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International Flavors & Fragrances 8-K Report, Financial Results (Feb 20, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 20, 2024
Period End
February 20, 2024
Security
IFF
In the record · 2016–202610-K1110-Q338-K151

IFF filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 151 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Oct ’18Oct ’18
  2. Deal closed8-K · Feb ’21Feb ’21
  3. Leadership change8-K · Feb ’23Feb ’23
  4. Leadership change8-K · Nov ’26Nov ’26

01—Abstract

Summary

Summary of the 8-K filed February 20, 2024. Cited figures are marked; the original filing is the authoritative source.

International Flavors & Fragrances Inc. (NYSE: IFF) reported fourth quarter 2023 net sales of $2.70 billiona, a decrease of 5% from the prior year period, and a reported loss before taxes of $2.64 billion, driven largely by a non-cash goodwill impairment charge of $2.6 billion in the Nourish reporting unit.

Fourth quarter adjusted operating EBITDA was $461 millionb, and on a comparable currency neutral basis it increased 17%. Reported EPS for the quarter was $(10.21), while adjusted EPS excluding amortization was $0.72 per diluted share. For the full year 2023, net sales were $11.48 billion, down 8% from the prior year, and the reported loss before taxes was $2.52 billion.

Full year adjusted operating EBITDA was $1.98 billionc, and comparable currency neutral adjusted operating EBITDA decreased 10%, reflecting lower volumes and unfavorable manufacturing absorption tied to the inventory reduction program. Cash flow from operations was $1.44 billion and free cash flow was $936 million. Net debt to credit-adjusted EBITDA was 4.5x at year end.

The company guided 2024 sales of $10.8 billion to $11.1 billiond and adjusted operating EBITDA of $1.9 billion to $2.1 billion, and it cut its quarterly dividend approximately 50% to $0.40 per share to accelerate deleveraging. Management described the operating environment as uncertain but said it is cautiously optimistic about improved results in 2024.

02—Key points

Key Highlights

  1. Q4 2023 net sales were $2.70 billion, down 5% reported, with comparable currency neutral sales up 1%.
  2. A non-cash goodwill impairment charge of $2.6 billion in the Nourish reporting unit drove the reported losses for both the quarter and the full year.
  3. Full year 2023 adjusted operating EBITDA was $1.98 billion, and comparable currency neutral adjusted operating EBITDA decreased 10%.
  4. Quarterly dividend reduced by approximately 50% to $0.40 per share ($1.60 annualized), with the stated aim of faster deleveraging and greater financial flexibility.
  5. 2024 guidance calls for sales of $10.8 billion to $11.1 billion and adjusted operating EBITDA of $1.9 billion to $2.1 billion, with volume expected to be 0% to 3% and pricing expected to decline approximately 2.5%.
  6. Full year 2023 cash flow from operations was $1.44 billion and free cash flow was $936 million; net debt to credit-adjusted EBITDA was 4.5x.
  7. Health & Biosciences adjusted operating EBITDA grew 35% on a comparable currency neutral basis in Q4 2023, while Scent grew 34%.

03—Questions

Frequently Asked Questions

  1. Why did IFF report such a large loss in the fourth quarter of 2023?

    The reported loss before taxes of $2.64 billion was largely driven by a non-cash goodwill impairment charge of $2.6 billion recorded for the Nourish reporting unit. The filing attributes the impairment to higher interest rates, lower business projections due to volume declines mainly in Functional Ingredients, continued cost inflation, and unfavorable foreign exchange rate fluctuations.

  2. What is IFF's dividend policy after this update?

    The Board, together with management, reduced the expected quarterly dividend approximately 50% to $0.40 per share, or $1.60 per share annually. A regular quarterly dividend of $0.40 per share is payable on April 10, 2024 to shareholders of record as of March 22, 2024. The company said the change is intended to enable faster deleveraging and provide improved financial flexibility.

  3. What does IFF expect for 2024?

    IFF expects full year 2024 sales of $10.8 billion to $11.1 billion and adjusted operating EBITDA of $1.9 billion to $2.1 billion. Volume is expected to be 0% to 3%, pricing is expected to decline approximately 2.5%, and comparable currency neutral adjusted operating EBITDA is expected to grow 3% to 11%. Foreign exchange is expected to have a 0% to 1% adverse impact on sales growth and an approximately 2% to 3% adverse impact on adjusted operating EBITDA growth.

  4. How did IFF's segments perform in the fourth quarter of 2023?

    On a comparable currency neutral basis, Scent sales rose 11% and adjusted operating EBITDA rose 34%, and Health & Biosciences sales rose 5% and adjusted operating EBITDA rose 35%. Nourish sales declined 3% on a currency neutral comparable basis, though adjusted operating EBITDA grew 3%. Pharma Solutions sales declined 10% and adjusted operating EBITDA declined 13%.

  5. What is the status of IFF's balance sheet and cash generation?

    Cash flow from operations for 2023 was $1.44 billion, and free cash flow, defined as operating cash flow less capital expenditures, was $936 million. Net debt to credit-adjusted EBITDA was 4.5x at the end of the fourth quarter. Total long-term debt was $9.19 billion at December 31, 2023, down from $10.37 billion a year earlier. The company said the dividend reduction is part of its effort to strengthen the capital structure.

04—Continue

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