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Why Is International Flavors (IFF) Up 9.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for International Flavors (IFF - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is International Flavors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
International Flavors Q2 Earnings Top on Higher Volumes
International Flavors reported adjusted earnings of $1.16 per share in second-quarter 2024, which beat the Zacks Consensus Estimate of $1.01. The bottom line improved 15% from the year-ago quarter.
Including one-time items, the company reported earnings of 66 cents per share compared with the prior-year quarter’s 11 cents.
International Flavors’ net sales were $2.9 billion in the June-end quarter, down 1% year over year. The top line surpassed the Zacks Consensus Estimate of $2.82 billion. Currency-neutral sales grew 7% year over year, led by growth in Scent, Health & Biosciences and Nourish segments. The company reported volume growth in high-single digits.
Operational Highlights
International Flavors’ cost of goods sold was down 9% year over year to $1.82 billion. The gross profit rose 14% year over year to $1.07 billion. The gross margin was 37% compared with 31.9% in the year-ago quarter.
Research and development expenses increased 7% year over year to $173 million. The selling and administrative expenses rose 11% year over year to $493 million.
Adjusted operating EBITDA was $588 million, up 15.3% from the prior-year quarter’s $510 million. The adjusted operating EBITDA margin was 20.4% compared with the year-ago quarter’s 17.4%.
Segment Performances
Revenues in the Nourish segment dipped 5.5% year over year to $1.48 billion. The figure beat our estimate of $1.42 billion. Adjusted operating EBITDA was $232 million, up 28% year over year. Our estimate for the segment’s adjusted EBITDA was $185 million.
Revenues generated in the Health & Bioscience segment were $558 million compared with the year-earlier quarter’s $522 million. Our estimate was $532 million. Adjusted operating EBITDA was $165 million compared with $145 million in the prior-year quarter. Our estimate for the segment’s adjusted EBITDA was $146 million.
The Scent segment’s revenues were $603 million compared with the year-ago quarter’s $592 million. Our projection was $591 million. Adjusted operating EBITDA improved 17% year over year to $137 million. Our model had projected EBITDA of $130 million.
Revenues in Pharma Solutions were $250 million, down 0.4% year over year. The figure surpassed our estimate of $228 million. Adjusted operating EBITDA fell 19% year over year to $54 million. Our model had projected EBITDA to be $40 million.
Financial Position
International Flavors had cash, cash equivalents and restricted cash of $671 million at the end of the second quarter, lower than the $709 million held at the end of 2023. The long-term debt was $8.6 billion at the second-quarter end compared with $9.2 billion as of Dec 31, 2023.
International Flavors generated $336 million in cash from operating activities in the first half of 2024 compared with $375 million in the prior-year comparable period.
2024 Guidance
International Flavors expects sales to be in the range of $11.1-$11.3 billion. Its prior stated expectation was near the higher end of $10.8-$11.1 billion.
Volume is expected to be up in the band of 3-5%, reflecting improvement across all segments. IFF had earlier provided a range of 0-3%. The company expects pricing to favor sales by 1% year over year.
Adjusted EBITDA is expected to be between $2.1 billion and $2.17 billion, up from the previous guided range of $1.9 - $2.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 11.28% due to these changes.
VGM Scores
At this time, International Flavors has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise International Flavors has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is International Flavors (IFF) Up 9.5% Since Last Earnings Report?
It has been about a month since the last earnings report for International Flavors (IFF - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is International Flavors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
International Flavors Q2 Earnings Top on Higher Volumes
International Flavors reported adjusted earnings of $1.16 per share in second-quarter 2024, which beat the Zacks Consensus Estimate of $1.01. The bottom line improved 15% from the year-ago quarter.
Including one-time items, the company reported earnings of 66 cents per share compared with the prior-year quarter’s 11 cents.
International Flavors’ net sales were $2.9 billion in the June-end quarter, down 1% year over year. The top line surpassed the Zacks Consensus Estimate of $2.82 billion. Currency-neutral sales grew 7% year over year, led by growth in Scent, Health & Biosciences and Nourish segments. The company reported volume growth in high-single digits.
Operational Highlights
International Flavors’ cost of goods sold was down 9% year over year to $1.82 billion. The gross profit rose 14% year over year to $1.07 billion. The gross margin was 37% compared with 31.9% in the year-ago quarter.
Research and development expenses increased 7% year over year to $173 million. The selling and administrative expenses rose 11% year over year to $493 million.
Adjusted operating EBITDA was $588 million, up 15.3% from the prior-year quarter’s $510 million. The adjusted operating EBITDA margin was 20.4% compared with the year-ago quarter’s 17.4%.
Segment Performances
Revenues in the Nourish segment dipped 5.5% year over year to $1.48 billion. The figure beat our estimate of $1.42 billion. Adjusted operating EBITDA was $232 million, up 28% year over year. Our estimate for the segment’s adjusted EBITDA was $185 million.
Revenues generated in the Health & Bioscience segment were $558 million compared with the year-earlier quarter’s $522 million. Our estimate was $532 million. Adjusted operating EBITDA was $165 million compared with $145 million in the prior-year quarter. Our estimate for the segment’s adjusted EBITDA was $146 million.
The Scent segment’s revenues were $603 million compared with the year-ago quarter’s $592 million. Our projection was $591 million. Adjusted operating EBITDA improved 17% year over year to $137 million. Our model had projected EBITDA of $130 million.
Revenues in Pharma Solutions were $250 million, down 0.4% year over year. The figure surpassed our estimate of $228 million. Adjusted operating EBITDA fell 19% year over year to $54 million. Our model had projected EBITDA to be $40 million.
Financial Position
International Flavors had cash, cash equivalents and restricted cash of $671 million at the end of the second quarter, lower than the $709 million held at the end of 2023. The long-term debt was $8.6 billion at the second-quarter end compared with $9.2 billion as of Dec 31, 2023.
International Flavors generated $336 million in cash from operating activities in the first half of 2024 compared with $375 million in the prior-year comparable period.
2024 Guidance
International Flavors expects sales to be in the range of $11.1-$11.3 billion. Its prior stated expectation was near the higher end of $10.8-$11.1 billion.
Volume is expected to be up in the band of 3-5%, reflecting improvement across all segments. IFF had earlier provided a range of 0-3%. The company expects pricing to favor sales by 1% year over year.
Adjusted EBITDA is expected to be between $2.1 billion and $2.17 billion, up from the previous guided range of $1.9 - $2.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 11.28% due to these changes.
VGM Scores
At this time, International Flavors has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise International Flavors has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.