International Flavors & Fragrances Inc. (IFF - Free Report) reported impressive results for the fourth quarter of 2017, delivering a positive earnings surprise of 7.7%. This result is the company’s third consecutive quarter with better-than-expected results.
Adjusted earnings in the quarter came in at $1.40 per share, surpassing the Zacks Consensus Estimate of $1.30. Also, the bottom line grew 14.8% from the year-ago tally of $1.22.
On a constant currency basis, the company’s adjusted earnings increased nearly 16% year over year. The bottom-line results benefitted costs and productivity measures and synergistic benefits from acquired assets.
For 2017, the company’s adjusted earnings per share were $5.89, above the Zacks Consensus Estimate of $5.78. Also, the result increased over the year-ago tally of $5.51.
Solid Segmental Results and Buyout Gains Drive Revenues
International Flavors’ revenues in the fourth quarter totaled at $854.6 million, reflecting a growth of 12% over the year-ago tally. Gains from acquired assets added 3% to sales growth. On a constant currency basis, revenues climbed 10% from the prior-year period.
Also, the top line surpassed the Zacks Consensus Estimate of $832.3 million by 2.7%.
Geographically, revenues generated from the North American operations grew 17% year over year, while revenues in Europe, Africa and the Middle East were up 12% or grew 7% on a constant currency basis. Revenues from Latin American operations increased 10% year over year, while those from Greater Asia increased 8%, 7% on a constant-currency basis.
The company operates in two segments: Flavors and Fragrances.
Revenues generated from the Flavors business were $401.9 million, increasing 6.4% year over year. On a constant currency basis, revenues grew 5% year over year. It represented 47% of the quarter’s revenues.
The Fragrances business’ revenues were $452.7 million, rising 17.6% year over year. It accounted for 53% of revenues in the quarter. On a constant currency basis, revenues grew 15% year over year.
Margins Weak
In the quarter, International Flavors’ cost of sales grew 14% year over year to $496.9 million. Adjusted gross profit increased 9.3% year over year to $365.5 million, while the adjusted margin of 42.8% was below 43.9% in the year-ago quarter.
Research and development expenses, as a percentage of revenues, increased 50 basis points (bps) to 8.8%, while adjusted selling and administrative expenses decreased 90 bps to 15.9%.
Adjusted operating margin was 16.9%, compared with 17.8% in the year-ago quarter. Interest expenses increased 28% year over year to $15.8 million.
Balance Sheet and Cash Flow
Exiting the fourth quarter, International Flavors & Fragrances’ cash and cash equivalents were $368 million, up 16.5% from $316 million in the preceding quarter-end. Long-term debt inched up 0.4% sequentially to $1,632.2 million.
In 2017, the company generated net cash of $390.8 million from its operating activities, down roughly 29% year over year. Capital spending grew 2% year over year to approximately $129 million.
During the year, the company paid dividends of approximately $206.1 million, while purchased treasury stocks worth $58.1 million.
Outlook
For 2018, International Flavors & Fragrances anticipates gaining from its acquired businesses as well as from its multi-year productivity program, enabling it to check on costs, make strategic investments and expand businesses globally.
Net sales in the year are projected to grow in a range of 6-8% or increase 3-5% on a constant currency basis. Likewise, operating profit will increase within 6.5-8.5% range or 5-7% on a constant currency basis and earnings per share will grow 5.5-7.5% or 4-6% on a constant currency basis.
The tax rate for the year is predicted to be approximately 21%.
Internationa Flavors & Fragrances, Inc. Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
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International Flavors & Fragrances Inc. (IFF - Free Report) reported impressive results for the fourth quarter of 2017, delivering a positive earnings surprise of 7.7%. This result is the company’s third consecutive quarter with better-than-expected results.
Adjusted earnings in the quarter came in at $1.40 per share, surpassing the Zacks Consensus Estimate of $1.30. Also, the bottom line grew 14.8% from the year-ago tally of $1.22.
On a constant currency basis, the company’s adjusted earnings increased nearly 16% year over year. The bottom-line results benefitted costs and productivity measures and synergistic benefits from acquired assets.
For 2017, the company’s adjusted earnings per share were $5.89, above the Zacks Consensus Estimate of $5.78. Also, the result increased over the year-ago tally of $5.51.
Solid Segmental Results and Buyout Gains Drive Revenues
International Flavors’ revenues in the fourth quarter totaled at $854.6 million, reflecting a growth of 12% over the year-ago tally. Gains from acquired assets added 3% to sales growth. On a constant currency basis, revenues climbed 10% from the prior-year period.
Also, the top line surpassed the Zacks Consensus Estimate of $832.3 million by 2.7%.
Geographically, revenues generated from the North American operations grew 17% year over year, while revenues in Europe, Africa and the Middle East were up 12% or grew 7% on a constant currency basis. Revenues from Latin American operations increased 10% year over year, while those from Greater Asia increased 8%, 7% on a constant-currency basis.
The company operates in two segments: Flavors and Fragrances.
Revenues generated from the Flavors business were $401.9 million, increasing 6.4% year over year. On a constant currency basis, revenues grew 5% year over year. It represented 47% of the quarter’s revenues.
The Fragrances business’ revenues were $452.7 million, rising 17.6% year over year. It accounted for 53% of revenues in the quarter. On a constant currency basis, revenues grew 15% year over year.
Margins Weak
In the quarter, International Flavors’ cost of sales grew 14% year over year to $496.9 million. Adjusted gross profit increased 9.3% year over year to $365.5 million, while the adjusted margin of 42.8% was below 43.9% in the year-ago quarter.
Research and development expenses, as a percentage of revenues, increased 50 basis points (bps) to 8.8%, while adjusted selling and administrative expenses decreased 90 bps to 15.9%.
Adjusted operating margin was 16.9%, compared with 17.8% in the year-ago quarter. Interest expenses increased 28% year over year to $15.8 million.
Balance Sheet and Cash Flow
Exiting the fourth quarter, International Flavors & Fragrances’ cash and cash equivalents were $368 million, up 16.5% from $316 million in the preceding quarter-end. Long-term debt inched up 0.4% sequentially to $1,632.2 million.
In 2017, the company generated net cash of $390.8 million from its operating activities, down roughly 29% year over year. Capital spending grew 2% year over year to approximately $129 million.
During the year, the company paid dividends of approximately $206.1 million, while purchased treasury stocks worth $58.1 million.
Outlook
For 2018, International Flavors & Fragrances anticipates gaining from its acquired businesses as well as from its multi-year productivity program, enabling it to check on costs, make strategic investments and expand businesses globally.
Net sales in the year are projected to grow in a range of 6-8% or increase 3-5% on a constant currency basis. Likewise, operating profit will increase within 6.5-8.5% range or 5-7% on a constant currency basis and earnings per share will grow 5.5-7.5% or 4-6% on a constant currency basis.
The tax rate for the year is predicted to be approximately 21%.
Internationa Flavors & Fragrances, Inc. Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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