International Flavors & Fragrances Inc.
) reported adjusted earnings of $1.32 per share in first-quarter
2014, up from $1.19 per share recorded in the year-ago quarter.
The bottom-line result also surpassed the Zacks Consensus
Estimate of $1.25 per share.
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Including one-time items, the company reported GAAP earnings of
$1.30 per share, up 18.2% year over year.
International Flavors & Fragrances generated net sales of
$770.2 million in first-quarter 2014, up 5.8% year over year and
above the Zacks Consensus Estimate of $764.0 million. On a
constant currency basis, revenues inched up 7% year over year,
driven by solid growth in the emerging markets. The acquired
assets of Aromor contributed 1% to total revenue growth.
International Flavors & Fragrances operates in two segments:
Flavors and Fragrances.
Revenues from the Flavors business were $366.5 million, up 2.8%
year over year and accounting for 47.6% of total revenue. On a
constant currency basis, revenues increased 5% year over year.
The Fragrances business recorded an 8.7% year over year increase
in revenues that came in at $403.7 million. On a constant
currency basis, revenues rose 8% year over year.
From a geographical perspective, revenues from North America
increased 2% year over year, while results from Europe, Africa
and the Middle East (EAME) were up 10% year over year or up 9% on
a constant currency basis. Revenues from Latin America increased
1% year over year or 3% on a constant currency basis and from
Greater Asia revenues were up 6% year over year or 11% on a
constant currency basis.
International Flavors & Fragrances' adjusted gross margin in
first-quarter 2014 was 44.7%, up 180 basis points (bps) year over
year on the back of new business wins, effective product mix,
innovations and cost reductions. Research and development
expense, as a percentage of sales, decreased by 10 bps to settle
at 8.0% while selling and administrative expense increased by 30
bps to 16.1%.
Adjusted operating margin in the quarter was 20.6% compared with
19.1% in the year-ago quarter. Interest expense increased 4.7% to
$11.7 million in the quarter.
Exiting the first quarter of 2014, International Flavors &
Fragrances had cash and cash equivalents of $268.6 million versus
$405.5 million in the preceding quarter. Long-term debt was
relatively flat sequentially at $931.6 million.
Cash generated from operating activities was $35.0 million, up
87% year over year. Capital spending was at $33.8 million versus
$29.9 million in the year-ago quarter. In the reported quarter,
International Flavors & Fragrances paid cash dividends of
International Flavors & Fragrances maintained its guidance
for 2014. Local currency sales growth is expected to be within a
range of 5-7%, including roughly 1% contribution from the Aromor
acquisition. Operating profit will get a boost from cost
reductions and manufacturing efficiencies. Both adjusted
operating profit and adjusted earnings per share will grow in a
International Flavors & Fragrances currently has a market
capitalization of $8.0 billion and carries a Zacks Rank #3
(Hold). Some better-ranked stocks in the industry include
Globe Specialty Metals, Inc.
Sensient Technologies Corporation
). While Globe Specialty Metals carries a Zacks Rank #1 (Strong
Buy), both Sensient Technologies and Zep hold a Zacks Rank #2