International Flavors & Fragrances, Inc.

At this time, I would like to welcome everyone to the IFF second quarter earnings conference call. All participants will be in a listen only mode until the formal question and answer portion of the call. To ask a question at that time, please press star one on your telephone keypad. If you would like to remove your name from the queue, please press star two. 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 IFF's second quarter 2024 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.iff.com. Please note that this call is being recorded live and will be available for replay. During the call, we will be making forward-looking statements about the company's 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 our press release, both of which can be found on our website. 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 the press release that we issued yesterday. With me on the call today is our CEO, Eric Vierwald, and our Executive Vice President, CFO, and Business Transformation Officer, Glenn Richter. We will begin with prepared remarks and then take any questions you may have at the end. With that, I would now like to turn the call over to Eric.

Well, thank you, Mike, and hello, everyone. I'm excited to join you all today and share the positive progress we are making in our strategic refresh and the solid performance IFF delivered in the second quarter. Also, during today's call, we will provide a brief update on the business-led strategic framework we are implementing across our organization. Now, over the last seven months, I've had the great pleasure to travel to many of our facilities and have met with customers that together represent over a third of our sales and several thousand of our IFF team members. I've been able to get great feedback on what makes IFF special and strategic and tactical moves our leadership team needs to make to strengthen our company to better serve customers and improve our performance. We have listened and are making the changes we need to unleash more of the potential for today and for the future. And I'm very pleased that the entire IFF team is rallying behind our resulting strategic refresh to make IFF better at bringing leading innovation to our customers. Now, beginning with slide six, IFF is building on last quarter's momentum and delivered another solid quarter. and I'm pleased with our performance and our results through the first half of the year. Led by CENT, Health and Biosciences, and Nourish, we delivered volume growth in the high single digits in the second quarter. On a comparable basis, adjusted operating EBITDA increased 22% driven by volume growth and productivity initiatives. This is a significant improvement over last year And it is great to have IFF on a better sales growth and margin expansion track. Now looking ahead, we are cautiously optimistic for the remainder of 2024. Given this outlook and our solid performance to date this year, we are raising both our sales and adjusted operating EBITDA guidance for the whole year. Glenn will speak more about this in a few minutes. Now, it's encouraging that the steps we have taken and continue to take to refocus IFF on bringing customers leading innovation while driving healthy productivity are yielding encouraging results. We are making solid progress advancing the business-led refresh I've spoken about before, but we are not satisfied. We've got a lot more work to do, but I've got confidence that we are on the right track toward achieving IFF's full potential. Moving to slide seven. As I did last quarter, I would like to give a brief update on our progress as we work across the organization to refresh our strategy and focus on a business-led operating model. IFF has had a challenging last three years. Constraints on our balance sheet led the company to underinvest in our core businesses and focused on divestitures. The company was not structured to effectively navigate the complex and fast moving environment, and we underperformed relative to our peers. We have now had several quarters of growth as we have taken decisive actions to get our businesses back on track. Our strategy moving forward will be driven by four key pillars. Our people, our customer focus, our position as an innovation powerhouse, and our operational excellence. We will engage and empower our people to deliver customer success while we drive profitable market share growth over time. We will also continue to develop sustainable new products and applications that are aligned with our customers' needs now and in the future, all while being relentless in our commitment to safety, quality, and the efficiency in our operations. We have already taken several steps toward resetting and refocusing our operating model, including the announced divestiture of pharma solutions, which is still on track to close in the first half of 2025 and our pivot to an end to end business led operating model that will promote greater accountability and better performance. We are also working hard to improve employee engagement and are seeing positive results. Furthermore, Each of our business units are building a five-year strategic plan to define and close gaps where they exist versus best-in-class companies. These plans include executing a refreshed turnaround strategy for functional ingredients and leveraging health and biosciences biotech expertise and capabilities across our scent and flavors platforms to enhance innovation and product development. As mentioned last quarter, we are focusing on having lean corporate functions to support our business units with speed, agility, and closer collaboration. As we prioritize growth investments to our highest value businesses, such as flavors, scent and health, and biosciences, we have already started to increase R&D and commercial investments. At the same time, we plan to increase our CapEx investments targeting about 6% of sales for the next several years to bolster capacity and accelerate our digital transformation, including ERP implementation. We believe these investments will generate strong returns providing us with incremental growth and efficiency opportunities that will lead us to continue to improve how we serve our customers profitably. Lastly, we are committed to delivering significant value creation for our shareholders. And with that in mind, we are on track to achieve our raised guidance targets for the year as we continue to drive profitable growth across each of our businesses. I'll now pass it over to Glenn for a closer look at our quarterly results, which demonstrate the continued progress and growth we are achieving.