SENSIENT TECHNOLOGIES CORP
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
SXT$119.19-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001140361-24-024653
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001140361-24-036129
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 66 current paragraphs.
36 unchanged; 15 reworded; 14 added; 5 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Revenue was $403.5 million and $374.3 million for the three months ended June 30, 2024 and 2023, respectively. Revenue was $788.2 million and $743.3 million for the six months ended June 30, 2024 and 2023, respectively. The increase in revenue for the three and six months ended June 30, 2024 was primarily due to higher volumes and selling prices. For the three months ended June 30, 2024, the impact of foreign exchange rates decreased consolidated revenue by approximately 1%. Foreign exchange rates did not have a material impact on revenue for the six months ended June 30, 2024.
Current report
Operating income was $99.1 million and $102.4 million for the six months ended June 30, 2024 and 2023, respectively. Operating margins were 12.6% and 13.8% for the six months ended June 30, 2024 and 2023, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 50 basis points for the six months ended June 30, 2024. The remaining decrease in operating margin was primarily due to the higher raw material costs and higher performance-based executive compensation in 2024, partially offset by higher volumes and selling prices.
Current report
The Company’s Felinfach site will continue to operate until all production activities have successfully transferred to other locations, and then will be closed. The Company has substantially completed all other actions contemplated underthe Portfolio Optimization Plan in accordance with local laws.
Current report
Flavors & Extracts segment revenue was $209.2 million and $188.3 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 11%. The increase was primarily a result of higher revenue in Natural Ingredients, primarily due to higher volumes. Foreign exchange rates had an immaterial impact on segment revenue for the three months ended June 30, 2024.
Current report
Flavors & Extracts segment operating income was $26.2 million and $24.5 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 7%. The higher segment operating income was primarily a result of higher operating income in Flavors, Extracts & Flavor Ingredients, primarily due to higher selling prices and lower raw material costs, partially offset by higher manufacturing and other costs. Segment operating income as a percent of revenue was 12.5% in the current quarter compared to 13.0% in the prior year’s comparable quarter. Foreign exchange rates had an immaterial impact on segment revenue for the three months ended June 30, 2024.
Current report
Segment revenue for the Color segment was $167.7 million and $160.5 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 5%. The increase was a result of higher revenue in Food & Pharmaceutical Colors and Personal Care, primarily due to higher volumes and higher selling prices. Foreign exchange rates decreased segment revenue by approximately 1%.
Current report
Segment revenue for the Color segment was $327.7 million and $321.6 million for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately 2%. The increase was a result of higher revenue in Food & Pharmaceutical Colors and Personal Care. The higher revenue in Food & Pharmaceutical Colors was primarily due to higher selling prices. The higher revenue in Personal Care was primarily due to higher selling prices and higher volumes. Foreign exchange rates had an immaterial impact on segment revenue for the six months ended June 30, 2024.
Current report
Segment operating income for the Color segment was $31.5 million and $29.2 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 8%. The increase in segment operating income was a result of higher operating income in Personal Care. The higher operating income in Personal Care was primarily due to higher selling prices and higher volumes. Foreign exchange rates decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 18.8% in the current quarter and 18.2% in the prior year’s comparable quarter.
Current report
Segment operating income for the Color segment was $63.2 million and $61.1 million for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately 3%. The increase in segment operating income was primarily a result of higher operating income in Personal Care, partially offset by lower operating income in Food & Pharmaceutical Colors. The higher operating income in Personal Care was primarily due to higher selling prices, lower manufacturing and other costs, and favorable volumes. The lower operating income in Food & Pharmaceutical Colors was primarily due to higher manufacturing and other costs, partially offset by higher selling prices, lower raw material costs, and a favorable product mix. Foreign exchange rates had an immaterial impact on segment operating income for the six months ended June 30, 2024. Segment operating income as a percent of revenue was 19.3% in the current six month period and 19.0% in the prior year’s comparable period.
Current report
Segment revenue for the Asia Pacific segment was $38.6 million and $36.0 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 7%. The increase was a result of higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 4%.
Current report
Segment revenue for the Asia Pacific segment was $78.9 million and $76.1 million for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately 4%. The increase was a result of higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 4%.
Current report
Segment operating income for the Asia Pacific segment was $7.9 million and $7.6 million for the three months ended June 30, 2024 and 2023, respectively, an increase of approximately 4%. Foreign exchange rates decreased segment operating income by approximately 5%. Segment operating income as a percent of revenue was 20.4% in the current quarter and 21.0% in the prior year’s comparable quarter.
Current report
Segment operating income for the Asia Pacific segment was $16.7 million and $16.8 million for the six months ended June 30, 2024 and 2023, respectively, a decrease of approximately 1%. Foreign exchange rates decreased segment operating income by approximately 5%. Segment operating income as a percent of revenue was 21.1% in the current six month period and 22.1% in the prior year’s comparable period.
Removed paragraphs (5)
Previous report
Revenue was $384.7 million and $369.0 million for the three months ended March 31, 2024 and 2023, respectively. The increase in revenue was primarily due to higher volumes and favorable pricing. For the three months ended March 31, 2024, foreign exchange rates had an immaterial impact on revenue.
Previous report
Segment revenue for the Color segment was $160.0 million and $161.2 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 1%. The decrease was primarily a result of lower revenue in Food & Pharmaceutical Colors, primarily due to lower volumes, partially offset by the favorable impact of foreign exchange rates that increased segment revenue by approximately 1%.
Previous report
Segment operating income for the Color segment was $31.7 million and $31.9 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 1%. Foreign exchange rates increased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 19.8% for both the three months ended March 31, 2024 and 2023.
Previous report
Segment revenue for the Asia Pacific segment was $40.3 million and $40.1 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 1%. Foreign exchange rates decreased segment revenue by approximately 4%.
Previous report
Segment operating income for the Asia Pacific segment was $8.8 million and $9.2 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 5%. Foreign exchange rates decreased segment operating income by approximately 4%. Segment operating income as a percent of revenue was 21.8% in the current quarter and 23.1% in the prior year’s comparable quarter.
Reworded paragraphs (15)
Previous wording
The Company’s gross margin was 32.9% and 33.8% for the three months ended March 31, 2024 and 2023, respectively. The decrease in gross margin was primarily due to higher raw material costs, partially offset by an increase in pricing.
Current wording
The Company’s gross margin was 32.4% and 32.6% for the three months ended June 30, 2024 and 2023, respectively. The Company’s gross margin was 32.6% and 33.2% for the six months ended June 30, 2024 and 2023, respectively. The decrease in gross margin for both the three and six months ended June 30, 2024 was primarily due to higher raw material costs, partially offset by higher volumes and selling prices.
Previous wording
Selling and administrative expense as a percent of revenue was 20.1% and 20.0% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $2.7 million, which increased selling and administrative expenses as a percent of revenue by approximately 70 basis points. See Portfolio Optimization Plan below for further information. This increase was largely offset as a percent of revenue due to increased operating leverage due to revenue growth without corresponding increases in selling and administrative expenses.
Current wording
Selling and administrative expense as a percent of revenue was 20.1% and 18.9% for the three months ended June 30, 2024 and 2023, respectively. Selling and administrative expense as a percent of revenue was 20.1% and 19.4% for the six months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.5 million, which increased selling and administrative expenses as a percent of revenue by approximately 40 basis points. For the six months ended June 30, 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $4.3 million, which increased selling and administrative expenses as a percent of revenue by approximately 60 basis points. See Portfolio Optimization Plan below for further information. The remaining increase in selling and administrative expense as a percent of revenue for the three months ended June 30, 2024 was primarily due to higher performance-based executive compensation in 2024.
Previous wording
Operating income was $49.4 million and $50.8 million for the three months ended March 31, 2024 and 2023, respectively. Operating margins were 12.8% and 13.8% for the three months ended March 31, 2024 and 2023, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 80 basis points for the three months ended March 31, 2024.
Current wording
Operating income was $49.7 million and $51.6 million for the three months ended June 30, 2024 and 2023, respectively. Operating margins were 12.3% and 13.8% for the three months ended June 30, 2024 and 2023, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 40 basis points for the three months ended June 30, 2024. The remaining decrease in operating margin was primarily due to the higher raw material costs and higher performance-based executive compensation in 2024, partially offset by higher volumes and selling prices.
Previous wording
Interest expense was $7.0 million and $6.0 million for the three months ended March 31, 2024 and 2023, respectively. The increase in expense was primarily due to an increase in the average interest rate.
Current wording
Interest expense was $7.7 million and $6.4 million for the three months ended June 30, 2024 and 2023, respectively, and $14.7 million and $12.4 million for the six months ended June 30, 2024 and 2023, respectively. The increase in expense for the three and six months ended June 30, 2024 was primarily due to an increase in the average interest rate.
Previous wording
The effective income tax rates for the three months ended March 31, 2024 and 2023, were 27.0% and 24.9%, respectively. The effective tax rates for the three months ended March 31, 2024 and 2023, were both impacted by changes in estimates associated with the finalization of prior year foreign tax items and the mix of foreign earnings. The effective tax rate for the three months ended March 31, 2024 was also impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan.
Current wording
The effective income tax rates for the three months ended June 30, 2024 and 2023 were 26.4% and 24.8%, respectively. For the six months ended June 30, 2024 and 2023, the effective income tax rates were 26.7% and 24.9%, respectively. The effective tax rates for the three and six months ended June 30, 2024 and 2023 were impacted by the mix of foreign earnings and changes in estimates associated with the finalization of prior year foreign tax items. The effective tax rates for both the three and six months ended June 30, 2024 were also impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan.
Previous wording
During the fourth quarter of 2023, the board of directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company began evaluating the potential closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the potential closure of its sales office in Granada, Spain, and the potential centralization and elimination of certain selling and administrative positions, with such proposals remaining subject to information and consultation processes in certain countries. In addition, in the Color segment, the Company’s proposals include closing a manufacturing facility in Delta, British Columbia, Canada, closing a sales office in Argentina, and centralizing and eliminating certain production positions as well as potentially eliminating some selling and administrative positions, with such proposals remaining subject to information and consultation processes in certain countries. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.
Current wording
During the fourth quarter of 2023, the board of directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.
Previous wording
In the three months ended March 31, 2024, the Company incurred $2.8 million related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for costs associated with employee separation and impairment of fixed assets.
Current wording
In the three and six months ended June 30, 2024, the Company incurred $1.8 million and $4.6 million, respectively, related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for costs associated with decommissioning, employee separation, and impairment of fixed assets.
Previous wording
The following table summarizes the percentage change for the results of the three months ended March 31, 2024, compared to the results for the three months ended March 31, 2023, in the respective financial measures.
Current wording
The following table summarizes the percentage change for the results of the three and six months ended June 30, 2024, compared to the results for the three and six months ended June 30, 2023, in the respective financial measures.
Previous wording
Flavors & Extracts segment revenue was $193.1 million and $178.9 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 8%. The increase was primarily a result of higher revenue in Natural Ingredients, primarily due to higher volumes. Foreign exchange rates increased segment revenue by approximately 1%.
Current wording
Flavors & Extracts segment revenue was $402.3 million and $367.1 million for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately 10%. The increase was primarily a result of higher revenue in Natural Ingredients, primarily due to higher volumes. Foreign exchange rates increased segment revenue by approximately 1% for the six months ended June 30, 2024.
Previous wording
Flavors & Extracts segment operating income was $23.7 million and $22.2 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 7%. The higher segment operating income was a result of higher operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower operating income in Natural Ingredients. The higher operating income in Flavors, Extracts & Flavor Ingredients was primarily due to lower raw material costs and higher selling prices. The lower operating income in Natural Ingredients was primarily due to higher raw material costs, partially offset by higher volumes. Foreign exchange rates increased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 12.3% in the current quarter compared to 12.4% in the prior year’s comparable quarter.
Current wording
Flavors & Extracts segment operating income was $49.9 million and $46.6 million for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately 7%. The increase was a result of higher segment operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower segment operating income in Natural Ingredients. The higher segment operating income in Flavors, Extracts & Flavor Ingredients was primarily a result of lower raw material costs and higher selling prices, partially offset by higher manufacturing and other costs and lower volumes. The lower segment operating income in Natural Ingredients was primarily a result of higher raw material costs, partially offset by higher volumes. Foreign exchange rates had an immaterial impact on segment operating income for the six months ended June 30, 2024. Segment operating income as a percent of revenue was 12.4% in the current six month period compared to 12.7% in the prior year’s comparable six month period.
Previous wording
The Corporate & Other operating expense was $14.7 million and $12.5 million for the three months ended March 31, 2024 and 2023, respectively. The higher operating expense was primarily a result of Portfolio Optimization Plan costs totaling $2.8 million negatively impacting the three months ended March 31, 2024. See the Portfolio Optimization Plan section above for further information.
Current wording
The Corporate & Other operating expense was $15.9 million and $9.7 million for the three months ended June 30, 2024 and 2023, respectively. The higher operating expense was primarily a result of Portfolio Optimization Plan costs totaling $1.8 million negatively impacting the three months ended June 30, 2024, and higher performance-based executive compensation costs. See the Portfolio Optimization Plan section above for further information.
Previous wording
As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company’s financial position and its results of operations for the three months ended March 31, 2024. The Company has experienced increased costs for certain inputs, such as raw materials, shipping and logistics, and labor-related costs. We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions could exacerbate these challenges and impact our profitability.
Current wording
As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company’s financial position and its results of operations for the three or six months ended June 30, 2024. The Company has experienced increased costs for certain inputs, such as raw materials, shipping and logistics, and labor-related costs. We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions could exacerbate these challenges and impact our profitability.
Previous wording
Net cash provided by operating activities was $15.1 million and net cash used in operating activities was $3.0 million for the three months ended March 31, 2024 and 2023, respectively. The increase in net cash provided by operating activities was primarily due to a decrease in the cash used for performance-based compensation payments made during 2024 compared to 2023 and an increase in cash provided by inventory during 2024 compared to 2023, partially offset by a decrease in cash provided by accounts receivable.
Current wording
Net cash provided by operating activities was $58.9 million and $51.7 million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash from operating activities was primarily due to a decrease in cash used for performance-based compensation payments (which are determined based on prior year performance) made during 2024 compared to 2023 and an increase in cash provided by inventory during 2024 compared to 2023, partially offset by a decrease in cash provided by accounts receivable.
Previous wording
Net cash used in investing activities was $10.9 million and $22.9 million during the three months ended March 31, 2024 and 2023, respectively. Capital expenditures were $11.0 million and $22.3 million during the three months ended March 31, 2024 and 2023, respectively.
Current wording
Net cash used in investing activities was $22.9 million and $43.0 million during the six months ended June 30, 2024 and 2023, respectively. Capital expenditures were $22.9 million and $45.1 million during the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Net cash used in financing activities was $9.1 million and net cash provided by financing activities was $24.6 million for the three months ended March 31, 2024 and 2023, respectively. Net debt increased by $11.0 million and $49.5 million for the three months ended March 31, 2024 and 2023, respectively. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $17.3 million were paid during each of the three months ended March 31, 2024 and 2023. Dividends paid per share were $0.41 for both the three months ended March 31, 2024 and 2023.
Current wording
Net cash used in financing activities was $26.1 million and net cash provided by financing activities was $0.5 million for the six months ended June 30, 2024 and 2023, respectively. Net debt increased by $11.6 million and $43.1 million for the six months ended June 30, 2024 and 2023, respectively. The cash proceeds from the increase in net debt in the current period were primarily used to support capital expenditure investments during the six months ended June 30, 2024. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $34.7 million and $34.6 million were paid during the six months ended June 30, 2024 and 2023, respectively. Total dividends of $0.82 per share were paid for both the six months ended June 30, 2024 and 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The Corporate & Other operating expense was $30.7 million and $22.1 million for the six months ended June 30, 2024 and 2023, respectively. The higher operating expense was primarily a result of Portfolio Optimization Plan costs totaling $4.6 million negatively impacting the six months ended June 30, 2024, and higher performance-based executive compensation costs. See the Portfolio Optimization Plan section above for further information.