IFF — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net sales for the third quarter were $1.94 billion, a 4% increase versus the prior-year period; currency-neutral comparable sales increased 5%.
• Reported loss from continuing operations before taxes was $(134) million; adjusted operating EBITDA was $403 million, representing a 6% increase on a currency-neutral comparable basis.
• Reported earnings per share (EPS) was $(0.50); adjusted EPS excluding amortization was $0.83.
• For the first nine months of 2026, sales were $5.8 billion; income before taxes was $126 million; and adjusted operating EBITDA was $1.2 billion with a margin of 21.4%.
• Cash flows from operations for the first nine months totaled $820 million, an increase of $288 million year-over-year; free cash flow was $371 million, an increase of $245 million year-over-year.
• Total debt to trailing twelve months net income was 34.5x; net debt to credit adjusted EBITDA was 2.75x.
• Reported net sales for the nine months ended September 30, 2026, were $5.802 billion, a 1% decrease from $5.838 billion in the prior year period.

Guidance and Future Outlook:

• Full-year 2026 sales guidance was raised to a range of $7.5 billion to $7.6 billion (previously $7.4 billion to $7.6 billion).
• Full-year 2026 adjusted operating EBITDA guidance was raised to a range of $1.55 billion to $1.60 billion (previously $1.53 billion to $1.60 billion).
• Comparable currency-neutral sales growth guidance for 2026 is now 3% to 4% (previously 2% to 4%).
• Comparable currency-neutral adjusted operating EBITDA growth guidance for 2026 is now 5% to 8% (previously 4% to 8%).
• Foreign exchange is expected to have an approximately 1% positive impact on sales growth and a 2% positive impact on adjusted operating EBITDA growth in 2026.
• Fourth-quarter profitability is expected to be softer, particularly in Health & Biosciences, due to higher costs and reinvestments.

Business Segments and Product Lines:

• Taste: Third-quarter sales were $687 million; currency-neutral sales increased 6% led by double-digit growth in Greater Asia. Adjusted operating EBITDA was $128 million with a margin of 18.6%.
• Health & Biosciences: Third-quarter sales were $566 million; currency-neutral sales increased 1%. Mid-single digit growth in Food Biosciences and Grain Processing offset a decline in Health. Adjusted operating EBITDA was $136 million with a margin of 24.0%.
• Scent: Third-quarter sales were $689 million; currency-neutral sales increased 6% led by high-single digit growth in Consumer Fragrances. Adjusted operating EBITDA was $139 million with a margin of 20.2%.
• The Food Ingredients disposal group and the Soy Crush, Concentrates, and Lecithin (SCL) disposal group are reported as discontinued operations.

Market and Competitive Landscape:

• Customers continue to value the company's strong R&D and innovation capabilities.
• The company remains focused on execution and financial commitments amid changing macroeconomic conditions.

Risks and Challenges:

• Risks include demand trends, competitive dynamics, execution of strategic transactions, working capital management, legal claims, tariffs, supply chain disruptions, input cost volatility, employee retention, product innovation, cybersecurity, foreign currency fluctuations, and regulatory compliance.
• Fourth-quarter profitability is expected to face pressure from higher costs and reinvestments.

Management Commentary and Tone:

• CEO Erik Fyrwald stated the company delivered a solid third quarter with improved sales and profitability across all divisions.
• Management expressed confidence in delivering results within the full-year financial outlook and creating long-term value for shareholders.
• The tone reflects confidence in the separation of Food Ingredients, which is progressing well and on track to close by the end of the second quarter of 2027.

Other Key Points:

• The company recently completed a $500 million accelerated share repurchase program.
• The separation of the Food Ingredients business is progressing well and is on track to close by the end of the second quarter of 2027.
• A live webcast to discuss the results was held on November 4, 2026.
• Significant non-GAAP adjustments included a $236 million loss on assets classified as held for sale and $115 million in regulatory costs for the nine-month period.
• Divestiture costs for the nine-month period were $25 million, and strategic initiative costs were $27 million.