International Flavors & Fragrances, Inc.

Good morning. At this time, I would like to welcome everyone to the IFF third quarter 2022 earnings conference call. All participants will be in listen-only mode until the formal question and answer portion of the call. To ask a question at that time, please press star 1 on your telephone keypad. If you'd like to remove your name from the queue, please press star 2. 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 Mr. Michael DeVoe, head of investor relations. You may begin.

Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFS third quarter 2022 conference call. Yesterday afternoon, we issued a press release announcing our financial results. A copy of the release can be found on our IR website at ir.isf.com. Please note that this call is being recorded live and will be available for replay. Please take a minute to review our forward-looking statement. During the call, we'll be making forward-looking statements about the company performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10-K and 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 set forth in our press release. With me on the call today is our CEO, Frank Clybourne, and our Executive Vice President and CFO, Glenn Richter. We will begin with prepared remarks and then take any questions that you may have. With that, I would now like to introduce Frank.

Thank you, Mike, and hello, everyone. Thank you for joining us today. On today's call, I will begin by providing an update on the strong progress we continue to make in reviewing and implementing a refreshed operating strategy. We are focused as ever on enhancing our operational plan and are making great progress towards completing the strategic refresh process and sharing this with you on December 7th at our Investor Day. I will then share our year-to-date performance and then turn the call over to Glenn, who will provide a detailed look at our third quarter financial results and discuss our outlook for the remainder of 2022. Once complete, we will then open the call up for any questions. Before we move ahead, I do want to take a moment, as I always do, to thank our dedicated colleagues around the world. It continues to be an unpredictable year, and our colleagues continue to work tirelessly to deliver for our customers. Our global IFF team members are truly committed to servicing our customers, and I continue to be so inspired by our team's determination and ingenuity. Now, beginning with slide six, I'd like to provide an update regarding our progress to complete our strategic refresh and begin putting this enhanced plan into action. We are now working diligently to operationalize our new divisional strategies and begin executing these focused, integrated, and value-additive strategies with our customers and in the marketplace. This next chapter in our company's transformation is intended to ensure we are going to market as the most effective and innovative IFF we can be to extend our position as as a trusted partner to our customers and maximize value for them, employees, and shareholders, both in the near and long term. Let me review what we focused on and what we've accomplished through this comprehensive enterprise-wide review process. This review of our portfolio and our business is designed to ensure we are able to defend and extend our industry leadership in key markets, geographies, and grow our business with key accounts and new customers. This has included evaluating our portfolio through a return on invested capital lens, identifying portfolio optimization and divestiture opportunities. This discipline will enable us to reduce debt and reinvest in our highest-performing businesses as well as identify additional growth opportunities in attractive end markets and geographies that will allow us to foster long-term growth even amid ongoing external headwinds. It has been an important endeavor not only to help us streamline the business, but also ensure that we are focusing on only the highest value opportunities and maximizing our return profile across the entire business. We are in the process of refining our operating model and organizational structure to ensure better commercial engagement enhance 1ISS company culture, strengthen talent in key roles, and realign incentives to ensure accountability and ownership. We are also finalizing our financial aspirations for full year 2023, as well as what we believe the business should deliver longer term under more normalized conditions and the capital allocation strategies necessary to achieve them. all while prioritizing accelerated growth of our high-performing businesses. With this collective foundational planning, I am confident that IFF will fully capitalize on our clear portfolio advantage and deliver value to all of our stakeholders. We look forward to sharing more with you at our Investor Day on December 7th. Moving to slide seven, I'd like to provide highlights of IFF's performance year to date. Despite a volatile market environment of the last nine months, IFF has continued to execute on our operational priorities to achieve strong top and bottom line results. Year to date, we have delivered $9.6 billion in sales, which translates to 11% comparable currency neutral growth, and our comparable currency neutral adjusted operating EBITDA grew 6% to $2 billion. Through the first nine months, we continued to take strategic pricing actions as necessary to offset inflationary pressures and, as a result, have fully recovered total inflation costs to date. Turning to productivity by focusing on efficiency in our manufacturing processes and optimizing our supply chain and procurement, we captured over $125 million in extremely valuable operational efficiencies and deal-related synergies through the first nine months of 2022. Accelerating productivity represents one of our top priorities and is increasingly important given the more challenging economic environment heading into the fourth quarter and full year 2023. To this end, we are accelerating and expanding our efforts beyond our existing supply chain and to end manufacturing, economic profit, and global shared services platform initiatives we outlined on our second quarter conference call. We are now looking at our total cost structure, to ensure we are optimized around go-forward strategic priorities to drive greater efficiency and effectiveness. These initiatives will be critical to support our growth strategy, all while positioning us to drive long-term profitable growth. To support our continuous improvement efforts within operations, I am pleased to welcome Ralph Pinzel to our executive team as Executive Vice President and Global Operations Officer. He joins us from Honeywell International Performance Materials and Technologies Business Group, where he most recently served as Vice President of Integrated Supply Chain. Ralph brings decades of leadership experience and his focus on operational excellence, sustainable continuous improvement, and customer satisfaction ensures he will be a key contributor to IFS success moving forward as he will be accountable to deliver on our net productivity goals. In addition, I am pleased to announce that we hired a new Chief Procurement Officer, Alex Tarula, who will be responsible for leading all of IFS procurement efforts globally with the goal to move from procurement to strategic sourcing. Alex, who joins from Mondelez International, where he served most recently as Senior Vice President, sourcing global direct materials, managing $11 billion globally, brings significant experience in end-to-end supply chain operations and procurement. We also continue to progress against our portfolio optimization efforts, now having successfully completed the divestiture of a microbial control business at the beginning of the third quarter. The proceeds were used to reduce our net debt to credit-adjusted EBITDA ratio to 3.9 times from 4.4 times at the end of the second quarter. As mentioned earlier, we continue to assess the profitability and potential of each of our businesses and explore additional non-core divestitures and other timely optimization opportunities to improve our capital structure and achieve our deleveraging target. Now, I'll turn it over to Glenn to provide a deeper dive into our third quarter, as well as an overview of the performance of each of our businesses.