Sensient Technologies Corporation Reports Results for the Second Quarter Ended June 30, 2013

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Sensient Technologies Corporation Reports Results for the Second Quarter Ended June 30, 2013

Reported EPS of 65 Cents Includes Restructuring Costs of 9 Cents

Adjusted EPS of 74 Cents is a 6% increase and an All-Time Quarterly Record


Cash Provided by Operations in the First Six Months Increased to $70 Million

MILWAUKEE--(BUSINESS WIRE)-- Sensient Technologies Corporation (NYS: SXT) reported diluted earnings per share of 65 cents in the second quarter which includes restructuring costs of 9 cents per share. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share were 74 cents, an all-time quarterly record and an increase of 5.7% over the 70 cents reported in the second quarter of 2012. Consolidated revenue reached a new quarterly record of $378.8 million compared to $367.8 million in the second quarter of 2012. Operating income was $48.7 million, as reported, and included $6.6 million of pre-tax restructuring costs. Adjusted operating income was $55.3 million compared to $54.3 million reported in the second quarter of 2012. Foreign currency translation did not have a significant impact on revenue or operating income in the second quarter.

Revenue for the six months ended June 30, 2013 was $744.5 million, compared to $733.4 million reported in the first half of 2012. Diluted earnings per share, as reported, were $1.08, which includes restructuring costs of 28 cents. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share were $1.36 compared to $1.28 reported in last year's first half. Foreign currency translation did not have a significant impact on revenue or earnings per share in the first half of the year.

Cash provided by operating activities in the second quarter of 2013 was $44.5 million, an increase of 11% from the $40.1 million reported in the second quarter of 2012. For the first six months of 2013 cash provided by operating activities increased 43% to $70.0 million compared to $49.1 million in the first six months of 2012.

Earlier this year, the Company announced that it was initiating a broad and strategic restructuring plan. The plan includes relocating the Flavors & Fragrances Group headquarters to Chicago, consolidating several operating facilities throughout Europe and North America, and reducing the Company's global headcount. The plan is progressing as scheduled and within the Company's original cost estimates. The Company has included non-GAAP results to remove the costs related to the restructuring plan and provide investors with a view of operating performance excluding significant and non-recurring items.

"Sensient delivered solid results in the second quarter," said Kenneth P. Manning, Chairman and CEO of Sensient Technologies Corporation. "We continue to see opportunities for growth in all of our Groups, and I remain very optimistic about the Company's future."

BUSINESS REVIEW

The Color Group reported revenue of $126.6 million in the second quarter of 2013, compared to $129.2 million reported in the comparable period last year. Second quarter operating income increased 4.4% to an all-time quarterly high of $27.7 million from $26.6 million in the second quarter of 2012. Color Group operating margins increased 140 basis points to 21.9% in the second quarter. Strong performances in digital inks and cosmetics contributed to the record results. Foreign currency translation did not have a significant impact on revenue or operating income in the quarter.

The Flavors & Fragrances Group reported quarterly revenue of $227.9 million compared to the $218.9 million reported in the comparable period last year. Operating income was $32.6 million in the quarter compared to $33.5 million reported in last year's second quarter. Second quarter results were impacted by higher raw material costs. Foreign currency translation did not have a significant impact on revenue or operating income in the quarter.

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 $38.8 million in the second quarter, an increase of 8.5% compared to $35.8 million reported in last year's second quarter. Revenue growth, in local currency terms, was very strong throughout the Asia Pacific region.

2013 OUTLOOK

Sensient has narrowed its guidance for 2013 diluted earnings per share, which is now expected to be between $2.68 and $2.73, excluding the impact of the restructuring charge. The Company's previous guidance had been a range of $2.66 to $2.73 per share, excluding the restructuring charge.

CONFERENCE CALL

The Company will host a conference call to discuss its 2013 second quarter financial results at 10:00 a.m. CDT on Friday, July 26, 2013. To make a reservation for the conference call, please contact InterCall Teleconferencing at (706) 645-6973 and refer to the Sensient Technologies Corporation conference call.

A replay will be available beginning at 1:00 p.m. CDT on July 26, 2013, through midnight on August 2, 2013, by calling (404) 537-3406 and referring to conference identification number 14964083. 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, 2012, and quarterly report on Form 10-Q for the quarter ended March 31, 2013. 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 EarningsThree Months Ended June 30,Six Months Ended June 30,
 
20132012% Change20132012% Change
 
Revenue$378,806$367,7773.0%$744,446$733,4371.5%
 
Cost of products sold256,285247,8223.4%504,788498,1501.3%
Selling and administrative expenses 73,843 65,65712.5% 154,642 134,50015.0%
 
Operating income48,67854,298-10.4%85,016100,787-15.6%
Interest expense 4,008 4,347 8,269 8,753
 
Earnings before income taxes44,67049,951-10.6%76,74792,034-16.6%
Income taxes 12,388 15,046 23,026 28,223
 
Net earnings$32,282$34,905-7.5%$53,721$63,811-15.8%
 
Earnings per common share:
Basic$0.65$0.70-7.1%$1.08$1.29-16.3%
 
Diluted$0.65$0.70-7.1%$1.08$1.28-15.6%
 
Average common shares outstanding:
Basic 49,751 49,5370.4% 49,731 49,6560.2%
 
Diluted 49,917 49,7710.3% 49,892 49,8840.0%
 
      
Reconciliation of Non-GAAP Amounts
 
The Company recorded restructuring costs of $6.6 million ($4.7 million after-tax or $0.09 per share) and $19.4 million ($14.1 million after-tax or $0.28 per share) for the three and six month periods ended June 30, 2013, respectively, related to the 2013 restructuring program to relocate the Flavors & Fragrances Group headquarters to Chicago, as well as a profit improvement plan across all segments of the Company.
 
 
 
Three Months Ended June 30,
 
ReportedRestructuringAdjustedReported
2013Impact20132012% Change
 
Revenue$378,806$-$378,806$367,7773.0%
 
Cost of products sold256,285277256,008247,8223.3%
Selling and administrative expenses 73,843 6,365  67,478 65,6572.8%
 
Operating income48,678(6,642)55,32054,2981.9%
Interest expense 4,008 -  4,008 4,347
 
Earnings before income taxes44,670(6,642)51,31249,9512.7%
Income taxes 12,388 (1,940) 14,328 15,046
 
Net earnings$32,282$(4,702)$36,984$34,9056.0%
 
Earnings per common share:
Basic$0.65$(0.09)$0.74$0.705.7%
 
Diluted$0.65$(0.09)$0.74$0.705.7%
 
Average common shares outstanding:
Basic 49,751 49,751 49,5370.4%
 
Diluted 49,917 49,917 49,7710.3%
 
 
 

Sensient Technologies Corporation

(In thousands, except percentages and per share amounts)
 
Reconciliation of Non-GAAP Amounts (continued)
 
Six Months Ended June 30,
 
ReportedRestructuringAdjustedReported
2013Impact20132012% Change
 
Revenue$744,446$-$744,446$733,4371.5%
 
Cost of products sold504,788872503,916498,1501.2%
Selling and administrative expenses 154,642 18,543  136,099 134,5001.2%
 
Operating income85,016(19,415)104,431100,7873.6%
Interest expense 8,269 -  8,269 8,753
 
Earnings before income taxes76,747(19,415)96,16292,0344.5%
Income taxes 23,026 (5,306) 28,332 28,223
 
Net earnings$53,721$(14,109)$67,830$63,8116.3%
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