International Flavors & Fragrances, Inc.

question at that time please press star 1 on your touch-tone phone if you would like to remove your name from the queue please press the pound key participants will be announced by their name and company in order to give all participants an opportunity to ask their questions we request a limit of one question per person I would now like to introduce Michael DeVoe head of investor relations you may begin

Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFS first quarter 2021 conference call. Yesterday evening, we issued a press release announcing our financial results for the first quarter, as well as our outlook for the full year 2021. A copy of the release can be found on our IR website at ir.iff.com. Please note that this call is being recorded live and will be available for replay. I ask that you please take a moment to review our forward-looking statements. During the call, we were making forward-looking statements about the company's performance and outlook based on the current state and our expectations for 2021. These statements contain elements of uncertainty, which we have laid out on slide two under the cautionary statement. For additional information concerning the factors that can cause actual results to differ materially from our forward-looking statements, please refer to our cautionary statement and risk factors stated in our press release. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability. A reconciliation of these non-GAAP financial measures to their respective GAAP measures is available on our website. Please also note that we'll be using combined historical results for the first quarter as defined as three months of legacy IFF results and two months, February and March, of NMD results in both the 2020 and 2021 periods to allow for comparability in light of the merger completion on February 1st, 2021. With me on the call today is our Chairman and CEO, Andreas Fibig, and our Executive Vice President and CFO, Rustem Gila. We'll begin with our prepared remarks and then take any questions that you may have. With that, I would now like to turn the call over to Andreas.

Thank you, Mike, and thank you to everyone for joining us today. I will begin today's call by providing an overview of our first quarter results, including a review of our performance by region and segment. I would also like to share with you an update regarding our efforts to integrate the DuPont NMB business, which continues to progress well following the completion of our transaction in February. Wilson will then provide a more detailed financial review of the business highlighting, segment-level business dynamics, and performance and cover cash flow and leverage as well. IFF is off. to a strong start in 2021. And I'm confident that the momentum we have built will continue for the remainder of the year and beyond. Now, beginning with slide six, I would like to review our performance and notable developments in the first quarter. We achieved 3% in combined sales growth or 1% in currency neutral basis compared to the first quarter of 2020. Also, because of our change to a fiscal calendar, Rather than a traditional 4-4-5 calendar, we have had two days less in first quarter. If we were to normalize for that, our combined currency neutral growth in the first quarter would also have been approximately 3%. And on a two-year average basis, to factor in our strong 7% year-ago comparison, growth would be strong at approximately 5%. Our adjusted operating EBITDA margin improved by 30 basis points, reflecting our team's diligent execution of our cost management strategy. IFF also continues to generate strong free cash flows, and we remain on track to meet our deleveraging target. For the first quarter, our leverage ratio was 4.3 times. I'm also pleased to say we have reached an agreement to divest our food preparation business to full luck. who specializes in food preparations for the food and beverage industry. The divestiture is expected to close in the third quarter of 2021, pending customary closing conditions, including regulatory approvals. The food preparation business contributed approximately $70 million to IFF's newer segment pro forma sales in 2020. This is our first step in terms of our portfolio optimization strategy So expect more news as we progress through 2021. As you can see, we have established a solid foundation to carry us forward. We have started with solid momentum, thanks to our disciplined focus on execution. As we have said before, the opportunity is in front of us, and our mission is to execute on our plan to deliver industry-leading returns for our shareholders. As we move into the second quarter, we will remain squarely focused, leveraging our new capabilities to reach our business objectives and further establish ourselves as an innovation leader in a global value chain for consumer goods and commercial products. Now on slide seven, I would like to briefly discuss the regional sales dynamics that have influenced our first quarter financial results. As you all know, there are notably significant differences in how different countries are managing the continued impacts of the pandemic. So we want to talk to the dynamics we are seeing in our business across the world. We are pleased to report that most of our operating regions saw sales growth in Q1. In North America, we achieved solid performance across our portfolio, which grows in nearly all our segments. This performance in North America reflects the impressive results in our ascend segment. We continue to see healthy performance across our Asian markets, achieving a 6% increase in combined currency neutral sales, primarily driven by double-digit growth in China and India. While we are pleased to see growth across many of these key markets, we must recognize that our growth in India could be challenged in the near term as the country is grappling with hardship related to the pandemic. We wish everyone in India, our Indian colleagues, and their loved ones the very best and hope to see rapid improvement in conditions. In Latin America, we saw an 11% increase in overall sales for the region, with growth primarily driven by local currency sales. Two highlights that I would like to call out in Brazil and South Korea, who both grew double digits in Q1. COVID-19 and related ongoing restrictions continue to heavily impact Western and Central Europe, which has resulted in challenges across the entire EMEA region and a 5% decline in overall sales. That said, we remain optimistic about the region's recovery as global vaccination rates increase and related restrictions ease. As we press ahead, we will continue to work diligently with our regional teams and communities, particularly those that remain under most pandemic-related pressure, to adapt our supply chain, ensure that our customers continue to receive the leading solutions they have come to expect. Let's move to slide eight. I would now like to review our first quarter sales performance across IFF's key business segments so you can get a more granular view. We are pleased to report solid growth across our Nourish, Farmer Solutions, and Scent divisions. Our largest group, Nourish, achieved combined currency-neutral sales force of 1%, led by robust performance in flavors. We continue to see pandemic-driven headwinds in food design, which is driven primarily by continued declines in food service. This channel, while improved for the sports quarter trends, was down mid-single digits in the first quarter. Scent continued its strong performance, achieving combined currency-neutral sales growth of 5%, the largest growth driver across our four divisions, led by continued strengths in consumer fragrances, double-digit growth in cosmetic actives, and a strong rebound in fine fragrance. For our pharma solutions division, we achieved combined currency-neutral sales growth of 3%, with continued strong performance across the entire division and all subcategories. Our Health and Bioscience Division combined currency neutral sales decreased 3% against a strong double-digit year ago comparison. Increases in both health and home and personal care were offset by pressures in microbial control and grain processing. Together, we have an in-demand and diversified portfolio that is meeting the needs of our core and markets. I feel that we are very well positioned to continue executing our ambitious growth initiatives and the complexity of the global marketplace. Now turning to slide nine, I want to show a summary that highlights our business performance, particularly with regards to segment level adjusted operating EBITDA margin. As you know, we are focused on driving overall group operating efficiencies as we execute on our integration plans. Rustin will cover our first quarter segment performance in much more detail, but I wanted to present this slide as it will be included in our standard earnings package going forward, specifically focusing on year-to-year performance. Some highlights for Q1 that are worth mentioning. Within our largest division, Nourish, I'm very pleased to see early progress on margin expansion. We achieved strong results in our scent division. The team did a great job driving higher volumes, benefiting from the rebound and fine fragrance, with both favorable mix and continued the effort to capture productivity savings. In H&B and pharma solutions, adjusted operating EBITDA margins were pressured by increased warm materials and logistics costs, which overshadowed the strong cost of discipline the team has accomplished. Now on slide 10, I would like to provide you with an update on our integration progress with NMB. Since completing our combination in February, we have achieved several financial and organizational integration milestones, which reflect the incredible efforts of our global team. From an organizational perspective, we have established a comprehensive operating and leadership structure for our combined company, having identified and announced roles all the way from CEO down to third-level leaders. These leaders are working closely with the Integration Management Office to ensure that all employees are provided with the tools and resources they need to succeed. We've also completed all IT migration from DuPont to IFF and are on schedule regarding exiting many of our transition service agreements with DuPont. On the revenue synergy front, we have a robust pipeline of projects, including both cross-selling and integrated solutions. that we expect will accelerate our ability to meet our 20 million synergy target this year. This quarter, we achieved a significant cross-selling win within our health and bioscience divisions by detergents, and we have invoiced our first sales in April. We are pleased with our project pipeline and with the efforts so far and continued expressions of demand from customers. We are confident in our ability to meet our three-year run rate synergy target of 400 million. From a cost synergy perspective, we are unaware and already seeing modest P&L benefits, given we are in early days. We expect these cost savings to increase over the course of the year, putting us well on track to meet our 45 million cost synergy target in the full year 2021 and our year three run rate cost synergy target of 300 billion U.S. dollars. I would now like to pass the call over to Rustam, who will provide a more detailed review of our financial performance in the first quarter.