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Sep 30, 2023
Sensient Q3 2023 Earnings Report
Sensient's Q3 2023 earnings reflect a slight revenue increase but a decline in operating income and EPS due to destocking headwinds and market environment impact.
Key Takeaways
Sensient Technologies reported a slight increase in revenue but declines in operating income and EPS for Q3 2023. The company faced destocking headwinds and a challenging market environment, which impacted sales volumes and profitability. Management is focused on customer service and sales execution to improve revenue growth as market dynamics improve.
Revenue increased 0.8% to $363.8 million, but decreased 2.0% on a local currency basis.
Operating income decreased 6.2% to $44.5 million, or 9.8% on a local currency basis.
Diluted earnings per share decreased 11.8% to 75 cents.
The company expects a return to improved revenue growth as market dynamics improve.
Sensient
Sensient
Sensient Revenue by Segment
Sensient Revenue by Geographic Location
Revenue by Segment
Flavors & Extracts Revenue
CapyFin.comColor Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.comRevenue by Geographic Location
Asia Pacific Revenue
CapyFin.com Forward Guidance
Sensient now expects 2023 full year GAAP diluted earnings per share to be down low double digits compared to our 2022 reported GAAP diluted earnings per share of $3.34 and also on a local currency basis compared to our 2022 adjusted diluted earnings per share(1) of $3.29. The Company now expects 2023 revenue to grow at a low single-digit rate on a local currency basis compared to the Company’s 2022 revenue. The Company continues to expect its 2023 adjusted EBITDA(1) to be down mid-single digits on a local currency basis compared to the Company’s 2022 adjusted EBITDA(1).
Positive Outlook
- Foreign exchange rates are expected to be modestly favorable for the full year.
- Focus on customer service and sales execution will result in a return to improved revenue growth as market dynamics improve.
- The Group’s revenue benefited from favorable pricing and exchange rates, partially offset by lower volumes, primarily due to customer destocking and market declines in certain product lines.
- The Group’s revenue benefited from favorable pricing, partially offset by lower volumes.
- Operating income benefited from higher pricing, which was offset by lower volumes and higher input costs.
Challenges Ahead
- Destocking headwinds and market environment impacted the quarter.
- Local currency adjusted EBITDA was down 7.1% in the third quarter, as a result of lower sales volumes.
- Local currency EPS decreased 15.3% in the third quarter as a result of lower sales volumes and higher interest expense.
- The Company expects its 2023 diluted earnings per share to be impacted by higher interest rates and a higher tax rate.
- Segment operating income was negatively impacted by lower volumes in both the food and pharmaceutical and personal care product lines, primarily due to customer destocking and market declines in certain product lines, partially offset by higher pricing and exchange rates.
Revenue & Expenses
Visualization of income flow from segment revenue to net income