International Flavors & Fragrances Inc. (IFF) reported in-line results for third-quarter 2014. Adjusted earnings came in at $1.32 per share, same as the Zacks Consensus Estimate but up 8.2% from $1.22 earned in the year-ago quarter.
Including one-time items, International Flavors & Fragrances reported Generally Accepted Accounting Principles (GAAP) earnings of $1.31 per share, up 9.2% year over year.
Revenues
International Flavors & Fragrances’ net revenues in the quarter totaled $773.8 million, increasing 4.3% year over year and coming slightly above the Zacks Consensus Estimate of $772 million. On a constant currency basis, revenues climbed 4% year over year. The top-line improvement can be attributed to a solid product line, the Aromor acquisition and successful implementation of the company’s growth strategies.
International Flavors & Fragrances operates in two segments: Flavors and Fragrances.
Revenues derived from the Flavors business increased 2.7% year over year to $358.7 million. It accounted for nearly 46.4% of total revenue. On a constant currency basis, Flavors revenues inched up 2% year over year.
The Fragrances business generated $415.1 million in revenues, up 5.7% year over year. It contributed 53.6% of total revenue in the quarter. On a constant currency basis, revenues rose 5% year over year.
From a geographical perspective, revenues from North America declined 3% year over year; while revenues from Europe, Africa and the Middle East (EAME) were up 9% year over year or 6% on a constant currency basis. Revenues from Latin American operations increased 8% year over year or 9% on a constant currency basis; while from Greater Asia, revenues were up 3% year over year or 4% on a constant currency basis.
Margins
International Flavors & Fragrances’ adjusted gross margin came in at 44% as against 44.2% recorded in the year-ago quarter. Research and development expenses, as a percentage of sales, were 8.2%, down 60 basis points (bps) year over year, while selling and administrative expense was stable at 15.9%. Adjusted operating margin was 19.8% versus 19.4% in the year-ago quarter. Interest expense decreased 5.7% year over year to $11 million.
Balance Sheet and Cash Flow
Exiting third-quarter 2014, International Flavors & Fragrances had cash and cash equivalents of $404.8 million versus $326.9 million in the preceding quarter. Long-term debt inched up 0.11% sequentially at $933.6 million.
In the nine months ended Sep 30, 2014, International Flavors & Fragrances generated cash of $317.5 million from its operating activities, rising 23.4% year over year. Capital spending totaled $97.8 million, up 13.2% from $86.4 million in the year-ago comparable period
Cash dividends paid during the first nine months of 2014 amounted to $95.1 million versus $55.5 million paid in the year-ago comparable period.
Outlook: For 2014, International Flavors & Fragrances anticipates achieving its previously provided sales growth guidance of 4–6%. Operating profit is expected to receive a boost from cost reductions and manufacturing efficiencies. Double-digits growth is expected for both adjusted operating profit and adjusted earnings per share.
With a market capitalization of $8 billion, International Flavors & Fragrances presently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Green Plains Inc. (GPRE), Minerals Technologies Inc. (MTX) and Globe Specialty Metals, Inc. (GSM). While Green Plains and Minerals Technologies sport a Zacks Rank #1 (Strong Buy), Globe Specialty Metals holds a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment