Q4 2021 Sensient Technologies Corp Earnings Call
Good morning, and welcome to the <unk> Technologies Corporation, 2021 fourth quarter and year end earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Speaker 1: Good morning and welcome to the Sentient Technologies Corporation 2021 fourth quarter and year-end earnings conference call. All participants will be in a listening mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Speaker 1: After today's presentation, there will be an opportunity to ask questions.
Speaker 1: To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is.
Please note this event is being recorded.
I would now like to turn the conference over to Mr. Steve Rolfs. Please go ahead Sir.
Speaker 1: I would now like to turn the conference over to Mr. Steve Walsh. Please go ahead, sir.
Good morning, welcome to <unk> fourth quarter earnings call I'm, Steve Rolfs, Senior Vice President and Chief Financial Officer of <unk> Technologies Corporation, and I'm joined this morning by Paul Manning <unk>.
Speaker 2: Good morning. Welcome to Sentient's fourth quarter earnings call. I'm Steve Rolfs, Senior Vice President and Chief Financial Officer of Sentient Technologies Corporation.
Speaker 2: I am joined this morning by Paul Manning, Senate's Chairman, President, and Chief Executive Officer.
Chairman, President and Chief Executive Officer.
Earlier. This morning, we released our 2021 fourth quarter financial results.
Speaker 2: Earlier this morning, we released our 2021 fourth quarter financial.
Speaker 2: A copy of the release and our investor presentation is available on our website at sentient.com.
A copy of the release and our Investor presentation is available on our website at <unk> com.
During our call today, 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 results of the operations divested the impact is.
Speaker 2: During our call today, we will be explaining the differences between our GAAP results and our adjusted results. The adjusted results for 2021 and 2020 remove the impact of the divestiture related costs, the results of the
Speaker 2: the impact of the costs and income related to our operational improvement plan, and the 2020 one-time employee
The cost and income related to our operational improvement plan.
And the 2021 time.
Employee Covid payment.
Speaker 2: We believe the removal of these items provides investors with additional information to evaluate the company's performance and improves the comparability of results between reporting periods.
We believe the removal of these items provides investors with additional information to evaluate the company's performance and improves the comparability of results between reporting periods.
This also reflects how management reviews and evaluates the company's operations and performance. These non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.
Speaker 2: This also reflects how management reviews and evaluates the company's operations and performance.
Speaker 2: 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 financial measures is available in our press release.
A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is available in our press release.
We encourage investors to review these reconciliations in connection with the comments we make this morning.
Speaker 2: We encourage investors to review these 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 question 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.
Speaker 2: I would also like to remind everyone that comments made this morning, including responses to your question, 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 at remedial action, and the timing of a return of more normal economic activity, including impacts on our business related to current logistic challenges.
Economic activity.
<unk> impacts on our business related to current logistics challenges.
We urge you to read since in previous SEC filings and our forthcoming 10-K 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.
Speaker 2: We urge you to read Stencian's previous FCC filings and our forthcoming 10-K 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.
Speaker 2: Now we'll hear from Paul Manning. Thank you, Steve. Good morning. Earlier today, we released our fourth quarter results, and I'm very pleased to report that we delivered adjusted fourth quarter local currency revenue growth of 11%, and adjusted local currency EBITDA growth of 15%.
Now, we'll hear from Paul Manning. Thank you Steve Good morning earlier today, we released our fourth quarter results and I'm very pleased to report that we delivered adjusted fourth quarter local currency revenue growth of 11%.
Adjusted local currency EBIT dollar growth of 15%.
We continue to have outstanding growth from each of our groups in the fourth quarter.
Speaker 3: We'll continue to have outstanding growth from each of our groups in the fourth quarter.
Our full year adjusted local currency revenue adjusted local currency EBITDA and adjusted local currency EPS were all at or above the top end of our guidance and exceeded the guidance we communicated at the start of 2021.
Speaker 3: Our full-year Adjusted Local Currency Revenue, Adjusted Local Currency EBITDA, and Adjusted Local Currency EPS were all at or above the top end of our guidance.
Speaker 3: and exceeded the guidance we communicated at the start of 2021.
Overall, the company had strong operating and financial performance in 2021, following a very good 2020.
Speaker 3: Overall, the company had strong operating and financial performance in 2021, following a very good 2020.
Flavor and extracts group had an outstanding year in 2021, achieving 9% adjusted local currency revenue growth in <unk>.
Speaker 3: The Flavors and Extracts Group had an outstanding year in 2021, achieving 9% adjusted local currency revenue growth and 15% adjusted local currency operating profit growth.
15% adjusted local currency operating profit growth.
This performance follows the exceptional performance it had in 2020 up 9% adjusted local currency revenue growth and 13% adjusted local currency profit growth.
Speaker 3: The group's performance follows the exceptional performance it had in 2020 of 9% adjusted local currency revenue growth and 13% adjusted local currency profit growth.
The color group finished 2021 with 9% adjusted local currency revenue growth and 5% adjusted local currency operating profit growth.
Speaker 3: The Color Group finished 2021 with 9% adjusted local currency revenue growth and 5% adjusted local currency operating profit growth.
Asia Pacific reported adjusted local currency revenue growth of 10% and adjusted local currency profit growth of 22%.
Speaker 3: Asia Pacific reported adjusted local currency revenue growth of 10% and adjusted local currency profit growth of 22%.
We completed the last of our three divestitures in the second quarter of 2021, and we completed the acquisition of flavor solutions during the third quarter of 2021.
Speaker 3: We completed the last of our three divestitures in the second quarter of 2021, and we completed the acquisition of flavor solutions during the third quarter of 2021.
Our focus on sales execution customer service and product delivery have been significant factors for our growth over the last few years.
Speaker 3: Our focus on sales execution, customer service, and product delivery have been significant factors for our growth over the last few years.
Our portfolio of natural flavors and colors and a robust product technologies is position us for continued growth.
Speaker 3: Our portfolio of natural flavors and colors and our robust product technologies has positioned us for continued growth.
Each of our groups are delivering high sales win rates and our sales pipelines remain strong.
Speaker 3: Each of our groups are delivering high sales win rates and our sales pipelines remain strong.
As mentioned during our last couple of calls we continue to see a number of supply chain challenges, including higher input costs, such as raw materials energy transportation and labor.
Speaker 3: As mentioned during our last couple of calls, we continue to see a number of supply chain challenges including higher input costs such as raw materials, energy transportation, and labor. We continue to experience delays.
We continue to experience delays in logistics, we are managing through these issues by investing in key raw materials and holding more safety stock to support our customer lead times.
Speaker 3: We are managing through these issues by investing in key raw materials and holding more safety stocks to support our customer lead.
We also continue to work through price increases to cover the higher costs.
Speaker 3: We also continue to work through price increases to cover the higher costs.
We expect these supply chain challenges to continue throughout 2022, but I have no doubt that we will overcome these challenges I'm very pleased with our solid on time customer product delivery.
Speaker 3: We expect these supply chain challenges to continue throughout 2022, but I have no doubt that we will overcome these challenges. I'm very pleased with our solid on-time.
The flavors and extracts finished 2021 reporting 8% adjusted local currency revenue growth in the fourth quarter and 11% adjusted local currency profit growth in the fourth quarter.
Speaker 3: The flavors and extracts finished 2021 reporting 8% adjusted local currency revenue growth in the fourth quarter and 11% adjusted local currency profit growth in the fourth quarter.
This is the seventh straight quarter of mid single digit or better local currency adjusted revenue growth.
Speaker 3: This is the seventh straight quarter of mid-single-digit or better local currency adjusted revenue growth.
This growth is generated across almost all product lines.
Speaker 3: This growth is generated across almost all product lines.
The growth in the flavors and extracts group is a direct result of strong new sales wins and more value added product solutions.
Speaker 3: The growth in the flavors and extracts group is a direct result of strong new sales wins and more value-added product solutions.
For the full year of 2021 the group's adjusted operating profit margin increased 60 basis points from $12 nine to 13, 5%.
Speaker 3: For the full year of 2021, the group's adjusted operating profit margin increased 60 basis points from 12.9 to 13.5 percent. The group is well positioned.
The group is well positioned for another good year in 2022.
The product portfolio is robust and the group is executing on its strategy.
Speaker 3: The product portfolio is robust and the group is executing on its strategy.
Speaker 3: I expect continued growth in our flavors and extracts and flavor ingredients product category.
That continued growth in our flavors and extracts and flavor ingredient product categories.
The group's natural ingredients business will have a modest headwind in the first half of 2022 as the yield on the most recent onion harvest was lower than hoped for and we exceeded our sales targets in 2021.
Speaker 3: The group's natural ingredients business will have a modest headwind in the first half of 2022, as the yield on the most recent onion harvest was lower than hoped for, and we exceeded our sales targets in 2021.
In 2022 and for the foreseeable future I expect the flavors and extracts group to deliver mid single digit revenue growth and operating profit margin improvement of 50 to 100 basis points annually.
Speaker 3: In 2022 and for the foreseeable future, I expect the Flavors and Extracts Group to deliver mid-single-digit revenue growth and operating profit margin improvement at 50 to 100 basis points annually.
The color group also had an outstanding fourth quarter and 2021, the group delivered 16% adjusted local currency revenue growth and 19% adjusted local currency profit growth in the quarter we.
Speaker 3: The Color Group also had an outstanding fourth quarter in 2021. The group delivered 16% adjusted local currency revenue growth and 19% adjusted local currency profit growth in the quarter.
We saw double digit revenue and profit growth in both food and pharmaceutical colors and personal care.
Speaker 3: We saw double-digit revenue and profit growth in both food and pharmaceutical colors and personal care.
The growth in the food and pharma business was driven by new product launches and solid demand for natural colors.
Speaker 3: The growth in the food and pharma business was driven by new product launches and solid demand for natural colors.
We continue to expand our already robust natural colored portfolio to ensure we fully support our customers and their ongoing product conversion needs.
Speaker 3: We continue to expand our already robust natural color portfolio to ensure we fully support our customers and their ongoing product conversion needs.
I anticipate our food and pharma business will have another good year in 2022.
Speaker 3: I anticipate our food and pharma business will have another good year in 2022.
The personal care business had a strong fourth quarter, delivering double digit revenue and double digit profit growth in.
Speaker 3: The personal care business had a strong fourth quarter, delivering double-digit revenue and double-digit profit growth.
In the first half of 2021, the personal care business continued to be impacted by COVID-19.
Speaker 3: In the first half of 2021, the personal care business continued to be impacted by COVID-19.
Speaker 3: However, in the second half of 2021, the business has rebounded nicely.
However, in the second half of 2021 the business has rebounded nicely.
The group continues to focus on product line diversification into skincare body care and other categories.
Speaker 3: The group continues to focus on product line diversification into skin care, body care, and other categories.
Our expansion in the personal care product portfolio should help fuel consistent growth for the foreseeable future.
Speaker 3: Our expansion of the personal care product portfolio should help fuel consistent growth for the foreseeable future.
In addition to the rebound in personal care, we believe that the growth in the color group is the direct result of its focus on innovation sales execution and customer service.
Speaker 3: In addition to the rebound in personal care, we believe that the growth in the color group is a direct result of its focus on innovation, sales execution, and customer service.
Continue to expect the color group to deliver mid single digit revenue growth and an operating profit margin at or above 20% in 2022 and over the long term.
Speaker 3: Continue to expect the Color Group to deliver mid-single-digit revenue growth and an operating profit margin at or above 20% in 2022 and over the long term.
Asia Pacific had an outstanding 2021, the group delivered 15% adjusted local currency revenue growth and 25% adjusted local currency profit growth in the fourth quarter.
Speaker 3: Asia-Pacific had an outstanding 2021. The group delivered 15% adjusted local currency revenue growth and 25% adjusted local currency profit growth in the fourth quarter.
We continue to see higher sales win rates as a result of our focus on sales execution customer service and new flavor and color technologies.
Speaker 3: We continue to see higher sales win rates as a result of our focus on sales execution, customer service, and new flavor and color technology.
In the fourth quarter of 2021, the color had strong demand in almost all regions.
Speaker 3: In the fourth quarter of 2021, the color had strong demand in almost all regions.
I expect Asia Pacific to deliver mid to high single digit revenue growth in 2022 and over the long term.
Speaker 3: I expect Asia-Pacific to deliver mid-to-high single-digit revenue growth in 2022 and over the long term.
I'm very pleased with our performance in 2021, our focus on sales execution product diversification and customer service are driving the growth in new sales wins, we are experiencing in each group.
Speaker 3: I'm very pleased with our performance in 2021. Our focus on sales execution, product diversification and customer service are driving the growth and new sales wins we're experiencing in each group.
We have seen an increase in our customers ordering in advance in response to the global supply chain challenges.
Speaker 3: We have seen an increase in our customers ordering in advance in response to the global supply chain challenges. This benefited our growth.
This benefited our growth in the fourth quarter.
We have implemented pricing actions with bags, which I expect to have more significant impact in 2022.
Speaker 3: We have implemented pricing actions, which I expect to have more significant impact in 2022 to offset the increase.
To offset the increases in our input costs.
As a baseline we expect we will continue to deliver mid single digit revenue growth in 2022 and beyond.
Speaker 3: As a baseline, we expect we will continue to deliver mid-single-digit revenue growth in 2022 and beyond.
With the completion of our previously announced divestiture activity in 2021, our product portfolio is strong and we remain focused on our key customer markets food pharmaceutical and personal care.
Speaker 3: With the completion of our previously announced divestiture activity in 2021, our product portfolio is strong and we remain focused on our key customer markets, food, pharmaceutical, and personal care.
We have very good internal investment opportunities that should drive future growth.
Speaker 3: We have very good internal investment opportunities that should drive future growth.
As a result, I expect our capital expenditures to be in the range of $80 million to $90 million in 2022 with a large number of investment opportunity projects.
Speaker 3: As a result, I expect our capital expenditures to be in the range of $80 to $90 million in 2022 with a large number of investment opportunity projects.
We completed the acquisition of flavor solutions in the third quarter of 2021 and the integration of this business is proceeding as planned.
Speaker 3: We completed the acquisition of Flavor Solutions in the third quarter of 2021, and the integration of this business is proceeding as planned.
We also continue to evaluate other sensible acquisition.
Speaker 3: We also continue to evaluate other sensible acquisition opportunities.
[noise] opportunities apps.
Absent an acquisition excess cash will be used to pay down debt and we have the option to buy back stock.
Speaker 3: Absent an acquisition, excess cash will be used to pay down debt, and we have the option to buy back the stock.
I'm very happy with our financial performance in 2021.
Speaker 3: I'm very happy with our financial performance in 2021. We're at the top end of our adjusted local currency guidance for the year, and I'm optimistic about 2022 and the future of our business.
We were at the top end of our adjusted local currency guidance for the year and I'm optimistic about 2022, and the future of our business.
Steve will now provide you with additional details on the fourth quarter results.
Speaker 3: Steve will now provide you with additional details on the fourth quarter results.
Thank you Paul.
Our fourth quarter GAAP diluted earnings per share was <unk> 65.
Speaker 2: Our fourth quarter GAAP diluted earnings per share was $0.65. Included in these results are approximately $0.07 per share of divestiture costs and the cost of the operational improvement plan. In addition, our GAAP earnings per share in the fourth quarter of 2021 include approximately $700,000 of revenue and $500,000 of operating expense related to the results of the divested operation.
Included in these results are approximately seven per share of divestiture costs and the cost of the operational improvement plan. In addition, our GAAP earnings per share in the fourth quarter of 2021 include approximately 700000 of revenue and 500000 of operating expense related to the results of a diverse.
The operations.
Last year's fourth quarter GAAP results include a divestiture operational improvement plan costs, and a onetime COVID-19 employee payment, which decreased last year's fourth quarter results by approximately <unk> seven per share.
Speaker 2: Last year's fourth quarter GAAP results included divestiture, operational improvement plan costs, and a one-time COVID employee payment, which decreased last year's fourth quarter results by approximately $0.07 per share. In addition, our GAAP earnings per share in the fourth quarter of 2020 included approximately $25.2 million of revenue and approximately $0.06 per share of earnings related to the divested product.
In addition, our GAAP earnings per share in the fourth quarter of 2020 included approximately $25 2 million of revenue and approximately <unk> <unk> per share of earnings related to the divested product lines.
Excluding these items consolidated adjusted revenue was $339 8 million, an increase of 10, 7% in local currency compared to the fourth quarter of 2020.
Speaker 2: Excluding these items, consolidated adjusted revenue was $339.8 million, an increase of 10.7% in local currency compared to the fourth quarter of 2020.
Our adjusted local currency EBITDA was up 14, 7% for the quarter and our adjusted local currency EPS was up 21, 3% for the quarter.
Speaker 2: Our adjusted local currency EBITDA was up 14.7% for the quarter, and our adjusted local currency EPS was up 21.3% for the quarter.
Our cash flow from operations was down in the fourth quarter, primarily due to an increase in strategic investments in our inventory position during the fourth quarter. We remain focused on optimizing our working capital levels and we will continue to make strategic investments in our inventory in 2022 to support our forecasts.
Speaker 2: Our cash flow from operations was down in the fourth quarter, primarily due to an increase in strategic investments in our inventory position during the fourth quarter.
Speaker 2: We remain focused on optimizing our working capital levels, and we will continue to make strategic investments in our inventory in 2022 to support our forecasted demand and ensure we have appropriate safety stock positions as logistics and supply chain challenges persist.
<unk> demand and ensure we have appropriate safety stock positions as logistics and supply chain challenges persist.
Capital expenditures were $61 million for 2021, we purchased approximately 492000 shares of company stock in 2021 for nearly $43 million.
Speaker 2: Capital expenditures were $61 million for 2021. We purchased approximately 492,000 shares of company stock in 2021 for nearly $43 million.
Our debt to adjusted EBITDA is now 2.0 as of December 31, 2021 down from two four as of December 31, 2020, our balance sheet is in a solid position to support increased capital expenditures attractive M&A and our long standing dividend.
Speaker 2: Our debt to adjusted EBITDA is now 2.0 as of December 31st, 2021, down from 2.4 as of December 31st, 2021.
Speaker 2: Our balance sheet is in a solid position to support increased capital expenditures, attractive M&A, and our long-standing dividend.
Now turning to 2022, we expect a reported GAAP EPS to grow at a mid teen growth rate compared to our 2021 reported GAAP EPS of $2 81.
Speaker 2: Now turning to 2022, we expect our reported GAP EPS to grow at a mid-teen growth rate compared to our 2021 reported GAP EPS of $2.81.
At this time at this time, we do not anticipate any material divestiture related costs or operational improvement plan cost in 2022.
Speaker 2: At this time, we do not anticipate any material divestiture related costs or operational improvement plan costs in 2022.
We expect our local currency revenue to be up mid single digits compared to our 2021 adjusted revenue and we expect our local currency adjusted EBITDA to grow at a high single digit rate in 2022, we also expect our local currency EPS.
Speaker 2: We expect our local currency revenue to be up mid-single digits compared to our 2021 adjusted revenue, and we expect our local currency adjusted EBITDA to grow at a high single-digit rate in 2022. We also expect our local currency EPS to be up high single digits compared to our 2021 adjusted EPS of $3.13.
To be up high single digits compared to our 2021 adjusted EPS of $3.13.
Looking at our 2022 tax rate, we expect to be roughly in line with our rate in 2021.
Speaker 2: Looking at our 2022 tax rate, we expect to be roughly in line with our rate in 2021. On a quarter-to-quarter basis, our rate will fluctuate, and therefore we continue to believe that our local currency adjusted EBITDA growth is an important measure of our performance.
On a quarter to quarter basis, our rate will fluctuate and therefore, we continue to believe that our adjusted that our local currency adjusted EBITDA growth.
<unk> is an important measure of our performance.
Based on current exchange rates, we expect currency to be a headwind of approximately <unk> 10 for the year with most of the impact in the first three quarters of 2022.
Speaker 2: Based on current exchange rates, we expect currency to be a headwind of approximately $0.10 for the year, with most of the impact in the first three quarters of 2022.
Our reported results include the impact of currency translation and as many of you are aware the U S. Dollar began to strengthen against other foreign currencies in the fourth quarter of 2021.
Speaker 2: Our reported results include the impact of currency translation, and as many of you are aware, the U.S. dollar began to strengthen against other foreign currencies in the fourth quarter of 2021.
Thank you for your time. This morning, we will now open the call for questions.
Speaker 2: Thank you for your time this morning. We will now open the call for questions.
Thank you we will now begin the question and answer session.
Speaker 1: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our...
Ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question will come from Ghansham Panjabi with Baird. Please go ahead.
Speaker 1: And the first question will come from Ghanshyam Punjabi with Baird. Please go ahead.
Thanks, Good morning, everyone.
Speaker 4: Thanks, good morning everyone. Morning, guys. Morning. Morning, you know, Paul, in your comments on customers ordering in advance, can you just give us a bit more color on that? Did that impact any particular segment? How much did it benefit the fourth quarter? How do you see this dynamic sort of unfolding during the first part of next year? And then also, could you disaggregate price versus volume contribution by segment for the fourth quarter?
Thank God morning, good morning.
Paul in your comments on customers ordering in advance can you just give us a bit more color on that did that impact any particular segment, how much of the benefit the fourth quarter.
Do you see this dynamic sort of unfolding during the first part of next year and then also could you disaggregate price versus volume contribution by segment for the fourth quarter.
Sure so.
If you look at our revenue in Q4, we were up about 11%.
Speaker 3: If you look at our revenue in Q4, we were up about 11%. 9% or so, high single digits was volume, which is to say that price was two percentage points roughly, so low single digits. So just on the price volume breakdown.
9% or so high single digits was volume.
Which is to say that price was two percentage points roughly so low single digits.
Just on the price volume breakdown first now.
Another snapshot of that 11% growth that you could say alright price was a couple of percentage points customers stock builds in other words customers ordering in excess of what would be their their typical demand that might have been about two or three percentage points.
Speaker 3: Another snapshot of that 11% growth, you could say, all right, price was a couple percentage points. Customer stock bill, in other words, customers ordering in excess of what would be their typical demand, that might have been about two or three percentage points.
Early consistent across each of the groups.
Speaker 3: fairly consistent across each of the groups.
<unk>.
If you look at kind of the progression of price in the group's flavor is probably a little bit ahead and as much as a number of their anniversary dates fell before January 1st.
Speaker 3: If you look at kind of the progression of price in the groups, Flavours is probably a little bit ahead in as much as a number of their anniversary dates fell before January 1st.
Colors in Asia, Therefore, youll see a bigger impact from price beginning January 1st where a larger component of their agreements had an anniversary date of January one.
Speaker 3: Colors in Asia, therefore, you'll see a bigger impact from price beginning January 1st, where a larger component of their agreements had an anniversary date of January 1st.
Speaker 3: So, those are sort of at a broad brush kind of how that breaks down for the fourth quarter.
So those are sort of that at a broad brush kind of how that breaks down.
For the fourth quarter.
Perfect and then as you as we kind of think about guidance for 2022, you know youre guiding towards pretty healthy mid single digit topline growth and basically <unk> in terms of operating leverage.
Speaker 4: Perfect. And then as you kind of think about guidance for 2022, you know, you're guiding towards pretty healthy single-digit top-line growth and basically 2x in terms of operating leverage. Just give us, you know, off of pretty tough comps. You've had a very, very good run the last couple of years on an EPS basis. So what do you attribute that operating leverage to? And then the second part to that, in terms of raw material inflation, where did you end 4Q and how should we think about quarterly sequencing in 2022?
Give us.
Off a pretty tough comps you've had a very very good run the last couple of years on an EPS basis. So what do you attribute that operating leverage too and then the second part to that in terms of raw material inflation, what did you and talk to you and how should we think about quarterly sequencing in 2022.
Okay. So on the operating leverage I think the fundamental reason why we're getting good operating allowed theirs too.
Product mix and now we're starting to get price to overcome those inflationary pressures so.
On the mix front, we've been talking for many years in the company that our strategy.
On the flavors and extracts side of the business was to do that really focus on selling what the industry would probably describe as traditional flavors, we had very good flavor ingredients.
Speaker 3: flavors and extracts side of the business was to do that, really focus on selling what the industry would probably describe as traditional flavors. We had very good flavor ingredients.
Those are important as well, but really where the the improvement in mix was going to come with by selling more within the realm of flavors extracts.
Speaker 3: Those are important as well, but really where the improvement in mix was going to come was by selling more within the realm of flavors, extracts.
Two a lot of these b and C customers. These local and regional customers that debt that we have described so I think that's a big factor, but what you're also now beginning to see is the operating leverage improving in each of the groups as well again consistent with some of the price attainment that we're starting to see and I think we will.
Speaker 3: to a lot of these B and C customers, these local and regional customers that we have described. So I think that's a big factor, but what you're also now beginning to see is the operating leverage improving in each of the groups as well, again, consistent with some of the price attainment that we're starting to see and I think we'll continue to see. So I have every expectation that
To see so I have every expectation that.
As we're now in Q1 and our sales are off to a very good start.
Speaker 3: As we're now in Q1 and our sales are off to a very good start and our pricing actions are well underway, completed in many cases, perhaps even a majority of cases.
Our pricing actions are well underway completed and in many cases, perhaps even a majority of cases.
But that that will be an ongoing item for us to consider but I think as you look at the sequence Q1 to Q4 of 2022, I think you'll continue to see a very very nice leverage.
Speaker 3: But that will be an ongoing item for us to consider, but I think as you look at the sequence Q1 to Q4 of 2022, I think you will continue to see a very, very nice leverage from that revenue growth that we're forecasting.
From that revenue growth that we're forecasting.
Now on your second question with respect to inflation or input costs.
Speaker 3: Now on your second question with respect to inflation or input costs, as you look at our
And as you look at our total business.
We would suggest that taking the equivalent of a mid single digit price increase so in other words, taking our total revenue and we should get about mid single digit.
Speaker 3: We would suggest that taking the equivalent of a mid-single-digit price increase, in other words taking our total revenue, and we should get about mid-single-digit price on that, we should be able to cover our inflationary pressure and maintain, perhaps even grow, our gross margin. So that's our pricing goal.
On that.
We should be able to cover our inflationary pressure and maintain perhaps even grow our gross margins. So that's our pricing goal.
That would that imply that if you look at the cost side of our income statement those costs would be up kind of mid single digit of costs. So revenues up by mid single digit on about a mid single digit inflationary.
Speaker 3: That would then imply that if you look at the cost side of our income statement, those costs would be up kind of mid-single-digit of cost, so revenues up by mid-single-digit on about a mid-single-digit inflationary income.
In input.
So again the goal gross margin will be at least maintained and so I think that would suggest that as you saw in Q4 and in Q3.
Speaker 3: So, again, the goal gross margin will be at least maintained, and so I think that would suggest that as you saw in Q4 and in Q3, there was not as much operating leverage as we would traditionally get, but the pricing is going to alleviate that and improve that situation, I think, each quarter that we move through the year.
There was not as much operating leverage as we would traditionally get but the pricing is going to alleviate that and improve that situation I think at each quarter that we move through the year.
Okay interesting. Thanks, so much congrats on all the progress enjoy your weekend.
Speaker 4: Okay, fantastic. Thanks so much. Congrats on all the progress. Enjoy your weekend. Thanks. Okay. Thank you, Consul.
Thank you Ghansham.
And the next question will come from Heidi <unk> with BNP Paribas. Please go ahead.
Speaker 1: And the next question will come from Heidi Besternan with BNP Paribas. Please go ahead. Good morning.
Good morning.
I'd a question.
Hi, first can you just clarify what you said it would be last question did you say mid single digit pricing or a mid single digit inflation.
Speaker 5: Hi. First, to just clarify what you said in the last question, did you say mid-single-digit pricing or mid-single-digit inflation? I mean, your sales guidance is mid-single-digit, so I'm just wondering what you're assuming for volume, then. So could you first clarify that mid-single-digit comment, please?
Our sales guidance is mid single digit so I'm just wondering what youre assuming for volumes and then so could you first clarify that mid single digit comment for me.
Yeah. So if you if you look at that on pricing, it's mid single digit pricing. So take our revenue as the denominator in that scenario and then mid single digit costs would be take our costs as the denominator in that scenario and so since we do generate a reasonably good gross margin.
Speaker 3: Yeah, so if you look at on pricing, it's mid-single-digit pricing, so take our revenue as the denominator in that scenario. And then mid-single-digit costs would be take our cost as the denominator in that scenario. And so since we do generate a reasonably good gross margin in the company, you'd see that by taking a mid-single-digit price increase, we could at least maintain the gross margin, if not enhance it in some business.
The company you would see that by taking the mid single digit price increase we get at least maintain the gross margin if not enhance it in some businesses and so then.
Speaker 3: So then from the volume standpoint, we're off to a very, very good start in the business and new wins continue to be very good. And I can tell you with a great deal of confidence, Heidi, that we are going to deliver mid-single digit revenue. There could be some upside for sure.
From the volume standpoint.
We're off to a very very good start in the business and new wins continued to be very good and.
I can tell you with a great deal of confidence that that we're going to deliver mid single digit revenue there could be some upside for sure.
But you know theres a lot of moving parts in the market right now.
Speaker 3: But, you know, there's a lot of moving parts in the market right now. There's, you know, there's price, some of the price is being driven by logistics costs. Some of those logistics costs could decline as the year goes on. So, for example, you may have a situation with a customer where you are giving him a surcharge.
As you know there's price some of the price is being driven by logistics costs. Some of those logistics costs could decline as the year goes on so for example, you may have a situation with a customer where you are giving him a surcharge.
Upon the reduction or deflationary impact on some of these transportation items, you may not be taking that surcharge later in the year.
Speaker 3: Upon the reduction or deflationary impact on some of these transportation items, you may not be taking that surcharge later in the year. So that's why pricing may not be mid-single digits across the board and in all phases, and it wouldn't be necessary either. That could be a factor later in the year.
So that's why pricing may not be mid single digits across the board in all phases and it wouldn't be necessary either that could be a factor later in the year and then of course there is.
Speaker 3: And then, of course, there's customers building inventory above and beyond their forecast. That is not a forever activity that our customers are going to be doing that.
Customers building inventory above and beyond their forecast that is not a forever.
Activity that our customers are going to be.
Doing that so.
Those could be.
Speaker 3: You know, those could be things to consider in the future. But again, I feel very, very comfortable about mid-single digit. We've been doing that. There could absolutely be some upside, Heidi, but ultimately I wanna commit to what we can do with a high degree of confidence.
Things to consider in the future, but again I feel very very comfortable that mid single digit we've been doing that there could absolutely be some upside highly but ultimately I want to commit to what we can do with a high degree of confidence.
Yeah.
Thank you.
Speaker 6: Thank you. And then the next one, I guess, you touched upon margin. Specifically in flavors and extracts, you talked about 50 to 100 basis points of margin expansion. It is quite unusual to see percentage margins increasing in times of inflation. So can you talk about the drivers there, please?
Then the next one I guess, sorry, you touched up on margin specifically in flavors and extracts you talks about it.
<unk> basis points of margin expansion. It is quite unusual to see percentage margins increasing in times of inflation.
So can you talk about the drivers there please.
Very similar.
Discussing its price and its mix so longer term, it's about mix selling more of the flavors related products selling more of our bio nutrients related products et cetera.
Speaker 3: selling more of the flavors-related products, selling more of our bio-nutrient-related products, et cetera.
Which in general tend to command a higher gross margin than some other products that we may be selling in the flavor and extracts group. So that's going to be the long term fundamental driver on our journey towards a 20% operating profit margin very similar to the dynamic that we executed in color.
Speaker 3: which in general tend to command a higher gross margin than some other products that we may be selling in the flavor and extracts group.
Speaker 3: So that's going to be the long-term fundamental driver on our journey towards a 20% operating profit margin. Very similar to the dynamic that we executed in color and in Asia Pacific.
And in Asia Pacific.
But for the shorter term I think certainly as inflation has hit before pricing as a general statement.
Speaker 3: But for the shorter term, I think certainly as inflation has hit before pricing as a general statement.
We will also get improvement on the operating profit margin there.
Speaker 3: We will also get improvement on the operating profit margin there as well, feeding into that. So again, on this metric, I feel very, very comfortable in our ability to achieve it. So whether pricing persists or inflation persists.
As well as feeding into that so again on this metric I feel very very comfortable in our ability to achieve it so whether pricing persists or inflation persists I think we'll be able to manage those two components, but I think the broader longer term, it's all about mix for us and I think we've shown a leg.
Speaker 3: I think we'll be able to manage those two components. But I think the broader, longer term, it's all about mix for us. And I think we've shown a level of success there that gives me great confidence that we can continue to do that well into the foreseeable future.
Will of success there that gives me great confidence that we can continue to do that well into the foreseeable future.
Thank you.
Speaker 5: Thank you, and then I got cut off during the colors discussion. I wondered if you could update us on where we stand in personal care colors, please. Is there more to go in makeup, and do you have an indication of, say, where we are versus pre-pandemic levels in makeup colors? Thank you.
And then I got cut off during the call. There is discussion and I Wonder if you could update us on where we stand in personal care color screen is there more to go in makeup and do you have an indication of staying where we are versus pre pandemic levels. In makeup colors. Thank you.
Sure. So personal care has started to make of it and the really the back half of 2021 started to make a very nice improvement rebound.
Speaker 3: Sure, so personal care has started to make a, really the back half of 2021, started to make a very nice improvement, rebound. I think that's going to nicely continue here in 2022. We are already off to, again, a very nice start in personal care as we look at the year so far. If you go back to kind of 2019, I would tell you that across all the categories, let's just take the broad categories of makeup,
I think that's going to nicely continue here in 2022, we are already off to again, a very nice start in personal care.
As we look at the year. So far if you go back to kind of 2019 I would tell you that across all of the category, let's just take the broad categories of of makeup.
Hair skin and then we can say other which would include Sun care body care.
Speaker 3: hair, skin, and then we can say other, which would include sun care, body care.
In general all of our categories are above their 2019 levels.
Speaker 3: In general, all of our categories are above their 2019 levels. Hair care definitely stands out. We've had excellent growth since 2019. There really was no significant decline there. Skin care is up, and as you know, that's an area that we've really been emphasizing in the portfolio.
Hair care definitely stands out we've had excellent growth since 2019, there really was no significant decline there.
Skincare is up and as you know that's an area that we're really been emphasizing in the portfolio really where that where were still down versus 2019 as makeup and so 'twenty 'twenty.
Speaker 3: Really where we're still down versus 2019 is makeup.
Speaker 3: So 2020, sorry, 2021 had a nice improvement versus 2020. That was up double digits, but we have still not recovered to the 2019 levels. So the positive there is as masks go away and folks start going out again, we can see makeup being perhaps.
Sorry, 2021 had a nice improvement versus 2020 that was up double digits, but we have still not recovered to the 20th 19 levels. So.
The positive there is as masks go away and folks start going out again.
We can see.
Makeup being perhaps.
A future tailwind for us as that market resumes. So in general there's there's some definitely some pieces of continued success in personal care, but the one is still kind of languishing are lagging a little bit as makeup but.
Speaker 3: a future tailwind for us as that market resumes.
Speaker 7: So in general, there's definitely some pieces of continued success in personal care, but the one still kind of languishing or lagging a little bit is makeup.
I I think signs are quite good.
Speaker 3: I think signs are quite good for an improvement in that category in 22 here.
For an improvement in that category in 'twenty two here.
Thank you.
Okay. Thank you Heidi.
And once again, if you have a question. Please press Star then one.
Speaker 1: And once again, if you have a question, please press star, then one. The next question will come from Mitra Ramgopal with Sidoti. Please go ahead.
The next question will come from Mitra Remco, Paul with Sidoti. Please go ahead.
Yes, hi, good morning, and thanks for taking the questions Yeah, I might just Paul and I was just high.
Speaker 8: Yes, hi, good morning, and thanks for taking the questions. Yeah, hi, Mitchell. Hi, I'm just curious in terms of how.
Curious in terms of Ho Hum.
And how comfortable you feel in terms of being able to implement price increases to cover the high cost youre seeing in terms of the conversations you're having with your customers.
Speaker 8: confident or comfortable you feel in terms of being able to implement price increases to cover the higher cost you're seeing in terms of the conversations you're having with your
Well in general nature, I feel very comfortable but what what I want everybody to understand in the world of pricing. This isn't just a you take pricing and somehow everybody accepts it in everybody's leaving with smiles.
Speaker 3: Well, in general, Mitra, I feel very comfortable, but what I want everybody to understand in the world of pricing, this isn't just a you take pricing and somehow everybody accepts it and everybody's leaving with smiles. There is a lot of sensitivity, there's a lot of negotiation, there's a lot of discussion that goes into that. If you're not thoughtful about your pricing, you could absolutely lose business.
There is a lot of sensitivity there is a lot of negotiation theres a lot of discussion that goes into that.
If you're not thoughtful about your pricing you get absolutely lose business.
If youre not thoughtful about your pricing you can absolutely be in a position where you're not covering your your input costs. So these are complicated programs.
Speaker 3: If you're not thoughtful about your pricing, you can absolutely be in a position where you're not covering your input cost.
Speaker 9: So these are complicated programs. You're dealing with many, many different customers in many parts of the world. Many of our products follow indexes, but many of our products do not follow indexes. And so in general, I feel very comfortable that we're going to get there. But it's not as simple as saying, hey, we're just going to get the pricing. And so I think this may be something that continues.
Youre dealing with many many different customers in many parts of the world many of our products follow indexes, but many of our products do not follow indexes and so in general I feel very comfortable that we're going to get there, but it's not as simple as saying Hey, we're just going to get the pricing.
And so I just.
I think this may be something that continues through.
Speaker 3: Through the course of 2022, I feel good about what we've achieved thus far, but time will tell with respect to what's going to happen in the market here.
Through the course of 2022 I feel good about what we've achieved thus far.
But time will tell with respect to what's going to happen in the market here.
Okay, No that's great.
Speaker 10: Yeah, no, that's great. And then something we're hearing from a lot of companies, especially given the tight labor market, costs really having an impact on their business on that front, seems like you've been able to manage that pretty well. I'm just wondering if any concerns for you as we look out the very inflationary environment this year and maybe going forward.
And then that's something that you're hearing from a lot of companies, especially given the tight labor market.
Costs really having an impact on your business on that front.
It seems like you've been able to manage that pretty well I was just wondering if you have any concerns for you as we look out I'm, so very inflationary environment this year and maybe going forward.
So yeah, I think no company in the World has been left unscathed in the pursuit of of getting good labor Theres always labor is a good labor effective labor maybe a question that can vary by geography.
Speaker 11: So yeah, I think no company in the world has been left unscathed in the pursuit of getting good labor. There's always labor. Is it good labor? Effective labor may be a question that can vary by geography. In general, we, like other companies, have had challenges there. But we have substantially overcome those challenges.
In general we've.
We like other companies have had challenges there, but we have substantially overcome those challenges.
We've been very very recruit.
Speaker 12: We've been very, very recruit, very, very creative on the recruiting side of the house.
They're very creative on the recruiting side of the house.
Speaker 3: And, you know, this is a company that's about winning and being successful. And that is very attractive to a lot of people out there in the market. And we've been, we work from the office, we're very engaged. We are all about building the type of community that winners want to come to. And so I think because of that mindset and culture that we've had, we've been able to maintain very good staffing in the vast majority of our facilities.
And you know this is a company that's about winning and being successful and that is very attractive to a lot of people.
Out there in the market and we've been we worked from the office. We're very engaged we are all about building the type of community that winners want to come to us.
So I think because of that mindset and culture that we've had we've been able to maintain very good staffing in the vast majority of our facilities now that omicron seems to be diminishing in many parts of the world.
Speaker 13: Now that Omicron seems to be diminishing in many parts of the world, we have fewer disruptions with respect to absences and the like.
We have fewer disruptions with respect to absences and the like.
But no I think in general we've been able to work through that it's not perfect and we certainly still have a couple of places where I sure I'd like to have a couple more folks.
Speaker 3: But no, I think in general, we've been able to work through that. It's not perfect, and we certainly still have a couple places where, sure, I'd like to have a couple more folks.
Working on a particular shift or or whatnot, but yeah, we're going to continue to manage through that niche and I think that is not going to be a reason why get on this call and tell you I can't deliver numbers, we will deliver the numbers and we will work around those challenges.
Speaker 3: working on a particular shift or or whatnot, but yeah, we're going to continue to manage through that Mitra And I think that is not going to be a reason why I get on this call and tell you I can't deliver numbers We will deliver the numbers and we'll work around those challenges
Okay. Thanks, and then finally, just maybe some more color on M&A.
Speaker 14: Thanks. And then finally, just maybe some more call on M&A.
You've completed the divestiture as you did a couple of deals last year.
Speaker 15: the divestiture as you did a couple of deals last year and you mentioned you know that's something you're always looking on in terms of opportunities to grow the business just curious in terms of maybe the pipeline or opportunities you're seeing out there and how aggressive you might
And you mentioned, that's something you're always looking on in terms of opportunities to grow the business. Just curious in terms of maybe pipeline or opportunities you're seeing out there and how aggressive huh.
I expect you to be on that front.
Well I would say we're sensibly aggressive.
Speaker 3: I would say we're sensibly aggressive. We need to deliver a return, but first and foremost, we need to find
We need to deliver a return, but first and foremost we need to find.
A company, where there is a culture that we can work with work together, we got to find win wins there and so for me. It starts with is a company that you may consider acquiring have a culture.
Speaker 3: a company where there is a culture that we can work with, work together, we got to find win-wins there. And so for me, it starts with, does the company that you may consider acquiring have a culture that kind of sees the market and sees other dimensions of working in a similar fashion? And then from there, do we believe we can add something by acquiring that company? So we always have a pipeline.
That that kind of sees the market and sees other dimensions of working in a similar fashion and then from there do we believe we can add something.
By acquiring that company. So we always have a pipeline.
Speaker 3: Companies may be various stages with us. Maybe we make offers and they're not accepted or maybe, as I said on a previous call, not everybody wants to sell his or her company.
Companies may be various stages with us maybe we make offers and they are not accepted or or maybe you know as I said on a previous call not everybody wants to sell his or her company and so it can be a process as well, but we're continuing to look.
Speaker 3: And so it can be a process as well, but we're continuing to look.
Look at opportunities to fill gaps or fill gaps in our portfolio to the extent there may be an opportunity to expand geographically through an acquisition that could be a meaningful thing for us to do.
Speaker 16: Look at opportunities to fulfill gaps or fill gaps in our portfolio. To the extent there may be an opportunity to expand geographically through an acquisition, that could be a meaningful thing for us to do.
Sometimes you know what setting up an exclusivity from a supply standpoint.
Speaker 3: Sometimes, you know what, setting up an exclusivity from a supply standpoint is every bit as good as an acquisition. And so we've got kind of a multi-variable approach to this and provided we can get things again at a sensible price.
Is every bit as good as an acquisition.
And so we've got kind of a multi.
Variable approach to this and provided we can get things again at a sensible price.
Where they win we win that this could certainly be something we're talking about in 'twenty two.
Speaker 3: Where they win, we win, this could certainly be something we're talking about in 22. Okay. That's great.
Okay. That's great. Thanks, again for taking the questions.
Okay. Thank you Mitra.
And the next question will be from David Greene with Bolt Haven. Please go ahead.
Speaker 1: And the next question will be from David Green with Boldhaven. Please go ahead. Hi, Paul. Hi, Stephen. Hi, David. Hi, Paul.
Hi, Paul Hi, Stephen.
Hello, David David.
Just a few questions for me.
Speaker 17: Just a few questions from me. It sounds like you're sort of seeing similar exit rates or strengths.
It sounds like you're sort of seeing similar exit rates saw strength.
As you sort of come into 'twenty to 'twenty two.
Speaker 17: as you come into 2022. I just wanted to get a feel for the visibility that you have at the moment into the year, into the first half in terms of new account wins that may have already taken place in 2021, and just the product pipeline that you're seeing at the moment from customers.
Just wanted to get a feel for sort of the.
<unk> ability that you have at the moment into the year into the first half in terms of.
New account wins that may have already.
Taken place in 2021, and just the projects.
The product pipeline that youre seeing at the moment from.
Some customers.
And.
Speaker 17: sort of drivers of that, whether that's a sort of continuation of new customer wins, existing customers, new products, etc. That's the first question.
The sort of the drivers of that whether that's a sort of continuation of new customer wins existing customers new products et cetera. That's the first question.
Okay.
So the pipeline is quite good and we generated a lot of wins in 'twenty, one and so to your point yeah. Many of those carry into 2022 and you know what.
Speaker 3: So the pipeline is quite good. And we generated a lot of wins in 21. And so to your point, yeah, many of those carry into 2022.
Speaker 3: You know, we had a very, very good January in each of the groups, and as I'm looking, I know you like this part, as I'm looking at February sales right here in front of me, they look super good too. So I think we're off to a very nice start. A lot of that driven by the new wins we generated in 2021.
We had a very very good January and each of the groups and as I'm looking I know you like this chart.
As I'm looking at February sales right here in front of me it looks super good too. So I think we're off to a very nice start a lot of that driven by the new wins, we generated in 2021.
We will obviously have some benefit from pricing but.
Speaker 3: we will obviously have some benefit from pricing. But yeah, despite the fact that, you know, I have the numbers here too, in terms of product launches around the world in 2021, despite the fact that the number of product launches were down, we were able to still do quite well. And there's definitely pockets of success.
Despite the fact that you know I.
Have the numbers here too in terms of product launches around the world in 2020 one despite the fact that the number of product launches were down.
We were able to still do quite well and there is definitely pockets of success.
In the markets in other words, if you look at the North America beverage market. The launches were up overall in the market that five 6% versus 2020.
Speaker 3: in the markets. In other words, if you look at the North America beverage market, the launches were up overall in the market, about 5-6 percent versus 2020.
But then again you look at Asia Pacific on the food side launches were down about two years to 3%. So it's a little bit of a mixed bag in terms of customers launch activities, but.
Speaker 18: So then again, you look at Asia-Pacific on the food side, launches were down about 2% or 3%. So it's a little bit of a mixed bag in terms of customers' launch activities.
But I think given the diversity of our customer base in the range of our products.
Speaker 3: But I think given the diversity of our customer base and the range of our products, we can certainly build up a very nice pipeline and generate some very strong wins. That's a very big focus for us, generating wins, and I think many of the ones that we had, well, all the ones that we had in 21.
We can certainly build up a very nice pipeline and generate some very strong wins at the very big focus for us.
Generating wins and I think many of the ones that we had while all the ones that we had in 'twenty one.
In the second half of the year should absolutely be feeding into.
Speaker 3: second half of the year should absolutely be feeding into this first half of the year and I think you'll see some very nice uplifts.
This first half of the year and I think youll see some very nice uplift from that.
And I think something we may have talked about a bit before in terms of the.
Speaker 17: is and I think something we may have talked about a bit before in terms of the customer base and the mix between large brands and sort of small and medium size is it you still seeing the momentum coming through on the larger global brands still or is it more balanced?
Customer base and the mix between large brands and sort of small and medium size is it are you still seeing.
The momentum coming through.
Logically boot brands fill or is it more balanced.
You know, it's it's it's fairly balanced overall.
Speaker 3: You know, it's fairly balanced overall. As you know, our color group would tend to be dealing with more of the largest multinationals, either through our food colors or our personal care.
As you know our color group would tend to be dealing with more of the largest multinationals either through our food colors of our personal care.
But we also have a significant presence in sort of the local regional.
Speaker 3: But we also have a significant presence in sort of the local, regional.
Brands as well flavor is tends to be more.
Speaker 19: brands as well. Flavors tends to be more, in terms of selling flavors anyway, at the local and regional type customers.
In terms of selling flavors anyway at the local and regional type customers and so I think activity.
Speaker 20: And so I think activity is good. Obviously, it's not good for everybody. You've heard me read off kind of the launches for 2021. But I think we're pretty good at sniffing out the opportunities, whether it's an A, B, or C sized customer in each one of our regions.
Is good obviously, it's not good for everybody if you've heard me read up kind of a launch launches for 2021.
But I think we're pretty good at are sniffing out the opportunities, whether it's an a b or C sized customer.
In each one of our regions.
Yeah.
Alright, thank you.
Speaker 17: Great, thank you. And then maybe just to try and get some more geographic colour. I mean, APAC's obviously seen a strong acceleration there. It would be really helpful just to sort of get more of a feel for what's driving that and, you know, is there a way for us to feel about, so for us to think about the sort of potential sales or eBit opportunity in that region specifically?
Maybe just to try and get some more.
Geographic Cala and.
In APAC, it's obviously seen a strong acceleration.
Would be really helpful just to sort of get more of a feel for what's driving that and.
Is there a way for us to feel about sorry.
Sorry for us to think about the sort of potential sales or EBIT opportunity in that region specifically.
Yeah. So Asia as you heard me say that guidance is mid to high single digit revenue I think that's very very achievable you saw we delivered a very nice Q4.
Speaker 3: Yeah, so Asia, as you heard me say, the guidance is mid to high single-digit revenue. I think that's very, very achievable.
Speaker 21: saw we delivered a very nice Q4, really across most of our regions. I'm looking at the figures here right now. North Asia did quite well.
Across most of our regions I'm looking at the figures here right now North Asia did quite well and.
South East Asia did really well so I think we're seeing broad based success.
Speaker 22: Southeast Asia did really well. So I think we're seeing broad-based success. And you know, it's about selling natural colors, it's about selling flavors.
And you know, it's about selling natural colors, it's about selling flavors.
And really focusing on a little bit more of an underserved group of customers. So I think the prospects for Asia are really good in.
Speaker 23: and really focusing on a little bit more of an underserved group of customers.
Speaker 24: So I think the prospects for Asia are really good in 2022 and beyond. You know, we're just sort of scratching the surface. I think there's a lot more accounts and markets for us to be penetrating.
In 2022 and beyond.
We're just sort of scratching the surface I think theres, a lot more accounts and markets for us to be penetrating there.
So hard.
Speaker 17: So hard at this stage to sort of quantify a sort of sales or eBit opportunity in the medium firm?
Hard at this stage to sort of quantify I sort of sales or EBIT opportunity in the medium term.
Well the sales opportunity is mid to high single digit revenue and whatever EBITDA flows from that you can take from that double digit or better on the EBITDA for Asia Pacific I think that's a reasonable.
Speaker 25: Well, sales opportunity is mid to high single-digit revenue and whatever EBITDA flows from that.
Speaker 26: take from that double-digit or better on the EBITDA for Asia-Pacific. I think that's a reasonable benchmark.
Reasonable benchmark.
Alright, thanks very much.
David Thank you.
Ladies and gentlemen, there are no further questions at this time I would like to turn the conference back over to the company for any closing remarks. Okay. So we've got a couple more items Steve's going to brief you on with respect to tax and interest and corporate expense. These are.
Speaker 27: Ladies and gentlemen, there are no further questions at this time. I would like to turn the conference back over to the company for any closing remarks.
Speaker 28: Okay, so we've got a couple more items Steve's going to brief you on with respect to tax and interest and corporate expense. These are for purposes of clarification and understanding as you look at 2022. So, Steve, do you want to? Sure. So, I usually get these questions regarding how to model expense items, so I'll just quickly address them. You know, the first one would be our corporate
For purposes of clarification and understanding as you look at 2022, So Steve you want to sure. So I usually get these questions regarding how to model or expense item soldiers quickly to address them.
First one would be our corporate expense.
Speaker 29: As many of you know, we've had a very heavily-weighted program towards performance-based compensation.
As many of you know we've had a very heavily.
Heavily weighted program towards performance based compensation.
Speaker 30: So this line item has moved around over the last couple of years. In 2021, we had an increase in non-cash stock-based compensation of about $4 million as we're resetting that to a normal level. And we have one more year, really, to reset that at a more normal level.
So this is a line item has moved around over the last couple of years.
In 2021, we had an increase in noncash stock based compensation of about $4 million as we're resetting that to a normal level and we have one more year really to reset that at them at a more normal level. So we will see another $4 million increase in that noncash stock based.
Speaker 2: We'll see another $4 million increase in that non-cash stock-based comp.
Hum.
Speaker 2: And so I if we have a good year in 22 I'd expect our corporate expense to be in the low 50s, maybe 52 million
If we have a good year in 'twenty, two and I'd expect our corporate expense to be in the low fifties, maybe $52 million.
Speaker 31: The other thing I expect people will ask about is interest expense. Fortunately...
The other thing I expect people will ask about is interest expense Fortunately.
The majority of our interest or our debt is fixed rate right. Now. So we don't have too much exposure, but if there is a rapid pace of interest rate increases we will see a little bit of an increase in interest expense, maybe a $1 million if.
Speaker 32: The majority of our interest or our debt is fixed rate right now, so we don't have too much exposure. But if there is a rapid pace of interest rate increases, we will see a little bit of an increase in interest expense, maybe a million dollars. If the pace is not as rapid, it will be a little less. If there's a more rapid pace of interest rate increases, it could be a little bit more than that.
If the pace is not as rapid and it'll be a little less.
If there is a more rapid pace of interest rate increases it could be a little bit more than that.
And then finally I mentioned the tax rate and.
Speaker 33: And then finally, I mentioned the tax rate in.
In the call I said, we for the year I expect to be roughly in line.
Speaker 34: In the call, I said for the year, I expect to be roughly in line with 2021's tax rate, which was about 21 percent. I will point out that our normal run rate is about 24 percent, but we typically have some discrete items that provide a benefit, and I expect that to be the case in 22 as well. So, in some quarters, it could be a little bit higher, but for the full year, I expect it to be about 21.
With 2021 's tax rate, which was about 21%.
I'll point out that our normal run rate is about 24%, but we typically have some discrete items that provide a benefit and.
And I expect that to be the case in 'twenty two as well.
So in some quarters it could be a little bit higher but for the full year I expect it to be about 21%.
And those were the main items I mentioned, we also mentioned foreign currency and again Thats a somewhat recent item you saw the dollar strengthening across.
Speaker 35: And those were the main items I mentioned. We also mentioned foreign currency. And again, that's a somewhat recent item. You saw the dollar strengthening across.
A number of foreign currencies in the fourth quarter, but I mentioned that Tencent headwind there.
Speaker 36: a number of foreign currencies in the fourth quarter, but I mentioned the 10-cent headwind.
So with that I will conclude our comments for today. Thank you for everyone for attending.
Speaker 2: So with that, that will conclude our comments for today. Thank you for everyone for attending.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 1: And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now.
Okay.
Speaker 37: ?
[music].
Speaker 38: I P.