International Flavors & Fragrances Inc. IFF reported adjusted earnings of $1.50 per share in second-quarter 2021, missing the Zacks Consensus Estimate of $1.51 by a whisker. The bottom-line figure, however, increased 10.3% from the year-ago period.
Including one-time items, the company reported earnings per share of 11 cents compared with the prior-year quarter’s 74 cents.
International Flavors’ net sales came in at $3,089 million in the June-end quarter, reflecting a year-over-year surge of 158%. This was driven by the additional sales related to the merger with DuPont de Nemours (NYSE:DD), Inc.’s DD Nutrition & Biosciences (N&B) business.
The top-line figure surpassed the Zacks Consensus Estimate of $2,991 million. During the April-June quarter, currency neutral sales were up 9%, aided by double-digit growth in Scent and Nourish as well as strong increase in Health & Biosciences.
Operational Highlights
During the reported quarter, International Flavors’ adjusted cost of goods sold was significantly up 177% year over year to $1,984 million. Adjusted gross profit climbed 129.2% year over year to $1,105 million. Adjusted gross margin came in at 36% compared with the 40% witnessed in the year-ago quarter.
Research and development expenses flared up 102% year over year to $164 million. Adjusted selling and administrative expenses shot up 98% year on year to $384 million during the second quarter. Adjusted operating EBITDA came in at $679 million compared with the prior-year quarter’s $239 million. Adjusted operating EBITDA margin was 22% compared with the year-earlier quarter’s 20%.
Segmental Performances
Revenues in the Nourish segment soared 142% year over year to $1,668 million during the June-end quarter. Adjusted operating EBITDA was $324 million, reflecting year-over-year growth of 128%.
Revenues generated in the Health & Bioscience segment came in at $639 million compared with the year-earlier quarter’s $34 million. Adjusted operating EBITDA was $190 million in the quarter compared with $10 million in the prior year quarter.
Scent segment revenues came in at $550 million compared with the year-ago quarter’s $475 million. Adjusted operating EBITDA increased 34% year over year to $117 million.
Revenues in the Pharma Solutions were $232 million in the second quarter. Adjusted operating EBITDA was $48 million.
Financial Position
International Flavors had cash and cash equivalents of $942 million at the end of second-quarter 2021, up from the $657 million witnessed at the end of 2020. Long-term debt increased to $11.3billion as of Jun 30, 2021, from $3.8 billion as of Dec 31, 2020.
International Flavors generated $698 million of cash from operating activities in the first half of the current year compared with the prior-year period’s $208 million. Capital invested in purchasing property, plant and equipment totaled $165 million during the six-month period ended on Jun 30, 2021 compared with the prior-year period’s $80 million. Dividend paid summed $274 million in the first half of 2021.
2021 Guidance
International Flavors now estimates sales of $11.4 billion in 2021, up from the prior estimate of $11.25 billion. Adjusted EBITDA margin is projected at around 22.5%, lower than its previous guidance of 23%. Given the rising raw material costs, the company is implementing price-hike actions and reducing expenses to support long-term profitability.
Price Performance
Over the past year, International Flavors’ shares have gained 19.6%, against the industry’s loss of 10.3%.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
International Flavors currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Consumer Staples sector are Inter Parfums (NASDAQ:IPAR), Inc. IPAR and Darling Ingredients (NYSE:DAR) Inc. DAR. While Inter Parfums flaunts a Zacks Rank #1 (Strong Buy), Darling Ingredients carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inter Parfums has an expected earnings growth rate of 67.7% for 2021. The stock has gained 78.5% in the past year.
Darling Ingredients has a projected earnings growth rate of 72.4% for the current year. Its shares have rallied 120.5% in a year’s time.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DuPont de Nemours, Inc. (DD): Free Stock Analysis Report
International Flavors & Fragrances Inc. (IFF): Free Stock Analysis Report
Darling Ingredients Inc. (DAR): Free Stock Analysis Report
Inter Parfums, Inc. (IPAR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research