Q2 2021 Sensient Technologies Corp Earnings Call
Good morning, and welcome to the sensory and Technologies Corporation 2021 second quarter earnings Conference call.
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I'd now like to turn the conference over to Mr. Steve Rolfs. Please go ahead Sir.
Good morning, welcome to the sense in the second quarter earnings call I'm, Steve Rolfs, Senior Vice President and Chief Financial Officer of Cynthia and Technologies Corporation.
I am joined this morning by Paul Manning, <unk>, Chairman, President and Chief Executive Officer.
Earlier. This morning, we released our 2021 second quarter financial results a copy of the release and our Investor presentation is available on our website at Centene and dotcom.
During our call today, and we will be explaining the differences between our GAAP results and our adjusted results. The adjusted results for 2021, and 2020 removes the impact of the divestiture related costs the operations divested and the impact of the costs related to our operational improvement plan.
And we believe the removal of these items provides investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods.
And this also reflects how management reviews and evaluates the company's operations and performance of these.
Non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.
A reconciliation of non-GAAP financial measures to the most directly comparable GAAP GAAP financial measures is available in our press release, we encourage investors to review these reconcile the reconciliations in connection with the comments we make this morning.
I would also like to remind everyone that comments made this morning, including responses to your questions may include forward looking statements.
Our actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic governmental attempts that remedial action and the timing of a return of more normal economic activity. We urge you to read since the US previously previous SEC filings and our forthcoming.
And 10-Q.
For a description of additional factors that could potentially impact our financial results. Please bear these factors in mind when you analyze our comments today.
Now, we'll hear from Paul Manning Thanks, Steve.
Good morning. This morning, we released our second quarter results each of our groups delivered solid adjusted revenue and operating and adjusted operating profit growth and the quarter.
Our flavors and extracts group had another outstanding quarter reporting, 9% adjusted local currency revenue growth.
And 13% adjusted local currency operating profit growth.
Our personal care business rebounded substantially contributing to the color group's 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth.
Asia Pacific had another strong quarter, delivering 11% adjusted local currency revenue growth and over 22% adjusted local currency operating profit growth.
On a consolidated basis, we reported 9% consolidated adjusted local currency revenue growth and.
And mid single digit adjusted EBITDA growth and the quarter.
Pleased with our results for the second quarter and for the first half of this year.
Last week, we completed the acquisition of the company called flavor solutions. This business brings a number of technology platforms, and savory flavors shelf life extender and tastes modulations and.
And it expands our portfolio for clean label flavors.
This acquisition aligns with our goal to continue to grow our value added flavor technologies.
We continue to look at other acquisition opportunities that support our strategic initiatives within our Corp product lines of food pharmaceutical excipient and personal care.
And each group, our new sales wins sales pipeline and sample activity continued to be strong and they are good bellwethers of future product development activity and launches.
We're also seeing increased in person customer visits and many of our markets and we anticipate that these visits will continue to increase as companies return of in person and work.
As mentioned during our first quarter call, we are encountering and an increase and supply chain challenges, but we continue to manage through these matters.
We're also seeing an increase and certain input costs, including raw material and transportation and.
And we expect these costs to remain elevated for the remainder of the year.
COVID-19 continues to impact of certain geographic regions and product lines. Despite the varied impacts of COVID-19, and throughout the world our food colors and flavor product lines continued to see robust growth.
As expected and discussed during our last quarterly call our personal care business has begun to strongly rebound and the second quarter.
And pharma, we see headwinds due to the top 2020 comparable and our nutraceutical and pharmaceutical product lines.
Overall, I'm pleased with the growth across the company and the more recent improvements and our personal care business.
Rich I anticipate the continue to improve and the second half of this year.
Turning to the group results.
Flavors and extracts group had another outstanding quarter with 9% adjusted local currency revenue growth and 13% adjusted local currency profit growth.
This growth is on top of the strong forward of the group achieved in last year's second quarter.
During the second quarter, the flavor and extract group generated strong growth and almost all product lines.
We are benefiting from a robust sales and customer service focus and a continued transition to more value added product solutions.
The group's adjusted operating profit margin increased 50 basis points and the quarter compared to last year's second quarter.
We are well on track to achieve 50 to 100 basis point improvement to operating profit margin this year.
Noteworthy win and the flavors and extract group is our ice cream product line. This product line continues to grow and both the U S and Europe as the result of its integrated product sales and strong application capabilities.
We continue to invest and this product line and I'm optimistic about its future growth prospects.
Our savory business is also having an outstanding year. This business continues to grow and win new sales opportunities as the result of its strong flavor technologies and exceptional customer service.
Our savory business is well positioned and the market and I expect it to have a strong year and future.
The color group had an exceptional rebound this quarter delivering 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth.
The group benefited from success in both food colors and personal care.
Revenue and the food and pharmaceutical product line was up mid single digits for the quarter.
The group's focus on sales execution and customer service as well as its strong technology platforms positions us to capitalize on the consumer demand for natural colors, while continuing to maintain our strong synthetic colors business.
The food and pharmaceutical business had good growth and almost all geographies and that's experienced improvement in Europe, and Latin America areas, and which we hadn't seen softer markets in recent quarters.
Revenue within the personal care business was up double digits and the quarter.
As noted during our last quarterly call. We are seeing a recovery within this business and anticipate continued improvement and the second half of the year and into next year.
The people return to travel and the other social activities that continue to be optimistic about the improvement within our personal care business.
The Asia Pacific Group delivered 11% adjusted local currency revenue growth and 22% adjusted local currency profit growth.
The group continues to drive revenue growth and almost all regions. This growth growth is the result of our focus on customer service.
New sales wins and utilization of our technology platforms.
The group's operating profit growth and margin improvements are a direct result of volume growth.
We delivered another good quarter and strong first half of the year. The markets. We have chosen to compete in our recent divestiture activity, our robust customer service model and our technology platform.
And our each providing the foundation for growth with our customers.
We are winning new sales opportunities and our sales pipelines remain very healthy.
We're well on track for our full year guidance and we are currently operating at or above the top end of this guidance.
Over the long term I continue to expect flavors and extracts.
To deliver mid single digit revenue growth.
And 50 to 100 basis points annual improvement to operating profit margin over the foreseeable future.
I also expect the color group to deliver mid single digit revenue growth along with an operating profit margin at or above 20%.
And I expect Asia Pacific Group to deliver mid single to high single digit revenue growth over the long term.
Continued to remain very optimistic about the year and the future of our business.
Steve will now provide you with additional details on the second quarter results.
Thank you Paul.
Our second quarter GAAP diluted earnings per share was <unk> 61 and included in these results are $7 million or approximately <unk> 16 per share of costs related to the divestitures and the cost of the operational improvement plan.
In addition, our GAAP earnings per share of this quarter include approximately $2.2 million of revenue.
Or 1 sense of costs related to the results of the divested operations.
Last year's second quarter GAAP results include a gain related to the reclassification of accumulated foreign currency translation as a result of the sale of the inks business and other divestiture related costs.
The combination of these items.
Were included within the divestiture and other related costs, which increased last year's second quarter net earnings of $1 million of approximately <unk> <unk> per share and.
In addition, our GAAP earnings per share and the second quarter of 2020 include.
Include approximately $28.2 million of revenue and an immaterial amount of net earnings related to the divested product lines.
Excluding these items consolidated adjusted revenue was $333.6 million and increase of 9.1% and local currency compared to the second quarter of 2020.
Our adjusted local currency EBITDA was up approximately 6% for the quarter and our adjusted local currency EPS was up 8.6% for the quarter.
Our cash flow from operations was down and the second quarter, primarily due to an increase and sales activity and the second quarter of 2021, and the resulting use of cash to fund our working capital and the current quarter.
While we are currently making strategic investments and our inventory positions to support our forecast of growth. We continue to remain focused on optima optimizing our working capital levels.
In terms of capital expenditures, we continue to expect our spend to be around $65 million for the year.
During the second quarter, we bought back approximately $11 million of company stock.
As Paul stated earlier, we completed the acquisition of flavor solutions last week.
And we are actively reviewing other potential acquisitions.
Our leverage ratios out of 2 times debt to adjusted EBITDA down from $2.7 a year ago, leaving our balance sheet and a solid position to support potential acquisitions share repurchases as well as our dividend payout. The company will continue to be prudent and our approach to our capital allocation.
<unk>.
Based on current trends and the current tax law, we are Reconfirming, our previously issued GAAP EPS adjusted EPS and adjusted local currency EBITDA guidance as Paul stated earlier, we do believe we are operating near the top end of this guidance.
Our GAAP EPS guidance calls for mid to high single digit growth compared to our 2020 reported GAAP EPS of $2.59.
Our full year guidance for 2021 and includes approximately 25 cents of divestiture related costs operational improvement plan cost.
And the impact of the divested businesses.
And I don't know adjusted basis, our EPS guidance for the year of calls for mid single digit local currency growth.
Compared to our 2020 adjusted EPS of $2.79.
We now expect our 2021 adjusted local currency revenue to grow at a mid single digit rate. This is up from our previous guidance of a low to mid single digit growth rate for 2021.
We continue to expect our adjusted local currency EBITDA to grow at a mid single digit rate.
Given current proposals related to changes and the corporate tax law, we continue to believe that our adjusted local currency EBITDA metric instead of EPS provides a more reliable measure for our underlying business growth.
Our reported results include the impact of currency and based on current exchange rates, we expect our earnings to benefit by approximately <unk> 10 cents due to currency for the year.
Thank you for your time. This morning, we will now open the call for questions.
We will now begin the question and answer session.
And to ask a question you May Press Star then 1 on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from Ghansham Panjabi with Baird. Please go ahead.
Hey, guys good morning.
Morning, guys good morning.
Yeah. So you know and just in context, as we kind of cycled through the back half of the year are you know, we're seeing an increase and mobility and certain parts of the world, including the U S. Some lockdowns and Asia a lot of companies have talked about raw material scarcity are theirs and extreme weather event on the west coast and so on.
So can you sort of update us on you know a.
Hey, your sort of updated outlook on volumes for the 3 segments as we cycled into the back half of the year and then also on the raw materials side of.
What do you what are you seeing at this point from the from.
From a raw material inflation standpoint.
So I think for the back half of your first question and the back half looks very good for us in.
And each of the groups I think that.
Certainly there are certain debt, while they are there geographies that are.
Far more open than others, but in all cases, we.
We see product launches continuing we see good customer activity fundamentals of our business remain very good whether there's a pandemic or not folks need to eat they need the drink and are in many cases. They are they continue to use personal care items as well.
So I think that that trend is always going to be solid for us, but there's certainly a sufficient activity and each of our markets that I feel very good about the back half of the year I feel very good about the mid single digit growth rate.
The volumes look good and in fact, most of the growth in Q2 here and in Q1 has been volume related.
To your point of that raw material.
A hallmark of our business is that input costs can go up but we have a very strong ability to price those input costs.
Into the market.
And so and in some cases, we perhaps need and reformulate the product, but and the vast majority of cases, we can take pricing and cover our cost and in fact, we can take pricing and cover our margins has tended to be how the company has operated over the years. So I wouldn't tell you that this what we're in.
Now would be any different from any other point and our history.
From our standpoint, you know theres, some very obvious increases and propylene glycol, and coconut oil and soy and and things of this nature I don't really believe of lot of those are permanent I think some of these will regress back to the mean.
But certainly there is there is there is.
The inflation with respect to transportation, but again these are things and.
They're a little bit more abnormal than normal normal, but business has always had to contend with input costs coming up so we feel very very confident and the formula that we use.
From a pricing standpoint, and and I feel very good about the back half and I do not believe inflation is an issue for this company as we move forward.
Okay and then just my second question on on the contribution margins I mean, just looking at color you know just looking on slide 13, our low.
The currency adjusted revenue plus 7% and operating income up 5.
And why it wasn't a more substantial just given the personal care and it's coming back for you.
Yeah. So that's that's a great question there should be.
More operating leverage as we go into the back half of the year.
Couple of factors there the big 1 is that personal care of volumes have really just been down for about the last year, so without getting into accounting gobbledygook, you can just see that as lower utilized plants.
But we were hitting the inflection point kind of as we speak maybe even a little bit at the end of Q2, so you'll see a much bigger uplift from the growth and personal care to the profit line as we get into the back half of the year.
And then you know as we go through our pricing the timing between input costs going up and pricing being effective there's oftentimes a little bit of a GAAP. There so that might of compressed the margin of point or 2 but I would tell you that the bigger impact there and personal care. It is just the less than normally utilized plants carrying in.
And.
But.
You can project that out pretty cleanly and see as we get into Q3 and Q4 that the the operating leverage will be quite a bit better and the color group.
For the for the rest of the year, and then and of course driving us too.
And maybe even beyond the 20% O P margin.
Got it thanks, so much.
Okay. Thank you.
The next question is from Mark Connelly with Stephens. Please go ahead.
Thanks, Paul.
And Mark talk a little bit of.
Can you talk a little bit about product development relative to normal and what customers are saying you did mentioned and the increased sampling, but we're still seeing categories like foodservice holding back on introducing new products. So maybe you could help us understand sort of the the early and sort of later stage.
And that feels like it's coming back.
Yeah, So general comment if I heard of compare 2020 to 2019.
And you would see that the total number of launches in places like the.
The U S. In Europe. The total number of launches were about the same.
So the companies launched X number of products and 2019. They also launched like X number of products and 2020.
And so what really the dynamic that changed there is who is making the launches and we saw a disproportionate number of launches for more of those local and regional customers and what I call the B and C boats.
And there were more launches coming from that group of customers than the larger.
Whatever you want of a multinational type customers.
So that dynamic continued into 2020, 1 I mean, certainly there's been some improvement there more of launch activity or certainly indications and.
And other multinationals of of increased launch activity as we get into 2020.1.
But that's probably the biggest dynamic at play there.
But I would tell you that theres certainly more activity.
Many of these largest companies or we see more activity with their employees coming back to their labs to develop products.
It was very very hard for many of them to do that and the last year as many of their folks are at home.
But we see that improving in the U S. We see that improving and parts of Europe, we see that improving and parts of the Asia Pacific as well, China for all intents and purposes is open for business and there's pretty much nearly universal access to customers and customers coming to you.
So if you look at that as of continuum and as much as the China faced much of Covid and the early stages.
And it provides maybe a good template for what we could expect to see and other parts of the world.
That's helpful and.
Just the second question.
The weather the country and mentioned you know.
Are you are you concerned about the impact on your Dehydrator and natural products business.
We have to worry about weather extremes and creating more volatility there.
Well, you know weather moves in cycles, and so we've had to respond to that for decades and that business and so like any agricultural company you had times, where the yield is what you expect and sometimes it's a little bit more sometimes it's a little bit less.
And so the early indications for this year's crops are good.
In terms of yields.
And so yes, we grow and a fairly broad area. So while there may be drought like conditions and some other parts, where we're growing maybe just fine and so I think the.
The footprint for where we're growing is diversified enough at this point that I wouldn't I would not be ringing any alarm bells.
For our business, there and as much as we talk about the other parts of our business say natural colors for example, or extra extracts, where we either growing or working with contract growers. There again, having a diversified growing base has been a big big part of our strategy for many years for this very reason and so I.
We're very well prepared for it.
And again I think the the the biggest factor there is the footprint.
And I could could really safe guard against and he really catastrophic weather event that we could face.
Sure if I can just squeeze in a quick 1 for Steve last quarter, we had a couple of unusual impacts on cash flow you know with the incentives is there anything like that this quarter or that we should be thinking about for the second half.
No so you're right.
Year to date, if you look at our cash flow. It is it is down partly because of the onset of payments early in the year, you know versus last year, but the main impact youre seeing this quarter is just with the.
Rising sales of little bit of working capital usage, particularly and receivables so last year and personal care sales were declining this year. They are increasing so that the that is the main factor.
And I don't have any things to call out other than that for the rest of the year.
And it's good news thank you very much.
Okay. Thanks Mark.
The next question is from Heidi Investor and and with Exane BNP. Please go ahead.
Good morning.
Hi, first question Hi, Frank first question on your upgrade it topline guidance, which segment is driving this and is this driven by volume or price or both and that's the first question.
Okay. So I would tell you it's pretty broad based we're seeing good growth and flavors and natural colors, and we're seeing it and personal care I would say personal care is probably going to be a little bit higher than the others. At this point because there's a fair amount of recovery built into that number.
Up until now it's really been volume I would suggest that there was very little price impact and the first half of the year, but as we get into the second half of it it's going to be volume and price that that's going to be driving that topline.
Yeah.
And digging into personal care C zone very upbeat on the outlook can you talk about what youre seeing in each region.
And do you have a view on when we might get back to pre pandemic levels in each region. Please.
So yeah, the the regions have kind of been and and very interesting cycles.
We had seen and.
And and we break it up really into 4 we talk Latin America, Europe, Asia, and North America. The strongest recovery, we're seeing right now is in Europe, and North America, we're seeing a very very strong recovery in color cosmetics, and and hair care I think skincare has been pretty steady throughout for those regions.
And Latin America has been a very strong factor of growing factor for us. They they had an outstanding year last year and and so we're seeing a little bit of the slowdown.
Now.
Really driven a lot by COVID-19 activity, so, even though COVID-19 was alive and well and the region in 2020.
We were able and our customers were able to really manage through that very well and we had a very very strong year. There now we're starting to see more of those impacts from COVID-19 on our customers on the populations and so our growth is sort of tapered off a little bit and Latin America for the moment.
The Asia, you know a lot of it depends on the country and overall they they they did okay last year.
They took a little bit, but they can take ups and downs depending on the.
What what Lockdowns may be in place and in Asia, and that's what's really driving a lot of the the the topsy turvy outcomes here in Asia as debt Lockdowns will go away and then they'll come back and then they'll go away and they will come back again.
But overall I think Asia, it should be and pretty good position for the back half of the year, but the short answer again is largely Europe and North America is going to lead the outsized growth and the back half of the year.
Latin America, I hope they will kind of weather through some of their COVID-19 storms and.
And resumed to be in a much better position and the it as we get into 2020.2.
And then Asia really again, it could be up it could be down a little but net net for personal care, where kind of a very good second half.
Now that we've got better utilization on the plants.
Youre going to see better operating leverage coming out of that group as well and that's going to feed a lot of the topline and the bottomline growth. The the color group, but I don't want of discount the very nice growth. We're also having and natural colors as well, which is going to continue to drive this growth.
Thank you and then as a final 1 when we look at flavors and extracts and flavor ingredients.
Nice double digit growth could you give some color on the 3 parts.
Sure so you're.
Youre right flavors has traditional flavors you know your traditional sweet savory beverage.
Up double digits, and and more or less and most regions, where we're doing very very well there. We continue to emphasize that part of our product line.
Our ingredients were up the looks like right at I'm looking at the sheet right in front of me kind of high single digits, and then within our S and I. We were looking more like about mid single digit growth. So overall that put us in the high single digit category and as you you're gathering from that pretty good growth across the board.
But we got a lot of work to do.
There are a lot more customers, we can sell to there's a lot more wins, we're going to capitalize on and so I feel very very good about their growth prospects moving forward.
Thank you.
Okay. Thanks Heidi.
Again, if you have a question. Please press Star then 1 of.
The next question is from Michal Ram Gopal with Sidoti. Please go ahead.
Yes, Hi, yes, good morning, Paul and thanks for taking the questions and <unk>.
Wanted to follow back up a little more on the personal care side I know.
You were very upbeat in terms of the outlook there and.
The 1 thing.
I think is concerned and for some as you know with the source and ultimately Orient.
So like Mark et cetera that has already had a difficult time.
People into the office et cetera.
This might sort of hung bath and the.
Wondering if you know we do have the kind of a situation. If you still feel very upbeat are bullish in terms of that business recovering.
Facet and you've seen so far.
Well, you know I don't want to get into a public policy commentary about how governments may respond to the delta variant or any other changes and COVID-19.
But I think there is a critical mass of countries customers.
And that I think will that will drive a lot of this growth.
Really as you look at 2020, and maybe we really kind of bottomed out and that business.
But now with yes, big parts of the World opened and other parts opening are open enough.
And that consumers are using these products I feel good about that now Asia is a bit of a yeah. It was a little bit of what you're getting at there as lockdowns come and go that can certainly impact the market and we have seen that and Asia.
But in my opinion are Europe, and the Americas, maybe more specifically North America I think that momentum is going to continue and as we look at our pipeline as we look at customer launch activity sample requests. They are all pointing in that direction of good back half.
The good first half of 2020.2.
And so as I'm sitting here today on July 23rd that's kind of the way I'm seeing the world.
We continue to diversify this product line as well you may recall that historically, we had a very very strong.
Part of our portfolio was with color cosmetics, but over time, we've really diversified more into hair care skin care.
The oral care, even bath and shower type products and so I think we continue to diversify the business those product lines and some of them did actually quite well during 2020, because they werent incumbent on somebody's socializing and being outside of skincare for example.
I would tell you that for all of those reasons I think the back half is going to be as good as I'm thinking of it as you know as I.
Sit here and all I can tell you of daily sales look like right now Mitch and I got it right in front of me.
And it looks good and it looks good for a July and it looks good for August and it looks good for September.
So yeah.
Yeah, that's what get so the the confidence is very well founded and and looking at the numbers and seeing what the customers' activity is.
Okay, No that's great.
And then just I think.
And it might've been necessarily but.
It relates to the supply.
And chain Challenge and says you know some companies have made it for example, the manta is not the issue of just getting the price cut out just the shorter in terms of.
Chips are.
And it's the move the price.
I was just wondering if you have any of those interest on your end.
Okay. Yeah. So on the I was sorry I was just the your call you came in a little bit broken on that 1 but I think your question is overall supply chain you know, it's hard to get stuff, it's hard to get carriers, you're reading a lot of the stuff and the paper but.
Yeah, Hey, listen friction as part of managing of business, and we expect our managers and and the folks who were running our plants and our supply chain to deliver the goods and whether it's tough times are easy times, you got to deliver the goods or you're out working and the right place and so our expectation and our focus around on time delivery.
And meeting our customers' expectations has not faltered.
The big part of why we won a lot last year and why we're winning a lot. This year and so we expect our businesses to manage through that and some cases, we do that with additional safety stock.
In other cases, we.
Well, let's just say Theres a lot of ways that you can manage your supply chain to meet your customers' expectations and so.
Sure it's tough out there, but you know what that that's why we have people and leadership positions to to overcome those and I would tell you that.
We're overcoming those very well and they are are you read about labor shortages.
Well, you know what recruiters recruit and whether it's hard or easy. If you of any good is the recruiter and youre going to be able to recruit and any environment and if you're good at the plant manager you're going to be able to produce and any environment and those of the expectations. We have of our employees, who have very high expectations and they meet them and so I feel good about our ability.
Ladies and navigate through.
Whether it's inflation, whether its shipping challenges.
Yeah, whatever it may be we work from the office, we operate with a lot of dedicated employees and for US. It's about results and so I think that culture that permeates all of our locations and all of our business lines and some of our employees know the expectations as you deliver the goods to the.
Customers no excuses and and this time is a perfect example, putting that in the practice.
And we can notice that's great and then.
Finally, just the if you could provide maybe a little more color on the flavor solutions acquisition.
And now with the divestitures are pretty much behind you and the appetite for being even more aggressive on that front and interest.
And if it's going to be more technology, driven like we saw was flavors solutions.
Yeah of flavor solutions is if there is a lot of things we like about it it's about $10 million and revenue.
It helps us to extend some of our technology platforms and as I've said, many times before and these calls there's no flavor company and the world that has a lock on and every.
Taste modulation technology. So for example.
Flavor Company X. They have a really good sweetness enhancement for this particular drink, but that doesn't mean it works and every suite related application and so the ability of that have complementary technologies and and expansive list of solutions really is what makes you a good flavor company and so of flavor solutions.
Adds to our capabilities there they have a very nice library of reaction flavors.
They have very good customer relationships, we oftentimes think it's the only the big flavor companies that have access to the really good customers and that's just simply not the case and so flavor solutions has built up some really good customer relationships over the years and and they're able to deliver a very good products.
The them too so.
A couple of reasons why we like the and then of course, the known as I've always said, we want something that we can integrate without a lot of headache and cultural issues. There's a very strong cultural connection I think we very much and see the importance of managing and we see the importance of putting our customers first and.
And those things are very very clear and both sensing and flavors solutions and so I feel very very good about flavor solutions.
I've also said and the past about acquisitions, we want to make them reasonable they should be purchased for reasonable multiples.
And you can integrate them and you can build upon your business and I think it checks the box on each 1 of those expectations that we have and so then looking forward.
Sure I have got a pipeline of businesses that we're interested in and maybe we'll have more to talk about later in the year.
But you know again, we're not going to rush things and we're not going to do anything that doesn't make sense strategically or financially for the company. So we're going to maintain our discipline there and.
But sure we may have some other things to talk about as we move into the future.
Okay, No that's great. Thanks for taking the questions and before I go and sandbox great.
Congratulations on the books Oh, yes. Thank you I I can't say I had much to do with that but I enjoyed watching them and T V.
It's nice to enjoy it and so there you go.
Okay. Thanks Mitra.
The next question is from Lee first with Hightower Advisors. Please go ahead.
Good morning, I have a follow up question and.
And inflation and.
I understand you can usually.
Has the long and inflation in the form of price and I understand the.
And moving target with the Sip.
And my chain right now but is there.
And <unk> and <unk>.
And are any price point, where you would get concerned that you could not pass along price and protect your margins.
Yeah, I'm not going to tell you that on your percent of products to 100% of customers.
The lands and the place that both parties are happy with and so you know and some cases I think another hallmark of our businesses, we have the ability of the ability to formulate something different formulated and alternative.
To what we've been using that that can certainly be the case, but I think overall, we're going to I think we're going to land and the good spot here I've got a great deal of competence of that again, that's borne of actually seeing what's happening in the market seeing what what our performance has been and with pricing over the years. So.
No I don't think there's anything out there that that's really going to be of problem.
No Theres no 1 raw material to this company, that's going to bring us to our knees and so that's yet another great feature of these ingredient businesses is you have a highly diversified raw material supply base.
<unk> also provides some level of installation in the face of a pretty broad based inflation. So in short.
We're managing 3 of this and I don't have any concerns about our ability.
To manage through this just as we've managed through many of these before us now.
Thank you and in terms of of the acquisition can you give us any more insight into.
And markets are and products that are complementary to what you're doing that radio there's something new.
And also 1 of its thing deal environment, and if theyre more competition for acquisitions.
The acquisitions right now.
Sure. So I think speaking about flavor solutions and made a lot of the technology.
And the complementary technologies and the realm of taste modulation and so things that.
Help you have sweetness without using as much sugar for example, help you have that solve the sensation of without as much salt actually being used.
And so yeah. They they would provide some enhancement to for example, our savory flavors platform. So that would be an example for you.
With respect to other companies that could be on the horizon or it could be something that we're interested in.
Yeah, I mean, a lot of companies that their auction processes, but in other companies you you affords the relationship over time.
And that that May then lead to an acquisition and some cases you made a day not acquired all of you May just license. Because then you get what you need without going through the <unk>.
The dynamics of and acquisition and so.
And I wouldn't tell you that it's any more or less competitive now to buy a company than it was a couple of years ago.
It's really just a matter of whether a seller is interested in selling not every company is for sale contrary to some some folks who believe that that that is the case and then.
The companies are family owned for many generations and they have no interest whatsoever and selling to anybody at any price.
But then there are many others that you know, it's it's a matter of timing.
And then it's a matter of of a of a win win on a from a financial standpoint.
So yeah, I wouldn't say, there's anything necessarily unique about this time and place with respect to the types of businesses that we are looking at maybe others have of different opinion on that but that's just what I what I have seen.
For the last year.
Thank you.
Okay. Thank you.
There are no further questions at this time I will turn the conference back over to the company for any closing remarks.
Okay. Thank you very much for your time this morning that will conclude our call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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