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International Flavors (IFF) Down 8.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for International Flavors (IFF - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is International Flavors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
International Flavors Q2 Earnings Miss, Guidance Cut
International Flavors reported adjusted earnings of $1.30 per share in second-quarter 2019, missing the Zacks Consensus Estimate of $1.61. Also, the bottom-line figure declined 21.6% from the year-ago quarter’s $1.66.
Including one-time items, earnings per share in the quarter came in at $1.20 per share compared with $1.25 recorded in the year-ago quarter.
In the reported quarter, International Flavors’ net sales were $1.29 billion, reflecting a year-over-year jump of 40%. However, the top-line figure missed the Zacks Consensus Estimate of $1.30 billion.
Operational Highlights
In the second quarter, International Flavors’ cost of goods sold surged 43% year over year to $745 million. Adjusted gross profit increased 37% year over year to $547 million. Adjusted gross margin came in at 42.3% compared with 43.4% witnessed in the year-ago quarter.
Research and development expenses flared up 13% year over year to $84.8 million. Adjusted selling and administrative expenses in the June-end quarter rose 38% year over year to $200 million. Adjusted operating profit increased 26.6% year over year to $214 million. Adjusted operating margin came in at 16.5% compared with the year-ago quarter’s 18.3%.
Segmental Performances
Revenues in the Taste segment decreased 4%, year over year, to $434.2 million during the April-June quarter. On a constant-currency basis, revenues edged down 1% year over year. Operating profit declined 11% year over year to $98 million.
Revenues generated from the Scent segment came in at $475.7 million, up 1% year over year. On a constant-currency basis, revenues improved 4% year over year. Operating profit climbed 13% year over year to $91.2 million.
Last October, International Flavors completed the acquisition of Frutarom Industries Ltd. The Frutarom segment’s revenues came in at $381.7 million and operating profit was $37 million during the quarter.
Financial Position
Exiting the second quarter, International Flavors had cash and cash equivalents of $454.8 million, down from the $648.5 million recorded at the end of 2018. Long-term debt fell to $4,428 million as of Jun 30, 2019, from $4,504 million as of Dec 31, 2018.
International Flavors generated $184.9 million of cash from operating activities during the six-month period ended Jun 30, 2019, compared with $55 million reported in the comparable period last year.
Capital invested in purchasing property, plant and equipment totaled $119 million during the six-month period ended Jun 30, 2019. Dividend paid totaled $155.5 million in the June-end quarter.
On Aug 5, International Flavors’ board increased its quarterly dividend by 3% to 75 cents per share. The dividend is payable on Oct 4, to shareholders of record as of Sep 23, 2019.
Outlook
International Flavors updated its guidance for 2019. Sales are now projected at $5.15-$5.25 billion, indicating year-over-year growth of 3-5%. The company’s prior guidance was $5.2-$5.3 billion. Adjusted earnings per share are expected in the band of $4.85-$5.05 compared with the previous guidance of $4.90-$5.10. Adjusted earnings excluding amortization are anticipated between $6.15 and $6.35 compared with the previous projection of $6.30-$6.50. The company expects to achieve cost savings of $40 million this year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.2% due to these changes.
VGM Scores
At this time, International Flavors has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, International Flavors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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International Flavors (IFF) Down 8.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for International Flavors (IFF - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is International Flavors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
International Flavors Q2 Earnings Miss, Guidance Cut
International Flavors reported adjusted earnings of $1.30 per share in second-quarter 2019, missing the Zacks Consensus Estimate of $1.61. Also, the bottom-line figure declined 21.6% from the year-ago quarter’s $1.66.
Including one-time items, earnings per share in the quarter came in at $1.20 per share compared with $1.25 recorded in the year-ago quarter.
In the reported quarter, International Flavors’ net sales were $1.29 billion, reflecting a year-over-year jump of 40%. However, the top-line figure missed the Zacks Consensus Estimate of $1.30 billion.
Operational Highlights
In the second quarter, International Flavors’ cost of goods sold surged 43% year over year to $745 million. Adjusted gross profit increased 37% year over year to $547 million. Adjusted gross margin came in at 42.3% compared with 43.4% witnessed in the year-ago quarter.
Research and development expenses flared up 13% year over year to $84.8 million. Adjusted selling and administrative expenses in the June-end quarter rose 38% year over year to $200 million. Adjusted operating profit increased 26.6% year over year to $214 million. Adjusted operating margin came in at 16.5% compared with the year-ago quarter’s 18.3%.
Segmental Performances
Revenues in the Taste segment decreased 4%, year over year, to $434.2 million during the April-June quarter. On a constant-currency basis, revenues edged down 1% year over year. Operating profit declined 11% year over year to $98 million.
Revenues generated from the Scent segment came in at $475.7 million, up 1% year over year. On a constant-currency basis, revenues improved 4% year over year. Operating profit climbed 13% year over year to $91.2 million.
Last October, International Flavors completed the acquisition of Frutarom Industries Ltd. The Frutarom segment’s revenues came in at $381.7 million and operating profit was $37 million during the quarter.
Financial Position
Exiting the second quarter, International Flavors had cash and cash equivalents of $454.8 million, down from the $648.5 million recorded at the end of 2018. Long-term debt fell to $4,428 million as of Jun 30, 2019, from $4,504 million as of Dec 31, 2018.
International Flavors generated $184.9 million of cash from operating activities during the six-month period ended Jun 30, 2019, compared with $55 million reported in the comparable period last year.
Capital invested in purchasing property, plant and equipment totaled $119 million during the six-month period ended Jun 30, 2019. Dividend paid totaled $155.5 million in the June-end quarter.
On Aug 5, International Flavors’ board increased its quarterly dividend by 3% to 75 cents per share. The dividend is payable on Oct 4, to shareholders of record as of Sep 23, 2019.
Outlook
International Flavors updated its guidance for 2019. Sales are now projected at $5.15-$5.25 billion, indicating year-over-year growth of 3-5%. The company’s prior guidance was $5.2-$5.3 billion. Adjusted earnings per share are expected in the band of $4.85-$5.05 compared with the previous guidance of $4.90-$5.10. Adjusted earnings excluding amortization are anticipated between $6.15 and $6.35 compared with the previous projection of $6.30-$6.50. The company expects to achieve cost savings of $40 million this year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -6.2% due to these changes.
VGM Scores
At this time, International Flavors has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, International Flavors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.