Filing Information Provides basic filing details for IFF's Form 10-Q for the period ended June 30, 2025, including registration status and common stock outstanding [General Information](index=1&type=section&id=General%20Information) Details IFF's basic filing information for the Quarterly Report on Form 10-Q, including its registration status and outstanding common stock - Registrant: International Flavors & Fragrances Inc. (IFF)[1](index=1&type=chunk) - Filing Type: Quarterly Report on Form 10-Q for the period ended June 30, 2025[1](index=1&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |---|---|---| | Common Stock, par value 12 1/2¢ per share | IFF | New York Stock Exchange | | 1.800% Senior Notes due 2026 | IFF 26 | New York Stock Exchange | - Filer Status: Large accelerated filer[3](index=3&type=chunk) - Common Stock Outstanding (as of July 31, 2025): **256,287,081 shares**[3](index=3&type=chunk) PART I - Financial Information Presents IFF's unaudited consolidated financial statements and management's discussion and analysis [ITEM 1. Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) Presents IFF's unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2025 and 2024 [Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=3&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)) Presents IFF's consolidated statements of income and comprehensive income for the three and six months ended June 30 Consolidated Statements of Income (Loss) - Three Months Ended June 30 | (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | |---|---|---| | Net sales | $ 2,764 | $ 2,889 | | Gross profit | 1,030 | 1,068 | | Operating profit (loss) | 198 | 191 | | Income (loss) before income taxes | 534 | 183 | | Net income (loss) attributable to IFF shareholders | $ 612 | $ 170 | | Net income (loss) per share - diluted | $ 2.38 | $ 0.66 | Consolidated Statements of Income (Loss) - Six Months Ended June 30 | (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | |---|---|---| | Net sales | $ 5,607 | $ 5,788 | | Gross profit | 2,065 | 2,092 | | Operating profit (loss) | (705) | 390 | | Income (loss) before income taxes | (460) | 298 | | Net income (loss) attributable to IFF shareholders | $ (406) | $ 230 | | Net income (loss) per share - diluted | $ (1.59) | $ 0.90 | - Net income attributable to IFF shareholders for the three months ended June 30, 2025, increased significantly to **$612 million** from **$170 million** in the prior year, primarily due to a **$488 million gain on extinguishment of debt**[6](index=6&type=chunk) - For the six months ended June 30, 2025, IFF reported a net loss attributable to shareholders of **$406 million**, a substantial decrease from a net income of **$230 million** in the prior year, largely impacted by a **$1.153 billion impairment of goodwill**[6](index=6&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Presents IFF's consolidated balance sheets, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights | (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | June 30, 2025 | December 31, 2024 | |---|---|---| | **ASSETS** | | | | Cash and cash equivalents | $ 816 | $ 469 | | Total Current Assets | 5,928 | 7,993 | | Goodwill | 8,283 | 9,080 | | Total Assets | $ 26,121 | $ 28,667 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Short-term debt and current portion of long-term debt | $ 500 | $ 1,413 | | Total Current Liabilities | 3,183 | 4,333 | | Long-term debt | 5,684 | 7,564 | | Total Shareholders' Equity | 14,404 | 13,876 | | Total Liabilities and Shareholders' Equity | $ 26,121 | $ 28,667 | - Total assets decreased from **$28,667 million** at December 31, 2024, to **$26,121 million** at June 30, 2025, primarily due to the reclassification of assets held for sale (Pharma Solutions disposal group) and a goodwill impairment[8](index=8&type=chunk) - Total debt (short-term and long-term) significantly decreased from **$8,977 million** at December 31, 2024, to **$6,184 million** at June 30, 2025, largely driven by debt repayments and extinguishment[8](index=8&type=chunk)[95](index=95&type=chunk) [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Presents changes in IFF's consolidated shareholders' equity for the six months ended June 30, 2025 and 2024 - Total Shareholders' Equity increased from **$13,911 million** at January 1, 2025, to **$14,436 million** at June 30, 2025, primarily due to net income and other comprehensive income, despite cash dividends declared[11](index=11&type=chunk) - Accumulated other comprehensive loss improved from **$(2,527) million** at January 1, 2025, to **$(1,415) million** at June 30, 2025, largely driven by foreign currency translation adjustments[11](index=11&type=chunk) - Cash dividends declared were **$0.40 per common share** for each of the three months ended June 30, 2025 and 2024, and **$0.80 per share** for each of the six months ended June 30, 2025 and 2024[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Presents IFF's consolidated statements of cash flows, detailing operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows - Six Months Ended June 30 | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Net cash provided by operating activities | $ 368 | $ 336 | | Net cash provided by investing activities | 2,541 | 664 | | Net cash used in financing activities | (2,654) | (1,023) | | Net change in cash and cash equivalents | 345 | (61) | | Cash and cash equivalents at end of period | $ 816 | $ 674 | - Net cash provided by investing activities significantly increased to **$2,541 million** in the first six months of 2025 from **$664 million** in 2024, primarily due to higher net proceeds from business divestitures (**$2,707 million** in 2025 vs. **$848 million** in 2024)[15](index=15&type=chunk) - Net cash used in financing activities increased to **$2,654 million** in the first six months of 2025 from **$1,023 million** in 2024, driven by substantial principal payments of debt (**$2,413 million** in 2025 vs. **$849 million** in 2024)[15](index=15&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting IFF's consolidated financial statements [NOTE 1. Nature of Operations and Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%201.%20Nature%20of%20Operations%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes IFF's business, recent segment reorganization, and significant accounting policies, including cash, inventories, and new accounting standards - IFF is a leading creator and manufacturer of products for food, beverage, health & biosciences, and scent applications, holding global leadership positions across key categories[17](index=17&type=chunk) - Effective January 1, 2025, IFF reorganized its internal structure, separating the former Nourish segment into two new reportable segments: Taste and Food Ingredients, and adjusted corporate cost allocations[22](index=22&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) Cash, Cash Equivalents and Restricted Cash (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Cash and cash equivalents | $ 816 | $ 469 | | Cash, cash equivalents and restricted cash | $ 816 | $ 471 | - The Company sold approximately **$910 million** of receivables under factoring agreements for the six months ended June 30, 2025, with related costs of **$12 million** included in interest expense[25](index=25&type=chunk) Inventories (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Raw materials | $ 804 | $ 657 | | Work in process | 396 | 368 | | Finished goods | 1,171 | 1,108 | | Total | $ 2,371 | $ 2,133 | - IFF is evaluating the impact of new FASB ASUs, including ASU 2025-05 (credit losses), ASU 2024-03/2025-01 (expense disaggregation), and ASU 2023-09 (income tax disclosures), with ASU 2023-09 expected to impact disclosures but not results of operations[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE 2. Net Income (Loss) Per Share](index=10&type=section&id=NOTE%202.%20Net%20Income%20(Loss)%20Per%20Share) Details the calculation of basic and diluted net income (loss) per share for the periods presented Net Income (Loss) Per Share - Three Months Ended June 30 | (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | |---|---|---| | Net income (loss) available to IFF shareholders | $ 612 | $ 170 | | Weighted average shares assuming dilution (diluted) | 257 | 256 | | Net income (loss) per share - diluted | $ 2.38 | $ 0.66 | Net Income (Loss) Per Share - Six Months Ended June 30 | (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | |---|---|---| | Net income (loss) available to IFF shareholders | $ (406) | $ 230 | | Weighted average shares assuming dilution (diluted) | 256 | 256 | | Net income (loss) per share - diluted | $ (1.59) | $ 0.90 | - Approximately **1 million** potentially dilutive securities were excluded from diluted net loss per share for the six months ended June 30, 2025, as their inclusion would have been anti-dilutive due to the net loss[33](index=33&type=chunk) [NOTE 3. Business Divestitures and Assets and Liabilities Held for Sale](index=11&type=section&id=NOTE%203.%20Business%20Divestitures%20and%20Assets%20and%20Liabilities%20Held%20for%20Sale) Outlines completed divestitures of Pharma Solutions, Nitrocellulose, and Tobacco Flavoring businesses, and related asset reclassifications - IFF completed the divestiture of its Pharma Solutions business on May 1, 2025, receiving gross cash proceeds of approximately **$2.564 billion**, with a pre-tax loss of **$91 million** recognized[37](index=37&type=chunk)[40](index=40&type=chunk) - The divestiture of the Nitrocellulose business was completed on May 9, 2025, yielding cash proceeds of approximately **$161 million** and resulting in a pre-tax gain of **$10 million**[43](index=43&type=chunk)[46](index=46&type=chunk) - The Tobacco Flavoring Business in North America was divested on April 1, 2025, for approximately **$20 million** in gross cash proceeds, recognizing a pre-tax gain of less than **$1 million**[47](index=47&type=chunk)[48](index=48&type=chunk) Assets and Liabilities Held for Sale (December 31, 2024) | (DOLLARS IN MILLIONS) | December 31, 2024 | |---|---| | Total assets held-for-sale | $ 3,030 | | Total liabilities held-for-sale | $ 332 | - As of June 30, 2025, there were no assets and liabilities classified as 'held for sale', following the completion of several divestitures during the period[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 4. Restructuring and Other Charges](index=15&type=section&id=NOTE%204.%20Restructuring%20and%20Other%20Charges) Details costs and impact of IFF's productivity enhancement program, including severance and fixed asset write-downs - IFF initiated a productivity enhancement program in 2024, aiming to improve productivity and optimize its organizational footprint by December 31, 2026, with estimated total costs ranging from **$100 million to $120 million**[53](index=53&type=chunk)[54](index=54&type=chunk) - For the six months ended June 30, 2025, the Company incurred **$38 million** in severance costs related to the IFF Productivity Program, with total severance costs of **$41 million** and fixed asset write-downs of **$20 million** since inception[55](index=55&type=chunk) Restructuring and Other Charges by Segment (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Taste | $ 8 | $ 1 | | Food Ingredients | 10 | 2 | | Health & Biosciences | 8 | 1 | | Scent | 12 | 1 | | Total Restructuring and other charges | $ 38 | $ 5 | [NOTE 5. Stock Compensation Plans](index=16&type=section&id=NOTE%205.%20Stock%20Compensation%20Plans) Provides information on stock-based compensation expense and unrecognized compensation costs related to equity awards Stock-Based Compensation Expense (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Equity-based awards | $ 51 | $ 43 | | Liability-based awards | 1 | 2 | | Total stock-based compensation expense | $ 52 | $ 45 | | Less: Tax benefit | (13) | (9) | | Total stock-based compensation expense, after tax | $ 39 | $ 36 | - As of June 30, 2025, there was approximately **$105 million** of total unrecognized compensation cost related to non-vested equity awards[58](index=58&type=chunk) [NOTE 6. Segment Information](index=16&type=section&id=NOTE%206.%20Segment%20Information) Presents financial data by IFF's reorganized reportable segments and geographic regions, including net sales and capital expenditures - Effective January 1, 2025, IFF reorganized its segments, splitting the former Nourish segment into Taste and Food Ingredients, and transferring immaterial businesses, resulting in five reportable segments[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) Net Sales by Segment (Three Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Taste | $ 631 | $ 610 | | Food Ingredients | 850 | 847 | | Health & Biosciences | 577 | 556 | | Scent | 603 | 603 | | Pharma Solutions | 103 | 273 | | Total | $ 2,764 | $ 2,889 | Adjusted Operating EBITDA by Segment (Six Months Ended June 30, 2025) | (DOLLARS IN MILLIONS) | Taste | Food Ingredients | Health & Biosciences | Scent | Pharma Solutions | Total | |---|---|---|---|---|---|---| | Adjusted Operating EBITDA | $ 256 | $ 235 | $ 289 | $ 274 | $ 76 | $ 1,130 | Consolidated Capital Expenditures by Segment (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Taste | $ 42 | $ 23 | | Food Ingredients | 100 | 70 | | Health and Biosciences | 62 | 35 | | Scent | 32 | 25 | | Pharma Solutions | 38 | 47 | | Consolidated | $ 274 | $ 200 | Net Sales by Region (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Europe, Africa and Middle East | $ 1,905 | $ 1,949 | | Greater Asia | 1,317 | 1,363 | | North America | 1,671 | 1,742 | | Latin America | 714 | 734 | | Consolidated | $ 5,607 | $ 5,788 | [NOTE 7. Employee Benefits](index=20&type=section&id=NOTE%207.%20Employee%20Benefits) Details net periodic benefit costs for non-U.S. pension plans and expected contributions to pension plans Net Periodic Benefit (Income) Cost - Non-U.S. Plans (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Service cost for benefits earned | $ 10 | $ 12 | | Interest cost on projected benefit obligation | 18 | 18 | | Expected return on plan assets | (23) | (25) | | Net amortization and deferrals | 2 | 3 | | Net periodic benefit (income) cost | $ 7 | $ 8 | - The Company expects to contribute **$5 million** to U.S. pension plans and **$15 million** to non-U.S. pension plans in 2025, with **$2 million** and **$7 million** already contributed, respectively, during the first six months[74](index=74&type=chunk) - Total postretirement benefit expense was **$0** for both the three and six months ended June 30, 2025 and 2024[74](index=74&type=chunk) [NOTE 8. Other Expense, Net](index=21&type=section&id=NOTE%208.%20Other%20Expense,%20Net) Breaks down other expense, net, including foreign exchange losses, interest income, and pension-related benefits Other Expense, Net (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Foreign exchange losses | $ (41) | $ (41) | | Interest income | 11 | 6 | | Pension-related benefit | 1 | 3 | | Other | (1) | 16 | | Other expense, net | $ (30) | $ (16) | - Other expense, net, increased to **$30 million** for the six months ended June 30, 2025, from **$16 million** in 2024, primarily due to a decrease in 'Other' income/gains[75](index=75&type=chunk) [NOTE 9. Income Taxes](index=22&type=section&id=NOTE%209.%20Income%20Taxes) Explains IFF's effective tax rates, unrecognized tax benefits, and deferred tax liabilities for the periods presented - The effective tax rate for the three months ended June 30, 2025, was **(14.6)%**, driven by a **$359 million tax benefit** from an entity realignment project, partially offset by business divestitures[77](index=77&type=chunk) - For the six months ended June 30, 2025, the effective tax rate was **12.0%**, influenced by the entity realignment tax benefit, business divestitures, and a largely non-taxable goodwill impairment charge[78](index=78&type=chunk) - As of June 30, 2025, IFF had **$154 million** in unrecognized tax benefits and **$58 million** in accrued interest and penalties, totaling **$212 million** for uncertain tax positions[79](index=79&type=chunk)[80](index=80&type=chunk) - A deferred tax liability of approximately **$151 million** is recorded for the effect of repatriating funds from non-U.S. subsidiaries to the U.S.[81](index=81&type=chunk) [NOTE 10. Property, Plant and Equipment, Net](index=22&type=section&id=NOTE%2010.%20Property,%20Plant%20and%20Equipment,%20Net) Provides details on IFF's property, plant, and equipment, including accumulated depreciation and capital expenditures Property, Plant and Equipment, Net (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Total Property, plant and equipment | $ 6,616 | $ 6,167 | | Accumulated depreciation | (2,711) | (2,428) | | Total Property, plant and equipment, net | $ 3,905 | $ 3,739 | - Depreciation expense for the six months ended June 30, 2025, was **$190 million**, down from **$203 million** in the prior year[82](index=82&type=chunk) - Capitalized interest during construction was approximately **$6 million** for the six months ended June 30, 2025, consistent with **$7 million** in the prior year[83](index=83&type=chunk) [NOTE 11. Goodwill and Other Intangible Assets, Net](index=22&type=section&id=NOTE%2011.%20Goodwill%20and%20Other%20Intangible%20Assets,%20Net) Details the goodwill impairment charge for the Food Ingredients unit and the carrying value of other intangible assets - IFF recognized a goodwill impairment charge of **$1.153 billion** for the Food Ingredients reporting unit for the six months ended June 30, 2025, following a segment reorganization, leaving no remaining goodwill for this unit[86](index=86&type=chunk) Goodwill Movements by Segment (Six Months Ended June 30, 2025) | (DOLLARS IN MILLIONS) | Taste | Food Ingredients | Scent | Health & Biosciences | Total | |---|---|---|---|---|---| | Balance at January 1, 2025 | $ — | $ — | $ 1,465 | $ 4,295 | $ 9,080 | | Reallocation of goodwill in segment reorganization | 2,178 | 1,153 | — | (14) | — | | Impairment | — | (1,153) | — | — | (1,153) | | Balance at June 30, 2025 | $ 2,305 | $ — | $ 1,511 | $ 4,467 | $ 8,283 | Other Intangible Assets, Net (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Customer relationships | $ 7,314 | $ 7,004 | | Technological know-how | 2,026 | 1,937 | | Total carrying value | 9,653 | 9,234 | | Total accumulated amortization | (3,223) | (2,789) | | Other intangible assets, net | $ 6,430 | $ 6,445 | - Amortization expense for acquisition-related intangibles decreased to **$288 million** for the six months ended June 30, 2025, from **$321 million** in 2024, primarily due to Pharma Solutions intangible assets being classified as 'held for sale'[89](index=89&type=chunk)[173](index=173&type=chunk) [NOTE 12. Other Current Assets and Liabilities, and Other Assets](index=24&type=section&id=NOTE%2012.%20Other%20Current%20Assets%20and%20Liabilities,%20and%20Other%20Assets) Provides a breakdown of various current and non-current assets and liabilities, including prepaid expenses and accrued income taxes Prepaid Expenses and Other Current Assets (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Value-added tax receivable | $ 154 | $ 152 | | Prepaid income taxes | 212 | 193 | | Earnout receivable | 100 | — | | Total | $ 940 | $ 737 | Other Assets (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Deferred income taxes | $ 244 | $ 240 | | Overfunded pension plans | 168 | 144 | | Long-term receivables | 240 | 171 | | Total | $ 955 | $ 837 | Other Current Liabilities (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Accrued income taxes | $ 218 | $ 131 | | Accrued expenses payable | 318 | 203 | | Accrued restructuring | 28 | 3 | | Total | $ 975 | $ 783 | [NOTE 13. Debt](index=25&type=section&id=NOTE%2013.%20Debt) Details IFF's debt structure, tender offers, repayments, and amendments to the Revolving Credit Agreement Debt Structure (in millions) | (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |---|---|---| | Total debt | $ 6,184 | $ 8,977 | | Less: Short-term borrowings | (500) | (1,413) | | Total Long-term debt | $ 5,684 | $ 7,564 | - IFF commenced tender offers on May 20, 2025, to repurchase **$2.5 billion** of Senior Notes for **$2.0 billion** cash, resulting in a **$488 million gain on debt extinguishment**, primarily funded by Pharma Solutions divestiture proceeds[97](index=97&type=chunk) - The remaining **$413 million** balance of the 2026 Term Loan Facility was repaid in the first six months of 2025 using divestiture proceeds[98](index=98&type=chunk) - On June 25, 2025, the Revolving Credit Agreement was amended, extending the termination date to June 25, 2030, and adjusting the net debt to credit adjusted EBITDA ratio covenant to **4.00x** through September 30, 2025, and **3.75x** thereafter[104](index=104&type=chunk) - As of June 30, 2025, IFF had no outstanding borrowings under its **$2 billion** Revolving Credit Facility and was in compliance with all debt covenants[104](index=104&type=chunk)[237](index=237&type=chunk) [NOTE 14. Leases](index=26&type=section&id=NOTE%2014.%20Leases) Presents information on total lease costs and supplemental cash flow information related to operating and finance leases Total Lease Cost (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Total operating lease cost | $ 90 | $ 92 | | Finance lease cost | 6 | 6 | Supplemental Cash Flow Information Related to Leases (Six Months Ended June 30) | (DOLLARS IN MILLIONS) | 2025 | 2024 | |---|---|---| | Operating cash flows for operating leases | $ 67 | $ 60 | | Financing cash flows for finance leases | 6 | 5 | | Right-of-use assets obtained in exchange for lease obligations (Operating leases) | 79 | 44 | [NOTE 15. Financial Instruments](index=26&type=section&id=NOTE%2015.%20Financial%20Instruments) Describes IFF's use of financial instruments, fair value hierarchy, and derivative contracts for risk management - IFF uses a fair value hierarchy (Level 1, 2, 3) for financial instruments, with most debt and derivatives classified as Level 2 due to observable market inputs[110](index=110&type=chunk)[113](index=113&type=chunk) Fair Value of Long-term Debt (June 30, 2025) | (DOLLARS IN MILLIONS) | Carrying Value | Fair Value | |---|---|---| | 2025 Notes | $ 500 | $ 496 | | 2026 Euro Notes | 942 | 934 | | 2027 Notes | 805 | 754 | | 2028 Notes | 399 | 399 | | 2030 Notes | 1,239 | 1,090 | | 2040 Notes | 342 | 245 | | 2047 Notes | 392 | 307 | | 2048 Notes | 674 | 592 | | 2050 Notes | 889 | 568 | - The Company uses foreign currency forward contracts to manage exchange rate risk, commodity contracts for price fluctuations (soybeans, natural gas), and cross currency swaps (**$1.4 billion** notional) as net investment hedges for European investments[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) Derivative Instruments Measured at Fair Value (June 30, 2025) | (DOLLARS IN MILLIONS) | Derivatives Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments | Total Fair Value | |---|---|---|---| | Foreign currency forward contracts (assets) | $ — | $ 36 | $ 36 | | Foreign currency contracts (liabilities) | — | 1 | 1 | | Cross currency swaps (liabilities) | 254 | — | 254 | | Total derivative assets | $ — | $ 36 | $ 36 | | Total derivative liabilities | $ 254 | $ 1 | $ 255 | [NOTE 16. Accumulated Other Comprehensive Loss](index=31&type=section&id=NOTE%2016.%20Accumulated%20Other%20Comprehensive%20Loss) Details changes in accumulated other comprehensive loss, primarily driven by positive foreign currency translation adjustments Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, 2025) | (DOLLARS IN MILLIONS) | Foreign Currency Translation Adjustments | Gains (Losses) on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | |---|---|---|---|---| | Accumulated other comprehensive loss, net of tax, as of January 1, 2025 | $ (2,426) | $ (2) | $ (99) | $ (2,527) | | Net current period other comprehensive income (loss) | 1,162 | (1) | (49) | 1,112 | | Accumulated other comprehensive loss, net of tax, as of June 30, 2025 | $ (1,264) | $ (3) | $ (148) | $ (1,415) | - The accumulated other comprehensive loss improved significantly by **$1,112 million** for the six months ended June 30, 2025, primarily driven by positive foreign currency translation adjustments of **$1,162 million**[128](index=128&type=chunk) [NOTE 17. Commitments and Contingencies](index=32&type=section&id=NOTE%2017.%20Commitments%20and%20Contingencies) Outlines IFF's bank guarantees, letters of credit, and legal proceedings, including class action settlements and antitrust investigations - As of June 30, 2025, IFF had approximately **$198 million** in available bank guarantees, letters of credit, and surety bonds, with **$54 million** outstanding[131](index=131&type=chunk) - In the second quarter of 2025, IFF finalized a settlement agreement for a securities class action in Israel related to the Frutarom acquisition, with a payment of approximately **$6.8 million** expected to be covered by insurers[136](index=136&type=chunk) - IFF recognized a **$42 million provision** in Q2 2025 for anticipated settlement of U.S. class action lawsuits related to alleged anticompetitive conduct in its fragrance businesses[139](index=139&type=chunk) - IFF is cooperating with ongoing antitrust investigations by the EC, CMA, DOJ, Swiss Competition Commission, and Mexican Competition Commission regarding its fragrance businesses, and has applied for leniency in several jurisdictions[141](index=141&type=chunk) - The criminal investigation by Israeli authorities into Frutarom and former executives for suspected bribery and money laundering was closed on February 26, 2024[140](index=140&type=chunk) [NOTE 18. Subsequent Events](index=35&type=section&id=NOTE%2018.%20Subsequent%20Events) Discloses significant events after the reporting period, including tax legislation, a share repurchase program, and a business divestiture - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S., permanently extending key tax provisions and making significant changes to the U.S. international tax framework, which IFF is currently evaluating for financial statement impact[146](index=146&type=chunk) - On August 5, 2025, IFF's Board authorized a new **$500 million** share repurchase program, to be funded from available cash and operating activities[147](index=147&type=chunk) - On August 5, 2025, IFF announced a definitive agreement to divest its soy crush, concentrates, and lecithin business, expected to close in Q4 2025, aligning with its portfolio strengthening strategy[148](index=148&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses IFF's financial condition and results, analyzing sales, profitability, segment performance, and liquidity for the periods ended June 30, 2025 [OVERVIEW](index=36&type=section&id=OVERVIEW) Provides an overview of IFF's business, recent segment reorganization, and key financial highlights for the second quarter of 2025 - IFF is a leading global creator and manufacturer of products for food, beverage, health & biosciences, and scent markets, with a recent sale of its Pharma Solutions disposal group[151](index=151&type=chunk) - Effective January 1, 2025, IFF reorganized its segments, splitting Nourish into Taste and Food Ingredients, resulting in five reportable segments[152](index=152&type=chunk) - Sales in Q2 2025 decreased by **4%** on a reported and currency-neutral basis to **$2.764 billion**, primarily due to divestiture impacts of approximately **$193 million**, partially offset by volume increases[158](index=158&type=chunk) - Gross profit in Q2 2025 decreased by **4%** to **$1.030 billion** (**37.3%** of sales), driven by divestitures, but partially offset by volume increases and productivity gains[159](index=159&type=chunk) [RESULTS OF OPERATIONS](index=38&type=section&id=RESULTS%20OF%20OPERATIONS) Presents a summary of IFF's key financial results, including net sales, gross profit, and net income, for the three and six months ended June 30 Key Financial Results (Three Months Ended June 30) | (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | Change (%) | |---|---|---|---| | Net sales | $ 2,764 | $ 2,889 | (4) % | | Gross profit | 1,030 | 1,068 | (4) % | | Operating profit (loss) | 198 | 191 | 4 % | | Income (loss) before income taxes | 534 | 183 | 192 % | | Net income (loss) attributable to IFF shareholders | $ 612 | $ 170 | 260 % | | Net income (loss) per share - diluted | $ 2.38 | $ 0.66 | 261 % | Key Financial Results (Six Months Ended June 30) | (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | Change (%) | |---|---|---|---| | Net sales | $ 5,607 | $ 5,788 | (3) % | | Gross profit | 2,065 | 2,092 | (1) % | | Operating profit (loss) | (705) | 390 | (281) % | | Income (loss) before income taxes | (460) | 298 | (254) % | | Net income (loss) attributable to IFF shareholders | $ (406) | $ 230 | (277) % | | Net income (loss) per share - diluted | $ (1.59) | $ 0.90 | (277) % | - Operating profit for Q2 2025 increased by **4%** to **$198 million**, while for the six months, it swung to a loss of **$705 million** from a profit of **$390 million** in 2024, primarily due to a **$1.153 billion goodwill impairment**[161](index=161&type=chunk) [SECOND QUARTER 2025 IN COMPARISON TO SECOND QUARTER 2024](index=39&type=section&id=SECOND%20QUARTER%202025%20IN%20COMPARISON%20TO%20SECOND%20QUARTER%202024) Compares IFF's financial performance for Q2 2025 against the prior year, including sales by segment and expense analysis Sales Performance by Segment (Q2 2025 vs. Q2 2024) | | Reported | (1) Currency Neutral | (1)(2) Comparable Currency Neutral | |---|---|---|---| | Taste | 3 % | 4 % | 6 % | | Food Ingredients | 0 % | 1 % | 1 % | | Health & Biosciences | 4 % | 4 % | 4 % | | Scent | 0 % | 1 % | 1 % | | Pharma Solutions | -62 % | -62 % | 21 % | | Total | -4 % | -4 % | 3 % | - Pharma Solutions sales decreased **62%** in Q2 2025 due to divestitures, but on a comparable currency neutral basis (excluding divestiture impact), sales increased **21%** driven by volume and price[169](index=169&type=chunk) - Cost of sales decreased by **$87 million** in Q2 2025, primarily due to divestitures (**$130 million** impact) and lower input costs, partially offset by volume increases[170](index=170&type=chunk) - R&D expenses increased by **$9 million** in Q2 2025 due to higher employee-related and operating costs, despite an **$8 million** reduction from divestitures[171](index=171&type=chunk) - S&A expenses decreased by **$10 million** in Q2 2025, driven by lower consulting fees related to divestitures, but partially offset by a **$42 million provision** for fragrance business class action settlements[172](index=172&type=chunk)[139](index=139&type=chunk) - Interest expense decreased by **$18 million** in Q2 2025 due to lower debt outstanding, while a **$488 million gain on extinguishment of debt** was recognized from tender offers funded by divestiture proceeds[176](index=176&type=chunk)[177](index=177&type=chunk) Adjusted Operating EBITDA Performance by Segment (Q2 2025 vs. Q2 2024) | | Reported | (1)(2) Comparable Adjusted | |---|---|---| | Taste | -2 % | 2 % | | Food Ingredients | 14 % | 16 % | | Health & Biosciences | 0 % | 1 % | | Scent | -9 % | -8 % | | Pharma Solutions | -62 % | 0 % | | Total | -6 % | 2 % | [FIRST SIX MONTHS 2025 IN COMPARISON TO FIRST SIX MONTHS 2024](index=43&type=section&id=FIRST%20SIX%20MONTHS%202025%20IN%20COMPARISON%20TO%20FIRST%20SIX%20MONTHS%202024) Compares IFF's financial performance for H1 2025 against the prior year, including sales by segment and goodwill impairment Sales Performance by Segment (H1 2025 vs. H1 2024) | | Reported | (1) Currency Neutral | (1)(2) Comparable Currency Neutral | |---|---|---|---| | Taste | 2 % | 5 % | 6 % | | Food Ingredients | -3 % | -2 % | -2 % | | Health & Biosciences | 3 % | 4 % | 4 % | | Scent | -2 % | 0 % | 3 % | | Pharma Solutions | -29 % | -28 % | 12 % | | Total | -3 % | -1 % | 3 % | - Consolidated sales for H1 2025 decreased **3%** to **$5.607 billion**, primarily due to a **$224 million** impact from divestitures, partially offset by volume increases[192](index=192&type=chunk) - Food Ingredients sales decreased **3%** in H1 2025, driven by volume decreases in Protein Solutions, while Taste, Health & Biosciences, and Scent segments showed positive or flat currency-neutral sales growth[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Goodwill impairment was **$1.153 billion** in H1 2025 (Food Ingredients) compared to **$64 million** in H1 2024 (Pharma Solutions disposal group)[206](index=206&type=chunk) - Restructuring and other charges increased to **$38 million** in H1 2025 from **$5 million** in 2024, driven by higher severance costs from the IFF Productivity Program[207](index=207&type=chunk) Adjusted Operating EBITDA Performance by Segment (H1 2025 vs. H1 2024) | | Reported | (1)(2) Comparable Adjusted | |---|---|---| | Taste | 5 % | 8 % | | Food Ingredients | 8 % | 9 % | | Health & Biosciences | — % | 1 % | | Scent | -12 % | -7 % | | Pharma Solutions | -28 % | 10 % | | Total | -3 % | 2 % | [Liquidity](index=49&type=section&id=Liquidity) Discusses IFF's cash and cash equivalents, and cash flows from operating, investing, and financing activities - Cash and cash equivalents increased to **$816 million** at June 30, 2025, from **$471 million** at December 31, 2024[225](index=225&type=chunk) - Cash flows from operating activities increased to **$368 million** for H1 2025 from **$336 million** in H1 2024, driven by decreased working capital[227](index=227&type=chunk) - Cash flows from investing activities significantly increased to **$2.541 billion** for H1 2025 from **$664 million** in H1 2024, primarily due to higher net proceeds from business divestitures[228](index=228&type=chunk) - Cash flows used in financing activities increased to **$2.654 billion** for H1 2025 from **$1.023 billion** in H1 2024, mainly due to **$2.0 billion** in Senior Notes repurchases and repayment of the 2026 Term Loan Facility[230](index=230&type=chunk) - Capital spending in 2025 is expected to be approximately **6.0% of sales**, up from **4.0%** in 2024[229](index=229&type=chunk) [Capital Resources](index=50&type=section&id=Capital%20Resources) Outlines IFF's capital allocation strategy, debt covenants, and outstanding senior unsecured notes - IFF's capital allocation strategy focuses on maintaining investment-grade ratings, investing in the business, paying dividends, repurchasing shares, and repaying debt[232](index=232&type=chunk) - The Revolving Credit Agreement was amended on June 25, 2025, extending its termination to June 25, 2030, and setting net debt to credit adjusted EBITDA ratio covenants[235](index=235&type=chunk)[236](index=236&type=chunk) - As of June 30, 2025, IFF was in compliance with all financial covenants, with a net debt to credit adjusted EBITDA ratio of **2.47 to 1.0**, below the **4.00x** covenant[238](index=238&type=chunk) Net Debt and Credit Adjusted EBITDA (Twelve Months Ended June 30, 2025) | (DOLLARS IN MILLIONS) | June 30, 2025 | |---|---| | Total debt | $ 6,213 | | Cash and cash equivalents | 816 | | Net debt | $ 5,397 | | Credit Adjusted EBITDA | $ 2,184 | - As of June 30, 2025, IFF had **$6.140 billion** in senior unsecured notes outstanding, with maturities ranging from October 2025 to December 2050[241](index=241&type=chunk) [New Accounting Standards](index=52&type=section&id=New%20Accounting%20Standards) Refers to Note 1 for a discussion of recent accounting pronouncements relevant to IFF's financial statements - Refer to Note 1 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements[245](index=245&type=chunk) [Non-GAAP Financial Measures](index=52&type=section&id=Non-GAAP%20Financial%20Measures) Defines and explains IFF's use of non-GAAP financial measures, including currency neutral metrics and adjusted operating EBITDA - IFF uses non-GAAP financial measures such as comparable currency neutral metrics, adjusted operating EBITDA, adjusted operating EBITDA margin, and net debt to credit adjusted EBITDA to provide additional insight into underlying operating results and comparable year-over-year performance[246](index=246&type=chunk)[247](index=247&type=chunk) - Currency neutral metrics are calculated by translating current year sales at prior year exchange rates to eliminate currency fluctuation effects[248](index=248&type=chunk) - Adjusted operating EBITDA excludes depreciation, amortization, interest, other expense, and certain non-recurring items like goodwill impairment, restructuring, and divestiture costs[250](index=250&type=chunk) - Net debt to credit adjusted EBITDA is a leverage ratio defined as net debt (debt less cash) divided by trailing 12-month credit adjusted EBITDA, used for credit agreement compliance[251](index=251&type=chunk) [Cautionary Statement Under the Private Securities Litigation Reform Act of 1995](index=52&type=section&id=Cautionary%20Statement%20Under%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) Highlights forward-looking statements and associated risks and uncertainties that could materially affect IFF's actual results - This section contains forward-looking statements based on management's current assumptions and expectations, which involve significant risks and uncertainties that could cause actual results to differ materially[252](index=252&type=chunk)[253](index=253&type=chunk) - Key risks include substantial indebtedness, ability to execute strategic transformation, regulatory and economic trends, outcomes of legal claims, supply chain disruptions, inflationary pressures, and ability to attract and retain key employees[253](index=253&type=chunk) - IFF does not undertake to update or revise forward-looking statements as more information becomes available or to reflect changes in expectations, assumptions, or results[255](index=255&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Discusses IFF's market risk exposures, noting no material changes from the 2024 Form 10-K, except for cross currency swap agreements - No material changes in market risk from the 2024 Form 10-K, except for cross currency swap agreements[257](index=257&type=chunk) - As of June 30, 2025, cross currency swaps had an aggregate fair value liability of **$254 million**; a hypothetical **10%** change in USD value against EUR would alter their fair value by approximately **$163 million**[258](index=258&type=chunk) [ITEM 4. Controls and Procedures](index=54&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Confirms the effectiveness of IFF's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - The CEO and CFO concluded that IFF's disclosure controls and procedures were effective as of June 30, 2025[259](index=259&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[261](index=261&type=chunk) PART II - Other Information Provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [ITEM 1. Legal Proceedings](index=55&type=section&id=ITEM%201.%20Legal%20Proceedings) Refers to Note 17 for updated disclosures on legal proceedings, including class action lawsuits and ongoing antitrust investigations - Updates on legal proceedings are provided in Note 17 to the Consolidated Financial Statements[264](index=264&type=chunk) [ITEM 1A. Risk Factors](index=55&type=section&id=ITEM%201A.%20Risk%20Factors) Indicates no material changes to the risk factors previously disclosed in the 2024 Form 10-K - No material changes to risk factors disclosed in the 2024 Form 10-K[265](index=265&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) States there were no unregistered sales of equity securities or use of proceeds during the reporting period - None[266](index=266&type=chunk) [ITEM 5. Other Information](index=55&type=section&id=ITEM%205.%20Other%20Information) Reports no directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[267](index=267&type=chunk) [ITEM 6. Exhibits](index=55&type=section&id=ITEM%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including certifications, XBRL documents, and the interactive data file - Includes certifications (Sarbanes-Oxley Act Section 302 and 18 U.S.C. Section 1350) and various XBRL taxonomy extension files[270](index=270&type=chunk) [Signatures](index=56&type=section&id=Signatures) Contains the signatures of the CEO, CFO, and SVP, Corporate Controller and Chief Accounting Officer, certifying the report - Report signed by J. Erik Fyrwald (CEO), Michael DeVeau (CFO), and Beril Yildiz (SVP, Corporate Controller and Chief Accounting Officer) on August 5, 2025[272](index=272&type=chunk)

[Executive Summary & Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Highlights) [Second Quarter 2025 Consolidated Summary](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Consolidated%20Summary) The company reported Q2 2025 sales of $2.8 billion and adjusted operating EBITDA of $552 million Second Quarter 2025 Consolidated Financials | Metric | Reported (GAAP) | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Sales | $2.8 B | - | | Income Before Taxes | $534 M | - | | EPS | $2.38 | - | | Operating EBITDA | - | $552 M | | Operating EBITDA Margin | - | 20.0% | | EPS ex Amortization | - | $1.15 | [First Six Months 2025 Consolidated Summary](index=1&type=section&id=1.2.%20First%20Six%20Months%202025%20Consolidated%20Summary) For the first six months of 2025, IFF recorded sales of $5.6 billion and adjusted operating EBITDA of $1.1 billion First Six Months 2025 Consolidated Financials | Metric | Reported (GAAP) | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Sales | $5.6 B | - | | Income Before Taxes | $(460) M | - | | EPS | $(1.59) | - | | Operating EBITDA | - | $1.1 B | | Operating EBITDA Margin | - | 20.2% | | EPS ex Amortization | - | $2.35 | [Management Commentary](index=1&type=section&id=1.3.%20Management%20Commentary) Management highlighted progress in strengthening the business through top-line growth, improved profitability, and strategic divestitures - Achieved top-line growth and improved profitability in Q2 2025, driven by disciplined execution and productivity[4](index=4&type=chunk) - Successfully closed divestitures of Pharma Solutions and Nitrocellulose, and completed debt tender offering, reducing **leverage to 2.5x**, ahead of target[4](index=4&type=chunk) - Announced a new **$500 million share repurchase authorization**, reflecting confidence in long-term value and a balanced capital allocation strategy[5](index=5&type=chunk) - Entered a definitive agreement to divest soy crush, concentrates, and lecithin business to Bunge, furthering portfolio evolution towards value-added offerings[4](index=4&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=2.%20Second%20Quarter%202025%20Financial%20Results) [Consolidated Performance](index=2&type=section&id=2.1.%20Consolidated%20Performance) Q2 2025 saw a 4% YoY decrease in reported net sales but a 3% increase in comparable currency neutral sales Q2 2025 Consolidated Sales & EBITDA Growth (YoY) | Metric | Reported Growth | Comparable Currency Neutral Growth | | :--- | :--- | :--- | | Net Sales | (4)% | 3% | | Adjusted Operating EBITDA | (6)% | 6% | Q2 2025 Consolidated Key Financials | Metric | Value | | :--- | :--- | | Reported Net Sales | $2.76 billion | | Income before taxes (reported) | $534 million | | Adjusted operating EBITDA | $552 million | | Reported EPS | $2.38 | | Adjusted EPS ex amortization | $1.15 | | Cash flows from operations (first six months) | $368 million | | Free cash flow (first six months) | $94 million | | Net debt to credit adjusted EBITDA | 2.5x | [Segment Performance](index=2&type=section&id=2.2.%20Segment%20Performance) Segment performance varied in Q2 2025, with Taste and Health & Biosciences showing mid-single-digit comparable sales growth Q2 2025 Segment Growth vs. Prior Year (Comparable Currency Neutral) | Segment | Sales Growth | Operating EBITDA Growth | | :--- | :--- | :--- | | Taste | 6% | 3% | | Food Ingredients | 1% | 21% | | Health & Biosciences | 4% | 3% | | Scent | 1% | (2)% | | Pharma Solutions | 21% | 5% | | Consolidated | 3% | 6% | [Taste Segment](index=2&type=section&id=2.2.1.%20Taste%20Segment) The Taste segment reported a 6% increase in comparable currency neutral sales to $631 million in Q2 2025 Q2 2025 Taste Segment Performance | Metric | Value | | :--- | :--- | | Reported Sales | $631 million | | Comparable Currency Neutral Sales Growth | 6% | | Adjusted Operating EBITDA | $125 million | | Adjusted Operating EBITDA Margin | 19.8% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | 3% | [Food Ingredients Segment](index=2&type=section&id=2.2.2.%20Food%20Ingredients%20Segment) The Food Ingredients segment saw a significant 21% increase in comparable currency neutral adjusted operating EBITDA Q2 2025 Food Ingredients Segment Performance | Metric | Value | | :--- | :--- | | Reported Sales | $850 million | | Comparable Currency Neutral Sales Growth | 1% | | Adjusted Operating EBITDA | $124 million | | Adjusted Operating EBITDA Margin | 14.6% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | 21% | [Health & Biosciences Segment](index=3&type=section&id=2.2.3.%20Health%20%26%20Biosciences%20Segment) The Health & Biosciences segment reported a 4% increase in comparable currency neutral sales, driven by solid performances across all businesses Q2 2025 Health & Biosciences Segment Performance | Metric | Value | | :--- | :--- | | Reported Sales | $577 million | | Comparable Currency Neutral Sales Growth | 4% | | Adjusted Operating EBITDA | $151 million | | Adjusted Operating EBITDA Margin | 26.2% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | 3% | [Scent Segment](index=3&type=section&id=2.2.4.%20Scent%20Segment) The Scent segment's comparable currency neutral adjusted operating EBITDA decreased by 2% due to unfavorable net pricing Q2 2025 Scent Segment Performance | Metric | Value | | :--- | :--- | | Reported Sales | $603 million | | Comparable Currency Neutral Sales Growth | 1% | | Adjusted Operating EBITDA | $130 million | | Adjusted Operating EBITDA Margin | 21.6% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | (2)% | [Pharma Solutions Segment](index=3&type=section&id=2.2.5.%20Pharma%20Solutions%20Segment) The divested Pharma Solutions segment showed strong comparable currency neutral sales growth of 21% Q2 2025 Pharma Solutions Segment Performance | Metric | Value | | :--- | :--- | | Reported Sales | $103 million | | Comparable Currency Neutral Sales Growth | 21% | | Adjusted Operating EBITDA | $22 million | | Adjusted Operating EBITDA Margin | 21.4% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | 5% | [Strategic Initiatives & Capital Allocation](index=3&type=section&id=3.%20Strategic%20Initiatives%20%26%20Capital%20Allocation) [Share Repurchase Authorization](index=3&type=section&id=3.1.%20Share%20Repurchase%20Authorization) The Board of Directors authorized a new $500 million share repurchase program with no specified term or termination date - Board of Directors authorized a new **$500 million share repurchase program**[11](index=11&type=chunk) - The program has no specified term or termination date and allows for repurchases in privately negotiated transactions, open market transactions (including Rule 10b5-1 plans), and block trades[11](index=11&type=chunk) - Funding for repurchases will come from available cash and cash provided by operating activities[11](index=11&type=chunk) [Divestitures and Portfolio Optimization](index=3&type=section&id=3.2.%20Divestitures%20and%20Portfolio%20Optimization) IFF is actively reshaping its portfolio through divestitures to focus on more value-added offerings - Successfully closed the divestitures of Pharma Solutions and Nitrocellulose[4](index=4&type=chunk) - Evaluating strategic alternatives for the Food Ingredients segment to evolve towards more value-added offerings and enhance margins[4](index=4&type=chunk) [Sale of Soy Crush, Concentrates & Lecithin Business](index=3&type=section&id=3.2.1.%20Sale%20of%20Soy%20Crush%2C%20Concentrates%20%26%20Lecithin%20Business) IFF signed a definitive agreement to sell its soy crush, concentrates, and lecithin business to Bunge - Entered a definitive agreement to divest soy crush, concentrates, and lecithin business to Bunge[12](index=12&type=chunk) - The divested business generated approximately **$240 million in revenue in 2024** and employs around 250 people globally[12](index=12&type=chunk) - Transaction is expected to close by year-end 2025[12](index=12&type=chunk) [Financial Guidance](index=3&type=section&id=4.%20Financial%20Guidance) [Full Year 2025 Outlook](index=3&type=section&id=4.1.%20Full%20Year%202025%20Outlook) IFF reaffirms its full-year 2025 financial guidance despite an expected challenging second half Full Year 2025 Financial Guidance | Metric | Range | | :--- | :--- | | Sales | $10.6 billion to $10.9 billion | | Adjusted Operating EBITDA | $2 billion to $2.15 billion | | Comparable Currency Neutral Sales Growth | 1% to 4% | | Comparable Currency Neutral Adjusted Operating EBITDA Growth | 5% to 10% | - Guidance is reiterated despite expectations of more challenging market conditions in the second half of the year[14](index=14&type=chunk) [Factors Impacting Guidance](index=3&type=section&id=4.2.%20Factors%20Impacting%20Guidance) Foreign exchange and the Pharma Solutions divestiture are expected to have adverse impacts on 2025 growth Expected Adverse Impacts on 2025 Guidance | Factor | Sales Growth Impact | Adjusted Operating EBITDA Growth Impact | | :--- | :--- | :--- | | Foreign Exchange | ~1% (vs. 2% previously) | ~3% | | Pharma Solutions Divestiture | ~7% | ~8% | [Financial Statements (GAAP)](index=7&type=section&id=5.%20Financial%20Statements%20(GAAP)) [Consolidated Statements of Income (Loss)](index=7&type=section&id=5.1.%20Consolidated%20Statements%20of%20Income%20(Loss)) Q2 2025 net income increased significantly YoY, while the first six months resulted in a net loss Consolidated Statements of Income (Loss) - Key Figures | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change (Q2) | YTD 2025 (Millions) | YTD 2024 (Millions) | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,764 | $2,889 | (4)% | $5,607 | $5,788 | (3)% | | Gross profit | $1,030 | $1,068 | (4)% | $2,065 | $2,092 | (1)% | | Operating profit (loss) | $198 | $191 | 4% | $(705) | $390 | (281)% | | Income (loss) before income taxes | $534 | $183 | 192% | $(460) | $298 | (254)% | | Net income (loss) attributable to IFF shareholders | $612 | $170 | 260% | $(406) | $230 | (277)% | | Net income (loss) per share - diluted | $2.38 | $0.66 | - | $(1.59) | $0.90 | - | [Condensed Consolidated Balance Sheets](index=8&type=section&id=5.2.%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $26.1 billion as of June 30, 2025, primarily due to reductions in goodwill and current assets Condensed Consolidated Balance Sheets - Key Figures | Metric (Millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $816 | $469 | | Total current assets | $5,928 | $7,993 | | Goodwill and other intangibles, net | $14,713 | $15,525 | | Total assets | $26,121 | $28,667 | | Short-term borrowings | $500 | $1,413 | | Total current liabilities | $3,183 | $4,333 | | Long-term debt | $5,684 | $7,564 | | Total Shareholders' equity including Non-controlling interests | $14,436 | $13,911 | | Total liabilities and shareholders' equity | $26,121 | $28,667 | [Consolidated Statements of Cash Flows](index=9&type=section&id=5.3.%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased, while investing activities generated a significant inflow from business disposals Consolidated Statements of Cash Flows - Key Figures (Six Months Ended June 30) | Metric (Millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net income (loss) | $(405) | $233 | | Net cash provided by operating activities | $368 | $336 | | Net cash provided by investing activities | $2,541 | $664 | | Net cash used in financing activities | $(2,654) | $(1,023) | | Net change in cash, cash equivalents and restricted cash | $345 | $(61) | | Cash, cash equivalents and restricted cash at end of period | $816 | $674 | - Net proceeds from business disposals significantly contributed to investing activities cash flow, totaling **$2,707 million in 2025**[41](index=41&type=chunk) - Principal payments of debt were a major use of cash in financing activities, amounting to **$(2,413) million in 2025**[41](index=41&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=5&type=section&id=6.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Use of Non-GAAP Financial Measures](index=5&type=section&id=6.1.%20Use%20of%20Non-GAAP%20Financial%20Measures) IFF utilizes several non-GAAP measures to offer additional insight into underlying operating results and comparable performance - Non-GAAP measures include comparable currency neutral sales, adjusted operating EBITDA and margin, adjusted EPS ex amortization, free cash flow, and net debt to credit adjusted EBITDA[27](index=27&type=chunk) - Currency neutral metrics eliminate foreign exchange effects by translating current year sales at prior year exchange rates[28](index=28&type=chunk) - Adjusted operating EBITDA and adjusted EPS ex Amortization exclude non-recurring or unusual items such as restructuring charges, impairment of goodwill, gains/losses on business disposals, divestiture and integration costs, and regulatory costs[29](index=29&type=chunk)[30](index=30&type=chunk) - Free Cash Flow is defined as operating cash flow less capital expenditures, and Net debt to credit adjusted EBITDA is a leverage ratio used in credit agreements[31](index=31&type=chunk) [GAAP to Non-GAAP Reconciliations](index=14&type=section&id=6.2.%20GAAP%20to%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations between GAAP and non-GAAP measures to present a clearer view of core operational performance - Reconciliations are provided for Q2 and YTD periods, covering gross profit, selling and administrative expenses, net income (loss), and EPS[50](index=50&type=chunk)[52](index=52&type=chunk)[57](index=57&type=chunk)[67](index=67&type=chunk) - Adjustments typically include restructuring and other charges, impairment of goodwill, gains/losses on business disposals, divestiture and integration costs, strategic initiatives costs, regulatory costs, and gain on debt extinguishment[58](index=58&type=chunk)[68](index=68&type=chunk) [Gross Profit Reconciliation](index=14&type=section&id=6.2.1.%20Gross%20Profit%20Reconciliation) Reported GAAP gross profit of $1,030 million for Q2 2025 remained unchanged for the adjusted non-GAAP figure Q2 Gross Profit Reconciliation (Millions) | (DOLLARS IN MILLIONS) | 2025 | 2024 | | :--- | :--- | :--- | | Reported (GAAP) | $1,030 | $1,068 | | Adjusted (Non-GAAP) | $1,030 | $1,068 | [Selling and Administrative Expenses Reconciliation](index=14&type=section&id=6.2.2.%20Selling%20and%20Administrative%20Expenses%20Reconciliation) Q2 2025 reported GAAP selling and administrative expenses were adjusted down from $483 million to $395 million (Non-GAAP) Q2 Selling and Administrative Expenses Reconciliation (Millions) | (DOLLARS IN MILLIONS) | 2025 | 2024 | | :--- | :--- | :--- | | Reported (GAAP) | $483 | $493 | | Divestiture and Integration Costs | $(26) | $(59) | | Strategic Initiatives Costs | $(6) | $(12) | | Regulatory Costs | $(53) | $(19) | | Entity Realignment Costs | $(3) | $0 | | Other | $0 | $(2) | | Adjusted (Non-GAAP) | $395 | $401 | [Net Income (Loss) and EPS Reconciliation (Q2)](index=15&type=section&id=6.2.3.%20Net%20Income%20(Loss)%20and%20EPS%20Reconciliation%20(Q2)) Q2 2025 reported GAAP net income was $612 million, while adjusted non-GAAP net income was $185 million Q2 Net Income (Loss) and EPS Reconciliation (Millions, except per share) | Metric | Reported (GAAP) 2025 | Adjusted (Non-GAAP) 2025 | Reported (GAAP) 2024 | Adjusted (Non-GAAP) 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to IFF (m) | $612 | $185 | $170 | $183 | | Diluted EPS | $2.38 | $0.72 | $0.66 | $0.71 | | Adjusted (Non-GAAP) EPS ex. Amortization | - | $1.15 | - | $1.16 | - Key adjustments for Q2 2025 included a **$488 million gain on debt extinguishment** and **$81 million in losses on business disposals**[58](index=58&type=chunk) [Net Income (Loss) and EPS Reconciliation (YTD)](index=18&type=section&id=6.2.4.%20Net%20Income%20(Loss)%20and%20EPS%20Reconciliation%20(YTD)) For the first six months of 2025, the reported GAAP net loss of $(406) million was adjusted to a non-GAAP net income of $383 million YTD Net Income (Loss) and EPS Reconciliation (Millions, except per share) | Metric | Reported (GAAP) 2025 | Adjusted (Non-GAAP) 2025 | Reported (GAAP) 2024 | Adjusted (Non-GAAP) 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to IFF (m) | $(406) | $383 | $230 | $345 | | Diluted EPS | $(1.59) | $1.49 | $0.90 | $1.34 | | Adjusted (Non-GAAP) EPS ex. Amortization | - | $2.35 | - | $2.29 | - Significant adjustments for YTD 2025 included a **$1,153 million impairment of goodwill** and a **$488 million gain on debt extinguishment**[68](index=68&type=chunk) [Reportable Segment Performance Reconciliation (Q2)](index=10&type=section&id=6.2.5.%20Reportable%20Segment%20Performance%20Reconciliation%20(Q2)) Consolidated adjusted operating EBITDA was $552 million in Q2 2025, with segment margins ranging from 14.6% to 26.2% Q2 Segment Adjusted Operating EBITDA (Millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Taste | $125 | $127 | | Food Ingredients | $124 | $109 | | Health & Biosciences | $151 | $151 | | Scent | $130 | $143 | | Pharma Solutions | $22 | $58 | | Total Adjusted Operating EBITDA | $552 | $588 | Q2 Segment Adjusted Operating EBITDA Margin | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Taste | 19.8% | 20.8% | | Food Ingredients | 14.6% | 12.9% | | Health & Biosciences | 26.2% | 27.2% | | Scent | 21.6% | 23.7% | | Pharma Solutions | 21.4% | 21.2% | | Consolidated | 20.0% | 20.4% | [Reportable Segment Performance Reconciliation (YTD)](index=12&type=section&id=6.2.6.%20Reportable%20Segment%20Performance%20Reconciliation%20(YTD)) For the first six months of 2025, consolidated adjusted operating EBITDA was $1,130 million YTD Segment Adjusted Operating EBITDA (Millions) | Segment | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Taste | $256 | $244 | | Food Ingredients | $235 | $217 | | Health & Biosciences | $289 | $289 | | Scent | $274 | $311 | | Pharma Solutions | $76 | $105 | | Total Adjusted Operating EBITDA | $1,130 | $1,166 | YTD Segment Adjusted Operating EBITDA Margin | Segment | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Taste | 20.3% | 19.9% | | Food Ingredients | 14.3% | 12.7% | | Health & Biosciences | 25.9% | 26.6% | | Scent | 22.5% | 24.9% | | Pharma Solutions | 20.6% | 20.1% | | Consolidated | 20.2% | 20.1% | [Comparable Reportable Segment Performance Reconciliation (Q2)](index=21&type=section&id=6.2.7.%20Comparable%20Reportable%20Segment%20Performance%20Reconciliation%20(Q2)) Q2 2025 comparable consolidated net sales were $2,764 million, and comparable adjusted operating EBITDA was $552 million Q2 Comparable Segment Net Sales (Millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Taste | $631 | $603 | | Food Ingredients | $850 | $847 | | Health & Biosciences | $577 | $556 | | Scent | $603 | $603 | | Pharma Solutions | $103 | $87 | | Consolidated | $2,764 | $2,696 | Q2 Comparable Segment Adjusted Operating EBITDA (Millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Taste | $125 | $123 | | Food Ingredients | $124 | $107 | | Health & Biosciences | $151 | $149 | | Scent | $130 | $141 | | Pharma Solutions | $22 | $22 | | Total | $552 | $542 | - Corporate costs previously attributed to Pharma Solutions were reallocated across Taste, Food Ingredients, Health & Biosciences, and Scent segments following divestitures[84](index=84&type=chunk) [Comparable Reportable Segment Performance Reconciliation (YTD)](index=21&type=section&id=6.2.8.%20Comparable%20Reportable%20Segment%20Performance%20Reconciliation%20(YTD)) For the first six months of 2025, comparable consolidated net sales were $5,607 million, and comparable adjusted operating EBITDA was $1,130 million YTD Comparable Segment Net Sales (Millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Taste | $1,258 | $1,218 | | Food Ingredients | $1,646 | $1,703 | | Health & Biosciences | $1,117 | $1,085 | | Scent | $1,217 | $1,221 | | Pharma Solutions | $369 | $337 | | Consolidated | $5,607 | $5,564 | YTD Comparable Segment Adjusted Operating EBITDA (Millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Taste | $256 | $238 | | Food Ingredients | $235 | $215 | | Health & Biosciences | $289 | $287 | | Scent | $274 | $295 | | Pharma Solutions | $76 | $69 | | Total | $1,130 | $1,104 | [Comparable Foreign Exchange Impact Reconciliation (Q2)](index=23&type=section&id=6.2.9.%20Comparable%20Foreign%20Exchange%20Impact%20Reconciliation%20(Q2)) Q2 2025 comparable currency neutral sales grew 3%, while comparable currency neutral adjusted operating EBITDA grew 6% Q2 Consolidated Sales & Adjusted Operating EBITDA Growth (YoY) | Metric | % Change - Reported | % Change - Comparable | % Change - Currency Neutral | | :--- | :--- | :--- | :--- | | Sales | (4)% | 3% | 3% | | Adjusted Operating EBITDA | (6)% | 2% | 6% | - Currency impact positively affected consolidated adjusted operating EBITDA growth by **4% in Q2**[86](index=86&type=chunk) [Comparable Foreign Exchange Impact Reconciliation (YTD)](index=24&type=section&id=6.2.10.%20Comparable%20Foreign%20Exchange%20Impact%20Reconciliation%20(YTD)) For the first six months of 2025, comparable currency neutral sales grew 3%, while comparable currency neutral adjusted operating EBITDA grew 7% YTD Consolidated Sales & Adjusted Operating EBITDA Growth (YoY) | Metric | % Change - Reported | % Change - Comparable | % Change - Currency Neutral | | :--- | :--- | :--- | :--- | | Sales | (3)% | 1% | 3% | | Adjusted Operating EBITDA | (3)% | 2% | 7% | - Currency impact positively affected consolidated adjusted operating EBITDA growth by **5% YTD**[89](index=89&type=chunk) [Debt Covenants](index=20&type=section&id=6.3.%20Debt%20Covenants) IFF provides reconciliations for debt covenant calculations, including Credit Adjusted EBITDA and Net Debt [Reconciliation of Credit Adjusted EBITDA to Net Loss](index=20&type=section&id=6.3.1.%20Reconciliation%20of%20Credit%20Adjusted%20EBITDA%20to%20Net%20Loss) Credit Adjusted EBITDA for the twelve months ended June 30, 2025, was $2,184 million Credit Adjusted EBITDA (Trailing Twelve Months Ended June 30, 2025) | (DOLLARS IN MILLIONS) | 2025 | | :--- | :--- | | Net loss | $(393) | | Interest expense | $275 | | Income taxes | $(89) | | Depreciation and amortization | $969 | | Specified items | $1,039 | | Non-cash items | $383 | | Credit Adjusted EBITDA | $2,184 | - Specified items include restructuring, goodwill impairment, divestiture and integration costs, strategic initiatives, regulatory costs, gain on debt extinguishment, and entity realignment costs[75](index=75&type=chunk) - Non-cash items include losses/gains on sale of assets, business disposals, assets held for sale, pension termination losses, and stock-based compensation[76](index=76&type=chunk) [Net Debt to Total Debt](index=20&type=section&id=6.3.2.%20Net%20Debt%20to%20Total%20Debt) As of June 30, 2025, IFF's net debt stood at $5,397 million Net Debt Calculation (June 30, 2025) | (DOLLARS IN MILLIONS) | Value | | :--- | :--- | | Total debt | $6,213 | | Cash and cash equivalents | $816 | | Net debt | $5,397 | - Total debt includes short-term debt, long-term debt, short-term finance lease obligations, and long-term finance lease obligations[78](index=78&type=chunk) [Additional Information](index=3&type=section&id=7.%20Additional%20Information) [Audio Webcast](index=3&type=section&id=7.1.%20Audio%20Webcast) A live webcast to discuss Q2 2025 results was held on August 6, 2025, with a recording available on the company's website - Live webcast for Q2 2025 results held on August 6, 2025, at 9:00 a.m. ET[20](index=20&type=chunk) - Webcast and presentation available on ir.iff.com, with a recorded version accessible for one year[20](index=20&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=7.2.%20Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) The report includes forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - Statements not historical facts are forward-looking, based on management's current assumptions, estimates, and expectations[21](index=21&type=chunk) - Forward-looking statements involve significant risks, uncertainties, and other factors that could cause actual results to differ materially[22](index=22&type=chunk) - Key risks include substantial indebtedness, ability to execute strategic transformation, regulatory and economic trends, supply chain disruptions, inflation, and ability to manage working capital[23](index=23&type=chunk) - The company does not undertake to update or revise forward-looking statements as more information becomes available[26](index=26&type=chunk) [Company Description](index=6&type=section&id=7.3.%20Company%20Description) IFF is an industry leader in food, beverage, scent, health, and biosciences, combining science and creativity to develop essential solutions - IFF is an industry leader in food, beverage, scent, health, and biosciences[35](index=35&type=chunk) - The company uses science and creativity to create essential solutions, partnering with customers to deliver scents, tastes, experiences, ingredients, and solutions[35](index=35&type=chunk)

Core Insights - International Flavors & Fragrances Inc. (IFF) is set to report its second-quarter 2025 results on August 5, with sales expected to decline by 5.4% year-over-year to $2.73 billion and earnings estimated at $1.11 per share, reflecting a 4.3% decrease from the previous year [1][5][6] Financial Performance - The Zacks Consensus Estimate for IFF's sales is $2.73 billion, indicating a 5.4% dip from the year-ago figure [1] - The consensus estimate for earnings per share is $1.11, which has increased by 0.9% over the past 60 days [1] - IFF has a history of earnings surprises, beating estimates in three of the last four quarters with an average surprise of 11.1% [3][4] Segment Performance - The Taste segment is projected to see a sales increase of 8.8% year-over-year to $663 million, with adjusted operating EBITDA expected to rise by 1.5% [10] - The Food Ingredients segment is anticipated to decline by 2.3% year-over-year to $827 million, with adjusted operating EBITDA rising by 0.9% [10] - The Scent segment's sales are expected to increase by 7.6% year-over-year to $649 million, although operating EBITDA is projected to decrease by 5.9% [11] - The Health & Biosciences segment is forecasted to grow by 21.3% year-over-year to $581 million, with operating EBITDA expected to increase by 1% [12] Cost and Margin Considerations - IFF has been facing high raw material costs and additional expenses related to labor, shipping, and cleaning, which are likely to impact margins despite cost-cutting efforts [8] - The company has been experiencing volume growth across its businesses, which is expected to positively influence its sales performance [7]

Core Insights - International Flavors & Fragrances Inc. (IFF) has relocated its Global Business Services (GBS) center to a newly constructed facility in Hyderabad, India, emphasizing its commitment to innovation and a future-ready work environment [1][5]. Facility Details - The new Hyderabad facility spans 75,000 sq. ft. and can accommodate up to 600 employees, featuring an innovation studio for experimentation with automation, robotics, and AI [3][9]. - The facility is designed for collaboration and wellness, located in a prime financial district, and incorporates cutting-edge technologies to support global operations [2][4]. Sustainability and Inclusivity - IFF's new facility aims for LEED Gold certification and includes eco-friendly features such as solar lighting and rainwater harvesting [4][9]. - The design promotes adaptable workspaces tailored to various work styles, ensuring high-speed connectivity and top-notch security [4]. Financial Performance - In Q1 2025, IFF reported adjusted earnings of $1.20 per share, exceeding the Zacks Consensus Estimate of $1.12, marking a 6% improvement from the previous year [6]. - Net sales for the March-end quarter were $2.84 billion, a decrease of 1.9% year-over-year, but currency-neutral sales grew by 3%, driven by growth in several segments [7]. Stock Performance - Over the past year, IFF's shares have declined by 21.6%, contrasting with a 0.4% decline in the industry [8].

Core Insights - International Flavors & Fragrance (IFF) is a global leader in the creation of flavors and fragrances, distinguished by its proactive research approach in product development [1] Company Overview - IFF operates across multiple segments, focusing on long-term and medium-term value creation [1] Investment Focus - The company targets investments in firms with strong fundamentals, indicating a sector-agnostic investment strategy [1]

Core Insights - International Flavors (IFF) reported total revenue of $2.84 billion for the quarter ending March 2025, reflecting a decrease of 1.9% compared to previous periods [4] International Revenue Trends - Revenue from Europe, Africa, and the Middle East was $952 million, accounting for 33.49% of total revenue, which was a surprise increase of +1.02% compared to the expected $942.36 million [5] - Latin America contributed $353 million, or 12.42% of total revenue, which was a surprise decrease of -5.51% from the anticipated $373.59 million [6] - Greater Asia generated $670 million, making up 23.57% of total revenue, slightly below the consensus estimate of $671.04 million, representing a surprise of -0.16% [7] Future Revenue Expectations - Analysts project IFF's total revenue for the current fiscal quarter to be $2.81 billion, a decline of 2.9% year-over-year, with expected contributions of 34.7% from Europe, Africa, and the Middle East ($972.63 million), 13.7% from Latin America ($385.59 million), and 24.7% from Greater Asia ($692.59 million) [8] - For the full year, total revenue is projected at $10.92 billion, indicating a fall of 4.9% from the previous year, with regional contributions expected to be 33.5% from Europe, Africa, and the Middle East ($3.66 billion), 13.3% from Latin America ($1.45 billion), and 23.9% from Greater Asia ($2.61 billion) [9] Stock Performance - Over the past month, IFF's stock increased by 3.9%, while the Zacks S&P 500 composite rose by 9.1% and the Zacks Basic Materials sector increased by 5% [13] - In the past three months, IFF's stock price declined by 10.8%, compared to a 3.1% fall in the S&P 500 index and a 2.2% decline in the broader sector [13]

Core Insights - International Flavors & Fragrances Inc. (IFF) reported better-than-expected earnings for Q1, with earnings of $1.20 per share, surpassing the analyst consensus estimate of $1.14 per share [1] - The company achieved quarterly sales of $2.84 billion, exceeding the analyst consensus estimate of $2.83 billion [1] - CEO Erik Fyrwald highlighted disciplined execution and broad-based growth as key drivers of performance, along with successful divestiture of the Pharma Solutions business [2] Financial Performance - IFF's Q1 earnings per share were $1.20, beating expectations [1] - Quarterly sales reached $2.84 billion, also above analyst estimates [1] - The company affirmed its FY2025 sales guidance of $10.60 billion to $10.90 billion, compared to market estimates of $10.87 billion [2] Market Reaction - Following the earnings announcement, IFF shares dipped 7.1% to close at $73.59 [3] - Analysts adjusted their price targets for IFF after the earnings report [3] Analyst Ratings - Barclays analyst upgraded IFF from Equal-Weight to Overweight, raising the price target from $76 to $84 [8] - Baird analyst maintained an Outperform rating but lowered the price target from $110 to $100 [8]

Core Viewpoint - International Flavors & Fragrances Inc. (IFF) reported mixed financial results for Q1 2025, with adjusted earnings per share beating estimates, but a significant loss when including one-time items. The company continues to face challenges in net sales, particularly in the Food Ingredients segment, while showing growth in other areas like Pharma Solutions and Taste segments [1][2][12]. Financial Performance - Adjusted earnings per share for Q1 2025 were $1.20, exceeding the Zacks Consensus Estimate of $1.12, and improved by 6% year-over-year. However, including one-time items, the company reported a loss of $3.98 per share compared to earnings of $0.23 in the prior year [1]. - Net sales for the quarter were $2.84 billion, a decrease of 1.9% year-over-year, but above the Zacks Consensus Estimate of $2.83 billion. Currency-neutral sales grew by 3% year-over-year [2]. - Gross profit increased by 1.1% year-over-year to $1.03 billion, with a gross margin of 36.4%, up from 35.3% in the previous year [2]. Segment Performance - The Taste segment saw net sales rise by 1.3% year-over-year to $627 million, with adjusted operating EBITDA increasing by 12% to $131 million [4]. - The Food Ingredients segment experienced a decline in net sales by 7% year-over-year to $796 million, although adjusted operating EBITDA rose by 2.8% to $111 million [5]. - Health & Bioscience segment sales were $540 million, slightly up from $529 million year-over-year, with adjusted operating EBITDA remaining flat at $138 million [6]. - The Scent segment's sales were $614 million, down from $618 million year-over-year, with adjusted operating EBITDA falling by 14.3% to $144 million [7]. - Pharma Solutions reported sales of $266 million, up 6.4% year-over-year, with adjusted operating EBITDA increasing by 14.9% to $54 million [8]. Cash Flow and Balance Sheet - At the end of Q1 2025, IFF had cash, cash equivalents, and restricted cash totaling $650 million, an increase from $471 million at the end of 2024. Long-term debt rose slightly to $7.60 billion from $7.56 billion [11]. - The company generated $127 million in cash from operating activities in Q1 2025, compared to $99 million in the same quarter of the previous year [11]. Guidance - IFF reaffirmed its sales guidance for fiscal 2025, expecting between $10.6 billion and $10.9 billion, with adjusted EBITDA projected between $2 billion and $2.15 billion [12]. Stock Performance - Over the past year, IFF's shares have declined by 14.6%, contrasting with a 1% decline in the industry [13].

Financial Data and Key Metrics Changes - IFF generated approximately $2.8 billion in sales for Q1 2025, representing a 3% comparable currency neutral growth [10] - Adjusted operating EBITDA totaled $578 million for the quarter, a strong 9% increase on a comparable currency neutral basis [10] - Comparable currency neutral adjusted operating EBITDA margin increased more than 120 basis points to 20.3% [10] Business Line Data and Key Metrics Changes - Pharma Solutions delivered $266 million in sales, an 8% year-over-year increase on a comparable currency neutral basis [11] - Taste segment sales were $627 million, a 7% year-over-year increase on a comparable currency neutral basis [13] - Food Ingredients had sales of $796 million, a 4% comparable currency neutral decrease from the prior year [13] - Health and Biosciences segment delivered a 5% increase in comparable currency neutral sales [14] - Scent achieved net sales of $614 million, up 4% year-over-year on a comparable currency neutral basis [14] Market Data and Key Metrics Changes - The company noted that broader macroeconomic dynamics remain challenging, but IFF's portfolio is grounded in resilient essential end markets [20] - The company expects approximately 2% adverse impact on revenue from foreign exchange, down from 4% previously [22] Company Strategy and Development Direction - IFF is focused on strengthening its business through consistent reinvestment in core growth drivers: R&D, commercial, digital, and capacity [20] - The company is maintaining its full-year guidance ranges despite macroeconomic uncertainties [21] - IFF completed the divestiture of Pharma Solutions, which strengthens its capital structure and helps achieve a net debt to credit adjusted EBITDA ratio of below three times [7][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the order book remaining consistent with guidance despite macroeconomic uncertainties [28] - The company is actively working with customers to mitigate impacts of tariff actions and remains disciplined in response to macroeconomic uncertainty [9] - Management acknowledged concerns about potential recessionary pressures but emphasized the resilience of 80% of its portfolio in essential products [29] Other Important Information - Cash flow from operations totaled $127 million year-to-date, with CapEx at $179 million, approximately 6% of sales [15] - Gross debt was approximately $9.3 billion, a decrease of more than $1 billion compared to the year-ago period [17] Q&A Session All Questions and Answers Question: Can you talk us through which areas of the portfolio could potentially be at risk and which parts could be more resilient in a recessionary scenario? - Management indicated that 80% of the portfolio is in essential products, which are resilient, while discretionary areas like fine fragrances may be at risk [29] Question: Can you disclose what you think the gross impact today is on your costs from tariffs? - Management noted a gross exposure of over $100 million for 2025 related to tariffs, primarily from China, but emphasized successful supply chain optimization efforts [35] Question: What were the year-ago comps for flavors and food ingredients? - Management reported that Taste grew 11% last year in Q1, while Food Ingredients declined 4% last year [40] Question: Can you elaborate on the strategic rationale for the joint venture with Chimera? - The joint venture aims to scale enzymatic biomaterials and is expected to start operations by the end of 2027, targeting high-value biodegradable polymers [44][46] Question: What drove volumes lower in protein solutions? - Management indicated that volumes were down due to weaker performance in lower-value areas and production issues in higher-value areas, which are being resolved [55] Question: How do you see the inventory cycle affecting IFF? - Management expressed that they do not believe inventory levels are elevated enough to cause a significant downtick, given the recent destocking period [88]

CAUTIONARY STATEMENT Statements in this presentation release, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations including those concerning expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; our ability to execute on our strategic a ...