Press Release Details

MILWAUKEE--(BUSINESS WIRE)-- Sensient Technologies Corporation (NYSE: SXT) reported earnings per share of $1.12 in the third quarter of 2018 compared to 73 cents in the third quarter of 2017. Revenue was $342.7 million in this year’s third quarter compared to $353.5 million in last year’s third quarter. Operating income was $50.3 million in the third quarter of 2018 and $52.0 million in last year’s third quarter.

For the nine months ended September 30, 2018 and 2017, earnings per share were $2.92 and $1.72, respectively. Revenue was $1.1 billion for the first nine months of 2018 and $1.0 billion for the first nine months of 2017. Operating income was $158.1 million and $120.4 million in the first nine months of 2018 and 2017, respectively.

The 2018 reported results include an adjustment to the provisional amount recorded in 2017 for the impact of the Tax Cuts and Jobs Act (“2017 Tax Legislation”), which is described in more detail under “Reconciliation of Non-GAAP Amounts” below. The impact of this adjustment increased earnings per share by 17 cents during this year’s third quarter and did not have any impact on the 2017 third quarter results.

The 2017 reported results include restructuring and other costs, which reduced 2017 third quarter operating income by $6.0 million ($6.7 million after-tax or 15 cents per share) and operating income for the first nine months of 2017 by $45.2 million ($37.8 million after-tax or 85 cents per share). See the “Reconciliation of Non-GAAP Amounts” below, for more information. The Company completed its restructuring activities in 2017 and did not incur any restructuring or other costs in the first nine months of 2018.

The adjusted results, discussed below, eliminate the impact of the adjustment to the provisional estimate related to the 2017 Tax Legislation recorded in this year’s third quarter and the restructuring and other costs recorded in last year’s results, and enhance the overall understanding of the Company’s performance when viewed together with our GAAP results. Refer to “Reconciliation of Non-GAAP Amounts” below. Sensient’s adjusted earnings per share increased approximately 7% to 95 cents in this year’s third quarter, compared to adjusted earnings per share of 89 cents in the comparable period last year. Third quarter operating income was $50.3 million, compared to adjusted operating income of $58.0 million reported in last year’s third quarter. The third quarter adjusted results include a 13 cent tax benefit related to opportunistic planning in response to last year’s tax law change. Foreign currency translation decreased operating income by approximately 1%, and revenue and adjusted earnings per share by approximately 2% compared to the adjusted results in 2017.

For the nine months ended September 30, 2018, adjusted earnings per share were $2.76 and operating income was $158.1 million, which compares to adjusted earnings per share of $2.58 and adjusted operating income of $165.6 million for the nine months ended September 30, 2017. Foreign currency translation increased revenue and operating income by approximately 2%, and adjusted earnings per share by approximately 1% compared to the adjusted results in 2017.

The Color Group reported revenue of $135.0 million in the quarter, an increase of approximately 1% over last year’s third quarter revenue of $133.2 million. Segment operating income was $27.3 million in this year’s third quarter compared to $28.6 million in last year’s comparable quarter. The higher revenue was due to a continued strong demand for natural colors. The Cosmetic business reported lower revenue and operating income in the quarter, compared to very strong results in last year’s third quarter, primarily due to customer inventory destocking. Foreign currency translation decreased quarterly revenue by approximately 3% and operating income by approximately 2%.

For the first nine months of 2018, the Color Group reported revenue of $426.4 million compared to $400.2 million in the first nine months of 2017, an increase of approximately 7%. Segment operating income increased by approximately 5% to $92.1 million in the first nine months of 2018 from $87.9 million in the first nine months of 2017. Foreign currency translation increased both revenue and operating income in the first nine months of 2018 by approximately 2%.

The Flavors & Fragrances Group reported revenue of $184.4 million in the quarter, compared to $196.0 million in last year’s comparable quarter. Segment operating income was $24.8 million in this year’s third quarter and $33.0 million in last year’s third quarter. The Group’s lower profit was a result of lower volumes at the production site affected by last year’s plant consolidation, ongoing market declines in several key dairy categories, higher onion costs, and lower onion pricing. The Latin America, Fragrances, BioNutrients, and European Sweet & Beverage businesses all delivered solid revenue and profit growth in the quarter. The Company believes that the headwinds created by onion costs and pricing have now subsided. The Company also believes that volumes at the site impacted by last year’s plant consolidation have now stabilized. Foreign currency translation had a minimal impact on both revenue and operating income in the quarter.

For the first nine months of 2018, the Flavors & Fragrances Group reported revenue of $571.4 million compared to $568.4 million in the first nine months of 2017, an increase of approximately 1%. Segment operating income was $74.1 million and $90.3 million for the first nine months of 2018 and 2017, respectively. Foreign currency translation increased revenue by approximately 2% and had a minimal impact on operating income in the first nine months of 2018.

The Asia Pacific Group reported revenue of $31.3 million in the current quarter compared to $32.7 million in last year’s comparable quarter. Segment operating income was $5.8 million in both the current quarter and last year’s comparable quarter. Revenue for the first nine months of 2018 was $92.1 million compared to $91.3 million in the first nine months of 2017. Segment operating income increased 3%, from $14.8 million reported in the first nine months of 2017 to $15.3 million in the first nine months of 2018. Foreign currency translation increased revenue by approximately 1% and operating income by approximately 2% in the first nine months of 2018.

Corporate & Other reported operating costs of $7.6 million in the quarter and $15.4 million in last year’s third quarter. Operating costs for the first nine months of 2018 were $23.3 million compared to $72.5 million in the first nine months of 2017. Last year’s third quarter and year-to-date results include $6.0 million and $45.2 million, respectively, of restructuring and other costs. The lower costs this year are primarily a result of the absence of restructuring and other costs, and lower performance based executive compensation. During the current quarter, the Company acquired a botanical extraction business that is recorded in the Corporate & Other segment. Revenue and operating income for this business were not material to the quarterly results.

2018 OUTLOOK

“I am pleased that we have now lapped the aftermath of our restructuring as well as our onion issues, which have impacted the Flavors & Fragrances segment this year,” said Paul Manning, Chairman, President and CEO of Sensient Technologies Corporation. “Our key focus going forward will be to capitalize on our positive commercial activity.”

The Company has a number of headwinds relative to last year’s fourth quarter earnings per share, including a higher tax rate, higher interest expense, and higher corporate expense. The higher tax rate is due to non-recurring tax benefits that occurred in the fourth quarter of 2017, and the higher corporate expense relates to a reduction in performance based compensation in last year’s fourth quarter. The Company also expects the impact of the recent acquisition to reduce fourth quarter earnings per share by approximately one cent. The total impact of these headwinds is approximately ten cents, or 12% of last year’s adjusted earnings per share. Considering the impact of these items, the Company expects fourth quarter earnings per share to be down mid-single digits, in percentage terms, from last year’s fourth quarter adjusted earnings per share result. As a result, the Company now expects that full year adjusted earnings per share will be slightly below the range previously provided.

CONFERENCE CALL

The Company will host a conference call to discuss its 2018 third quarter financial results at 9:00 a.m. CDT on Friday, October 19, 2018. To participate in the conference call, please contact InterCall Teleconferencing at (888) 818-9025 and refer to conference identification number 4758329. A webcast of the conference call will be available on the Investor Information section of the Company’s web site at www.sensient.com.

A replay will be available beginning at 12:00 p.m. CDT on October 19, 2018, through 11:00 p.m. on October 26, 2018, by calling (404) 537-3406 and referring to conference identification number 4758329. A transcript of the call will be posted on the Company’s web site at www.sensient.com after the call concludes.

This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors concerning the Company’s operations and business environment. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect the Company’s future financial performance include the following: the pace and nature of new product introductions by the Company and the Company’s customers; the Company's ability to successfully implement its strategy to create sustainable, long-term shareholder value; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts; the effectiveness of the Company’s past restructuring activities; changes in costs or availability of raw materials, including energy; industry and economic factors related to the Company’s domestic and international business; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors, including increased intensity of competition; the loss of any customers in certain product lines in which our sales are made to a relatively small number of customers; product liability claims or product recalls; the costs of compliance, or failure to comply, with laws and regulations applicable to our industries and markets; changing consumer preferences and changing technologies; currency exchange rate fluctuations; estimates related to the Tax Cuts and Jobs Act and its effects on our results; and failure to complete and integrate future acquisitions or dispositions. The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on our business, financial condition and results of operations. This release contains time-sensitive information that reflects management’s best analysis only as of the date of this release. Except to the extent required by applicable laws, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized. Additional information regarding these risks can be found in our most recent Annual Report on Form 10-K and subsequent reports that we file with the SEC.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks and colors, and other specialty and fine chemicals. The Company’s customers include major international manufacturers representing most of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

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Sensient Technologies Corporation
Kim Chase, (414) 347-3706

Source: Sensient Technologies Corporation