Sensient Technologies Reports Results for 4Q, Full Year 2013

Sensient Technologies Corporation reported diluted earnings per share of 56 cents in the fourth quarter, which includes restructuring costs of seven cents per share. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share were 63 cents, a fourth quarter record and an increase of 15% over the 55 cents reported in the comparable period last year.

Consolidated revenue was $351.1 million compared to $356.2 million in the fourth quarter of 2012. Operating income was $38.6 million as reported and included $5.7 million of pre-tax restructuring costs. Adjusted operating income increased 11.5% to $44.3 million compared to $39.7 million reported in last year’s fourth quarter.

Revenue was approximately $1.5 billion for the full year in both 2013 and 2012. Diluted earnings per share, as reported, were $2.27, which includes restructuring costs of 44 cents. As adjusted, to remove the impact of the restructuring costs, diluted earnings per share for 2013 were $2.71 compared to $2.49 reported last year. Gross margin, as reported, improved 70 basis points in 2013 to 32.4%. Adjusted gross margin improved 90 basis points to 32.6%, from 31.7% in 2012. Operating income, as reported, was $172.4 million in 2013 and included $31.7 million of restructuring costs. Adjusted operating income increased 7% to $204.1 million, from $191.2 million in 2012.

Cash provided by operating activities in 2013 was $153.6 million, as reported. Adjusted to remove the restructuring impact, cash provided by operating activities increased 19.4% to $166.4 million in 2013 from $139.4 million last year. Cash provided by operating activities was $35.8 million as reported in the fourth quarter of 2013. Fourth quarter cash provided by operating activities, adjusted to remove the restructuring impact, was $42.2 million compared to $47.1 million in last year’s fourth quarter.

The company successfully completed both elements of its restructuring plan as of the end of 2013. The plan included relocating the Flavors & Fragrances Group headquarters from Indianapolis to Chicago, and consolidating multiple facilities throughout the company.

“Sensient had an exceptional year in 2013, and we delivered strong results in the fourth quarter,” said Paul Manning, president and CEO of Sensient Technologies Corporation. “The Color Group performed very well throughout the year, and I was encouraged by the Flavors & Fragrances Group’s performance in the fourth quarter. I am confident in our ability to grow both businesses and I am optimistic about 2014 and beyond.”

The Color Group reported revenue of $115.7 million in the quarter, compared to $115.6 million reported in the comparable period last year. Operating income increased 16.2% in the quarter to $23.1 million from $19.9 million in last year’s fourth quarter. The Color Group’s operating margin increased 280 basis points to 20.0% in the quarter, driven by strong performances across the Group. The food colors, pharmaceutical excipients, cosmetic ingredients and digital inks businesses all achieved solid growth in the quarter.

The Color Group reported revenue of $494.0 million in 2013 and $499.2 million in 2012. Operating income increased 7.5% to $103.6 million in 2013 from $96.4 million last year. The Color Group’s operating margin was 21.0% in 2013, a 170 basis point increase from the 19.3% reported in 2012.

The Flavors & Fragrances Group reported quarterly revenue of $210.1 million compared to the $216.9 million reported in the comparable period last year. Operating income increased 2% to $29.2 million, compared to $28.7 million in last year’s fourth quarter. The Flavors & Fragrances Group’s operating margin increased to 13.9% in the quarter, an improvement of 70 basis points from last year’s fourth quarter.

The Flavors & Fragrances Group reported revenue of $881.3 million in 2013, up from $875.3 million last year. Operating income was $122.4 million in 2013 and $123.0 million in 2012. The Flavors & Fragrances Group’s operating margins were 13.9% in 2013 and 14.1% in 2012.

The Corporate & Other segment, which includes the Company’s operations in Asia Pacific and China, and the flavor businesses in Central and South America, reported revenue of $38.1 million in the fourth quarter compared to $37.0 million in the comparable period last year. Fourth quarter revenue grew by 8% in local currency. For the full year, revenue was $150.4 million in 2013 and $145.6 million in 2012. Revenue grew by 6%, in local currency, for the year.