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Sensient(SXT) - 2025 Q2 - Quarterly Results

Company Announcement & Overview Sensient Technologies Corporation announced its Q2 2025 financial results, emphasizing strong performance driven by customer service and innovation Introduction Sensient Technologies Corporation reported its financial results for the second quarter ended June 30, 2025, highlighting continued strong performance driven by customer service and innovation - Sensient Technologies Corporation (NYSE: SXT) is a leading provider of flavors and colors for the food, pharmaceutical, and personal care markets2 - The company's Chairman, President, and CEO, Paul Manning, expressed confidence in the performance for 2025 and beyond, attributing results to a focus on customer service and innovation4 Second Quarter Consolidated Results The company reported strong consolidated financial results for Q2 2025, with increases in revenue, operating income, and EPS Consolidated Financial Highlights Sensient Technologies reported strong consolidated financial results for Q2 2025, with increases in reported revenue, operating income, and earnings per share, both on a GAAP and local currency adjusted basis Consolidated Financial Highlights | Metric | Q2 2025 (Reported) | Q2 2024 (Reported) | % Change | Local Currency % Change | | :-------------------------------- | :------------------- | :------------------- | :------- | :---------------------- | | Revenue | $414.2 million | $403.5 million | 2.7% | 2.1% | | Operating Income | $57.7 million | $49.7 million | 16.2% | 16.9% (Adjusted) | | Earnings Per Share | 88 cents | 73 cents | 20.5% | 20.8% (Adjusted Diluted) | - The company recorded $3.3 million in costs related to its Portfolio Optimization Plan in Q2 2025, an increase from $1.8 million in Q2 20245 Second Quarter Group Results by Segment Segment-wise performance for Q2 2025 showed varied results, with strong growth in Color and Asia Pacific, a slight decrease in Flavors & Extracts revenue, and increased corporate expenses Flavors & Extracts Group Performance The Flavors & Extracts Group experienced a slight revenue decrease in Q2 2025, primarily due to lower volumes in natural ingredients, but managed to increase operating income through strong profitability in other product lines Flavors & Extracts Group Performance | Metric | Q2 2025 | Q2 2024 | Reported % Change | Local Currency % Change | | :---------------- | :---------- | :---------- | :---------------- | :---------------------- | | Revenue | $203.3 million | $209.2 million | (2.8%) | (3.2%) | | Operating Income | $28.5 million | $26.2 million | 8.8% | 8.6% | - Lower volumes in natural ingredients unfavorably impacted revenue, but this was partially offset by higher volumes in flavors, extracts, and flavor ingredients product lines7 Color Group Performance The Color Group demonstrated strong growth in Q2 2025, with significant increases in both revenue and operating income, driven by robust performance in the food and pharmaceutical product lines Color Group Performance | Metric | Q2 2025 | Q2 2024 | Reported % Change | Local Currency % Change | | :---------------- | :---------- | :---------- | :---------------- | :---------------------- | | Revenue | $179.3 million | $167.7 million | 6.9% | 6.6% | | Operating Income | $38.9 million | $31.5 million | 23.6% | 22.1% | - Revenue increase was primarily driven by strong growth in the food and pharmaceutical product lines8 Asia Pacific Group Performance The Asia Pacific Group reported solid revenue growth across nearly all geographies in Q2 2025, leading to a notable increase in segment operating income Asia Pacific Group Performance | Metric | Q2 2025 | Q2 2024 | Reported % Change | Local Currency % Change | | :---------------- | :---------- | :---------- | :---------------- | :---------------------- | | Revenue | $42.7 million | $38.6 million | 10.8% | 7.6% | | Operating Income | $8.9 million | $7.9 million | 13.5% | 8.0% | - Revenue increased across nearly all geographies within the Asia Pacific Group10 Corporate & Other Expenses Corporate & Other operating expenses increased in Q2 2025, primarily due to higher costs associated with the Portfolio Optimization Plan and increased performance-based compensation Corporate & Other Operating Expenses | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :---------- | :---------- | :------- | | Operating Expenses | $18.7 million | $15.9 million | 17.6% | - Higher operating expenses were primarily due to increased Portfolio Optimization Plan costs and higher performance-based compensation costs11 2025 Outlook The company maintained its revenue growth guidance and updated its EBITDA guidance for 2025 Guidance for 2025 Sensient Technologies maintained its mid-single-digit local currency revenue growth guidance and updated its local currency adjusted EBITDA guidance to high single-digit growth. Diluted EPS guidance remains unchanged, including approximately 20 cents of Portfolio Optimization Plan costs 2025 Financial Guidance | Metric | Current Guidance | Prior Guidance | | :-------------------------------- | :----------------------- | :------------------------------------ | | Local Currency Revenue | Mid-Single-Digit Growth | Mid-Single-Digit Growth | | Local Currency Adjusted EBITDA | High Single-Digit Growth | Mid-Single-Digit to High Single-Digit Growth | | Diluted EPS (GAAP) | Between $3.13 and $3.23* | Between $3.13 and $3.23 | | Local Currency Adjusted Diluted EPS | High Single-Digit to Double-Digit Growth | High Single-Digit to Double-Digit Growth | *Includes approximately 20 cents of Portfolio Optimization Plan costs. - Foreign currency impact is expected to be a slight tailwind for the year based on current exchange rates13 Use of Non-GAAP Financial Measures Non-GAAP financial measures are used to provide a clearer view of performance by excluding specific items Purpose of Non-GAAP Measures Sensient Technologies uses non-GAAP financial measures to provide a more comprehensive understanding of its performance by excluding specific items such as currency movements, depreciation, amortization, Portfolio Optimization Plan costs, and non-cash share-based compensation - Non-GAAP measures eliminate the impact of certain items to enhance the overall understanding of the Company's performance when viewed together with GAAP results16 - These measures exclude currency movements, depreciation and amortization, Portfolio Optimization Plan costs, and non-cash share-based compensation16 Conference Call Details Details for the Q2 2025 financial results conference call are provided, including access and replay information Q2 2025 Conference Call Sensient Technologies will host a conference call on Friday, July 25, 2025, at 8:30 a.m. CDT to discuss its second quarter financial results, with replay options available - The conference call to discuss Q2 2025 financial results will be held on Friday, July 25, 2025, at 8:30 a.m. CDT18 - Participants can join by contacting Chorus Call Inc. or accessing the webcast link on the Investor Information section of the Company's website (www.sensient.com)[18](index=18&type=chunk) - A replay of the call will be available through August 1, 2025, via phone and an audio replay/written transcript will be posted online on or after July 29, 202519 Forward-Looking Statements and Risk Factors Forward-looking statements are subject to various known and unknown risks and uncertainties that could impact future performance Risks and Uncertainties This section highlights that forward-looking statements are not guarantees of future performance and are subject to various known and unknown risks, including macroeconomic conditions, supply chain disruptions, regulatory changes, and competitive actions, which could materially affect the company's financial performance - Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors21 - Important factors that could cause actual results to differ materially include general business, economic, and capital market conditions, macroeconomic and geopolitical volatility (inflation, supply chain disruptions, conflicts), industry and regulatory factors, labor and transportation costs, and the company's ability to adapt to changing consumer preferences and technologies21 - Other risks include the outcome of productivity-improvement efforts, acquisition/divestiture activities, the Portfolio Optimization Plan, currency exchange rate fluctuations, and factors detailed in the Company's Annual Report on Form 10-K21 About Sensient Technologies Corporation Sensient Technologies Corporation is a global leader in specialty ingredients, serving diverse industries with advanced technological solutions Company Profile Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients, providing advanced technological solutions and robust supply chain capabilities to diverse industries worldwide - Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients23 - The company uses advanced technologies and global supply chain capabilities to develop specialized solutions for food and beverages, pharmaceutical, nutraceutical, and personal care industries23 - Sensient serves a wide range of customers, from small entrepreneurial businesses to major international manufacturers, and is headquartered in Milwaukee, Wisconsin23 Consolidated Financial Statements (GAAP) GAAP financial statements detail the company's earnings, balance sheet, and cash flow performance for Q2 and YTD 2025 Consolidated Statements of Earnings The Consolidated Statements of Earnings show significant year-over-year growth in revenue, operating income, and net earnings for both the three and six months ended June 30, 2025, with diluted EPS also increasing Consolidated Statements of Earnings | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Revenue | $414,230 | $403,525 | 2.7% | | Operating income | $57,706 | $49,657 | 16.2% | | Net earnings | $37,587 | $30,932 | 21.5% | | Diluted EPS | $0.88 | $0.73 | 20.5% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Revenue | $806,555 | $788,195 | 2.3% | | Operating income | $111,236 | $99,063 | 12.3% | | Net earnings | $72,049 | $61,872 | 16.4% | | Diluted EPS | $1.69 | $1.46 | 15.8% | Consolidated Condensed Balance Sheets The Consolidated Condensed Balance Sheets as of June 30, 2025, show an increase in total assets and shareholders' equity compared to December 31, 2024, with a notable rise in cash and cash equivalents Consolidated Condensed Balance Sheets | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $56,686 | $26,626 | | Total Current Assets | $1,066,082 | $961,886 | | Total Assets | $2,204,561 | $2,023,794 | | Total Current Liabilities | $251,124 | $270,639 | | Long-term debt | $710,119 | $613,523 | | Shareholders' Equity | $1,157,121 | $1,060,986 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities decreased, while net cash used in investing activities increased significantly, primarily due to higher acquisition of property, plant, and equipment and a new business acquisition. Financing activities shifted from net cash used to net cash provided Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $39,304 | $58,946 | | Net cash used in investing activities | $(41,492) | $(22,890) | | Net cash provided by (used in) financing activities | $25,988 | $(26,083) | | Net increase in cash and cash equivalents | $30,060 | $1,405 | | Cash and cash equivalents at end of period | $56,686 | $30,339 | - Acquisition of property, plant, and equipment increased to $38,035 thousand in 2025 from $22,850 thousand in 2024, and the company acquired a new business for $4,867 thousand in 202526 Reconciliation of Non-GAAP Amounts Reconciliations provide adjusted financial metrics by excluding specific items like Portfolio Optimization Plan costs and foreign exchange impacts Adjusted Operating Income, Net Earnings, and Diluted EPS Reconciliations show that excluding Portfolio Optimization Plan costs significantly increases operating income, net earnings, and diluted EPS, providing a clearer view of underlying operational performance Adjusted Operating Income, Net Earnings, and Diluted EPS | Metric | Q2 2025 (GAAP) | Q2 2025 (Adjusted) | % Change (Adjusted) | | :-------------------------- | :--------------- | :----------------- | :------------------ | | Operating income | $57,706 | $61,045 | 18.7% | | Net earnings | $37,587 | $40,111 | 23.5% | | Diluted EPS | $0.88 | $0.94 | 22.1% | | Metric | YTD 2025 (GAAP) | YTD 2025 (Adjusted) | % Change (Adjusted) | | :-------------------------- | :--------------- | :----------------- | :------------------ | | Operating income | $111,236 | $117,439 | 13.3% | | Net earnings | $72,049 | $76,735 | 16.5% | | Diluted EPS | $1.69 | $1.80 | 15.4% | - Portfolio Optimization Plan costs, before tax, were $3,339 thousand for Q2 2025 and $6,203 thousand for YTD 202528 Segment Operating Income Adjustments The Portfolio Optimization Plan costs primarily impacted the Corporate & Other segment, while the Flavors & Extracts, Color, and Asia Pacific segments showed no direct adjustments to their operating income Segment Operating Income Adjustments | Segment | Q2 2025 (GAAP) | Adjustments (2) | Q2 2025 (Adjusted) | | :---------------- | :--------------- | :---------------- | :----------------- | | Flavors & Extracts | $28,506 | $0 | $28,506 | | Color | $38,922 | $0 | $38,922 | | Asia Pacific | $8,943 | $0 | $8,943 | | Corporate & Other | $(18,665) | $3,339 | $(15,326) | | Consolidated | $57,706 | $3,339 | $61,045 | (2) Adjustments consist of Portfolio Optimization Plan costs. Local Currency and Other Adjustments This reconciliation details the impact of foreign exchange rates and Portfolio Optimization Plan costs on reported percentage changes, providing local currency adjusted growth rates for revenue, operating income, diluted EPS, and Adjusted EBITDA Local Currency and Other Adjustments | Metric (Q2 2025) | Total % Change | Foreign Exchange Rates | Local Currency Adjusted % Change | | :------------------------ | :------------- | :--------------------- | :------------------------------- | | Total Revenue | 2.7% | 0.6% | 2.1% | | Total Operating Income | 16.2% | 1.9% | 16.9% | | Diluted Earnings Per Share | 20.5% | 1.3% | 20.8% | | Adjusted EBITDA | 15.4% | 1.3% | 14.1% | | Metric (YTD 2025) | Total % Change | Foreign Exchange Rates | Local Currency Adjusted % Change | | :------------------------ | :------------- | :--------------------- | :------------------------------- | | Total Revenue | 2.3% | (0.8%) | 3.1% | | Total Operating Income | 12.3% | (0.3%) | 13.6% | | Diluted Earnings Per Share | 15.8% | 0.0% | 16.0% | | Adjusted EBITDA | 11.7% | (0.4%) | 12.1% | Adjusted EBITDA and Credit Adjusted EBITDA Reconciliation The reconciliation from GAAP operating income to Adjusted EBITDA shows a 15.4% increase for Q2 2025 and 11.7% for YTD 2025. For the trailing twelve months, Credit Adjusted EBITDA increased, leading to an improved Net Debt to Credit Adjusted EBITDA ratio Adjusted EBITDA and Credit Adjusted EBITDA Reconciliation | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Operating income (GAAP) | $57,706 | $49,657 | 16.2% | | Depreciation and amortization | $15,260 | $15,016 | | | Share-based compensation expense | $3,739 | $2,916 | | | Portfolio Optimization Plan costs, before tax | $3,339 | $1,752 | | | Adjusted EBITDA | $80,044 | $69,341 | 15.4% | | Metric | YTD 2025 | YTD 2024 | % Change | | :-------------------------------- | :------- | :------- | :------- | | Operating income (GAAP) | $111,236 | $99,063 | 12.3% | | Depreciation and amortization | $30,334 | $29,725 | | | Share-based compensation expense | $6,639 | $4,911 | | | Portfolio Optimization Plan costs, before tax | $6,203 | $4,564 | | | Adjusted EBITDA | $154,412 | $138,263 | 11.7% | | Metric (Trailing Twelve Months) | June 30, 2025 | June 30, 2024 | | :------------------------------ | :------------ | :------------ | | Net Debt | $693,006 | $643,624 | | Credit Adjusted EBITDA | $283,956 | $251,223 | | Net Debt to Credit Adjusted EBITDA | 2.4x | 2.6x |