International Flavors & Fragrances, Inc.

Good morning. At this time, I would like to welcome everyone to the IFF fourth quarter and full year 2024 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 1 on your telephone keypad. If you would 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 like now to introduce Michael Bender, Head of Investor Relations. You may begin, Michael.

Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFF's fourth quarter and full year 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'll 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 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 Fearwald, and our CFO, Michael DeVoe. We will begin with prepared remarks and then take questions at the end. With that, I would now like to turn the call over to Eric.

Thanks, Mike, and hello, everyone. I'm excited to walk through our full year 2024 financial results and reflect on the progress we've made over the past year. I'll then turn the call over to Mike DeVoe, who will provide a more detailed look at our fourth quarter and our financial outlook for 2025. Then I'll come back to discuss our go-forward priorities in 2025 to maintain our momentum and continue to drive long-term profitable growth. We'll then open the call for questions. Starting with slide six, I'd like to recap the significant improvement and progress achieved by IFF over the past year, supported by consistent execution across the businesses. One year ago, when I joined IFF, I found an exciting company that was not delivering on its full potential. With a new perspective on our priorities and a renewed focus on execution by our executive leadership team, we got back to basics in 2024. The renewed commitment to operational discipline by our global teams led to improved financial results, including strong growth in both revenue and profit. The transition to our end-to-end business-led operating model, splitting Nourish into focused taste and food ingredients business units, and our new operating system have better connected us to customer end markets and increased our line of sight into customer dynamics. These initiatives have driven greater accountability across the organization while enabling our global teams to be faster, more efficient, and more responsive to the evolving needs of our customers. As part of our updated strategy, we have increased emphasis on biotechnology as an important differentiator and capability across our core business segments. This focus ensures that we are investing in the necessary resources to leverage this competitive advantage and serve our customers more effectively. Now, alongside this effort, we also implemented a program to increase investments across research and development, commercial capabilities, and CapEx focused on our high growth, high margin, health and biosciences, taste, and scent businesses to enhance our infrastructure and drive innovation at scale. We are also continuing to strengthen our talent with several key hires and internal promotions that solidify the next generation of IFF leadership. I'm also pleased to share that our employee engagement levels improved significantly compared to 2023, demonstrating the success of our return to focus on bringing leading innovation to customers. Lastly, we announced the next phase in the evolution of our board of directors. appointing three new board members with the backgrounds, expertise, and proven track records to support management to fulfill our long-term strategic vision and unlock greater value for our stakeholders. We are excited to welcome Cynthia Jamieson, Dr. Mahmoud Khan, and Vincent Intrieri to our board. We also announced that Kevin O'Byrne will become our new board chair. He will succeed our current chair, Roger Ferguson, who decided not to stand for reelection at the 2025 Annual Shareholder Meeting after 14 years of distinguished service. I thank Roger for all his support and guidance and look forward to working with Kevin in his new role. Taken together, all these efforts, focus on our people, customers, innovation, and operational excellence form the foundation of our long-term profitable growth approach. On slide seven, we'll take a closer look at our financial results in 2024. In 2024, IFF delivered $11.5 billion in sales, representing 6% comparable currency neutral growth. Our profitability also improved as IFF delivered over 2.2 billion in adjusted operating EBITDA, representing 16% comparable growth. Broad-based volume improvement across our portfolio, strong execution by our commercial teams, and the absence of destocking drove growth across all our businesses. At the beginning of 2024, we also adjusted our dividend policy to better support our deleveraging efforts and give us greater financial flexibility to invest in key growth areas across IFF. On the portfolio optimization front, we continued to progress toward completing the sale of pharma solutions which we expect will occur in the first half of 2025. From a leverage standpoint, our net debt to credit adjusted EBITDA ended 2024 at 3.8 times, improving from 4.5 times at the end of 2023. We continue to be committed to further deleveraging and the completed sale of Pharma Solutions will help achieve that goal. I'm very proud of our results and the growth we achieved in the past year and what has continued to be a dynamic market and geopolitical environment. Our businesses achieved solid financial performance, and we've made very good progress delivering on our strategic and operational initiatives. While I'm pleased with the significant progress we've made over the last year, we still have a lot more work to do. In 2025, we plan to continue to strategically reinvest in R&D, commercial, capacity, and technology as we aim to strengthen IFF and build a long-term sustainable platform that will deliver strong value creation for all our stakeholders. We are also focused on simplifying our business process and IT systems to improve efficiency and effectiveness. I want to also take a moment to thank our IFFers across the globe, whose passion and relentless focus have been the reason for the value we've created and the innovation we've achieved. And, as I mentioned on the previous slide, developing and promoting strong internal talent is a priority. Mike DeVoe is the kind of leader we elevate, and I would like to congratulate him on his appointment to IFF's Chief Financial Officer. Mike has been an integral part of IFF's global finance leadership over the last 15 years, He brings a deep understanding of the needs of our global finance operations and the value IFF delivers for the world's consumer product companies. I know Mike will continue to be an even more incredible asset to our team in this key role. I'll now pass it over to him to share a closer look at our fourth quarter results. Mike?