International Flavors & Fragrances Inc. (NYSE:IFF) is among the 9 Undervalued Chemical Stocks to Buy According to Hedge Funds. International Flavors & Fragrances Inc.'s (IFF) Q4 Results Ease Concerns About European Slowdown, Says BofA International Flavors & Fragrances Inc. (NYSE:IFF) is one of the best chemical stocks. TheFly reported on February 17 that Deutsche Bank and Mizhou raised their price targets on IFF. Deutsche Bank raised its price target by $20 while Mizhou raised it by $7. Similarly, a da ...

PresentationUnknown Attendee Good afternoon, everyone. We're excited to welcome International Flavors & Fragrances back to CAGNY, especially Chief Financial Officer, Michael DeVeau, who is representing his team that includes CEO, Erik Fyrwald, who's celebrating his daughter's wedding and several business unit heads who are here with us today. We're very lucky to have them. Please join me in thanking IFF for sponsoring dinner tonight, which looks absolutely spectacular. For decades, IFF's products and system ...

Summary of International Flavors & Fragrances (IFF) Conference Call Company Overview - **Company**: International Flavors & Fragrances (NYSE:IFF) - **Date**: February 19, 2026 - **Key Speakers**: CFO Michael DeVeau, Yuvraj Arora (Taste Division), Leticia Gonçalves (Health & Biosciences), Ana Paula Mendonça (Scent Division) Core Industry Insights - **Industry**: Flavors and Fragrances - **Market Dynamics**: The industry is characterized by high barriers to entry, steady growth, and good margins. IFF represents 1%-5% of product costs but accounts for 50% of consumer purchasing decisions due to taste and smell [4][5][6]. Financial Performance - **Sales Growth**: IFF achieved $2.5 billion in net sales in 2025 with a 4% organic top-line growth and 10% EBITDA growth [19][28]. - **EBITDA Margins**: The Taste division reported a 19% EBITDA margin, while the Scent division achieved a 21% EBITDA margin [19][41]. - **Capital Structure**: IFF divested 11 businesses, generating $6 billion in proceeds, which improved their capital structure from 4.5 times net cash and credit-adjusted EBITDA in 2023 to 2.6 times [9][13]. Strategic Initiatives - **Portfolio Optimization**: Focus on divesting lower-margin businesses and reinvesting in higher-margin opportunities. The average gross margin of divested businesses was 29%, compared to a projected 36% for the remaining portfolio by 2025 [12][13]. - **Capital Expenditure**: Planned CapEx spending is projected to increase from 4% in 2024 to around 6% in 2026, focusing on capacity expansion and digital transformation [10][11]. - **Share Buyback Program**: IFF authorized a $500 million share buyback program for the first time in several years, indicating confidence in the intrinsic value of the business [14]. Division-Specific Highlights Taste Division - **Market Size**: The flavors market is estimated at $16-$17 billion, growing at 3%-4% annually [18]. - **Competitive Position**: IFF holds leading positions in key markets like India, Indonesia, and the U.S. and has a unique go-to-market model called Taste One for smaller customers [19][20]. - **Innovation Focus**: Emphasis on AI for flavor development and concept creation, reducing innovation timelines for customers [20][21]. Health & Biosciences Division - **Market Size**: The health and biosciences market is valued between $12 billion and $20 billion, growing at 2.5% annually [31]. - **Product Reach**: IFF's probiotics are in one out of three probiotic supplements and yogurts globally, indicating strong market penetration [30]. - **R&D Investment**: IFF invests $220 million annually in R&D, representing 9% of turnover, with 34% of revenue coming from new product launches in the last five years [35]. Scent Division - **Sales Performance**: The Scent division achieved $2.5 billion in sales with 22 consecutive quarters of growth [41][56]. - **Innovation in Fragrance**: IFF has pioneered fragrance encapsulation and is focusing on sustainable solutions and personalization trends driven by younger consumers [44][48]. - **Market Trends**: The division is adapting to clean label demands and the growing role of scent in health and well-being [48][49]. Conclusion - **Growth Strategy**: IFF aims for mid-single-digit top-line growth and high-single-digit EBITDA growth, focusing on innovation, portfolio optimization, and strategic market penetration [28][40][56]. - **Long-term Vision**: The company is committed to leveraging its diversified business model and strong R&D capabilities to drive sustainable growth and value creation [4][28].

CAGNY CONFERENCE Michael DeVeau Executive Vice President Chief Financial Officer CAUTIONARY STATEMENT This presentation includes statements that are not historical facts and are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations, including with respect to our financial and operational outlook (sales, adjusted operating EBITDA and cash flow), portfoli ...

Core Insights - International Flavors & Fragrances Inc. (IFF) reported adjusted earnings of 80 cents per share in Q4 2025, missing the Zacks Consensus Estimate of 85 cents, and down from 93 cents in the same quarter last year [1][11] - The company's net sales for Q4 2025 were $2.59 billion, a decrease of 6.6% year-over-year, but exceeded the Zacks Consensus Estimate of $2.51 billion [2][11] - IFF's gross margin for Q4 2025 was 34.4%, down from 35.4% in the previous year, with gross profit falling 9.1% to $891 million [3] Financial Performance - The cost of goods sold decreased by 5.1% year-over-year to $1.7 billion, while adjusted operating EBITDA was $437 million, up 7.2% from the prior year's $471 million [3][4] - Research and development expenses rose by 2.4% to $174 million, and selling and administrative expenses increased by 12.8% to $383 million in Q4 [4] - IFF's cash and cash equivalents increased to $590 million at the end of 2025, up from $469 million at the end of 2024, while long-term debt decreased to $4.74 billion from $7.56 billion [9] Segment Performance - The Taste segment saw net sales increase by 2.1% year-over-year to $588 million, with adjusted operating EBITDA of $94 million, up 8% [5] - The Food Ingredients segment's net sales fell by 2.1% to $802 million, but adjusted operating EBITDA rose by 18% to $82 million [6] - Health & Bioscience segment sales were $586 million, up from $555 million, with adjusted operating EBITDA increasing by 14% to $155 million [7] - The Scent segment's sales increased by 5.5% to $610 million, with adjusted operating EBITDA remaining flat at $106 million [8] 2025 Overview and Guidance - For the full year 2025, IFF reported net sales of $10.89 billion, down 5.2% year-over-year, but above the Zacks Consensus Estimate of $10.82 billion [13] - The company expects sales for fiscal 2026 to be between $10.5 billion and $10.8 billion, with adjusted EBITDA projected between $2.05 billion and $2.15 billion [14][11] Stock Performance - Over the past year, IFF's shares have declined by 7%, contrasting with the industry's growth of 3.5% [15]

Core Insights - International Flavors & Fragrances Inc. (IFF) has a market capitalization of $19.7 billion and operates in the food, beverage, health and biosciences, scent, and complementary adjacent products sectors [1] Performance Overview - Over the past 52 weeks, IFF shares have declined by 9.7%, while the S&P 500 Index has increased by 14.4%. However, year-to-date, IFF stock is up 14.2%, outperforming the S&P 500's 1.4% return [1] - IFF has also underperformed compared to the State Street Materials Select Sector SPDR ETF (XLB), which rose 20.1% over the past 52 weeks and 18.2% year-to-date [2] Financial Results - In Q4, IFF reported a revenue decline of 6.6% year-over-year to $2.6 billion, although this figure exceeded analyst estimates by 3.2%. The adjusted EPS fell 14% from the previous year to $0.80, missing consensus estimates of $0.85 [2] Future Projections - For fiscal 2026, analysts project IFF's EPS to grow by 7.4% year-over-year to $4.51. The company's earnings surprise history shows mixed results, exceeding consensus estimates in three of the last four quarters [3] - Among 20 analysts covering IFF, the consensus rating is a "Moderate Buy," with 12 "Strong Buy," two "Moderate Buy," and six "Hold" ratings [3] Analyst Ratings - Argus Research analyst Alexandra Yates has maintained a "Buy" rating on IFF with a price target of $80. The current trading price is above the mean price target of $82.14, while the highest price target of $105 indicates a potential upside of 26.4% from current levels [5]

Financial Data and Key Metrics Changes - In Q4 2025, IFF generated revenue of nearly $2.6 billion, with a 1% growth compared to a 6% year-ago comparable, and a 4% increase on a two-year average basis [12] - EBITDA totaled $437 million for Q4, a 7% increase, with EBITDA margin increasing by 90 basis points to 16.9% [12] - For the full year 2025, IFF achieved 7% EBITDA growth with 100 basis points of margin expansion [11] Business Line Data and Key Metrics Changes - Taste segment sales increased 2% to $588 million, with EBITDA rising 17% to $94 million [13] - Health & Biosciences segment achieved sales of $589 million, a 5% increase, with EBITDA growing 20% to $155 million [15] - Scent segment delivered sales of $610 million, representing 4% growth, with EBITDA increasing 1% to $106 million [16] - Food Ingredients sales were down 4% to $802 million, but EBITDA grew by 10% due to margin improvements [14] Market Data and Key Metrics Changes - The performance in North America for the Taste segment showed high-single-digit growth driven by new wins [13] - Health & Biosciences saw strong growth in Food Biosciences and Animal Nutrition, both growing double digits [15] - The Scent segment's Fine Fragrance grew by 10%, while Fragrance Ingredients faced pressure due to market softness [16] Company Strategy and Development Direction - IFF is focusing on high-value, innovation-driven businesses, having completed divestitures of several lower-margin businesses [8] - The company is pursuing a sale for its Food Ingredients business to optimize its portfolio [9] - IFF aims to drive profitable growth while maintaining a disciplined capital allocation strategy, with net debt to credit-adjusted EBITDA down to 2.6x [7] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting sales growth in the range of $10.5 billion to $10.8 billion, representing 1%-4% growth [20] - The company anticipates that macroeconomic uncertainty will persist but believes in its ability to achieve consistent, profitable growth [10] - Management highlighted the importance of innovation and productivity in driving future performance [26] Other Important Information - Cash flow from operations totaled $850 million for the full year, with CapEx at $594 million [16] - The company returned $409 million to shareholders through dividends and share repurchases [18] - IFF's cash and cash equivalents finished at $590 million, with gross debt decreasing by nearly $3 billion compared to 2024 [18] Q&A Session Summary Question: Assumptions around price and volume in 2026 - Management indicated that expected growth for 2026 is volume-driven, with incremental margins on volumes around 30%-35% depending on the business segment [32] Question: Top and bottom end of the 1%-4% currency neutral sales outlook - Management expressed cautious optimism, driven by a strong pipeline and customer emphasis on volume growth, with expectations for all divisions to grow within the range [35] Question: Early interest in the sale of Food Ingredients - Management confirmed strong interest from both strategic and private equity firms, with proceeds expected to be used for share buybacks and debt reduction [40] Question: Price dynamics in the Scent segment - Management noted that pricing was flat year-over-year, with margin pressure primarily from input costs, and a shift towards higher growth proprietary ingredients will take time [42] Question: Health & Biosciences margin uplift - Management attributed strong performance to volume growth and productivity, with expectations for the Health business to stabilize and grow in the second half of 2026 [46] Question: Free Cash Flow expectations - Management expects meaningful improvement in Free Cash Flow for 2026, driven by profitability growth and disciplined cash management [51] Question: R&D efforts and innovation pipeline - Management reported significant investments in innovation capabilities, with expected benefits starting in the second half of 2026 [56] Question: Reformulation opportunities in the marketplace - Management noted ongoing reformulation trends, with opportunities for IFF to support customers in creating healthier products [85]

Financial Data and Key Metrics Changes - In Q4 2025, IFF generated revenue of nearly $2.6 billion, with a 1% growth compared to a 6% year-ago comparable, and a 4% increase on a two-year average basis [12][10] - EBITDA totaled $437 million for Q4, a 7% increase, with an EBITDA margin increase of 90 basis points to 16.9% [12][10] - For the full year 2025, IFF achieved 7% EBITDA growth with 100 basis points of margin expansion [11] Business Line Data and Key Metrics Changes - Taste segment sales increased 2% to $588 million, with EBITDA up 17% to $94 million [13] - Health and Biosciences segment sales grew 5% to $589 million, with EBITDA increasing 20% to $155 million [15] - Scent segment sales rose 4% to $610 million, with EBITDA increasing 1% to $106 million [16] - Food ingredients sales decreased 4% to $802 million, but EBITDA grew 10% with a 150 basis points margin expansion [11][15] Market Data and Key Metrics Changes - The performance in North America for the Taste segment showed high single-digit growth driven by new wins [13] - Health and Biosciences saw strong growth in food biosciences and animal nutrition, both achieving double-digit growth [15] - The Scent segment's fine fragrance experienced double-digit growth, while fragrance ingredients faced declines due to market softness [11][16] Company Strategy and Development Direction - IFF is focusing on high-value, innovation-driven businesses, having divested from lower-margin segments [8][9] - The company is pursuing a sale for its food ingredients business to optimize its portfolio [8][19] - IFF aims to enhance competitiveness through investments in innovation, digital transformation, and operational excellence [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting sales growth in the range of $10.5 billion to $10.8 billion, representing 1%-4% growth [20] - The company anticipates EBITDA for 2026 to be between $2.05 billion and $2.15 billion, reflecting 3%-8% growth [21] - Management acknowledged ongoing macroeconomic uncertainties but emphasized confidence in achieving profitable growth [10][20] Other Important Information - Cash flow from operations totaled $850 million for the full year, with CapEx at $594 million [16] - The company returned $409 million to shareholders through dividends and share repurchases [17] - IFF's net debt to credit-adjusted EBITDA improved to 2.6 times, down from 3.8 times in 2024 [18] Q&A Session Summary Question: Assumptions around price and volume in 2026 - Management indicated that expected growth for 2026 is volume-driven, with incremental margins on volumes around 30%-35% depending on the segment [30][31] Question: Top and bottom end of the 1%-4% currency neutral sales outlook - Management expressed cautious optimism, driven by a strong pipeline and customer emphasis on volume growth [33][34] Question: Early interest in the sale of food ingredients - Management confirmed strong interest from both strategic and private equity firms, with proceeds expected to be used for share buybacks and debt reduction [39][41] Question: Price dynamics in the scent segment - Management noted that pricing was flat year-over-year, with margin pressure primarily from input costs [43][44] Question: Health and biosciences margin uplift - Management attributed strong performance to volume growth and productivity, with expectations for stabilization and growth in the health business [46][48] Question: Free cash flow expectations for 2026 - Management expects meaningful improvement in cash flow driven by profitability growth and working capital management [50][52] Question: R&D efforts and innovation metrics - Management highlighted a $100 million investment in innovation capabilities, with expected benefits materializing in the second half of 2026 [56][58] Question: Reformulation opportunities in the marketplace - Management noted ongoing reformulation trends, viewing them as opportunities for growth in healthier product offerings [88][90]

Financial Data and Key Metrics Changes - In Q4 2025, IFF generated revenue of nearly $2.6 billion, with a 1% growth compared to a 6% year-ago comparable, and a 4% increase on a two-year average basis [11] - EBITDA totaled $437 million for Q4, a 7% increase, with an EBITDA margin increase of 90 basis points to 16.9% [11] - For the full year 2025, IFF achieved 7% EBITDA growth with 100 basis points of margin expansion [10] Business Segment Performance Changes - Taste segment sales increased 2% to $588 million, with EBITDA up 17% to $94 million [12] - Health and Biosciences segment sales grew 5% to $589 million, with EBITDA increasing 20% to $155 million [13] - Scent segment delivered sales of $610 million, representing 4% growth, with EBITDA increasing 1% to $106 million [14] - Food ingredients sales were down 4% to $802 million, but EBITDA grew by 10% due to margin improvements [12][14] Market Data and Key Metrics Changes - The performance in North America for the Taste segment showed high single-digit growth, driven by new wins [12] - Health and Biosciences saw strong growth in food biosciences and animal nutrition, both achieving double-digit growth [13] - The Scent segment's fine fragrance grew by 10%, while fragrance ingredients faced pressure due to market softness [14] Company Strategy and Development Direction - IFF is focusing on high-value, innovation-driven businesses, having divested from lower-margin segments [6][8] - The company is optimistic about the sale process for its food ingredients business, aiming to enhance shareholder value [17] - Investments in R&D, commercial capabilities, and manufacturing capacity are prioritized to drive profitable growth [5][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving consistent, profitable growth despite macroeconomic uncertainties [9] - For 2026, IFF expects sales in the range of $10.5 billion to $10.8 billion, representing 1%-4% growth [18] - EBITDA for 2026 is projected to be between $2.05 billion and $2.15 billion, indicating 3%-8% growth [19] Other Important Information - Cash flow from operations totaled $850 million for the full year, with CapEx at approximately 5.5% of sales [14] - The company returned $409 million to shareholders through dividends and share repurchases [15] - The net debt to credit-adjusted EBITDA ratio improved to 2.6 times, down from 3.8 times in 2024 [16] Q&A Session Summary Question: Assumptions around price and volume in 2026 - Management indicated that growth for 2026 is expected to be volume-driven, with incremental margins on volumes around 30%-35% depending on the segment [28][29] Question: Top and bottom end of the 1%-4% currency neutral sales outlook - Management expressed cautious optimism, driven by a strong pipeline and customer focus on volume growth, with expectations for all divisions to grow within the range [31][32] Question: Early interest in the sale of food ingredients - Management confirmed strong interest from both strategic and private equity firms, with optimism about the sale process [36][37] Question: Price dynamics in the scent segment - Management noted that pricing was flat year-over-year, with margin pressure primarily from input costs, and a gradual shift towards higher-value ingredients is expected [40][41] Question: Health and biosciences margin uplift - Strong volume growth and productivity improvements contributed to the margin uplift, with expectations for stabilization and growth in the health business [43][44] Question: Free cash flow expectations for 2026 - Management anticipates meaningful improvement in free cash flow driven by profitability growth and working capital management [46][49] Question: R&D efforts and innovation metrics - Management highlighted a $100 million investment in innovation capabilities, with expected benefits starting in the second half of 2026 [53][56] Question: Reformulation opportunities in the marketplace - Management noted ongoing reformulation trends, with opportunities for IFF to support customers in creating healthier products [82][84]

Fourth Quarter & Full Year 2025 Earnings Conference Call February 12, 2026 CAUTIONARY STATEMENT This presentation includes statements that are not historical facts and are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward- looking statements are based on management's current assumptions, estimates and expectations, including with respect to our financial and operational outlook (sales, adjusted operating EBITDA and cash flow), portfolio opt ...