QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended:
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
to
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
Registrant’s telephone number, including area code:
|
(
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
Accelerated Filer ☐
|
Non-Accelerated Filer ☐
|
Smaller Reporting Company
|
Emerging Growth Company
|
Class
|
Outstanding at April 24, 2024
|
|
Common Stock, par value $0.10 per share
|
|
Page No.
|
||
PART I. FINANCIAL INFORMATION:
|
||
Item 1.
|
Financial Statements:
|
|
|
||
1
|
||
|
||
2
|
||
|
||
3
|
||
|
||
4
|
||
|
||
5
|
||
6
|
||
Item 2.
|
12 |
|
Item 3.
|
16
|
|
Item 4.
|
16
|
|
PART II. OTHER INFORMATION:
|
||
Item 1.
|
16
|
|
Item 1A.
|
16
|
|
Item 2.
|
16
|
|
Item 5.
|
16
|
|
Item 6 |
Exhibits. | 16 |
17
|
||
18
|
PART I. |
FINANCIAL INFORMATION
|
ITEM 1. |
FINANCIAL STATEMENTS
|
Three Months
Ended March 31,
|
||||||||
2024
|
2023
|
|||||||
Revenue
|
$
|
|
$
|
|
||||
Cost of products sold
|
|
|
||||||
Selling and administrative expenses
|
|
|
||||||
Operating income
|
|
|
||||||
Interest expense
|
|
|
||||||
Earnings before income taxes
|
|
|
||||||
Income taxes
|
|
|
||||||
Net earnings
|
$
|
|
$
|
|
||||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
||||||
Earnings per common share:
|
||||||||
Basic
|
$
|
|
$
|
|
||||
Diluted
|
$
|
|
$
|
|
||||
Dividends declared per common share
|
$
|
|
$
|
|
Three Months
Ended March 31,
|
||||||||
2024
|
2023
|
|||||||
Comprehensive income
|
$
|
|
$
|
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
||||||
Assets |
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Trade accounts receivable
|
|
|
||||||
Inventories
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Other assets
|
|
|
||||||
Deferred tax assets
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Property, Plant, and Equipment:
|
||||||||
Land
|
|
|
||||||
Buildings
|
|
|
||||||
Machinery and equipment
|
|
|
||||||
Construction in progress
|
|
|
||||||
|
|
|||||||
Less accumulated depreciation
|
(
|
(
|
||||||
|
|
|||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities
and Shareholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Trade accounts payable
|
$
|
|
$
|
|
||||
Accrued salaries, wages, and withholdings from employees
|
|
|
||||||
Other accrued expenses
|
|
|
||||||
Income taxes
|
|
|
||||||
Short-term borrowings
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Deferred tax liabilities
|
|
|
||||||
Other liabilities
|
|
|
||||||
Accrued employee and retiree benefits
|
|
|
||||||
Long-term debt
|
|
|
||||||
Shareholders’ Equity:
|
||||||||
Common stock
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Earnings reinvested in the business
|
|
|
||||||
Treasury stock, at cost
|
(
|
(
|
||||||
Accumulated other comprehensive loss
|
(
|
(
|
||||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months
Ended March 31,
|
||||||||
2024
|
2023
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
|
$
|
|
||||
Adjustments to arrive at net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Share-based compensation expense
|
|
|
||||||
Net (gain) loss on assets
|
(
|
)
|
|
|||||
Portfolio Optimization Plan costs
|
||||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventories
|
|
(
|
)
|
|||||
Prepaid expenses and other assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable and other accrued expenses
|
(
|
)
|
(
|
)
|
||||
Accrued salaries, wages, and withholdings from employees
|
|
(
|
)
|
|||||
Income taxes
|
|
|
||||||
Other liabilities
|
|
|
||||||
Net cash provided by (used in) operating activities
|
|
(
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Acquisition of property, plant, and equipment
|
(
|
)
|
(
|
)
|
||||
Proceeds from sale of assets
|
|
|
||||||
Other investing activities
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from additional borrowings
|
|
|
||||||
Debt payments
|
(
|
)
|
(
|
)
|
||||
Dividends paid
|
(
|
)
|
(
|
)
|
||||
Other financing activities
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
|
Treasury Stock
|
|
|
|||||||||||||||||||||||||
Three Months
Ended March 31, 2024
|
Common
Stock |
Additional
Paid-In
Capital |
Earnings
Reinvested
in the
Business |
Shares
|
Amount
|
Accumulated
Other
Comprehensive
Income (Loss) |
Total
Equity
|
|||||||||||||||||||||
Balances at December 31, 2023
|
$
|
|
$
|
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Net earnings
|
|
|
|
-
|
|
|
|
|||||||||||||||||||||
Other comprehensive loss
|
|
|
|
-
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Cash dividends
paid – $
|
|
|
(
|
)
|
-
|
|
|
(
|
)
|
|||||||||||||||||||
Share-based compensation
|
|
|
|
-
|
|
|
|
|||||||||||||||||||||
Non-vested stock issued upon vesting
|
|
(
|
)
|
|
(
|
)
|
|
|
|
|||||||||||||||||||
Benefit plans |
( |
) | ||||||||||||||||||||||||||
Other
|
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||
Balances at March 31, 2024
|
$
|
|
$
|
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Three Months Ended March 31, 2023
|
||||||||||||||||||||||||||||
Balances at December 31, 2022
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net earnings
|
- | |||||||||||||||||||||||||||
Other comprehensive income
|
- | |||||||||||||||||||||||||||
Cash dividends
paid – $
|
( |
) | - | ( |
) | |||||||||||||||||||||||
Share-based compensation
|
- | |||||||||||||||||||||||||||
Non-vested stock issued upon vesting |
( |
) | ( |
) | ||||||||||||||||||||||||
Benefit plans |
( |
) | ||||||||||||||||||||||||||
Other |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Balances at March 31, 2023
|
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ |
1.
|
Accounting Policies
|
2.
|
Portfolio Optimization Plan
|
(In thousands)
|
Flavors &
Extracts
|
Color
|
Corporate
& Other
|
Consolidated
|
||||||||||||
Non-cash impairment charges – Selling and administrative expenses
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Non-cash charges – Cost of products sold
|
|
(
|
)
|
|
|
|||||||||||
Employee separation – Selling and administrative expenses
|
|
|
|
|
||||||||||||
Other costs – Selling and administrative expenses(1)
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
|
(1) |
|
3. |
Trade Accounts Receivable
|
(In
thousands)
Three Months Ended March 31, 2024
|
Allowance for
Doubtful Accounts
|
|||
Balance at December 31, 2023
|
$
|
|
||
Provision for expected credit losses
|
|
|||
Accounts written off
|
(
|
)
|
||
Translation and other activity
|
(
|
)
|
||
Balance at March 31, 2024
|
$
|
|
(In
thousands)
Three Months Ended March 31, 2023
|
Allowance for
Doubtful Accounts
|
|||
Balance at December 31, 2022
|
$
|
|
||
Provision for expected credit losses
|
|
|||
Accounts written off
|
(
|
)
|
||
Translation and other activity
|
|
|||
Balance at March 31, 2023
|
$
|
|
4. |
Inventories
|
5. |
Fair Value
|
6. |
Segment Information
|
(In
thousands)
|
Flavors &
Extracts
|
Color
|
Asia
Pacific
|
Corporate &
Other
|
Consolidated
|
|||||||||||||||
Three months ended March 31, 2024:
|
||||||||||||||||||||
Revenue from
external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Intersegment
revenue
|
|
|
|
|
|
|||||||||||||||
Total revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Operating
income (loss)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
Interest
expense
|
|
|
|
|
|
|||||||||||||||
Earnings
(loss) before income taxes
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
Three months ended March 31, 2023:
|
||||||||||||||||||||
Revenue from
external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Intersegment
revenue
|
|
|
|
|
|
|||||||||||||||
Total revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Operating
income (loss)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||
Interest
expense
|
|
|
|
|
|
|||||||||||||||
Earnings
(loss) before income taxes
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(In
thousands)
|
Flavors &
Extracts
|
Color
|
Asia Pacific
|
Consolidated
|
||||||||||||
Three
months ended March 31, 2024
|
||||||||||||||||
Flavors,
Extracts & Flavor Ingredients
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Natural
Ingredients
|
|
|
|
|
||||||||||||
Food &
Pharmaceutical Colors
|
|
|
|
|
||||||||||||
Personal Care
|
|
|
|
|
||||||||||||
Asia Pacific
|
-
|
-
|
|
|
||||||||||||
Intersegment
Revenue
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total revenue
from external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Three
months ended March 31, 2023:
|
||||||||||||||||
Flavors,
Extracts & Flavor Ingredients
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Natural
Ingredients
|
|
|
|
|
||||||||||||
Food &
Pharmaceutical Colors
|
|
|
|
|
||||||||||||
Personal Care
|
|
|
|
|
||||||||||||
Asia Pacific
|
-
|
-
|
|
|
||||||||||||
Intersegment
Revenue
|
(
|
)
|
( |
) |
|
(
|
)
|
|||||||||
Total revenue
from external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
(In
thousands)
|
Flavors &
Extracts
|
Color
|
Asia Pacific
|
Consolidated
|
||||||||||||
Three months ended March 31, 2024:
|
||||||||||||||||
North America
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Europe
|
|
|
|
|
||||||||||||
Asia Pacific
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total revenue
from external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Three months ended March 31, 2023:
|
||||||||||||||||
North America
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Europe
|
|
|
|
|
||||||||||||
Asia Pacific
|
|
|
|
|
||||||||||||
Other
|
|
|
|
|
||||||||||||
Total revenue
from external customers
|
$
|
|
$
|
|
$
|
|
$
|
|
7. |
Retirement Plans
|
Three Months Ended
March 31,
|
||||||||
(In thousands)
|
2024
|
2023
|
||||||
Service cost
|
$
|
|
$
|
|
||||
Interest cost
|
||||||||
Expected return on plan assets
|
(
|
)
|
(
|
)
|
||||
Recognized actuarial gain
|
( |
) | ( |
) | ||||
Total defined benefit expense
|
$
|
|
$
|
|
8. |
Derivative Instruments and Hedging
Activity
|
9. |
Income Taxes
|
10. |
Accumulated Other Comprehensive Income
|
(In thousands)
|
Cash Flow
Hedges (1)
|
Pension
Items (1)
|
Foreign
Currency
Items
|
Total
|
||||||||||||
Balances at December 31, 2023
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||
Other comprehensive income (loss) before
reclassifications
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Amounts reclassified from OCI
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
Balances at March 31, 2024
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
(In thousands)
|
Cash Flow
Hedges (1)
|
Pension
Items (1)
|
Foreign
Currency
Items
|
Total
|
||||||||||||
Balances at December 31, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Other comprehensive income before reclassifications
|
|
|
|
|
||||||||||||
Amounts reclassified from OCI
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
Balances at March 31, 2023
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
(1) |
|
11. |
Commitments and Contingencies
|
12. |
Subsequent Event
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended March 31,
|
||||||||||||
(In thousands except per share amounts)
|
2024
|
2023
|
% Change
|
|||||||||
Operating Income (GAAP)
|
$
|
49,406
|
$
|
50,838
|
(2.8
|
)%
|
||||||
Portfolio Optimization Plan costs – Cost of products sold
|
107
|
-
|
||||||||||
Portfolio Optimization Plan costs – Selling and administrative expenses
|
2,705
|
-
|
||||||||||
Adjusted operating income
|
$
|
52,218
|
$
|
50,838
|
2.7
|
%
|
||||||
Net Earnings (GAAP)
|
$
|
30,940
|
$
|
33,651
|
(8.1
|
)%
|
||||||
Portfolio Optimization Plan costs, before tax
|
2,812
|
- | ||||||||||
Tax impact of Portfolio Optimization Plan costs(1)
|
(355
|
)
|
- | |||||||||
Adjusted net earnings
|
$
|
33,397
|
$
|
33,651
|
(0.8
|
)%
|
||||||
Diluted Earnings Per Share (GAAP)
|
$
|
0.73
|
$
|
0.80
|
(8.8
|
)%
|
||||||
Portfolio Optimization Plan costs, net of tax
|
0.06
|
-
|
||||||||||
Adjusted diluted earnings per share
|
$
|
0.79
|
$
|
0.80
|
(1.3
|
)%
|
Three Months Ended March 31, 2024
|
||||||||||||
Total
|
Foreign
Exchange
Rates
|
Adjustments(1)
|
Adjusted
Local
Currency
|
|||||||||
Revenue
|
||||||||||||
Flavors & Extracts
|
8.0%
|
1.1%
|
N/A
|
6.9%
|
||||||||
Color
|
(0.7%)
|
1.0%
|
N/A
|
(1.7%)
|
||||||||
Asia Pacific
|
0.6%
|
(3.5%)
|
N/A
|
4.1%
|
||||||||
Total Revenue
|
4.2%
|
0.4%
|
N/A
|
3.8%
|
||||||||
Operating Income
|
||||||||||||
Flavors & Extracts
|
6.8%
|
0.5%
|
0.0%
|
|
6.3%
|
|||||||
Color
|
(0.6%)
|
1.2%
|
0.0%
|
|
(1.8%)
|
|||||||
Asia Pacific
|
(5.0%)
|
(4.4%)
|
0.0%
|
|
(0.6%)
|
|||||||
Corporate & Other
|
18.1%
|
0.0%
|
22.5%
|
(4.4%)
|
||||||||
Total Operating Income
|
(2.8%)
|
0.2%
|
(5.6%)
|
2.6%
|
||||||||
Diluted Earnings per Share
|
(8.8%)
|
0.0%
|
(7.5%)
|
|
(1.3%)
|
(1)
|
Adjustments consist of Portfolio Optimization Plan costs.
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
RISK FACTORS
|
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 5. |
OTHER INFORMATION
|
ITEM 6. |
EXHIBITS
|
Exhibit
|
Description
|
Incorporated by Reference From
|
Filed Herewith
|
Certifications of the Company’s Chairman, President & Chief Executive Officer and Senior Vice President & Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
|
X
|
||
Certifications of the Company’s Chairman, President & Chief Executive Officer and Senior Vice President & Chief Financial Officer pursuant to 18 United States Code § 1350
|
X
|
||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
X
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
X
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
X
|
SENSIENT TECHNOLOGIES CORPORATION
|
||||
Date:
|
May 7, 2024
|
By:
|
/s/ John J. Manning
|
|
John J.Manning, Senior Vice
|
||||
President, General Counsel & | ||||
Secretary
|
Date:
|
May 7, 2024
|
By:
|
/s/ Stephen J. Rolfs
|
|
Stephen J. Rolfs, Senior Vice
|
||||
President & Chief Financial Officer
|