Sensient Technologies Corporation Reports Results for the Quarter Ended March 31, 2012

Revenue Increased 5% to a New First Quarter High

Earnings per Share Reach 58 Cents; A First Quarter Record and a 9% Increase

MILWAUKEE--()--Sensient Technologies Corporation (NYSE: SXT) reported new first quarter records for revenue, operating income and earnings per share for the three months ended March 31, 2012. Diluted earnings per share were 58 cents, an increase of 9.4% over the 53 cents reported in last year’s first quarter. Consolidated revenue increased 4.6% to $365.7 million in the first quarter compared to $349.7 million reported in the comparable period for 2011. Operating income for the three months ended March 31, 2012, was $46.5 million, an increase of 6.6% over the $43.6 million reported in the first three months of last year. In local currency, revenue was up 6.3% and operating income was up 8.8% in the quarter.

Cash provided by operating activities was $9.0 million in the first quarter of 2012 compared to $28.4 million in the first quarter of 2011. Cash flow was impacted by increases in working capital related to growth in revenue and inventory restocking.

“The Company continues to perform very well,” said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation. “We achieved solid revenue and operating profit growth during the first quarter and we expect to sustain this level of growth, in local currency terms, for the rest of the year. We continue to see opportunities for growth, and I remain very optimistic about the Company’s future.”

BUSINESS REVIEW

The Color Group reported revenue of $131.3 million in the first quarter of 2012, a record level for the first quarter and an increase of 4.5% over the $125.7 million reported in the comparable period last year. Operating income increased 14.2% to $25.5 million, an all-time quarterly high, from $22.3 million reported in the first quarter of 2011. In local currency, revenue increased 6.9% and operating income increased 16.7%. The operating income growth for the Group was driven by strong growth in the North American food color business and the inks businesses in both North America and Europe. Color Group operating margins improved 160 basis points in the quarter to 19.4%.

The Flavors & Fragrances Group reported revenue of $214.7 million, a new high for the first quarter and an increase of 4.3% compared to $206.0 million reported in the first quarter of 2011. Operating income increased to $29.1 million in the quarter from $28.6 million in the prior year. In local currency, revenue increased 6.1% and operating income increased 3.0%.

The Corporate & Other segment, which includes the Company’s operations in Asia Pacific and China, and the flavor businesses in Central and South America, reported revenue of $37.2 million, an increase of 7.5% compared to the $34.6 million reported in the first quarter of 2011.

2012 OUTLOOK

Sensient has increased its guidance for 2012 diluted earnings per share, which is now expected to be between $2.50 and $2.59. The Company’s previous guidance had been a range of $2.48 to $2.58 per share.

CONFERENCE CALL

The Company will host a conference call to discuss its 2012 first quarter financial results at 10:00 a.m. CDT on Friday, April 20, 2012. To make a reservation for the conference call, contact InterCall Teleconferencing at (706) 645-6973. To participate in the conference call, contact InterCall Teleconferencing at (706) 758-1089 and refer to conference identification number 67473347.

A replay will be available beginning at 1:00 p.m. CDT on April 20, 2012, through midnight on April 27, 2012, by calling (404) 537-3406 and referring to conference identification number 67473347. A transcript of the call will also be posted on the Company’s web site at www.sensient.com after the call concludes.

This release contains forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results, including, but not limited to the factors noted in this press release and in the Management’s Discussion and Analysis in our most recently filed annual report on Form 10-K for the year ended December 31, 2011. The forward-looking statements in this press release speak only as to the date of this release. Sensient Technologies Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations upon which such statements are based.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks and colors, and other specialty and fine chemicals. The Company’s customers include major international manufacturers representing most of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

www.sensient.com

 
Sensient Technologies Corporation

 

(In thousands, except percentages and per share amounts)
     
 
 
Consolidated Statements of Earnings Three Months Ended March 31,
 
2012 2011 % Change
 
Revenue $ 365,660 $ 349,686 4.6%
 
Cost of products sold 250,328 241,979 3.5%
Selling and administrative expenses   68,843     64,110   7.4%
 
Operating income 46,489 43,597 6.6%
Interest expense   4,406     4,850  
 
Earnings before income taxes 42,083 38,747 8.6%
Income taxes   13,177     12,332  
 
Net earnings $ 28,906   $ 26,415   9.4%
 
Earnings per common share:
Basic $ 0.58   $ 0.53   9.4%
 
Diluted $ 0.58   $ 0.53   9.4%
 
Average common shares outstanding:
Basic   49,795     49,637   0.3%
 
Diluted   50,016     49,818   0.4%
 
 
 
 
Results by Segment Three Months Ended March 31,
 

Revenue

2012 2011 % Change
 
 
Flavors & Fragrances $ 214,731 $ 205,974 4.3%
Color 131,272 125,671 4.5%
Corporate & Other * 37,176 34,595 7.5%
Intersegment elimination   (17,519 )   (16,554 ) 5.8%
 
Consolidated $ 365,660   $ 349,686   4.6%
 
 
 

Operating Income

 
 
Flavors & Fragrances $ 29,065 $ 28,610 1.6%
Color 25,522 22,347 14.2%
Corporate & Other *   (8,098 )   (7,360 ) 10.0%
 
Consolidated $ 46,489   $ 43,597   6.6%
 
* Beginning in the first quarter of 2012, the results of operations for the Company's flavor businesses in Central and South America, previously reported in the Flavors & Fragrances Group, are reported in the Corporate & Other segment. Results for 2011 have been restated to reflect this change.
           
Sensient Technologies Corporation

 

(In thousands, except per share amounts)
 
 
Consolidated Condensed Balance Sheets
March 31, 2012 2011
 
Current assets $ 733,790 $ 693,612
Goodwill and intangibles (net) 466,461 472,150
Property, plant and equipment (net) 463,082 442,195
Other assets   38,070     35,854  
 
Total Assets $ 1,701,403   $ 1,643,811  
 
Current liabilities $ 198,700 $ 195,203
Long-term debt 336,716 323,216
Accrued employee and retiree benefits 54,068 55,016
Other liabilities 32,523 35,782
Shareholders' equity   1,079,396     1,034,594  
 
Total Liabilities and Shareholders' Equity $ 1,701,403   $ 1,643,811  
 
 
 
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2012 2011
 
Net cash provided by operating activities $ 8,978   $ 28,413  
 
Cash flows from investing activities:
Acquisition of property, plant and equipment (16,939 ) (10,124 )
Proceeds from sale of assets 32 -
Other investing activity   (94 )   (60 )
 
Net cash used in investing activities   (17,001 )   (10,184 )
 
Cash flows from financing activities:
Proceeds from additional borrowings 31,364 12,002
Debt payments (11,613 ) (23,131 )
Purchase of treasury stock (15,360 ) -
Dividends paid (10,561 ) (10,487 )
Proceeds from options exercised and other   272     1,319  
 
Net cash used in financing activities   (5,898 )   (20,297 )
 
Effect of exchange rate changes on cash and cash equivalents   4,415     1,833  
 
Net decrease in cash and cash equivalents (9,506 ) (235 )
Cash and cash equivalents at beginning of period   22,855     14,255  
Cash and cash equivalents at end of period $ 13,349   $ 14,020  
 
 
 
Supplemental Information
Three Months Ended March 31, 2012 2011
 
Depreciation and amortization $ 12,037 $ 11,588
 
Dividends per share $ 0.21 $ 0.21

Contacts

Sensient Technologies Corporation
Dick Hobbs, (414) 347-3706

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Contacts

Sensient Technologies Corporation
Dick Hobbs, (414) 347-3706