SENSIENT TECHNOLOGIES CORP

Previous wording

This report 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 September 30, 2024, 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 the forward-looking 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, among others, the Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and Israel and Hamas and other parties in the Middle East; the availability and cost of labor, logistics, and transportation; 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 Portfolio Optimization Plan; 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; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; currency exchange rate fluctuations; and the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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.

Current wording

This report 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 March 31, 2025, 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 the forward-looking 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, among others, the Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and in the Middle East; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; the availability and cost of labor, logistics, and transportation; 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, changing technologies, and changing regulations; 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 Portfolio Optimization Plan; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; currency exchange rate fluctuations; and the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. 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.

Previous wording

Selling and administrative expense as a percent of revenue was 20.3% and 19.0% for the three months ended September 30, 2024 and 2023, respectively. Selling and administrative expense as a percent of revenue was 20.2% and 19.3% for the nine months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.0 million, which increased selling and administrative expenses as a percent of revenue by approximately 20 basis points. For the nine months ended September 30, 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $5.3 million, which increased selling and administrative expenses as a percent of revenue by approximately 50 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 and nine months ended September 30, 2024, was primarily due to higher performance-based executive compensation costs in 2024.

Current wording

Selling and administrative expense as a percent of revenue was 19.9% and 20.1% for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.1 million and $2.7 million, respectively, which increased selling and administrative expenses as a percent of revenue by approximately 20 and 70 basis points, respectively. See Portfolio Optimization Plan below for further information. The decrease in Portfolio Optimization Plan costs as a percent of revenue was offset by higher performance-based executive compensation costs incurred in 2025.

Previous wording

Operating income was $50.5 million and $44.5 million for the three months ended September 30, 2024 and 2023, respectively. Operating margins were 12.9% and 12.2% for the three months ended September 30, 2024 and 2023, respectively. The increase in operating margin was primarily due to the higher volumes and selling prices, partially offset by higher raw material costs and higher performance-based executive compensation costs in 2024. Portfolio Optimization Plan costs also offset the increase, decreasing operating margins by approximately 30 basis points for the three months ended September 30, 2024.

Current wording

Operating income was $53.5 million and $49.4 million for the three months ended March 31, 2025 and 2024, respectively. Operating margins were 13.6% and 12.8% for the three months ended March 31, 2025 and 2024, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 80 basis points for both the three months ended March 31, 2025 and 2024. The increase in operating margin was primarily due to favorable pricing and higher volumes, partially offset by higher raw material costs and higher performance-based executive compensation costs incurred in 2025.

Previous wording

Interest expense was $7.7 million and $6.3 million for the three months ended September 30, 2024 and 2023, respectively, and $22.4 million and $18.6 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in interest expense for the three and nine months ended September 30, 2024, was primarily due to an increase in the average interest rate.

Current wording

Interest expense was $7.3 million and $7.0 million for the three months ended March 31, 2025 and 2024, respectively. The increase in expense was primarily due to an increase in the average interest rate.

Previous wording

The effective income tax rates for the three months ended September 30, 2024 and 2023 were 23.7% and 17.5%, respectively. The effective income tax rates for the nine months ended September 30, 2024 and 2023 were 25.7% and 22.7%, respectively. The effective tax rates for the three and nine months ended September 30, 2024 and 2023 were impacted by changes in estimates associated with the finalization of prior year foreign tax items and the mix of foreign earnings. The effective tax rates for both the three and nine months ended September 30, 2024, were also impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan. The effective tax rates for both the three and nine months ended September 30, 2023, were also impacted by changes in valuation allowances.

Current wording

The effective income tax rates for the three months ended March 31, 2025 and 2024, were 25.4% and 27.0%, respectively. The effective tax rates for the three months ended March 31, 2025 and 2024 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 further impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan.

Previous wording

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 wording

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 under the Portfolio Optimization Plan in accordance with local laws.

Previous wording

For the nine months ended September 30, 2024, the Company incurred costs of $5.8 million related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for costs associated with employee separation, impairment of fixed assets, decommissioning, and professional services.

Current wording

For the three months ended March 31, 2025, the Company incurred costs of $2.9 million related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for dual plant operating costs, non-cash inventory charges, professional services, and employee separation costs. For the three months ended March 31, 2024, the Company incurred costs of $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.

Previous wording

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including the Portfolio Optimization Plan costs, and (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs.

Current wording

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including the Portfolio Optimization Plan costs, (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA, which excludes restructuring and other costs, including the Portfolio Optimization Plan costs, and non-cash share based compensation expense.

Previous wording

The following table summarizes the percentage change for the results of the three and nine months ended September 30, 2024, compared to the results for the three and nine months ended September 30, 2023, in the respective financial measures.

Current wording

The following table summarizes the percentage change for the results of the three months ended March 31, 2025, compared to the results for the three months ended March 31, 2024, in the respective financial measures.

Previous wording

The Company determines its operating segments based on information utilized by its chief operating decision maker to allocate resources and assess performance. Segment performance is evaluated on operating income before share-based compensation, restructuring and other costs, including the Portfolio Optimization Plan costs, and other costs (which are reported in Corporate & Other), interest expense, and income taxes.

Current wording

The Company determines its operating segments based on information utilized by its chief operating decision maker to allocate resources and assess performance. Segment performance is evaluated on operating income before share-based compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders); restructuring and other costs, including the Portfolio Optimization Plan costs (which are reported in Corporate & Other); interest expense; and income taxes.

Previous wording

Flavors & Extracts segment operating income was $25.9 million and $23.1 million for the three months ended September 30, 2024 and 2023, respectively, an increase of approximately 12%. The higher segment operating income was primarily a result of higher operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower operating income in Natural Ingredients. The higher segment operating income in Flavors, Extracts, & Flavor Ingredients was primarily due to lower raw material costs, higher selling prices, lower manufacturing and other costs, higher volumes, and savings generated from the Portfolio Optimization Plan. The lower segment operating income in Natural Ingredients was primarily a result of higher raw material costs, partially offset by higher selling prices and volumes. Foreign exchange rates decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 12.7% in the current quarter compared to 12.1% in the prior year’s comparable quarter.

Current wording

Flavors & Extracts segment operating income was $25.0 million and $23.7 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 6%. 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 higher volumes and selling prices. The lower operating income in Natural Ingredients was primarily due to higher raw material costs and lower volumes, partially offset by higher selling prices. Foreign exchange rates decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 12.9% in the current quarter compared to 12.3% in the prior year’s comparable quarter.

Previous wording

Color segment revenue was $489.8 million and $466.6 million for the nine months ended September 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 selling prices. Foreign exchange rates had an immaterial impact on segment revenue for the nine months ended September 30, 2024.

Current wording

Segment revenue for the Color segment was $167.8 million and $160.0 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 5%. The increase was primarily a result of higher revenue in Food & Pharmaceutical Colors, primarily due to higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 3%.

Previous wording

Segment operating income for the Color segment was $29.8 million and $22.9 million for the three months ended September 30, 2024 and 2023, respectively, an increase of approximately 30%. The increase in segment operating income was a result of higher operating income in Personal Care and Food & Pharmaceutical Colors. The higher operating income in Personal Care was primarily due to higher volumes and lower raw material costs. The higher operating income in Food & Pharmaceutical Colors was primarily due to higher volumes, selling prices, and savings generated from the Portfolio Optimization Plan, partially offset by higher manufacturing and other costs. Foreign exchange rates decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 18.4% in the current quarter and 15.8% in the prior year’s comparable quarter.

Current wording

Segment operating income for the Color segment was $34.9 million and $31.7 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 10%. The higher segment operating income was a result of higher operating income in Food & Pharmaceutical Colors, partially offset by lower operating income in Personal Care. The higher operating income in Food & Pharmaceutical Colors was primarily due to higher selling prices and volumes, partially offset by higher raw material costs and the unfavorable impact of foreign exchange rates that decreased segment operating income by approximately 4%. The lower operating income in Personal Care was primarily due to higher manufacturing and other costs. Segment operating income as a percent of revenue was 20.8% and 19.8% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Segment operating income for the Asia Pacific segment was $26.0 million and $24.9 million for the nine months ended September 30, 2024 and 2023, respectively, an increase of approximately 4%. The increase was primarily a result of the higher volumes and selling prices, partially offset by higher raw material and manufacturing and other costs and the unfavorable impact of foreign exchange rates that decreased segment operating income by approximately 3%. Segment operating income as a percent of revenue was 21.5% in the current nine month period and 22.1% in the prior year’s comparable period.

Current wording

Segment revenue for the Asia Pacific segment was $41.9 million and $40.3 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 4%. The increase was primarily due to higher volumes, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 1%.

Previous wording

The Corporate & Other operating expense was $14.5 million and $9.6 million for the three months ended September 30, 2024 and 2023, respectively. The higher operating expense was primarily a result of Portfolio Optimization Plan costs totaling $1.2 million negatively impacting the three months ended September 30, 2024, and higher performance-based executive compensation costs. See the Portfolio Optimization Plan section above for further information.

Current wording

The Corporate & Other operating expense was $15.8 million and $14.7 million for the three months ended March 31, 2025 and 2024, respectively. The higher operating expense was primarily due to higher performance-based executive compensation costs in 2025. Portfolio Optimization Plan costs totaling $2.9 million and $2.8 million also negatively impacted the three months ended March 31, 2025 and 2024, respectively. 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 or nine months ended September 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.

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 months ended March 31, 2025. 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 $135.8 million and $106.8 million for the nine months ended September 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.

Current wording

Net cash used in operating activities was $9.0 million and net cash provided by operating activities was $15.1 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in net cash provided by operating activities was primarily due to an increase in the cash used for performance-based compensation payments (which are determined based on prior year performance) made during 2025 compared to 2024 and a decrease in cash provided by inventory during 2025 compared to 2024, partially offset by an increase in cash provided by accounts receivable.

Previous wording

Net cash used in investing activities was $37.2 million and $65.6 million during the nine months ended September 30, 2024 and 2023, respectively. Capital expenditures were $36.1 million and $67.7 million during the nine months ended September 30, 2024 and 2023, respectively.

Current wording

Net cash used in investing activities was $21.3 million and $10.9 million during the three months ended March 31, 2025 and 2024, respectively. Capital expenditures were $16.9 million and $11.0 million during the three months ended March 31, 2025 and 2024, respectively. In 2025, the Company paid $4.3 million for the acquisition of Biolie SAS.

Previous wording

Net cash used in financing activities was $75.1 million and $36.4 million for the nine months ended September 30, 2024 and 2023, respectively. Net debt decreased by $19.8 million and increased by $23.5 million for the nine months ended September 30, 2024 and 2023, respectively. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $52.0 million and $51.9 million were paid during the nine months ended September 30, 2024 and 2023, respectively. Total dividends of $1.23 per share were paid for both the nine months ended September 30, 2024 and 2023.

Current wording

Net cash provided by financing activities was $36.0 million and net cash used in financing activities was $9.1 million for the three months ended March 31, 2025 and 2024, respectively. Net debt increased by $55.7 million and $11.0 million for the three months ended March 31, 2025 and 2024, respectively. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $17.4 million and $17.3 million were paid during the three months ended March 31, 2025 and 2024, respectively. Dividends paid per share were $0.41 for both the three months ended March 31, 2025 and 2024.