International Flavors & Fragrances (IFF) 9 Aug 222022 Q2 Earnings call transcript

At this time, I would like to welcome everyone to the IFF Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to introduce Michael DeVeau, Head of Investor Relations.

You may begin.

Thank you. and everyone. afternoon good morning, good evening, Good Welcome Second Quarter Call. XXXX Conference to IFF's distributed announcing press afternoon, a Yesterday we release our results. financial at of copy our the can ir.iff.com. website be A found release IR on replay. being Please that and available this is note recorded call will live, be for a forward-looking Please moment review to our take statements.

today performance, statements we the call, and second we're company's full statements contain are to how regard and year about forward-looking the with uncertainty. things the These based of half see on During the XXXX. making particularly elements outlook for

measures, found from For factors can will presentation additional our information cause XX-K set Glenn which that actual which concerning comparability. GAAP financial today on non-GAAP risk and Vice Frank Clyburn; forward-looking include be release, the of these in contained CFO, factors results believe their our that President to statements, in our financial press website. me differ our and Executive our of A and to Today's CEO, refer the forth measures With please our reconciliation our affect cautionary respective exclude statement both measures release. on materially to can and items non-GAAP Richter. is is we those call press

questions with and begin over to like prepared that, We will I now Frank. at then you take remarks the any have would With call end. turn to the

and for us joining everyone, you today. thank hello, and Mike, you, Thank

the innovative today's well to work. IFF joining made thank display to been world work, on to IFF's on our take we are update I the environment, for Glenn as as Under Before hard I delivering the taking aggressive as detailed again I pricing near creation steadfast over continued challenging months. strategy focusing moment action dive I we inflation, X we to recent well success. passion and our customers then once of right financial first value their begin as IFF, in of cost as on creative look operational teams ensuring a and the the with Microbial our half term, to into cover right I our expertise impressed accomplishments XXXX. discuss an last turn a the profitable $XX to our year, business and a have our long the call priorities. global want as This teams the provide the I and by for the savings people that culture execute that at second of and process to rest our our commitment Control the over the call for exiting discoveries tremendous of outlook results, our our million in will and will consistently acknowledge deliver Since quarter swift delivered underpins growth. innovation roles. half we talent the progress includes first their have for opportunities refresh our results and caliber have operating around

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sustainable generate to can plan. execute further is plan we of our create the clear through to have Our ensuring where successfully competitive all innovation, map evaluation product stakeholders. value the of our foundational lasting for this to phases a and by goal completed road superiority the Already, we operating provide sales priorities comprehensive growth develop differentiation significant refined to

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I within this Make we and quickly and approach initiatives a are pectin our also no enhanced say, Earlier priorities, well will to the maintaining already and categories we businesses quite taking am differently popular optimization. natural for market accelerate near-term to bringing optimized a pricing to improvement excited pricing clean-label in about like IFF optimized seeing business, upside rigor have invest the competitiveness year, example, earnings and across mistake, a time will cost strong do our are this business spent are our We where key Flavors. through including plan, work with for every businesses, growth not while stronger operations our our portfolio and drive those exit reallocating we underway. progress to we category, stabilizer, we already. reviewing divestitures function. running and I initiative

reinvestment mentioned ensure execute the X. spent organization, we our to asked have have Since to an this on team to optimize and joining Moving our Slide accelerate key goals. the earlier, to as year. expectations I are as and to fully program achieving believe to efforts multi-year is of would our well I to move focus profile committed I the have opportunity believe, positioned analyzing I and profitability and am second our growth our time which unlocking value cost into productivity the now we IFF, half I cost a long-term to like we significant structure.

details, For more Glenn I to ask to comment. would like

provide Thank afternoon challenging To additional environment economic transparency Accelerating and in is to our to represents and and program expected expense increasingly and performance. financial priorities, results. morning multi-year one a to top synergy our order of good everyone. more the end, efforts productivity to and you, our good in Frank, productivity we important this want maximize

efficiencies First describe that all, of X primarily productivity focused efforts. global additional me chain, global Overall, cover established teams spending cost S&OP expenses. logistics and reduced total which XX% costs let of particularly IFF's indirect our enhanced approximately driving driven operations. efforts we includes processes. spend structure, management, the in The supply indirect include our operations of and direct overhead demand and improved and and logistics include strategies on X have procurement scope Opportunities procurement material for through by

second a broad-based savings accelerating and improvements, programs. yield including operations efforts, end-to-end initiatives, includes digital on our The practices focused of manufacturing energy team and best is system-wide driving manufacturing set

and is team to service we be preliminary technology focused to is million third platform standardization efficiencies total, our our and global business and Two million administrative mix, shared important processes our The enhance and decisions. out on building to disciplined versus in notes. leveraging achieved XXXX And targeting optimize that buy our drive is that $XXX with make process net combined and annualized focused impact improved centralization increased to of initiative In to team between XXXX. fourth SKUs the on a support product P&L across are functions. drive profit technology, rationalize economic programs $XXX expect

our our strengthen and $XXX that million annual this regions, $XXX technology pipeline, reinvestments expand is strengthen First, digital commercial customers deepen of products, are and targeted our efforts to impact across key talent. innovation and to million our net capabilities

and that, December. Day XXXX Frank. turn details Secondly, forward the skewed sharing to our With to you We at more net will savings Investor look to be slightly it I'll in more back with XXXX.

Glenn. you, Thank

to we share said, specifics this in indication details on provide with committed I our to topic wanted December, Day program at provide on Investor our early more As this we as QX but will earnings more an call. during you

customer significant map for with our by combination have you that remain Investor confident and more detailed ahead, also well been lead. opportunities I COVID, expected provide including confirmed as our wins and to feedback capacity. More disruption, importantly, realization our these N&B. our including bandwidth, at revenue of following growth, benefits we our have factors, commercial and we know positive constrained from our a will Day, initial road opportunities clear initiatives We as competitors external customer with supply than chain that incremental due slower pricing

a existing have emphasis gaps. focused since initiative reinforce and However, I our address launched joining, to

into developing are with each to forward we owner me engagement portfolio that involved, significant be our Heritage exceeding market line to delivering set enjoying with technical leading for and alternative a financial with will flavors to plant-based combined N&B improve to Specifically, steady relationship. share long-term significant performance. customers' This IFF am business of portfolio. drive pleased supplier, increasing producer a to Protein-Based, going prioritized awarded see resulted as opportunities, our wins committed to the the to core continue be three, our deliver. as incorporation provide time IFF we I'm and focus essentially a of of upstreaming proposition and time a impact, in value in personally say dedicating I Heritage and commercial of and This confidence across our clear will burgers. our one ability we protein being for a co-collaborated expectation the Recently, collaboration,

development thanks with were Dairy in H&B addition, is ahead strong and in to we proposition good solutions that direction this the the best early moving a value and approach are very better to integrated together opportunities, collaboration. and of are In early delivering culture the right with customers. better, value win, divisions. seeing step points phase part competition engagement of but collaboration customers. due In The proof support our large dairy between Nourish showing we examples, during to technical flavor showing are just a These customer and our the category we a a X

performance Now provide our turning to half XX, like for to I'd the of year. the first Slide overview an of

operating first a to global am to and sales once strong X billion. our XXth grew dedication by generation. proud portfolio $X.X future to the above have challenges or Our and again basis currency-neutral in by adjusted consecutive year strong market. that the we business X% report to shareholders, of grew belief to complex Comparable increased who results I XX% testament are in payouts of beyond Despite increased our cash $X.X currency teams quarterly strong billion. to neutral and a talented which a underscores EBITDA months, XX% strength of continued our the IFF's dividend half our macroeconomic a our last the go approximately flow of the on our X%,

time, the We discuss debt transaction, deleveraging which same on to the uncertainty. prudently also and on net we the the Xx where At covenants committed agreements credit XX continue to XXXX. market months reducing we work of remain deleverage to will objectives, amended Glenn volatility detail. to less our than existing given in target EBITDA post X, more February is and proactively our

described mentioned a earlier. approach as also ahead bit business As Microbial earlier, our of the I on divestiture based management divestiture non-core X opportunities additional I our and move assets we category our continuing for completed on to we July evaluate Control

closer Now, quarter to look financials. I back would provide over like into to Glenn turn second the to call a our

Thanks again, Frank.

generated double-digit our comparable primarily increase than $X results. on solutions. growth driven second to Pharma representing currency-neutral and basis, billion in quarter first sales, XX% in Turning by consolidated IFF Nourish more year-over-year

represented growth with In the up majority, volumes terms our modestly. pricing contribution, of

actions, inflation to are into pricing through was full we the track for approximately inflation. and on year, coming fully to in recover cost recover billion XXXX $X focus Our

We strategic are margin over in doing lower manner, businesses. and so capacity-constrained on a thoughtful very and

exchange quarter. on foreign by comparable grew operating adverse impact X% to the EBITDA on in our second I'm and year-over-year basis EBITDA implemented While X% pricing a and have actions quarter, currency basis gains had adjusted the rates or productivity pleased we reported neutral sales on in that report driven a an

of year-over-year achieved earnings We share per excluding solid amortization. also growth X%,

Before business our hygiene have non-cash to food, It expected and reduced such growth the reduced include exchange future, to entities that focus allocated products assets and rate million I number intangible the in to the within conflict. determined share quarter limited and consumer impairment expected and 'XX, charge Russia-Ukraine the restricted of within supply to property, moving took rata of This result certain factors, million, and in the we due was expected operations approximately as given Russia. declines volatility, of chain as $XX Russia including amount we not $XX performance issues, on, that respectively. reverse $XXX during near a is operating pro in was to in demand be all second equipment and essential group an operating future wanted medicine, of of the impairment million charge conditions that in the plant to were asset product

provide XX, to business the now segments. Moving I'll Slide underlying our brief across performance overview a of

each with Biosciences negative Cultures Enzymes Food a the As and consistent Scent currency-neutral to growth our each our Consumer were prior across XX%. Biosciences, the double-digit IFF's led our as delivered segments, I in July. growth single had completed across Flavors, in and currency-neutral growth Personal sales had period. Nutrition, Nourish significant was sales high mid-single-digit of Control broad-based and Scents second as Solutions of largest official Processing year the driver, contribute by once Care including & growth Ingredients mentioned, Pharma Design Microbial strong the strong Health and growth Health, in as quarter business Nourish, comparable again very Food Health sales growth Grain divestiture business Home in with performance comparison year-over-year Both Fine digits well prior Animal businesses. & to due Fragrance Fragrance, quarter, & & to and Ingredients. in another

pleased double-digit we Lastly, our strength are growth Industrial in by continued Pharma businesses. having and Pharma achieved rebound, driven by Solutions continued

I'd Slide like our to for Turning the provide profitability of XX, review a quarter. to

Second quarter comparable productivity pricing adjusted year-over-year mentioned the $XXX actions I earlier. and currency-neutral totaled expectations EBITDA growth that X% representing by our and driven million, gains exceeding in

XX.X%, second basis margin if of basis comparable contribution adjusted EBITDA to an the the in for an was in XXX normalize sales. margin approximately higher EBITDA on to of inflation-adjusted XX.X%, been XX% we and compares or This Our of impact would have pricing XXXX. quarter approximately QX

result we actions, strategic a to As cost for date, of cost that pricing our and the we full are inflation will we dollar fully full fiscal year. have total recovery achieve recovered optimistic

XX% As logistics currency-neutral Design offset raw the Cultures and Food division. increases of strong Slide we our inflationary Nourish, sales drove In and costs currency and growth saw in and particularly growth continue take maintain in ahead is which of Food monitor this segment. adjusted EBITDA, currency-neutral XX% additional single-digit quarter by and comparable sales and business X% high navigating overview & continue performance demand, we will Health in comparable uncertain quarters growth Nutrition materials action the comparable market, second for closely in delivered neutral appropriate profitability. pressures year-over-year operating growth to to On mid-single-digit Biosciences, Health and Flavors. an Animal and XX Enzymes, in

currency low decrease saw in strategic comparable growth, an achieved operating Collectively, continue single-digit comparable neutral quarter, double-digit led and to to in with though mix decrease Nourish EBITDA. way adjusted strategic In lower X%, a inflationary of X% XX% in followed productivity pricing this year-over-year neutral Fine neutral actions, we Scent the high to similar operating notable pricing outpaced volumes and unfavorable actions and While Scent, gains growth implemented lead Fragrances pressures single-digit which our growth currency comparable growth by Fragrance. to year-over-year currency Consumer EBITDA. adjusted sales in led Ingredients

anticipate pressures, to work over recover to time. we address costs all customers these Our inflationary ongoing are continuing to fully teams with our and inflationary

achieving growth neutral single-digit in division's in Lastly, and driven in Pharma. actions XX% Pharma XX% an supported strongest Solutions and growth comparable EBITDA, growth our currency adjusted gains. this high increase was operating currency-neutral Industrial comparable sales productivity one quarter, profitability The of further year-over-year and double-digit by exceptional was performers by in pricing

of would our impacted our In was to and free to inflationary half, discuss business. XX, combination for sales, inventory cash customer higher to by position result necessary like I our first a cash continue inventories we leverage Turning our results. make months, investments This of the first in of was a Slide values. representing first half flow X flow and position service million support the X.X% pressures continued in levels. rebuilding to as approximately

$XXX remain we second $XXX Note Control debt the addition, quarter In dividends to well adjusted received the strategic QX, refresh. quarter At credit of July. X.Xx we that shareholders. billion sale billion. proceeds we $XX.XX we in finished cash We equivalents cash million in from as million a business IFF From gross Microbial our advance net debt perspective, delivered $X.X our for positioned EBITDA with a of leverage ratio. of the while and gross totaled maintained our end the the

last addition, fee credit ratio agreement occurring loan associated delayed flexibility to EBITDA the The $X.XXX we down amended from proactively time, of end agreement the our the with of credit revolving near-term term step-downs just adjusted the week, quarter maximum now quarter approximately the agreements totaled order to stepping X.X:X amended XXXX credit leverage previously. was and X.X:X, The navigate adequate XXXX market permitted over existing $XXX,XXX. amendment maintain billion. Trailing certain first uncertainties. to third in In of XX-month end down versus ensure fourth at step we

quarterly share as per authorization, year. our XXth of shareholders payable Frank our is stock. increased August the of on the XXXX Including the dividend a X, mentioned, The September record consecutive dividend in increase of $X.XX quarterly XX. this to October on Board quarterly common Directors we of X, company's X% payment As authorized $X.XX or dividend to for

on to now our Let's turn XX. Slide outlook consolidated

currency-neutral to deliver reconfirming XX%. our of are remainder growth sales the billion track year on of As sales to guidance XXXX, full billion $XX commitments we remain X% to we to and $XX.X and projected look of

navigate outlook, environment While foreign on and the reconfirming fluctuations, recessionary increasingly as outlook inflation cautious we our are also pressures. potentially continued we are we ongoing overall exchange market

We press full recovery. we expect through targets sales dollar ahead to achieve as pricing cost our toward actions

points expect to percentage forecasted to percentage sales exchange previously We our X compared X points. foreign pressures impact by approximately

also reconfirming EBITDA are approximately adjusted growth X We to to billion, operating to note $X.X that points growth exchange expect X%. be that to previously. EBITDA $X.X X% we X of by operating percentage currency-neutral to foreign impact Please equates billion which percentage points versus

As the uncertain always, productivity. an we these macroeconomic we during remain on laser focusing focused many with execution on emphasis controlling notably can what challenges on mitigating control pricing times, and

the we growth by million. driven In Control. above expect sales $X of actions, foreign revenues will pricing terms approximately business $XXX strong exchange quarter, some by The of with headwinds, impacted and QX Microbial our seasonality divestiture of the sales in incremental of modestly sale be impact Control and by coming billion to third Microbial

million. to quarter, adjusted million third expect EBITDA $XXX the For we approximately be to $XXX

for XX% X% growth Before of passing Frank, X Overall, are to objectives business so of are our this outlined the momentum, beginning 'XX operational sales half strong we back against of full sales core the targeting XX% year-over-year to maintaining call for the priorities the currency-neutral we far year. to currency-neutral revisit the growth well year. we year. to achieved executing first the at I Relative and want

full inflation, to dollar pricing on executing full track cost remain year recovered we of fully a achieve and the 'XX. we've terms cost our recovery total broad-based actions, for In of the

in are are we to inflationary future broader Importantly, the monitoring we ahead market necessary, equipped to ensure stay challenges. closely well quickly environment respond and, to where trends

goals tremendous the In over first deal-related operational continue delivered front, productivity we full savings On $XX year, expectations. of year. synergies, the well towards the efficiencies our above make half the we productivity progress to our for and million

on to well target. our are year savings full $XXX million exceed We track

performing identify optimization successfully divestitures, portfolio are over our divestiture These in of and call and completed assess this the delever us the to our that, Frank. uncertain sale July opportunities balance portfolio our market. to pass X additional on business in to to relative Finally, continuing our businesses. help accelerating non-core divestitures Control will back Microbial I'll we enable reinvest highest us With sheet to and

Thanks, Glenn.

to up efforts half our dividend Before in We've of achieved our to I market wrap our year. we I teams the XXXX confident against of and amid are the first I we as we efforts, our global continue challenging I for proud say to of and ability our increased refining strong control execute deliver our achieve At of financial strategic stakeholders. advancing year deploying our we to for performance XXth strong portfolio to strengthening full same committed targets transformation value am call, continue control. executing operational time, can want culture in what priorities innovation, today's the our all creation consecutive the as am conditions. our and

look Thank of urgently and our the across Markets business, now to refreshed and like December. business will be position IFF Capital for focused upcoming open our call communicating the at on and market year, half strategic in value I'd new creation protecting the the identifying our Moving the intensely any you. questions. sharing growing second I and we operating model through forward success. for more Day early long-term to to opportunities,

Instructions]. [Operator take our And first Mark from Stifel. we will with Astrachan question

think growth program balancing in volume you that that ask period, of to I going net sort to forward? given, think margin how we this think points implied something do longer margin about as savings about about we think, and Glenn, targets, you relates growth you volume versus of I do get do about basis wanted in said, modest I how XXX you're it of thinking especially expansion? implied think including the what how And margins. about long-term would north the term? How math productivity

that of really the announced, program is We couple really important start Mark, want A we've we this as I'll not productivity that continuing build company. first, only but near-term, Mark, into mindset. the see Frank. that a comments. with building productivity

really to to trying We invest to Mark, We done leverage sustainable, on portfolio, that's specific is be the a profitable financial be going This December be of a able and achieve, able growth growth, targets in that perspective. with to work, our our the from profile to important get for use to to some Mark, to really and we're think ROIC also What why us throughout you we've be start P&L. perspective. the able in really from also to want is share opportunities. we'll

from Paribas Exane. And with take question Heidi next we'll our Vesterinen BNP

understand at I So price. if we currency-neutral look this is mainly your growth, QX

do into you volumes? terms of think QX, such quarter, of most in strong that somewhat of And year on in momentum you your not exit EBITDA? had see HX volumes could weren't And we perhaps While able then upgrading why what please? a full comment you peers the after to rate QX volumes to strong guidance this the was reason in that, terms for your linked and grow

Heidi, our to this Relative ways. are questions. you're volume I One would sort X given comparatives, well. first comparatives are But the it our I the if sort the of aware, that of and difficult business oranges down is Glenn. core would the look strip Thanks to sort of as answer maybe apples kind for is, well say results, you doing most quite sometimes really half actually of of comparisons businesses the business. of at

digit within Animal single mid-single low mid-single units are single Pharma up Flavors, Cultures, digit. volume digits. Health business is growth. Scents both high Nutrition, So Food digits. of Enzymes, terms in up is Core H&B,

we've balance thoughtful and between as being throughout volume profitability. is, year, very difference the discussed a the regarding we're So

it. our as it kind into pressures making pace that's X very on strategic implementing early very and/or consistent shareholders by of vary with to been performance. businesses basically margin through would balance very flattish and inflationary We're guidance, specifically and in lastly, cost year well we've of are the and materials I as goods, focusing thoughtful sort said the of the sure this good We've that very to enhancement business. capacity strategy relative the to have businesses, is the note does be what year, flow we're those both lower-margin so from the reality our with trying we which So planning raw constraints and the difference. that outcomes focus is customers of And Relative consistent we in point, our were then is to very for this deliver on we signaled. actions how relatively to

consequently, of to little So sort of overperformance because explains terms cautionary that's full sticking on guide, terms we the perspective a outlook hitting the to third quarter-to-quarter. in we're we're a how and lag of That the here generally of of quarter, in and lag quarter just the macro of relative the And environment, there's being outlook. realistic a same bit guidance. in year consequently, some given of that how kind

So hopefully, that's helpful.

next our And we'll Gunther question from take Zechmann Bernstein. with

And QX? and in how Glenn, you place? that that included for insight contribution Can can Frank, is any revenue please? Mike. much forecast that share are synergies about volume the in and within updated you into expect And then inflation what integrated you secondly, the Nourish talk and solutions year, XXXX, your

Frank. I'll Gunther, get started. it's

did within we mentioned, Flavors, and revenue Nourish, to synergies, Glenn within we there. significant we and first, So believe about as good especially excited regards performance, see opportunity the have we're really with

are with as important burgers. the plant-based N&B to we're win we're win for highlighted We're examples, as legacy we well call regards that some opportunities. IFF vanilla expertise the our important some by where highlighted an on wins Gunther, encouraged is utilizing cross-selling good there. seeing flavor really that legacy expertise, of also We We seeing an

to area well team. highlighted as So portfolio positive bring our work be we We're said, done, technology our customers. broader overall, that that to starting to personally customers. going how remarks. synergies see going there's leaning and feedback our revenue the This and from the be With we're a as I we're prepared good is to myself hearing be on executive to significant that's platform focus of for into something Gunther,

So inflation? something share lot December this maybe is Capital touch you more on the Glenn, want Day. about don't if know we'll to our in I a Markets

have year time P&L, in impact impact through the Sure. additional generally, likely show stable. is would no it's materials Yes. change XXXX. worse been takes the nature been has materials Definitely hit of been and the to it Gunther. Raw has go inventory XXXX, to outlook But are muted of better. of Logistics note be sort the for in and up of any inflation. pockets. to the choppy, Generally, really better. Relative to also energy X still balance the raw just relative to I in that to slightly but our slightly slightly things general,

do our very view on That's are increase coming the at deep say, anticipate a be from for taking we preliminary a to perspective our we in We look materials. going We've here concentrated as meaningful is at plan run raw through update I'll 'XX. this more another, in point of cost round doing XXXX. scenario, we're weeks And inflation. an

soy, is prices to of increase groups So number likely sort some of we're significant areas well. certain some We're a choppy, grains inflation. including as of see those likely to Energy well. modestly increase things, and such seeing and but as energy be there's also obviously, oils, as sort agricultural pretty modest in logistics commodity

'XX pressures kind same So we additional probably for are we of but year. the degree overall, next expecting not are to inflationary expecting as 'XX,

go to We'll with Fargo. Sison next Wells Mike

Nice quarter and outlook.

flow terms color for second 'XX. flow driving positive What's you that any hoping I think free the cash in about XQ, billion cash free half then of year? of to $X by in were segment? up Can you in of sort more And In make the of maybe consumption? this some do performance

Yes.

well, So as good question, Mike. is you The sole there's impact seasonality, -- know.

there's on a first inventories. the build quarter, first namely half year, the So typically, capital, of working in

gets there's paid basically of cetera. compensation year-end the et out, Secondarily, that

to costs. flow that higher on We to of to the than about million. principally related is are running That basically levels higher inventory XXX% cash is anticipated actually $XXX attributable worse tune

Wave the through. So We X of significant That the we may coming as when our year. in round very you inflation identified entered rolling kind inflation subsequent recall, year, of inventory. had early another into we is

this initiatives less the byproduct flow $XXX of about important we to at guided the very that relatively we'd billion-ish. sort So be free to a are million We're probably year N&B than prior largely about legacy a to as be year full that businesses. targeting a we of standpoint point in $X of against said, cash flat time. that, series from of implementing being had That

say is new putting drive point best inventory will In some probably we're those bring i.e., processes terms the I'd hopeful some efficiencies, of to S&OP billion. that versus and $X XXX-ish original enhancements, levels. this guess at be in able But

we'll And go Goldman next to Adam Sachs. Samuelson with

I see of on a cumulative in can along actions And of imbalance guess, price those taking having So to in to of compress or price you to catching just basis there question. of to the more probably lines, have I -- how price-cost some quarter? that still balance, on try shorten and a be kind of guess from back some year you cost come business, do specifically? that been to you're think cycles? -- But sight and line still talk in cost about in the the 'XX? see I I think second behind we length lags 'XX, cost but into do this segment balance the the the maybe and that price entered hoping up half it businesses, the those in wanted appreciate help the to can us inventories Is you'd Scent a little to the bit inflation recapturing there's about -- I 'XX. what you still cost --

for for couple behind back reason part year. slightly of the we're price things guidance year, the one -- the ahead, That's how cost, i.e. implied say of the One first say slightly year. Adam, of answers. thinks of thanks roll question. to the half second the versus through inventory is just a about of the I'll how year balance kind this the I'd of half the the relative to versus

lag months piece the a to it. be So would of full XX inflation that's from We -- capture. normally,

are by the one the here 'XX. it's we see differently And continue customers that of generally timing, is sort the case. contracts from and that that's relatively is to from the Scent question itself given standpoint. only indices be the nature tag to to behind one would the thinks of the business. The how can furthest manifesting about You expect large mark fully a

mentioned, round So as see to going to my inflation that just come another I are Mike through. of we answer probably prior is

required other So to the rethinking to And on to suggest discussions been to extent, environment customers inflation these but round, marketplace. we've 'XX burden. frequency, to And rethink from having of standpoint, obviously, that way we with in share sort of them even if sort more to from very the realistic addition, catch we've may may part contracts which having probably of terms we last in been 'XX, up, the to be rethinking then of it traditional first all semi-annual of our contracts. so some relative just just set level as inflation a need continued the that's to case. months rounds your late in of a the annual, that's and of of open have us or opposed But changes or question, is, and type the XX -- in agreements would relative unprecedented your pricing,

I as a 'XX. in place, it been the put we we and in the future to of about that's relative prevail bigger So suspect as well factor contracts will think

Suisse. John take will next we Credit our with question And Roberts from

Glenn.

billion divestments proceeds. And the earlier $X.X portfolio? comments you ballpark to higher or I in X right still Is for quantified the think capital. it's at expected as billion on that target you then your and X inflation working $X.X to look

structural commodity just versus how stuff? way logistics in and structural, to the the much you So rotating and way Can prices think issues separate it's chain, facing? their about to prices versus just constraints you lockdowns prices supply working get gas to the China, is oil taking oil down you're or European time

Good John. Yes. question,

ballpark. we year end is next $X.X slowed relative our markets The difficult, private completed $X.X as to for ball right the by to the you're So made still think billion has of substantially to investors. less the it well proceeds, activity the outlook gross divestitures, billion level X transactions in down, for the is credit with the more that particularly aware, so in has market, X equity M&A of

strategic nice aren't of just They businesses. be tend to fits large. of can our do for sort transactions, the However, other the simple size that you math,

the initial good. very level So seems interest dialogue from an standpoint,

I still think thinks the one or broader our is inventory dollar we our So is standpoint, global we're our year, slower confident a about target. to inflation we Relative half about sort inventories growth be things of of longer that this of growth, half hit from will supplies over process how a fairly to of related little may about that higher reduce cycle, but and businesses, N&B improve of customer businesses. that our related low inventories, we service across through us inventories. improved inventory to inventory levels. the processes a those again, say, Those levels, to the implementation higher that some levels recall, would allow will of our number legacy of basically increasingly will I'm you actually because confident higher if S&OP though, had

as provide We're terms visibility for year, the thing the sort have et And of gets the that order. you like we'll third come on that to be for I the back of But to of extended longer back able for the Clearly, There's system, products more do supply opportunity really that. just at The the basically I mentioned some means everyone an what actually supply this will more end inventory be volatility we, on cetera, ourselves, longer times. meaningful thinking i.e., of buffer water of capital. a day, sitting suspect is and about everybody, the global improvement by supply think for chain, end stock chain accommodate market. our the term there's that in in not chain. working but

our question from Deutsche with Bank. take we'll And Begleiter next David

And initial pull deeper downturn, that to a to geography Frank or we you into business? would demand offset if of by and downturn? Glenn, can, where weakness, go are signs either what you levers were seeing by second,

our perspective, is our probably in couple see so Food Fragrance portfolio, second And Glenn Cultures the geography Health, see did growth & you positive an it's for for side, China challenge Flavors, impact think the clearly lockdowns, is about of did largest then the mentioned, no we A From and we Enzymes, market, a surprises. the And so we well, we had Consumer as David, Thanks that's the question. demand if weakness good are that's somewhat of quarter. seeing on that been China, as us. Frank. positive. to Really and in Fine thoughts. the second recall, just David, the

If as resiliency challenge. , One Fine overall of Fragrances continue anticipate pressures about portfolio, feel the to our you cautiously a somewhat would optimistic. be may think of we

to the global of the lot to really seeing. and that's our Working we for with that about do to spoken you something possible. we're our insight connection about quick important already recoup additional our customers, has kind are our pricing teams, continuously As on teams, a close of seeing Glenn marketplace. to account what really as can lever and them is the inflation customer everything the time staying prepared and us, our agile we remarks, to our we what and we trying levers that good some think with understand about going clearly, But customers and we're we're And is a to be into. have make spending our key have then this levers, listen we as really other if in thinking really working team be with of is as staring to sure there. customers to productivity

X% to range, feel are recommitment then Both we good top at those also So XX%. it's EBITDA and our the of levers our focused are all on, range why we on growth that but our also guidance. line of XX%

our today. we reconfirming confident So guidance and in feel that's comfortable why

our question from Ghansham Panjabi take with We'll Baird. next

just we about relates potentially as sort you leverage basis? I And a recession. we you up on then portfolio of slowing think in to level seen of uncertain occurred. some do your Frank, follow of on signs about just wanted asking market customers major And is to worry more XX, context I'm talked conditions, profile preparing elasticity the for including the on question How as consumer slowdown? positioned any Have Slide of macroeconomic into go first development. new product as it a global last up,

Yes.

may overall start business, challenging about you from possibly on Food overall. about think pieces portfolio. we on so area Fine into of overall you the and lot think now. of that about we mentioned, the you Pharma kind resiliency, from see an So positioned what Fragrances that if seeing optimistic some feel I be highlighted moving cautiously our we portfolio feel a I've we as going a think really pullback some Health, And right to perspective. Beverage, But the resiliency is times that well Clearly, demand are there's

are not really core our that there this the as our are point in far about maybe at to think that to innovation new going they're offerings, question some offerings going As in on portfolio, focus time. customers

still strong our wanting are and going be us, customers still and However, my future. that time about of to pipeline really that's belief something we'll important key our is the And critically excited we with be really signals excited very we're December and sharing about to to co-develop we're work seeing with innovate, why in It's pipeline going spend you that's for portfolio, for but really us. portfolio.

some you'll offerings. the see yes, So maybe on focus in term core customers near

on look the signals as important with to innovation. be still future. to seeing we're we However, us from are out, really customers working It's that going

I you're to as add well is through relative Ghansham, if that that maybe And resilient business as indicated, the could Frank this aware, to leverage Yes. highly just is cycles. question,

you temporary terms percent, don't volume. see general, but you sort as X have be or quarter destock may of a transition in in swings you couple inventories, of So may down some customers massive

able of Secondarily, to sustain believe passing continue very that importantly, pricing being we helpful. to which is the through, resiliency do inflation sort and

mentioned, CapEx of capital, such some and a maybe the Third, well, offset slower a of we've slowdown other even demand marketplace. investments. of sort driver as potential probably sort drop in to as general, elements major working of And stable more here productivity, as is the is in then inventory helps

So standpoint, focus flow, cycle, managing cash but from the particularly a and sort resilient not in a pricing very on P&L the success with the to only from of productivity.

Spector question with We'll from UBS. Josh take our next

your wanted and I expectations, just the margins particularly much I quarter, higher believe, follow than to than up on our in Nourish, were expectations. segment higher

system. materials visibility your through raw You flowing the talked about of

better that why what and the quarter? next quarter, versus of quarters? different can't occur the What's went what really couple happened curious I'm something So in in this like

Yes, point, relative we at the built good standpoint. inventories. to generally Raw Josh. in have And question, related flow-throughs sort as really It inventories fairly this come is matching cost from the -- through. i.e., of of of sort materials sort materials raw the we've build a to going And sales. to static of of the are think be we're mentioned, the

run them So to wouldn't expect we of through timing to sort the artificial pickup do or have next so, I'll expect quarter from a say, we standpoint. and this,

Chris from question next with our take Parkinson we'll Mizuho. And

We've quick hit segments? there's opportunities some enrichment, that obviously, look Frank, into can Just cost, when in of hit When really -- try 'XX, on X us some that compartmentalize primary out on you've to uncertainty But and look the to second we year. look we out about businesses, mix now H&B, productivity. the talk we've price across had half your any any time in potential anything your longer-term margin specifically at you and help could thoughts? else just 'XX,

improve we've our and the our Flavors, highlighted some just spend Grow around and why Culture excited Enzyme business have significant the Invest particular. at about. This some -- we've mean, lens that through Invest highlighted to the then categories really exit. area. & We're or highlighted, spoken that then see to I've ROIC we looked also Health, And that have we Yes, Chris, we'll we we December within opportunities you is the business, Food in maintaining in I to actually our businesses. have that really can time Grow And portfolio, X

good are is, categories we there significant growth, very very categories. strong end markets. So profitable big opportunities think, for growing, The

a divestiture our areas continue take Glenn about Chris. And And approach the to we do as So we that also, best that, to disciplined strategy, to very are think well. continue overall we're we then where we'll will excited not highlighted do owners.

December. I we'll So to like about all impact we all, when get that we lot feel the a more good And of in said, portfolio.

Jeffrey to next go Zekauskas JPMorgan. we'll with And

your the Scent profit weaker is sequentially. be Why quarter, funds on for the deferred The of you year, is was first Glenn, you've cash in one second $XXX tax the compression the the that? weaker And have your with was taxes full an seems for where not year of an going That business million. that flow in outflow $XXX resiliency. outflow? had that same your to margin million. And was it outflow so from line to last What's this

to me or want you Jeff, question? answer question first second the

You can go.

Okay.

Sorry.

Okay.

and So to question the relative trend was -- Scent your first

Market performance.

one-time X reality The One, the relative second is in some there Scents. expenses that -- things. were quarter to

X been rounds there's that mentioned, we as of inflation. Secondarily,

as talked, a we little of business standpoint. more lag a in So a it's that from

you if So about to and depending on flows, lots -- the there's think basically settlements. the through across And of coming lots tax taxes, impact bit that's ebbs globe there's a every various of of delay. positions rounds happening our of terms relative in of of what's Jeffrey, and there's year, X parts and

the versus standpoint. year-over-year nothing from sort actually appreciate a sort I There's this trending question. time. But abnormal is everything So of do point in our fine expectations at of

take we And our...

one. next the to go can We

take We'll with the DeYoe Okay. final America. of from question Matthew Bank

into what a line category percent basis, were rough sales just versus at maximize or cut I top businesses of your versus optimized? the fall to look kind If of on the invest

little question. do And thanks really Invest is percentages, good category. December percentage-wise. and Day, get to But have to opportunities as that well a that's What the Grow opportunities. we're we're specific share portfolio prepared share we mentioned, in as the as prepared not really okay? now, that have that around the we that different right cuts share unpack And would clearly I I something time, into excitement not bit at the as And and for the this share Investor more we the to we'll

the And time. remarks. Clyburn there call are this back at closing turn over Frank any questions further I'll to no for

everyone around So also for around of of call, thank performance feel teams our the the we we our our successful business December again, as has thank our half innovation rest to hope our colleagues to customers seeing And our the on as, quarter in X, help with proud that all and morning. look third once world bring good again to and work I Day results, well world. just the once joining would everyone We and know forward Thank the at you. first of and and IFF to be Capital to to like very the customers continue call a Markets marketplace.

conclude your Thank program. today's this participation. Thank you, you and for does

at disconnect time. You may any