INTERNATIONAL FLAVORS & FRAGRANCES INC Q4 FY2024 earnings call

• Renewed focus on execution by executive leadership team leading to improved financial results. - Transition to end-to-end business-led operating model, splitting Nourish into taste and food ingredients units, and new operating system connecting to customer end markets. - Increased emphasis on biotechnology as a differentiator. - Investments in R&D, commercial capabilities, and CapEx for high-growth, high-margin businesses. - Strengthened talent with key hires and promotions. - Board of directors evolved with new members and chair appointment. - Employee engagement levels improved compared to 2023.

In Nourish, sales were $1.4 billion, a 4% increase year over year on a comparable currency-neutral basis, with comparable adjusted operating EBITDA also increasing by 4%. In Health and Biosciences, sales came in at $553 million, a 6% year-over-year increase on a comparable currency-neutral basis, but comparable adjusted operating EBITDA decreased by 3%. In Scent, net sales totaled $579 million, up 7% year over year on a comparable currency-neutral basis, and adjusted operating EBITDA was $97 million, up 1% on a comparable basis. Pharma Solutions achieved sales of $228 million, a 12% year-over-year increase on a comparable basis, with adjusted operating EBITDA of $47 million, up 81%.

• For full year 2025, expects sales in the range of $10.6 billion to $10.9 billion, representing comparable currency-neutral growth of 1% to 4%. - Expects full-year 2025 adjusted operating EBITDA between $2 billion to $2.15 billion. - CapEx expected to be approximately 6% of sales, with half maintenance CapEx and rest for growth investments and digital transformation. - Pharma Solutions divestiture assumed to close June 30, 2025, with impact on sales and adjusted EBITDA growth factored in.

• Macro uncertainties and geopolitical environment posing challenges. - Ever-evolving tariff situation with potential impacts on supply chain and costs. - Regulatory changes and potential impacts on businesses, such as at FDA. - Uncertainty around biotech R&D and potential regulatory hurdles.

Q: Wanted to ask if you can elaborate on the sources, wins versus underlying demand of your volume growth expected in 2025.

A: Erik Fyrwald responded that volume increases will be mainly in health and biosciences, scent, and taste with strong commercial pipelines and high win rate.

Q: Just on the EBITDA bridge for 2025. I mean, understanding the pharma divestment and FX are negative, I guess, we thought that volume and the incentive comp resets could get you to about neutral. So there's obviously something else, investments or price cost or otherwise, which is adding a negative variance to that bridge that we're not accounting for. How do you build that bridge? And then secondly, just around seasonality and your expectations for 1Q versus the rest of the year EBITDA specifically?

A: Michael DeVeau responded on EBITDA bridge and EBITDA cadence, discussing volume growth, productivity, and seasonality.