Sensient Technologies Reports Results for the Quarter Ended Sept. 30, 2016

Sensient Technologies reported diluted earnings per share from continuing operations of 79 cents in this year’s third quarter compared to 61 cents in last year’s third quarter. Revenue was $349.7 million in this year’s third quarter, an increase of 1.5% compared to $344.5 million in the comparable period last year. Operating income was $51.2 million in the third quarter of 2016 compared to $43.2 million in last year’s third quarter. Foreign currency translation impacted third quarter results, reducing reported revenue, operating income and earnings per share by approximately 1%.
 
For the nine months ended Sept. 30, 2016 and 2015, diluted earnings per share from continuing operations were $2.04 and $1.89, respectively. Revenue increased approximately 2% to $1.05 billion in the first nine months of 2016, from $1.04 billion in the first nine months of 2015. Operating income was $142.3 million in the first nine months of 2016, an increase of approximately 6% from the $134.7 million reported in the comparable period last year. Foreign currency translation impacted the year to date results, reducing revenue, operating income and earnings per share by approximately 2%.
 
For the nine months ended September 30, 2016 and 2015, adjusted earnings per share from continuing operations were $2.42 and $2.34, respectively. Adjusted operating income was $162.2 million in the first nine months of this year, compared to $163.3 million in the comparable period last year.
 
Cash provided by operating activities was $49.7 million in the quarter and $150.6 million year to date. Last year cash provided by operating activities was $16.6 million in the third quarter and $93.5 million in the first nine months. The improvement is due to higher cash earnings, lower restructuring payments and the company’s focus on working capital.
 
“Sensient had another strong performance in the third quarter with solid profit growth at each of our operating segments,” said Paul Manning, chairman, president and CEO of Sensient Technologies. “The Color Group and the Asia Pacific Group are having outstanding years, while the Flavors & Fragrances Group continues to make progress and deliver solid results.”
 
The Color Group reported revenue of $125.4 million in the quarter, an increase of 5.9% compared to $118.5 million in last year’s third quarter. Segment operating income increased 13.4% to $26.3 million in the third quarter compared to $23.2 million in the comparable period last year. Foreign currency translation reduced both revenue and segment operating income by approximately 1% in the quarter. The Color Group’s performance was driven by strong results from the Food Color and Cosmetic businesses, with each business reporting solid revenue and profit growth.
 
For the first nine months of this year, the Color Group reported revenue of $383.1 million, an increase of 5.7% over $362.5 million reported in the comparable period last year. Segment operating income increased 9.6%, to $82.1 million in the first nine months of this year compared to $75.0 million in the first nine months of 2015. Foreign currency translation reduced revenue by approximately 3% and segment operating income by approximately 2% in the first nine months of 2016.
 
The Flavors & Fragrances Group reported third quarter revenue of $200.7 million, a decrease of 3.2% from $207.4 million reported in last year’s third quarter. Segment operating income was $32.3 million, an increase of approximately 3% compared to $31.4 million in the third quarter of 2015. Foreign currency translation reduced revenue and segment operating income by approximately 1% in the quarter. Several of the businesses in the Flavors & Fragrances Group delivered solid results in the quarter, including Natural Ingredients, and the Beverage businesses in both North America and Europe.
 
The Flavors & Fragrances Group reported revenue of $608.3 million and $618.0 million in the first nine months of 2016 and 2015, respectively. Segment operating income was $95.1 million in the first nine months of this year compared to $94.4 million in the comparable period last year. Foreign currency translation reduced both revenue and segment operating income by approximately 2% year to date.
 
The Asia Pacific Group reported revenue of $33.4 million in the quarter, an 18% increase compared to $28.4 million in the comparable period last year. Segment operating income increased 15.4% to $6.6 million in this year’s third quarter from $5.7 million in last year’s quarter. Revenue for the first nine months of 2016 and 2015 was $95.0 million and $86.9 million, respectively. Segment operating income was $18.7 million in the first nine months of this year compared to $17.4 million in the comparable period last year. In the third quarter, foreign currency translation increased revenue by approximately 3% and segment operating income by approximately 2%. For the year to date period, foreign currency translation reduced revenue by approximately 2% and segment operating income by approximately 3%.
 
Sensient expects earnings per share from continuing operations to be between $2.77 and $2.80, which includes an estimated 43 cents of restructuring and other costs. The company expects adjusted earnings per share, which excludes restructuring and other costs, to be between $3.20 and $3.23.
 
The company’s previous guidance for earnings per share from continuing operations was $2.66 to $2.71, which included 54 cents of restructuring and other costs. The company’s previous guidance for adjusted earnings per share from continuing operations was $3.20 to $3.25.