IFF Reports Fourth Quarter and Full Year 2024 Results

International Flavors & Fragrances Inc. (NYSE:IFF) reported financial results for the fourth quarter and full year ended December 31, 2024.

Full year 2024 Consolidated Summary:

Management Commentary

"IFF delivered a solid performance in 2024, reflecting the hard work and dedication of our global team," said CEO Erik Fyrwald. "Their commitment to serving our customers with industry-leading innovation drove strong top and bottom-line financial results. I'm pleased with the significant progress we've made over the past year yet believe that we still have more work to do to realize IFF's full potential. In 2025, we'll strategically increase our investment in R&D, commercial, capacity and technology as we aim to continue to strengthen IFF. Recognizing ongoing macroeconomic uncertainties, we remain confident in our strategy and our ability to navigate challenges as we continue to create long-term value for all shareholders."

Full year 2024 Consolidated Financial Results

• Reported net sales for the full year were $11.48 billion, flat compared to the prior year period. On a comparable basis², currency neutral sales¹ increased 6%, as broad-based growth was led by a double-digit performance in Scent, high-single digit growth in Health & Biosciences and a mid-single digit increase in Nourish.
• Income before taxes on a reported basis for the full year was $278 million. Adjusted operating EBITDA¹ for the full year was $2.21 billion. On a comparable basis², adjusted operating EBITDA¹ increased 16%, led by strong volume growth and the benefits of productivity gains.
• Reported earnings (loss) per share (EPS) for the full year was $0.95. Adjusted EPS excluding amortization¹ was $4.31 per diluted share.
• Cash flow from operations for the full year was $1,070 million, and free cash flow¹ defined as cash flow from operations less capital expenditures totaled $607 million. Total debt to trailing twelve months net income at the end of the fourth quarter was 37.1x. Net debt to credit-adjusted EBITDA¹ at the end of the fourth quarter was 3.8x.

Full year 2024 Segment Summary: Growth vs. Prior Year

Nourish Segment

• On a reported basis, sales were $5.87 billion. On a comparable basis², currency neutral sales¹ increased 4% as strong double-digit growth in Flavors was partially offset by softness in Functional Ingredients. Functional Ingredients volume improved mid-single digits yet was more than offset by pricing actions.
• Nourish adjusted operating EBITDA¹ was $824 million and adjusted operating EBITDA margin¹ was 14.0% for the full year. On a comparable basis², adjusted operating EBITDA¹ grew 18% led by primarily volume growth and productivity gains.

Health & Biosciences Segment

• On a reported basis, sales were $2.21 billion. On a comparable basis², currency neutral sales¹ increased 8% driven by growth across all businesses led by double-digit increases in Cultures & Food Enzymes, Home & Personal Care, Grain Processing & Animal Nutrition.
• Health & Biosciences adjusted operating EBITDA¹ was $654 million and adjusted operating EBITDA margin¹ was 29.6% for the full year. On a comparable basis², adjusted operating EBITDA¹ grew 11% led primarily by volume growth and productivity gains.

Scent Segment

• On a reported basis, sales were $2.44 billion. On a comparable basis², currency neutral sales¹ improved 12% led by double-digit growth in both Consumer Fragrance and Fragrance Ingredients and a high single digit performance in Fine Fragrance.
• Scent adjusted operating EBITDA¹ was $518 million and adjusted operating EBITDA margin¹ was 21.2% for the full year. On a comparable basis², adjusted operating EBITDA¹ grew 25% led primarily by volume growth and productivity gains.

Pharma Solutions Segment

• On a reported basis, sales were $961 million. On a comparable basis², currency neutral sales¹ increased 2% led by high-single digit growth in Industrial.
• Pharma Solutions adjusted operating EBITDA¹ was $209 million and adjusted operating EBITDA margin¹ was 21.7% for the full year. On a comparable basis², adjusted operating EBITDA¹ grew 5% led by volume growth and productivity gains.

Fourth Quarter 2024 Consolidated Summary:

Fourth Quarter 2024 Consolidated Financial Results

• Reported net sales for the fourth quarter were $2.77 billion, an increase of 3% compared to the prior year period. On a comparable basis², currency neutral sales¹ increased 6% versus the prior year period, led by broad-based growth in all divisions.
• Loss before taxes on a reported basis for the fourth quarter was $(115) million. Adjusted operating EBITDA¹ for the fourth quarter was $471 million. On a comparable basis², adjusted operating EBITDA¹ increased 5% led primarily by volume growth and productivity gains.
• Reported earnings (loss) per share (EPS) for the fourth quarter was $(0.18). Adjusted EPS excluding amortization¹ was $0.97 per diluted share.

Fourth Quarter 2024 Segment Summary: Growth vs. Prior Year

Nourish Segment

• On a reported basis, sales were $1.41 billion. On a comparable basis², currency neutral sales¹ increased 4%, as strong double-digit growth in Flavors was partially offset by softness in Functional Ingredients. Functional Ingredients volume improved mid-single digits yet was more than offset by pricing actions.
• Nourish adjusted operating EBITDA¹ was $170 million and adjusted operating EBITDA margin¹ was 12% in the fourth quarter. On a comparable basis², adjusted operating EBITDA¹ grew 4% led primarily by volume growth and productivity gains.

Health & Biosciences Segment

• On a reported basis, sales were $553 million. On a comparable basis², currency neutral sales¹ increased 6% driven by growth in nearly all businesses led by double-digit performances in Home & Personal Care and Grain Processing.
• Health & Biosciences adjusted operating EBITDA¹ was $157 million and adjusted operating EBITDA margin¹ was 28.4% in the fourth quarter. On a comparable basis², adjusted operating EBITDA¹ declined 3% as volume growth and productivity gains were more than offset primarily by reinvestment and a strong year ago comparable.

Scent Segment

• On a reported basis, sales were $579 million. On a comparable basis², currency neutral sales¹ improved 7% driven by double-digit growth in Fragrance Ingredients, a high-single digit increase in Fine Fragrance and a mid-single digit performance in Consumer Fragrance.
• Scent adjusted operating EBITDA¹ was $97 million and adjusted operating EBITDA margin¹ was 16.8% in the fourth quarter. On a comparable basis², adjusted operating EBITDA¹ grew 1% as volume growth and productivity gains were partially offset by reinvestment.

Pharma Solutions Segment

• On a reported basis, sales were $228 million. On a comparable basis², currency neutral sales¹ increased 12% driven by strong growth in both Core Pharma and Industrial.
• Pharma Solutions adjusted operating EBITDA¹ was $47 million and adjusted operating EBITDA margin¹ was 20.6% in the fourth quarter. On a comparable basis², adjusted operating EBITDA¹ grew 81% led primarily by volume growth and productivity gains.

2025 Financial Guidance

Full year 2025 sales are expected to be in the range of $10.6 billion to $10.9 billion and full year 2025 adjusted operating EBITDA to be in the range of $2 billion to $2.15 billion. Full year guidance includes six months of Pharma Solutions results with the divestiture assumed to close on June 30, 2025.

The Company expects comparable currency neutral sales growth to be between 1% to 4%, with volume growth in all businesses. Comparable currency neutral adjusted operating EBITDA is expected to grow at a faster rate than sales, growing 5% to 10% year-over-year.

Based on recent market foreign exchange rates, the Company expects that foreign exchange will have an approximately 4% adverse impact to sales growth and an approximately 6% adverse impact to adjusted operating EBITDA growth in 2025 driven primarily by the Euro and certain other emerging market currencies. The Company also expects that divestitures will have an approximately 5% adverse impact to sales growth and an approximately 6% adverse impact to adjusted operating EBITDA growth in 2025.

The Company cannot reconcile its expected adjusted operating EBITDA without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time. These items include but are not limited to acquisition, divestiture and integration costs, gains (losses) on business disposals, and regulatory costs.

A copy of the Company's Annual Report on Form 10-K will be available on its website at www.iff.com or at www.sec.gov by March 3, 2025.

Audio Webcast

A live webcast to discuss the Company's fourth quarter and full year 2024 financial results will be held on February 19, 2025, at 9:00 a.m. ET. The webcast and accompanying slide presentation may be accessed on the Company's IR website at ir.iff.com. For those unable to listen to the live webcast, a recorded version will be made available on the Company's website approximately one hour after the event and will remain available on IFF's website for one year.

Cautionary Statement Under The Private Securities Litigation Reform Act of 1995

Statements in this press release, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations including those concerning expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; our ability to execute on our strategic and financial transformation, including the progress and success of our portfolio optimization strategy (including the sale process for our Pharma Solutions disposal group), through non-core business divestitures and acquisitions, and expectations regarding the implementation of our refreshed growth-focused strategy and expectations around our business divestitures; our ability to continue to generate value for, and return cash to, our shareholders; expectations of the impact of inflationary pressures and the pricing actions to offset exposure to such impacts; expectations regarding the impact of government actions including tariffs; the impact of high input costs, including commodities, raw materials, transportation and energy; the expected impact of global supply chain challenges; our ability to enhance our innovation efforts, drive cost efficiencies and execute on specific consumer trends and demands; the growth potential of the markets in which we operate, including the emerging markets; expectations regarding sales and profit for the fiscal year 2025, including the impact of foreign exchange, pricing actions, raw materials, energy, and sourcing, logistics and manufacturing costs; the impact of global economic uncertainty and recessionary pressures on demand for consumer products; the success of our integration efforts, following the N&B transaction, and ability to deliver on our synergy commitments as well as future opportunities for the combined company; our strategic investments in capacity and increasing inventory to drive improved profitability; our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; expected capital expenditures in 2025; and the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings.

These forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Certain of such forward-looking information may be identified by such terms as "expect", "anticipate", "believe", "intend", "outlook", "may", "estimate", "should", "predict" and similar terms or variations thereof. Such forward-looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve significant risks, uncertainties and other factors, including assumptions and projections, for all forward periods. Our actual results may differ materially from any future results expressed or implied by such forward-looking statements.

Such risks, uncertainties and other factors include, among others, the following: (1) our substantial amount of indebtedness and its impact on our liquidity, credit rating and ability to return capital to its shareholders; (2) our ability to successfully execute our strategic transformation; (3) the impact of regulatory, consumer, and economic trends on demand for consumer products; (4) the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation; (5) supply chain disruptions, geopolitical developments, climate change events, natural disasters, public health crises, tariffs and trade wars, and other events that may affect our suppliers or procurement of raw materials; (6) inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy); (7) our ability to successfully manage our working capital and inventory balances; (8) our ability to attract and retain key employees, and manage turnover of top executives; (9) our ability to successfully market to our expanded and diverse customer base; (10) our ability to effectively compete in our market and develop and introduce new products that meet customers' needs; (11) changes in demand from large multi-national customers due to increased competition and our ability to maintain "core list" status with customers; (12) our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations; (13) the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad; (14) our ability to benefit from our investments and expansion in emerging markets; (15) the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate; (16) economic, regulatory and political risks associated with our international operations; (17) our ability to declare and pay dividends which is subject to certain considerations; (18) our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness; (19) our ability to meet increasing customer, consumer, shareholder and regulatory focus on sustainability; (20) any impairment on our tangible or intangible long-lived assets; (21) our ability to enter into or close strategic transactions or divestments, or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships; (22) changes in market conditions or governmental regulations relating to our pension and postretirement obligations; (23) our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environment impact; (24) defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities; (25) our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; (26) the impact of our or our counterparties' failure to comply with the U.S. Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; (27) our ability to protect our intellectual property rights; (28) changes in business and operations related to the adoption of artificial intelligence; (29) the impact of changes in federal, state, local and international tax legislation or policies and adverse results of tax audits, assessments, or disputes; (30) the impact of any tax liability resulting from the N&B Transaction; and (31) our ability to comply with data protection laws in the U.S. and abroad.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the Company (such as in our other filings with the SEC or in company press releases) for other factors that may cause actual results to differ materially from those projected by the Company. Please refer to Part I. Item 1A., Risk Factors, of the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2024 for additional information regarding factors that could affect our results of operations, financial condition and liquidity.

We intend our forward-looking statements to speak only as of the time of such statements and do not undertake or plan to update or revise them as more information becomes available or to reflect changes in expectations, assumptions or results. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this press release or included in our other periodic reports filed with the SEC could materially and adversely impact our operations and our future financial results. Any public statements or disclosures made by us following this press release that modify or impact any of the forward-looking statements contained in or accompanying this press release will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this press release.

Use of Non-GAAP Financial Measures

We provide in this press release non-GAAP financial measures, including: (i) comparable, currency neutral sales; (ii) adjusted operating EBITDA and comparable, currency neutral adjusted operating EBITDA; (iii) adjusted operating EBITDA margin; (iv) adjusted EPS ex amortization; (v) free cash flow; (vi) net debt to credit adjusted EBITDA; [and] (vii) adjusted selling and administrative expenses; and adjusted gross profit.

Our non-GAAP financial measures are defined below.

Comparable results for the fourth quarter and full year exclude the impact of divestitures.

Currency Neutral metrics eliminate the effects that result from translating non-U.S. currencies to U.S. dollars. We calculate currency neutral numbers by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. We use currency neutral results in our analysis of subsidiary or segment performance. We also use currency neutral numbers when analyzing our performance against our competitors.

Adjusted operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other expense, net, and certain non-recurring or unusual items that are not part of recurring operations such as, restructuring and other charges, impairment of goodwill, gains (losses) on business disposals, loss on assets classified as held for sale, acquisition, divestiture and integration costs, strategic initiative costs, regulatory costs and other items.

Adjusted EPS ex Amortization excludes the impact of non-operational items including, restructuring and other charges, impairment of goodwill, acquisition, divestitures and integration costs, losses (gains) on business disposals, loss on assets classified as held for sale, pension settlement losses (gains); gain on China facility relocation, strategic initiative costs, regulatory costs, redemption value adjustment to EPS and other items that are not a part of recurring operations.

Free Cash Flow is operating cash flow (i.e. cash flow from operations) less capital expenditures.

Net debt to credit adjusted EBITDA is the leverage ratio used in our credit agreements and defined as net debt (which is debt for borrowed money less cash and cash equivalents) divided by the trailing 12-month credit adjusted EBITDA. Credit adjusted EBITDA is defined as income (loss) before interest expense, income taxes, depreciation and amortization, specified items and non-cash items.

Adjusted selling and administrative expenses exclude acquisition, divestiture and integration costs, strategic initiative costs, regulatory costs and other costs.

Adjusted gross profit excludes acquisition, divestiture and integration costs.

These non-GAAP measures are intended 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. In discussing our historical and expected future results and financial condition, we believe it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, as well as the impact of exchange rate fluctuations. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of the Company's results under GAAP and may not be comparable to other companies' calculation of such metrics.

The Company cannot reconcile its expected adjusted operating EBITDA under "Financial Guidance" without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time. These items include but are not limited to acquisition, divestiture and integration costs, gains (losses) on business disposals, and regulatory costs.

Welcome to IFF

At IFF (NYSE:IFF), we make joy through science, creativity and heart. As the global leader in flavors, fragrances, food ingredients, health and biosciences, we deliver groundbreaking, sustainable innovations that elevate everyday products—advancing wellness, delighting the senses and enhancing the human experience. Learn more at iff.com, LinkedIn, Instagram and Facebook.

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¹ Schedules at the end of this release contain reconciliations of reported GAAP to Non-GAAP metrics. See Use of Non-GAAP Financial Measures for explanations of our Non-GAAP metrics.

² Comparable results for the fourth quarter and full year 2024 exclude the impact of divestitures.

The following table reconciles cash, cash equivalents and restricted cash between the Company's balance sheets as of December 31, 2024 and 2023 to the amounts reported on the Company's statement of cash flows for the periods ended December 31, 2024 and 2023.

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

(Unaudited)

The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

(Unaudited)

The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

(Unaudited)

The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.

International Flavors & Fragrances Inc.

GAAP to Non-GAAP Reconciliation

(Unaudited)

The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.

International Flavors & Fragrances Inc.

Debt Covenants

(Amounts in millions)

(Unaudited)

The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.

International Flavors & Fragrances Inc.

Comparable Reportable Segment Performance

(Amounts in millions)

(Unaudited)

The following information and schedule provides reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedule is not intended as, and should not be viewed as, a substitute for reported GAAP amounts or financial statements of the Company prepared and presented in accordance with GAAP.