Sensient Q4 net income up 11% year-over-year to US$28.6M as revenue inches up 0.3% to US$340.4M; results reflect gain from company's acquisition of Les Colorants Wackherr do Brasil, growth in North American natural color market

MILWAUKEE , February 7, 2012 (press release) – Sensient Technologies Corporation (NYSE: SXT) reported record revenue, operating income and earnings per share in 2011. Consolidated revenue was over $1.43 billion, an increase of 7.7% over 2010 revenue of $1.33 billion. Diluted earnings per share for the year increased by 11.1%, to $2.41, from $2.17 reported in 2010. Consolidated operating income reached $190.8 million in 2011. Excluding the net impact of items discussed below, consolidated operating income was $192.1 million, an increase of 10.0% from the 2010 result of $174.6 million. Foreign currency translation increased revenue and operating income by approximately 2% and 3%, respectively for the year.

“We achieved record revenue and earnings for the second consecutive year, made substantial investments in our operations, reduced debt and increased the dividend to shareholders. We continue to see opportunities for growth and I am optimistic about the Company’s future.”

Consolidated revenue for the fourth quarter of 2011 reached $340.4 million, a new fourth quarter high, compared to $339.3 million reported in the same quarter last year. Diluted earnings per share for the quarter increased 9.6% to 57 cents, also a fourth quarter record and up from the 52 cents reported in the comparable period of 2010. Foreign currency translation decreased revenue by approximately 1% and operating income by approximately 2% in the quarter.

The results for both the quarter and full year included a pre-tax charge of approximately $4.8 million ($3.7 million after tax, or 7 cents per share) for a cost reduction plan. This plan was implemented in the fourth quarter to improve the efficiency and profitability of selected operations and primarily consisted of severance payments and related costs.

The fourth quarter results included a gain related to the Company’s acquisition of Les Colorants Wackherr do Brasil. Generally accepted accounting principles required that the Company’s previously held equity interest in Les Colorants Wackherr do Brasil be revalued upon obtaining control of the business. The revaluation resulted in a pre-tax gain of approximately $3.6 million ($3.6 million after tax, or 7 cents per share).

Cash provided by operating activities in 2011 was $142.9 million, compared to $155.7 million in 2010. Total debt as of December 31, 2011, was $335.4 million, a decrease of $14.4 million during 2011. The Company’s debt to total capital ratio improved to 24.2%, from 26.2% on December 31, 2010.

“The Company performed exceptionally well in 2011,” said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation. “We achieved record revenue and earnings for the second consecutive year, made substantial investments in our operations, reduced debt and increased the dividend to shareholders. We continue to see opportunities for growth and I am optimistic about the Company’s future.”

BUSINESS REVIEW

The Color Group reported revenue of $112.8 million in the fourth quarter compared to $113.3 million in the fourth quarter of 2010. Operating income in the quarter increased 10.6% to $20.3 million over the $18.4 million reported last year. Foreign currency translation reduced revenue by 2% and operating income by 1% in the fourth quarter. The operating income growth was primarily driven by our North American operations and our continued focus on the natural color market. As a result of this strong performance, the fourth quarter operating margin increased 180 basis points over the comparable period in 2010.

Annual revenue for the Color Group reached a record $491.9 million in 2011, an increase of 9.9% over the $447.5 million in 2010. Operating income grew to $90.2 million in 2011, also a record level and up 16.6% from the $77.4 million reported in 2010. Foreign currency translation increased both revenue and operating income by approximately 3% for the year. The Color Group’s operating margin increased 100 basis points to 18.3% in 2011.

The Flavors & Fragrances Group reported fourth quarter revenue of $206.3 million compared to the $206.1 million in the same quarter last year. Operating income for the quarter was $32.2 million, a 9.3% increase over the $29.4 million reported in the comparable period of 2010. Foreign currency translation reduced both revenue and operating income by approximately 1% in the quarter. The U.S. flavor businesses drove the solid operating profit growth.

Revenue for the Flavors & Fragrances Group increased 6.4% to a record $860.7 million in 2011, compared to $809.1 million reported in 2010. Operating income for the year was $130.8 million, also a record level and an increase of 7.3% over the $122.0 million reported last year. Foreign currency translation increased revenue and operating income by approximately 2% in 2011.

Corporate & Other, which includes the Company’s operations in Asia Pacific and China, reported revenue of $32.3 million for the fourth quarter, an increase of 4.6% over the $30.8 million reported in the fourth quarter of 2010. Revenue for the year was $131.8 million, an increase of 16.5% from the $113.2 million reported in 2010.

2012 OUTLOOK

Sensient expects 2012 diluted earnings per share to be within a range of $2.48 to $2.58.

The Company will host a conference call to discuss its 2011 fourth quarter and full year financial results at 10:00 a.m. CST on Tuesday, February 7, 2012. To make a reservation for the conference call, please contact InterCall Teleconferencing at (706) 645-6973 and refer to the Sensient Technologies Corporation conference call.

A replay will be available beginning at 1:00 p.m. CST on February 7, 2012, through midnight on February 14, 2012, by calling (404) 537-3406 and referring to conference identification number 42163538. A transcript of the call will also be posted on the Company’s web site at www.sensient.com after the call concludes.

This release contains forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results, including, but not limited to the factors noted in this press release and in the Management’s Discussion and Analysis in our most recently filed annual report on Form 10-K for the year ended December 31, 2010, and quarterly report on Form 10-Q for the quarter ended September 30, 2011. The forward-looking statements in this press release speak only as to the date of this release. Sensient Technologies Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations upon which such statements are based.

ABOUT SENSIENT TECHNOLOGIES

Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks and colors, and other specialty and fine chemicals. The Company’s customers include major international manufacturers representing most of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.  

                         
                         

Sensient Technologies Corporation

(In thousands, except percentages and per share amounts)
                         
                         
                         
Consolidated Statements of Earnings   Three Months Ended December 31,   Twelve Months Ended December 31,
                         
    2011   2010   % Change   2011   2010   % Change
                         
Revenue   $ 340,358     $ 339,267     0.3 %   $ 1,430,789     $ 1,328,180     7.7 %
                         
Cost of products sold     232,221       237,091     -2.1 %     981,137       919,821     6.7 %
Selling and administrative expenses     65,187       61,160     6.6 %     258,829       233,782     10.7 %
                         
Operating income     42,950       41,016     4.7 %     190,823       174,577     9.3 %
Interest expense     4,520       4,894           19,439       20,384      
                         
Earnings before income taxes     38,430       36,122     6.4 %     171,384       154,193     11.1 %
Income taxes     9,844       10,347           50,900       47,049      
                         
Net earnings   $ 28,586     $ 25,775     10.9 %   $ 120,484     $ 107,144     12.5 %
                         
Earnings per common share:                        
Basic   $ 0.57     $ 0.52     9.6 %   $ 2.42     $ 2.18     11.0 %
                         
Diluted   $ 0.57     $ 0.52     9.6 %   $ 2.41     $ 2.17     11.1 %
                         
Average common shares outstanding:                        
Basic     49,814       49,395     0.8 %     49,746       49,138     1.2 %
                         
Diluted     50,013       49,636     0.8 %     49,937       49,424     1.0 %
                         
                         
                         
Results by Segment   Three Months Ended December 31,   Twelve Months Ended December 31,
                         

Revenue

  2011   2010   % Change   2011   2010   % Change
                         
                         
Flavors & Fragrances   $ 206,328     $ 206,100     0.1 %   $ 860,680     $ 809,053     6.4 %
Color     112,843       113,276     -0.4 %     491,881       447,461     9.9 %
Corporate & Other     32,256       30,834     4.6 %     131,835       113,179     16.5 %
Intersegment elimination     (11,069 )     (10,943 )   1.2 %     (53,607 )     (41,513 )   29.1 %
                         
Consolidated   $ 340,358     $ 339,267     0.3 %   $ 1,430,789     $ 1,328,180     7.7 %
                       
                         
                         

Operating Income

                       
                         
                         
Flavors & Fragrances   $ 32,164     $ 29,440     9.3 %   $ 130,849     $ 121,997     7.3 %
Color     20,331       18,380     10.6 %     90,217       77,404     16.6 %
Corporate & Other     (9,545 )     (6,804 )   40.3 %     (30,243 )     (24,824 )   21.8 %
                         
Consolidated   $ 42,950     $ 41,016     4.7 %   $ 190,823     $ 174,577     9.3 %
                         
                         
Impact of 2011 One-Time Items
                         

The Company's 2011 results include a charge related to the Company’s plan to improve the profitability and efficiency of selected operations and a gain related to the revaluation of the Company’s non-controlling interest in an equity investment.

                         
                         
    Three Months Ended December 31,   Twelve Months Ended December 31,
                         
    2011   2010   % Change   2011   2010   % Change
                         
Consolidated operating income as reported   $ 42,950     $ 41,016         $ 190,823     $ 174,577      
                         
Restructuring charge     4,836       -           4,836       -      
                         
Gain on revaluation of equity investment     (3,586 )     -           (3,586 )     -      
    $ 44,200     $ 41,016     7.8 %   $ 192,073     $ 174,577     10.0 %
                         
                         
                         
 
 

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