7345a3302925780f084d6d51d41b9bb608760a7e23ada9f690135720738cee25

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

Selling, General, and Administrative Expenses (SG&A) [USD, Millions]

Research and Development (R&D) [USD, Millions]

Depreciation and Amortization (D&A) [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

Earnings Per Share (EPS) - Basic [USD, Units]

Earnings Per Share (EPS) - Diluted [USD, Units]

257a3a0b23754d0b2d07c4353f646999fcff6d1945c4c434d1682b101c5c79a9

Nourish

Health & Biosciences

Scent

Pharma Solutions

Taste Segment

- Flavor Compounds

- Flavor Ingredients

- Fragrance Compounds

- Fragrance Ingredients

Frutarom

Flavors Segment

Fragrances Segment

Total Revenue

ab506c9d85d4593b9dc79418b18b88b6a8f86bf2b694979a2b0790d380a905e9

| Geographical Segment | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Europe, Africa, and Middle East (USD Million) | **977**  **[0000051253-24-000016_iff-20240331.htm:12]**  | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Greater Asia (USD Million) | **682**  **[0000051253-24-000016_iff-20240331.htm:12]**  | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| North America (USD Million) | **866**  **[0000051253-24-000016_iff-20240331.htm:12]**  | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Latin America (USD Million) | **374**  **[0000051253-24-000016_iff-20240331.htm:12]**  | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Total Consolidated Net Sales (USD Million) | **2,899**  **[0000051253-24-000016_iff-20240331.htm:12]**  | N/A | N/A | N/A | N/A | N/A | N/A | N/A |

ae35050c22c153a77eb2f5b2a403f437ca73210973bea1b7f57b7a6bc23f4eb5

International Flavors & Fragrances Inc. (IFF) is a leading creator and manufacturer of a diverse range of products used in consumer goods **[0000051253-24-000042_iff-20240930.htm:37]**. The company operates through four main segments, offering natural-based ingredients, biotechnology-derived products, fragrance compounds, and pharmaceutical excipients **[0000051253-24-000042_iff-20240930.htm:37]** **[0000051253-24-000006_iff-20231231.htm:3]**. IFF's products serve various markets, including food, non-food, perfumes, household products, and industrial uses **[0000051253-24-000042_iff-20240930.htm:37]** **[0000051253-24-000006_iff-20231231.htm:3]** **[0000051253-24-000006_iff-20231231.htm:151]**.

1. **Nourish** - Offers natural-based ingredients that enhance nutritional value, texture, and functionality in food applications such as beverages, dairy, bakery, and confectionery.
2. **Health & Biosciences** - Focuses on biotechnology-derived products like enzymes, probiotics, and specialty ingredients for both food and non-food applications, serving markets such as animal nutrition and grain processing.
3. **Scent** - Produces fragrance compounds and ingredients used in perfumes and household products.
4. **Pharma Solutions** - Provides pharmaceutical excipients and other specialty products for industrial uses.

d55a7ce0680368645686bee2aa4af4d700e1a76b7f0cc8c42d006ba760a18b1a

1. **With the increased reinvestment needs in R&D and innovation, including the additional **$20 million** planned in Q3 and Q4  **[IFF_3406021_18]** ,** how do you plan to balance this with your goal of continuously improving margins and ROIC, and can you provide more specifics on achieving both objectives?

2. **Given your net debt of **$9.1 billion** and a net debt to EBITDA ratio of **3.9x**  **[IFF_3406021_3]** ,** what specific steps are you taking to strengthen your capital structure and reduce leverage, especially considering the upcoming divestiture of the Pharma Solutions business?

3. **With your updated full-year guidance expecting net sales of **$11.3 billion to $11.4 billion** and adjusted operating EBITDA at the high end of **$2.1 billion to $2.17 billion**  **[IFF_3406021_4]** ,** can you elaborate on the key risks that could prevent you from achieving these targets, particularly in light of potential macroeconomic headwinds?

4. **You mentioned a flat price/cost dynamic expected for next year  **[IFF_3406021_15]** ;** can you provide more clarity on how you plan to manage potential increases in raw material costs and tariffs, and what impact these could have on your margins?

5. **Regarding the Functional Ingredients business turnaround and the ongoing restructuring of your global supply chain footprint  **[IFF_3406021_12]** ,** what key challenges do you foresee in achieving the targeted EBITDA margins of **15% plus**, and how confident are you in meeting those targets within the planned timeframe?

f9f0341e8c0cee88266ba5abc27b36e2a52313ec668432af020de5b1342189b1

Europe, Africa, and Middle East

Greater Asia

North America

Latin America

United States

All Foreign Countries

fa1d4b5b10c5785505fb7dff54578555d83dc1c5e4da2313c5a20ad285eb9dff

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

be6194e321dd63bec70baf73007f46ce8f78383e48c0cc42c9241e22cb1f501a

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Net Sales**: $11.3 billion to $11.4 billion  **[IFF_3406021_1]** **[IFF_3406021_4]** .
  2. **Volume Growth**: 5% to 6%  **[IFF_3406021_4]** .
  3. **Pricing**: Roughly flat  **[IFF_3406021_4]** .
  4. **Adjusted Operating EBITDA**: Near the high end of $2.1 billion to $2.17 billion  **[IFF_3406021_1]** **[IFF_3406021_4]** .
  5. **Foreign Exchange Impact**: Approximately 3% adverse impact  **[IFF_3406021_4]** .
  6. **Free Cash Flow**: $600 million  **[IFF_3406021_11]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Adjusted Operating EBITDA**: $2.1 billion to $2.17 billion  **[IFF_3397188_6]** .
  2. **Net Sales**: $11.1 billion to $11.3 billion  **[IFF_3397188_5]** .
  3. **Volume Growth**: 3% to 5%  **[IFF_3397188_5]** .
  4. **Free Cash Flow**: $600 million  **[IFF_3397188_13]** .
  5. **Capital Expenditures (CapEx)**: $575 million  **[IFF_3397188_5]** .
  6. **Third Quarter Sales and EBITDA**: Sales of $2.75 billion to $2.85 billion, EBITDA of $520 million to $540 million  **[IFF_3397188_21]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales Guidance for Q2 2024**: $2.75 billion to $2.85 billion  **[IFF_3386995_4]** .
  2. **Adjusted Operating EBITDA for Q2 2024**: $500 million to $525 million  **[IFF_3386995_4]** .
  3. **Full Year Sales Volume Growth**: Towards the high end of 0% to 3%  **[IFF_3386995_4]** .
  4. **Full Year Pricing Guidance**: Approximately 1% increase  **[IFF_3386995_4]** .
  5. **Currency Impact**: 3% to 4% adverse impact  **[IFF_3386995_4]** .
  6. **Full Year Adjusted Operating EBITDA**: High end of $1.9 billion to $2.1 billion  **[IFF_3386995_4]** .
  7. **Net Debt to Credit Adjusted EBITDA Target**: 3x  **[IFF_3386995_4]** .
  8. **Productivity Gains**: $200 million  **[IFF_3386995_15]** .
  9. **Free Cash Flow**: $600 million reported, $900 million adjusted  **[IFF_3386995_7]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales**: $10.8 billion to $11.1 billion  **[IFF_3374366_5]** .
  2. **Adjusted Operating EBITDA**: $1.9 billion to $2.1 billion  **[IFF_3374366_6]** .
  3. **First Quarter Sales**: $2.7 billion to $2.8 billion  **[IFF_3374366_6]** .
  4. **First Quarter Adjusted EBITDA**: $475 million to $500 million  **[IFF_3374366_6]** .
  5. **Free Cash Flow**: $500 million  **[IFF_3374366_10]** .
  6. **Pricing**: 2.5% decline  **[IFF_3374366_6]** .
  7. **Volume Growth**: 0% to 3%  **[IFF_3374366_6]** .
  8. **Dividend**: $0.40 per share  **[IFF_3374366_4]** .

fb07edd308bb9335feed6bd50596aefe24defd770300fc5f1c0948af0c253f11

- Givaudan, DSM-Firmenich Symrise, Kerry, ADM, Novonesis - **Large global companies**  **[0000051253-24-000006_iff-20231231.htm:12]** 

b8030520a806bec871f56d06ed95ce36d58aab85a26437f1fe5ac66cbdd35a4b

| Name              | Position                                                                 | Start Date          | Short Bio                                                                                                                                                                                                                                                                                                                                                   |
|-------------------|--------------------------------------------------------------------------|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| J. Erik Fyrwald   | Chief Executive Officer and Board Member                                 | February 6, 2024    | J. Erik Fyrwald has served as the CEO and a member of the Board of Directors at IFF since February 6, 2024. He was previously CEO of Syngenta and held leadership roles at Univar Solutions and Nalco  **[0000051253-24-000006_iff-20231231.htm:15]** **[0001140361-24-014498_ny20015032x1_def14a.htm:16]** **[0000051253-24-000006_iff-20231231.htm:18]** .                                                                                                                                            |
| Yuvraj Arora      | Executive Vice President and President, Nourish                          | June 19, 2023       | Yuvraj Arora joined IFF as Executive Vice President and President of Nourish in June 2023. He previously worked at Kellogg North America as President of U.S. categories  **[0000051253-24-000006_iff-20231231.htm:15]** **[0001140361-24-014498_ny20015032x1_def14a.htm:80]** .                                                                                                                                                                            |
| Deborah Borg      | Executive Vice President, Chief Human Resources, Diversity & Inclusion and Communications Officer | August 29, 2022     | Deborah Borg has been with IFF since August 2022, previously serving as Chief Human Resources and Communications Officer at Bunge Limited  **[0000051253-24-000006_iff-20231231.htm:15]** **[0000051253-23-000009_iff-20221231.htm:15]** .                                                                                                                                                                                                           |
| Michael DeVeau    | Senior Vice President, Corporate Finance and Investor Relations          | December 2022       | Michael DeVeau has been with IFF since 2009 and became Senior Vice President, Corporate Finance and Investor Relations in December 2022. He will become Executive Vice President, Chief Financial Officer effective January 1, 2025  **[0000051253-24-000006_iff-20231231.htm:16]** **[0000051253-24-000006_iff-20231231.htm:15]** **[0000051253-23-000009_iff-20221231.htm:15]** **[0001193125-24-274359_d875452d8k.htm:1]** .                                                                                                           |
| Ralf Finzel       | Executive Vice President, Global Operations Officer                      | November 1, 2022    | Ralf Finzel joined IFF in November 2022, previously serving as Vice President of Integrated Supply Chain at Honeywell International  **[0000051253-24-000006_iff-20231231.htm:16]** **[0000051253-24-000006_iff-20231231.htm:15]** **[0000051253-23-000009_iff-20221231.htm:15]** .                                                                                                                                                                                                              |
| Simon Herriott    | President, Health & Biosciences and Scent                                | February 2021       | Simon Herriott has been President, Health & Biosciences at IFF since February 2021 and took on additional responsibilities as President, Scent in July 2023  **[0000051253-24-000006_iff-20231231.htm:16]** **[0001140361-24-017009_ny20015032x3_defr14a.htm:47]** **[0000051253-23-000009_iff-20221231.htm:16]** .                                                                                                                                                                                      |
| Jennifer Johnson  | Executive Vice President, General Counsel and Corporate Secretary        | February 2021       | Jennifer Johnson has served as Executive Vice President, General Counsel and Corporate Secretary since February 2021, having joined DuPont's predecessor companies in 2013  **[0000051253-24-000006_iff-20231231.htm:16]** **[0000051253-23-000009_iff-20221231.htm:16]** .                                                                                                                                                                          |
| Glenn Richter     | Executive Vice President, Chief Financial & Business Transformation Officer | February 2023       | Glenn Richter has been with IFF since September 2021, initially as Chief Financial Officer. He will retire on December 31, 2024  **[0000051253-24-000006_iff-20231231.htm:16]** **[0000051253-23-000009_iff-20221231.htm:16]** **[0000051253-24-000006_iff10-k2023exhibit32.htm:0]** .                                                                                                                                                                                                                 |
| Angela Strzelecki | President, Pharma Solutions                                              | February 2021       | Angela Strzelecki has been President of Pharma Solutions since February 2021, having held various leadership roles at DuPont  **[0000051253-24-000006_iff-20231231.htm:17]** **[0000051253-23-000009_iff-20221231.htm:16]** .                                                                                                                                                                                                                       |
| Vic Verma         | Executive Vice President, Chief Information Officer                      | February 2021       | Vic Verma has been with IFF since 2016, becoming Executive Vice President, Chief Information Officer in February 2021  **[0000051253-24-000006_iff-20231231.htm:17]** **[0000051253-23-000009_iff-20221231.htm:16]** .                                                                                                                                                                                                                               |
| Casper Vroemen    | Executive Vice President, Chief Research & Development Officer           | September 2023      | Casper Vroemen has been with the N&B Business since 2004 and became Executive Vice President, Chief Research & Development Officer in September 2023  **[0000051253-24-000006_iff-20231231.htm:17]** .                                                                                                                                                                                                   |

4b342985104c9cd99a22dc31dbff3bfd220ae2f138ab9d0054931a9e57b0db8a

**Annual guidance for FY 2024:**
- **Net Sales**: $11.3B to $11.4B  **[IFF_3406021_1]** **[IFF_3406021_4]**  (raised from $11.1B to $11.3B  **[IFF_3397188_5]** )  
- **Volume Growth**: 5% to 6%  **[IFF_3406021_4]**  (raised from 3% to 5%  **[IFF_3397188_5]** )  
- **Pricing**: roughly flat  **[IFF_3406021_4]**  (no prior guidance)  
- **Adjusted Operating EBITDA**: near the high end of $2.1B to $2.17B  **[IFF_3406021_1]** **[IFF_3406021_4]**  (no change from $2.1B to $2.17B  **[IFF_3397188_6]** )  
- **Foreign Exchange Impact**: approximately 3% adverse impact  **[IFF_3406021_4]**  (no prior guidance)  
- **Free Cash Flow**: $600 million  **[IFF_3406021_11]**  (no change from $600 million  **[IFF_3397188_13]** )  

db11caf44fe7533a5a904dfbad305276ae066abade23a756b8644f928322ff54

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1957  **[0000051253-24-000006_iff-20231231.htm:101]**  | Present  | Current auditor   |

ab74a5b92993690c08cc1f86c81567c736e701e36e7c61e1e8e78069c79d5b5e

273d0c97014e43c35b49b9b1e4511ca6cc9f4438605c607da5f4212bc68e4d87

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $2,925 million  **[0000051253-24-000042_iff-20240930.htm:2]**  vs. $2,820 million  **[0000051253-23-000036_iff-20230930.htm:4]**  (+4% YoY)  
- Health & Biosciences: $570 million  **[0000051253-24-000042_iff-20240930.htm:17]**  vs. $518 million  **[0000051253-23-000036_iff-20230930.htm:50]**  (**+10%** YoY)  
- Pharma Solutions: $256 million  **[0000051253-24-000042_iff-20240930.htm:17]**  vs. $238 million  **[0000051253-23-000036_iff-20230930.htm:50]**  (**+8%** YoY)  
- United States: $834 million  **[0000051253-24-000042_iff-20240930.htm:19]**  vs. $782 million  **[0000051253-23-000036_iff-20230930.htm:30]**  (**+7%** YoY)  
- Operating Income (EBIT): $249 million  **[0000051253-24-000042_iff-20240930.htm:2]**  vs. $15 million  **[0000051253-23-000036_iff-20230930.htm:4]**  (**>+1,500%** YoY)  
- Net Income: $6 million  **[0000051253-24-000042_iff-20240930.htm:2]**  vs. $27 million  **[0000051253-23-000036_iff-20230930.htm:4]**  (**-78%** YoY)  
- EPS (Diluted): $0.23  **[0000051253-24-000042_iff-20240930.htm:2]**  vs. $0.09  **[0000051253-23-000036_iff-20230930.htm:4]**  (**+156%** YoY)  

60a4275129893190a340d0ba53bf7053cb5ea7eb7e481158f07d00e14a9b9e58

77f46ee2552e40ce22280182e854098ba638b6cd1f6b7bf7e7b2be47923adc67

e23135b2929198e971633978d0bdbae145586b68da05d731835b796cac273215

| Year | Amount Due (in millions) | Debt Type       | Interest Rate (%) | % of Total Debt |
|----------|-------------------------------|---------------------|-----------------------|----------------------|
| 2024     | $468 **[0000051253-24-000042_iff-20240930.htm:3]**                  | 2026 Term Loan Facility (current portion) | 5.21 **[0000051253-24-000042_iff-20240930.htm:22]**         | 5.1% = (468 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** **[0000051253-24-000042_iff-20240930.htm:3]** |
| 2025     | $1,000 **[0000051253-24-000042_iff-20240930.htm:22]**                | 2025 Notes          | 1.22 **[0000051253-24-000042_iff-20240930.htm:22]**          | 11.0% = (1,000 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2026     | $892 **[0000051253-24-000042_iff-20240930.htm:22]**                  | 2026 Euro Notes     | 1.93 **[0000051253-24-000042_iff-20240930.htm:22]**          | 9.8% = (892 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2027     | $1,210 **[0000051253-24-000042_iff-20240930.htm:22]**                | 2027 Notes          | 1.56 **[0000051253-24-000042_iff-20240930.htm:22]**          | 13.3% = (1,210 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2028     | $398 **[0000051253-24-000042_iff-20240930.htm:22]**                  | 2028 Notes          | 4.57 **[0000051253-24-000042_iff-20240930.htm:22]**          | 4.4% = (398 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2030     | $1,508 **[0000051253-24-000042_iff-20240930.htm:22]**                | 2030 Notes          | 2.21 **[0000051253-24-000042_iff-20240930.htm:22]**          | 16.6% = (1,508 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2040     | $772 **[0000051253-24-000042_iff-20240930.htm:22]**                  | 2040 Notes          | 3.04 **[0000051253-24-000042_iff-20240930.htm:22]**          | 8.5% = (772 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2047     | $494 **[0000051253-24-000042_iff-20240930.htm:22]**                  | 2047 Notes          | 4.44 **[0000051253-24-000042_iff-20240930.htm:22]**          | 5.4% = (494 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2048     | $787 **[0000051253-24-000042_iff-20240930.htm:22]**                  | 2048 Notes          | 5.12 **[0000051253-24-000042_iff-20240930.htm:22]**          | 8.6% = (787 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |
| 2050     | $1,568 **[0000051253-24-000042_iff-20240930.htm:22]**                | 2050 Notes          | 3.21 **[0000051253-24-000042_iff-20240930.htm:22]**          | 17.2% = (1,568 / 9,099) * 100 **[0000051253-24-000042_iff-20240930.htm:22]** |

4d3b3e5c29a935015c4ecd9e6ca2acbb7b2f8e50956e09260bf59b87e7540115

62d0ff472e1b5e4b9d6c16c8373f50151fbd8e0c588c63b40f0f1dc09b281d15

- **Strong leadership committed to improving performance:** CEO **Erik Fyrwald** acknowledges past underperformance compared to peers and is focused on clarifying strategies for each business unit to **win and fully compete on margins and growth rates**.  **[IFF_3374366_12]** ,  **[IFF_3374366_21]**
- **Operational improvements and cost optimization underway:** The company is accelerating productivity initiatives, focusing on **taking costs out** and **driving empowerment and strong leadership**, which are expected to lead to **margin expansion and improved financial performance**.  **[IFF_3374366_12]** ,  **[IFF_3374366_16]**
- **Strong customer relationships and innovation capabilities:** IFF has **world-class teams** and has demonstrated **excellence** in areas like the **Scent business**, outperforming competition, and has strong partnerships with major customers, which provide confidence in the company's ability to **grow market share and create sustainable value**.  **[IFF_3374366_2]** ,  **[IFF_3374366_12]** ,  **[IFF_3374366_21]**

a96f6711d573eed5c2d86b2fa765caf3ad176d7cd6a647a4a249f3cc7367d4cc

- **Functional Ingredients business is showing signs of a turnaround**, with expectations of continued improvement into **2024** and **2025**, driven by strategic focus, pricing actions, and innovation pipeline enhancements.  **[IFF_3386995_11]**
- **Productivity gains are exceeding initial targets**, with full-year productivity now anticipated at **$200 million**, up from the prior target of **$150 million**, contributing to higher EBITDA guidance.  **[IFF_3386995_15]**
- **Scent division delivered over 9% volume growth in Q1**, fueled by world-class perfumers and strong customer relationships, with expectations of continued strong performance.  **[IFF_3386995_14]**

9f05568fbece06df394c217497725f7f86fa4d40ee1097486e45223e9226b035

- The **probiotics business has experienced volatility** due to dependence on the Chinese market, leading to fluctuations that can "whipsaw the business sort of back and forth."  **[IFF_3406021_21]**
- There is **uncertainty surrounding potential tariffs and international trade policies**, which could impact the company's cost structure and operations.  **[IFF_3406021_15]**
- There's a **lack of clarity on the expected margin structure and return on invested capital (ROIC)** after the divestiture of the Pharma Solutions business, with management focusing on continuous improvement but not providing specific targets.  **[IFF_3406021_10]**

3f31fc4eac032ed9ab21c6a2f18342bbbb822f3a5242e94b977856439c1e68c2

1. **Second Half Volume and EBITDA Outlook**  
   **Q:** Why will EBITDA and volumes decline in H2?  
   **A:** Management expects **modest volume growth** in the second half, especially in Q4 where volumes are forecasted to be **flat** year-over-year.  **[IFF_3397188_8]**  The decline in EBITDA is due to **lower revenues** from seasonal factors and an additional **$20–$30 million** in OpEx investments to accelerate growth in 2025 and 2026.  **[IFF_3397188_8]** 

2. **R&D and CapEx Investments**  
   **Q:** Are you increasing R&D and CapEx spending?  
   **A:** Yes, they are increasing R&D spending in **Health & Biosciences, Scent, and Flavors**, including **$20–$30 million** in OpEx investments this year.  **[IFF_3397188_9]**  CapEx will also increase to add capacity, especially in Health & Biosciences, to support aggressive growth plans.  **[IFF_3397188_11]** 

3. **Functional Ingredients Margin Improvement**  
   **Q:** How is the Functional Ingredients business improving margins?  
   **A:** The business is showing progress, with gross margins up about **250 basis points** in Q2.  **[IFF_3397188_14]**  EBITDA margins are tracking towards the **low teens** this year, aiming for **mid-teens** in the future.  **[IFF_3397188_14]**  Improvements are driven by volume recovery, innovation, and cost structure initiatives.  **[IFF_3397188_14]** 

4. **Health Business Growth**  
   **Q:** What's driving growth in the Health business?  
   **A:** Strong performance in **probiotics** is driven by increasing emphasis on health and gut health, especially in the U.S. market.  **[IFF_3397188_16]**  They have added significant commercial capability and are excited about a strong pipeline for future growth.  **[IFF_3397188_16]** 

5. **Free Cash Flow Guidance**  
   **Q:** Any update to free cash flow guidance?  
   **A:** The company is still guiding full-year free cash flow of **$600 million**, including about **$350 million** in one-time Reg G items.  **[IFF_3397188_13]**  Adjusting for these items, free cash flow would be around **$950 million**, consistent with previous guidance.  **[IFF_3397188_13]** 

6. **Fourth Quarter Volume Outlook**  
   **Q:** Why is Q4 volume expected to be flat?  
   **A:** Management has limited visibility into Q4 but is cautious due to lack of improvement in consumer demand and no signs of restocking by customers.  **[IFF_3397188_18]**  They forecast Q4 volumes to be **flattish** year-over-year.  **[IFF_3397188_8]** 

7. **Potential Divestitures**  
   **Q:** Are more divestitures planned?  
   **A:** Currently, they are focused on the divestiture of the **Pharma** business and are concentrating on performance and strengthening the remaining businesses for 2024 and beyond.  **[IFF_3397188_23]** 

8. **Balance Sheet and Strategic Plans**  
   **Q:** What are your plans once the balance sheet improves?  
   **A:** They plan to strengthen **Health & Biosciences, Flavors, and Scent** businesses through organic investments and may consider **bolt-on acquisitions** next year to complement their capabilities.  **[IFF_3397188_19]** 

9. **Guidance for Q3**  
   **Q:** Did you provide guidance for Q3?  
   **A:** Yes, they guided Q3 revenue between **$2.75–$2.85 billion** and EBITDA of **$520–$540 million**.  **[IFF_3397188_21]** 

10. **Impact of CPG Discounting and Innovation**  
    **Q:** Will CPG discounting boost your volumes?  
    **A:** They are not seeing restocking or consumer strength but note that CPGs are focusing on **innovation** to drive growth, which benefits their business through collaborative efforts on new products.  **[IFF_3397188_17]** 

5d87651ed7f40146dd7f8baca4f7105a464e14d26ea1b9ade62db4c36f0ae9cf

- **Functional Ingredients business underperformance:** The Functional Ingredients segment has faced a "long, tough spell" and requires significant turnaround efforts, with full recovery not expected until **2025**. Management acknowledges that "there's a lot of remediation in that business."  **[IFF_3386995_11]** **[IFF_3386995_9]**
- **Scent division's performance may not be sustainable:** The Scent division's strong performance in Q1 is not expected to continue, as management anticipates that "those high single-digit volume gains will [not] continue through the balance of the year." This could negatively impact future revenue and profitability.  **[IFF_3386995_17]** **[IFF_3386995_12]**
- **Strategic execution challenges:** Previous initiatives to combine Flavors and Ingredients for synergy benefits did not yield expected results and are being reversed. This shift indicates potential missteps in strategic execution and ongoing challenges in optimizing business segments.  **[IFF_3386995_9]**

d0c5bb3c6cd7afd0f21a3360b633d230507861c8c9af918346d1510b66b65b87

1. **Dividend Cut Impact**  
   **Q:** Why cut the dividend now?  
   **A:** CEO **Erik Fyrwald** decided to cut the dividend to strengthen the balance sheet, seeing it as a wise move to improve financial health. The decision doesn't impact investment timing or strategy, and they continue to work on portfolio optimization.  **[IFF_3374366_9]** 

2. **2024 EBITDA Guidance**  
   **Q:** Explain the bridge to 2024 EBITDA guidance.  
   **A:** Starting from last year's normalized EBITDA of **$1.85 billion**, they forecast a positive **$170 million** from volume mix, zero net pricing change, a **$35 million** negative reset for AIP, **$120 million** in wage inflation, and **$150 million** in productivity gains, leading to a midpoint guidance of **$2 billion** in EBITDA for 2024.  **[IFF_3374366_8]** 

3. **CEO's Priorities**  
   **Q:** What are your priorities for this year?  
   **A:** **Erik Fyrwald** aims to continue portfolio optimization to improve the balance sheet, strengthen each business by focusing on customer needs to grow market share, enhance R&D and innovation, and drive productivity across business units and corporate functions.  **[IFF_3374366_10]** 

4. **Pricing Dynamics**  
   **Q:** Is the 2.5% price reduction all you expect to give back?  
   **A:** After cumulative price increases of **18–19%** over the last three years due to inflation, they anticipate a **2.5%** price reduction in 2024, mostly concentrated in functional ingredients and scent ingredients. Pricing is locked in for most of the year, reflecting competitive dynamics and commodity deflation.  **[IFF_3374366_11]** ,  **[IFF_3374366_12]** ,  **[IFF_3374366_13]** 

5. **Functional Ingredients Turnaround**  
   **Q:** How are you addressing underperformance in Functional Ingredients?  
   **A:** The company is focusing on improving service levels, increasing volumes through better sales execution and competitive pricing, refining their go-to-market strategy, and reducing costs through SKU rationalization and footprint consolidation to enhance margins and performance.  **[IFF_3374366_12]** ,  **[IFF_3374366_14]** 

6. **Free Cash Flow Guidance**  
   **Q:** What is your free cash flow guidance for 2024?  
   **A:** They project a free cash flow of **$500 million** for 2024, inclusive of **$200 million** in taxes and restructuring one-time items.  **[IFF_3374366_10]** 

7. **Health & Biosciences Margin**  
   **Q:** Can H&B maintain 30%+ margins into 2024?  
   **A:** Health & Biosciences achieved margins over **30%** due to volume improvements, productivity, and input cost declines. They expect H&B to continue demonstrating EBITDA growth and margin expansion in 2024.  **[IFF_3374366_15]** 

8. **Input Cost Trends**  
   **Q:** What are your input cost expectations?  
   **A:** Input costs are anticipated to decrease this year, with energy costs flattish, logistics costs down, and raw material deflation, contributing positively to margins.  **[IFF_3374366_15]** 

9. **Organizational Structure Plans**  
   **Q:** Are you changing segment reporting from four to three segments?  
   **A:** No decisions have been made yet, but the CEO favors business units with end-to-end accountability to drive performance, suggesting potential organizational changes focused on improving business unit effectiveness.  **[IFF_3374366_14]** 

22ef1e2b43bab8741f26a9637f320462cbed70baf3d7d4bbdb2a997eb7c7e8cf

- **Functional Ingredients business requires substantial turnaround efforts and may take over a year to reach desired profitability**, as it previously dropped to high single-digit EBITDA margins and is only expected to reach low teens this year.  **[IFF_3397188_15]** ,  **[IFF_3397188_14]**
- **No incremental improvement in consumer markets**, with **Food & Beverage and Home and Personal Care showing no strengthening**, and the company expressing concerns as **"the market continues to give us pause because we're just not seeing a lot of strength in the consumer."**  **[IFF_3397188_12]**
- **Volume growth may not be sustainable**, as the company notes a pattern where **volumes diminish throughout the quarter**, with the **third month typically being the softest**, indicating potential volatility and weak demand trends.  **[IFF_3397188_22]**

011aa018c6d443cf6b0517544e9f81136617838d63de02ca0a56b9ad2754db09

1. **2025 Outlook**  
   **Q:** How are you thinking about 2025 in terms of volumes, prices, compensation expenses, and cost savings?  **[IFF_3406021_8]**   
   **A:** Management indicated it's too early to provide specifics for 2025, as they normally guide in February and are finalizing their budgeting process. However, they mentioned that there will be over **$100 million in incentive compensation reset** in 2025, which is a positive for next year. They continue to focus on customer engagement, innovation, and productivity to drive performance, and are pleased with how the teams are executing.  **[IFF_3406021_8]** 

2. **Margin Trends and Incentive Compensation Impact**  
   **Q:** Why does your Q4 EBITDA outlook imply a year-over-year decline despite positive growth?  **[IFF_3406021_16]**   
   **A:** The key factor affecting Q4 EBITDA is the significant year-over-year increase in incentive compensation. Last year, variable compensation was below 100%, whereas this year it's materially above 100%, resulting in an incremental **$100 million** in variable comp, with nearly **$40 million** impacting Q4 alone. This normalization has a substantial effect on EBITDA. Productivity is offsetting modest inflation and investment, but the incentive comp growth is the biggest impact.  **[IFF_3406021_16]** 

3. **Functional Ingredients Turnaround**  
   **Q:** Can you provide an update on the Functional Ingredients turnaround and order activity?  **[IFF_3406021_12]**   
   **A:** Management reported very good progression in the Functional Ingredients business, expecting momentum to continue into next year. They've addressed service issues, achieving extremely high service levels, reinvested deflation to become more competitive, and reenergized the sales pipeline to win back customers and new business. As a result, they've achieved mid-single-digit volume growth this year, regaining about half of the lost volume, and expanded both gross margin and EBITDA significantly. They are restructuring the global supply chain footprint to move the business back to mid-teens EBITDA margins, currently at approximately **12–13%** this year, aiming for **15%+** in coming years.  **[IFF_3406021_12]** 

4. **Innovation Pipeline and R&D Progress**  
   **Q:** How is the progress on the R&D organization and innovation pipeline impacting future sales?  **[IFF_3406021_13]**   
   **A:** Management is pleased with the progress, with each business unit developing strong strategies and clear priorities. Embedding R&D within business units has enhanced focus and connection to customer needs, energizing the R&D teams. For example, the Scent team is strengthening its pipeline in naturals, synthetic chemistry, and biotech molecules. They expect the main impact of new projects to materialize in **2026 and beyond**, but the current energy and strengthened pipeline are already benefiting discussions with customers and will have positive effects in **2025**.  **[IFF_3406021_13]** 

5. **Scent Business Growth Sustainability**  
   **Q:** How long can the strong growth in the Scent business, particularly Fine Fragrance, last?  **[IFF_3406021_14]**   
   **A:** Fine Fragrance has experienced explosive growth since COVID, driven by factors like new brand launches, social media influence, and the rise of digital channels. The use of Fine Fragrance has expanded beyond special occasions. Management believes this growth will continue to some degree due to new channels, brand opportunities, and regional expansion. They are winning market share through investments in new geographies, adding perfumers, and new creative centers, not only in Scent but across higher-growth, higher-margin businesses.  **[IFF_3406021_14]** 

6. **Segment Reporting and Volume Strength**  
   **Q:** Are you on track to report Flavors separately from Functional Ingredients next year, and where is volume strength coming from?  **[IFF_3406021_9]**   
   **A:** They are on track to separate and report Flavors (to be called **Taste**) and Functional Ingredients (to be called **Food Ingredients**) as completely separate businesses, starting in the first quarter of next year. Organizational changes have been implemented, including naming two presidents for the new segments. Volume strength in the third quarter was broad-based across businesses, with strong performances in Flavors, Scent, and Health & Biosciences. They believe they are gaining market share due to renewed focus on innovation, commercial excellence, and a new operating model.  **[IFF_3406021_9]** 

7. **Free Cash Flow Guidance**  
   **Q:** Is there an update to the adjusted free cash flow guidance for the year?  **[IFF_3406021_11]**   
   **A:** Management expects full-year free cash flow to remain largely unchanged from the previous guidance. While the earnings trajectory is higher, they are building more working capital, almost exclusively related to higher sales sitting in receivables. Therefore, they are in a net-neutral position for the full year, with no change in the forecast.  **[IFF_3406021_11]** 

8. **Price/Cost Dynamics and Tariffs**  
   **Q:** What are your expectations for price cost dynamics, and how are you planning for potential tariff scenarios?  **[IFF_3406021_15]**   
   **A:** The price/cost dynamic is expected to be relatively flat, with some continued deflation this year but not as much as last year. The early outlook for next year is stable, with certain input costs increasing and others decreasing. Regarding tariffs, it's difficult to forecast currently. Past experiences, like during the Trump administration, focused on China. If tariffs escalate, it might be advantageous due to their global footprint and ability to react, particularly given the competitive environment in China. They'll provide more guidance in February.  **[IFF_3406021_15]** 

9. **Customer Sentiment and Demand Outlook for 2025**  
   **Q:** What are you seeing from customers regarding demand outlook for 2025?  **[IFF_3406021_16]**   
   **A:** They're not seeing strong indications of improvement from customers for 2025. However, they're taking aggressive actions to strengthen their position with heavy customer focus and innovation. As customers face slowing end markets, they seek more innovation to drive growth, which benefits IFF. Management has engaged extensively with customers globally, noting energy in their teams and bullishness from customers in high-growth markets like India and Indonesia. They believe they're putting the right initiatives in place to grow above the market, despite tough conditions.  **[IFF_3406021_16]** 

10. **Margins and ROIC Outlook**  
    **Q:** What do you think is the right margin structure and ROIC for your portfolio longer term once Pharma is divested?  **[IFF_3406021_10]**   
    **A:** Management is focused on driving continuous improvement in both margins and ROIC, tracking them closely by business. Levers such as customer focus, innovation, and productivity are helping to improve these metrics. They're prioritizing capital allocation to higher-margin and higher-return businesses like Scent, Taste (Flavors), and Health & Biosciences. They're also making good progress on turning around Functional Ingredients. Overall, they aim to continuously improve margins and ROIC over time.  **[IFF_3406021_10]** 

11. **Fourth Quarter Guidance and Trends**  
    **Q:** Can you explain the assumptions behind your Q4 guidance versus Q3, which seems lower than expected?  **[IFF_3406021_6]**   
    **A:** The fourth quarter has started as expected, but management is cautious due to a pattern of strong starts and then deceleration through the quarter, with limited visibility into December. They are cautious about potential customer inventory adjustments at year-end, as seen in previous years. Their goal is to ensure they deliver on commitments, but they acknowledge the potential for adjustments impacting Q4 results.  **[IFF_3406021_6]** 

12. **Nourish Margins Sequential Decline**  
    **Q:** What drove the sequential decline in Nourish margins despite strong top-line performance, and what are the expectations for Q4?  **[IFF_3406021_7]**   
    **A:** Typically, Nourish's highest margin is in Q2 due to positive mix entering the summer season. From Q2 to Q3, margins contract slightly as the mix normalizes and investments in the business increase, impacting margins. Looking into Q4, seasonality leads to lower volumes for Nourish, and they expect margin degradation of **50 to 90 basis points** quarter-over-quarter due to this seasonality.  **[IFF_3406021_7]** 

13. **Growth Versus Slower End Markets**  
    **Q:** How do you explain strong organic growth when end markets are slower, especially in Scent?  **[IFF_3406021_14]**   
    **A:** Part of the growth is due to a bounce-back effect from last year's destocking. In Scent, particularly Fine Fragrance, the category has grown significantly since COVID due to new brands, social media, digital channels, and expanded usage beyond special occasions. Management believes the growth will continue due to new channels and opportunities and that they are gaining market share through investments in perfumers, creative centers, and innovation.  **[IFF_3406021_14]** 

14. **Regional Growth Variations**  
    **Q:** How has growth varied across regions and segments, especially in China and India?  **[IFF_3406021_20]**   
    **A:** Growth has been strong across all businesses. China shows some improvement but remains choppy due to local market conditions. India is experiencing extremely strong growth. Management is doubling down on investments in India to capture growth opportunities, including building creative centers to support both global and local customers.  **[IFF_3406021_20]** 

15. **Health & Biosciences Performance**  
    **Q:** Can you provide more details on Health & Biosciences results and what to consider entering 2025?  **[IFF_3406021_21]**   
    **A:** All businesses within Health & Biosciences performed well in the quarter. Probiotics bounced back significantly after softness in previous years, partly due to China, their second-largest market. The third quarter saw strong performance across the board in this segment.  **[IFF_3406021_21]** 

0cc5378222ed724726ea64654f8c9838f16ecc05cf6e4a20ac62bca0f55a1373

- **Significant recovery and strong performance in the Health & Biosciences segment**, with every business within H&B showing very good performance in the quarter, especially **probiotics bouncing back a lot**, indicating growth potential in key markets like China.  **[IFF_3406021_21]**
- **Focused capital allocation to higher-margin businesses** such as Scent, Flavors (now called Taste), and Health & Biosciences, with **continuous improvement in margins and ROIC** expected over time due to customer focus, innovation, and productivity enhancements.  **[IFF_3406021_10]**
- **Successful turnaround in Functional Ingredients**, with **mid-single-digit volume growth** and plans to increase EBITDA margins from **12-13% this year to 15%+ in coming years**, supported by service improvements, competitive pricing, sales pipeline reenergization, and supply chain restructuring.  **[IFF_3406021_12]**

7afebb493e7a6bbb9d5df57647a9ccbdaddb00ce3e13df52dc3a0cd42ced7899

- The company reported a significant **$2.6 billion** noncash goodwill impairment charge related to its Nourish business, primarily driven by volume declines in functional ingredients, cost inflation, and unfavorable foreign exchange rates.  **[IFF_3374366_4]**
- The Functional Ingredients segment continues to underperform, acting as a major drag on overall performance, with ongoing volume pressures and the need for price reductions to regain market share.  **[IFF_3374366_12]**
- IFF reduced its quarterly dividend by approximately **50%** to **$0.40 per share** to accelerate deleveraging, indicating financial pressures and challenges in improving its capital structure.  **[IFF_3374366_11]**

74561cda561ac797d4c13c8cc9c6959719417dead65582ffb7be5634eb16758c

1. **Volume Outlook**  
   **Q:** Are you being conservative with your volume guidance?  
   **A:** Management expects volumes to soften in the second half due to ongoing consumer softness in the U.S. and EU, and they can't expect significant market tailwinds.  **[IFF_3386995_8]** **[IFF_3386995_12]**  They believe destocking has mostly ended outside of Pharma Solutions, but until consumer markets strengthen, they are cautious about volume growth.  **[IFF_3386995_8]** **[IFF_3386995_12]** **[IFF_3386995_20]** 

2. **Margin Sustainability**  
   **Q:** Can EBITDA margins remain at 20% for the rest of the year?  
   **A:** Management anticipates EBITDA margins will decrease from the first quarter's **20%** to around **18.5%** for the rest of the year.  **[IFF_3386995_9]**  This decline is due to lower volumes, mix changes, and timing of expenses.  **[IFF_3386995_9]**  While the first quarter benefited from net price-cost realization and some timing benefits, they do not expect these to recur to the same extent.  **[IFF_3386995_9]** **[IFF_3386995_17]** 

3. **Divestitures and Portfolio**  
   **Q:** Will you pursue more divestments after Pharma Solutions?  
   **A:** The focus is now on strengthening the remaining four business units—Nourish, Scent, Health & Biosciences, and Functional Ingredients.  **[IFF_3386995_7]**  Management is conducting a strategy review for each business but did not commit to any further divestitures at this time.  **[IFF_3386995_7]** 

4. **Cash Flow Confidence**  
   **Q:** Are you confident in achieving your free cash flow targets?  
   **A:** Management is trending more favorable and now expects free cash flow closer to **$600 million**, up from the initial **$500 million** target.  **[IFF_3386995_7]**  This improvement is due to earnings momentum, better working capital performance, and timing on taxes.  **[IFF_3386995_7]** 

5. **Functional Ingredients Turnaround**  
   **Q:** Can Functional Ingredients return to prior sales and earnings levels?  
   **A:** Management believes the first quarter marks the beginning of improvement in Functional Ingredients.  **[IFF_3386995_11]**  They are focusing on strengthening execution and conducting a strategy refresh.  **[IFF_3386995_11]**  They aim for a strong improvement in **2024** and continued progress into **2025** and beyond.  **[IFF_3386995_11]** 

6. **Scent Division Performance**  
   **Q:** What drove strong performance in Scent, especially Consumer Fragrances?  
   **A:** The Scent division saw **9%** volume growth in the first quarter.  **[IFF_3386995_12]** **[IFF_3386995_14]**  This was driven by world-class perfumers and a focus on bringing leading innovation to customers.  **[IFF_3386995_14]**  Management expects continued strong performance under new leadership.  **[IFF_3386995_14]** 

7. **Productivity Gains**  
   **Q:** Is the $150 million productivity gain target increasing?  
   **A:** Management is now expecting **$200 million** in productivity gains for the full year, achieving about **$50 million per quarter**.  **[IFF_3386995_15]**  This increase is due to operational efficiencies, procurement improvements, and opportunities in manufacturing.  **[IFF_3386995_15]** 

8. **Organizational Changes**  
   **Q:** What are the implications of the new organizational structure?  
   **A:** The company is moving to an end-to-end business unit model to drive clarity in strategy and execution.  **[IFF_3386995_6]** **[IFF_3386995_18]**  Functions like finance and HR will now report directly into business units, aligning incentives with business performance.  **[IFF_3386995_16]** **[IFF_3386995_18]**  Management believes this will unleash the full potential of their people and capabilities.  **[IFF_3386995_6]** **[IFF_3386995_18]** 

9. **Market Demand Trends**  
   **Q:** What are customers saying about future demand and innovation?  
   **A:** Customers are pivoting towards needing more innovation, as they can't rely on price increases for growth.  **[IFF_3386995_19]**  They're seeking leading innovation from IFF to help profitably grow their businesses.  **[IFF_3386995_19]**  Management sees this as a tailwind, as innovation is central to their strategy.  **[IFF_3386995_19]** 

c204a3e6e4968e2866875dbf633cc729ee9568153a6b02026e3ec04280242765

- **IFF's Functional Ingredients business is showing significant improvement**, with volume recovery ahead of the market, aggressive productivity measures, and margin improvement goals being achieved, moving EBITDA margins from high single digits to **mid-teens**.  **[IFF_3397188_15]** **[IFF_3397188_14]**
- **The Health business has returned to growth in Q2, driven by strong performance in probiotics**, addition of significant commercial talent, and an exciting pipeline expected to drive future growth.  **[IFF_3397188_16]**
- **IFF raised its full-year free cash flow guidance to $600 million from $500 million**, reflecting stronger earnings expectations and improved operational performance.  **[IFF_3397188_13]**

8dd84d604356f8df0252632375e46f01663faddd0a10294c015006443158382a

International Flavors & Fragrances Inc (IFF)

Financials