INTERNATIONAL FLAVORS & FRAGRANCES INC Q1 FY2025 earnings call

• IFF had a solid start to 2025 with refreshed strategy and operational discipline driving results. - Separated Nourish into Taste and Food Ingredients for better tracking and growth opportunities. - Strong broad-based growth in four segments in Q1, though Food Ingredients had volume decline due to pull forward and capacity issues. - Completed divestiture of Pharma Solutions to Roquette, strengthening capital structure. - Macro environment challenging but portfolio grounded in resilient end markets. - Productivity initiatives and margin expansion across segments.

Pharma Solutions: Delivered $266 million in sales, an 8% year-over-year increase on a comparable currency neutral basis, with adjusted operating EBITDA of $54 million, a 19% increase. Taste: Sales were $627 million, a 7% year-over-year increase on a comparable currency neutral basis, with comparable currency neutral adjusted operating EBITDA growth of 22%. Food Ingredients: Had sales of $796 million, a 4% comparable currency neutral decrease from the prior year, but currency neutral adjusted operating EBITDA growth of 5% on a comparable basis. Health & Bioscience: Delivered a 5% increase in comparable currency neutral sales, with segment delivered adjusted operating EBITDA of $138 million, a 3% increase on a year-over-year comparable currency neutral basis. Scent: Net sales for the quarter totaled $614 million, up 4% year-over-year on a comparable currency neutral basis, and adjusted operating EBITDA of $144 million, up 4% on a comparable currency neutral basis.

• Maintains full-year guidance for sales in range of $10.6 billion to $10.9 billion, representing currency neutral growth of between 1% to 4%. - Expects adjusted operating EBITDA range of between $2 billion to $2.15 billion, representing currency neutral growth between 5% and 10%. - Foreign exchange impact adjusted to ~2% adverse, divestiture impact ~8% adverse. - Portfolio grounded in resilient essential end markets.

• Broader macroeconomic volatility and potential recessions from global trade policy changes not embedded in guidance. - Tariff impacts on costs and supply chains, though actions taken to mitigate, but some cost impacts unavoidable with targeted pricing surcharges.

Q: On outlook and portfolio resilience, can you talk about which areas could be at risk and which resilient in recession?

A: Erik says order book consistent, ~80% portfolio essential, 20% discretionary; bulk resilient, but fine fragrances, consumer fragrances, probiotics have some discretionary, but order pattern solid so far.

Q: Expand on tariffs, gross impact on costs and mitigation?

A: Michael DeVeau says most tariff exposure related to China, ~$100 million 2025 impact, supply chain optimization mitigating, targeting full mitigation with price surcharges.

Q: Year ago comps for Flavors and Food Ingredients?

A: Michael DeVeau says Taste on two-year basis better than 2021 Q1, 11% growth 2024 Q1, 7% 2025 Q1; Food Ingredients down 4% both 2024 and 2025 Q1, but volume basis better in 2025 Q1 when normalizing price reductions.

Q: Alpha Bio JV with Kemira?

A: Erik says 50/50 JV, €130 million plant in Finland, starts up end 2027, servicing water treatment, cardboard, paper packaging, with biodegradable polymers growth opportunity.

Q: Taste segment specific end markets and tariffs impact?

A: Erik says Taste growth from strong win rate and pipeline, no major tariff impact seen yet in Q1, trend consistent in April.

Q: Food Ingredients volumes lower in protein solutions and margin target?

A: Erik says Food Ingredients turnaround, EBITDA margin improving, volumes down due to lower value protein and production issues, but higher value protein growth and margin target of above 15% by 2026.

Q: Deleveraging philosophy post pharma sale?

A: Michael DeVeau says focus on debt tender to get net debt-to-EBITDA below 3 times, then reinvest in CapEx, bolt-on acquisitions, and capital return to shareholders via dividend and buyback.