Sensient Technologies Corporation Reports Results For The Third Quarter Ended September 30, 2012

Sensient Technologies Corporation (NYSE: SXT) reported diluted earnings per share of 66 cents in the quarter, a third quarter record and an increase of 3.1% over the 64 cents earned in last year’s third quarter. In local currency, third quarter earnings per share increased 7.8% as the impact of foreign currency translation reduced reported earnings by three cents per share. Foreign currency translation also significantly reduced revenue and operating income in the quarter. Revenue was $369.4 million in the third quarter compared to $363.8 million in last year’s third quarter. Operating income increased to $50.7 million from the $49.9 million reported in the comparable period last year. In local currency, both revenue and operating income increased by more than 5% in the quarter.

Diluted earnings per share were $1.94 for the first nine months of 2012, an increase of 5.4% over the $1.84 reported in last year’s first nine months. Foreign currency translation reduced year to date earnings by seven cents per share. In local currency, revenue increased 4.5% and diluted earnings per share increased 9.2% in the first nine months of this year.

Cash flows from operations increased to $43.1 million in the third quarter, up 8.4% from the $39.7 million generated in last year’s third quarter. Debt was reduced by over $13 million in the third quarter.

“Sensient delivered another strong performance in the third quarter despite the difficult economic conditions,” said Kenneth P. Manning, Chairman and CEO of Sensient Technologies Corporation. “We continue to see opportunities for growth in all of our Groups and I remain very optimistic about the Company’s future.”

BUSINESS REVIEW

The Color Group reported revenue of $120.7 million in the third quarter, compared to $121.0 million reported in the comparable period last year. Operating income increased 2.5% to a third quarter record of $23.5 million, from $22.9 million in last year’s third quarter. In local currency, revenue and operating income increased 5.0% and 7.9%, respectively. The Color Group’s focus on higher value products resulted in stronger operating margins. The operating margin in the quarter increased to 19.4%, up from 18.9% reported in last year’s third quarter.

The Flavors & Fragrances Group reported third quarter revenue of $224.7 million compared to $220.3 million in last year’s third quarter. Operating income was $31.8 million in the quarter compared to $33.1 million in the third quarter of 2011. Foreign currency translation reduced revenue by 3.4% and operating income by 1.4% in the quarter. Third quarter results were affected by customer inventory destocking and higher raw material costs.

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 $40.8 million in the quarter, an increase of 8.4% over the $37.6 million reported in last year’s third quarter.

2012 OUTLOOK

Sensient has narrowed its guidance for 2012 diluted earnings per share, which is now expected to be between $2.51 and $2.56.

CONFERENCE CALL

The company will host a conference call to discuss its 2012 third quarter financial results at 10:00 a.m. CDT on Friday, October 19, 2012. 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 19, 2012, through midnight on October 26, 2012, by calling (404) 537-3406 and referring to conference identification number 36872451. 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, 2011, and quarterly report on Form 10-Q for the quarter ended June 30, 2012. 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,
       
2012 2011 % Change 2012 2011 % Change
 
Revenue $ 369,371 $ 363,751 1.5 % $ 1,102,808 $ 1,090,431 1.1 %
 
Cost of products sold 251,778 249,086 1.1 % 749,928 748,916 0.1 %
Selling and administrative expenses   66,892     64,722   3.4 %   201,392     193,642   4.0 %
 
Operating income 50,701 49,943 1.5 % 151,488 147,873 2.4 %
Interest expense   4,483     4,934     13,236     14,919  
 
Earnings before income taxes 46,218 45,009 2.7 % 138,252 132,954 4.0 %
Income taxes   13,342     13,012     41,565     41,056  
 
Net earnings $ 32,876   $ 31,997   2.7 % $ 96,687   $ 91,898   5.2 %
 
Earnings per common share:
Basic $ 0.66   $ 0.64   3.1 % $ 1.95   $ 1.85   5.4 %
 
Diluted $ 0.66   $ 0.64   3.1 % $ 1.94   $ 1.84   5.4 %
 
Average common shares outstanding:
Basic   49,536     49,776   -0.5 %   49,616     49,723   -0.2 %
 
Diluted   49,785     49,967   -0.4 %   49,850     49,911   -0.1 %
 
 
Results by Segment Three Months Ended September 30, Nine Months Ended September 30,
 

Revenue
2012 2011 % Change 2012 2011 % Change
 
 
Flavors & Fragrances $ 224,699 $ 220,266 2.0 % $ 658,348 $ 652,063 1.0 %
Color 120,660 120,975 -0.3 % 379,851 379,038 0.2 %
Corporate & Other* 40,790 37,643 8.4 % 116,443 108,515 7.3 %
Intersegment elimination   (16,778 )   (15,133 ) 10.9 %   (51,834 )   (49,185 ) 5.4 %
 
Consolidated $ 369,371   $ 363,751   1.5 % $ 1,102,808   $ 1,090,431   1.1 %
 
 

Operating Income
 
 
Flavors & Fragrances $ 31,810 $ 33,149 -4.0 % $ 94,334 $ 97,634 -3.4 %
Color 23,459 22,891 2.5 % 74,930 69,886 7.2 %
Corporate & Other*   (4,568 )   (6,097 ) -25.1 %   (17,776 )   (19,647 ) -9.5 %
 
Consolidated $ 50,701   $ 49,943   1.5 % $ 151,488   $ 147,873   2.4 %
 

* Beginning in the first quarter of 2012, the results of operations for the Company's flavors business in Central and South America, previously reported in the Flavors & Fragrances Group, are reported in the Corporate & Other segment. Results for 2011 have been restated to reflect this change.
 
Sensient Technologies Corporation
(In thousands, except per share amounts)
 
Consolidated Condensed Balance Sheets      
September 30, 2012 2011
 
Current assets $ 750,358 $ 697,625
Goodwill and intangibles (net) 458,370 455,360
Property, plant and equipment (net) 488,707 437,998
Other assets   39,405     40,442  
 
Total Assets $ 1,736,840   $ 1,631,425  
 
Current liabilities $ 208,511 $ 212,967
Long-term debt 328,837 301,064
Accrued employee and retiree benefits 56,420 57,740
Other liabilities 31,085 26,758
Shareholders' equity   1,111,987     1,032,896  
 
Total Liabilities and Shareholders' Equity $ 1,736,840   $ 1,631,425  
 
 
Consolidated Statements of Cash Flows
Three Months Ended September 30, 2012 2011
 
Net cash provided by operating activities $ 43,093   $ 39,737  
 
Cash flows from investing activities:
Acquisition of property, plant and equipment (19,753 ) (20,367 )
Other investing activity   (36 )   (51 )
 
Net cash used in investing activities   (19,789 )   (20,418 )
 
Cash flows from financing activities:
Proceeds from additional borrowings 8,060 6,001
Debt payments (22,777 ) (6,291 )
Dividends paid (10,941 ) (10,450 )
Proceeds from options exercised and other   526     252  
 
Net cash used in financing activities   (25,132 )   (10,488 )
 
Effect of exchange rate changes on cash and cash equivalents   2,113     (9,644 )
 
Net increase (decrease) in cash and cash equivalents 285 (813 )
Cash and cash equivalents at beginning of period   12,055     14,297  
Cash and cash equivalents at end of period $ 12,340   $ 13,484  
 
 
Supplemental Information
Three Months Ended September 30, 2012 2011
 
Depreciation and amortization $ 12,051 $ 11,509
 
Dividends per share $ 0.22 $ 0.21
 

Copyright Business Wire 2010

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