EX-99.1 2 brhc10047730_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

Contact:
Amy Agallar
 
(414) 347-3706

Sensient Technologies Corporation
Reports Results for the Quarter Ended December 31, 2022

Full Year 2022 Reported Consolidated Revenue Growth of 4.1%
Full Year 2022 Adjusted Local Currency Revenue Growth of 9.7%

Full Year 2022 Reported Operating Profit Growth of 15.7%
Full Year 2022 Adjusted Local Currency Operating Profit Growth of 12.5%

MILWAUKEE— February 10, 2023 — Sensient Technologies Corporation (NYSE: SXT) reported consolidated revenue of $348.7 million in this year’s fourth quarter compared to $340.4 million in last year’s fourth quarter. Reported operating income in the fourth quarter of 2022 was $41.2 million compared to $40.4 million in the fourth quarter of 2021. Reported diluted earnings per share was 69 cents in the fourth quarter of 2022 compared to 65 cents in the fourth quarter of 2021. Foreign currency translation decreased revenue by approximately 3% and earnings per share by approximately 6% in the current quarter.

The 2022 fourth quarter reported results included income related to an earnout payment received in connection with the divestiture of our yogurt fruit preparations business, which in total increased 2022 fourth quarter net earnings by $1.9 million ($0.04 per diluted share). The 2021 fourth quarter reported results include divestiture & other related costs and operational improvement plan costs, which in total decreased 2021 fourth quarter net earnings by $3.0 million ($0.07 per diluted share). The 2021 fourth quarter reported results also include the operations of the divested product lines, which were not material to the results in the fourth quarter of 2021. The adjustments to our reported results are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.

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Page 2
Earnings Release – Quarter Ended December 31, 2022
  
February 10, 2023
  
BUSINESS REVIEW

   
Reported
  
Revenue
  
Quarter
    
Year-to-Date
  
Flavors & Extracts
    
0.8
%
    
-0.2
%
Color
    
7.8
%
    
10.8
%
Asia Pacific
    
-3.3
%
    
6.1
%
Total Revenue
    
2.4
%
    
4.1
%

   
Adjusted
  
   
Local Currency (1)
  
Revenue
  
Quarter
    
Year-to-Date
  
Flavors & Extracts
    
2.7
%
    
5.8
%
Color
    
11.9
%
    
15.0
%
Asia Pacific
    
6.4
%
    
14.4
%
Total Revenue
    
5.9
%
    
9.7
%
                 
(1) Adjusted local currency percentage changes are described in more detail in the "Reconciliation of Non-GAAP Amounts" at the end of this release.
        

The Flavors & Extracts Group reported fourth quarter revenue of $178.9 million compared to $177.4 million in last year’s fourth quarter, an increase of 0.8%. Adjusted local currency revenue increased 2.7% in the quarter. The Group benefited from pricing across all of its product lines. Segment operating income was $21.5 million in the current quarter compared to $21.9 million reported in the comparable period last year, a decrease of 2.0%. Adjusted local currency operating income decreased 4.1% in the quarter. The lower operating income was primarily due to higher input costs and lower volumes, partially offset by favorable pricing. Foreign currency translation decreased segment revenue by approximately 2% and was not material on segment operating income in the quarter.

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Page 3
Earnings Release – Quarter Ended December 31, 2022
  
February 10, 2023
  
The Color Group reported revenue of $147.8 million in the quarter compared to $137.1 million in last year’s fourth quarter, an increase of 7.8%. Adjusted local currency revenue increased 11.9% in the quarter. The Group benefited from higher pricing and higher volumes. Segment operating income was $24.6 million in the quarter compared to $24.1 million in last year’s comparable period, an increase of 2.0%. Adjusted local currency operating income increased 7.8% compared to the prior year’s fourth quarter. The higher operating income is primarily a result of the higher volumes and favorable pricing, partially offset by higher input costs. Foreign currency translation decreased segment revenue by approximately 4% and segment operating income by approximately 6% in the quarter.

The Asia Pacific Group reported revenue of $34.6 million in the quarter compared to $35.7 million in last year’s fourth quarter, a decrease of 3.3%, primarily due to foreign currency translation. Adjusted local currency revenue increased 6.4% in the quarter, primarily as a result of higher pricing. Segment operating income was $6.6 million in the quarter compared to $7.2 million in last year’s fourth quarter, a decrease of 7.9%, primarily due to foreign currency translation. Adjusted local currency operating income increased 3.6% in the quarter, primarily as a result of the higher pricing, partially offset by higher input costs. Foreign currency translation decreased segment revenue and operating income by approximately 10% and 12%, respectively, in the quarter.

Corporate & Other reported an operating loss of $11.5 million in the current quarter compared to $12.8 million in last year’s fourth quarter, a decrease of 10.5%. In the fourth quarter of 2022, the Company recorded $2.5 million of divestiture related income related to an earnout payment received in connection with the divestiture of our yogurt fruit preparations business. The fourth quarter results of 2021 include $0.8 million of divestiture and operational improvement plan costs. Adjusted local currency operating expenses for Corporate & Other increased 16.1% in the quarter primarily due to higher performance-based compensation.

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Page 4
Earnings Release – Quarter Ended December 31, 2022
  
February 10, 2023
  
2023 OUTLOOK

Sensient expects 2023 full year GAAP diluted earnings per share to be flat to low-single digit growth compared to our 2022 reported GAAP diluted earnings per share of $3.34.

The Company expects 2023 revenue to grow at a mid-single digit rate on a local currency basis compared to the Company’s 2022 revenue. The Company expects 2023 diluted earnings per share to be flat to low-single digit growth on a local currency basis compared to the Company’s 2022 adjusted diluted earnings per share(2) of $3.29. The Company expects 2023 adjusted EBITDA(2) to grow at a mid-to-high single digit rate on a local currency basis compared to the Company’s 2022 adjusted EBITDA(2).

The Company expects its 2023 diluted earnings per share to be impacted by higher interest rates and a higher tax rate. The Company currently expects interest expense to increase by approximately $11 million ($0.20 per diluted share) in 2023 compared to the Company’s 2022 full year interest expense of $14.5 million. The Company also expects its full year 2023 tax rate to be approximately 25%.

 Based on current exchange rates, the Company expects foreign exchange rates to be a headwind for the beginning of the year, and modestly favorable for the full year.

The Company’s guidance is based on current conditions and economic and market trends in the markets in which the Company operates and is subject to various risks and uncertainties as described below.  We do not anticipate any divestiture related costs, operational improvement plan costs, or results of divested business in 2023 at this time.

  (2)
See “Reconciliation of Non-GAAP Amounts” at the end of this release for more information.

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Page 5
Earnings Release – Quarter Ended December 31, 2022
  
February 10, 2023
  
USE OF NON-GAAP FINANCIAL MEASURES

The Company’s non-GAAP financial measures eliminate the impact of certain items, which, depending on the measure, include: currency movements, depreciation and amortization, non-cash share-based compensation, divestiture & other related costs and income, operational improvement plan costs and income, and the results of the divested operations. These measures are provided to enhance the overall understanding of the Company’s performance when viewed together with the GAAP results. Refer to “Reconciliation of Non-GAAP Amounts” at the end of this release.

CONFERENCE CALL

The Company will host a conference call to discuss its 2022 fourth quarter financial results at 8:30 a.m. CST on Friday, February 10, 2023. To participate in the conference call, contact Chorus Call Inc. at (844) 492-3726 or (412) 317-1078, and ask to join the Sensient Technologies Corporation conference call. Alternatively, the call can be accessed by using the webcast link that is available on the Investor Information section of the Company’s web site at www.sensient.com.

A replay of the call will be available one hour after the end of the conference call through February 17, 2023, by calling (877) 344-7529 and referring to conference identification number 7722006. An audio replay and written transcript of the call will also be posted on the Investor Information section of the Company’s web site at www.sensient.com on or after February 14, 2023.

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Sensient Technologies Corporation
Page 6
Earnings Release – Quarter Ended December 31, 2022
  
February 10, 2023
  
This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2023 Outlook” above. 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 Company’s ability to manage economic and capital 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; the availability and cost of labor, logistics, and transportation; the impact and uncertainty created by the COVID-19 pandemic and efforts to manage it on the global economy, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, governmental regulations and restrictions, and general economic conditions; 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; 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, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 that will be filed by March 1, 2023. 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.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients.  Sensient uses advanced technologies and robust global supply chain capabilities to develop specialized solutions for food and beverages, as well as products that serve the pharmaceutical, nutraceutical, and personal care industries. Sensient’s customers range in size from small entrepreneurial businesses to major international manufacturers representing some of the world’s best-known brands.  Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

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  Page 7
(In thousands, except percentages and per share amounts)
  
(Unaudited)
  

Consolidated Statements of Earnings
  
Three Months Ended December 31,
    
Year Ended December 31,
  
                                     
   
2022
    
2021
    
% Change
    
2022
    
2021
    
% Change
  
                                     
Revenue
  
$
348,736
    
$
340,448
      
2.4
%
  
$
1,437,039
    
$
1,380,264
      
4.1
%
                                                 
Cost of products sold
    
237,232
      
228,065
      
4.0
%
    
947,928
      
925,603
      
2.4
%
Selling and administrative expenses
    
70,279
      
71,963
      
(2.3
%)
    
292,360
      
284,633
      
2.7
%
                                                 
Operating income
    
41,225
      
40,420
      
2.0
%
    
196,751
      
170,028
      
15.7
%
Interest expense
    
4,799
      
2,752
              
14,547
      
12,544
          
                                                 
Earnings before income taxes
    
36,426
      
37,668
              
182,204
      
157,484
          
Income taxes
    
7,305
      
10,439
              
41,317
      
38,739
          
                                                 
Net earnings
  
$
29,121
    
$
27,229
      
6.9
%
  
$
140,887
    
$
118,745
      
18.6
%
                                                 
Earnings per share of common stock:
                                                
Basic
  
$
0.70
    
$
0.65
            
$
3.36
    
$
2.82
          
Diluted
  
$
0.69
    
$
0.65
            
$
3.34
    
$
2.81
          
                                                 
Average common shares outstanding:
                                                
Basic
    
41,896
      
41,890
              
41,888
      
42,077
          
Diluted
    
42,255
      
42,173
              
42,213
      
42,258
          

Results by Segment
  
Three Months Ended December 31,
    
Year Ended December 31,
  
                                     
Revenue
  
2022
    
2021
    
% Change
    
2022
    
2021
    
% Change
  
                                     
Flavors & Extracts
  
$
178,893
    
$
177,448
      
0.8
%
  
$
738,003
    
$
739,427
      
(0.2
%)
Color
    
147,842
      
137,104
      
7.8
%
    
604,017
      
545,270
      
10.8
%
Asia Pacific
    
34,567
      
35,749
      
(3.3
%)
    
143,581
      
135,348
      
6.1
%
Intersegment elimination
    
(12,566
)
    
(9,853
)
            
(48,562
)
    
(39,781
)
        
                                                 
Consolidated
  
$
348,736
    
$
340,448
      
2.4
%
  
$
1,437,039
    
$
1,380,264
      
4.1
%
                                                 
Operating Income
                                                
                                                 
Flavors & Extracts
  
$
21,495
    
$
21,942
      
(2.0
%)
  
$
105,424
    
$
98,660
      
6.9
%
Color
    
24,584
      
24,113
      
2.0
%
    
114,619
      
103,575
      
10.7
%
Asia Pacific
    
6,615
      
7,184
      
(7.9
%)
    
29,492
      
26,330
      
12.0
%
Corporate & Other
    
(11,469
)
    
(12,819
)
            
(52,784
)
    
(58,537
)
        
                                                 
Consolidated
  
$
41,225
    
$
40,420
      
2.0
%
  
$
196,751
    
$
170,028
      
15.7
%

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Sensient Technologies Corporation
Page 8
(In thousands)
  
(Unaudited)
  

Consolidated Condensed Balance Sheets
  
December 31,
2022
    
December 31,
2021
  
             
Cash and cash equivalents
  
$
20,921
    
$
25,740
  
Trade accounts receivable
    
302,109
      
261,121
  
Inventories
    
564,110
      
411,635
  
Prepaid expenses and other current assets
    
47,640
      
42,657
  
Total Current Assets
    
934,780
      
741,153
  
                 
Goodwill & intangible assets (net)
    
434,315
      
435,009
  
Property, plant, and equipment (net)
    
483,193
      
446,478
  
Other assets
    
129,326
      
122,853
  
                 
Total Assets
  
$
1,981,614
    
$
1,745,493
  
                 
Trade accounts payable
  
$
142,365
    
$
125,519
  
Short-term borrowings
    
20,373
      
8,539
  
Other current liabilities
    
109,415
      
98,247
  
Total Current Liabilities
    
272,153
      
232,305
  
                 
Long-term debt
    
630,331
      
503,006
  
Accrued employee and retiree benefits
    
26,364
      
28,579
  
Other liabilities
    
53,168
      
43,178
  
Shareholders' Equity
    
999,598
      
938,425
  
                 
Total Liabilities and Shareholders' Equity
  
$
1,981,614
    
$
1,745,493
  

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Sensient Technologies Corporation
  Page 9
(In thousands, except per share amounts)
  
(Unaudited)
  

Consolidated Statements of Cash Flows
            
Year Ended December 31,
            
   
2022
    
2021
  
Cash flows from operating activities:
            
Net earnings
  
$
140,887
    
$
118,745
  
Adjustments to arrive at net cash provided by operating activities:
                
Depreciation and amortization
    
52,467
      
52,051
  
Share-based compensation expense
    
16,138
      
9,573
  
Net loss on assets
    
276
      
331
  
Net (gain) loss on divestitures and other charges
    
(2,532
)
    
14,021
  
Deferred income taxes
    
(11,010
)
    
(6,071
)
Changes in operating assets and liabilities:
                
Trade accounts receivable
    
(46,086
)
    
(34,571
)
Inventories
    
(159,014
)
    
(36,323
)
Prepaid expenses and other assets
    
(5,055
)
    
(6,057
)
Trade accounts payable and other accrued expenses
    
17,489
      
21,326
  
Accrued salaries, wages, and withholdings
    
3,486
      
7,321
  
Income taxes
    
4,422
      
4,275
  
Other liabilities
    
602
      
597
  
                 
Net cash provided by operating activities
    
12,070
      
145,218
  
                 
Cash flows from investing activities:
                
Acquisition of property, plant, and equipment
    
(79,322
)
    
(60,788
)
Proceeds from sale of assets
    
264
      
216
  
Proceeds from divestiture of businesses
    
2,532
      
37,790
  
Acquisition of new businesses
    
(22,714
)
    
(13,875
)
Other investing activities
    
792
      
1,097
  
                 
Net cash used in investing activities
    
(98,448
)
    
(35,560
)
                 
Cash flows from financing activities:
                
Proceeds from additional borrowings
    
328,597
      
112,194
  
Debt payments
    
(171,447
)
    
(110,168
)
Purchase of treasury stock
    
-
      
(42,511
)
Dividends paid
    
(68,915
)
    
(66,694
)
Other financing activities
    
(2,056
)
    
(582
)
                 
Net cash provided by (used in) financing activities
    
86,179
      
(107,761
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(4,620
)
    
(927
)
                 
Net (decrease) increase in cash and cash equivalents
    
(4,819
)
    
970
  
Cash and cash equivalents at beginning of period
    
25,740
      
24,770
  
Cash and cash equivalents at end of period
  
$
20,921
    
$
25,740
  

Supplemental Information
Year Ended December 31,
     
2022
        
2021
   
             
Dividends paid per share
  
$
1.64
    
$
1.58
  

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Sensient Technologies Corporation
  Page 10
(In thousands, except percentages and per share amounts)
  
(Unaudited)
  

Reconciliation of Non-GAAP Amounts

The Company's results for the three and twelve months ended December 31, 2022 and 2021 include adjusted revenue, adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude divestiture & other related costs, operational improvement plan costs and income, and the results of the divested operations.

   
Three Months Ended December 31,
    
Year Ended December 31,
  
   
2022
    
2021
    
% Change
    
2022
    
2021
    
% Change
  
Revenue (GAAP)
  
$
348,736
    
$
340,448
      
2.4
%
  
$
1,437,039
    
$
1,380,264
      
4.1
%
Revenue of the divested product lines
    
-
      
(663
)
            
-
      
(30,062
)
        
Adjusted revenue
  
$
348,736
    
$
339,785
      
2.6
%
  
$
1,437,039
    
$
1,350,202
      
6.4
%
                                                 
Operating income (GAAP)
  
$
41,225
    
$
40,420
      
2.0
%
  
$
196,751
    
$
170,028
      
15.7
%
Divestiture & other related costs  – Cost of products sold
    
-
      
58
              
-
      
86
          
Divestiture & other related (income) costs – Selling and administrative expenses
    
(2,532
)
    
579
              
(2,532
)
    
14,052
          
Operating loss (income) of the divested product lines
    
-
      
518
              
-
      
(1,880
)
        
Operational improvement plan - Selling and administrative expenses (income)
    
-
      
115
              
-
      
(1,895
)
        
Adjusted operating income
  
$
38,693
    
$
41,690
      
(7.2
%)
  
$
194,219
    
$
180,391
      
7.7
%
                                                 
Net earnings (GAAP)
  
$
29,121
    
$
27,229
      
6.9
%
  
$
140,887
    
$
118,745
      
18.6
%
Divestiture & other related (income) costs, before tax
    
(2,532
)
    
637
              
(2,532
)
    
14,138
          
Tax impact of divestiture & other related costs(1)
    
636
      
1,809
              
636
      
2,092
          
Net loss (earnings) of the divested product lines, before tax
    
-
      
518
              
-
      
(1,880
)
        
Tax impact of the divested product lines(1)
    
-
      
(130
)
            
-
      
460
          
Operational improvement plan costs (income), before tax
    
-
      
115
              
-
      
(1,895
)
        
Tax impact of operational improvement plan(1)
    
-
      
427
              
-
      
471
          
Adjusted net earnings
  
$
27,225
    
$
30,605
      
(11.0
%)
  
$
138,991
    
$
132,131
      
5.2
%
                                                 
Diluted earnings per share (GAAP)
  
$
0.69
    
$
0.65
      
6.2
%
  
$
3.34
    
$
2.81
      
18.9
%
Divestiture & other related (income) costs, net of tax
    
(0.04
)
    
0.06
              
(0.04
)
    
0.38
          
Results of operations of the divested product lines, net of tax
    
-
      
0.01
              
-
      
(0.03
)
        
Operational improvement plan costs (income), net of tax
    
-
      
0.01
              
-
      
(0.03
)
        
Adjusted diluted earnings per share
  
$
0.64
    
$
0.73
      
(12.3
%)
  
$
3.29
    
$
3.13
      
5.1
%

Note: Earnings per share calculations may not foot due to rounding differences.

(1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.

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Sensient Technologies Corporation
Page 11
(In thousands)
 
(Unaudited)
 

Reconciliation of Non-GAAP Amounts - Continued

Results by Segment
  
Three Months Ended December 31,
  
Revenue
  
2022
    
Adjustments(2)
    
Adjusted
2022
    
2021
    
Adjustments(2)
    
Adjusted
2021
  
                                     
Flavors & Extracts
  
$
178,893
    
$
-
    
$
178,893
    
$
177,448
    
$
(221
)
  
$
177,227
  
Color
    
147,842
      
-
      
147,842
      
137,104
      
(442
)
    
136,662
  
Asia Pacific
    
34,567
      
-
      
34,567
      
35,749
      
-
      
35,749
  
Intersegment elimination
    
(12,566
)
    
-
      
(12,566
)
    
(9,853
)
    
-
      
(9,853
)
                                                 
Consolidated
  
$
348,736
    
$
-
    
$
348,736
    
$
340,448
    
$
(663
)
  
$
339,785
  
                                                 
Operating Income
                                                
                                                 
Flavors & Extracts
  
$
21,495
    
$
-
    
$
21,495
    
$
21,942
    
$
491
    
$
22,433
  
Color
    
24,584
      
-
      
24,584
      
24,113
      
27
      
24,140
  
Asia Pacific
    
6,615
      
-
      
6,615
      
7,184
      
-
      
7,184
  
Corporate & Other
    
(11,469
)
    
(2,532
)
    
(14,001
)
    
(12,819
)
    
752
      
(12,067
)
                                                 
Consolidated
  
$
41,225
    
$
(2,532
)
  
$
38,693
    
$
40,420
    
$
1,270
    
$
41,690
  

Results by Segment
  
Year Ended December 31,
  
Revenue
   
 
2022
      
 
Adjustments(2)
      
Adjusted
2022
      
 
2021
      
 
Adjustments(2)
      
Adjusted
2021
   
                                     
Flavors & Extracts
  
$
738,003
    
$
-
    
$
738,003
    
$
739,427
    
$
(27,837
)
  
$
711,590
  
Color
    
604,017
      
-
      
604,017
      
545,270
      
(2,080
)
    
543,190
  
Asia Pacific
    
143,581
      
-
      
143,581
      
135,348
      
(295
)
    
135,053
  
Intersegment elimination
    
(48,562
)
    
-
      
(48,562
)
    
(39,781
)
    
150
      
(39,631
)
                                                 
Consolidated
  
$
1,437,039
    
$
-
    
$
1,437,039
    
$
1,380,264
    
$
(30,062
)
  
$
1,350,202
  
                                                 
Operating Income
                                                
                                                 
Flavors & Extracts
  
$
105,424
    
$
-
    
$
105,424
    
$
98,660
    
$
(2,368
)
  
$
96,292
  
Color
    
114,619
      
-
      
114,619
      
103,575
      
575
      
104,150
  
Asia Pacific
    
29,492
      
-
      
29,492
      
26,330
      
(87
)
    
26,243
  
Corporate & Other
    
(52,784
)
    
(2,532
)
    
(55,316
)
    
(58,537
)
    
12,243
      
(46,294
)
                                                 
Consolidated
  
$
196,751
    
$
(2,532
)
  
$
194,219
    
$
170,028
    
$
10,363
    
$
180,391
  

(2) 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 income, and 2021 operational improvement plan costs and income.

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Sensient Technologies Corporation
 Page 12
(In thousands, except percentages)
 
(Unaudited)
 

Reconciliation of Non-GAAP Amounts - Continued

The following tables summarize the percentage change in the 2022 results compared to the 2021 results for the corresponding periods.

   
Three Months Ended December 31,
  
Revenue
  
Total
    
Foreign
Exchange
Rates
    
Adjustments(3)
    
Adjusted
Local
Currency
  
Flavors & Extracts
    
0.8
%
    
(1.8
%)
    
(0.1
%)
    
2.7
%
Color
    
7.8
%
    
(3.8
%)
    
(0.3
%)
    
11.9
%
Asia Pacific
    
(3.3
%)
    
(9.7
%)
    
0.0
%
    
6.4
%
Total Revenue
    
2.4
%
    
(3.3
%)
    
(0.2
%)
    
5.9
%
                                 
Operating Income
                                
Flavors & Extracts
    
(2.0
%)
    
(0.1
%)
    
2.2
%
    
(4.1
%)
Color
    
2.0
%
    
(5.9
%)
    
0.1
%
    
7.8
%
Asia Pacific
    
(7.9
%)
    
(11.5
%)
    
0.0
%
    
3.6
%
Corporate & Other
    
(10.5
%)
    
0.0
%
    
(26.6
%)
    
16.1
%
Total Operating Income
    
2.0
%
    
(5.6
%)
    
9.3
%
    
(1.7
%)
Diluted Earnings Per Share
    
6.2
%
    
(6.1
%)
    
19.1
%
    
(6.8
%)
Adjusted EBITDA
    
(4.3
%)
    
(4.6
%)
    
N/A
      
0.3
%

   
Year Ended December 31,
  
Revenue
  
Total
    
Foreign
Exchange
Rates
    
Adjustments(3)
    
Adjusted
Local
Currency
  
Flavors & Extracts
    
(0.2
%)
    
(2.2
%)
    
(3.8
%)
    
5.8
%
Color
    
10.8
%
    
(3.8
%)
    
(0.4
%)
    
15.0
%
Asia Pacific
    
6.1
%
    
(8.0
%)
    
(0.3
%)
    
14.4
%
Total Revenue
    
4.1
%
    
(3.4
%)
    
(2.2
%)
    
9.7
%
                                 
Operating Income
                                
Flavors & Extracts
    
6.9
%
    
(0.9
%)
    
(2.5
%)
    
10.3
%
Color
    
10.7
%
    
(5.1
%)
    
0.7
%
    
15.1
%
Asia Pacific
    
12.0
%
    
(10.1
%)
    
(0.4
%)
    
22.5
%
Corporate & Other
    
(9.8
%)
    
0.0
%
    
(29.4
%)
    
19.6
%
Total Operating Income
    
15.7
%
    
(5.2
%)
    
8.4
%
    
12.5
%
Diluted Earnings Per Share
    
18.9
%
    
(5.3
%)
    
14.3
%
    
9.9
%
Adjusted EBITDA
    
8.7
%
    
(4.1
%)
    
N/A
      
12.8
%

(3) For Revenue, adjustments consist of revenues of the divested product lines. For Operating Income, Diluted Earnings per Share, and Adjusted EBITDA, adjustments consist of the results of the divested product lines, divestiture & other related costs and income, and 2021 operational improvement plan costs and income.

The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021.

   
Three Months Ended December 31,
    
Year Ended December 31,
  
                                     
   
2022
    
2021
    
% Change
    
2022
    
2021
    
% Change
  
Operating income (GAAP)
  
$
41,225
    
$
40,420
      
2.0
%
  
$
196,751
    
$
170,028
      
15.7
%
Depreciation and amortization
    
13,205
      
13,223
              
52,467
      
52,051
          
Depreciation and amortization, divested product lines
    
-
      
-
              
-
      
(146
)
        
Share-based compensation expense
    
3,662
      
3,142
              
16,138
      
9,573
          
Divestiture & other related (income) costs, before tax
    
(2,532
)
    
637
              
(2,532
)
    
14,138
          
Results of operations of the divested product lines, before tax
    
-
      
518
              
-
      
(1,880
)
        
Operational improvement plan costs (income), before tax
    
-
      
115
              
-
      
(1,895
)
        
Adjusted EBITDA
  
$
55,560
    
$
58,055
      
(4.3
%)
  
$
262,824
    
$
241,869
      
8.7
%

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Sensient Technologies Corporation
 Page 13
(In thousands, except percentages)
 
(Unaudited)
 

Reconciliation of Non-GAAP Amounts - Continued

   
Year Ended December 31,
  
             
Debt
  
2022
    
2021
  
Short-term borrowings
  
$
20,373
    
$
8,539
  
Long-term debt
    
630,331
      
503,006
  
Credit Agreement adjustments (4)
    
(10,180
)
    
(14,900
)
Net Debt
  
$
640,524
    
$
496,645
  
                 
Operating income (GAAP)
  
$
196,751
    
$
170,028
  
Depreciation and amortization
    
52,467
      
52,051
  
Depreciation and amortization, divested product lines
    
-
      
(146
)
Share-based compensation expense
    
16,138
      
9,573
  
Divestiture & other related (income) costs, before tax
    
(2,532
)
    
14,138
  
Results of operations of the divested product lines, before tax
    
-
      
(1,880
)
Operational improvement plan income, before tax
    
-
      
(1,895
)
Other non-operating (gains) losses (5)
    
(866
)
    
1,027
  
Credit Adjusted EBITDA
  
$
261,958
    
$
242,896
  
                 
Net Debt to Credit Adjusted EBITDA
    
2.4
x
    
2.0
x

(4) Adjustments include cash and cash equivalents, as described in the Company's Third Amended and Restated Credit Agreement (Credit Agreement), and certain letters of credit and hedge contracts.
(5) Adjustments consist of certain financing transaction costs, certain non-financing interest items, and gains and losses related to certain non-cash, non-operating, and/or non-recurring items as described in the Credit Agreement.

We have included each of these non-GAAP measures in order to provide additional information regarding our 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 release and our 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, and we believe the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. With respect to Net Debt to Credit Adjusted EBITDA, this represents our leverage ratio as calculated for purposes of compliance with covenants under our Credit Agreement.  In addition to use for these purposes, management utilizes this measure to assess leverage trends and may from time to time disclose it to investors to be used for these purposes.