International Flavors & Fragrances Inc. Q1 FY2026 earnings call

CEO Eric Fehrwald mentioned IFF's solid start in Q1 with sales growth driven by volume improvements, productivity initiatives leading to higher margin, completed divestiture of commodity business in March, food ingredients sale process making good progress, and regional production and innovation capabilities added in Latin America for health and biosciences. CFO Michael DeVoe discussed revenue, adjusted EBITDA growth, detailed segment performances including taste, food ingredient, health and biosciences, scent, cash flow, and capital allocation

Taste: Sales increased 2% to 656 million, with adjusted operating EBITDA of 153 million, an 18% increase from the year-ago period. Food ingredient: Sales were up 3% to 839 million, with adjusted operating EBITDA of $114 million, a 12% increase year-over-year. Health and biosciences: Achieved sales of 595 million, an increase of 5% from the prior year, with adjusted operating EBITDA of 153 million, an increase of 7% from the prior year. Scent: Sales of 651 million, a 1% growth from the prior year, with adjusted operating EBITDA decreased 2% to $148 million

Reaffirms full year 2026 sales expectation of $10.5 billion to $10.8 billion (1% to 4% growth), adjusted operating EBITDA of $2.05 billion to $2.15 billion (3% to 8% growth), foreign exchange to have roughly one percentage point positive impact on full-year sales growth, inflationary pressures expected to build in 2026 with second quarter impacted and easing later, fine fragrance volume in Middle East impacted in second quarter

Uncertainty and challenges from ongoing Middle East conflict, inflationary pressures, impact on fine fragrance volume and supply chain in Middle East for scent business

Q: On ad performance specifics and pre-buy, A: Strong top line and operating leverage driven by volume-led growth and productivity, no significant pre-buy indication.

Q: On food ingredients exit process, A: Disciplined process with potential buyers in second round of due diligence, update expected by second quarter earnings call.

Q: On pricing and input inflation assumptions, A: Energy and logistics inflation starting with double-digit increases, raw material inflation expected later, working with customers on surcharges.

Q: On segments' outlook after Q1, A: Q1 better than expectations, second quarter challenged due to Middle East but confident in second half.

Q: On inflation impact on demand, A: Demand expected solid, fine fragrance to see continued growth though less than double-digit, consumer fragrance pipeline growing.

Q: On scent business, A: Specialty side emphasized, commodity side de-emphasizing external sales.

Q: On capital allocation, A: Disciplined, looking at share buybacks, R&D, M&A, considering divestiture proceeds.

Q: On North American health trends, A: Expected to improve in back half of year and recover in 2027.

Q: On Q2 details, A: EBITDA lower than Q1 due to moderate growth, price to input cost unfavorability, fine fragrance pressure.

Q: On segment share and strategy, A: Progress in health and biosciences, scent, taste, food ingredients, expecting improvement by 2027.

Q: On free cash flow in 2026, A: Expect meaningful improvement driven by profitability, working capital, interest expense, incentive compensation.

Q: On segments' share gain, A: Progress in health and biosciences enzymes, cultures, scent fine fragrance, taste, food ingredients.

Q: On taste margins, A: Driven by volume growth, favorable net pricing, productivity.

Q: On pricing discussions and offsetting inflation, A: Conversations based on facts, tactical on logistics energy, modest pricing now with focus on raw materials later