now at the end of the second quarter of 2023. The board declared a quarterly dividend of $0.81 per share for the third quarter.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2022

International Flavors & Fragrances Inc. reported net sales of $3.307 billion for the second quarter of 2022, up from $3.089 billion in the prior-year period, with the increase driven by price increases across all businesses. Net income attributable to IFF shareholders was $107 million ($0.43 per diluted share), compared with $28 million ($0.11 per diluted share) a year earlier. Operating profit rose to $213 million from $110 million, and the quarter included a $120 million impairment of long-lived assets tied to operations in Russia. For the six months, net sales were $6.533 billion and net income attributable to IFF shareholders was $351 million, or $1.38 per diluted share. Cash flow and liquidity were weaker in the first half: net cash used in operating activities was $100 million, compared with $698 million provided in the prior-year period, driven mainly by higher inventories and trade receivables. Cash and cash equivalents were $569 million at June 30, 2022, while total debt was $12.112 billion, including $792 million of commercial paper and $350 million under the Amended Revolving Credit Facility. Dividends paid totaled $402 million in the six-month period. Subsequent to the quarter, the company completed the sale of its Microbial Control business unit on July 1, 2022, receiving net cash proceeds of approximately $1.277 billion. Proceeds were used to repay the $350 million revolving credit borrowings and, as of August 5, 2022, approximately $900 million of commercial paper. On August 4, 2022, the company amended its debt agreements to delay the first step-down in its maximum permitted leverage ratio to the end of the third quarter of 2023.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2022

International Flavors & Fragrances Inc. reported first-quarter 2022 net sales of $3.226 billion, up from $2.465 billion in the prior-year quarter, with the filing stating the increase reflected approximately $568 million of incremental sales attributable to N&B for January 2022 along with volume and price increases. Gross profit rose to $1.145 billion (35.5% of sales) from $754 million (30.6%). Operating profit was $341 million versus $4 million a year earlier, and net income attributable to IFF stockholders was $244 million, or $0.96 per diluted share, compared with a loss of $42 million, or $(0.21) per share, in the first quarter of 2021. Adjusted operating EBITDA was $702 million (21.8% of sales) versus $569 million (23.1% of sales). Cash flow from operations was negative $4 million, compared with $358 million provided in the prior-year period, driven mainly by changes in inventories, receivables, incentive compensation accruals and accounts payable. Cash and cash equivalents were $657 million at March 31, 2022, and total debt was $11.677 billion. The filing states the company was in compliance with its debt covenants, with a Net Debt to Credit Adjusted EBITDA ratio of 4.18 to 1.0. Capital spending in 2022 is expected to be approximately 5.0% of sales, up from 3.4% in 2021. The filing also discusses the Microbial Control business, which is held for sale with an expected sale price of approximately $1.282 billion in the third quarter of 2022, and the company's operations in Russia and Ukraine, where it recorded an approximately $20 million credit loss charge and tested assets of about $228 million with no impairment. A subsequent event was the April 1, 2022 acquisition of Health Wright Products for approximately $131 million.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2021

International Flavors & Fragrances Inc. completed its combination with the nutrition and biosciences business of DuPont (N&B) on February 1, 2021, in a Reverse Morris Trust transaction. Its results for the three and nine months ended September 30, 2021 include N&B from that date, so year-over-year comparisons are heavily affected by the merger. Third-quarter net sales rose 142% on a reported basis to $3.071 billion from $1.268 billion, with $1.640 billion attributed to N&B. Net income attributable to IFF stockholders was $194 million, or $0.76 diluted EPS, versus $85 million, or $0.75, a year earlier. For the nine months, net sales were $8.625 billion, up 126%, but net income attributable to IFF stockholders was $180 million, down from $296 million, and diluted EPS was $0.75 versus $2.64. The filing cites $363 million of N&B inventory step-up costs and $91 million of N&B transaction costs in the nine-month period. The balance sheet expanded substantially. Total assets were $40.252 billion at September 30, 2021, compared with $13.555 billion at December 31, 2020. Goodwill was $16.590 billion and other intangible assets, net, were $10.959 billion. Total debt was $11.526 billion, and the company stated it was in compliance with all covenants, with a Net Debt/Credit Adjusted EBITDA ratio of 4.10 to 1.0. Net cash provided by operating activities for the nine months was $1.126 billion. Dividends declared were $0.79 per share for the quarter. Portfolio changes are under way. The company agreed to sell its Microbial Control business, with a transaction expected to close for approximately $1.274 billion in the second quarter of 2022, and its fruit preparation business closed on October 1, 2021, after the quarter-end. The filing also discloses an accrual of approximately $35 million related to a voluntary recall of out-of-specification Avicel PH NF, ongoing securities class action litigation tied to the Frutarom acquisition, and an Israeli criminal investigation of Frutarom.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2021

International Flavors & Fragrances Inc. reported second-quarter 2021 net sales of $3.089 billion, up $1.890 billion, or 158% on a reported basis, from $1.199 billion a year earlier. The filing attributes $1.693 billion of the increase to the February 1, 2021 Merger with Nutrition & Biosciences, Inc. (N&B), with volume increases across the Nourish, Health & Biosciences and Scent segments also contributing. Operating profit was $110 million versus $120 million, and the company reported a net income attributable to IFF stockholders of $28 million, or $0.11 per diluted share, compared with $87 million, or $0.74 per diluted share, a year earlier. Results were weighed down by $195 million of N&B inventory step-up costs in cost of goods sold, and gross margin fell to 29.5% from 40.2%. For the six months ended June 30, 2021, the company posted a net loss attributable to IFF stockholders of $14 million, or $(0.06) per diluted share, versus net income of $211 million a year earlier. Net cash provided by operating activities was $698 million, compared with $208 million, and cash and cash equivalents rose to $935 million from $650 million at December 31, 2020. Total debt was $11.970 billion, and the company reported Net Debt to Credit Adjusted EBITDA of 4.23 to 1.0, below its covenant levels. Adjusted operating EBITDA for the second quarter rose to $679 million (22% of sales) from $239 million (20% of sales). The purchase price allocation for N&B remains preliminary, with total purchase consideration of $15.954 billion and goodwill of $11.788 billion recognized to date. On August 5, 2021, the Board authorized a quarterly dividend increase to $0.79 per share, and on July 28, 2021, the company entered into a new $2.000 billion senior unsecured revolving credit facility maturing July 28, 2026. The company also agreed in the second quarter to divest its fruit preparation business, with related assets held for sale of approximately $113 million.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2021

International Flavors & Fragrances Inc. (IFF) reported a first quarter 2021 net loss attributable to IFF stockholders of $42 million, or $(0.21) per diluted share, compared with net income attributable to IFF stockholders of $124 million, or $1.15 per diluted share, in the first quarter of 2020. Net sales rose to $2.465 billion from $1.347 billion, driven primarily by $1.076 billion of incremental sales from the Nutrition & Biosciences (N&B) business, which was merged into IFF on February 1, 2021 in a Reverse Morris Trust transaction. Operating profit fell to $4 million from $196 million, largely due to $182 million of N&B inventory step-up costs, $152 million of amortization of acquisition-related intangibles, and $89 million of N&B transaction-related costs. Segment Adjusted Operating EBITDA increased to $569 million from $303 million. The balance sheet changed substantially with the merger. Total assets rose to $40.817 billion from $13.555 billion at year-end 2020, goodwill increased to $17.104 billion, and other intangible assets, net, grew to $11.652 billion. Total debt was $11.958 billion at March 31, 2021, compared with $4.413 billion at December 31, 2020, and cash and cash equivalents were $872 million. Operating cash flow was $358 million, compared with $17 million in the prior-year quarter. The company stated that the purchase price allocation is preliminary and that the valuation process is not complete. IFF also reported a Net Debt/Credit Adjusted EBITDA ratio of 4.32 to 1.0 and said it was in compliance with its debt covenants. A subsequent event disclosed an agreement to divest the fruit preparation business to Frulact, with closing expected in the third quarter of 2021. The company disclosed continuing legal proceedings related to the Frutarom acquisition, including a securities class action that was dismissed on March 30, 2021 and appealed by lead plaintiffs on April 28, 2021.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2020

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2020 net sales of $1.27 billion, flat on a reported basis and up 1% on a currency neutral basis versus $1.27 billion in the prior-year quarter. Operating profit fell to $150.3 million (11.9% of sales) from $184.7 million (14.6% of sales), reflecting higher raw material costs, volume declines in Taste and Fine Fragrances tied to COVID-19, and $38.7 million of N&B transaction and integration costs. Net income attributable to IFF stockholders was $84.8 million, or $0.75 diluted EPS, versus $1.13 a year earlier. For the first nine months, net sales were $3.81 billion, down 1% reported and up 1% currency neutral, and diluted EPS was $2.64 compared with $3.30. Scent was the stronger segment, with sales up 4% in the quarter and segment profit rising to $101.4 million, driven by Consumer Fragrances. Taste sales declined 2% on a reported basis, and Taste segment profit fell to $101.6 million from $121.4 million. Cash flow from operations for the nine months was $415.0 million, and cash and cash equivalents stood at $469.8 million at September 30, 2020, against $3.89 billion of long-term debt. The company reported a Net Debt/adjusted EBITDA ratio of 3.44 to 1.0, within its covenant limits. The filing's central item is the pending DuPont Nutrition & Biosciences transaction, expected to close in early 2021. DuPont will receive a $7.3 billion special cash payment, and DuPont shareholders will own approximately 55.4% of IFF on a fully diluted basis. IFF shareholders approved the share issuance on August 27, 2020. The company also disclosed a Frutarom-related securities class action, an Israeli fraud investigation begun June 3, 2020, and ongoing China plant zoning matters.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2020

International Flavors & Fragrances Inc. reported net sales of $1,198,773 thousand ($1.2 billion) for the quarter ended June 30, 2020, down 7% on a reported basis and 4% on a currency neutral basis from $1,291,568 thousand a year earlier. Operating profit fell to $119,370 thousand from $199,937 thousand, and net income attributable to IFF stockholders was $86,204 thousand, versus $136,377 thousand. Diluted EPS was $0.74 compared with $1.20. The filing attributes the sales decline mainly to COVID-19 stay-at-home and travel restrictions, with weak demand for Fine Fragrances and Taste products used in retail food services, partly offset by Consumer Fragrances. Operating margin was 10.0% versus 15.5%, and the company recorded $22,502 thousand and $10,926 thousand of N&B integration and transaction costs in the quarter. For the six months, net cash provided by operating activities was $208,396 thousand, and cash and cash equivalents were $497,412 thousand at June 30, 2020. Total debt was $4,366,901 thousand, and the company reported a Net Debt/adjusted EBITDA ratio of 3.40 to 1.0 under its credit agreements. The pending combination with Nutrition & Biosciences, Inc., a business of DuPont, is expected to close in early 2021, with DuPont shareholders owning approximately 55.4% of IFF on a fully diluted basis and a $7.3 billion special cash payment to DuPont. On August 10, 2020, the Board authorized a quarterly dividend increase to $0.77 per share from $0.75. The filing also discloses an ongoing securities class action and Israeli proceedings tied to the Frutarom acquisition and alleged improper payments, plus an Israeli fraud investigation that began June 3, 2020. Management states it does not currently anticipate COVID-19-related impairment charges, but notes that a prolonged pandemic could lead to asset write-downs.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2020

International Flavors & Fragrances Inc. (IFF) reported first-quarter 2020 net sales of $1.35 billion, up 4% on a reported basis and 6% on a currency neutral basis from $1.30 billion a year earlier. Growth was driven by new wins (net of losses) and volume increases in both Taste and Scent, including increased shipments tied to COVID-19 demand, partially offset by Fine Fragrances declines in March 2020. Gross margin rose to 42.0% from 40.9%, and operating profit increased to $196.2 million (14.6% of sales) from $163.9 million (12.6% of sales). Net income attributable to IFF stockholders was $124.6 million, and diluted EPS was $1.15 versus $0.96. Adjusted operating profit was $222.3 million (16.5% of sales). Cash flow was weaker. Net cash provided by operating activities fell to $16.9 million from $47.2 million, driven by higher working capital, mainly receivables and payables. Cash, cash equivalents and restricted cash decreased $175.6 million, and foreign exchange reduced cash by $42.5 million. Total debt was $4.33 billion against cash of $433.2 million, and the company reported a Net Debt/adjusted EBITDA ratio of 3.33 to 1.0 versus a covenant ceiling of 4.0 to 1.0 at March 31, 2020. Management said the overall COVID-19 impact on first-quarter results was not significant, but that the effect on 2020 results remains uncertain. The pending transaction with Nutrition & Biosciences, Inc. (from DuPont de Nemours, Inc.) is the most significant item for investors. DuPont would receive a $7.3 billion special cash payment, and DuPont shareholders would own approximately 55.4% of IFF on a fully diluted basis. The company expects the transaction to close in early 2021. Goodwill fell to $5.27 billion from $5.50 billion, largely due to foreign exchange, and the Frutarom-related securities class actions and related litigation remain pending.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2019

International Flavors & Fragrances Inc. reported third-quarter 2019 net sales of $1.27 billion, up 40% on a reported basis from $907.5 million in the prior-year quarter, with the Frutarom acquisition contributing 40% to that growth. Net income attributable to IFF stockholders was $127.1 million, or $1.13 per diluted share, compared with $95.7 million, or $1.17 per diluted share, a year earlier. Operating profit rose to $184.7 million from $159.3 million, but operating margin fell to 14.6% from 17.5%, driven mainly by lower Frutarom margins, unfavorable price versus input costs, and higher amortization of acquisition-related intangibles ($48.4 million versus $9.0 million). Gross margin declined to 42.1% from 44.1%. Segment results were mixed. Taste sales declined 3% on a reported basis, while Scent sales grew 2%, and Frutarom contributed $363.7 million in third-quarter sales. For the nine months, cash provided by operations was $383.0 million, and cash and cash equivalents stood at $494.9 million at September 30, 2019. Total debt was $4.39 billion, and the company reported that it was in compliance with its debt covenants, with a Net Debt/adjusted EBITDA ratio of 3.42 to 1.0 against a covenant of 4.25 to 1.0 as of September 30, 2019. The filing also discloses significant legal and compliance matters tied to Frutarom. These include a securities class action filed August 12, 2019, related Israeli class action motions, and the Russia and Ukraine improper payments investigation, which the company says has been substantiated and whose impact is not expected to be material. The company also filed a claim against Frutarom's former CEO over a $20 million 2018 bonus, and it estimates its own exposure to certain matters at a range of $0 to approximately $25 million in excess of accruals.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2019

International Flavors & Fragrances Inc. reported net sales of $1,291,568 thousand for the three months ended June 30, 2019, up from $920,016 thousand a year earlier, with the Frutarom acquisition (completed October 4, 2018) contributing to the increase. Sales for the six months were $2,588,970 thousand versus $1,850,944 thousand. Operating profit for the quarter was $199,937 thousand (15.5% of sales) compared with $154,509 thousand (16.8% of sales) in the prior-year quarter. Net income attributable to IFF stockholders was $136,377 thousand, and diluted EPS was $1.20 versus $1.25. For the first six months, diluted EPS was $2.16 versus $2.87, with net cash provided by operating activities of $184,916 thousand compared with $55,169 thousand. The company's balance sheet shows total debt of $4,512,906 thousand at June 30, 2019, and cash and cash equivalents of $426,717 thousand. Management described its Frutarom Integration Initiative, which expects to close approximately 35 manufacturing sites over the next two years and to achieve $145 million of synergy targets. Restructuring and integration costs rose sharply in 2019, with integration-related costs of $26.3 million and restructuring and other charges of $18.7 million for the six months. The Net Debt/adjusted EBITDA ratio was 3.63 to 1.0 against a covenant maximum of 4.5 to 1.0, which steps down to 4.25 to 1.0 as of September 30, 2019. The filing also discloses an ongoing internal investigation into improper payments made by two Frutarom businesses operating principally in Russia and Ukraine. Management states the estimated affected sales were less than 1% of combined 2018 net sales and that the impact is not expected to be material, though costs could be material in a particular quarter. The company also announced a reorganization into three segments (Taste, Scent and Nutrition & Ingredients), expected to be implemented over the next six to nine months.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2019

International Flavors & Fragrances Inc. reported net sales of $1,297,402 thousand ($1.30 billion) for the first quarter of 2019, up from $930,928 thousand in the prior-year quarter, a 39% increase on a reported basis and 44% on a currency neutral basis. The filing attributes the growth primarily to the acquisition of Frutarom, which contributed approximately 39 percentage points to reported growth; excluding Frutarom, sales were flat on a reported basis and grew 3% on a currency neutral basis. Frutarom contributed $364.4 million of net sales in the quarter, and the Taste and Scent segments recorded sales of $444.6 million and $488.4 million, respectively, with Taste down 1% reported and Scent up 1% reported. Profitability declined. Gross margin fell to 40.9% from 43.6%, and operating profit decreased to $163.9 million (12.6% of sales) from $174.9 million (18.8% of sales). Excluding $40.8 million of specified charges, adjusted operating profit rose to $204.7 million, but adjusted operating margin fell to 15.8% from 19.4%. Interest expense more than doubled to $36.6 million, reflecting borrowings used to finance Frutarom. Diluted EPS was $0.96 versus $1.63 a year earlier, and net income attributable to IFF stockholders was $108.8 million versus $129.4 million. Cash generation and balance sheet items were notable. Operating cash flow was $47.2 million, compared with cash used of $11.4 million in the prior-year quarter. Cash and cash equivalents declined to $483.5 million from $634.9 million, and total debt was $4,505.4 million. Management stated that its net debt to adjusted EBITDA ratio was 3.67 to 1 against a covenant maximum of 4.5 to 1.0, and that capital allocation is focused on debt repayment to maintain an investment grade rating. Share repurchases remain suspended until the deleveraging target is met.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2018

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2018 net sales of $907.5 million, up from $872.9 million in the prior-year quarter, with net income of $95.7 million versus $110.3 million. Diluted EPS was $1.17 compared with $1.39. Operating profit rose to $159.3 million from $149.0 million, while the effective tax rate fell to 5.0% from 22.0%, reflecting U.S. tax reform benefits and other items. Net income for the quarter was reduced by a $38.8 million loss on extinguishment of debt and $38.8 million of interest expense in the nine-month period tied to the Frutarom financing, and by Frutarom acquisition-related costs of $14.3 million in the quarter. The balance sheet changed substantially because of financing raised to fund the pending acquisition of Frutarom Industries Ltd., which IFF completed on October 4, 2018. In September 2018 the company issued 12,667,947 common shares for net proceeds of about $1.6 billion, sold 16,500,000 6.00% tangible equity units for net proceeds of $799.0 million, and issued senior unsecured notes in euro and U.S. dollars. Cash and cash equivalents rose to $5.27 billion at September 30, 2018 from $368.0 million at year-end 2017, and total debt reached $4.38 billion. The filing states that at quarter-end cash exceeded total debt, and the company's Net Debt/adjusted EBITDA ratio was (1) to 1 under its debt agreements. The purchase price was valued at approximately $7.1 billion, including about $797 million of Frutarom net debt repaid at closing, and the purchase price allocation is expected to be completed during 2019. Operationally, sales growth was driven by new wins (net of losses) and price increases, with Flavors sales up 6% on a reported basis and Fragrances up 2%. Gross margin improved to 44.1% from 43.6%, aided by $9.8 million of insurance recoveries related to an FDA-mandated product recall. The filing also notes that raw material costs are expected to remain higher for the next several quarters and that the BASF supply disruption continues to affect the Fragrances segment.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2018

International Flavors & Fragrances Inc. (IFF) reported net sales of $920.0 million for the second quarter of 2018, up 9% on a reported basis and 5% on a currency neutral basis, with net income of $99.1 million, or $1.25 per diluted share, compared with $109.8 million, or $1.38 per diluted share, a year earlier. Operating profit was essentially flat at $154.5 million, while interest expense rose to $53.2 million from $17.6 million, driven by $10.7 million of bridge loan commitment fees and a $25.0 million mark-to-market loss on deal-contingent interest rate swaps. Gross margin declined to 43.3% from 44.3%, mainly due to unfavorable price versus input costs, including the BASF supply disruption. For the six months, net sales were $1.85 billion, up 11% reported and 6% currency neutral. The dominant investor item is the pending acquisition of Frutarom Industries Ltd., valued at approximately $7.1 billion including about $681 million of assumed net debt. Frutarom shareholders will receive $71.19 in cash and 0.2490 of an IFF share per Frutarom share, and the transaction is expected to close in the fourth quarter of 2018 subject to regulatory clearance. Funding plans include up to $3.1 billion of debt, cash on hand and up to $2.2 billion of new equity, with a $5.45 billion bridge facility as backstop. Cash fell to $322.4 million, total debt rose to $1.72 billion, and the company suspended share repurchases until its deleveraging target is met. Operating cash flow for the first six months was $55.2 million, down from $57.9 million, reflecting bridge loan fees, higher inventories and FDA mandated product recall costs. The company stated it was in compliance with all debt covenants, with a Net Debt/adjusted EBITDA ratio of 1.61 to 1 at June 30, 2018, and it reported $1.6 billion of available credit under its Amended Credit Facility.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2018

International Flavors & Fragrances Inc. reported first-quarter 2018 net sales of $930.9 million, up 12% on a reported basis and 7% on a currency neutral basis from $828.3 million, driven by higher volumes primarily in Fragrances and favorable pricing primarily in Flavors. Operating profit rose to $174.9 million (18.8% of sales) from $130.1 million, and net income increased to $129.4 million, or $1.63 per diluted share, from $115.8 million, or $1.45. Operating cash flow was negative at $11.4 million, compared with $18.5 million provided in the prior-year period, principally due to higher core working capital requirements and a payment for a product claim. The filing's most significant development is the May 7, 2018 definitive agreement to acquire Frutarom Industries Ltd. in a transaction valued at approximately $7.1 billion, including about $681 million of assumed net debt. Frutarom shareholders would receive $71.19 in cash and 0.2490 of a share of IFF common stock per share, and the company expects to issue about 18.9% of its outstanding shares plus approximately $2.2 billion in equity to fund the cash portion. The company has also secured a $5.5 billion bridge facility commitment, suspended share repurchases until its deleveraging target is met, and plans to repay $250 million of 2007 Senior Notes with make-whole payments of about $35 million. Total debt stood at $1.71 billion against $305.3 million of cash at quarter end. The filing also flags ongoing exposures, including Chinese plant relocations with net book value of about $160 million across five China plants, an FDA-mandated product recall with $17.5 million in total charges recorded, and a Brazilian tax dispute with $31.6 million of guarantees and pledged assets. The company reported a Net Debt/adjusted EBITDA ratio of 1.71 to 1 against a covenant maximum of 3.5 to 1, and the effective tax rate was 18.5% versus 16.4% a year earlier.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2017

International Flavors & Fragrances Inc. reported net sales of $872.9 million for the third quarter of 2017, up 12% on both a reported and currency neutral basis from $777.0 million a year earlier, with acquisitions contributing approximately 6% of growth. Operating profit rose to $157.7 million (18.1% of sales) from $124.4 million (16.0% of sales), and net income increased to $110.3 million, or $1.39 per diluted share, from $89.8 million, or $1.12 per diluted share. For the first nine months, net sales were $2.54 billion, up 8%, and net income was $335.8 million, or $4.22 per diluted share. Nine-month operating cash flow fell to $199.5 million from $341.8 million, principally due to a $56 million litigation settlement payment and higher working capital requirements. Balance sheet leverage increased during 2017. Total debt rose to $1,673.3 million at September 30, 2017 from $1,325.4 million at December 31, 2016, after the company issued $500.0 million of 4.375% Senior Notes due 2047 in May 2017 and paid $250 million on its 2007 Senior Notes. Cash and cash equivalents were $316.0 million, and the company reported a Net Debt/adjusted EBITDA ratio of 1.72 to 1 against a covenant maximum of 3.5 to 1. Goodwill and intangibles grew with the acquisitions of Fragrance Resources (approximately $150.5 million) and PowderPure (approximately $55.0 million) in 2017. The company is running a 2017 Productivity Program, with cumulative pre-tax cash charges expected at $30-$35 million and annual run-rate savings of $40-$45 million targeted by 2019. Management also disclosed an open product recall claim with recorded charges of approximately $5.3 million, and a possible relocation of its Guangzhou Flavors plant with a net book value of approximately $68 million. In November 2017, the board approved an additional $300 million share repurchase authorization.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2017

International Flavors & Fragrances Inc. (IFF) reported second-quarter 2017 net sales of $842.9 million, up 6% on a reported basis and 8% on a currency neutral basis versus the prior-year quarter, with acquisitions contributing approximately 6% to both growth rates. Operating profit fell to $159.1 million (18.9% of sales) from $164.7 million (20.8% of sales), and net income declined to $109.8 million from $116.7 million, or $1.38 diluted EPS versus $1.46. Results were weighed by $12.7 million of acquisition-related, product recall, legal, restructuring, integration and operational improvement costs in the quarter; excluding these items, adjusted operating profit was $171.8 million (20.4% of sales). Gross margin declined to 44.4% from 46.1%, driven mainly by unfavorable price versus input costs and sales mix. For the first six months, net cash provided by operating activities fell to $57.9 million from $172.3 million, principally due to a $56 million litigation settlement payment to ZoomEssence, Inc. during the second quarter, along with lower net income and higher incentive compensation payments. The company completed the acquisitions of Fragrance Resources (approximately $150.5 million) and PowderPure (approximately $55.0 million) in 2017 and issued $500.0 million of 4.375% Senior Notes due 2047 in May 2017. Total debt rose to $1,894.2 million from $1,325.4 million at December 31, 2016, while cash increased to $491.4 million. The company reported 1.83 to 1 Net Debt/adjusted EBITDA under its debt agreements, below its 3.5 to 1 covenant, and declared a $0.64 quarterly dividend per share. The company also disclosed a multi-year 2017 Productivity Program with expected cumulative pre-tax cash charges of $30 to $35 million and annual run-rate savings of $40 to $45 million by 2019. Management noted a product recall-related claim with a recorded charge of approximately $5.3 million to date, with additional losses considered probable but not yet estimable, and a second Flavors plant in China expected to begin operating in the first quarter of 2019 while the Guangzhou plant faces a possible zoning change.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2017

International Flavors & Fragrances Inc. reported first-quarter 2017 net sales of $828.3 million, up 6% on a reported basis and 7% on a currency neutral basis versus $783.3 million in the prior-year quarter, with acquisitions contributing approximately 5% to both growth rates. Operating profit fell to $137.4 million (16.6% of sales) from $169.9 million (21.7% of sales), reflecting $26.1 million of restructuring, acquisition-related, tax assessment, integration-related and operational improvement costs. Excluding these items, adjusted operating profit was $163.5 million (19.7% of sales) versus $167.2 million (21.3% of sales). Net income was $115.8 million, or $1.45 diluted EPS, compared with $118.6 million and $1.47 a year earlier. Other income of $13.9 million was driven largely by a $12.2 million foreign currency gain on the liquidation of a foreign entity. Cash flow from operations was $21.7 million, down from $39.9 million, principally due to higher pension and incentive compensation payments. Total debt rose to $1,552.1 million from $1,325.4 million at year-end 2016, largely from commercial paper ($107.4 million) and revolver borrowings ($102.3 million) used to fund the Fragrance Resources acquisition for approximately $150.5 million and the PowderPure acquisition for approximately $55 million, which closed April 7, 2017. The company reported a Net Debt/adjusted EBITDA ratio of 1.65 to 1 against a covenant maximum of 3.25 to 1, and stated it was in compliance with all covenants. The company launched a 2017 Productivity Program with expected cumulative pre-tax cash charges of $30-$35 million and about 370 expected workforce reductions, and it recorded a $50 million reserve in 2016 for the ZoomEssence litigation, which remains unsettled. Pressure on margins came from gross margin falling to 44.0% from 46.0%, driven by unfavorable price versus input costs and manufacturing performance. The company also disclosed relocation requests and plant-related uncertainty in China.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2016

International Flavors & Fragrances Inc. reported third-quarter 2016 net sales of $777.0 million, up 2% on a reported basis and 3% on a currency neutral basis, with Flavors and Fragrances segments both growing. Operating profit fell to $124.3 million (16.0% of sales) from $156.7 million (20.5% of sales) a year earlier, weighed down by a $25.0 million legal charge tied to the ZoomEssence litigation along with acquisition-related and operational improvement costs. Net income declined to $89.8 million, or $1.12 per diluted share, from $106.4 million, or $1.31 per diluted share. Gross margin fell to 44.6% from 45.4%, driven by unfavorable mix, manufacturing performance and input costs. For the first nine months of 2016, net sales were $2.35 billion, up 2%, and net income was $325.1 million. Operating cash flow rose to $329.4 million from $294.7 million, mainly due to lower pension contributions and lower core working capital needs. Total debt increased to $1,367.9 million at September 30, 2016 from $1,067.7 million at December 31, 2015, following the issuance of Euro 500.0 million of 1.75% senior notes due 2024 and the repayment of $125.0 million of 2006 senior notes. Cash and cash equivalents rose to $498.7 million. Subsequent to quarter end, the company completed the acquisition of David Michael & Company, Inc. for approximately $242 million, funded from existing resources, and agreed on November 3, 2016 to acquire Fragrance Resources, with closing expected in 2017. The company also disclosed potential exposure from a $0 to approximately $53 million range of reasonably possible losses in excess of accruals for third-party contingencies, and ongoing Brazilian tax disputes secured by $29.7 million in bank guarantees and pledged assets.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2016

International Flavors & Fragrances Inc. (IFF) reported second-quarter 2016 net sales of $793.5 million, up 3% on a reported basis and 4% on a currency neutral basis, with acquisitions contributing approximately 2% to both measures. Operating profit rose $15.6 million to $164.5 million (20.7% of sales), and net income increased 11% to $116.7 million, or $1.46 per diluted share. For the first six months, net sales were $1.58 billion, up 2% reported and 5% currency neutral, and net income was $235.3 million, with diluted EPS of $2.93. Gross margin improved to 46.1% in the quarter from 45.0% a year earlier, driven by volume growth, productivity initiatives and acquisitions. Cash flow from operations was $154.6 million for the six months, down from $166.3 million, mainly because of higher core working capital. Total debt rose to $1.49 billion from $1.07 billion at year-end 2015, following the March 2016 issuance of Euro 500.0 million of 1.75% Senior Notes due 2024. Cash and cash equivalents increased to $540.0 million. The company reported a net debt to adjusted EBITDA ratio of 1.29 to 1 against a covenant maximum of 3.25 to 1, and it repurchased 622,224 shares for $71.7 million in the first half of 2016. The filing also notes ongoing contingencies, including a ZoomEssence trade secret litigation with a trial expected in late 2016 or early 2017, a range of reasonably possible loss of $0 to $46 million across certain matters, Brazilian tax disputes with $29.6 million in guarantees and pledged assets, and a Chinese government request to relocate the Zhejiang Ingredients plant. Management stated that none of these items is expected to be material to results except as described.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2016

International Flavors & Fragrances Inc. reported first-quarter 2016 net sales of $783.3 million, up 1% from $774.9 million in the prior year quarter on a reported basis, and up 6% on a currency neutral basis, with acquisitions (Ottens Flavors and Lucas Meyer) contributing approximately 4%. Operating profit rose to $167.2 million (21.3% of sales) from $161.8 million (20.9% of sales), while net income declined to $118.6 million from $128.3 million, largely due to lower other income and a higher effective tax rate of 23.4% versus 18.0% a year earlier. Diluted EPS was $1.47 compared with $1.57. The balance sheet and financing picture changed materially in the quarter. On March 14, 2016, the company issued Euro 500.0 million ($556.6 million) of 1.75% Senior Notes due 2024 and repaid the full $131.2 million outstanding under its credit facility. Total debt rose to $1,503.6 million from $1,070.2 million at December 31, 2015, while cash and cash equivalents increased to $528.9 million, of which $333.4 million was held outside the United States. Net cash from operating activities was $31.6 million, essentially flat year over year, reflecting higher core working capital needs. The company repurchased 363,334 shares for $40.0 million and paid $44.8 million in dividends, and it declared a $0.56 per share quarterly dividend. The filing states the company was in compliance with all financial covenants, with a Net Debt to adjusted EBITDA ratio of 1.36 to 1 against a maximum of 3.25 to 1. Legal matters include a favorable Spanish Supreme Court ruling on a capital tax case, which produced $1.4 million of additional income in the quarter, and the ZoomEssence trade secret litigation, for which management does not believe a material loss contingency exists. The company also disclosed a possible relocation request from the Chinese government for its Zhejiang Fragrance Ingredients plant, with an estimated reasonably possible loss range of $0 to $31 million for certain matters described in the filing.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2015

International Flavors & Fragrances Inc. reported net sales of $765.1 million for the third quarter of 2015, a decrease of 1% from the prior year quarter, while currency neutral sales increased 7%. Operating profit was $156.7 million (20.5% of sales) versus $152.6 million a year earlier, and net income was $106.4 million, or $1.31 diluted EPS, flat year over year. For the first nine months, net sales were $2.31 billion (down 1%), with net income of $340.1 million and diluted EPS of $4.18, up from $3.95. Cash flow from operations fell to $294.7 million from $317.5 million, driven by higher working capital outflows and pension contributions. The company spent heavily on acquisitions in 2015, buying Ottens Flavors for about $198.9 million and Lucas Meyer for about Euro 284 million ($312 million). Goodwill rose to $932.3 million from $675.5 million at year-end 2014, and total debt increased to $1.19 billion from $942.3 million, largely from a $248 million revolving credit facility borrowing. Cash fell to $272.3 million. The company stated it was in compliance with all debt covenants, with a net debt to adjusted EBITDA ratio of 1.3 to 1 against a covenant maximum of 3.25 to 1. Management highlighted its Vision 2020 strategy and long-term targets for 2016 to 2020, including 4-6% currency neutral sales growth and 10% currency neutral EPS growth, plus $500 million to $1 billion of acquisition-driven sales growth. Key risks disclosed include a China odor compliance matter that could force plant closures, a ZoomEssence trade secret lawsuit with possible loss of $0 to $31 million, and Brazilian tax disputes with $25.2 million in guarantees and pledged assets.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2015

International Flavors & Fragrances Inc. reported net sales of $767.5 million for the second quarter of 2015, a decrease of 3% from $788.4 million in the prior-year quarter, while currency neutral sales increased 5%. Operating profit was $148.8 million (19.4% of sales) and net income was $105.4 million, or $1.29 per diluted share, compared with $110.3 million and $1.35 per diluted share a year earlier. For the first six months, net sales were $1.54 billion, a 1% decrease on a reported basis and a 6% increase on a currency neutral basis, and net income rose to $233.6 million from $217.0 million. The company cited new wins and lower volume erosion as drivers of currency neutral growth, with emerging markets at 52% of currency neutral sales. The company made two acquisitions: Ottens Flavors, completed in the second quarter of 2015 for approximately $199.2 million, and Lucas Meyer Cosmetics, completed on July 30, 2015 for approximately Euro 283 million ($311 million). Total debt rose to $998.0 million at June 30, 2015 from $942.3 million at December 31, 2014, including a $55 million revolving credit facility drawdown, and cash fell to $377.3 million. The company also announced its Vision 2020 strategy and long-term targets for 2016 to 2020, and in August 2015 approved an additional $250 million share repurchase authorization and a 20% increase in the quarterly dividend to $0.56 per share. The filing also discloses a China odor compliance matter that could lead to material plant-related charges, and a ZoomEssence trade secret litigation with a reasonably possible loss range of $0 to $31 million. Management stated it was in compliance with all debt covenants, with a Net Debt/adjusted EBITDA ratio of 0.88 to 1 against a maximum of 3.25 to 1.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2015

International Flavors & Fragrances Inc. reported net sales of $774.9 million for the first quarter of 2015, up from $770.2 million in the prior-year quarter. Net income rose to $128.3 million from $106.7 million, and diluted EPS was $1.57 versus $1.30. Operating profit was $161.8 million (20.9% of sales) compared with $156.1 million (20.3%). Reported sales grew 1%, while currency neutral sales grew 6%, with Flavors up 9% and Fragrances up 5% on that basis. The filing notes that exchange rate fluctuations had a 500 basis point unfavorable impact on net sales, driven mainly by the weaker Euro. The quarter's net income benefited from a $10.5 million tax benefit from favorable tax rulings in Spain and another jurisdiction, which lowered the effective tax rate to 18.0% from 25.3%. Operating cash flow was $31.5 million, down from $35.0 million, reflecting higher net income and lower incentive compensation payments, offset by higher pension contributions of $54.0 million. Cash and cash equivalents fell to $443.7 million, and total debt was $943.5 million. The company stated it was in compliance with all debt covenants, with a Net Debt/adjusted EBITDA ratio of 0.69 to 1. Subsequent to quarter end, on May 1, 2015, IFF acquired Henry H. Ottens Manufacturing Co., Inc. (Ottens Flavors) for approximately $190 million from existing cash, a move intended to strengthen the Flavors business in North America. The filing also reports a share repurchase program with $98.3 million remaining, and management expects 2015 currency neutral sales growth to be in line with long-term targets.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2014

International Flavors & Fragrances Inc. reported net sales of $773.8 million for the third quarter of 2014, up 4% from $742.3 million a year earlier on both reported and local currency bases, with Aromor adding about 1%. Net income rose to $107.4 million from $99.0 million, and diluted EPS was $1.31 versus $1.20. For the first nine months, net sales were $2.33 billion (up 5%) and net income was $324.4 million, with diluted EPS of $3.95 versus $3.54. Operating margin was 19.7% for the quarter, compared with 19.1% a year earlier. Management expects full-year 2014 local currency sales growth of 4-6%. Cash flow from operations for the nine months was $317.5 million, up from $257.3 million, supported by higher net income and lower Spanish tax and pension payments. The company paid $102.5 million, net of cash received, for the Aromor acquisition and spent $97.8 million on capital expenditures. Cash dividends paid were $95.1 million, and treasury stock purchases totaled $52.5 million for the nine months. Total debt was $943.2 million, cash was $404.8 million, and the company reported a Net Debt/adjusted EBITDA ratio of 0.79 to 1, well inside its covenant limits. The filing also details the closure of the Augusta, Georgia fragrance ingredients facility in the third quarter of 2014, with total charges expected at $14-15 million, and ongoing tax disputes in Spain and Brazil. Management highlighted rising raw material costs, which it expects to continue for the rest of the year, as a risk to margins.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2014

International Flavors & Fragrances Inc. (IFF) reported second-quarter 2014 net sales of $788.4 million, up 4% from $757.6 million a year earlier on both reported and local currency (LC) bases, with the Aromor acquisition adding about 1%. For the six months ended June 30, 2014, net sales were $1,558.6 million versus $1,485.5 million, and net income was $217.0 million versus $193.0 million. Second-quarter diluted EPS was $1.35, up from $1.24. Operating profit rose to $153.1 million (19.4% of sales) from $142.4 million (18.8% of sales), and the company noted gross margin expansion, partly offset by higher R&D and selling and administrative costs. Segment results were mixed. Flavors sales were flat on a reported basis and up 1% in local currency, with higher volume erosion on existing business, particularly in Flavors. Fragrances sales rose 8% reported and 6% in local currency, led by new wins in Fragrance Compounds and strong Fragrance Ingredients sales. Management now expects full-year 2014 local currency sales growth of 4-6%, and noted that Flavors erosion is expected to continue in the near term, particularly in the third quarter. Balance sheet and cash flow remained stable. Cash and cash equivalents were $326.9 million at June 30, 2014, total debt was $935.7 million, and net cash from operating activities for the first six months was $154.0 million. The company paid $102.5 million for the Aromor acquisition, closed its Augusta, Georgia fragrance ingredients facility in the third quarter, and repurchased 144,057 shares in the second quarter for $14.0 million. The filing also discloses that Andreas Fibig will succeed Douglas D. Tough as Chief Executive Officer effective September 1, 2014.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2014

International Flavors & Fragrances Inc. reported first-quarter 2014 net sales of $770.2 million, up 6% from $727.8 million in the prior-year quarter. Local currency sales grew 7%, including a 1% benefit from the Aromor acquisition completed January 15, 2014. Net income rose to $106.7 million from $90.7 million, and diluted EPS increased to $1.30 from $1.10. Operating profit was $156.1 million (20.3% of sales) versus $137.6 million (18.9%), with gross margin improving to 44.3% from 42.8%. Flavors segment profit rose to $88.1 million and Fragrances segment profit rose to $87.2 million from $68.4 million. Cash flow from operations was $35.0 million, compared with $18.7 million in the prior-year quarter, which included a $30.0 million pension contribution. Cash and cash equivalents fell to $268.6 million from $405.5 million at year-end 2013, reflecting the $102.4 million Aromor payment, capital expenditures of $33.8 million, and $20.1 million of share repurchases. Total debt was $933.9 million. On April 4, 2014, the company amended and restated its credit agreement, extending the maturity to April 4, 2019 and lowering the applicable margin. The filing also discloses ongoing contingencies, including a Spanish capital tax case where the company estimates a reasonably possible loss of approximately $13 million if the appeal is unsuccessful, a ZoomEssence trade secret lawsuit with a reasonably possible loss range of $3 to $20 million, and Brazilian tax matters backed by $42.6 million in bank guarantees and pledged assets. Management stated that it does not believe the ZoomEssence matter represents a material loss contingency.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2013

International Flavors & Fragrances Inc. reported net sales of $742.3 million for the third quarter of 2013, up 5% from $709.0 million a year earlier, with local currency sales up 4%. Net income rose to $99.0 million, or $1.20 per diluted share, from $16.4 million, mainly because the prior-year quarter included a $72.4 million charge tied to the Spanish tax settlement. Operating profit was $141.5 million (19.1% of sales) versus $134.2 million (18.9%). For the first nine months, net sales were $2.23 billion, up 4%, and net income was $292.1 million, or $3.54 per diluted share, compared with $186.0 million a year earlier. Operating cash flow for the nine months was $257.3 million, compared with $137.6 million in the prior-year period, which had included $105.5 million of payments under the Spanish tax settlement. The company issued $300.0 million of 3.20% senior notes due 2023 in April 2013, repaid the $283.1 million credit facility balance, and paid $100.0 million on 2006 senior notes. Total debt fell to $933.6 million from $1,031.2 million at year-end 2012, and cash rose to $343.1 million. The company also announced plans to close its Augusta, Georgia fragrance ingredients plant by July 2014, with estimated charges of $16 to $21 million. The company remains in compliance with its debt covenants, with a net debt to adjusted EBITDA ratio of 0.86 to 1 at September 30, 2013. Remaining exposures include Spanish tax disputes, Brazilian tax matters with a reasonably possible loss range of $2 to $20 million, and a ZoomEssence trade secret lawsuit that management does not believe is material.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2013

International Flavors & Fragrances Inc. reported net sales of $757.6 million for the second quarter of 2013, up 5% from $721.3 million a year earlier, with local currency sales up 6% and like-for-like sales up 8% excluding the exit of low margin Flavors activities. Operating profit rose to $142.4 million (18.8% of sales) from $132.3 million, and net income increased to $102.3 million from $88.6 million, or diluted EPS of $1.24 versus $1.08. Results were helped by gross margin expansion to 44.1% from 41.8% and a $16.1 million gain on the sale of a non-operating asset, partly offset by higher incentive compensation and R&D spending. For the first six months, net sales were $1.49 billion and net income was $193.0 million, with diluted EPS of $2.34. Operating cash flow was $118.0 million, down from $135.4 million, mainly due to $30.0 million of U.S. pension contributions and higher incentive compensation payments. The company issued $300.0 million of 3.20% Senior Notes due 2023 in April 2013 and repaid the $283.1 million outstanding under its credit facility. Total debt was $1,033.0 million at June 30, 2013, against cash of $365.9 million, and the company reported a Net Debt/adjusted EBITDA ratio of 1.05 to 1 under its debt agreements. The filing also discloses the planned closure of the Augusta, Georgia fragrance ingredients facility by July 2014, with total charges expected at $16-$21 million, and continued Spanish tax disputes, including remaining assessments and bank guarantees. Management expects growth to moderate in the second half of 2013 given strong comparisons, and expects gross margin to keep expanding year over year, though at a slower rate in the third quarter.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2013

International Flavors & Fragrances Inc. reported first-quarter 2013 net sales of $727.8 million, up 2% from $710.6 million a year earlier, with local currency sales up 3% and like-for-like sales up 4% excluding the exit of low margin Flavors activities. Operating profit rose to $137.6 million (18.9% of sales) from $120.9 million (17.0%), and net income increased to $90.7 million from $81.1 million. Diluted EPS was $1.10 versus $0.99. Gross margin improved to 42.8% from 40.2%, driven by mix, manufacturing leverage and modestly lower raw material costs. The Flavors segment profit margin was 23.3% and the Fragrances segment margin was 18.4%. Cash flow from operations fell to $18.7 million from $52.6 million, largely due to $30.0 million of U.S. pension contributions and higher incentive compensation payments. Cash and cash equivalents were $300.0 million at March 31, 2013, and total debt was $1,016.0 million. After quarter-end, the Company issued $300.0 million of 3.20% Senior Notes due 2023 on April 4, 2013 and repaid the $282.2 million outstanding under its credit facility on April 26, 2013. The Company also announced on May 3, 2013 plans to close its Augusta, Georgia fragrance ingredients facility by July 2014, with expected costs of $16-$21 million. The filing also details ongoing tax disputes in Spain. The Company paid Euro 17.7 million ($23.3 million) in the second quarter of 2013 following the Appellate Court's ruling on the 2003 assessment, and recorded a $6.2 million after-tax charge in the quarter. The Company repurchased 203,068 shares for $14.2 million during the quarter under a $250 million authorization.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2012

International Flavors & Fragrances Inc. reported net sales of $708.955 million for the third quarter of 2012, down 1% from $713.775 million in the prior-year quarter, while local currency sales rose 5%. Operating profit increased to $134.2 million (18.9% of sales) from $128.6 million (18.0% of sales). Net income fell to $16.4 million, or $0.20 per diluted share, from $82.2 million, primarily because of an after-tax charge of $72.4 million related to the overall settlement with Spanish tax authorities. Excluding that charge, the company said adjusted net income rose 9% to $88.8 million. For the nine months ended September 30, 2012, net sales were $2.14 billion, essentially unchanged from the prior year, and net income was $186.0 million, or $2.26 per diluted share. Operating cash flow was $142.9 million, which includes a $105.5 million outflow for the Spanish tax settlement. Flavors segment profit rose to $236.5 million for the nine months, while Fragrances segment profit declined to $185.1 million. Gross margin improved to 42.5% in the quarter from 39.0%. Management cited continued emerging market strength, with emerging markets representing 47% of third-quarter sales, and an ongoing exit from certain low-margin Flavors sales activities. Total debt was $903.7 million at quarter end, with Net Debt/adjusted EBITDA of 1.38 to 1 against a covenant maximum of 3.25 to 1. The company also disclosed that Hurricane Sandy disrupted several Northeast U.S. locations in late October 2012, and that the financial impact is still being evaluated.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2012

International Flavors & Fragrances Inc. reported net sales of $721.3 million for the second quarter of 2012, up from $715.6 million a year earlier, and net income of $88.6 million, or $1.08 per diluted share, compared with $76.2 million and $0.93 in the second quarter of 2011. Operating profit rose to $132.3 million (18.3% of sales) from $118.0 million (16.5% of sales). The company said local currency sales grew 4% in the quarter, with emerging markets representing 48% of sales and growing 9% in local currency. Flavors segment profit increased to $80.6 million, while Fragrances segment profit rose to $63.6 million. Cash flow from operations improved to $135.4 million for the six months ended June 30, 2012, compared with $2.1 million a year earlier. The most significant item for investors is the Spanish tax settlement reached on August 1, 2012. The company agreed to pay Euro 86.0 million ($105.7 million) to settle income tax disputes for 2004-2010, and it will record an aggregate after-tax charge of $72.4 million in the third quarter of 2012. That charge includes $58.5 million for the settlement and the expected 2011 assessment, plus $13.9 million for additional uncertain tax position accruals covering 2002-2003. The filing states that net income and earnings per share will be negatively affected in the third quarter and second half of 2012. The company also disclosed that it had $864.9 million of total debt and $104.6 million of cash at June 30, 2012, and that it was in compliance with its debt covenants. Management expects modest growth for the remainder of 2012 and notes risk to the low end of its long-term growth targets, given the exit of low-margin Flavors sales, continued weakness in Fragrance Ingredients, and a weaker economic environment in Western Europe. The company also increased its quarterly dividend by 10% to $0.34 per share, authorized July 24, 2012.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2012

International Flavors & Fragrances Inc. (IFF) reported net sales of $710.6 million for the quarter ended March 31, 2012, down slightly from $714.3 million a year earlier, while local currency sales rose 1%. Operating profit fell to $120.9 million (17.0% of sales) from $133.4 million (18.7%), and diluted EPS was $0.99 versus $1.03. Results were pressured by higher raw material costs, with cost of goods sold rising to 59.8% of sales from 58.4%, and by volume declines in Ingredients. Flavors grew 5% in local currency, while Fragrances declined 3% in local currency. Cash flow improved sharply, with operating cash flow of $52.6 million compared with an outflow of $34.9 million a year earlier, driven by lower incentive compensation and tax payments and lower working capital needs. Total debt declined to $870.5 million from $894.9 million at year-end 2011, and the company reported Net Debt/adjusted EBITDA of 1.41 to 1, within its covenant limit of 3.25 to 1. The main legal and tax risk remains the Spanish tax disputes. The company recorded a $10.9 million charge for an unfavorable Spanish Supreme Court decision, and expects an additional $3.3 million charge in the second quarter of 2012 after further unfavorable April rulings. Aggregate Spanish tax assessments reached Euro 84.8 million ($112.9 million), and the company expects further assessments for 2007-2011.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2011

International Flavors & Fragrances Inc. (IFF) reported net sales of $713.8 million for the third quarter ended September 30, 2011, up 6% from $673.3 million a year earlier, and $2.14 billion for the first nine months, up 8%. Excluding currency impacts, local currency sales grew 1% in the quarter, with Flavors up 8% in local currency and Fragrances down 5%. Net income was $82.2 million in the quarter (diluted EPS of $1.00) versus $77.0 million a year earlier, and $242.5 million for the nine months (diluted EPS of $2.96) versus $208.0 million. The filing cites significantly higher raw material costs as the main drag on gross margin, with cost of goods sold rising to 61.0% of sales from 57.7%. Cash flow from operations for the nine months fell to $116.7 million from $208.3 million, reflecting higher incentive compensation and tax and trade payments. Total debt stood at $911.7 million at September 30, 2011, and the company stated it was in compliance with its financial covenants, with Net Debt/Adjusted EBITDA of 1.5 to 1 against a covenant maximum of 3.25 to 1. In October 2011, IFF obtained a commitment letter for a new revolving credit facility to refinance its multicurrency facility, which matures November 23, 2012. The quarterly dividend was raised 15% to $0.31 per share. Litigation developments included settlement of the popcorn flavor lawsuits and the diacetyl-related cases in the third quarter, with the remaining V. Mane Fils patent case still pending and under settlement discussions. The company stated that it does not anticipate further restructuring expenses related to the European fragrance rationalization, which totaled $34.1 million in aggregate.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2011

International Flavors & Fragrances Inc. (IFF) reported second-quarter 2011 net sales of $715.6 million, up 7% from $665.8 million a year earlier, with local currency sales growing 3%. Net income rose to $76.2 million from $67.2 million, and diluted earnings per share were $0.93 versus $0.83. Growth was led by Flavors, where reported sales rose 14% and local currency sales rose 8%, while Fragrances reported a 2% increase but declined 2% in local currency against strong prior-year comparables. Gross margin pressure was evident: cost of goods sold rose to 60.3% of sales from 57.2%, mainly due to higher raw material costs, while selling and administrative expenses fell to 14.8% of sales from 18.0%. Cash generation weakened in the first half. Net cash provided by operations was only $2.1 million, compared with $127.6 million in the prior year period, reflecting higher incentive compensation and tax payments and increased receivables and inventory. Working capital rose to $811 million, total debt was $983.7 million, and the company stated it was in compliance with its debt covenants, with a Net Debt/Adjusted EBITDA ratio of 1.60 to 1 against a covenant maximum of 3.25 to 1. Management also noted that a $100 million repayment on the 2006 Senior Notes was made on July 12, 2011, and that the Board authorized a 15% increase in the quarterly dividend to $0.31 per share. The filing also describes ongoing legal matters, including popcorn flavor respiratory illness lawsuits, a patent infringement suit by V. Mane Fils S.A. with a possible October 2011 trial, and a European tax dispute. The company states it does not expect these matters to have a material adverse effect on its financial condition, although the patent case could affect its ability to sell certain flavor products if an injunction were issued.

International Flavors & Fragrances Quarterly Report for Q1 Ended Mar 31, 2011

International Flavors & Fragrances Inc. (IFF) reported net sales of $714.3 million for the first quarter of 2011 (three months ended March 31, 2011), up from $653.9 million in the prior-year quarter. Net income rose to $84.0 million from $63.8 million, and diluted net income per share was $1.03 versus $0.80. The filing states that local currency sales grew 9%, with the Flavors business up 13% on a reported basis and the Fragrance business up 6% on a reported basis. Operating profit for Flavors was $79.0 million (23.3% of sales) and for Fragrances was $68.7 million (18.3% of sales). Cash flow was weaker in the quarter. Net cash used in operations was $34.9 million, compared with $32.4 million provided in the prior-year period, which the company attributed to higher incentive compensation, tax and trade payable payments, and higher commercial activity on receivables and inventory. Total debt rose to $972.1 million from $921.6 million at year end, mainly from increased short-term borrowings. The company stated it was in compliance with all financial covenants, with a Net Debt/Adjusted EBITDA ratio of 1.64 to 1 against a maximum of 3.25 to 1. Cash and cash equivalents were $112.0 million at March 31, 2011. The filing notes rising input costs, which management expects to affect reported results in the next few quarters. It also discloses ongoing litigation, including popcorn flavor respiratory claims (16 actions involving 269 claimants) and a patent suit by V. Mane Fils S.A. with a possible trial in October 2011. Management does not expect these matters to have a material adverse effect on financial condition, though it acknowledges they could affect cash flows or results in a particular period. A roughly $4 million charge related to the Drogheda restructuring is expected in the second quarter of 2011.

International Flavors & Fragrances Quarterly Report for Q3 Ended Sep 30, 2010

International Flavors & Fragrances Inc. (IFF) reported third-quarter 2010 net sales of $673.3 million, up from $612.6 million a year earlier, and net income of $77.0 million versus $52.8 million. Diluted earnings per share were $0.95 compared with $0.66. For the first nine months of 2010, net sales were $1.99 billion versus $1.74 billion, and net income was $208.0 million versus $148.1 million, with diluted EPS of $2.58 compared with $1.86. Management attributes the sales gains to net new customer wins and higher volumes in both the Flavors and Fragrances businesses, with local currency growth of 13% in the quarter and 14% for the nine months. Profitability improved, with cost of goods sold falling to 57.7% of sales in the quarter from 59.4% and to 57.8% for the nine months from 59.8%. Fragrance operating profit rose to $68.6 million in the quarter from $47.3 million, and Flavors operating profit rose to $63.0 million from $55.0 million. Restructuring charges continued in connection with the Drogheda, Ireland compounding facility closure and European Fragrance and Ingredients rationalization, with total estimated costs of $31 to $34 million. The company ceased operations at the Drogheda plant as of September 30, 2010. Balance sheet and liquidity were stable. Cash and cash equivalents were $114.9 million, total debt was $948.6 million, and the company stated it was in compliance with all covenants, with a Net Debt/Adjusted EBITDA ratio of 1.62 to 1 against a maximum of 3.25 to 1. The quarterly dividend was raised 8% to $0.27 per share. Pending litigation includes a patent suit brought by V. Mane Fils S.A. and a series of popcorn flavor respiratory-illness claims; management does not expect either to have a material adverse effect.

International Flavors & Fragrances Quarterly Report for Q2 Ended Jun 30, 2010

International Flavors & Fragrances Inc. (IFF) reported net sales of $665.8 million for the second quarter of 2010, up from $568.3 million in the prior-year quarter, and net income of $67.2 million versus $48.1 million. For the six months ended June 30, 2010, net sales were $1,319.7 million and net income was $130.9 million, with diluted earnings per share of $1.63 compared with $1.20. The company attributed the growth to higher volumes in both Flavors and Fragrances, new business wins, a recovery in demand, lower base-period comparisons, and some re-stocking, which it said had slowed through the second quarter. Cost of goods sold fell to 57.2% of sales in the quarter from 59.9% a year earlier, mainly on favorable input costs. Operating cash flow for the first six months was $127.6 million, compared with $87.5 million in the prior year, and cash and equivalents rose to $110.6 million. Total debt was $983.3 million at June 30, 2010, versus $1,011.5 million at December 31, 2009, and the company stated it was in compliance with all financial covenants, with a Net Debt/Adjusted EBITDA ratio of 1.76 to 1 against a maximum of 3.25 to 1. The board authorized an increase in the quarterly dividend to $0.27 per share from $0.25 on July 27, 2010. The filing also discloses ongoing contingencies, including a provision recorded in the second quarter related to the V. Mane Fils patent litigation, pending popcorn flavor respiratory-illness lawsuits involving 228 claimants, and environmental matters where the company's share of future costs at ten sites is estimated at less than $5 million. Management stated it does not expect these matters to have a material adverse effect, although adverse outcomes could affect cash flows or results in a particular period.