10-17-13 4:34 PM EDT | Email Article

Sensient Technologies Corporation (NYSE: SXT) reported diluted earnings per share of 63 cents in the third quarter which includes restructuring costs of nine cents per share. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share were 72 cents, a third quarter record and an increase of 9.1% over the 66 cents reported in the comparable period last year. Consolidated revenue was $372.0 million compared to $369.4 million in the third quarter of 2012. Operating income was $48.8 million, as reported, and included $6.6 million of pre-tax restructuring costs. Adjusted operating income increased 9.2% to $55.4 million compared to $50.7 million reported in last year’s third quarter. Foreign currency translation did not have a significant impact on revenue or operating income in the third quarter.

Revenue was approximately $1.1 billion for the year to date periods in both 2013 and 2012. Diluted earnings per share, as reported, were $1.71, which includes restructuring costs of 37 cents. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share were $2.08 compared to $1.94 reported in the first nine months of last year. Foreign currency translation did not have a significant impact on revenue or earnings per share in the first nine months of this year.

Cash provided by operating activities in the third quarter of 2013 was $47.7 million, an increase of 11% from the $43.1 million reported in the third quarter of 2012. For the first nine months of 2013 cash provided by operating activities increased 28% to a record level of $117.8 million compared to $92.2 million in the first nine months of 2012.

Earlier this year, the Company announced that it was initiating a broad and strategic restructuring plan. The plan includes relocating the Flavors & Fragrances Group headquarters from Indianapolis to Chicago, which was completed this quarter. The plan also included consolidating several operating facilities throughout Europe and North America, and reducing the Company’s global headcount. The plan is progressing as scheduled and within the Company’s original cost estimates. The Company has included non-GAAP results to remove the costs related to the restructuring plan and provide investors with a view of operating performance excluding significant and non-recurring items.

“The Company had an outstanding quarter,” said Kenneth P. Manning, Chairman and CEO of Sensient Technologies Corporation. “We are encouraged by opportunities in both the Color and Flavor businesses, and I am very optimistic about the Company’s future.”

BUSINESS REVIEW

The Color Group reported revenue of $123.9 million in the third quarter of 2013, compared to $122.1 million reported in the comparable period last year. Operating income increased 10.8% in the quarter to $26.8 million from $24.2 million in last year’s third quarter. The Color Group’s operating margin increased 190 basis points to 21.7% in the third quarter, driven by strong performances across the Group. The food, pharmaceuticals, cosmetics and digital inks businesses all reported double digit operating income growth in the quarter. Foreign currency translation impacted both revenue and operating income by less than one percent in the quarter.

The Flavors & Fragrances Group reported quarterly revenue of $226.3 million compared to the $224.7 million reported in the comparable period last year. Operating income was $31.8 million in the third quarter of both years. The impact of foreign currency translation was less than one percent for both revenue and operating income.

The Corporate & Other segment, which includes the Company’s operations in Asia Pacific and China, and the flavor businesses in Central and South America, reported revenue of $37.6 million in the third quarter compared to $37.8 million in the comparable period last year. Revenue increased 3.3%, in local currency, in the third quarter.

2013 OUTLOOK

Sensient is maintaining its previous guidance for 2013 diluted earnings per share, which is expected to be between $2.68 and $2.73, excluding the impact of the restructuring charge.

CONFERENCE CALL

The Company will host a conference call to discuss its 2013 third quarter financial results at 10:00 a.m. CDT on Friday, October 18, 2013. To make a reservation for the conference call, please contact InterCall Teleconferencing at (706) 645-6973 and refer to the Sensient Technologies Corporation conference call.

A replay will be available beginning at 1:00 p.m. CDT on October 18, 2013, through midnight on October 25, 2013, by calling (404) 537-3406 and referring to conference identification number 73776066. A transcript of the call will also be posted on the Company’s web site at www.sensient.com after the call concludes.

This release contains forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results, including, but not limited to the factors noted in this press release and in the Management’s Discussion and Analysis in our most recently filed annual report on Form 10-K for the year ended December 31, 2012, and quarterly report on Form 10-Q for the quarter ended June 30, 2013. The forward-looking statements in this press release speak only as to the date of this release. Sensient Technologies Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations upon which such statements are based.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks and colors, and other specialty and fine chemicals. The Company’s customers include major international manufacturers representing most of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

 

 

 

Sensient Technologies Corporation

(In thousands, except percentages and per share amounts)
           
 
 
Consolidated Statements of Earnings Three Months Ended September 30, Nine Months Ended September 30,
 
2013 2012 % Change 2013 2012 % Change
 
Revenue $ 371,993 $ 369,371 0.7 % $ 1,116,439 $ 1,102,808 1.2 %
 
Cost of products sold 251,934 251,778 0.1 % 756,722 749,928 0.9 %
Selling and administrative expenses   71,269   66,892 6.5 %   225,911   201,392 12.2 %
 
Operating income 48,790 50,701 -3.8 % 133,806 151,488 -11.7 %
Interest expense   4,048   4,483   12,317   13,236
 
Earnings before income taxes 44,742 46,218 -3.2 % 121,489 138,252 -12.1 %
Income taxes   13,217   13,342   36,243   41,565
 
Net earnings $ 31,525 $ 32,876 -4.1 % $ 85,246 $ 96,687 -11.8 %
 
Earnings per common share:
Basic $ 0.63 $ 0.66 -4.5 % $ 1.71 $ 1.95 -12.3 %
 
Diluted $ 0.63 $ 0.66 -4.5 % $ 1.71 $ 1.94 -11.9 %
 
Average common shares outstanding:
Basic   49,761   49,536 0.5 %   49,741   49,616 0.3 %
 
Diluted   49,946   49,785 0.3 %   49,910   49,850 0.1 %
 
 
 
Reconciliation of Non-GAAP Amounts
 
The Company recorded restructuring costs of $6.6 million ($4.4 million after-tax or $0.09 per share) and $26.0 million ($18.5 million after-tax or $0.37 per share) for the three and nine months ended September 30, 2013, respectively, related to the 2013 restructuring program to relocate the Flavors & Fragrances Group headquarters to Chicago, as well as a profit improvement plan across all segments of the Company.
 
 
 
Three Months Ended September 30,
 
Reported Restructuring Adjusted Reported
2013 Impact 2013 2012 % Change
 
Revenue $ 371,993 $ - $ 371,993 $ 369,371 0.7 %
 
Cost of products sold 251,934 545 251,389 251,778 -0.2 %
Selling and administrative expenses   71,269   6,041     65,228   66,892 -2.5 %
 
Operating income 48,790 (6,586 ) 55,376 50,701 9.2 %
Interest expense   4,048   -     4,048   4,483
 
Earnings before income taxes 44,742 (6,586 ) 51,328 46,218 11.1 %
Income taxes   13,217   (2,206 )   15,423   13,342
 
Net earnings $ 31,525 $ (4,380 ) $ 35,905 $ 32,876 9.2 %
 
Earnings per common share:
Basic $ 0.63 $ (0.09 ) $ 0.72 $ 0.66 9.1 %
 
Diluted $ 0.63 $ (0.09 ) $ 0.72 $ 0.66 9.1 %
 
Average common shares outstanding:
Basic   49,761   49,761   49,536 0.5 %
 
Diluted   49,946   49,946   49,785 0.3 %
 
 
 
Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)
           
Reconciliation of Non-GAAP Amounts (continued)
 
Nine Months Ended September 30,
 
Reported Restructuring Adjusted Reported
2013 Impact 2013 2012 % Change
 
Revenue $ 1,116,439 $ - $ 1,116,439 $ 1,102,808 1.2 %
 
Cost of products sold 756,722 1,417 755,305 749,928 0.7 %
Selling and administrative expenses   225,911     24,584     201,327     201,392   0.0 %
 
Operating income 133,806 (26,001 ) 159,807 151,488 5.5 %
Interest expense   12,317     -     12,317     13,236  
 
Earnings before income taxes 121,489 (26,001 ) 147,490 138,252 6.7 %
Income taxes   36,243     (7,512 )   43,755     41,565  
 
Net earnings $ 85,246   $ (18,489 ) $ 103,735   $ 96,687   7.3 %
 
Earnings per common share:
Basic $ 1.71   $ (0.38 ) $ 2.09   $ 1.95   7.2 %
 
Diluted $ 1.71   $ (0.37 ) $ 2.08   $ 1.94   7.2 %
 
Average common shares outstanding:
Basic   49,741     49,741     49,616   0.3 %
 
Diluted   49,910     49,910     49,850   0.1 %
 
The Company is presenting these non-GAAP amounts to provide investors with a view of operating performance excluding the restructuring impact.
 
 
 
 
Results by Segment Three Months Ended September 30, Nine Months Ended September 30,
 

Revenue

2013 2012 % Change 2013 2012 % Change
 
 
Flavors & Fragrances $ 226,270 $ 224,699 0.7 % $ 671,229 $ 658,348 2.0 %
Color * 123,854 122,102 1.4 % 378,321 383,599 -1.4 %
Corporate & Other 37,579 37,809 -0.6 % 112,377 108,582 3.5 %
Intersegment elimination   (15,710 )   (15,239 ) 3.1 %   (45,488 )   (47,721 ) -4.7 %
 
Consolidated $ 371,993   $ 369,371   0.7 % $ 1,116,439   $ 1,102,808   1.2 %
 
 
 

Operating Income

 
 
Flavors & Fragrances $ 31,759 $ 31,810 -0.2 % $ 93,240 $ 94,334 -1.2 %
Color * 26,833 24,211 10.8 % 80,516 76,547 5.2 %
Corporate & Other   (9,802 )   (5,320 )   (39,950 )   (19,393 )
 
Consolidated $ 48,790   $ 50,701   -3.8 % $ 133,806   $ 151,488   -11.7 %
 
Consolidated Excluding Restructuring Charge $ 55,376   $ 50,701   9.2 % $ 159,807   $ 151,488   5.5 %
 
* Beginning in the first quarter of 2013, the results of operations for the Company’s cosmetic and pharmaceutical businesses in Asia Pacific and China, previously reported in the Corporate & Other segment, are reported in the Color Group. Results for 2012 have been restated to reflect this change.
 
 
 
Sensient Technologies Corporation
(In thousands, except per share amounts)
   
 
Consolidated Condensed Balance Sheets
September 30, 2013 2012
 
Current assets $ 789,408 $ 750,358
Goodwill and intangibles (net) 464,541 458,370
Property, plant and equipment (net) 547,467 488,707
Other assets   45,388     39,405  
 
Total Assets $ 1,846,804   $ 1,736,840  
 
Current liabilities $ 240,179 $ 208,511
Long-term debt 334,852 328,837
Accrued employee and retiree benefits 43,222 56,420
Other liabilities 18,396 31,085
Shareholders' equity   1,210,155     1,111,987  
 
Total Liabilities and Shareholders' Equity $ 1,846,804   $ 1,736,840  
 
 
 
Consolidated Statements of Cash Flows
Three Months Ended September 30, 2013 2012
 
Net cash provided by operating activities $ 47,725   $ 43,093  
 
Cash flows from investing activities:
Acquisition of property, plant and equipment (22,006 ) (19,753 )
Proceeds from sale of assets 5,900 -
Other investing activity   (33 )   (36 )
 
Net cash used in investing activities   (16,139 )   (19,789 )
 
Cash flows from financing activities:
Proceeds from additional borrowings 4,978 8,060
Debt payments (27,238 ) (22,777 )
Dividends paid (11,509 ) (10,941 )
Proceeds from options exercised and other   93     526  
 
Net cash used in financing activities   (33,676 )   (25,132 )
 
Effect of exchange rate changes on cash and cash equivalents   (320 )   2,113  
 
Net (decrease) increase in cash and cash equivalents (2,410 ) 285
Cash and cash equivalents at beginning of period   26,665     12,055  
Cash and cash equivalents at end of period $ 24,255   $ 12,340  
 
 
 
Supplemental Information
Three Months Ended September 30, 2013 2012
 
Depreciation and amortization $ 13,158 $ 12,051
 
Dividends per share $ 0.23 $ 0.22

Add a Comment

News   More...

Start Premium Trial Register For Free

P F Fund Financial Data (13,000+ funds)
P F Stock Financial Data (7,000+ stocks)
P F Stock and Fund Screeners (basic)
P F Investing Articles and Market Commentary
P F Articles Archive (>30 days)
P F Discuss (dozens of stock, fund, bond, and general bulletin boards)
P F Portfolio Manager (basic)
P F Morningstar Investment Classroom
P F Access Your Portfolio Anytime, Anywhere via Your Mobile Device
P   Morningstar Fund Analyst Reports (full research on 1,700 funds, ETFs, and CEFs)
P   Morningstar Stock Analyst Reports (full research on more than 1,100 stocks)
P   Portfolio Manager (advanced with 10 X-Ray analyses, including recommendations)
P   Portfolio Monitor (monthly and on-demand personalized portfolio statements)
P   Morningstar Proprietary Stock Information (stock star ratings, buy/sell prices, economic moat ratings, and more)
P   Morningstar 5-Star Stock and Fund Favorites & Red Flags eNewsletters
P   Premium Stock and Fund Screeners (advanced with nearly infinite ways to find the best securities for you)
P   Discounts on Morningstar newsletters, books, seminars, and more

Sign-up to Morningstar


Basic Access

Articles and Videos
Morningstar video reports, articles, data, and tools. Dig into our lineup of e-newsletters and investing classroom courses outlining sensible strategies for maximizing your investments.
Morningstar Discuss
Follow the buzz on individual stocks or fund families. Plus, read the latest posts from Morningstar members and analysts.
Portfolio Manager
Track your investments and watch lists with our Portfolio Manager. Customize your view with our comprehensive stock, fund, and ETF data.

Access these features and more when you sign up for Free Membership.
Join Morningstar today. It's Free.

Unlimited Access

Analyst Research
Gather in-depth, actionable insight on over 3,700 stock and mutual funds covered by Morningstar analysts. View our mutual fund Analyst Reports favored by professionals, savvy experienced investors, and new investors researching options for retirement savings, college plans, or other investment needs.
Portfolio X-Ray®
Ensure your portfolio is positioned exactly how you want with Morningstar's X-Ray Interpreter and Stock Intersection tools. A Barron's "Best of the Web" award winner for five years running, X-Ray Interpreter goes under the hood of your portfolio to provide a useful allocation, sector, and geographic analysis. And you can discover how much of a stock you really own, individually and through mutual funds, with Stock Intersection.
Investment Picks
Find new 5-star stocks (greatly undervalued companies) to consider daily. Our 5-star stock rating is a proven winner, consistently beating benchmarks like the S&P 500. Plus, browse our Fund Analyst Picks and Stewardship Grades to find shareholder-friendly mutual funds that are poised for outperformance.
Portfolio Monitor
Get a clear view of your investments with personalized reports about your portfolio. Receive monthly statements and generate reports on-demand to help you stay on track to meet your investment goals.

Access these features and more when you sign up for Premium Membership.
Start your free 14-day trial today online
Your subscription may be tax deductible. Please contact your tax advisor.

Content Partners
Morningstar - 2013/10/17 - Sensient Technologies Corporation Reports Results for the Third Quarter Ended September 30, 2013
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Author |  Collection |  Interest |  Popularity

Previous: Sensient Technologies Corporation Reports Results for the Quarter and Year Ended December 31, 2013  |  Next: Sensor Platforms and ARM Introduce Open Source Software to Enable Sensor Hub Implementations