EX-99.2 3 brhc10043120_ex99-2.htm EXHIBIT 99.2
Exhibit 99.2

 Third Quarter 2022 Investor Presentation 
 

 FORWARD-LOOKING STATEMENTS  2  This document contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2022 Financial Outlook” in this presentation. 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 impact and uncertainty created by the COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, the availability and cost of raw materials, energy, and other supplies, the availability and cost of labor, logistics, and transportation, governmental regulations and restrictions, and general economic conditions, including inflation; the uncertain impacts of the ongoing conflict between Russia and Ukraine on our supply chain, input costs, including energy and transportation, and on general economic conditions; 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 operational improvement plan; 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 other factors included in “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as updated and supplemented by the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and in other documents that the Company files with the SEC. 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 presentation contains time-sensitive information that reflects management’s best analysis only as of the date of this presentation. 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. 
 

 NON-GAAP FINANCIAL MEASURES  2  Within this document, the Company reports certain non-GAAP financial measures, including: (1) adjusted revenue, adjusted operating income, adjusted net earnings, adjusted EBITDA, and adjusted diluted earnings per share (which exclude divestiture & other related costs, the results of the divested product lines, and restructuring and other costs, which include operational improvement plan costs and income) (2) adjusted results by segment (which exclude divestiture & other related costs, operational improvement plan costs and income, and the results of the divested operations), (3) percentage changes in revenue, operating income, diluted earnings per share, and EBITDA on an adjusted local currency basis (which eliminate the effects that result from translating its international operations into U.S. dollars, divestiture & other related costs, the results of the divested product lines, and restructuring and other costs, which include operational improvement plan costs), and (4) adjusted EBITDA (which excludes depreciation and amortization expense, non-cash share based compensation expense, the results of the divested product lines, the divestiture & other related costs, and operational improvement plan costs and income). 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 presentation 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. 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 presentation for reconciliations and additional information. 
 

 Sensient Overview  2  Provider of customized solutions for food and beverage, pharmaceutical, and personal care customers  Global market leader offering an extensive portfolio of natural flavor and color technology platforms and solutions  Exceptional innovation & applications expertise with unique ability to service global, regional, and local customers 
 

 Innovative Technologies Creating Unique Solutions  2  Applications expertise and solutions-based selling  High impact relative to cost  Technically-driven products that are difficult to replace Strong consumer trends  Opportunities to grow organically and through M&A 
 

Focusing our portfolio and strengthening our commitment to the end markets  2  Investing in core focus areas of Flavors and Extracts, Natural Ingredients, Food and Pharmaceutical Colors, and Personal Care  Divested non-core product lines (inks, fragrances, and yogurt fruit prep  product lines) in 2020 and 2021  Expanded flavor portfolio and strengthened technical solutions capabilities  through the acquisition of Flavor Solutions, Inc. on July 15, 2021  Strengthened extensive natural cololor portfolio by acquiring Endemix, a vertically integrated natural color and extracts company, in October 2022
 

 Natural solutions provider focused on consistent and sustainable supply chain  2  Provider of natural solutions to support health & wellness and clean label consumer trends  Robust agronomy program ensures responsible procurement and traceability of sustainable ingredients  Committed to delivering safe, authentic, high-quality natural products through Sensient’s CertasureTM program 
 

 8  Global Revenue by Group  2021 Global Revenues include intercompany sales which are eliminated on a consolidated basis.  *Adj. Revenue is a Non-GAAP metric, please see our GAAP to Non-GAAP Reconciliation at the end of this document.  Color Group  2021 Revenue: $545M 2021 Adj. Revenue*: $543M Core Areas of Focus: Food and Pharmaceutical Colors and Personal Care  Flavors & Extracts Group  2021 Revenue: $739M 2021 Adj. Revenue*: $712M Core Areas of Focus: Natural Flavors, Extracts and Natural Ingredients  Asia Pacific Group  2021 Revenue: $135M 2021 Adj. Revenue*: $135M Core Areas of Focus: Flavors and Colors for food and beverage 
 

 9  Global market leader  Natural color innovator  Excellent innovation & applications expertise  Color Group 
 

 10  Color Overview  Food and Pharmaceutical  LC Revenue Change*  Q3 ’22  YTD ’22  +16.4%  +17.5%  Market trend toward natural colors in food and beverage  Unique value proposition for Pharmaceutical customers includes  colors, flavors, coatings, and extracts  Personal Care 29% of  Segment Revenue 29% of Adj. Segment Revenue  LC Revenue  Q3 ’22  YTD ’22  Change* • Demand for innovative products with multiple benefits  +8.4% • Product line includes dyes, pigments, formulation aides and  +11.2% ingredients for color cosmetics, hair care, and skin care  2021 Revenue: $545M 2021 Adj. Revenue*: $543M  71% of Segment Revenue 71% of Adj. Segment Revenue  *Local-currency (LC) revenue and adjusted revenue are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end of this document. 
 

 11  Flavors & Extracts Group  Broad product offering  Unique ability to service global, regional, and local customers  Leading technology platforms  Outstanding applications expertise 
 

 12  Flavors & Extracts Overview  Flavors, Extracts, and Flavor Ingredients  62% of Segment Revenue 64% of Adj. Segment Revenue  LC Revenue Change* Q3 ’22 +11.3%  YTD ’22 +13.0%  Opportunities for on trend products with extracts, taste modulation, and natural flavors  Natural  Ingredients  35% of Segment Revenue 36% of Adj. Segment Revenue  LC Revenue Change*  Q3 ’22 (1.7%)  YTD ’22 (4.6%)  Leading provider of dehydrated onion, garlic, and other products  Temporary headwind due to a limited supply of onion and strong onion sales in 2021.  Fragrances & Yogurt Fruit Prep  3% of Segment Revenue  Yogurt Fruit Prep divested September 2020  Fragrances divested April 2021  2021 Revenue: $739M 2021 Adj. Revenue*: $712M  *Local-currency (LC) revenue and adjusted revenue are Non-GAAP metrics, please see our GAAP to Non- GAAP Reconciliation at the end of this document. 
 

 13  Asia Pacific Group  Portfolio of food and beverage flavors and colors  R&D centers in Singapore, Thailand, and China to support local and regional customer base  Ability to deliver localized solutions  and technology platforms 
 

 14  2021 adjusted revenue* of $135 million and adjusted operating income* of $26 million  Sensient’s sales of flavors and colors for Food and Pharmaceutical are managed on a geographic basis and reported as a separate segment  Manufacturing capabilities in Australia, New Zealand, China, Japan, Philippines, Thailand, and India  Q3 2022 local currency adjusted revenue* and operating profit*  improved 14.5% and 16.3%, respectively  * Adjusted revenue, local currency adjusted revenue, adjusted operating income, and local currency adjusted operating profit are Non-GAAP metrics.  Please see our GAAP to Non-GAAP Reconciliation at the end of this document.  Asia Pacific Overview 
 

 15  2022 Q3 Segment Results  Color Group reported higher revenue in the quarter due to double digit growth in Food and Pharmaceutical and high single digit growth in Personal Care. Operating income was up due to pricing and volume growth.  Flavors & Extracts Group third quarter revenue increased as a result of pricing actions across the Group. Operating income was up as a result of pricing actions offset by higher raw material costs.  Asia Pacific Group third quarter revenue increased double digits driven by volume growth in almost all regions and pricing actions. Operating income improved in the quarter due to volume growth and pricing actions.  Local Currency Adjusted Operating  Income*  Q3  YTD  Color  +10.9%  +17.3%  Flavors & Extracts  +5.6%  +14.6%  Asia Pacific  +16.3%  +29.6%  Local Currency Adjusted Revenue*  Local Currency Adjusted* Commentary:  Q3  YTD  Color  +14.6%  +16.0%  Flavors & Extracts  +6.7%  +6.9%  Asia Pacific  +14.5%  +17.2%  * Local-currency (LC) adjusted revenue and adjusted operating income are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document. 
 

 16  2022 Q3 Consolidated Results  Q3  YTD  Local Currency Adjusted Revenue*  +9.9%  +11.0%  Local Currency Adjusted Operating Income*  +5.8%  +16.7%  Local Currency Adjusted Diluted EPS*  +7.1%  +15.0%  Local Currency Adjusted EBITDA*  +7.8%  +16.8%  Q3 consolidated local currency adjusted revenue increased due to pricing actions across the groups and volume growth in the Color and Asia Pacific Groups. Flavors & Extracts volumes have been impacted by limited availability of onion. This supply situation has improved throughout 2022 and Q3 saw modest sequential improvement in volumes with additional improvement expected in Q4.  Q3 consolidated local currency adjusted operating income was up due to pricing actions across all of the groups and the volume growth in the Color and Asia Pacific Groups. The operating income improvement was partially offset due to higher year-over-year Corporate expenses related to performance-based compensation.  * Local-currency (LC) adjusted 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. 
 

 Capital Allocation  Prioritize ROI capital projects  Maintain financial flexibility to pursue  M&A  Dividend payout increased 5.1% in 2021  Excess capital returned to shareholders  through opportunistic share repurchases  $87  $77  $43  $54  $57  $62  $66  $67  $56  $51  $39  $52  $61  $31  $14  $9  $87  $118  $-  $50  $100  $150  $200  $250  2017  2018  2019  2020  2021  DOLLARS IN MILLIONS  Share Repurchase  Acquisitions  Dividends  Debt Repayments  Capital Expenditures  17 
 

 2022 Financial Outlook  17  Metric  Revised  Guidance*  Previous  Guidance*  Comments  Diluted EPS (GAAP)  No Change  High-teen growth  At current rates, we anticipate a FX headwind of approximately 20 cents  Local Currency Diluted EPS*  No Change  High single to double-digit growth  Local Currency Revenue*  No Change  High single-digit growth  Adjusted Local Currency EBITDA*  No Change  High single to double-digit growth  Excludes the impact of share-based stock compensation  *In 2022, the Company does not anticipate any impact to the above metrics as a result of divestiture & other related costs, operational improvement plan  costs, or the results of the divested operations.  The 2022 Local Currency Diluted EPS, Local Currency Revenue and Adjusted Local Currency EBITDA growth rates for 2022 are compared to the 2021 Adjusted Diluted EPS, Adjusted Revenue and Adjusted EBITDA, respectively, which excluded the divestiture & other related costs, operational improvement plan costs and the results of operations of the divested product lines. Adjusted revenue, adjusted diluted EPS and adjusted EBITDA are Non-GAAP metrics. Please see our GAAP to Non-GAAP Reconciliation at the end of this document. 
 

 Why Invest?  Strong competitive position  Defensible and ‘sticky’ business (& low portion of  customer costs)  Global presence  Exposure to stable and growing markets Focused on improving returns and on growth  17 
 

 APPENDIX*  *Amounts in thousands, except percentages and per share amounts 
 

 ESG Information  Click here to access our  Environmental  Sensient is committed to the principles of sound environmental stewardship and the responsible and sustainable use of energy and natural resources.  Long-term goals to reduce Energy, Water, and Hazardous Waste intensity  Seed-to-shelf program focused on sustainable supply chain  Emphasis on new products and technologies that minimize waste and environmental impacts  Chemical Risk Strategy implemented to identify and reduce risk in our portfolio  Social  Sensient strives to conduct business in an ethical manner and to make a positive contribution to society through our product offerings and business activities.  Sensient’s Code of Conduct and Supplier Code of Conduct require strong ethical behavior, fair employment practices, and strict human rights practices and product safety standards  Robust product, environmental, and raw material safety programs designed to exceed industry standards  Raw material traceability and sustainability programs  Support for our local communities through volunteerism, financial donations, sponsorships, and employee education opportunities  Governance  Sensient is committed to maintaining the highest standards of professional conduct and strong corporate  governance practices through our comprehensive corporate governance framework.  Board comprised of a majority of independent directors with diverse and accomplished backgrounds  Committed to board diversity and refreshment, we were recognized by 50/50 Women on Boards for the tenth year in a row and we have added seven new directors since 2014.  Robust Code of Conduct built on a foundation of ethics, safety and quality, and professionalism resulting in ethical and lawful conduct of our business  21 
 

 22  Non-GAAP Financial Measures  Note: EPS Calculations may not foot due to rounding differences  Three Months Ended September 30, 2022  Three Months Ended September 30, 2021  Nine Months Ended September 30, 2022  Nine Months Ended September 30, 2021  Year Ended December 31, 2021  * Tax impact adjustments were determined based on the nature of the underlying Non-GAAP adjustments and their relevant jurisdictional tax rates.  Revenue (GAAP)  $  361,076  $  344,287  $  1,088,303  $  1,039,816  $  1,380,264  Revenue of the divested product lines   -    (12,660)   -    (29,399)   (30,062)  Adjusted revenue   $ 361,076   $ 331,627  $ 1,088,303  $ 1,010,417  $ 1,350,202  Operating income (GAAP)  $  47,493  $  46,958  $  155,526  $  129,608  $  170,028  Divestiture & other related costs – Cost of products sold  - -  -  28  86  Divestiture & other related costs – Selling and administrative expenses  - 241  -  13,473  14,052  Operating loss (income) of the divested product lines  - 70  -  (2,398)  (1,880)  Operational improvement plan - Selling and administrative expenses (income)   - 483    -    (2,010)   (1,895)  Adjusted operating income   $ 47,493   $  47,752  $  155,526  $  138,701  $  180,391  Net earnings (GAAP)  $  36,048  $  33,912  $ 111,766  $  91,516  $ 118,745  Divestiture & other related costs, before tax  -  241  -  13,501  14,138  Tax impact of divestiture & other related costs *  -  1,179  -  283  2,092  Net loss (earnings) of the divested product lines, before tax  -  70  -  (2,398)  (1,880)  Tax impact of the divested product lines *  -  (18)  -  590  460  Operational improvement plan costs (income), before tax  -  483  -  (2,010)  (1,895)  Tax impact of operational improvement plan *   -    (115)   -    44    471   Adjusted net earnings   $ 36,048   $ 35,752  $ 111,766  $ 101,526  $ 132,131  Diluted earnings per share (GAAP)  $  0.85  $  0.80  $  2.65  $  2.16  $  2.81  Divestiture & other related costs, net of tax  -  0.03  -  0.33  0.38  Results of operations of the divested product lines, net of tax  -  0.00  -  (0.04)  (0.03)  Operational improvement plan income, net of tax   -    0.01    - (0.05)   (0.03)  Adjusted diluted earnings per share   $ 0.85   $ 0.85  $ 2.65 $ 2.40  $ 3.13 
 

 Non-GAAP Financial Measures (Cont’d)  Revenue  Total  Foreign  Exchange Rates  Adjustments*  Adjusted  Local Currency  Total  Foreign  Exchange Rates  Adju  A  Flavors & Extracts  3.0%  (2.9%)  (0.8%)  6.7%  (0.5%)  (2.4%)  Color  8.8%  (5.5%)  (0.3%)  14.6%  11.8%  (3  Asia Pacific  5.3%  (9.2%)  0.0%  14.5%  9.5%  Total Revenue  4.9%  (4.4%)  (0.6%)  9.9%  4.7  Operating Income  Flavors & Extracts  4.7%  (1.1%)  0.2%  Color  3.5%  (7.4%)  0.0%  Asia Pacific  5.3%  (11.0%)  Corporate & Other  16.0%  (0.1%)  Total Operating Income  1.1%  Diluted Earnings Per Share  6.3%  Adjusted EBITDA  * For Reven adju   Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022   29 
 

 Non-GAAP Financial Measures (Cont’d)  29  Note: *Fragrances was divested in April 2021, Inks was divested in June 2020, and Yogurt Fruit Prep was divested in September 2020.  Revenue  Total  Exchange  Rates  Local  Currency  Total  Exchang  Flavors, Extracts and Flavor Ingredients  6.7%  (4.6%)  11.3%  9.6%  Natural Ingredients  (1.7%)  0.0%  (1.7%)  Fragrances*  (100.0%)  0.0%  (10  Yogurt Fruit Prep*  (100.0%)  0.0%  Flavors & Extracts Group  3.0%  Food and Pharmaceutical  11.5%  Personal Care  Inks*  Color Group  Asia Pacific  Total reven  div   Three Months Ended September 30, 2022 Foreign   Nine Months Ended September 30, 202  Foreign 
 

 Non-GAAP Financial Measures (Cont’d)  * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs, and 2021 operational improvement plan costs and income.  Results by Segment Three Months Ended September 30,   Revenue   2022    Adjustments*   Adjusted   2022    2021    Adjustments*   Adjusted   2021   Flavors & Extracts  $ 187,046  $ -  $ 187,046  $ 181,667  $ (1,312)  $ 180,355  Color  151,469  -  151,469  139,239  (310)  138,929  Asia Pacific  35,221  -  35,221  33,442  -  33,442  Intersegment elimination   (12,660)   -    (12,660)   (10,061)   -    (10,061)  Consolidated   $ 361,076   $ -  $ 361,076  $ 344,287  $ (1,622)  $ 342,665  Operating Income  Flavors & Extracts  $ 26,337  $ -  $ 26,337  $ 25,164  $ 66  $ 25,230  Color  28,200  -  28,200  27,253  4  27,257  Asia Pacific  6,952  -  6,952  6,601  -  6,601  Corporate & Other   (13,996)   -    (13,996)   (12,060)   724    (11,336)  Consolidated   $ 47,493   $ -  $ 47,493  $ 46,958  $ 794  $ 47,752  29 
 

 Non-GAAP Financial Measures (Cont’d)  Results by Segment Nine Months Ended September 30,   * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs, and 2021 operational improvement plan costs and income.  Revenue   2022    Adjustments*   Adjusted   2022    2021    Adjustments*   Adjusted   2021   Flavors & Extracts  $ 559,110  $ -  $ 559,110  $ 561,979  $ (27,616)  $ 534,363  Color  456,175  -  456,175  408,166  (1,638)  406,528  Asia Pacific  109,014  -  109,014  99,599  (295)  99,304  Intersegment elimination   (35,996)   -    (35,996)   (29,928)   150    (29,778)  Consolidated   $ 1,088,303   $ -  $ 1,088,303  $ 1,039,816  $ (29,399)  $ 1,010,417  Operating Income  Flavors & Extracts  $ 83,929  $ -  $ 83,929  $ 76,718  $ (2,859)  $ 73,859  Color  90,035  -  90,035  79,462  548  80,010  Asia Pacific  22,877  -  22,877  19,146  (87)  19,059  Corporate & Other   (41,315)  -  (41,315)  (45,718)  11,491  (34,227)  Consolidated   $ 155,526   $ -  $ 155,526  $ 129,608  $ 9,093  $ 138,701  29 
 

 Non-GAAP Financial Measures (Cont’d)  Results by Segment   Year Ended December 31,   Adjusted  * For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, adjustments consist of the results of the divested product lines, divestiture & other related costs, and operational improvement plan costs and income.  Revenue   2021    Adjustments*   2021   Flavors & Extracts  $ 739,427  $ (27,837)  $ 711,590  Color  545,270  (2,080)  543,190  Asia Pacific  135,348  (295)  135,053  Intersegment elimination   (39,781)   150    (39,631)  Consolidated   $ 1,380,264   $ (30,062)  $ 1,350,202  Operating Income  Flavors & Extracts  $ 98,660  $ (2,368)  $ 96,292  Color  103,575  575  104,150  Asia Pacific  26,330  (87)  26,243  Corporate & Other   (58,537)   12,243    (46,294)  Consolidated   $ 170,028   $ 10,363  $ 180,391  29 
 

 Non-GAAP Financial Measures (Cont’d)  2022  2021  % Change  2022  2021  % Change  Operating income (GAAP)  $ 47,493  $ 46,958  1.1%  $ 155,526  $ 129,608  20.0%  Depreciation and amortization  13,082  13,011  39,262  38,828  Depreciation and amortization, divested product lines  -  (49)  -  (146)  Share-based compensation expense  3,785  2,243  12,476  6,431  Divestiture & other related costs, before tax  -  241  -  13,501  Results of operations of the divested product lines, before tax  -  70  -  (2,398)  Operational improvement plan costs (income), before tax   -    483       -    (2,010)  Adjusted EBITDA   $ 64,360   $ 62,957  2.2%  $ 207,264  $ 183,814  12.8%  Three Months Ended September 30,  Nine Months Ended September 30,  29 
 

 29