EX-99.1 2 ef20037619_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

Contact:
Amy Agallar
(414) 347-3706
investor.relations@sensient.com

Sensient Technologies Corporation
Reports Results for the Quarter Ended September 30, 2024

MILWAUKEE — October 25, 2024 — Sensient Technologies Corporation (NYSE: SXT), a leading provider of flavors and colors for the food, pharmaceutical, and personal care markets, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter Consolidated Results


 •
Reported revenue increased 7.9% to $392.6 million in the third quarter of 2024 versus last year’s third quarter results of $363.8 million. On a local currency basis(1), revenue increased 8.6%.

•
Reported operating income increased 13.4% to $50.5 million compared to $44.5 million recorded in the third quarter of 2023. In the third quarter of 2024, the Company recorded $1.2 million of costs related to its Portfolio Optimization Plan. Local currency adjusted operating income(1) and local currency adjusted EBITDA(1) increased 17.1% and 12.8%, respectively, in the third quarter.

•
Reported diluted earnings per share increased 2.7% to 77 cents in the third quarter of 2024 compared to 75 cents in the third quarter of 2023. Local currency adjusted diluted EPS(1) increased 8.0% to 80 cents in the third quarter.
 
“I am pleased with our results this quarter and remain confident that our solid performance and volume growth will allow the Company to achieve our 2024 guidance,” said Paul Manning, Sensient’s Chairman, President, and Chief Executive Officer.

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Sensient Technologies Corporation
Page 2
Earnings Release – Quarter Ended September 30, 2024
October 25, 2024
Third Quarter Group Results

   
Reported
  
Local Currency(1)
Revenue
  
Quarter
  
Year-to-Date
  
Quarter
  
Year-to-Date
Flavors & Extracts
  
6.4%
  
8.5%
  
6.8%
 
8.3%
Color
  
11.8%
  
5.0%
  
13.0%
 
5.2%
Asia Pacific
  
13.6%
  
6.9%
  
13.4%
 
9.4%
Total Revenue
  
7.9%
  
6.7%
  
8.6%
 
6.9%

   
Reported
  
Adjusted Local Currency(1)
Operating Income
  
Quarter
  
Year-to-Date
  
Quarter
 
Year-to-Date
Flavors & Extracts
  
12.1%
  
8.7%
  
12.8%
 
8.8%
Color
  
30.0%
  
10.7%
  
30.9%
 
10.8%
Asia Pacific
  
15.0%
  
4.2%
  
15.3%
 
7.5%
Total Operating Income
  
13.4%
  
1.8%
  
17.1%
 
6.4%
 
 
 
 
 
 
 
 
 

The Flavors & Extracts Group reported third quarter 2024 revenue of $203.3 million, an increase of $12.3 million versus the prior year’s third quarter. Segment operating income was $25.9 million in the third quarter of 2024, an increase of $2.8 million compared to the prior year’s third quarter. The Group’s higher revenue and operating income were driven by higher volumes and pricing.

The Color Group reported revenue of $162.1 million in the third quarter of 2024, an increase of $17.1 million compared to the prior year’s third quarter. Segment operating income was $29.8 million in the third quarter of 2024, an increase of $6.9 million compared to the prior year’s third quarter results. The Group’s increased revenue and operating income were primarily a result of the higher volumes across all product lines and higher pricing.

The Asia Pacific Group reported revenue of $41.8 million in the third quarter of 2024, an increase of $5.0 million compared to the prior year’s third quarter. The Group benefited from higher revenues across nearly all geographies. Segment operating income was $9.3 million in the quarter, an increase of $1.2 million compared to the prior year’s third quarter. The higher operating income is primarily a result of higher volumes.

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Sensient Technologies Corporation
Page 3
Earnings Release – Quarter Ended September 30, 2024
October 25, 2024
Corporate & Other reported operating expenses of $14.5 million in the third quarter of 2024, compared to $9.6 million of operating expenses reported in the prior year’s third quarter. In the third quarter of 2024, the Company recorded $1.2 million of Portfolio Optimization Plan costs in Corporate & Other.  Local currency adjusted operating expenses(1) for Corporate & Other increased $3.7 million compared to the prior year’s third quarter, primarily due to the higher performance-based compensation costs recorded in the third quarter of 2024 compared to the low comparable amount recorded in the third quarter of 2023.

2024 Outlook

         
Metric
  
Updated Guidance
  
Prior Guidance
         
Local Currency Revenue(1)
  
High Single-Digit Growth
  
Mid-to High Single-Digit Growth
         
Local Currency Adjusted EBITDA(1)
  
High Single-Digit Growth
  
Mid-to High Single-Digit Growth
         
Diluted EPS (GAAP)
  
Between $2.77 and $2.87*
  
Between $2.77 and $2.87*
         
Local Currency Adjusted Diluted EPS(1)
  
Mid-Single-Digit Growth
  
Mid-Single-Digit Growth
         
*Includes approximately 18 cents of Portfolio Optimization Plan costs.
 
 

This 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.


 (1)
Please refer to “Reconciliation of Non-GAAP Amounts” at the end of this release for more information regarding our non-GAAP financial measures.

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Sensient Technologies Corporation
Page 4
Earnings Release – Quarter Ended September 30, 2024
October 25, 2024
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, Portfolio Optimization Plan costs, and non-cash share-based compensation. 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 2024 third quarter financial results at 8:30 a.m. CDT today, Friday, October 25, 2024.  Investors may access the live webcast, including presentation slides, on the Company’s web site at investor.sensient.com.  Alternatively, investors may join the conference call by contacting Chorus Call Inc. at (844) 492-3726 or (412) 317-1078.

A webcast replay will be available on the Company’s web site following the call.  The call transcript will be available on the Company’s web site on or after October 29, 2024.

This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2024 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 general business, economic, and capital market conditions, including actions taken by customers in response to such 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, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and Israel and Hamas and other parties in the Middle East; the availability and cost of labor, logistics, and transportation; 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 Portfolio Optimization 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; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; 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, 2023, 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 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.

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Sensient Technologies Corporation
Page 5
Earnings Release – Quarter Ended September 30, 2024
October 25, 2024
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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Sensient Technologies Corporation
Page 6
(In thousands, except percentages and per share amounts)
(Unaudited)

Consolidated Statements of Earnings
  
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
                                     
   
2024
    
2023
    
% Change
    
2024
    
2023
    
% Change
  
                                     
Revenue
  
$
392,613
    
$
363,829
      
7.9
%
  
$
1,180,808
    
$
1,107,148
      
6.7
%
                                                 
Cost of products sold
    
262,209
      
250,202
      
4.8
%
    
793,133
      
746,681
      
6.2
%
Selling and administrative expenses
    
79,884
      
69,096
      
15.6
%
    
238,092
      
213,507
      
11.5
%
                                                 
Operating income
    
50,520
      
44,531
      
13.4
%
    
149,583
      
146,960
      
1.8
%
Interest expense
    
7,696
      
6,294
              
22,394
      
18,648
          
                                                 
Earnings before income taxes
    
42,824
      
38,237
              
127,189
      
128,312
          
Income taxes
    
10,134
      
6,694
              
32,627
      
29,085
          
                                                 
Net earnings
  
$
32,690
    
$
31,543
      
3.6
%
  
$
94,562
    
$
99,227
      
(4.7
%)
                                                 
Earnings per share of common stock:
                                                
Basic
  
$
0.78
    
$
0.75
            
$
2.24
    
$
2.36
          
                                                 
Diluted
  
$
0.77
    
$
0.75
            
$
2.23
    
$
2.35
          
                                                 
Average common shares outstanding:
                                                
Basic
    
42,159
      
42,045
              
42,139
      
42,020
          
                                                 
Diluted
    
42,429
      
42,233
              
42,377
      
42,241
          

Results by Segment
  
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
                                     
Revenue
  
2024
    
2023
    
% Change
    
2024
    
2023
    
% Change
  
                                     
Flavors & Extracts
  
$
203,279
    
$
190,997
      
6.4
%
  
$
605,584
    
$
558,133
      
8.5
%
Color
    
162,080
      
144,939
      
11.8
%
    
489,805
      
466,563
      
5.0
%
Asia Pacific
    
41,778
      
36,774
      
13.6
%
    
120,664
      
112,888
      
6.9
%
Intersegment elimination
    
(14,524
)
    
(8,881
)
            
(35,245
)
    
(30,436
)
        
                                                 
Consolidated
  
$
392,613
    
$
363,829
      
7.9
%
  
$
1,180,808
    
$
1,107,148
      
6.7
%

Operating Income
                                    
                                     
Flavors & Extracts
  
$
25,862
    
$
23,078
      
12.1
%
  
$
75,749
    
$
69,714
      
8.7
%
Color
    
29,806
      
22,925
      
30.0
%
    
92,987
      
84,027
      
10.7
%
Asia Pacific
    
9,307
      
8,095
      
15.0
%
    
25,963
      
24,911
      
4.2
%
Corporate & Other
    
(14,455
)
    
(9,567
)
            
(45,116
)
    
(31,692
)
        
                                                 
Consolidated
  
$
50,520
    
$
44,531
      
13.4
%
  
$
149,583
    
$
146,960
      
1.8
%

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Sensient Technologies Corporation
Page 7
(In thousands)
(Unaudited)

Consolidated Condensed Balance Sheets
  
September 30,
    
December 31,
  
   
2024
    
2023
  
             
Cash and cash equivalents
  
$
36,969
    
$
28,934
  
Trade accounts receivable
    
302,012
      
272,164
  
Inventories
    
580,847
      
598,399
  
Prepaid expenses and other current assets
    
38,973
      
37,119
  
Total Current Assets
    
958,801
      
936,616
  
                 
Goodwill & intangible assets (net)
    
438,220
      
436,177
  
Property, plant, and equipment (net)
    
494,619
      
505,277
  
Other assets
    
150,972
      
136,437
  
                 
Total Assets
  
$
2,042,612
    
$
2,014,507
  
                 
Trade accounts payable
  
$
119,238
    
$
131,114
  
Short-term borrowings
    
17,811
      
13,460
  
Other current liabilities
    
119,406
      
91,732
  
Total Current Liabilities
    
256,455
      
236,306
  
                 
Long-term debt
    
625,627
      
645,085
  
Accrued employee and retiree benefits
    
26,130
      
27,715
  
Other liabilities
    
53,949
      
52,077
  
Shareholders’ Equity
    
1,080,451
      
1,053,324
  
                 
Total Liabilities and Shareholders’ Equity
  
$
2,042,612
    
$
2,014,507
  

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Sensient Technologies Corporation
Page 8
(In thousands, except per share amounts)
(Unaudited)

Consolidated Statements of Cash Flows
Nine Months Ended September 30,

   
2024
    
2023
  
Cash flows from operating activities:
            
Net earnings
  
$
94,562
    
$
99,227
  
Adjustments to arrive at net cash provided by operating activities:
                
Depreciation and amortization
    
45,185
      
43,360
  
Share-based compensation expense
    
6,980
      
7,285
  
Net gain on assets
    
(210
)
    
(81
)
Portfolio Optimization Plan costs
    
1,406
      
-
  
Deferred income taxes
    
(11,117
)
    
2,082
  
Changes in operating assets and liabilities:
                
Trade accounts receivable
    
(32,138
)
    
18,830
  
Inventories
    
14,902
      
(21,455
)
Prepaid expenses and other assets
    
221
      
842
  
Trade accounts payable and other accrued expenses
    
(4,664
)
    
(20,572
)
Accrued salaries, wages, and withholdings
    
16,769
      
(16,749
)
Income taxes
    
854
      
(6,536
)
Other liabilities
    
3,011
      
587
  
                 
Net cash provided by operating activities
    
135,761
      
106,820
  
                 
Cash flows from investing activities:
                
Acquisition of property, plant, and equipment
    
(36,088
)
    
(67,718
)
Proceeds from sale of assets
    
338
      
130
  
Other investing activities
    
(1,444
)
    
2,036
  
                 
Net cash used in investing activities
    
(37,194
)
    
(65,552
)
                 
Cash flows from financing activities:
                
Proceeds from additional borrowings
    
134,432
      
197,577
  
Debt payments
    
(154,219
)
    
(174,083
)
Dividends paid
    
(52,034
)
    
(51,900
)
Other financing activities
    
(3,317
)
    
(8,034
)
                 
Net cash used in financing activities
    
(75,138
)
    
(36,440
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(15,394
)
    
6,236
  
                 
Net increase in cash and cash equivalents
    
8,035
      
11,064
  
Cash and cash equivalents at beginning of period
    
28,934
      
20,921
  
Cash and cash equivalents at end of period
  
$
36,969
    
$
31,985
  

Supplemental Information
Nine Months Ended September 30,
  
2024
    
2023
  
             
Dividends paid per share
  
$
1.23
    
$
1.23
  
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Sensient Technologies Corporation
Page 9
(In thousands, except percentages and per share amounts)
(Unaudited)

Reconciliation of Non-GAAP Amounts

The Company’s results for the three and nine months ended September 30, 2024 and 2023 include adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which, in each case, exclude Portfolio Optimization Plan costs.

   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2024
    
2023
    
% Change
    
2024
    
2023
    
% Change
  
Operating income (GAAP)
  
$
50,520
    
$
44,531
      
13.4
%
  
$
149,583
    
$
146,960
      
1.8
%
Portfolio Optimization Plan costs  – Cost of products sold
    
209
      
-
              
523
      
-
          
Portfolio Optimization Plan costs – Selling and administrative expenses
    
1,002
      
-
              
5,252
      
-
          
Adjusted operating income
  
$
51,731
    
$
44,531
      
16.2
%
  
$
155,358
    
$
146,960
      
5.7
%
                                                 
Net earnings (GAAP)
  
$
32,690
    
$
31,543
      
3.6
%
  
$
94,562
    
$
99,227
      
(4.7
%)
Portfolio Optimization Plan costs, before tax
    
1,211
      
-
              
5,775
      
-
          
Tax impact of Portfolio Optimization Plan costs(1)
    
(17
)
    
-
              
(586
)
    
-
          
Adjusted net earnings
  
$
33,884
    
$
31,543
      
7.4
%
  
$
99,751
    
$
99,227
      
0.5
%
                                                 
Diluted earnings per share (GAAP)
  
$
0.77
    
$
0.75
      
2.7
%
  
$
2.23
    
$
2.35
      
(5.1
%)
Portfolio Optimization Plan costs, net of tax
    
0.03
      
-
              
0.12
      
-
          
Adjusted diluted earnings per share
  
$
0.80
    
$
0.75
      
6.7
%
  
$
2.35
    
$
2.35
      
0.0
%

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.

Results by Segment
  
Three Months Ended September 30,
  
               
Adjusted
                
Adjusted
  
Operating Income
  
2024
    
Adjustments(2)
    
2024
    
2023
    
Adjustments(2)
    
2023
  
                                     
Flavors & Extracts
  
$
25,862
    
$
-
    
$
25,862
    
$
23,078
    
$
-
    
$
23,078
  
Color
    
29,806
      
-
      
29,806
      
22,925
      
-
      
22,925
  
Asia Pacific
    
9,307
      
-
      
9,307
      
8,095
      
-
      
8,095
  
Corporate & Other
    
(14,455
)
    
1,211
      
(13,244
)
    
(9,567
)
    
-
      
(9,567
)
                                                 
Consolidated
  
$
50,520
    
$
1,211
    
$
51,731
    
$
44,531
    
$
-
    
$
44,531
  

Results by Segment
  
Nine Months Ended September 30,
  
               
Adjusted
                
Adjusted
  
Operating Income
  
2024
    
Adjustments(2)
    
2024
    
2023
    
Adjustments(2)
    
2023
  
                                     
Flavors & Extracts
  
$
75,749
    
$
-
    
$
75,749
    
$
69,714
    
$
-
    
$
69,714
  
Color
    
92,987
      
-
      
92,987
      
84,027
      
-
      
84,027
  
Asia Pacific
    
25,963
      
-
      
25,963
      
24,911
      
-
      
24,911
  
Corporate & Other
    
(45,116
)
    
5,775
      
(39,341
)
    
(31,692
)
    
-
      
(31,692
)
                                                 
Consolidated
  
$
149,583
    
$
5,775
    
$
155,358
    
$
146,960
    
$
-
    
$
146,960
  

(2) Adjustments consist of Portfolio Optimization Plan costs.

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Sensient Technologies Corporation
Page 10
(In thousands, except percentages)
(Unaudited)

Reconciliation of Non-GAAP Amounts - Continued

The following table summarizes the percentage change in the 2024 results compared to the 2023 results for the corresponding periods.

   
Three Months Ended September 30, 2024
  
Revenue
  
Total
    
Foreign
Exchange
Rates
    
Adjustments(3)
    
Adjusted
Local
Currency
  
Flavors & Extracts
    
6.4
%
    
(0.4
%)
    
N/A
      
6.8
%
Color
    
11.8
%
    
(1.2
%)
    
N/A
      
13.0
%
Asia Pacific
    
13.6
%
    
0.2
%
    
N/A
      
13.4
%
Total Revenue
    
7.9
%
    
(0.7
%)
    
N/A
      
8.6
%
                                 
Operating Income
                                
Flavors & Extracts
    
12.1
%
    
(0.7
%)
    
0.0
%
    
12.8
%
Color
    
30.0
%
    
(0.9
%)
    
0.0
%
    
30.9
%
Asia Pacific
    
15.0
%
    
(0.3
%)
    
0.0
%
    
15.3
%
Corporate & Other
    
51.1
%
    
0.1
%
    
12.6
%
    
38.4
%
Total Operating Income
    
13.4
%
    
(1.0
%)
    
(2.7
%)
    
17.1
%
Diluted Earnings Per Share
    
2.7
%
    
(1.3
%)
    
(4.0
%)
    
8.0
%
Adjusted EBITDA
    
12.0
%
    
(0.8
%)
    
N/A
      
12.8
%

   
Nine Months Ended September 30, 2024
  
Revenue
  
Total
    
Foreign
Exchange
Rates
    
Adjustments(3)
    
Adjusted
Local
Currency
  
Flavors & Extracts
    
8.5
%
    
0.2
%
    
N/A
      
8.3
%
Color
    
5.0
%
    
(0.2
%)
    
N/A
      
5.2
%
Asia Pacific
    
6.9
%
    
(2.5
%)
    
N/A
      
9.4
%
Total Revenue
    
6.7
%
    
(0.2
%)
    
N/A
      
6.9
%
                                 
Operating Income
                                
Flavors & Extracts
    
8.7
%
    
(0.1
%)
    
0.0
%
    
8.8
%
Color
    
10.7
%
    
(0.1
%)
    
0.0
%
    
10.8
%
Asia Pacific
    
4.2
%
    
(3.3
%)
    
0.0
%
    
7.5
%
Corporate & Other
    
42.4
%
    
0.1
%
    
18.2
%
    
24.1
%
Total Operating Income
    
1.8
%
    
(0.7
%)
    
(3.9
%)
    
6.4
%
Diluted Earnings Per Share
    
(5.1
%)
    
(0.8
%)
    
(5.2
%)
    
0.9
%
Adjusted EBITDA
    
5.0
%
    
(0.5
%)
    
N/A
      
5.5
%

(3) Adjustments consist of Portfolio Optimization Plan costs.

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Sensient Technologies Corporation
Page 11
(In thousands, except percentages)
(Unaudited)

Reconciliation of Non-GAAP Amounts - Continued

The following table summarizes the reconciliation between Consolidated Operating Income (GAAP) and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.
 
   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
                                     
   
2024
    
2023
    
% Change
    
2024
    
2023
    
% Change
  
Operating income (GAAP)
  
$
50,520
    
$
44,531
      
13.4
%
  
$
149,583
    
$
146,960
      
1.8
%
Depreciation and amortization
    
15,460
      
14,770
              
45,185
      
43,360
          
Share-based compensation expense
    
2,069
      
2,519
              
6,980
      
7,285
          
Portfolio Optimization Plan costs, before tax
    
1,211
      
-
              
5,775
      
-
          
Adjusted EBITDA
  
$
69,260
    
$
61,820
      
12.0
%
  
$
207,523
    
$
197,605
      
5.0
%

The following table summarizes the reconciliation between Debt (GAAP) and Net Debt, and Operating Income (GAAP) and Credit Adjusted EBITDA for the trailing twelve months ended September 30, 2024 and 2023.

   
September 30,
  
Debt
  
2024
    
2023
  
Short-term borrowings
  
$
17,811
    
$
22,807
  
Long-term debt
    
625,627
      
648,556
  
Credit Agreement adjustments(4)
    
(22,633
)
    
(19,463
)
Net Debt
  
$
620,805
    
$
651,900
  
                 
Operating income (GAAP)
  
$
157,646
    
$
188,185
  
Depreciation and amortization
    
59,645
      
56,565
  
Share-based compensation expense
    
8,628
      
10,947
  
Portfolio Optimization Plan costs, before tax
    
33,616
      
-
  
Other non-operating gains(5)
    
(998
)
    
(3,783
)
Credit Adjusted EBITDA
  
$
258,537
    
$
251,914
  
                 
Net Debt to Credit Adjusted EBITDA
    
2.4
x
    
2.6
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.

The following table summarizes the reconciliation between Diluted Earnings Per Share (GAAP) and Adjusted Diluted Earnings Per Share for the twelve months ended December 31, 2023.

Twelve Months Ended December 31,
      
   
2023
  
Diluted earnings per share (GAAP)
  
$
2.21
  
Portfolio Optimization Plan costs, net of tax
    
0.65
  
Adjusted diluted earnings per share
  
$
2.86
  

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

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.