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International Flavors' (IFF) Q4 Earnings & Sales Beat Estimates

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International Flavors & Fragrances Inc. (IFF - Free Report) reported adjusted earnings of $1.10 per share in fourth-quarter 2021, beating the Zacks Consensus Estimate of $1.04. The bottom line declined 17% from the year-ago quarter’s levels.

Including one-time items, the company reported earnings per share (EPS) of 35 cents compared with the prior-year quarter’s 57 cents.

International Flavors’ net sales came in at $3,031 million in the December-end quarter, surging 139% year over year. This was driven by the additional sales related to the merger with DuPont de Nemours, Inc.’s (DD - Free Report) Nutrition & Biosciences (N&B) business. The top line surpassed the Zacks Consensus Estimate of $2,960 million. During the October - December quarter, currency-neutral sales were up 10%, aided by a double-digit increase in Health & Biosciences and high-single-digit growth in Nourish, Pharma Solutions & Scent.

Operational Highlights

During the reported quarter, International Flavors’ adjusted cost of goods sold was significantly up 170% year over year to $2,044 million. Adjusted gross profit climbed 92% year over year to $987 million. Adjusted gross margin came in at 32.6% compared with 40.5% in the year-ago quarter.

Research and development expenses flared up 64% year over year to $166 million. Adjusted selling and administrative expenses shot up 92% year on year to $403 million during the fourth quarter. Adjusted operating EBITDA came in at $529 million, up 123% from  the prior-year quarter’s $237 million due to the incremental profit related to the merger with N&B. Adjusted operating EBITDA margin was 17.4% compared with the year-earlier quarter’s 18.7%.

 

Segmental Performances

Revenues in the Nourish segment soared 128% year over year to $1,626 million during the December-end quarter. Adjusted operating EBITDA was $251 million, reflecting year-over-year growth of 88.7%.

Revenues generated in the Health & Bioscience segment came in at $646 million compared with the year-earlier quarter’s $35 million. Adjusted operating EBITDA was $156 million in the quarter compared with $11 million in the prior-year quarter.

Scent segment revenues came in at $555 million compared with the year-ago quarter’s $523 million. Adjusted operating EBITDA declined 5.4% year over year to $88 million.

Revenues in Pharma Solutions were $204 million in the fourth quarter. Adjusted operating EBITDA was $34 million.

Financial Position

International Flavors had cash and cash equivalents of $715 million at the end of 2021, up from the $657 million witnessed at the end of 2020. Long-term debt increased to $10.8 billion in 2021, from $3.8 billion in 2020.

International Flavors generated $1,437 million of cash from operating activities in 2021, compared with the prior-year’s $714 million. Capital invested in purchasing property, plant and equipment totaled $393 million in 2021 compared with $192 million in 2020. Dividend paid summed $667 million in 2021.

2021 Performance

International Flavors reported an adjusted EPS of $5.63 in 2021 compared with $5.70 reported in the prior year. Earnings beat the Zacks Consensus Estimate of $5.60. Including one-time items, the bottom line came in at $1.10, down 65.7% from $3.21 reported in 2020.

Sales were up 129% year over year to $11.7 billion. The top line surpassed the Zacks Consensus Estimate of $11.6 billion.

2022 Guidance

International Flavors estimates sales to be around $12.3 billion to $12.7 billion in 2022. Adjusted EBITDA is expected between $2.5 billion and $2.6 billion. The adjusted EBITDA margin is projected to grow 4-8% on a currency-neutral basis. Currency-neutral sales growth for the year is expected to be around 6% to 9%. However, foreign currency translation is likely to affect sales growth by 2 percentage points (PP) and adjusted operating EBITDA growth by 4 PP.

Price Performance

In the past year, International Flavors’ shares have lost 0.9% compared with the industry’s decline of 30.1%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Key Picks

International Flavors currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Consumer Staples sector include Helen of Troy (HELE - Free Report) and Medifast, Inc. (MED - Free Report) . While HELE sports a Zacks Rank #1 (Strong Buy), MED carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Helen has an expected earnings growth rate of 0.6% for fiscal 2022. The Zacks Consensus Estimate for HELE’s fiscal 2022 earnings has been revised 3.7% upward in the past 60 days and is currently pinned at $11.72.

Helen’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 19.1%. HELE has a long-term earnings growth rate of 8%.

Medifast has an expected earnings growth rate of 18.6% for the current year. The Zacks Consensus Estimate for MED’s 2022 earnings has been revised 0.06%% upward in the past 60 days and is currently pegged at $16.19.

Medifast’s bottom line beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.3%.