UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 2, 2015
Date of Report (Date of earliest event reported)
INTERNATIONAL FLAVORS & FRAGRANCES INC.
(Exact Name of Registrant as Specified in Charter)
| NEW YORK | 1-4858 | 13-1432060 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
521 WEST 57th STREET
NEW YORK, NEW YORK 10019
(Address of Principal Executive Offices) (Zip Code)
(212) 765-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
On June 2, 2015, International Flavors & Fragrances Inc. (the “Company”) issued a press release regarding its previously announced 2015 Investor Day, being held today, Wednesday, June 2, 2015 in New York, New York, and providing commentary of the second quarter and full year 2015 and its long-term financial guidance for the 2016 to 2020 period. Interested parties can access a live webcast of 2015 Investor Day within the Investor Relations section of the Company’s website at www.iff.com. For those unable to listen to the live webcast, a replay will be accessible on the Investor Relations section of the Company’s website. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and a copy of the 2015 Investor Day slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K (including the exhibits hereto) is being furnished under Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Non-GAAP Financial Measures
Certain of the presentations furnished with this Current Report on Form 8-K contain non-GAAP financial measures, including (i) adjusted EPS, (ii) adjusted operating profit and (iii) currency neutral sales. These measures are not intended to represent a presentation in accordance with GAAP. In discussing the Company’s historical and expected future results and financial condition, the Company believes it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding identified items. The Company believes such non-GAAP measures provide investors with an overall perspective of the period-to-period performance of its business. In addition, management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to our business. A material limitation of these non-GAAP measures is that such measures do not reflect actual GAAP amounts. The Company compensates for such limitations by presenting reconciliations of the non-GAAP measures contained in the furnished presentations to the most directly comparable GAAP measures. These non-GAAP measures may not be comparable to similarly titled measures used by other companies. A reconciliation of these non-GAAP measures to GAAP measures can be accessed by visiting the Investor Relations section of the Company’s website.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press release dated June 2, 2015. | |
| 99.2 | Investor Day Presentation Materials dated June 2, 2015. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERNATIONAL FLAVORS & FRAGRANCES INC. | ||||||
| Date: June 2, 2015 | By: | /s/ Richard A. O’Leary | ||||
| Name: | Richard A. O’Leary | |||||
| Title: | Interim Chief Financial Officer, Vice President and Controller | |||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press release dated June 2, 2015. | |
| 99.2 | Investor Day Presentation Materials dated June 2, 2015. | |
Exhibit 99.1
IFF to Share Vision 2020 at Investor Meeting
NEW YORK, N.Y., June 2, 2015 – International Flavors & Fragrances Inc. (NYSE: IFF), a leading global creator of flavors and fragrances for consumer products, announced that the Company’s senior executives will offer their perspective on IFF’s Vision 2020 and commentary on the second quarter and full year 2015, at an investor meeting today in New York City.
“The cornerstone of Vision 2020 is our new purpose statement, ‘We are the catalyst for discoveries that spark the senses and transform the everyday,’” said Andreas Fibig, Chairman and CEO. “Building on our legacy of pioneering firsts, we believe that our strategy will help us build differentiation and accelerate growth for all our stakeholders.”
The Company’s strategy is built on four pillars and supported by three enablers.
Win Where We Compete
“We aim to be #1 or #2 with key customers and in strategic categories and regions. To succeed, we must all be explorers, constantly pushing each other to take smart risks. This mindset, courage, and drive for the future is critical to IFF’s Vision 2020 and our team is ready.” Matthias Haeni, Group President, Flavors
Innovating Firsts
“Whether it’s being first-to-market with a revolutionary fragrance in response to a pressing consumer demand, cracking the code on a customer’s need for a breakthrough flavor, or rethinking supply chain processes that save time and support sustainability, we work together, leveraging a passionate team and robust intellectual property to deliver innovative “firsts” to our customers the world over.” Ahmet Baydar, SVP Research & Development
Become Our Customers’ Partner of Choice
“Nothing succeeds like exceptional partnerships, especially in the current environment. Our customers will gain additional access and leverage the full breadth of the added value we bring to them, including industry-leading consumer insights, robust innovation pipeline, the highest level of service and impeccable quality. We will bring them our best.” Nicolas Mirzayantz, Group President, Fragrances
Strengthen and Expand the Portfolio
“The boundaries of our industry are blurring and expanding, and we touch lives in a myriad of ways. By building on our core strengths and through strategic acquisitions, partnerships and collaborations, we will grow our market share and deliver exceptional and multifaceted solutions to our partners.” Rich O’Leary, Interim CFO
The three enablers to the strategy include Talent and Organization, with investment in its people; Continuous Improvement, with a relentless focus on finding efficiencies and streamlining processes to reinvest in the business; and Sustainability, strengthening sustainable practices and innovation in every area of the organization.
Financial Guidance
The Company is also announcing its long-term financial targets for 2016-2020. These include 4-6% currency neutral sales growth, 7-9% currency neutral operating profit growth, and 10% currency neutral EPS growth. In addition, the Company is targeting $500 million to $1 billion of sales growth through acquisitions by 2020. Leveraging its strong cash flow generation and commitment to Vision 2020, the Company intends to increase its targeted cash return to shareholders to 50-60% of adjusted net income.
The Company will also provide commentary on the second quarter 2015, where it expects currency neutral sales growth to be about 5% including approximately one point impact from Ottens Flavors. In addition, the Company expects adjusted operating profit in the second quarter to be up 6 to 8% on a currency neutral basis and flat to down low single-digits on a reported basis. For the full year 2015, the Company expects currency neutral sales to be in line with its long-term target and expects adjusted operating profit and adjusted EPS to be at the low-end of its long-term range, on a currency neutral basis.
“Over the past five years, IFF’s strategy has served us well, putting key fundamentals and a disciplined approach in place,” continued Mr. Fibig. “Vision 2020 is a natural evolution and the logical next step that will provide the fuel we need to accelerate our growth and increase differentiation. We are here to lead where we compete. We believe our strong financial foundation, expansion in key markets and investment in innovation will redefine winning and lead to sustainable, profitable growth at IFF.”
The live webcast of today’s meeting and accompanying presentation materials, as well as the U.S. Generally Accepted Accounting Principles (U.S. GAAP) reconciliation, can be accessed by visiting the Investor Relations section of www.iff.com. The meeting will begin at 1:00 pm EDT and the webcast will be available as an archive on the site for later viewing.
Cautionary Statement Under The Private Securities Litigation Reform Act of 1995
This press release includes “forward-looking statements” under the Federal Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for the second quarter and full year 2015, and our ability to generate shareholder returns and sustain our long-term growth performance. These forward-looking statements are qualified in their entirety by cautionary statements and risk factor disclosures contained in the Company’s Securities and Exchange Commission filings, including the Company’s Annual Report on Form 10-K filed with the Commission on March 2, 2015. The Company wishes to caution readers that certain important factors may have affected and could in the future affect the Company’s actual results and could cause the Company’s actual results for subsequent periods to differ materially from
those expressed in any forward-looking statements made by or on behalf of the Company. With respect to the Company’s expectations regarding these statements, such factors include, but are not limited to: (1) volatility and increases in the price of raw materials, energy and transportation; (2) the economic and political risks associated with the Company’s international operations; (3) the Company’s ability to benefit from its investments and expansion in emerging markets; (4) fluctuations in the quality and availability of raw materials; (5) changes in consumer preferences and demand for the Company’s products or a decline in consumer confidence and spending; (6) the Company’s ability to implement its business strategy, including the achievement of anticipated cost savings, profitability, realization of price increases and growth targets; (7) the Company’s ability to successfully develop new and competitive products that appeal to its customers and consumers; (8) the impact of a disruption in the Company’s supply chain or its relationship with its suppliers; (9) the impact of currency fluctuations or devaluations in the Company’s principal foreign markets; (10) any adverse impact on the availability, effectiveness and cost of the Company’s hedging and risk management strategies; (11) the effects of any unanticipated costs and construction or start-up delays in the expansion of the Company’s facilities; (12) the Company’s ability to successfully identify and execute acquisitions, collaborations and joint ventures; (13) the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by U.S. and foreign governments; (14) adverse changes in federal, state, local and foreign tax legislation or adverse results of tax audits, assessments, or disputes; and (15) changes in market conditions or governmental regulations relating to our pension and postretirement obligations. New risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risks on the Company’s business. Accordingly, the Company undertakes no obligation to publicly revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
About International Flavors & Fragrances Inc.
International Flavors & Fragrances Inc. (NYSE:IFF) is a leading global creator of flavors and fragrances used in a wide variety of consumer products. Consumers experience these unique scents and tastes in fine fragrances and beauty care, detergents and household goods, as well as beverages, sweet goods and food products. The Company leverages its competitive advantages of consumer insight, research and development, creative expertise, and customer intimacy to provide customers with innovative and differentiated product offerings. A member of the S&P 500 Index, IFF has more than 6,200 employees working in 32 countries worldwide. For more information, please visit our website at www.iff.com; follow us on Twitter and LinkedIn.
Contact:
VP, Global Corporate Communications & Investor Relations
Michael DeVeau
212-708-7164
Exhibit 99.2
Michael DeVeau
VP, Global
Communications & Investor Relations
Cautionary Statement
Statements made in this
presentation that relate to our future performance or future financial results or other future events (identified by such terms as “expect”, “anticipate”, “believe”, “outlook”, “guidance”,
“may”, “target” or similar terms and variations thereof) are forward-looking statements, including the Company’s 2015 guidance, its long-term financial guidance and the Company’s expectations regarding the impact of its
2020 strategy on its financial and operational results, including its ability to fund through cost-savings and the impact of acquisitions. These statements are based on our current beliefs and expectations and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause IFF’s actual results to differ materially include (1) risks associated with the Company’s supply chain,
including availability and pricing of raw materials, energy and transportation; (2) economic, regulatory and political risks associated with the Company’s international operations; (3) changes in consumer demand, either due changes in
preferences or consumer confidence; (4) the Company’s ability to successfully increase its sales through acquisitions, collaborations and joint ventures including its ability to identify, acquire on terms consistent with the Company’s
return criteria and successfully integrate bolt-on or adjacent companies and (5) the Company’s ability to implement its business strategy, including the ability to fund growth through anticipated cost saving and (6) the impact of
currency fluctuations or devaluations in the Company’s principal foreign markets as well as those risks described in the Risk Factor forward-looking statements sections of our Annual Report on Form 10-K for the year ended December 31, 2014
and in our other periodic reports filed with the SEC, all of which are available on our website under Investor Relations, at www.iff.com. We do not undertake to update the forward-looking statements to reflect the impact of circumstances or events
that may arise after the date of the forward-looking statements.
We have disclosed certain non-GAAP measures within this presentation. Please see reconciliations
to their respective measures prescribed by accounting principles generally accepted in the U.S., all of which are available on our website under Investor Relations, at www.iff.com.
Andreas Fibig
Chairman and Chief Executive Officer
Vision 2020
Accelerating
Growth
5-Year CAGR
Currency neutral sales* +6% Adjusted
operating profit* +11% Adjusted
EPS* +14%
Currency Neutral Sales, Adjusted
Operating Profit and Adjusted Diluted EPS are Non-GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at IFF.com.
$117
June 1, 2015
17% CAGR
Top-Quartile Total Shareholder Return
$53
March 15, 2011
Consumer Dynamics Are Changing
What if?
“We are the catalyst for discoveries that spark the senses & transform the everyday”
Win
WhereWe
Compete
Defi ned as #1 or #2
Innovating
Firsts
Drive differentiation in key technologies
BecomeOur
Customers’
Partnerof
Choice
Go-to supplier
Investin
People
Fund the Journey
Createa
Sustainable
Future
Vision
2020Accelerating Growth
Strategic Pillars
Win Where1 We Compete Innovating 2 Firsts
Become Our Customers’ 3 Partner of Choice Strengthen &4 Expand Portfolio
Matthias Haeni
Group President, Flavors
Vi 2020
Accelerating
Growth
Strong Financial Foundation
5-Year CAGR
10% 7%
Currency Adjusted Operating Neutral Sales* Profit Growth*
Expansion in Key Markets
Consumer Dynamics Are Changing
What if?
Become our
Customers’
Partner
of
Choice
Leader in Strategic Insights
Centers of Excellence
Early Partnerships with Customers
Innovating
Firsts
Modulation
Delivery Systems
Protein & Texture
Where Win
We
Compete
North America Africa & Middle-East Key Customers and Categories
Strengthen
and Expand
Portfolio
M&A, partnerships & collaborations
Invest inPeople &Science
Flavor to taste
Vi sion2020
Accelerating
Growth
Nicolas Mirzayantz
Group President, Fragrances
Vi sion2020
Accelerating
Growth
Strong Financial Foundation
5-Year CAGR
12% 6%
Currency Adjusted Operating Neutral Sales* Pro?t Growth*
Currency Neutral Sales and Adjusted Operating Pro?t are Non-GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at IFF.com.
Expansion in Key Markets
Consumer Dynamics Are Changing
What if?
Innovating
Firsts
Delivery Systems New Molecules Naturals Futures Project
Win North America
Africa & Middle East
Where We China
Compete Home Care
Fine Fragrance
Becomeour
Customers’ Leader in Strategic
Insights Centers of Excellence Partnerof Redesigned Creative Model Choice Early Customer Partnerships
Strengthen
and
Expand Portfolio
M&A
Strategic Partnerships
External Collaborations
Invest
inPeople
&
Expertise
Vision2020
Accelerating
Growth
Ahmet Baydar
Senior Vice President,
Research & Development
Vision2020
Firsts
What if?
Modulation
Healthier products
Delivery
Extended release
New
Molecules
Delivering novel ingredients
Naturals
Pure & sustainable
Protein
and
Texture
Talent isCritical
to our
Success
Strengthen Prof. Linda B. Buck
Nobel Laureate
&Expand IFF Board of Directors
Partnershipsand
Prof. Leslie B. Vosshall
Collaborations The Rockefeller University IFF Scientific Advisory Board
Prof.
Steven V. Ley, CBE
Cambridge University, UK IFF Scientific Advisory Board
Dr. Shekhar Mitra
President, Innopreneur IFF Scientific Advisory Board
Prof. Thomas D. Sharkey
Michigan State University IFF Scientific Advisory
Board
Cheryl Perkins, M.S.
President, Innovationedge IFF Scientific Advisory
Board
Vision 2020
Firsts
Rich O’Leary
Interim CFO
Vision 2020
Accelerating
Growth
Excellent Financial Results
5-Year CAGR
14% 11%
10%
target
6% 7-9%
target
4-6%
target
Currency Adjusted Adjusted Neutral Sales* Operating EPS* Profit*
Currency Neutral Sales, Adjusted Operating Profit and Adjusted Diluted EPS are Non-GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at IFF.com.
Identifying Incremental Growth Initiatives
1
Strategic Importance
2Execution Risk
3Value to Cost
4Payback Period
Driving Accelerated Organic Growth
Market
3% Growth Currency Neutral
Sales 4-6% Growth
Fund
theJourney
Unlock Value
Standardize global
functions & business services
Optimize global supply chain & facilities
Realize greater procurement savings
Implement zero-based budgeting
2016 to 2020 Financial Targets
Currency neutral
sales growth 4-6% Currency neutral operating 7-9% profit growth
Currency neutral 10% EPS growth
Accelerate Growth Through M&A
Targeting $500M
to $1B of sales through acquisitions by 2020
Redefine Uses of Cash
3-3.5%
of sales
50-60%
of net income
Currency Neutral 2016 to 2020 Targets
4-6% 7-9%
10%
Sales Operating EPS growth profit growth growth
Targeting $500M to $1B of
sales through acquisitions by 2020
Expect capex to be 3-3.5%
Increase payout
ratio to 50-60% of net income
Insight into Currency
Q1 2015A 7% Q2 2015E ~8%
2015E 4-5% 2016E 3-4%
Impact to Pro?t
Based on a Euro to USD exchange rate of
1.09
Q2 and FY Perspective
Currency Currency Neutral
Neutral Sales* Operating Profit*
Q2 ~4% 6-8%
2015E
FY 4-6% ~7%
2015E
Currency Neutral Sales and Currency Neutral Operating Profit are Non-GAAP metrics, please see our GAAP to Non-GAAP Reconciliation at IFF.com.
Andreas Fibig
Chairman and Chief Executive Officer
Vision
2020Accelerating Growth
Strategic Pillars
Win Where1 We Compete Innovating 2 Firsts
Become Our Customers’ 3 Partner of Choice Strengthen &4 Expand Portfolio
Vision
2020Accelerating Growth
Enablers
Building Our Talent & Organization Continuous Improvement Creating a
Sustainable Future
Currency Neutral 2016 to 2020 Targets
4-6% 7-9%
10%
Sales Operating EPS growth profit growth growth
Targeting $500M to $1B of
sales through acquisitions by 2020
Expect capex to be 3-3.5%
Increase payout
ratio to 50-60% of net income
