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International Flavors & Fragrances (IFF) Q1 Earnings Top - Analyst Blog

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International Flavors & Fragrances Inc.IFF reported better-than-expected earnings for first-quarter 2015. The company's adjusted earnings came in at $1.45 per share, 3 cents above the Zacks Consensus Estimate of $1.42. Also, the bottom line improved 9.8% over the year-ago tally of $1.32 per share.

International Flavors & Fragrances Inc. - Earnings Surprise | FindTheCompany

Revenues

International Flavors & Fragrances' total revenue was $774.9 million in the quarter, up 0.61% year over year. However, the top line lagged the Zacks Consensus Estimate of $779 million.

On a constant currency basis, revenues climbed 6% year over year. The top-line improvement was driven by better performance in both business segments. Also, businesses in emerging markets flourished during the quarter.

International Flavors & Fragrances operates in two segments: Flavors and Fragrances.

Revenues derived from the Flavors business increased 3% year over year to $377.1 million. It accounted for nearly 48.7% of total revenue. On a constant currency basis, Flavors revenues rose 9% year over year.

The Fragrances business generated $397.8 million in revenues, down 1% year over year. It represented 51.3% of total revenue in the quarter. On a constant currency basis, revenues grew 5% year over year.

From a geographical perspective, revenues from North America increased 2% year over year; while revenues from Europe, Africa and the Middle East ("EAME") were down 6% year over year or up 7% on a constant currency basis. Revenues from Latin American operations increased 11% year over year or 14% on a constant currency basis; while that from Greater Asia were up 2% year over year or 5% on a constant currency basis.

Margins

International Flavors & Fragrances' adjusted gross margin was 44.7%, flat year over year. Research and development expenses, as a percentage of sales, stood at 8.2%, up 20 basis points (bps) year over year; while selling and administrative expense declined 60 bps to 15.5%.

Adjusted operating margin was 21% versus 20.6% in the year-ago quarter. Interest expense decreased 5% year over year to $11.1 million.

Balance Sheet and Cash Flow

Exiting first-quarter 2015, International Flavors & Fragrances had cash and cash equivalents of $443.7 million, down from $478.6 million in the preceding quarter. Long-term debt stood at $935.2 million versus $934.2 million in the prior quarter.

In the quarter, International Flavors & Fragrances generated cash of $31.5 million from its operating activities, down 10.1% year over year. Capital spending totaled $19.4 million, down from $33.8 million in the year-ago quarter.

Cash dividends paid during the quarter amounted to $38 million versus $31.7 million paid in the prior-year comparable quarter.

Outlook: For 2015, International Flavors & Fragrances anticipates its revenues and operating profits to come in line with its long-term targets. For earnings per share, the company predicts adjusted operating profit and earnings per share growth in low-to-high single digits.

With a market capitalization of $9.6 billion, International Flavors & Fragrances presently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include Chemtura Corporation CHMT , Ferro Corporation FOE and KMG Chemicals Inc. KMG . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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