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| 8-K - 8-K - SENSIENT TECHNOLOGIES CORP | form8k.htm |
Exhibit 99.1
Fourth Quarter 2019 Investor Presentation
2 sensient.com FORWARD-LOOKING STATEMENTS This document contains forward-looking statements that
reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results. Forward-looking statements include statements in the future tense, statements referring to
any period after December 31, 2019, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or conditions. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that could cause actual events to differ
materially from those expressed in those statements. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of
new product introductions by the Company and the Company’s customers; our 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 and acquisition and divestiture activities; the success of the Company’s efforts to explore strategic alternatives for certain non-core product lines; 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 the matters discussed in
our most recent Annual Report on Form 10-K under the heading “Risk Factors” and under Part II, including the critical accounting policies set forth under the heading “CRITICAL ACCOUNTING POLICIES” within “Management’s Discussion and Analysis of
Financial Condition and Results of Operation.” Except to the extent required by applicable law, 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 therein will not be realized.
3 sensient.com NON-GAAP FINANCIAL MEASURES Within this document, the Company reports certain
non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted EPS (which exclude divestiture & other related costs and the impacts of the Tax Cuts and Jobs Act (2017 Tax
Legislation)), (2) adjusted EBITDA (which excludes non-cash stock based compensation expense), and (3) percentage changes in revenue, operating income, diluted EPS, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA on
a local currency basis (which eliminate the effects that result from translating its international operations into U.S. dollars). The Company has included each of these non-GAAP measures in order to provide additional information
regarding our underlying operating results and comparable year-over-year 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 report. 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. The Company believes this information can be beneficial to investors for
these same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. Refer to “Non-GAAP” Financial Measures” at the end of this document for reconciliations and additional
information.
4 sensient.com Over 135 years of Industry Leadership Established in 1882 as Meadow Springs
DistilleryEvolved into Universal Foods as a diversified food and ingredients companyName changed to Sensient Technologies Corporation in 2000Today, we are a provider of advanced technologies, serving markets with strong growth profiles through
delivery of customized solutions for food and beverages, cosmetics, pharmaceuticals, household care, and other applications.
5 sensient.com Innovative Technologies Creating Unique Solutions Applications expertise and
solutions-based sellingHigh impact relative to costTechnically-driven products that are difficult to replace Strong consumer trendsOpportunities to grow organically and through M&A
6 sensient.com Focusing our portfolio and strengthening our commitment to the end
markets Investing in core focus areas of Flavors and Extracts, NaturalIngredients, Food and Pharmaceutical Colors, and CosmeticDivesting non-core product lines (inks, fragrances, and fruitprep product lines) where Sensient lacks scale to
competeThe sale of these product lines solidifies our focus on core strategic businesses and improves the Company’s future growth profile
7 sensient.com Global Revenue by Group * 2019 Global Revenues
include intercompany sales which are eliminated on a consolidated basis. Color Group2019 Revenue: $535MCore Areas of Focus: Food and Pharmaceutical Colors and CosmeticFlavors and Fragrances Group2019 Revenue: $700MCore Areas of Focus: Flavors
and Extracts, Natural Ingredients and Other Flavor Ingredients,Asia Pacific Group2019 Revenue: $118MCore Areas of Focus: Flavors and Colors for food and beverage
8 sensient.com Global market leaderNatural color innovatorUnmatched
innovation & applications expertise Color Group
9 sensient.com Color Overview 2019 Revenue$535 Million Main Products Revenue Targeted
for Divestiture Food Colors57% of SegmentYTD Change: +3%Q4 Change: +2% Synthetic Colors Natural Colors Coloring Foodstuffs No impact from divestitures Pharmaceutical6% of SegmentYTD Change: +17%Q4 Change: +18% Colors Coatings
FlavorsFlavor Masking No impact from divestitures Cosmetic26% of SegmentYTD Change: -7%Q4 Change: -1% Agents Active Ingredients Inks and Industrial11% of SegmentYTD Change: -12%Q4 Change: -17% Inkjet inks Pigments DyesOther
Industrial Colorants ~35 Million of inkjet ink revenue with: Double-digit negative growth rate in 2019 Declining margin profile * Percent changes presented on a local-currency basis. Local-currency revenue is a Non-GAAP metric, please see
our GAAP to Non-GAAP Reconciliation at the end of this document for Group results.
10 sensient.com Flavors and Fragrances Group Broad product offeringUnique ability to service global,
regional, and local customersLeading technology platformsUnmatched applicationsexpertise
11 sensient.com Flavors and Fragrances Overview 2019 Revenue$700 Million Main Products Revenue
Targeted for Divestiture Flavors & Extracts40% of SegmentYTD Change: +6%Q4 Change: +8% ExtractsTaste Modifiers Mouthfeel Enhancers Fragrance Compounds Essential Oils Bionutrients ~$48 Million of Fragrance Compounds with:Profitability
break-even or worse Low double-digit growth rate in 2019 Natural Ingredients31% of SegmentYTD Change: -5%Q4 Change: +1% Dehydrated Garlic, Onion, Capsicum, Parsley, and other products No material impact from divestitures Other Flavor
Ingredients29% of SegmentYTD Change: -16%Q4 Change: -20% * Percent changes presented on a local-currency basis. Local-currency revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of
this document for Group results.
12 sensient.com Asia Pacific Group Sales of flavors and colors in the Asia Pacific markets are
reported as a separate segment since it is managed on a geographic basisManufacturing capabilities in Australia, New Zealand, China, Japan, Philippines, Thailand, and India; R&D capabilities in Singapore, Thailand, and ChinaAnnual revenues
of $118 million and operating income of $19 million in 2019Excellent long-term growth potential
13 sensient.com 2019 Q4 Highlights Color Group saw higher sales of Food and Pharmaceutical Colors
in thequarterOverall Cosmetic sales still somewhat soft; but revenue has stabilized aftermore significant declines earlier in the yearFlavor and Extract sales remained strong with mid single-digit growth, offset by lower Flavor Ingredient
salesAlthough some market and economic conditions remain challenging, severalflavor product lines are beginning to return to growth
14 sensient.com 2019 Q4 and Full Year Consolidated Results Q4 Full Year Local Currency
Revenue* (1.4%) (2.8%) Local Currency Adjusted Operating Income* (30.6%) (16.3%) Local Currency Adjusted Diluted EPS* (21.5%) (14.9%) Local Currency Adjusted EBITDA* (23.2%) (12.6%) Q4: Consolidated revenue decreased due to lower
sales in Flavor Ingredients, inks, and market softness in Cosmetic, partially offset by continued strong sales of natural colors, Pharmaceuticals, and Flavors and Extracts. Consolidated operating income declined on lower production and sales
volumes, higher raw material costs, and customer bankruptcy charges.YTD: Consolidated revenue decreased due to lower sales in Flavor Ingredients and inks, market softness in Cosmetic, and certain regions for food and beverage colors, partially
offset by continued strong sales of natural colors, Pharmaceuticals, and Flavors and Extracts. Consolidated operating income declined on lower production and sales volumes, higher raw material costs, trade and economic impacts, and customer
bankruptcy charges. * Local-currency revenue, adjusted operating income, adjusted diluted EPS, and adjusted EBITDA are Non- GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at the end of this document.
15 sensient.com 2019 Q4 and Full Year Segment Results Local Currency Revenue* Q4 Full
Year Color (0.6%) (0.7%) Flavors & Fragrances (3.3%) (4.8%) Asia Pacific (3.7%) (3.6%) Color Group fourth quarter revenue decreased due to lower sales in inks and certain industrial products, partially offset by strong growth in
natural colors and Pharmaceutical. Operating income declined in the fourth quarter due to lower volumes. On a full year basis, operating income was also impacted by raw material costs which moderated in the later part of the year and impacts
from the trade and economic conditions.Flavors & Fragrances Group reported lower revenue in the quarter as solid sales of Flavors and Extracts were offset by lower revenue in certain ingredient product lines. Operating income was down due
to lower volumes, higher raw material costs, and customer bankruptcy charges. On a full year basis, operating income was also impacted by the trade and economic conditions. Local Currency Operating Income* Q4 Full
Year Color (8.8%) (7.8%) Flavors & Fragrances (36.4%) (21.8%) Asia Pacific (6.3%) (10.0%) * Local-currency revenue and operating income, are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end of this
document.
16 sensient.com Capital Allocation Prioritize ROI capital projects Maintain
dividend payout ratio Debt reduction to maintain targetedleverage Maintain financial flexibility to pursue M&A Excess capital returned to shareholdersthrough opportunistic share
repurchases $137 $177 $50 $87 $77 $48 $48 $50 $54 $57 $62 $79 $80 $81 $56 $51 $39 $8 $31 $25 $9 $87 $- $50 $100 $150 $200 $250 $300 $350 2014 2015 2016 2017 2018 2019 DOLLARS
IN MILLIONS Share Repurchase Acquisitions Dividends Debt Repayments Capital Expenditures
17 sensient.com 2020 Revenue and Profit Outlook Year-over-year revenue growth driven by:Investing
in core areas of Food and Pharmaceutical Colors, Cosmetic, Flavors andExtracts, and Natural IngredientsDivesting non-core product lines where Sensient lacks scaleReturn to growth in our Cosmetic business based on normalizing markets and a
broader portfolioProfit improvement will be achieved through:Continued volume growth in natural colors and Flavors and Extracts Improving competitive landscape for savory flavorsImproving product mix as Cosmetic returns to growth and we divest
the inks,fragrances, and fruit prep product linesReducing our manufacturing and administrative cost structure Moderating raw material cost impact
18 sensient.com 2020 Financial Outlook Metric Guidance Diluted EPS $1.85 to $2.15 Includes an
estimated $0.65 to $0.75 of divestiture andother related costsTax and non-cash based compensation headwind of approximately $0.26 and $0.12, respectivelyExcludes results of operations of product lines to be divested Adjusted Diluted EPS $2.60
to $2.80 Excludes divestiture and other related costsExcludes results of operations of product lines to bedivested Adjusted Local Currency Revenue Low to mid-single digit growth Excludes revenue of product lines to be divested Adjusted
Operating Income Flat to down low-single digits Excludes divestiture and other related costsExcludes results of operations of product lines to be divested Adjusted EBITDA Low to mid-single digit growth Excludes divestiture and other
related costsExcludes results of operations of product lines to bedivested * Local-currency revenue, operating income, adjusted diluted EPS, and adjusted EBITDA are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end
of this document. The 2020 outlook, on an adjusted basis, provided above excludes the results of operations for the product lines we are planning to divest. Because it is uncertain when these divestitures will be consummated, it is difficult
to predict their impact to our full year results.For reference, the product lines identified to be divested represented approximately $140 million in 2019 annual revenue and approximately $2 million of 2019 annual operating income.
19 sensient.com Why Invest? Strong competitive position‘Sticky’ business (& low portion of
customer costs) Global presenceExposure to stable and growing markets Focused on improving returns and on growth
Non-GAAP Financial Measures Non-GAAP Financial MeasuresWithin the following tables, the Company reports
certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted EPS (which exclude divestiture & other related costs as well as the impact of the 2017 Tax Legislation) and (2)
percentage changes in revenue, operating income, adjusted operating income, diluted EPS, adjusted diluted EPS, and adjusted EBITDA on a local currency basis (which eliminate the effects that result from translating its international operations
into U.S. dollars).The Company has included each of these non-GAAP measures in order to provide additional information regarding the 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 report and the Company’s 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 the Company believes 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. Three Months Ended Three Months Ended Full Year Ended Full Year Ended December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Operating income (GAAP) $
(14,466) $ 45,252 $ 121,110 $ 203,378 Transaction related costs – Cost of products sold 10,567 - 10,567 - Transaction related costs – Selling and administrative 35,313 - 35,313 - Adjusted operating
income $ 31,414 $ 45,252 $ 166,990 $ 203,378 Net earnings (GAAP) $ (16,962) $ 32,850 $ 82,047 $ 157,360 Transaction related costs, before tax 45,880 - 45,880 - Tax impact of transaction related
costs (2,671) - (2,671) - Impact of the 2017 Tax Legislation - 427 - (6,634) Adjusted net earnings $ 26,247 $ 33,277 $ 125,256 $ 150,726 Diluted EPS from (GAAP) $ (0.40) $ 0.78 $ 1.94 $
3.70 Transaction related costs, net of tax 1.02 - 1.02 - 2017 Tax Legislation - 0.01 - (0.16) Adjusted diluted EPS $ 0.62 $ 0.79 $ 2.96 $ 3.55 Average common shares
outstanding: Diluted 42,272 42,287 42,294 42,499 EPS Calculations may not foot due todifferences rounding 20 sensient.com
Revenue Total
ExchangeRates LocalCurrency Total ExchangeRates LocalCurrency Flavors & Fragrances (3.7%) (0.4%) (3.3%) (6.2%) (1.4%) (4.8%) Color (1.6%) (1.0%) (0.6%) (3.4%) (2.7%) (0.7%) Asia
Pacific (1.6%) 2.1% (3.7%) (4.0%) (0.4%) (3.6%) Total Revenue (1.8%) (0.4%) (1.4%) (4.6%) (1.8%) (2.8%) Operating IncomeFlavors &
Fragrances (36.4%) 0.0% (36.4%) (22.3%) (0.5%) (21.8%) Color (10.3%) (1.5%) (8.8%) (10.7%) (2.9%) (7.8%) Asia Pacific (0.8%) 5.5% (6.3%) (7.1%) 2.9% (10.0%) Corporate &
Other 1077.8% (0.1%) 1077.9% 173.4% (0.1%) 173.5% Total Operating Income (132.0%) 0.0% (132.0%) (40.5%) (1.6%) (38.9%) Adjusted Operating
Income (30.6%) 0.0% (30.6%) (17.9%) (1.6%) (16.3%) Diluted Earnings Per Share (151.3%) 0.0% (151.3%) (47.6%) (1.4%) (46.2%) Adjusted Diluted Earnings Per
Share (21.5%) 0.0% (21.5%) (16.6%) (1.7%) (14.9%) Adjusted EBITDA (23.3%) (0.1%) (23.2%) (13.9%) (1.1%) (30.7%) 21 sensient.com 2019 Results Summary * Local-currency revenue, operating income, adjusted
operating income, diluted EPS, adjusted diluted EPS and adjusted EBITDA are Non-GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at sensient.com. The following table summarizes the percentage change in the 2019 results compared to
the 2018 results for the corresponding periods: Three Months Ended December 31, 2019 Foreign Twelve Months Ended December 31, 2019 Foreign
22 sensient.com