Flavors & Extracts Group and the Asia Pacific Group Report Strong Revenue and Profit Growth

Personal Care Continues to be Negatively Impacted by the COVID-19 Pandemic

In April, the Company Completed the Divestiture of Fragrances

Sensient Technologies Corporation (NYSE: SXT) reported consolidated revenue of $359.7 million in this year’s first quarter compared to $350.7 million in last year’s first quarter. Reported operating income in the first quarter of 2021 was $46.9 million compared to $34.6 million in the first quarter of 2020. Reported diluted earnings per share was 75 cents in the first quarter of 2021 compared to 49 cents in the first quarter of 2020. Foreign currency translation increased revenue and earnings per share by approximately 3% and 4%, respectively, in the quarter.

The 2021 first quarter reported results include divestiture & other related costs and operational improvement plan costs, which in total decreased first quarter net earnings by $3.1 million ($0.07 per diluted share). The 2020 first quarter results include divestiture & other related costs which decreased net earnings by $10.9 million ($0.26 per diluted share). The 2021 and 2020 first quarter results also include the operations of the product lines divested or to be divested, which increased diluted earnings per share by $0.05 in the first quarter of 2021 and $0.03 in the first quarter of 2020. These adjustments are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.

The Flavors & Extracts Group reported first quarter revenue of $200.9 million compared to $186.5 million reported in the comparable period last year, an increase of 7.7%. Adjusted local currency revenue increased 8.9% in the quarter. The higher revenue was the result of strong growth in all product categories. Segment operating income was $27.0 million in the current quarter compared to $20.9 million reported in the comparable period last year, an increase of 29.5%. Adjusted local currency operating income increased 21.2%. The Group’s higher profit was primarily a result of the higher volumes, product mix from strong flavor sales, and the favorable impact of the Group’s cost reduction initiatives. Foreign currency translation increased both segment revenue and operating income by approximately 2% in the quarter.

The Color Group reported revenue of $135.7 million in the quarter compared to $143.5 million in last year’s comparable period, a decrease of 5.4%. Adjusted local currency revenue decreased 1.9% in the quarter. The Group continued to experience growth in food and pharmaceutical colors; however, this growth was offset by lower volumes in the personal care business, primarily as a result of the continued lower demand for makeup due to the COVID-19 pandemic. Segment operating income was $26.6 million in the quarter compared to $29.7 million in last year’s comparable period, a decrease of 10.3%. Adjusted local currency operating income decreased 13.3% compared to prior year’s first quarter. The lower operating income is primarily a result of the lower volumes in personal care and unfavorable product mix in food & pharmaceutical colors. Foreign currency translation increased segment revenue and operating income by approximately 2% and 3%, respectively, in the quarter.

The Asia Pacific Group reported revenue of $33.8 million in the quarter compared to $30.4 million in last year’s comparable period, an increase of 11.1%. Adjusted local currency revenue increased 4.7% in the quarter. Segment operating income was $6.8 million in the quarter compared to $5.1 million in last year’s comparable quarter, an increase of 33.5%. Adjusted local currency operating income increased 31.4% in the quarter. The higher profit was primarily a result of the favorable volume growth combined with lower operating costs. Foreign currency translation increased segment revenue and operating income by approximately 6% and 1%, respectively, in the quarter.

Corporate & Other reported operating costs of $13.5 million in the current quarter compared to $21.0 million in last year’s comparable period, a decrease of 36.0%. The lower costs are primarily due to lower divestiture & other costs reported in the first quarter of 2021 compared to the amount recorded in the first quarter of 2020. Adjusted local currency operating expenses for Corporate & Other increased 18.5% in the quarter primarily due to higher performance based executive compensation.

In April 2021, the Company completed the divestiture of its Fragrances product line.

2021 OUTLOOK

Sensient is reconfirming its previously issued 2021 guidance for GAAP diluted earnings per share to grow at a mid to high single digit growth rate compared to the Company’s 2020 reported GAAP diluted earnings per share of $2.59. Our full year 2021 guidance includes approximately 30 cents per share of estimated divestiture & other related costs, the results of the operations to be divested, and the operational improvement plan costs.

The Company is also reconfirming its previously issued 2021 adjusted local currency revenue ⁽²⁾ to grow at a low to mid-single digit rate and adjusted local currency EBITDA ⁽²⁾ to grow at a mid-single digit rate. The Company also continues to expect, on a local currency basis, 2021 adjusted diluted earnings per share ⁽²⁾ to grow at a mid-single digit growth rate compared to the Company’s 2020 adjusted diluted earnings per share of $2.79.

The Company expects earnings per share reported on a U.S. dollar basis to benefit by approximately ten cents based on current exchange rates.

The Company’s guidance is based upon current trends, current tax law, and the effects of COVID-19 to date. The full impacts of the ongoing COVID-19 pandemic remain uncertain and management will continue to monitor its impacts on our business.

USE OF NON-GAAP FINANCIAL MEASURES

The Company’s non-GAAP financial measures eliminate the impact of certain items, which, depending on the measure, include, currency movements, depreciation and amortization, non-cash share-based compensation, divestiture & other related costs, operational improvement plan costs, and the results of the operations divested or to be divested. These measures are provided to enhance the overall understanding of the Company’s performance when viewed together with the GAAP results. Refer to “Reconciliation of Non-GAAP Amounts” at the end of this release.

CONFERENCE CALL

The Company will host a conference call to discuss its 2021 first quarter financial results at 8:30 a.m. CDT on Friday, April 23, 2021. To participate in the conference call, contact Chorus Call Inc. at (844) 492-3726 or (412) 317-1078, and ask to join the Sensient Technologies Corporation conference call. Alternatively, the call can be accessed by using the webcast link that is available on the Investor Information section of the Company’s web site at www.sensient.com.

A replay of the call will be available one hour after the end of the conference call through April 30, 2021, by calling (877) 344-7529 and referring to conference identification number 10153329. An audio replay and written transcript of the call will also be posted on the Investor Information section of the Company’s web site at www.sensient.com on or after April 27, 2021.

This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2021 Outlook” above. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, the availability and cost of raw materials and other supplies, the availability of logistics and transportation, governmental regulations and restrictions and general economic conditions; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences and changing technologies; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and operational improvement plan; the effectiveness of the Company’s past restructuring activities; changes in costs of raw materials, including energy; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; currency exchange rate fluctuations; and other factors included in “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents that the Company files with the SEC. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition, and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. Sensient uses advanced technologies and robust global supply chain capabilities to develop specialized solutions for food and beverages, as well as products that serve the pharmaceutical, nutraceutical, cosmetic, and personal care industries. Sensient’s customers range in size from small entrepreneurial businesses to major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

We have included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable period-over-period performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this release and our SEC filings. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and we believe the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

Category: Earnings

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