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SXT Sensient Technologies

Filed: 23 Apr 21, 7:00am

Exhibit 99.1

Contact:Amy Agallar
 (414) 347-3706

Sensient Technologies Corporation
Reports Results for the Quarter Ended March 31, 2021

Flavors & Extracts Group and the Asia Pacific Group Report Strong Revenue and Profit Growth

Personal Care Continues to be Negatively Impacted by the COVID-19 Pandemic

In April, the Company Completed the Divestiture of Fragrances

MILWAUKEE— April 23, 2021 — Sensient Technologies Corporation (NYSE: SXT) reported consolidated revenue of $359.7 million in this year’s first quarter compared to $350.7 million in last year’s first quarter. Reported operating income in the first quarter of 2021 was $46.9 million compared to $34.6 million in the first quarter of 2020. Reported diluted earnings per share was 75 cents in the first quarter of 2021 compared to 49 cents in the first quarter of 2020. Foreign currency translation increased revenue and earnings per share by approximately 3% and 4%, respectively, in the quarter.

The 2021 first quarter reported results include divestiture & other related costs and operational improvement plan costs, which in total decreased first quarter net earnings by $3.1 million ($0.07 per diluted share). The 2020 first quarter results include divestiture & other related costs which decreased net earnings by $10.9 million ($0.26 per diluted share). The 2021 and 2020 first quarter results also include the operations of the product lines divested or to be divested, which increased diluted earnings per share by $0.05 in the first quarter of 2021 and $0.03 in the first quarter of 2020. These adjustments are described in more detail under “Reconciliation of Non-GAAP Amounts” at the end of this release.


Sensient Technologies Corporation
Earnings Release – Quarter Ended March 31, 2021
April 23, 2021
 Page 2

BUSINESS REVIEW

Revenue 
Reported
Quarter
Flavors & Extracts 7.7%
Color
 -5.4%
Asia Pacific 11.1%
Total Revenue 2.6%
    
Revenue 
Adjusted
Local Currency (1)
Quarter
Flavors & Extracts 
8.9
%
Color 
-1.9
%
Asia Pacific 
4.7
%
Total Revenue 4.0%
    
(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 first quarter revenue of $200.9 million compared to $186.5 million reported in the comparable period last year, an increase of 7.7%. Adjusted local currency revenue increased 8.9% in the quarter. The higher revenue was the result of strong growth in all product categories.  Segment operating income was $27.0 million in the current quarter compared to $20.9 million reported in the comparable period last year, an increase of 29.5%. Adjusted local currency operating income increased 21.2%.  The Group’s higher profit was primarily a result of the higher volumes, product mix from strong flavor sales, and the favorable impact of the Group’s cost reduction initiatives. Foreign currency translation increased both segment revenue and operating income by approximately 2% in the quarter.

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Sensient Technologies Corporation
Earnings Release – Quarter Ended March 31, 2021
April 23, 2021
 Page 3

The Color Group reported revenue of $135.7 million in the quarter compared to $143.5 million in last year’s comparable period, a decrease of 5.4%. Adjusted local currency revenue decreased 1.9% in the quarter. The Group continued to experience growth in food and pharmaceutical colors; however, this growth was offset by lower volumes in the personal care business, primarily as a result of the continued lower demand for makeup due to the COVID-19 pandemic. Segment operating income was $26.6 million in the quarter compared to $29.7 million in last year’s comparable period, a decrease of 10.3%. Adjusted local currency operating income decreased 13.3% compared to prior year’s first quarter. The lower operating income is primarily a result of the lower volumes in personal care and unfavorable product mix in food & pharmaceutical colors. Foreign currency translation increased segment revenue and operating income by approximately 2% and 3%, respectively, in the quarter.

The Asia Pacific Group reported revenue of $33.8 million in the quarter compared to $30.4 million in last year’s comparable period, an increase of 11.1%. Adjusted local currency revenue increased 4.7% in the quarter. Segment operating income was $6.8 million in the quarter compared to $5.1 million in last year’s comparable quarter, an increase of 33.5%. Adjusted local currency operating income increased 31.4% in the quarter. The higher profit was primarily a result of the favorable volume growth combined with lower operating costs. Foreign currency translation increased segment revenue and operating income by approximately 6% and 1%, respectively, in the quarter.

Corporate & Other reported operating costs of $13.5 million in the current quarter compared to $21.0 million in last year’s comparable period, a decrease of 36.0%. The lower costs are primarily due to lower divestiture & other costs reported in the first quarter of 2021 compared to the amount recorded in the first quarter of 2020. Adjusted local currency operating expenses for Corporate & Other increased 18.5% in the quarter primarily due to higher performance based executive compensation.

In April 2021, the Company completed the divestiture of its Fragrances product line.

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Sensient Technologies Corporation
Earnings Release – Quarter Ended March 31, 2021
April 23, 2021
 Page 4

2021 OUTLOOK

Sensient is reconfirming its previously issued 2021 guidance for GAAP diluted earnings per share to grow at a mid to high single digit growth rate compared to the Company’s 2020 reported GAAP diluted earnings per share of $2.59. Our full year 2021 guidance includes approximately 30 cents per share of estimated divestiture & other related costs, the results of the operations to be divested, and the operational improvement plan costs.

The Company is also reconfirming its previously issued 2021 adjusted local currency revenue (2) to grow at a low to mid-single digit rate and adjusted local currency EBITDA (2) to grow at a mid-single digit rate. The Company also continues to expect, on a local currency basis, 2021 adjusted diluted earnings per share (2) to grow at a mid-single digit growth rate compared to the Company’s 2020 adjusted diluted earnings per share of $2.79.

The Company expects earnings per share reported on a U.S. dollar basis to benefit by approximately ten cents based on current exchange rates.

The Company’s guidance is based upon current trends, current tax law, and the effects of COVID-19 to date. The full impacts of the ongoing COVID-19 pandemic remain uncertain and management will continue to monitor its impacts on our business.


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

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, operational improvement plan costs, and the results of the operations divested or to be divested. 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.

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Sensient Technologies Corporation 
Earnings Release – Quarter Ended March 31, 2021
April 23, 2021
Page 5

CONFERENCE CALL

The Company will host a conference call to discuss its 2021 first quarter financial results at 8:30 a.m. CDT on Friday, April 23, 2021. 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 April 30, 2021, by calling (877) 344-7529 and referring to conference identification number 10153329. 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 April 27, 2021.

This release contains statements that may constitute “forward-looking statements” within the meaning of Federal securities laws including under “2021 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 impact and uncertainty created by the ongoing COVID-19 pandemic, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, the availability and cost of raw materials and other supplies, the availability of logistics and transportation, governmental regulations and restrictions and 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; the effectiveness of the Company’s past restructuring activities; 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, 2020, 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 
Earnings Release – Quarter Ended March 31, 2021
April 23, 2021
 Page 6

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

Consolidated Statements of Earnings Three Months Ended March 31,
          
  2021  2020  % Change
          
Revenue 
$
359,702
  
$
350,677
   
2.6
%
             
Cost of products sold  
244,089
   
238,784
   
2.2
%
Selling and administrative expenses  
68,716
   
77,332
   
(11.1
%)
             
Operating income  
46,897
   
34,561
   
35.7
%
Interest expense  
3,433
   
4,307
     
             
Earnings before income taxes  
43,464
   
30,254
     
Income taxes  
11,796
   
9,481
     
             
Net earnings 
$
31,668
  
$
20,773
   
52.4
%
             
Earnings per share of common stock:            
Basic 
$
0.75
  
$
0.49
     
             
Diluted 
$
0.75
  
$
0.49
     
             
Average common shares outstanding:            
Basic  
42,263
   
42,284
     
             
Diluted  
42,389
   
42,307
     

Results by Segment Three Months Ended March 31,
          
Revenue
 2021  2020  % Change
          
Flavors & Extracts 
$
200,911
  
$
186,498
   
7.7
%
Color  
135,720
   
143,495
   
(5.4
%)
Asia Pacific  
33,840
   
30,449
   
11.1
%
Intersegment elimination  
(10,769
)
  
(9,765
)
    
             
Consolidated 
$
359,702
  
$
350,677
   
2.6
%
             
Operating Income
            
             
Flavors & Extracts 
$
27,018
  
$
20,871
   
29.5
%
Color  
26,594
   
29,664
   
(10.3
%)
Asia Pacific  
6,752
   
5,059
   
33.5
%
Corporate & Other  
(13,467
)
  
(21,033
)
    
             
Consolidated 
$
46,897
  
$
34,561
   
35.7
%

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

Consolidated Condensed Balance Sheets  
March 31,
2021
    
December 31,
2020
 
 
       
Cash and cash equivalents 
$
28,000
  
$
24,770
 
Trade accounts receivable  
257,289
   
234,132
 
Inventories  
350,294
   
381,346
 
Prepaid expenses and other current assets  
51,978
   
48,578
 
Assets held for sale  
49,597
   
52,760
 
Total Current Assets  
737,158
   
741,586
 
         
Goodwill & intangible assets (net)  
427,453
   
434,220
 
Property, plant, and equipment (net)  
442,080
   
445,493
 
Other assets  
114,318
   
119,561
 
         
Total Assets 
$
1,721,009
  
$
1,740,860
 
         
Trade accounts payable 
$
101,225
  
$
107,324
 
Short-term borrowings  
6,057
   
9,247
 
Other current liabilities  
76,138
   
82,045
 
Liabilities held for sale  
15,353
   
17,339
 
Total Current Liabilities  
198,773
   
215,955
 
         
Long-term debt  
524,244
   
518,004
 
Accrued employee and retiree benefits  
29,198
   
28,941
 
Other liabilities  
43,148
   
43,624
 
Shareholders’ Equity  
925,646
   
934,336
 
         
Total Liabilities and Shareholders’ Equity 
$
1,721,009
  
$
1,740,860
 

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

Consolidated Statements of Cash Flows      
Three Months Ended March 31,      
  2021  2020 
Cash flows from operating activities:      
Net earnings 
$
31,668
  
$
20,773
 
Adjustments to arrive at net cash provided by operating activities:        
Depreciation and amortization  
12,799
   
12,404
 
Share-based compensation expense  
2,113
   
1,177
 
Net loss on assets  
161
   
14
 
Loss on divestitures and other charges  
1,238
   
10,558
 
Deferred income taxes  
4,257
   
4,077
 
Changes in operating assets and liabilities:        
Trade accounts receivable  
(27,237
)
  
(41,684
)
Inventories  
27,621
   
29,058
 
Prepaid expenses and other assets  
(13,239
)
  
(6,048
)
Trade accounts payable and other accrued expenses  
(6,242
)
  
2,773
 
Accrued salaries, wages, and withholdings  
(10,872
)
  
1,611
 
Income taxes  
5,742
   
1,662
 
Other liabilities  
955
   
553
 
         
Net cash provided by operating activities  
28,964
   
36,928
 
         
Cash flows from investing activities:        
Acquisition of property, plant, and equipment  
(14,244
)
  
(9,411
)
Proceeds from sale of assets  
69
   
6
 
Proceeds from divestiture of businesses  
4,059
   
-
 
Other investing activities  
286
   
4,505
 
         
Net cash used in investing activities  
(9,830
)
  
(4,900
)
         
Cash flows from financing activities:        
Proceeds from additional borrowings  
21,530
   
9,669
 
Debt payments  
(8,999
)
  
(11,104
)
Purchase of treasury stock  
(11,665
)
  
-
 
Dividends paid  
(16,535
)
  
(16,500
)
Other financing activities  
(228
)
  
(249
)
         
Net cash used in financing activities  
(15,897
)
  
(18,184
)
         
Effect of exchange rate changes on cash and cash equivalents  
(7
)
  
(11,912
)
         
Net increase in cash and cash equivalents  
3,230
   
1,932
 
Cash and cash equivalents at beginning of period  
24,770
   
21,153
 
Cash and cash equivalents at end of period 
$
28,000
  
$
23,085
 

Supplemental Information      
Three Months Ended March 31, 2021  2020 
       
Dividends paid per share 
$
0.39
  
$
0.39
 

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

Reconciliation of Non-GAAP Amounts

The Company’s results for the three months ended March 31, 2021 and 2020 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 the results of operations divested or to be divested.

  Three Months Ended March 31,
  2021  2020  % Change
Revenue (GAAP) $359,702  $350,677   
2.6
%
Revenue of the product lines divested or to be divested  
(25,570
)
  
(36,585
)
    
Adjusted revenue $334,132  $314,092   
6.4
%
             
Operating income (GAAP) $46,897  $34,561   
35.7
%
Divestiture & other related costs  – Cost of products sold  
25
   
190
     
Divestiture & other related costs – Selling and administrative expenses  
1,547
   
11,653
     
Operating income of the product lines divested or to be divested  
(2,927
)
  
(1,385
)
    
Operational improvement plan - Selling and administrative expenses  
1,001
   
-
     
Adjusted operating income $46,543  $45,019   
3.4
%
             
Net earnings (GAAP) $31,668  $20,773   
52.4
%
Divestiture & other related costs, before tax  
1,572
   
11,843
     
Tax impact of divestiture & other related costs  
793
   
(934
)
    
Net earnings of the product lines divested or to be divested, before tax  
(2,927
)
  
(1,385
)
    
Tax impact of the product lines divested or to be divested  
723
   
297
     
Operational improvement plan costs, before tax  
1,001
   
-
     
Tax impact of operational improvement plan  
(296
)
  
-
     
Adjusted net earnings $32,534  $30,594   
6.3
%
             
Diluted earnings per share (GAAP) $0.75  $0.49   
53.1
%
Divestiture & other related costs, net of tax  
0.06
   
0.26
     
Results of operations of the product lines divested or to be divested, net of tax  
(0.05
)
  
(0.03
)
    
Operational improvement plan costs, net of tax  
0.02
   
-
     
Adjusted diluted earnings per share $0.77  $0.72   
6.9
%

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

Results by Segment Three Months Ended March 31, 
Revenue
   2021     
Adjustments (1)
    
Adjusted
2021
     2020     
Adjustments (1)
    
Adjusted
2020
 
 
                   
Flavors & Extracts 
$
200,911
  
$
(24,889
)
 
$
176,022
  
$
186,498
  
$
(27,445
)
 
$
159,053
 
Color  
135,720
   
(536
)
  
135,184
   
143,495
   
(9,072
)
  
134,423
 
Asia Pacific  
33,840
   
(295
)
  
33,545
   
30,449
   
(121
)
  
30,328
 
Intersegment elimination  
(10,769
)
  
150
   
(10,619
)
  
(9,765
)
  
53
   
(9,712
)
                         
Consolidated 
$
359,702
  
$
(25,570
)
 
$
334,132
  
$
350,677
  
$
(36,585
)
 
$
314,092
 
                         
Operating Income
                        
                         
Flavors & Extracts 
$
27,018
  
$
(2,880
)
 
$
24,138
  
$
20,871
  
$
(1,218
)
 
$
19,653
 
Color  
26,594
   
40
   
26,634
   
29,664
   
(133
)
  
29,531
 
Asia Pacific  
6,752
   
(87
)
  
6,665
   
5,059
   
(34
)
  
5,025
 
Corporate & Other  
(13,467
)
  
2,573
   
(10,894
)
  
(21,033
)
  
11,843
   
(9,190
)
                         
Consolidated 
$
46,897
  
$
(354
)
 
$
46,543
  
$
34,561
  
$
10,458
  
$
45,019
 

(1) For Revenue, adjustments consist of revenues of the product lines divested or to be divested. For Operating Income, adjustments consist of the results of the product lines divested or to be divested, divestiture & other related costs, and operational improvement plan costs.

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Sensient Technologies Corporation
(In thousands, except percentages)
(Unaudited)
Page 11
Reconciliation of Non-GAAP Amounts - Continued

The following table summarizes the percentage change in the 2021 results compared to the 2020 results for the corresponding periods.

  Three Months Ended March 31,
Revenue Total 
Foreign Exchange
Rates
 
Adjustments (2)
 
Adjusted
Local
Currency
Flavors & Extracts  
7.7
%
  
2.4
%
  
(3.6
%)
  
8.9
%
Color  
(5.4
%)
  
2.4
%
  
(5.9
%)
  
(1.9
%)
Asia Pacific  
11.1
%
  
5.9
%
  
0.5
%
  
4.7
%
Total Revenue  2.6%  2.7%  (4.1%)  4.0%
                 
Operating Income                
Flavors & Extracts  
29.5
%
  
1.9
%
  
6.4
%
  
21.2
%
Color  
(10.3
%)
  
3.3
%
  
(0.3
%)
  
(13.3
%)
Asia Pacific  
33.5
%
  
1.3
%
  
0.8
%
  
31.4
%
Corporate & Other  
(36.0
%)
  
0.0
%
  
(54.5
%)
  
18.5
%
Total Operating Income  35.7%  4.1%  31.3%  0.3%
Diluted Earnings Per Share  53.1%  4.1%  44.8%  4.2%
Adjusted EBITDA  4.9%  2.8%  N/A   2.1%

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

The following table summarizes the reconciliation between Operating Income (GAAP) and Adjusted EBITDA for the three months ended March 31, 2021 and 2020.

  Three Months Ended March 31,
          
  2021  2020  % Change
Operating income (GAAP) 
$
46,897
  
$
34,561
   
35.7
%
Depreciation and amortization  
12,799
   
12,404
     
Depreciation and amortization, product lines divested or to be divested  
(49
)
  
(80
)
    
Share-based compensation expense  
2,113
   
1,177
     
Divestiture & other related costs, before tax  
1,572
   
11,843
     
Results of operations of the product lines divested or to be divested, before tax  
(2,927
)
  
(1,385
)
    
Operational improvement plan costs, before tax  
1,001
   
-
     
Adjusted EBITDA 
$
61,406
  
$
58,520
   
4.9
%

The following table summarizes the reconciliation between Net cash provided by operating activities (GAAP) and Free Cash Flow for the three months ended March 31, 2021 and 2020.

  Three Months Ended March 31,
  2021  2020  % Change
Net cash provided by operating activities (GAAP) 
$
28,964
  
$
36,928
   
(21.6
%)
Capital expenditures  
(14,244
)
  
(9,411
)
    
Free Cash Flow 
$
14,720
  
$
27,517
   
(46.5
%)

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.