International Flavors (IFF) Q4 Earnings Lag Estimates, Dip Y/Y
International Flavors & Fragrances Inc. IFF reported adjusted earnings of 72 cents per share in the fourth-quarter 2023, missing the Zacks Consensus Estimate of 75 cents. The bottom line declined 13% from the year-ago quarter.
Including one-time items, the company reported a loss of $10.21 per share compared with the prior-year quarter’s loss of 10 cents.
International Flavors’ net sales were $2.70 billion in the December-end quarter, down 5% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $2.72 billion. In the quarter, currency-neutral sales were up 1%, aided by growth in the Scent, and Health & Biosciences segments.
International Flavors & Fragrances Inc. Price, Consensus and EPS Surprise
International Flavors & Fragrances Inc. price-consensus-eps-surprise-chart | International Flavors & Fragrances Inc. Quote
Operational Highlights
In the reported quarter, International Flavors’ cost of goods sold was down 6.7% year over year to $1.8 billion. Gross profit fell 1% to $860 million. The gross margin came in at 31.8% compared with 30.6% in the year-ago quarter.
Research and development expenses increased 10% year over year to $157 million. Selling and administrative expenses were up 1% to $444 million in the fourth quarter. Adjusted operating EBITDA came in at $461 million, up 4.5% from the prior-year quarter’s $441 million.
On a comparable basis, currency-neutral adjusted operating EBITDA increased 22% from the prior year. The upside was driven by volume growth, price increases and productivity gains. The adjusted operating EBITDA margin was 17.1% compared with the year-ago quarter’s 15.6%.
Segment Performances
Revenues in the Nourish segment fell 11.6% year over year to $1.39 billion in the December-end quarter. On a comparable basis, currency-neutral sales were down 3%. The figure beat our estimate of $1.37 billion.
The segment’s adjusted operating EBITDA was $165 million, down 15.4% year over year. On a comparable basis, currency-neutral adjusted operating EBITDA increased 3%, driven by gains from price increases and productivity improvements. Our estimate for the segment’s adjusted EBITDA was $162 million.
Revenues generated in the Health & Bioscience segment were $528 million compared with the year-earlier quarter’s $501 million. Currency-neutral sales rose 5% on a comparable basis. Growth was aided by a double-digit performance in Health. Our estimate was $511 million for the same.
The adjusted operating EBITDA was $162 million in the quarter compared with $121 million in the prior-year quarter. Price increases and productivity gains led to the improvement. Our model had projected an EBITDA of $116 million for the segment.
The Scent segment’s revenues were $578 million compared with the year-ago quarter’s $527 million. Currency-neutral sales improved 11%, led by double-digit growth in Consumer Fragrance and mid-single-digit growth in Fine Fragrance. The figure surpassed our estimate of $563 million.
The segment’s adjusted operating EBITDA increased 13.7% year over year to $108 million. On a comparable basis, currency-neutral adjusted operating EBITDA improved 34%, owing to volume growth, favorable price and productivity gains. The figure beat our projection of $102 million.
Revenues in Pharma Solutions were $203 million in the fourth quarter , down 8.1% year over year. The segment’s sales, per our model, were $223 million. The adjusted operating EBITDA plunged 13.3% year over year to $26 million, as lower volumes negated the gains from higher pricing and productivity improvements. The figure was lower than our projection of $34 million.
Financial Position
International Flavors had cash and cash equivalents of $703 million at the end of 2023, up from $483 million at the end of 2022. Long-term debt was $9.2 billion at the 2023-end compared with $10.4 billion at 2022-end.
International Flavors utilized $1.44 billion in cash in operating activities in 2023, up from $0.39 billion in the prior year.
2023 Performance
The company reported adjusted earnings of $3.34 per share in 2023, in line with the Zacks Consensus Estimate. The bottom line declined 38% from 2022. Including one-time items, the company reported a loss of $10.05 per share compared with the prior year’s loss of $7.32.
International Flavors’ net sales came in at $11.48 billion in 2023, down 7.7% from a year ago. The top line missed the Zacks Consensus Estimate of $11.49 billion. During the year, currency-neutral sales were down 1%. Growth in the Scent, and Health & Biosciences segments were offset by declines in the Pharma and Nourish segments.
2024 Guidance
International Flavors expects sales for fiscal 2024 between $10.8 billion and $11.1 billion. Volume is anticipated to be flat to up 3%. The company expects pricing to decline around 2.5% year over year.
Adjusted EBITDA is expected between $1.9 billion and $2.1 billion.
Price Performance
In the past year, International Flavors’ shares have lost 10.3% compared with the industry’s decline of 23.3%.
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Zacks Rank & Key Picks
International Flavors currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Staples sector are Fomento Económico Mexicano, S.A.B. de C.V. FMX, e.l.f. Beauty, Inc. ELF and Inter Parfums, Inc. IPAR. FMX flaunts a Zacks Rank #1 (Strong Buy) at present, and ELF and IPAR have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fomento Económico Mexicano has an average trailing four-quarter earnings surprise of 23.2%. The Zacks Consensus Estimate for FMX’s fiscal 2024 earnings is pegged at $5.90 per share. The consensus estimate for 2023 earnings has moved 3% north in the past 60 days. Its shares gained 45.2% in the last year.
e.l.f. Beauty has an average trailing four-quarter earnings surprise of 69.2%. The Zacks Consensus Estimate for ELF’s fiscal 2024 earnings is pegged at $3.04 per share. This indicates an 83.1% increase from the prior-year reported figure. The consensus estimate for fiscal 2024 earnings has moved 13% north in the past 60 days. ELF shares have gained 134% in the past year.
The Zacks Consensus Estimate for Inter Parfums’ fiscal 2024 earnings per share is pegged at $4.78, indicating growth of 20.4% from the prior-year actual. Earnings estimates have moved 1% north in the past 60 days. IPAR’s shares have gained 29.5% in the past year.
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