Q1 2024 International Flavors & Fragrances Inc Earnings Call

Operator: At this time, I would like to welcome everyone to the IFF First Quarter Earnings Conference Call. All participants will be in a listen-only mode until the formal question-and-answer portion of the call.

At this time I would like to welcome everyone to the Iff's first quarter earnings Conference call. All participants will be in a listen only mode until the formal question and answer portion of the call to ask a question at that time. Please press star one on your telephone keypad, if you would like to remove your name from.

Operator: To ask a question at that time, please press Star 1 on your telephone keypad. If you would like to remove your name from the queue, please press Star 2. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of one question per person. I would now like to introduce Michael DeVeau, Head of Investor Relations. You may begin. Thank you. Good morning, good afternoon, and good evening.

The queue. Please press star two.

Participants will be announced by their name and company in order to give all participants an opportunity to ask their questions. We request a limit of one question per person.

I'd now like to introduce Michael Deveau head of Investor Relations you may begin.

Michael DeVeau: Good morning, good afternoon, and good evening, everyone welcome to Iff's first quarter 2024 conference call.

Michael DeVeau: Welcome to IFF's first quarter 2024 conference. Yesterday afternoon, we issued a press release announcing our financial... A copy of the release can be found on our IR website at ir.ifs.gov. Please note that this call is being recorded live and will be available for replay.

Speaker Change: Yesterday afternoon, we issued a press release announcing our financial results a.

Speaker Change: A copy of the release can be found on our IR website at IR <unk>.

Dot com.

Speaker Change: Please note that this call is being recorded live and will be available for replay.

Michael DeVeau: During the call, we were making forward-looking statements about the company's performance and outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10-K. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability.

Speaker Change: During the call we were making forward looking statements about the company's performance and outlook.

Speaker Change: These statements are based on how we see things today and contain elements of uncertainty.

Speaker Change: For additional information concerning the factors that can cause actual results to differ materially. Please refer to our cautionary statement and risk factors contained in our 10-K and press release.

Speaker Change: Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability.

Speaker Change: A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release that we issued yesterday.

Michael DeVeau: A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release that we issued yesterday. With me on the call today is our CEO, Eric Fyrwald, and our Executive Vice President, CFO, and Business Transformation Officer, Glenn Richter. We will begin with prepared remarks and then take any questions you have. With that, I would now like to turn the call over to you.

Speaker Change: With me on the call today is our CEO, Eric firewall, and our executive Vice President CFO and business transformation Officer, Glenn Director.

Eric Firewall: We will begin with prepared remarks, and then take any questions you have at the end.

Eric Firewall: With that I would now like to turn the call over to Eric.

Jon Erik Fyrwald: Well, thank you, Mike, and hello, everyone. I'm excited to join you all today to discuss our solid performance in the first quarter and what we are seeing across the business so far this year. Today we'll focus on our financial results, our outlook for the balance of the year, and our increased confidence in our reiterated guidance, where we now see us trending toward the upper end. Now, before moving forward, I want to acknowledge Glenn, who today is announcing his plan to retire at the end of 2024 after three successful years with the company.

Eric Firewall: Well, thank you, Mike and Hello, everyone.

Eric Firewall: I'm excited to join you all today to discuss our solid performance in the first quarter and what we are seeing across the business. So far this year.

Eric Firewall: Today, we will focus on our financial results our outlook for the balance of the year and our increased confidence in our reiterated guidance, where we now see us trending toward the upper end.

Jon Erik Fyrwald: During his tenure, Glenn has driven multiple actions to improve our balance sheet and position the company for financial success. We've benefited from his experience and commitment to transformation, and his ongoing leadership to position IFF has also been very helpful to me already as I've come on board the IFF team. Now, with this announcement, we have started a succession plan to evaluate internal and external candidates to succeed Glenn. The board and I are grateful for all Glenn has helped IFF accomplish and look forward to his continued leadership as we identify a successor and ensure a smooth transition. Now, turning to slide 6.

Eric Firewall: Now before moving forward.

Eric Firewall: Wanted to acknowledge Glenn.

Glenn Robert Richter: Today is announcing his plan to retire at the end of 2024 after three successful years with the company.

Glenn Robert Richter: During his tenure Glenn has driven multiple actions to improve our balance sheet and position the company for financial success.

Glenn Robert Richter: We've benefited from his experience and commitment to transformation and his ongoing leadership to position <unk> to drive long term profitable market share growth.

Glenn Robert Richter: He has also been very helpful to me already as I've come onto the <unk>.

Speaker Change: Now with this announcement, we have started the succession plan.

Speaker Change: To evaluate internal and external candidates to succeed Glenn.

Speaker Change: The board and I are grateful for all Glenn has helped ISF accomplish and look forward to his continued leadership as we identify a successor and ensure a smooth transition.

Speaker Change: Now turning to slide six.

Jon Erik Fyrwald: We are off to a good start at IFA. We achieved volume growth for the first time since the first quarter of 2022. And his volumes grew mid-single-digit in the first quarter of 2024.

Speaker Change: We are off to a good start at <unk>.

Speaker Change: We achieved volume growth for the first time since the first quarter of 2022.

Speaker Change: As volumes grew mid single digit in the first quarter of 2024.

Jon Erik Fyrwald: Contributions from Scent, Nourish, and Health & Bioscience. We are also encouraged by the double-digit comparable adjusted EBITDA growth as we not only benefited from volume growth but also from productivity gains across our business. At the same time, we made important progress focusing our portfolio, with the Closing of the Divestiture of the Cosmetics Ingredients Business and the Announced Sale of our Pharma Solutions. We expect to complete the pharma transaction in the first half of 2025; proceeds from these divestitures will help further strengthen our capital structure, address our deleveraging goal of three times net debt to credit-adjusted EBITDA, and refocus us on high-growth areas of our business. With our solid performance in the first quarter and our expectations for the remainder of the year, we are cautiously optimistic about the remainder of 2024 and now expect full year We are focused on building on our momentum to energize our team and return to sustainable, profitable growth. Turning to slide 7.

Speaker Change: With strong contributions from scent nourish and health <unk> Biosciences.

Speaker Change: We are also encouraged by the double digit comparable adjusted EBITDA growth as we not only benefited from volume growth, but also from productivity gains across our businesses.

Speaker Change: At the same time, we made important progress focusing our portfolio with closing the divestiture of the cosmetics ingredients business and the announced sale of our pharma solutions business.

Speaker Change: We expect to complete the pharma transaction in the first half of 2025.

Speaker Change: The proceeds from these divestitures will help further strengthen our capital structure address our deleveraging goal of three times net debt to credit adjusted EBITDA.

Speaker Change: And refocus us on high growth areas of our business.

Speaker Change: With our solid performance in the first quarter and our expectations for the remainder of the year. We are cautiously optimistic about the remainder of 2024 and now expect full year 2024 results to trend toward the higher end of our previously announced guidance ranges.

Speaker Change: It's still early in the year and there is a lot more work to be done, but we are focused on building on our momentum energize, our team and return to sustainable profitable growth.

Speaker Change: Turning to slide seven.

Jon Erik Fyrwald: Let me take a step back for a moment and share what I've learned during my first 90 days here at IFS. I've spent time getting to know our teams all over the world and meeting with many of our customers. I'm grateful for the productive discussions.

Speaker Change: Let me take a step back for a moment and share what I've learned during my first 90 days here.

Speaker Change: I have spent time getting to know our teams all over the world and meeting with many of our customers.

Speaker Change: And I am grateful for the productive discussions.

Jon Erik Fyrwald: What I've found is that IFF has lots of top talent and incredible innovation capability, but we're not yet realizing our full potential. With a new leadership perspective on our priorities and a renewed focus on execution by our executive leadership team, we are getting back to basics, and I'm optimistic about what we will do from here. First

Speaker Change: And what I found is that <unk> has lots of top talent and incredible innovation capabilities.

Speaker Change: But we're not yet realizing our full potential.

Speaker Change: With a new leadership perspective on our priorities and a renewed focus on execution by our executive leadership team.

Speaker Change: We are getting back to basics.

Speaker Change: And I'm optimistic about what we will do from here.

Speaker Change: First we are strengthening our balance sheet and capital structure to create the flexibility we need to achieve our long term goals.

Jon Erik Fyrwald: We are strengthening our balance sheet and capital structure to create the flexibility we need to achieve our long-term goals. However, my assessment is that we have not consistently delivered on our financial commitments, largely due to a need for more strategic and organizational operating model clarity to enable us to better execute against our goals. I think we are now getting the clarity we need and have taken some decisive steps. First Quarter to help us start to realize more of our potential.

Speaker Change: My assessment is we have not consistently delivered on our financial commitments.

Speaker Change: Largely due to a need for more strategic and organization operating model clarity to enable us to better execute against our goals.

Speaker Change: I think we are now getting the clarity we need and have taken some slice of steps in the first quarter to help us start to realize more of our potential.

Jon Erik Fyrwald: We recently right-sized our quarterly dividend to align with the market and our long-term cash flow generation and have made divestiture moves, including cosmetics and pharma solutions, to focus our portfolio and drive debt reduction. We also recently announced and are implementing our refocused IFF operating model, which is now business-led. This includes the appointment of Ana Paula Mendoza, who has dedicated her career to the advancement of fragrance at IFF, as the president of Scent.

Speaker Change: We recently right sized our quarterly dividend to align with our market and our long term cash flow generation.

Speaker Change: And I've made divestiture moves, including cosmetics and pharma solutions.

Speaker Change: To focus our portfolio and drive debt reduction.

Speaker Change: We also recently announced and are implementing our refocused ISF operating model.

Speaker Change: Which is now business led.

Speaker Change: Ported by lean functions.

Speaker Change: This includes the appointment of Ana Paula Mendoza.

Speaker Change: Who has dedicated her career to the advancement of fragrance at ISS.

Speaker Change: As the president of scent.

Jon Erik Fyrwald: This enables Simon Harriot to focus his full attention on driving profitable growth in our health and biosciences business. We will also put more focus on our flavors and functional ingredients units within our nourish. With this operating model change, we have also changed the reporting structure of several of our functions, including R&D, Operations, Finance, and HR, to go directly into our business unit presentation. So they have full end-to-end responsibility and accountability for business execution.

Speaker Change: This enables Simon Harriet to focus his full attention on driving profitable growth in our health and Biosciences business unit.

Speaker Change: We will also put more focus on our flavors and functional ingredients units within our nurse Division.

Speaker Change: With this operating model change we have also changed the reporting structure of several of our functions, including R&D operations Finance and HR to go directly into our business unit presidents.

Speaker Change: So they have the full end to end responsibility and accountability for business execution.

Jon Erik Fyrwald: Their goals will include delivering growth above market with a margin structure that gets us in line with or better than leading peers. Now, to make this work, we have also established an operating system, which is a simple set of management processes that collectively define how IFF makes decisions and creates value, provides a framework for standardized processes, responsibilities, and metrics, and defines the tools to help managers drive continuous improvement. We believe this will create greater visibility to track performance.

Speaker Change: Their goals will include delivering growth above market with our margin structure that gets us in line with or better than leading peers.

Speaker Change: Now to make this work we have also established an operating system, which is a simple set of management processes that.

Speaker Change: Collectively define how iff's makes decisions and creates value provides a.

Speaker Change: Our framework for standardized processes responsibilities and metrics.

Speaker Change: And defines the tools to help managers drive continuous improvement.

Speaker Change: We believe this will create greater visibility to track performance. So we drive execution to deliver results in the current period.

Jon Erik Fyrwald: So we drive execution to deliver results in the current period in ways that strengthen us for the coming year. We are also introducing an operating philosophy based on four main pillars. Number one is customer focus. Number two.

Speaker Change: In ways that strengthen us for the coming years.

Speaker Change: We are also introducing an operating philosophy based on four main pillars.

Speaker Change: Number one customer focus to drive profitable market share growth.

Speaker Change: Number two.

Jon Erik Fyrwald: Innovation Powerhouse. Create sustainable new products and other innovations that customers value, and do this fast. Number 3, Operational Excellence. To lead our relentless focus on safety, quality, Continuous Improvement, and Competitive Cost Structure, and For People, people who are engaged across the organization. We expect that our business-empowered model and operating system will enhance collaboration to profitably win with customers and, by doing so, deliver strong financial performance over time. And while it's still early, I am pleased and encouraged by the energy and commitment of our teams all around the world. With that, I'll now pass it over to Glenn to dive deeper into our results for the first quarter.

Speaker Change: Innovation powerhouse to create sustainable new products and other innovations.

Speaker Change: Customers value and do this faster.

Speaker Change: Number three operational excellence.

Speaker Change: To lead our relentless focus on safety quality continuous improvement and competitive cost structures.

Speaker Change: And for.

Speaker Change: People people, who are engaged across the organization.

Speaker Change: We expect that our business empowered model and operating system will enhance collaboration to profitably win with customers and.

Speaker Change: And by doing so deliver strong financial performance over time.

Speaker Change: And while it's still early I am pleased and encouraged by the energy and commitment of our teams all around the world.

Speaker Change: With that I'll now pass it over to Glenn to dive deeper into our results for the first quarter.

Glenn Robert Richter: Glenn Thank.

Glenn Robert Richter: Thank you, Eric. And thanks to everyone for joining us today. As Eric mentioned earlier, we're encouraged by the momentum across our business as we start the year. And we are excited to continue to build on these positive early signals throughout 2024 and beyond. In the first quarter, IFF generated roughly $2.9 billion in sales. On a comparable currency-neutral basis, sales increased 5% year-over-year.

Glenn Robert Richter: Thank you, Eric and thanks to everyone for joining us today as Eric mentioned earlier, we are encouraged by the momentum across our business as we start the year and we are excited to continue to build on these positive early signals throughout 2024 and beyond.

Glenn Robert Richter: In the first quarter <unk> generated roughly $2 9 billion in sales on a comparable currency neutral basis sales increased 5% year over year. Our strong quarterly revenue performance was led by mid single digit volume growth with sequential improvements across most of our businesses, including scent health and.

Glenn Robert Richter: Our strong quarterly revenue performance was led by mid-single-digit volume growth, with sequential improvements across most of our businesses, including Scent, Health & Biosciences, and Nourish. Pricing was modestly positive, inclusive of FX-related pricing in emerging markets, in particular the Argentine peso, where we, like the industry, have indexed pricing to U.S. and or Euro exchange rates that drive pricing changes. Absent this benefit, pricing would have been negative in the quarter, largely in line with our plan.

Glenn Robert Richter: <unk> Sciences and Europe.

Glenn Robert Richter: Pricing was modestly positive inclusive of FX related pricing in emerging markets in particular, the Argentine peso, where we like the industry have indexed pricing to U S and euro exchange rates that drive pricing changes.

Glenn Robert Richter: Of this benefit pricing would have been negative in the quarter largely in line with our plan.

Glenn Robert Richter: We delivered strong profitability in the quarter, with adjusted operating EBITDA of $578 million. This represents a 20% increase on a comparable year-over-year basis, led by volume growth and the contribution from productivity initiatives. As a result, margins improved by approximately 310 basis points to nearly 20% adjusted operating margin in the quarter. Turning now to slide 9, I'll dive deeper into the business performance across our segments. In Nourish, sales increased by 3% on a comparable currency-neutral basis, with strong double-digit growth in flavors and improvements in both volume and price.

Glenn Robert Richter: We delivered strong profitability in the quarter with adjusted operating EBITDA of $578 million. This represents a 20% increase on a comparable year over year basis led by volume growth and the contribution from productivity initiatives.

Glenn Robert Richter: As a result margins improved by approximately 310 basis points to nearly 20% adjusted operating margin in the quarter.

Speaker Change: Turning now to slide nine I'll dive deeper into the business performance across our segments.

Speaker Change: In Europe sales increased by 3% on a comparable currency neutral basis with strong double digit growth in flavors with improvements in both volume and price and we saw very strong growth in our flavors business across nearly all markets.

Glenn Robert Richter: And we saw very strong growth in our flavors business across nearly all markets. Functional Ingredients Volume was up low single digits for the first time since the fourth quarter of 2021. Overall, comparable currency-neutral sales declined year-over-year due to our planned pricing action.

Speaker Change: Functional ingredients volume was up low single digits. The first time since the fourth quarter of 2021 overall comparable currency neutral sales declined year over year due to our planned pricing actions in terms of profitability productivity gains and volume growth drove a 13% increase in <unk>.

Glenn Robert Richter: In terms of profitability, productivity gains and volume drove a 13% increase in comparable adjusted operating EBITDA with solid gross margin improvements in both flavors and functional ingredients. Additionally, our health and bioscience segment had another strong quarter with both top and bottom line growth. Solid performance in our H&B portfolio, led by double-digit sales growth in cultures and food enzymes, animal nutrition, and grain processing, and mid-single-digit growth in home and personal care, drove a 6% increase in comparable currency-neutral sales.

Speaker Change: Comparable adjusted operating EBITDA with solid gross margin improvements in both flavors and functional ingredients.

Speaker Change: Our health and Bioscience segment had another strong quarter with both top and bottom line growth.

Speaker Change: Solid performance in our ATB portfolio led by double digit sales growth in cultures, and food enzymes and animal nutrition and grain processing.

Speaker Change: And mid single digit growth in home and personal care drove a 6% increase in comparable currency neutral sales improved volume and productivity gains led to a 21% increase in year over year comparable adjusted operating EBITDA.

Glenn Robert Richter: Improved volume and productivity gains led to a 21% increase in year-over-year comparable adjusted operating EBITDA. Set delivered another excellent quarter, including 16% growth in comparable currency-neutral sales, driven by double-digit growth in consumer fragrance and fragrance ingredients and mid-single-digit growth in fine fragrance.

Speaker Change: <unk> delivered another excellent quarter, including 16% growth in comparable currency neutral sales driven by double digit growth in consumer fragrance and fragrance ingredients and mid single digit growth in fine fragrances.

Glenn Robert Richter: This segment also excelled in terms of profitability, primarily led by volume growth and productivity improvements, which delivered an outstanding adjusted operating EBITDA growth of 55% on a comparable basis. Lastly, in Pharma Solutions, while we saw some improvements from productivity initiatives, these were offset by lower volumes driven, as expected, due to continued destocking trends, which began late last year. It's worth noting that part of the destocking trend in the first quarter was market-related, and the other was due to Pharma Solutions' initiative to reduce reliance on distributors and convert more of its core excipients business into a direct distribution model.

Speaker Change: Segment also excel in terms of profitability.

Speaker Change: <unk> led by volume growth and productivity improvements, which delivered an outstanding adjusted operating EBITDA growth of 55% on a comparable basis.

Speaker Change: Lastly in pharma solutions, while we saw some improvements from productivity initiatives. These were offset by lower volumes driven as expected due to continued destocking trends, which began late last year, it's worth noting that part of the Destocking trend in the first quarter was market related and the.

Speaker Change: Other is due to a pharma solutions initiative to reduce reliance on distributors and convert more of its core excipient business into a direct distribution model. We believe the shift to a more direct approach will enhance our customer relationships reduce supply chain complexity and provide greater access.

Glenn Robert Richter: We believe this shift to a more direct approach will enhance our customer relationships, reduce supply chain complexity, and provide greater access to technical resources while also improving margin. Also, as mentioned, we agree to divest the Pharma Solutions business as part of our portfolio optimization efforts and are confident the business will be positioned to thrive and succeed in partnership with Rogelio. Now, on slide 10, I'd like to discuss our cash flow and leverage position.

Speaker Change: Technical resources, while also improving margins.

Speaker Change: Also as mentioned, we agreed to divest the pharma solutions business as part of our portfolio optimization efforts and are confident the business will be positioned to thrive and succeed in partnership with roquette.

Glenn Robert Richter: Cash flow from operations totaled $99 million this quarter, while CapEx was $118 million, or roughly 4.1% of sales. In the first quarter, normal seasonality impacted our free cash flow results. As a reminder, Q1 is usually the lowest cash flow quarter of the year as we make annual cash bonus payments in March. Our free cash flow position was negative $19 million in the quarter versus negative $48 million in the year-ago period.

Speaker Change: Now on slide 10, I'd like to discuss our cash flow and leverage position.

Speaker Change: Cash flow from operations totaled $99 million this quarter, while capex was $118 million or roughly four 1% of sales.

Speaker Change: In the first quarter normal seasonality impacted our free cash flow results. As a reminder, Q1 is usually the lowest cash flow quarter of the year as we make annual cash bonus payments in March our free cash flow position totaled negative $19 million in the quarter versus negative $48 million.

Speaker Change: In the year ago period.

Glenn Robert Richter: We also paid $207 million in dividends through the end of the first quarter. Our cash and cash equivalents total $764 million, including $32 million in assets held for sale. IFF continues to make progress in its deleveraging efforts and reduced its gross debt by almost $1 billion versus a year ago for a net debt-to-credit-adjusted EBITDA ratio of 4.4 times at quarter end. IFF's trailing 12-month credit-adjusted EBITDA totaled approximately $2.2 billion. Please note that the proceeds from the sale of LMC of $810 million were received in April and are consequently not reflected in the quarterly results.

Speaker Change: We also paid $207 million in dividends through the end of the first quarter.

Speaker Change: Our cash and cash equivalents totaled 764 million, including $32 million assets held for sale.

Speaker Change: <unk> continues to make progress in our deleveraging efforts and reduced our gross debt by almost 1 billion versus year ago for a net debt to credit adjusted EBITDA ratio of four four times at quarter end.

Speaker Change: Our trailing 12 month adjusted EBITDA totaled approximately $2 2 billion. Please note that the proceeds from the sale of LLC of $810 million were received in April and consequently, not reflected in the quarterly results.

Glenn Robert Richter: With the announced pharma solutions transaction, we are confident that we will achieve our net debt to credit adjusted EBITDA target of three times following the transaction close, which we expect will be completed in the first half of 2025. Now, on slide 11, I'd like to now turn to our outlook for 2024. Based on improved financial and operational performance in the first quarter and our expectations for the balance of the year, we remain cautiously optimistic about the year ahead.

Speaker Change: With the announced the pharma solutions transaction, we are confident that we will achieve our net debt to credit adjusted EBITDA target of three times.

Speaker Change: Following the transaction close, which we expect will be completed in the first half of 2025.

Speaker Change: On slide 11, I'd like to now turn to our outlook for 2024 based on our improved financial and operational performance in the first quarter and our expectations for the balance of the year. We remain cautiously optimistic about the year ahead and as Eric mentioned now expect results.

Glenn Robert Richter: And, as Eric mentioned, we now expect results to trend towards the higher end of our previously announced guidance ranges. This reflects our belief that volumes will also be towards the high end of our previously announced 0.3% with improving trends across the majority of our portfolio. We also saw pricing increases due to FX-related pricing in emerging markets in the first quarter and therefore raised our previously announced pricing guidance to approximately 1% for the full year 2024 versus the previous expectation that pricing would decline approximately 2.5%. With these foreign exchange rate changes, we now expect currency will have an adverse impact of 3-4% versus 0-1% as previously expected on our sales growth, which is essentially offsetting the FX pricing contribution.

Speaker Change: Trend towards the higher end of our previously announced guidance ranges.

Speaker Change: This reflects our belief that volumes will also be towards the high end of our previously announced zero to 3% with improving trends across the majority of our portfolio.

Speaker Change: We also saw pricing increases due to FX related pricing in emerging markets in the first quarter and therefore raised our previously announced pricing guidance to approximately 1% for the full year 2024 versus previous expectation that pricing will decline approximately two 5% with these <unk>.

Speaker Change: Exchange rate changes, we now expect currency will have an adverse impact of 3% to 4%.

Speaker Change: Versus zero to 1% as previously expected on our sales growth, which is essentially offsetting the FX pricing contribution.

Glenn Robert Richter: On the bottom line, for 2024, we are now trending towards the high end of our previously announced adjusted operating EBITDA guidance range of $1.9 to $2.1 billion. This assumes continued improvements in volumes as well as strong productivity. While it is still early in the year, volume trends are encouraging, and consequently, we have increased confidence in our ability to achieve our full-year guidance. For the second quarter, we expect sales to be approximately $2.75 to $2.85 billion, driven by improved volumes, with an adjusted operating EBITDA of approximately $500 to $525 million. I'll now turn it back to Eric for his closing remarks. Thank you, Glenn.

Speaker Change: On the bottom line for 2024, we are now trending towards the high end of our previously announced adjusted operating EBITDA guidance range of one nine to $2 1 billion.

Speaker Change: This assumes continued improvements in volumes as well as strong productivity. While it is still early in the year volume trends are encouraging and consequently, we have increased confidence in our ability to achieve our full year guidance.

Speaker Change: For the second quarter, we expect sales to be approximately $2 75 to 2.85 billion driven by improved volumes with an adjusted operating EBITDA of approximately $500 million to $545 million.

Speaker Change: Now I'll turn it back to Eric for closing remarks.

Eric Firewall: Thank you Glenn.

Jon Erik Fyrwald: Now, as I shared at the start of the call, my first 90 days on Team IFF have been energizing as I see so much potential. We have great talent and capabilities across our global network. And our solid top and bottom line results from the first quarter show that we are building positive momentum. It is an honor to lead IFF during this transformative time, and I am encouraged by our positive start to the year and our outlook. Yet, we still have a lot of work to do.

Eric Firewall: Now as I've shared at the top of the call. My first 90 days on team ISF have been energizing because I see so much potential.

Eric Firewall: Great talent and capabilities across our global teams and our solid top and bottom line results from the first quarter show that we are building positive momentum.

Eric Firewall: And it's an honor to lead ISF. During this transformative time and I am encouraged by our positive start to the year and our outlook.

Eric Firewall: Yet we still have a lot of work to do.

Operator: As the market continues to be very competitive, we are committed to bringing products and innovation that differentiate us from our peers and give customers what they need to win, and in turn, helps them and us drive sustainable profitable growth. And with a solid start to the year, I'm excited to see what we can accomplish going forward. And with that, I'd like to now open it up to questions. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question, please press star followed by two.

Eric Firewall: As the market continues to be very competitive we are committed to bringing products and innovation that differentiate us from our peers.

Eric Firewall: And give customers what they need to win.

Eric Firewall: And in turn helps them and us drive sustainable profitable growth.

Eric Firewall: And with a solid start to the year I am excited to see what we can accomplish going forward.

Speaker Change: And with that I'd like to now open it up for questions.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question. Please press star followed by too.

Speaker Change: As a reminder, we ask that you limit yourself to one question.

Speaker Change: If you were using a speakerphone please pick up your handset before asking your question.

Operator: As a reminder, we ask that you limit yourself to one question. If you are using a speakerphone, please pick up your handset before asking your question. Our first question comes from the line of Kevin McCarthy with Vertical Research Partners. Kevin, your line is now open. Thank you, and good morning. This is Matthew Hetwer on behalf of Kevin McCarthy.

Kevin William McCarthy: Our first question comes from the line of Kevin Mccarthy with vertical research partners.

Kevin William McCarthy: Kevin Your line is now open.

Kevin William McCarthy: Thank you and good morning. This is Matthew on for Kevin.

Jon Erik Fyrwald: It's nice to see a strong start to the year. Eric, could you give us some, yeah, morning? Eric, could you give us some additional context and detail regarding how you've seen the individual businesses react? Operating Philosophy Through the First 90 Days. Yeah, thanks for the question, Matthew. As you probably know, I've been on a listening tour or a discussion tour since right after the January 11th announcement of the change and my joining IFF.

Kevin William McCarthy: Nice to see a strong start trying Matthew.

Matthew: Eric could you give us some yes good morning.

Matthew: Could you give us some additional context and details regarding how you've seen the individual businesses react to your new operating philosophy through the first 90 days.

Jon Erik Fyrwald: And it's been really great to hear from our employees all around the world and our customers all around the world. And what I've learned from that is that, you know, we have had multiple companies coming together with different operating models, different philosophies. And there was significant uncertainty about the organization structure and how we were going to do things. And what we've done is the executive leadership team has come together very nicely, and I'm very proud of the team, and we've been able to together clarify the structure and operational model that we have going forward and the four pillars that we're focused on to drive our performance. We've had town halls all around the world, both live and via video.

Eric Firewall: Yes, thanks for the question Matthew.

Eric Firewall: As you probably know I have been on a listening tour or a discussion tour since right. After the January 11th announcement of the change in my joining ISF and it's been really great to hear from our employees all around the world and our customers all around the world.

Eric Firewall: And what.

Eric Firewall: Discerned from that is that we've had multiple companies coming together with different operating models different philosophies and there was a significant uncertainty about the organization structure and how we were going to do things and what we've done is the executive leadership team has come together very nicely and I'm very proud of the team and we.

Eric Firewall: Been able to together clarify the structure and operational model that we have going forward and the four pillars that we're focused on to drive our performance.

Eric Firewall: We've had town halls, all around the world both live and by video we've touched all of our employees.

Jon Erik Fyrwald: We've touched all our employees. We've spent special time with our leadership, and I think we've gotten really clear on how we're moving the company forward. And what I love about it is that I feel the engagement of our people around the world.

Eric Firewall: Spent special special time with our leadership.

Eric Firewall: And I think we've gotten really clear on how we're moving the company forward and what I love about it is I feel the engagement of our people around the world I feel their energy.

Jon Erik Fyrwald: I feel their energy growing. I think there's a great acceptance and enthusiasm for the Empowered Business Unit model, for the focus on customers, and that the job of all of us is to support our teams to win with customers and help us profitably grow our market share. And then also drive our innovation, that we're, at the core, we're an innovation company, and we need to make sure that we have leading innovation that we're bringing to our customers, and it's innovation that customers value. And then, finally, that we also have healthy productivity, productivity that helps us strengthen the company and invest more in growth and innovation. And doing that with smart productivity, things like reducing consultants, and reducing layers.

Eric Firewall: Rowing I think there is great acceptance and enthusiasm for the empowered business unit model.

Eric Firewall: For the focus on customers.

Eric Firewall: Job of all of US is to support our teams to win with customers and help us profitably grow our market share.

Eric Firewall: And then also drive our innovation that we are.

Eric Firewall: At the core we are an innovation company and we need to make sure that we have leading innovation that we're bringing to our customers and its innovation that customers value.

Eric Firewall: And then finally that we also have healthy productivity.

Eric Firewall: Productivity that helps us strengthen the company and invest more in growth and innovation and doing that with smart productivity things like like reducing consultants reducing layers.

Jon Erik Fyrwald: I'm driving functional shared service centers where it makes sense, using technology, information technology. So my feeling is that there are great capabilities, great people in this company, and the executive leadership team is coming together to try and do all we can to unleash the full potential of our people all around the world. Thank you. Thank you. Our next question comes from the line of Nicola Tang with P&B Paribas. Nicola, your line is now open.

Eric Firewall: Driving functional shared service centers that where it makes sense using technology information technology. So my feeling is that there's great capabilities great people in this company.

Eric Firewall: And the executive leadership team is coming together to try and do all we can to unleash the full potential of our people all around the world.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Nicola Tang with <unk> being PMD Pernod Nikola.

Nicola Tang: Nicole Your line is now open.

Nicola Tang: Hi, everyone. Thanks for taking the questions.

Nicola Tang: Bethany.

Operator: Eric, you talked there about the portfolio. Can you talk a little bit about it and, you know, following the announcement to divest pharma solutions, do you intend to pursue any further divestments or is that it for now? Another one. Transcribed by https://otter.ai. Could you explain what drove you to make this film? Okay, I'll start and then hand it over to Glenn.

Nicola Tang: Eric you talked there about the changed operating model.

Nicola Tang: Can you talk a little bit about portfolio. Following the announcement to divest boneless stations do you intend to pursue any further divestments.

Nicole: Is that it for now and then if I could squeeze in another one for Glen on cash flow.

Nicola Tang: Are you still confident in your.

Nicola Tang: Free cash flow target of $500 million seven.

Nicola Tang: 700 million on adjusted basis.

Nicola Tang: Is that potentially upside given the upward revision was at the high end you see in terms of the EBITDA guidance.

Speaker Change: Could you explain what drove the increase in trade receivables in the quarter. Thanks a lot.

Speaker Change: Okay, I'll start and then hand, it over to Glen and thanks for the question Nicola our questions.

Jon Erik Fyrwald: And thanks for the question, Nicola, or questions. So on the portfolio, first of all, the Pharma Solutions business will be with us for another year, and we see a lot of opportunity to further strengthen the performance of Pharma Solutions over the next year and then beyond that with Roquette. But then we have the other four business units that we're going to really focus on driving forward, of course, with Nourish, both the flavors and the functional ingredients. We have the scent business, and we have the health and biosciences business.

Glen: So on the portfolio first of all the pharma solutions business will be with us for another year and we see a lot of opportunity to further strengthen the performance of pharma solutions over the next year and then beyond that with Roquette.

Speaker Change: But then we have the other four business units.

Glen: That we're going to really focus on driving forwards of course with nourish.

Glen: Both the flavors and the functional ingredients, we have the <unk> business and we have the health and Biosciences business. All our focus now is on supporting those businesses to perform well.

Glenn Robert Richter: All our focus now is on supporting those businesses to perform well, to drive profitable market share growth, to drive healthy productivity, to make sure that we're bringing leading innovation and delivering the best performance we can in the second quarter and full year 2024, but do it in ways that strengthen us for 2025 and beyond. We're also going through a strategy review process for each of the businesses, and we'll take a look at what it takes to win in each of those businesses in the coming years and what we have to do investment-wise, and make sure that each of the businesses has the right portfolio to win going forward.

Glen: To drive profitable market share growth to drive healthy productivity to make sure that we're bringing leading innovation and deliver the best performance. We can in the second quarter full year 2024, but do it in ways that strengthen us for 25 and beyond.

Glen: We're also going through a strategy review process for each of the businesses and we will take a look at what it takes to win in each of those businesses in the coming years, and what we have to do investment wise and making sure that each of the businesses has the right portfolio.

Glen: To win going forward, so you'll hear more about that in the coming quarters and years.

Glenn Robert Richter: So you'll hear more about that in the coming quarters and years, but right now, our focus is all on making sure we've got the right strategy, the right capabilities in each business, the right collaboration culture across businesses, and are winning with customers by bringing leading innovation. Glenn.

Glen: But right now our focus is on making sure. We've got the right strategy the right capabilities in each business the right collaboration culture across businesses, and our winning with customers by bringing leading innovation.

Glenn Robert Richter: Thanks, Eric. Thanks for the question, Nicola. We're actually trending more favorable in terms of our full-year outlook for free cash flow and adjusted as well. As you mentioned, a combination of earnings momentum and actually, working capital is actually performing better than planned, and we expect actually some improvement. And then just some timing on taxes. We're probably going to be closer to 600 versus the 500.

Speaker Change: Glenn Thanks, Thanks, Eric Thanks for the question Nicola we're actually trending more favorable in terms of our full year outlook for free cash flow and adjusted as well as you mentioned a combination of earnings momentum actually working capital is actually performing better than planned and we expect to actually some improvement and then just some.

Glenn Robert Richter: I would note that that also includes higher Reg G costs related to pharma. So we gave you a $200 million number in Feb that did not include pharma for obvious reasons. The heavy lifting, as Eric mentioned, is the balance of this year separating systems, legal entities, etc. That's roughly about $100 million.

Speaker Change: Timing on taxes, we're probably going to be closer to 600 versus the 500 I would note that Thats also includes higher Reg G costs related to pharma. So we gave you a $200 million number instead that did not include pharma for obvious reasons. The heavy lifting as Eric mentioned is the balance of this year separating systems.

Speaker Change: Legal entities et cetera, that's roughly about 100 million Bucks. So on adjusted basis 900 on a free cash flow reported basis Directionally six hunter. Thanks for the question.

Operator: So on an adjusted basis, 900 on a free cash flow reported basis, directionally 600. Thanks for the question. Thank you. Our next question comes from the line of Josh Spector with UBS. Josh, your line is now open. Yeah, hi.

Speaker Change: Thank you. Our next question comes from the line of Josh Spector with UBS, Josh Your line is now open.

Joshua David Spector: Yes, hi, good morning.

Jon Erik Fyrwald: Good morning. I wanted to ask you about your expectations for volume cadence. I mean, clearly, a very strong first quarter, so congrats on that. But I think some of the comps on a year-over-year basis actually get a bit easier. So is there something you'd call out that you would say is a headwind we should consider? Or would you characterize your view as just conservatism?

Joshua David Spector: I wanted to ask on your expectations of volume cadence I mean, clearly very strong first quarter. So congrats on that but I think some of the comps on a year over year basis actually get a bit easier. So is there something you'd call out that you would say as a headwind we should consider or would you characterize your view as Jessica.

Joshua David Spector: Thanks.

Jon Erik Fyrwald: Thanks. Thanks, Josh. And then Glenn can give you more details.

Jessica: Thanks, Josh Let me start and then Glenn can give you more details, but as I see it.

Jessica: Fairly new.

Jessica: Coming into the company.

Glenn Robert Richter: Clearly CPG company volumes are still soft in the U S and the EU and so we can't expect a whole lot of market tailwind growth.

Glenn Robert Richter: I do think we've seen the end of most of the Destocking outside of pharma solutions and plan alluded to the pharma solutions Destocking, both market Destocking and our change in channel strategy.

Jon Erik Fyrwald: But as I see it, you know, still fairly new coming into the company. Clearly, CPG company volumes are still soft in the US and the EU. And so we can't expect a whole lot of market tailwind growth. I do think we've seen the end of most of the de-stocking outside of Pharma Solutions, and Glenn alluded to the Pharma Solutions de-stocking, both market de-stocking and our change in channel strategy. But the bottom line is, we can't expect a lot of growth from the marketplace, although there are some emerging markets that we're going after that are seeing very attractive volume growth.

Jessica: But bottom line is we can expect a lot of growth from the marketplace. Although there are some emerging markets that we're going after that are seeing.

Jessica: That's very attractive volume growth.

Jessica: But overall, our focus has to be growth through bringing leading innovation and winning business with customers and I've heard a lot already about about commercial projects that we're winning but we're also going to increase the focus and understanding.

Jon Erik Fyrwald: But overall, our focus has to be growth through leading innovation and winning business with customers. And I've heard a lot already about commercial projects that we're winning, but we're also going to increase the focus on understanding the projects that we didn't win. Why didn't we win them?

Jessica: The projects that we didn't win why didn't we win them what does it take for us to be even more successful with our customers and win even more projects and bring that leading innovation. So that customers are growing their market share profitably and we're growing with them.

Jon Erik Fyrwald: What does it take for us to be even more successful with our customers and win even more projects and bring that leading innovation so that customers are growing their market share profitably, and we're growing with them? Thanks, Eric. Again, Josh, I think, as Eric mentioned, until we see a strengthening in the consumer environment, which has yet to appear, and until we have a few more months underneath our belts, it's sort of hard for us to be incredibly optimistic about the second half. As a reference point, volumes in the first half are circa 4 to 5%, and in the second half, basically 1 to 2%.

Jessica: Glen Thanks, Eric Josh I think it's.

Speaker Change: As Eric mentioned until we see a strengthening in the consumer environment, which has yet to appear and until we have a few more months underneath our belt, it's sort of hard for us to be sort of incredibly optimistic on the second half as a reference point the first half volumes of circa 4% to 5% and second half basically 1% to two.

Speaker Change: 2% as a reminder, the first half of last year because of the aggressive destocking was down 9% in the second half down 5%. So a little bit is the lapping as well as we sort of think about providing guidance, but I think the end market as Eric said, we need to see greater strength, there before we're sort of more confident in higher volume growth in the.

Speaker Change: Second half.

Jessica: Thank you. Our next question comes from the line of Mike Sison with Wells Fargo. Mike. Your line is now open.

Glenn Robert Richter: As a reminder, the first half of last year, because of the aggressive destocking, was down 9%, and the second half was down 5%. So a little bit of this is the lapping as well as we sort of think about, you know, providing guidance. But I think the end market, as Eric said, we need to see greater strength there before we're sort of more confident in higher volume growth in the second half. Our next question comes from the line of Mike Sison with Wells Fargo. Mike, your line is now open. Hey, good morning, and a really nice start to the year.

Michael Joseph Sison: Hey, good morning, and a really nice start to the year.

Operator: When I think about the first quarter EBITDA run rate and EBITDA margins, really good improvement at 20%. I think about staying in this 20% range for the rest of the year, and congrats on retirement. Thank you, Mike. I might actually come visit you in Cleveland when I retire, by the way.

Michael Joseph Sison: When I think about the first quarter EBITDA run rate in <unk>.

Michael Joseph Sison: The EBITDA margins really good improvement at 20%.

Michael Joseph Sison: Our guidance would sort of imply that those levels fall sequentially. So.

Michael Joseph Sison: Any sort of onetime positives during the first quarter that wouldn't reoccur and just curious if demand and volume levels remained here why wouldnt EBITDA margins stay.

Michael Joseph Sison: Sort of in this 20% range for the rest of the year and congrats on retirement.

Glenn Robert Richter: So good question. So 20% for Q1, sort of the implied balance of years around 18.5%. That 150 basis points have changed, half of that's related to volume and mix, you know, inclusive of LMC. So LMC, you take out about $12 million per quarter and about $25 million of revenue. So it's a relatively high margin. So everything normalized, that gets you from the 20 down to basically 19 and a quarter.

Speaker Change: Thank you, Mike I might actually come visit here in Cleveland when I retire by the way. So good question. So 20% for Q1 sort of the implied balance of the year is around <unk>, 5%.

Speaker Change: That 150 basis points of change half of that's related to volume and mix inclusive of LLC. So LLC you take out about $12 million per quarter on about $25 million of revenue. So it's a relatively high margin.

Speaker Change: Everything normalize that gets you from the 20 down to basically <unk> 19 in the quarter. The residual 75 basis points really is a little bit more net price cost realization in Q1 versus the forecast and then just some timing of expenses, but to answer. Your direct question is volumes, where it had maintained then we should be somewhere.

Speaker Change: In the 19%, probably 19% plus range for the balance of the year.

Operator: The residual 75 basis points really is a little bit more net price to cost realization in Q1 versus the forecast and then just some timing of expenses. But to answer your direct question, if volumes were to maintain, then we should be somewhere in the 19%, probably 19% plus, range for the balance of the year. Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Patrick, your line is now open. Hi, good morning. This is Eric Zang on for Patrick.

Speaker Change: Thank you. Our next question comes from the line of Patrick Cunningham with City Patrick Your line is now open.

Glenn Robert Richter: What are your expectations for price costs for the full year? The price guide seems to be a bit of a small net positive if you net out FX. Are there any areas where you're getting structural pricing, or is this just a let's get back? Yeah, yeah, Eric. You're right.

Speaker Change: Hi, Good morning, This is Eric Zhang on for Patrick.

Eric Zhang: Are your expectations for price cost for the full year, the price guide seems to be a bit.

Eric Zhang: Seems to be a small net positive if you net out FX are there any areas, where youre getting structural pricing or is this just let's get back than you expected.

Glenn Robert Richter: I mean, for the full year, we're expecting a small net positive, as I mentioned, a little more bias towards Q1 than the balance of the year. Our pricing actions, which were largely givebacks this year, were highly focused in the functional ingredients space. We are tracking well against the expectations that we set for the year. We do believe that the improved performance in the business is in part related to these pricing actions on top of the other actions.

Eric Zhang: Yeah.

Speaker Change: Eric you are right I mean, the full year were we're expecting a small net positive as I mentioned, a little more bias towards Q1 than the balance of the year our pricing actions.

Speaker Change: We're largely give backs this year, we're highly focused in the functional ingredients space.

Speaker Change: We are tracking well against the expectations that we set for the year. We do believe that the improved performance in the business is in part related to these pricing actions on top of the other actions.

Glenn Robert Richter: And we don't see sort of any additional kind of pricing for the balance year at this point in time. And then, in general, if we look at sort of the inflationary environment for the balance of the year, it's pretty stable. I'd say commodities are flattish to maybe a tad higher.

Eric Zhang: And we don't see sort of any additional kind of pricing for the balance here at this point in time and then in general if we look at sort of the inflationary environment for the balance of the year, it's pretty stable I'd say commodities are flattish to maybe a tad up.

Eric Zhang: Energy is trending down, particularly in Europe, and logistics is trending slightly up, particularly ocean freight, but given what's happening in the red sea, but generally stability and as we mentioned a little more positive net price in the first quarter than the balance of the year.

Eric Zhang: Eric.

Glenn Robert Richter: Generally, energy is trending down, particularly in Europe, and logistics is trending slightly up, particularly ocean freight, given what's happening in the Red Sea. But you know, generally stability, and, as we mentioned, a little more positive net price in the first quarter than the balance of the year. Thank you, Eric. Thank you.

Eric Zhang: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. David Your line is now open.

David L. Begleiter: Thank you Eric does improvement in functional ingredients market turn in this business.

Operator: Thank you. Eric, does the improvement in functional ingredients mark a turn in this business? And looking forward, can the entirety of this business return to prior levels of sales and earnings? Or is there some portion of this business that will not due to low cost?

David L. Begleiter: And looking forward, Ken the entirety of this business return to prior levels of sales earnings.

David L. Begleiter: Or is there some portion of the business that will not due to low cost Asian competition. Thank you.

Jon Erik Fyrwald: Thanks for the question, David. And I'm glad to be back with you again after some years. Absolutely, it marks the beginning of improvement in the functional ingredients business, and I am very pleased to see that after a long, tough spell. And what I would say is that we are putting more focus on the functional ingredients business. And I'm very pleased to see the start of what the team is working really hard to make a sustained turnaround.

David L. Begleiter: Thanks for the question, David and glad to be back with you again.

David L. Begleiter: After some years.

Ken: Absolutely it marks the beginning of improvement in the functional ingredients business and very pleased to see that after a long tough spell.

Speaker Change: And what I would say is that we are putting more focus on the functional ingredients business and I am very pleased to see the start of what the team are working really hard to make a sustained turnaround.

Jon Erik Fyrwald: And in addition to better execution, which is happening, we are doing a strategy refresh and looking at all the product families and our systems approach across the functional ingredients business. And we are focused very much right now on delivering a strong improvement in 2024, but also doing what it takes to make sure that that improvement continues into 2025, starting with the second quarter of 24, then the third quarter, but the full year this year, but making sure that we're doing the right things to strengthen for 25 and beyond. And you'll hear more about that in the coming quarters.

Speaker Change: In addition to better execution, which is happening we are doing our strategy refresh and looking at all the product families and our systems approach across the functional ingredients business and we are focused very much right now on delivering a strong improvement in 2024, but also what it what it to.

Speaker Change: <unk> to make sure that that improvement continues into 2025, starting with the second quarter 'twenty four and then the third quarter, but the full year this year, but doing making sure that we're doing the right things to strengthen for 25 and beyond.

Jon Erik Fyrwald: But it is the start of a turnaround. Very pleased with the progress that the team is making, the actions that they're taking, both with customers and on productivity. And we'll see how well we can do in 24. And then we'll focus on 25.

Speaker Change: And Youll hear more about that in the coming quarters, but it is the start of a turnaround very pleased with the progress that the team is making the actions they are taking both with customers and on productivity.

Speaker Change: We will see how good we can do in 'twenty four and then we'll focus on 25, but making progress I would just add to that David as we've mentioned in the past.

Glenn Robert Richter: But making progress. Yeah, I would just add to that, David, as we've mentioned in the past, we've stated we didn't think we're going to get to sort of full recovery till 25. We're pleased by the start of this year. A lot of the service elements are 100% back to where they should be.

Speaker Change: We've stated we didn't think we're going to get to sort of full recovery until 'twenty five.

Speaker Change: We're pleased by the start of this year and love the service elements are 100% back to where they should be pricing actions have been effective more innovation in the pipeline. The last piece of the equation is on the cost side and we're going through a very extensive review of our manufacturing and procurement operations that probably will be implement late this year into early <unk>.

Glenn Robert Richter: Pricing actions have been effective. More innovation is in the pipeline. The last piece of the equation is on the cost side.

Speaker Change: <unk> is the final piece to get to the margin structure in terms of where we need to be thanks for the question.

Operator: And we're going through a very extensive review of our manufacturing and procurement operations. That probably will be implemented late this year and early next year as the final piece to get to the margin structure in terms of where we need to be. Thanks for the question. Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Adam, your line is now open. Yes, thank you. Good morning, everyone.

Speaker Change: Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Adam Your line is now open.

Adam L. Samuelson: Yes. Thank you good morning, everyone.

Operator: I'd love to get your perspective on volume trends by region in the first quarter and if there's anything you would call out as notable areas. Outside Strength or Weakness, uh, versus, I'll probably exclude pharma from that discussion. Again, given that first quarter performance, is there any... Hey, good morning, Adam. Good question.

Adam L. Samuelson: But love to get your perspective on volume trends by region in the first quarter and if there's anything you would call out as notable areas of <unk>.

Adam L. Samuelson: Strength or weakness versus the portfolio as a whole up mid single digits and I think we could probably exclude pharma from that discussion.

Adam L. Samuelson: Again, given that first quarter performance is there anything.

Adam L. Samuelson: There with the regional performance would differ materially kind of over the balance of the year. Thank you.

Glenn Robert Richter: Regionally, we have seen greater strength in a combination of Asia and Latin America, so more emerging markets from a volume standpoint, and sort of across the board, generally a little softer in North America and in EMEA. That's probably not dissimilar from what others are seeing in the marketplace. If we look by business, you know, Scent had a phenomenal start to the year, 9% plus volumes, Nourish, and H&B in the 4% range.

Speaker Change: Hey, good morning, Adam Good question reads.

Speaker Change: Regionally, we have seen greater strength and a combination of Asia and Latam So more of the emerging markets from a volume standpoint.

Speaker Change: And sort of across the board generally a little softer in North America and in EMEA.

Speaker Change: That's probably not too dissimilar than what others are seeing in the marketplace. If we look by business had a phenomenal start.

Speaker Change: <unk> for the year, 9% plus volumes nourish an agent in the 4% range.

Glenn Robert Richter: As we think about the balance of the year, you know, we're not planning on Scent continuing at these very, very high levels, so some softening from those, and then a little bit softer for H&B and Nourish, and then Pharma actually improving because they were down about 9% in Q1, and actually getting to flattish as we move into Q2 of the balance of the year. But generally, where we're seeing a Thank you. Our next question comes from the line of John Roberts with Mizuho. John, your line is now open. Thank you and best wishes, Glenn. Thanks for all your help.

Speaker Change: As we think about the balance of the year.

Speaker Change: We're not planning on continuing at these very very high levels.

Speaker Change: Some softening from these and then a little bit softer for <unk>, and then pharma actually improving because they were down about 9% in Q1 and actually getting to flattish as we move into Q2 and the balance of the year, but generally where were seeing the regional balance more emerging market, we're expecting that to continue at least through the second quarter.

Speaker Change: Thank you. Our next question comes from the line of John Roberts with Mizuho. John Your line is now open.

John Ezekiel Roberts: Thank you and best wishes Glenn Thanks for all your help.

Operator: Eric, IFF has had more opportunities than most companies to promote from within for the CEO and CFO positions. Do you think there's anything that needs to change in the organization to develop a deeper bench so the C-suite transitions are smoother? Or is there just a culture on the board to look outside for C-suite positions?

John Ezekiel Roberts: Eric ISF has had more opportunities than most companies to promote from within for the CEO and CFO positions.

John Ezekiel Roberts: I think there is anything that needs to change in the organization to develop a deeper bench. So the C suite transitions are smoother or is there just a culture on the board to look outside for C suite positions.

Jon Erik Fyrwald: Well, thanks for the question, Jon, and I think it's a really important one. To me, the most important thing we do as leaders is make sure that we have the right talent in the company, that we develop the right talent, and we give them opportunities through promotion to continue to advance their careers. And so I always prefer internal promotions, but sometimes external talent needs to come in to fill gaps or when we don't have the right talent inside.

Speaker Change: Well thanks for the question, John and I think it's a really important one.

Speaker Change: To me the most important thing we do as leaders is make sure that we have the right talent in the company that we develop the right talent and we give them the opportunities through promotion to continue to advance their careers and so I always prefer internal promotions, but sometimes external talent needs to come in to fill gaps or when we don't have the right.

Jon Erik Fyrwald: But I can tell you that, like at Syngenta, I very much want my successor to come from inside when I do retire at some point. And also, I'll just point out that the one significant executive leadership change that we've made so far was Ana Paula Mendoza being promoted to run the Scent division as president of Scent. And if you look at her background and talk to the people across the company and customers, there was great enthusiasm for her promotion. And I like that.

Speaker Change: Inside.

Speaker Change: But I can tell you that like if syngenta I very much want to have my successor come from inside when I do retire at some point.

Speaker Change: And also I will just point out that the one <unk>.

Speaker Change: Significant executive leadership changes that we've made so far was Ana Paula Mendosa.

Speaker Change: <unk> is being promoted to run the scent division as president of scent and if you look at her background and if you talk to the people across the company and customers. There was great enthusiasm for her promotion and.

Speaker Change: And I like that so I will continue to work with executive leadership team and with the board to make sure that we're developing the right talent inside the company.

Jon Erik Fyrwald: So I will continue to work with the executive leadership team and with the board to make sure that we're developing the right talent inside the company to make sure that we promote from within wherever we can. Thank you. Our next question comes from the line of Ghansham Panjabi with Baird. Ghansham, your line is not open.

Speaker Change: To make sure that we promote from within wherever we can.

Speaker Change: Thank you. Our next question comes from the line of Ghansham Panjabi with Baird Ghansham. Your line is now open.

Ghansham Panjabi: Thank you operator, and good morning, everybody.

Operator: Operator, good morning, everybody. You know, Eric, first off, on the... The Bulletproof Executive 2013, How would you sort of objectively assess the... The Bulletproof Executive 2013, And then just related to that, in terms of scent, what did drive the first quarter in terms of scent? The Bulletproof Executive 2013, Thanks, Lawrence. It's also good to be back with you. We've had some history that dates back quite a ways.

Ghansham Panjabi: I guess, Eric first off on the.

Ghansham Panjabi: As you sort of meet with customers in your listening tour et cetera, how would.

Ghansham Panjabi: You sort of objectively assess the modes of the residual businesses that are going to be part of <unk> going forward and then just related to that in terms of cents. What did drive the first quarter in terms of outperformance, especially consumer fragrances was that sort of share gains and if it was what was that driven by.

Jon Erik Fyrwald: The way I would say it is that, in the businesses that are remaining, we've got a lot of great innovation capability and a lot of really terrific people that understand customers and have great consumer insight capability. So we have the people and the capabilities, including the innovation capabilities, to be very successful. And what I would say is, even talking to our people, but also our customers, we haven't realized our full potential. And that's what it's about.

Speaker Change: Thanks, Laurence it's also good to be back with you.

Speaker Change: <unk> had some history that dates back quite a ways.

Laurence: Well the way I would say it is that.

Speaker Change: And the businesses that are remaining we've got a lot of great innovation capability and a lot of really terrific people that understand customers have great consumer insights capability. So we have the people and the capabilities, including the innovation capabilities to be very successful.

Speaker Change: What I would say is and even talking to our people, but also our customers we haven't realized our full potential and that's what it's about it's the leadership team working to unleash the full potential by making things decision, making clear by having businesses be end to end be able to drive clarity in their strategy.

Jon Erik Fyrwald: It's the leadership team working to unleash the full potential by making decision-making clear, by having businesses be end-to-end, able to drive clarity in their strategy and then clarity in their execution. But at the same time, having a collaborative culture so that we can collaborate across businesses wherever it makes sense, to enhance our ability to bring solutions to customers or to drive healthy productivity. And so I believe that we're doing well with that, but we've got a lot more potential to unleash.

Speaker Change: And then clarity in their execution, but.

Speaker Change: But at the same time, having a collaborative culture. So that we can collaborate across businesses wherever it makes sense to.

Speaker Change: To enhance our ability to bring solutions to customers or to drive healthy productivity.

Speaker Change: And so I.

Speaker Change: I believe that we're doing well with that but we've got a lot more potential to unleash and I think if you talk to people across the company I think you'll find a lot of enthusiasm about what.

Jon Erik Fyrwald: And I think if you talk to people across the company, I think you'll find a lot of enthusiasm about what IFF is doing and what more we can do going forward. Specifically, on Scent, I think Scent has been a unit that has stayed focused largely on customers and that has brought a lot of innovation to customers. I've spent a lot of time with the perfumers in this company. We have world-class perfumers, and I'm just so proud to be part of this company with such great perfumes that our customers value. I've spent time with the CEOs of leading...

Speaker Change: What <unk> is.

Speaker Change: He is doing and what more we can do going forward specifically on <unk> I think <unk> has been a unit that has stayed focused largely on customers and that has brought a lot of innovation to customers I've spent a lot of time with the perfumes and this company we've got World class performance.

Speaker Change: Humor's and just I'm, so proud to be part of this company with such great perfume or that our customers value I've spent time with Ceos of leading.

Jon Erik Fyrwald: Leading CPG companies that have named our perfumers by name because they're so important to their success. And so making sure that we bring not only our perfumers but the whole team around the perfumers to help co-create great new fragrances and fine fragrances or great new consumer products, whether they're shampoos or detergents, laundry detergents, or dishwash detergents, or floor cleaners, or body wash, whatever it is. The scent, I've learned, is such a critical part of the success of a consumer product.

Speaker Change: Leading CPG companies did have named our <unk> by name.

Speaker Change: Because there is so important to their success and so making sure that we're bringing not only our pro <unk>, but the whole team around the perfumes to help co create great new fragrances, and fine fragrances, or great, new consumer products, whether theyre shampoos or or detergents laundry.

Speaker Change: Detergents, or dishwashing, detergents or floor cleaners or body wash whatever it is.

Speaker Change: The scent I've learned is such a critical part of the success of the consumer product and our great perfumes and the teams around them, bringing great technology and great formulations to help the customers.

Jon Erik Fyrwald: And our great perfumers and the teams around them bringing great scent technology and great formulations to help the customers develop leading consumer products have really been what's driven the growth. So I expect, under Anna's leadership and with the super team that she's got, that continued strong performance to continue. Thank you. Our next question comes from the line of Salvatore Tiano with Bank of America. Salvatore, your line is now open.

Speaker Change: Customers.

Speaker Change: <unk>, leading consumer products has really been whats driven the growth so I expect under leach.

Speaker Change: Leadership and with a super team that she's got I expect that continued strong performance to continue.

Operator: Yes, thank you very much. If I remember correctly, you had talked about 150 million productivity gains for the year. So can you talk a little bit, can you quantify what the benefit was in Q1? What do you expect for the rest of the year? And given obviously the strong gains in the first quarter, is this number increased for the rest of the year? A good question, Salvator.

Speaker Change: Thank you. Our next question comes from the line of Salvator Tiano with Bank of America Salvator. Your line is now open.

Salvator Tiano: Thank you very much.

Salvator Tiano: Remember correctly, you had talked about $150 million productivity gains for the year.

Salvator Tiano: So can you talk a little bit kind of quantify what was the benefit in Q1.

Salvator Tiano: Do you expect for the rest of the year and given obviously the strong gains.

Salvator Tiano: First quarter is this number for the rest of the year.

Glenn Robert Richter: We are trending at around $200 million full year in terms of productivity, and hence some of our commentary about guiding towards the higher range of our EBITDA guide. And that's about $50 million per quarter, so it's fairly ratable in terms of the kind of achievement. You know, I would note, as we've said in previous calls, we have made tremendous progress with our operations and procurement leadership teams in really driving a very disciplined approach to taking costs out, everything from SKU rationalization to literally looking plant by plant in terms of best practices.

Salvator Tiano: A good question Salvator, we were trending at around $200 million full year in terms of productivity and hence some of our.

Salvator Tiano: Our commentary about guiding towards the higher range of our EBITDA guide.

Salvator Tiano: And that's about $50 million per quarter. So it's fairly ratable in terms of kind of the achievement I would note as we said on previous calls we have made tremendous progress with our operations and procurement leadership teams and really driving a very disciplined approach is taking cost out everything from SKU rationalization too.

Salvator Tiano: Looking at plant by plant in terms of best practices.

Glenn Robert Richter: And behind that, and by the way, there's plenty of additional opportunities, as I mentioned, we're taking a zero-paced approach to our ingredients. Thanks for watching. Thank you. Our next question comes from the line of Lisa de Neve with Morgan Stanley. Lisa, your line is now open. Good morning.

Salvator Tiano: And behind that and by the way there is plenty of additional opportunities as I mentioned, we're taking a zero based approach to our ingredients.

Salvator Tiano: Platform.

Salvator Tiano: To provide additional opportunities and behind that we've really been looking at opportunities within RSA there've been focused on leveraging our global shared services really focusing on our indirect spend so getting every dollar out we need and then continuing to advanced technology as a way to basically automate eliminate work so that piece of it is actually picking up speed.

Salvator Tiano: Well, so we feel very good about 200, and I would suggest as we look out into the future. We're going to continue to deliver very strong productivity numbers. Thanks for the question.

Speaker Change: Thank you. Our next question comes from the line of Lisa de Neve with Morgan Stanley. Please state. Your line is now open.

Operator: Thank you for taking my question. Congratulations on the strong first quarter. My first question, so with the announcement of the pharma division, which is expected to complete in the first half of next year, can you just share where you see potential scope for optimizing your balance sheet position and maybe where you see some depth that could be reduced or be up for redemption or that may not require any refinancing? And then I am going to sneak in a second question.

Speaker Change: Good morning, Thank you for taking my question and congratulations on the strong first quarter.

Speaker Change: My first question so with the announcement of the Pharma Division, which is expected to complete in the first half of next year can you just share where you see potential scope for optimizing your balance sheet position and maybe where you see some depth that could be reduced or be up for redemption or that may not require any refinancing and then I'm going to sneak in.

Glenn Robert Richter: So during the presentation, you mentioned that your finance and HR departments, amongst others, are now directly feeding into your divisions. Can you shed some light on their compensation structure, the variable pay they may or may not receive, and what key KPIs they have to deliver on this? Thank you. Sure. Hey, Lisa. Good morning. This is Glenn.

Speaker Change: Second question. So during the presentation, you mentioned that Youll finance and HR departments amongst others are now directly feeding into your divisions can you shed some light on their compensation structure, a desirable paid in may or may not receive and what key kpis. They have to deliver on this thank you.

Glenn Robert Richter: So we're in the early innings of deciding sort of our liability management strategy. As you know, we will bring in circa net proceeds of $2.4 billion from PhRMA. Coincidentally, we have maturities cumulatively for 2025 and 2026 that are $2.4 billion, but we're actually taking a more holistic look, and we're actually going to be balancing the tradeoff between interest cost savings and notional debt repayment, so how do we think about basically bringing in some of the cheaper debt, as well as refinancing risk?

Speaker Change: Sure Hey, Lisa Good morning. This is Glenn so we're in the early innings of deciding sort of our liability management strategy. As you know we will bring in circa net proceeds of $2 4 billion from pharma Coincidentally.

Glenn Robert Richter: Coincidentally, we have maturities cumulatively for 25, and 26 that are $2 4 billion, but we're actually taking a more holistic look and we're actually going to be balancing the trade off between interest rate interest cost savings.

Speaker Change: Notional debt repayments. So how do we think about basically bringing in some of the cheaper debt as well as refinancing risks. So we'll think about bringing some towers down as part of that so there'll be more to come as we get closer to finalizing the close of the deal, but we are sort of thinking about not just the immediate maturities, but how the optimize the straw.

Glenn Robert Richter: So we'll think about bringing some towers down as part of that. So there'll be more to come as we get closer to finalizing the close of the deal, but we are sort of thinking about not just the immediate maturities but how to optimize the structure going forward. So with that, Eric, I'm happy to take the next question. Would you like to take the next question? Yes.

Speaker Change: Structure going forward, so with that Erik I'm happy to take the next question. We'll take the next question, yes. So on the functions feeding into the business units reporting into the business units. It's clearly being done so that the business units can drive their performance and there'll be no changes to the 2024 plan because everybody set in.

Jon Erik Fyrwald: So on the functions feeding into the business units, reporting into the business units, it's clearly being done so that the business units can drive their performance. And there will be no changes to the 2024 plan, because everybody's set and clear about it, and we're not making changes. But effective in 2025, those functions that we're reporting corporately that we'll be reporting into the business units will be incentivized based on business unit performance

Speaker Change: Clear about it and we're not making changes but effective in 2025 those functions that were reporting corporately that we'll be reporting into the business units will be incentivized on the business unit performance.

Jon Erik Fyrwald: As a large part of their incentive, they'll also, of course, continue to have a corporate element to encourage overall corporate performance and collaboration across business units. And the more senior, I would also say that there'll continue to be corporate functional leadership that ensures that we're doing functional best practices across the business units and that each of the functional people have great career opportunities across the company. So it will be a combination, but clearly, each business unit is going to be highly incented to drive the performance of that business through collaboration that enhances their business performance and the business performance of the other businesses. Thank you. Our next question comes from the line of Mark Astrachan with Stiefel.

Speaker Change: As a large part of their incentive. They are also of course continue to have a corporate element to encourage overall corporate performance and collaboration across business units and the more senior.

Speaker Change: But all the people are the more the corporate component, but clearly what we want to drive his business unit alignment and everybody on that business team driving that business unit's performance, but also collaborating to enhance their business units performance and the total company performance.

Speaker Change: I would also say that there'll continue to be corporate functional leadership that ensure that we're doing functional best practices across the business units.

Speaker Change: And that each of the functional people have great career opportunities across the company.

Speaker Change: So it will be a combination, but clearly each business unit is going to be highly incentive to drive the performance of that business with collaboration that enhances their business performance and the business performance of the other businesses.

Operator: Mark, your line is now open. Yeah, thanks, and good morning, everybody. For clarification, and a question. So, sounds like there was a lot of benefit, sent volumes in the quarter. I guess that partly explains the big TheBetta number and growth rate on your basis. So is it fair to say that that, www.globalonenessproject.org Total Business. And if you could maybe, tell us how much.

Speaker Change: Thank you. Our next question comes from the line of Mark Astrachan with Stifel. Mark. Your line is now open.

Mark Stiefel Astrachan: Yes, thanks, and good morning, everybody two two clarification.

Mark Stiefel Astrachan: Question so.

Mark Stiefel Astrachan: It sounds like there was a lot of benefit in <unk>.

Mark Stiefel Astrachan: Volumes in the quarter I guess that partly explains the the big EBITDA.

Mark Stiefel Astrachan: EBITDA.

Speaker Change: Number in growth rate on a year on year basis. So is it fair to say that.

Speaker Change: Specifically the EBITDA growth.

Speaker Change: Normalized as we head through the year and I guess.

Speaker Change: <unk> picture same thing on the total business and if you could maybe.

Speaker Change: Tell us how much you think the <unk> volume growth had to do with channel refill from.

Glenn Robert Richter: The 1Q volume growth had to do with channel refill. What your customers are ordering from you? That'd be helpful.

Speaker Change: The destocking and how much of it is really.

Speaker Change: What your customers are ordering for me that'd be helpful. Thank you.

Glenn Robert Richter: Thank you. Yeah, so hard to answer your second question, Mark. It's hard to definitively understand, kind of what's going on downstream in terms of the supply chain. However, I think in general, there was a little bit of volume that went from Q4 into Q1, but directionally probably less than half a point. We were reducing prices, as you know, in certain segments, so customers decided to push some orders into Q1, but I think it's fairly de minimis. In general, the feeling is that there's not been any restocking in the marketplace.

Speaker Change: Yes, so hard to your second question Mark hard too.

Speaker Change: <unk> I understand.

Speaker Change: Kind of what's going on downstream in terms of the supply chain. However, I think in general there was a little bit of volume that went from Q4 into Q1, but directionally probably less than half a point, we were reducing prices as you know in certain segments. So customers decided to push some orders into Q1, but.

Speaker Change: It's fairly de Minimis in general the feeling is that there is not any restocking in the marketplace. There is an absence of destocking, but theres no view I think generally in terms of the customers are restocking at this point in time.

Glenn Robert Richter: There's an absence of destocking, but there's no view, I think, generally, in terms of whether customers are restocking at this point in time. In terms of your question on cent volumes, cent had a very strong first quarter, and it was stronger in consumer versus fine, so that makes that sort of mixed neutral versus the enterprise from a standpoint, and as mentioned, we're not anticipating that those high single-digit volume gains will continue through the balance of the year, so that is a piece that's basically reflected in our balance of your guide being lower from a volume standpoint. Thank you. Our next question comes from the line of Lauren Lieberman with Barclays. Lauren, your line is now open. Great, thanks.

Speaker Change: In terms of your question on set volumes had a very strong first quarter note that it was stronger than consumer versus spine. So that as it makes that sort of mix neutral versus the enterprise from the standpoint.

Speaker Change: And as mentioned we are not anticipating that those high single digit volume gains will continue through the balance of the year. So that is a piece that's basically reflected in our balance of year guide being lower from a volume standpoint.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Lauren Lieberman with Barclays. Lauren Your line is now open.

Operator: I had two questions. The first was just on Nourish's performance in the quarter and volumes being up. Food industry volumes are still quite weak, so I was just kind of curious if you could square for us your performance outside of inventory rebuilding versus kind of what we're seeing in end market demand. And then the second thing was, Eric, it was very helpful to hear kind of the update on the organization structure and the direction you're moving in.

Lauren Rae Lieberman: Great. Thanks, I had two questions.

Lauren Rae Lieberman: First was just on the nourish performance in the quarter and volumes being up.

Lauren Rae Lieberman: Food industry volumes are still quite weak. So I was just kind of curious if you could square for us your performance outside of inventory rebuilding versus kind of what we're seeing in end market demand.

Lauren Rae Lieberman: And then the second thing was Eric very helpful to hear kind of the update on org structure and the direction you're moving in.

Lauren Rae Lieberman: I was curious, though that's a little bit backwards question. The the org structure that was in the process of being setup and Glenn you were obviously a part of that.

Lauren Rae Lieberman: I understand the notion that it's not it's been deemed not the right path forward, but there were surely merits to that plan. There were there are elements there that we're going to bring something positive or there was an intention. So I'm just curious what if anything you think you kind of give up or forego.

Lauren Rae Lieberman: Not pursuing that model and if there are ways to kind of bring that into.

Lauren Rae Lieberman: This structure, Eric that youre going to be setting up is that didn't make sense I can try to clarify that.

Operator: I was curious, though, that's a little bit of a backwards question, the organizational structure that was in the process of being set up, and Glenn, you were obviously a part of that. Yeah, no, no. I'll start, and then Glenn can add to it. First of all, in the organization structure, the idea was to have a market-based organization structure. So, for example, health and biosciences would have been split up into four different units.

Speaker Change: No no.

Speaker Change: I'll start and then Glenn can add to it first of all on the organization structure. The idea was to have market based organization structure. So for example, health <unk> Biosciences would've been split up into four different units.

Jon Erik Fyrwald: As we've come together as an executive leadership team and talked about it, the belief is that you gain the most by making sure that your innovation, that your R&D engine stays within the business and the manufacturing and the commercial so that you have that end-to-end, and you're going to customers with expertise that they can connect all the way back to R&D and what we call IC&D, the innovation, creation, and design capabilities that we bring. That really needs to stay within a business and be there end-to-end.

Lauren Rae Lieberman: As we've come together as an executive leadership team and talked about it. The belief is that you gain the most by having making sure that your innovation that your R&D engine.

Glenn Robert Richter: As within the business and the manufacturing and the commercial so that you have that end to end and youre going to customers with expertise that they can connect all the way back to R&D and what we call <unk>.

Glenn Robert Richter: The innovation creation and design capabilities that we bring.

Jon Erik Fyrwald: Now, we have different businesses that hit the same markets. So health, excuse me, home, and personal care; both our biosciences business and our scent business have a lot in common with customers. So we'll continue to have a global key account leader for large accounts, that will represent the company. But then we'll have experts from the business units coming into that account and working with that account, which is what the accounts want.

Glenn Robert Richter: That really needs to stay within our business and be their end to end now we have different businesses that hit the same markets. So health excuse me home and personal care, both our biosciences business in our <unk> business have a lot in common with customers. So we'll continue to have.

Glenn Robert Richter: A global key account leader for large accounts.

Jon Erik Fyrwald: They want both that overall IFF relationship, which, by the way, will include the presidents of the businesses will include me and others, but that coordinated, but they want to see the experts that really know the details of the innovation that can bring that innovation to them. And that's what these end-to-end business units will enable us to bring. Yeah, so if I can add, you know, the original premise, which actually predates me, Lauren, was that combining flavors and ingredients would represent a significant revenue synergy opportunity through cross sell.

Glenn Robert Richter: That will represent the company, but then we will have experts from the business units coming into that account and working with that account, which is what the accounts want they want both that overall ISF relationship, which by the way. We will include the presidents of the businesses will includes me and others, but that coordinated but they want to see the experts that really.

Glenn Robert Richter: So the innovation details that can bring that innovation to them and that's what these end to end business units will enable us to bring.

Jon Erik Fyrwald: And the axis was put on synergies, as opposed to how do you optimize the individual businesses that are being shifted the other way, where the reality is, these businesses will run much, much better with a single focus either on flavors or ingredients. As Eric said, there are other mechanisms to help cross out, particularly with the global key accounts as a way to develop long-term plans, etc.

Speaker Change: Yeah, So if I can add.

Speaker Change: The original premise, which actually predates me.

Glenn Robert Richter: Lauren was that combining flavors and ingredients would represent a significant quote revenue synergy opportunity through cross sell.

Glenn Robert Richter: And the access was put on synergies as opposed to how do you optimize the individual businesses that is being shifted the other way where the reality is these businesses will run much much better with a single focus either on flavors and ingredients as Eric said there are other mechanisms to help cross sell particularly with the global key accounts as a way to develop long.

Glenn Robert Richter: But we've seen it just firsthand in terms of the more that we get our ingredients team sort of focused on only ingredients, it does deliver results. So I think that's the big shift from three plus years ago when the deal was put together. And early, to your first question, very early innings, by the way, although cautiously optimistic, our trends in terms of our flavors business were four plus percent volumes, and the ingredients business was three, three and a half percent.

Glenn Robert Richter: Term plans et cetera, but we've seen it just firsthand in terms of the more that we get our ingredients teams sort of focused on only ingredients. It does deliver results. So I think that's the big shift from three plus years ago. When the deal was put together.

Glenn Robert Richter: And early to your first question very early innings by the way, although cautiously optimistic.

Glenn Robert Richter: Our trends in terms of our flavors business, we're four plus percent volumes and the ingredients business for 335%.

Glenn Robert Richter: From what we can measure in terms of our competitive set on both sides of the house, we feel that we're at parity or gaining share based on the quarterly results. However, I would caution, particularly in the ingredients business; it is early.

Glenn Robert Richter: From what we can measure in terms of our competitive set on both sides of the house, we feel that we're at parity or gaining share based on the quarterly results I would I'd caution, particularly on the ingredients business. It is early there's a lot of remediation in that business, but it's encouraging that we're starting off relative to our peers in a good place and what I would just add to that.

Glenn Robert Richter: As I think flavors. It was it was really a good pipeline.

Glenn Robert Richter: The commercial team was able to land and in ingredients. It was a combination of a strengthening pipeline, but also pricing actions that led to regain some share that was lost due to.

Glenn Robert Richter: Big over over pricing increases and now we've recovered some of that with some price give backs.

Speaker Change: Okay great.

Speaker Change: Thank you our.

Glenn Robert Richter: There's a lot of remediation in that business, but it's encouraging that we're starting off relative to our peers in a good place. And what I would just add to that is I think flavors was really a good pipeline that the commercial team was able to land. And in ingredients, it was a combination of a strengthening pipeline but also pricing actions that led to a regain of some share that was lost due to big over-overpricing increases, and now we've recovered some of that with some price givebacks. Our next question comes from the line of Laurence Alexander with Jeffreys. Laurence, your line is now open. Good morning.

Speaker Change: Our next question comes from the line of Laurence Alexander with Jefferies. Laurence Your line is now open.

Operator: Just want to follow up on the comment about sort of the inventory dynamics downstream. If you look a little bit farther out, what are you hearing from customers about either them shifting their innovation strategies and therefore having more demand pull for your product? Or, longer term, they're needing to reset inventory levels in terms of working capital days or other metrics. And then that would be a net tailwind or headwind for you from the current.

Laurence Alexander: Good morning.

Laurence Alexander: Just wanted to follow up on the comments about sort of the.

Laurence Alexander: Inventory dynamics downstream, if you look a little bit farther out.

Laurence Alexander: What are you hearing from customers about either them shifting their innovation strategies, and therefore, having more demand pull for your product.

Laurence Alexander: Longer term they are needing to resets.

Laurence Alexander: Inventory levels in terms of working capital days or other metrics.

Laurence Alexander: And then would that be a net tailwind or headwind for you from current levels.

Jon Erik Fyrwald: So in the last few months since I joined, I think I've met with more than 20 customers, maybe 30 customers, and very consistently, what we're hearing back is that they're pivoting from being able to grow with price increases to now needing innovation, and innovation being more important than ever. And that's a good part of why it's so important for us to have end-to-end business units that can bring that innovation quickly and aggressively because that's what our customers want. So that they can continue to profitably grow their business, they have to have more innovation.

Laurence Alexander: So in the last since since I've joined I think I've met with more than 20 customers, maybe 30 customers.

Laurence Alexander: And very consistently what we are hearing back is that theyre pivoting from being able to grow with price increases to now needing innovation innovation being more important than ever and that's a good part of why it's so important for us to have end to end business units that can bring that innovation.

Jon Erik Fyrwald: That's what they're looking for, that's what they need, and that's what we're going to deliver. So that's how they're going to grow, and that's how we're going to grow. Thank you. Our next question comes from the line of Jeff Zekauskas with JP Morgan. Jeff, your line is now open. Thanks very much.

Laurence Alexander: Quickly and aggressively because that's what our customers want so that they can continue to profitably grow their business. They have to have more innovation, that's what they're looking for that's what they need and that's what we're going to deliver so thats, how theyre going to grow and that's how we're going to grow.

Laurence Alexander: Okay.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of.

Speaker Change: Jeff Zekauskas with Jpmorgan, Jeff Your line is now open.

Jeffrey John Zekauskas: Thanks very much.

Operator: I've been given your revenue forecast for the second quarter, which at the midpoint is down about 5%. Are your April volumes down 5% sequentially, or can you talk about what's happened sequentially? And then second, when you look at your first quarter.

Jeffrey John Zekauskas: Given your revenue forecast for the second quarter, which at the midpoint is down about 5%.

Jeffrey John Zekauskas: Are your April volumes down 5% or.

Jeffrey John Zekauskas: On a sequential basis that is or can you talk about what's happened sequentially.

Jeffrey John Zekauskas: And then second.

Jeffrey John Zekauskas: When you look at your first quarter.

Jeffrey John Zekauskas: Performance versus your fourth quarter performance.

Glenn Robert Richter: Your revenues were up about $200 million, and your cost of goods sold was up, I don't know, maybe $30 million. Can you discuss what the dynamic was which allowed your revenues to go ahead. Jeff, Jeff, that second part of the question was Q4 to Q1. What was the reference point?

Jeffrey John Zekauskas: Your revenues were up about $200 million.

Jeffrey John Zekauskas: And your cost of goods sold was up I don't know maybe $30 million.

Jeffrey John Zekauskas: Can you discuss what the dynamic is behind that and which allowed here.

Speaker Change: Jeff Thats really.

Speaker Change: And Jeff just that second part of your question was Q4 to Q1, what was the reference point, yes, exactly right because theres not much change in cost of goods sold in revenues dropped a couple on travel.

Glenn Robert Richter: Yes, exactly right. Yeah, because there's not much of a change in the cost of goods sold and revenues for a couple. Yeah, yeah, yeah.

Glenn Robert Richter: Well, there are a number of timing elements in the fourth quarter and sort of the mix of the business in the fourth quarter vis-a-vis Q1. Generally, the productivity and net price dynamics are very similar, so I'd say the fundamentals are, but you really have some mixed dynamics and then some one-time items related to that as we think about Q4 to Q1. You referenced the I think the decline sequentially is about $100 million from Q1 to Q2. About a quarter of that is basically associated with the absence of LMC in the mix.

Speaker Change: Yeah, Yeah well.

Jeff: There are a number of timing elements in the fourth quarter and sort of the mix of the business in the fourth quarter vis vis Q1, generally the productivity and net price dynamics are very similar so I would say the fundamentals were but you really have some mixed dynamics and then some onetime items related to that as we think about Q4 to Q1.

Jeff: You referenced the I think the decline decline sequentially is about $100 million from Q1 to Q2 about a quarter of that basically is associated with.

Jeff: The absence of LLC and the mix. The other part is just sort of the outlook in the business a little bit of seasonality in terms of the business as well versus prior year to remind you. This time last year, we had savory solutions. We had Ssi. We also had <unk> in the mix of there's a pretty substantial sort of reduction in revenue on a year over year comparison.

Glenn Robert Richter: The other part is just sort of the outlook for the business, a little bit of seasonality in terms of the business as well. Versus prior year, to remind you, this time last year, we had savory solutions, we had FSI, and we also had LMC in the mix, so there was a pretty substantial sort of reduction in revenue on a year-over-year comparison. Volumetrically, your question about what we're seeing in the second quarter; we're obviously well into the middle of the quarter at this point.

Jeff: Volume Metrically your question about what we're seeing in the second quarter, we're obviously well into the middle of the court at this point, we are anticipating a 5% to 6%.

Glenn Robert Richter: We're anticipating a 5% to 6% all-in volume growth versus the 4% for Q1. April was an extremely good month, but last year it was an extremely lousy month, so there's a bit of an overlap from the standpoint. But May and at least the June book, at this point, are trending towards that basically sort of 5% plus in terms of the performance for the quarter. Thanks Jeff.

Jeff: All in volume growth versus the 4% for Q1 April was extremely good month, but last year. It was an extremely allows the months so theres a bit of an overlap from standpoint, but may in at least the June book at this point is trending towards that that basically sort of 5% plus in terms of the performance.

Jeff: For the first quarter.

Speaker Change: Thanks, Jeff.

Jeffrey John Zekauskas: Thank you.

Speaker Change: No questions registered at this time, so I will pass the call back over to Eric for concluding remarks.

Eric: Thank you all for joining today, let me just close with two comments first of all.

Eric: Glenn did announced his pending retirement, but I just want to make sure. He is not leaving yet theres lots more work to do and we're enjoying him as part of the ELT to an executive leadership team.

Eric: To get us unleashing our full potential second point is really great being part of team Iaff, We've got terrific people, great innovation capabilities, and we're going to do all we can to unleash our full potential and try to delight our customers our employees and our shareholders. Thank you very much.

Eric: Yeah.

Speaker Change: That concludes today's call. Thank you for your participation you may now disconnect your line.

Speaker Change: [music].

Speaker Change: [music].

Operator: Thank you. There are no questions registered at this time, so I will pass the call back over to Eric for closing remarks. Thank you all for joining today. Let me just close with two comments. First of all, Glenn did announce his pending retirement, but I just want to make sure he's not leaving yet.

Speaker Change: At this time I would like to welcome everyone to the Iff's first quarter earnings Conference call. All participants will be in a listen only mode until the formal question and answer portion of the call to ask a question at that time. Please press star one on your telephone keypad. If you would like to remove your name from the queue. Please press star two.

Speaker Change: Pits will be announced by their name and company in order to give all participants an opportunity to ask their questions. We request a limit of one question per person.

Jon Erik Fyrwald: There's lots more work to do, and we're enjoying him as part of the ELT, the Executive Leadership Team, to get us unleashing our full potential. Second point is it's really great being part of Team IFF. We've got terrific people, great innovation capabilities, and we're going to do all we can to unleash our full potential and try to delight our customers, our employees, and our shareholders. Thank you very much.

Speaker Change: I would now like to introduce Michael Deveau head of Investor Relations you may begin.

Operator: That concludes today's call. Thank you for your participation. You may now disconnect your line.

Operator: ...?? At this time, I would like to welcome everyone to the IFS First Quarter Earnings Conference Call. All participants will be in a listen-only mode until the formal question and answer portion of the call begins. To ask a question at that time, please press Star 1 on your telephone keypad. If you would like to remove your name from the queue, please press Star 2.

Michael DeVeau: Thank you good morning, good afternoon, and good evening, everyone. Welcome to Iff's first quarter 2024 conference call yesterday afternoon, we issued a press release announcing our financial results.

Michael DeVeau: Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of one question per person. I would now like to introduce Michael DeVeau, Head of Investor Relations. You may begin. Thank you.

Michael DeVeau: Welcome to IFF's first quarter 2024 conference. Yesterday afternoon, we issued a press release announcing our financial... A copy of the release can be found on our IR website at ir.ifs.gov. Please note that this call is being recorded live and will be available for replay.

Michael DeVeau: A copy of the release can be found on our IR website at IR Dot our ISS dot com.

Michael DeVeau: Please note that this call is being recorded live and will be available for replay.

Michael DeVeau: During the call, we were making forward-looking statements about the company's performance and outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10-K. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability.

Michael DeVeau: Joining the call, we're making forward looking statements about the company's performance and outlook.

Michael DeVeau: Statements are based on how we see things today and contain elements of uncertainty.

Michael DeVeau: For additional information concerning the factors that could cause actual results to differ materially. Please refer to our cautionary statement and risk factors contained in our 10-K and press release.

Michael DeVeau: Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability.

Michael DeVeau: Reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release, we issued yesterday.

Michael DeVeau: With me on the call today is our CEO, Eric firewall, and our executive Vice President CFO and business transformation Officer, Glenn Director.

Eric Firewall: We will begin with prepared remarks, and then take any questions you have at the end.

Michael DeVeau: A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release that we issued yesterday. With me on the call today is our CEO, Eric Fyrwald, and our Executive Vice President, CFO, and Business Transformation Officer, Glenn Richter. We will begin with prepared remarks and then take any questions you have. With that, I would now like to turn the call over to you.

Michael DeVeau: With that I would now like to turn the call over to Eric.

Jon Erik Fyrwald: Well, thank you, Mike, and hello, everyone. I'm excited to join you all today to discuss our solid performance in the first quarter and what we are seeing across the business so far this year. Today we'll focus on our financial results, our outlook for the balance of the year, and our increased confidence in our reiterated guidance, where we now see us trending toward the upper end. Now, before moving forward, I want to acknowledge Glenn, who today is announcing his plan to retire at the end of 2024 after three successful years with the company.

Eric: Well, thank you, Mike and Hello, everyone.

Eric: Excited to join you all today to discuss our solid performance in the first quarter and what we are seeing across the business. So far this year.

Eric: Today, we will focus on our financial results our outlook for the balance of the year and our increased confidence in our reiterated guidance where are we now see us trending towards the upper end.

Eric: Before moving forward I want to acknowledge Glenn.

Eric: <unk> is announcing his plan to retire at the end of 2024 after three successful years with the company.

Jon Erik Fyrwald: During his tenure, Glenn has driven multiple actions to improve our balance sheet and position the company for financial success. We've benefited from his experience and commitment to transformation and his ongoing leadership to position IFF. To drive long-term profitable market share growth has also been very helpful to me already as I've come on to the IFF team. Now, with this announcement, we have started a succession plan to evaluate internal and external candidates to succeed Glenn. The Board and I are grateful for all Glenn has helped IFF accomplish and look forward to his continued leadership as we identify a successor and ensure a smooth transition.

Eric: During his tenure Glenn has driven multiple actions to improve our balance sheet and position the company for financial success.

Eric: We've benefited from his experience and commitment to transformation and his ongoing leadership to position <unk> to drive long term profitable market share growth.

Eric: He has also been very helpful to me already has that come on to the <unk>.

Eric: Now with this announcement, we have started the succession plan.

Eric: To evaluate internal and external candidates to succeed Glenn.

Eric: The board and I are grateful for all Glenn has helped <unk> to accomplish and look forward to his continued leadership as we identify a successor and ensure a smooth transition.

Eric: Now turning to slide six.

Jon Erik Fyrwald: We are off to a good start at IFA. We achieved volume growth for the first time since the first quarter of 2022. His volumes grew mid-single digits in the first quarter of 2024 thanks to strong contributions from Scent, Nourish, and Health & Bioscience.

Eric: We are off to a good start at <unk>.

Eric: We achieved volume growth for the first time since the first quarter of 2022.

Eric: As volumes grew mid single digit in the first quarter of 2024.

Eric: With strong contributions from scent nourish and health and Biosciences.

Jon Erik Fyrwald: We are also encouraged by the double-digit comparable adjusted EBITDA growth as we not only benefited from volume growth but also from productivity gains across our business. At the same time, we made important progress in focusing our portfolio, with Closing the Divestiture of the Cosmetics Ingredients Business and the Announced Sale of our Pharma Solutions. We expect to complete the pharma transaction in the first half of 2025; proceeds from these divestitures will help further strengthen our capital structure, address our deleveraging goal of three times net debt to credit-adjusted EBITDA, and refocus us on high-growth areas of our business. With our solid performance in the first quarter and our expectations for the remainder of the year, we are cautiously optimistic about the remainder of 2024, and now expect full Turning to slide 7.

Eric: We are also encouraged by the double digit comparable adjusted EBITDA growth as we not only benefited from volume growth, but also from productivity gains across our businesses.

Eric: At the same time, we made important progress focusing our portfolio with closing the divestiture of the cosmetics ingredients business and the announced sale of our pharma solutions business.

Eric: We expect to complete the pharma transaction in the first half of 2025.

Eric: The proceeds from these divestitures will help further strengthen our capital structure.

Eric: Our deleveraging goal of three times net debt to credit adjusted EBITDA.

Eric: And refocus us on high growth areas of our business.

Eric: With our solid performance in the first quarter and our expectations for the remainder of the year.

Eric: We're cautiously optimistic about the remainder of 2024 and now expect full year 2024 results to trend toward the higher end of our previously announced guidance ranges.

Eric: It's still early in the year and there is a lot more work to be done, but we are focused on building on our momentum to energize, our team and return to sustainable profitable growth.

Eric: Turning to slide seven.

Jon Erik Fyrwald: Let me take a step back for a moment and share what I've learned during my first 90 days here at IFM. I've spent time getting to know our teams all over the world and meeting with many of our customers, and I'm grateful for the productive discussions. And what I've found is that IFF has lots of top talent and incredible innovation capability, but we're not yet realizing our full potential with a new leadership perspective on our priorities and a renewed focus on execution by our executive leadership team. We are getting back to base, and I'm optimistic about what we will do from here. First,

Speaker Change: Let me take a step back for a moment and share what I've learned during my first 90 days here.

Eric: I've spent time getting to know our teams all over the world and meeting with many of our customers.

Eric: And I am grateful for the productive discussions.

Eric: And what I found is that <unk> has lots of top talent and incredible innovation capabilities.

Eric: But we're not yet realizing our full potential.

Eric: With a new leadership perspective on our priorities and our renewed focus on execution by our executive leadership team.

Eric: We're getting back to basics.

Eric: And I'm optimistic about what we will do from here.

Eric: First we are strengthening our balance sheet and capital structure to create the flexibility we need to achieve our long term goals.

Jon Erik Fyrwald: We are strengthening our balance sheet and capital structure to create the flexibility we need to achieve our long-term goals. However, my assessment is that we have not consistently delivered on our financial commitments, largely due to a need for more strategic and organizational operating model clarity to enable us to better execute against our goals. I think we are now getting the clarity we need and have taken some decisive steps. First Quarter to help us start to realize more of our potential.

Eric: My assessment is we have not consistently delivered on our financial commitments.

Eric: Largely due to a need for more strategic and organization operating model clarity to enable us to better execute against our goals.

Eric: I think we are now getting the clarity we need and have taken some good size of steps in the first quarter to help us start to realize more of our potential.

Jon Erik Fyrwald: We recently right-sized our quarterly dividend to align with the market and our long-term cash flow generation and have made divestiture moves, including cosmetics and pharma solutions, to focus our portfolio and drive debt reduction. We also recently announced and are implementing our refocused IFF operating model, which is now business-led. This includes the appointment of Ana Paula Mendoza, who has dedicated her career to the advancement of fragrance at IFF, as the President of Scent.

Eric: We recently right sized our quarterly dividend to align with our market and our long term cash flow generation.

Eric: And they've made divestiture moves, including cosmetics and pharma solutions to focus our portfolio and drive debt reduction.

Eric: We also recently announced and are implementing our refocused ISF operating model.

Eric: This is now business led supported by lean functions.

Eric: This includes the appointment of Ana Paula Mendoza.

Eric: Who has dedicated her career to the advancement of fragrance at ISS.

Eric: As the president of set.

Jon Erik Fyrwald: This enables Simon Harriot to focus his full attention on driving profitable growth in our health and biosciences business. We will also put more focus on our flavors and functional ingredients units within our nourish. With this operating model change, we have also changed the reporting structure of several of our functions, including R&D, Operations, Finance, and HR, to go directly into our business unit presentation. So they have full end-to-end responsibility and accountability for business execution.

Eric: This enables Simon Herriot.

Eric: Focus his full attention on driving profitable growth in our health and Biosciences business unit.

Eric: We will also put more focus on our flavors and functional ingredients units within our nurse Division.

Eric: With this operating model change we have also changed the reporting structure of several of our functions, including R&D operations Finance and HR to go directly into our business unit presidents.

Eric: So they have the full end to end responsibility and accountability for business execution.

Jon Erik Fyrwald: Their goals will include delivering growth above market with a margin structure that gets us in line with or better than leading peers. Now, to make this work, we have also established an operating system, which is a simple set of management processes that collectively define how IFF makes decisions and creates value, provides a framework for standardized processes, responsibilities, and metrics, and defines the tools to help managers drive continuous improvement. We believe this will create greater visibility to track performance.

Eric: Their goals will include delivering growth above market with our margin structure that gets us in line with or better than leading peers.

Eric: Now to make this work we have also established an operating system, which is a simple set of management processes that collectively define how iff's makes decisions and creates value provide.

Eric: <unk> provides a framework for standardized processes responsibilities and metrics.

Eric: And defines the tools to help managers drive continuous improvement.

Eric: We believe this will create greater visibility to track performance. So we drive execution to deliver results in the current period.

Jon Erik Fyrwald: So we drive execution to deliver results in the current period in ways that strengthen us for the coming year. We are also introducing an operating philosophy based on four main pillars. Number one is customer focus. Number two.

Eric: In ways that strengthen us for the coming years.

Eric: We are also introducing an operating philosophy based on four main pillars.

Eric: Number one customer focus to drive profitable market share growth.

Eric: Number two.

Jon Erik Fyrwald: Innovation Powerhouse. Create sustainable new products and other innovations that customers value, and do this fast. Number three, operational excellence.

Eric: Innovation powerhouse to create sustainable new products and other innovations customers value and do this faster.

Eric: Number three operational excellence.

Jon Erik Fyrwald: To lead our relentless focus on safety, quality, Continuous Improvement, and Competitive Cost Structure, and for people, people who are engaged across the organization. We expect that our business-empowered model and operating system will enhance collaboration to profitably win with customers and, by doing so, deliver strong financial performance over time. And while it's still early, I am pleased and encouraged by the energy and commitment of our teams all around the world. With that, I'll now pass it over to Glenn to dive deeper into our results for the first quarter. Glenn.

Eric: Lead a relentless focus on safety quality continuous improvement and competitive cost structures.

Eric: And for <unk>.

Eric: People people, who are engaged across the organization.

Eric: We expect that our business empowered model and operating system will enhance collaboration to profitably win with customers and.

Eric: And by doing so deliver strong financial performance over time.

Eric: And while it's still early I am pleased and encouraged by the energy and commitment of our teams all around the world.

Eric: With that I'll now pass it over to Glenn to dive deeper into our results for the first quarter.

Glenn Robert Richter: Glenn Thank.

Glenn Robert Richter: Thank you, Eric. And thanks to everyone for joining us today. As Eric mentioned earlier, we're encouraged by the momentum across our business as we start the year. And we are excited to continue to build on these positive early signals throughout 2024 and beyond. In the first quarter, IFF generated roughly $2.9 billion in sales. On a comparable currency-neutral basis, sales increased 5% year-over-year.

Glenn Robert Richter: Thank you, Eric and thanks to everyone for joining us today as Eric mentioned earlier, we are encouraged by the momentum across our business as we start the year and we are excited to continue to build on these positive early signals throughout 2024 and beyond.

Glenn Robert Richter: In the first quarter ISS generated roughly $2 9 billion in sales on a comparable currency neutral basis sales increased 5% year over year. Our strong quarterly revenue performance was led by mid single digit volume growth with sequential improvements across most of our businesses, including set health and <unk>.

Glenn Robert Richter: Our strong quarterly revenue performance was led by mid-single-digit volume growth, with sequential improvements across most of our businesses, including Scent, Health & Biosciences, and Nourish. Pricing was modestly positive, inclusive of FX-related pricing in emerging markets, in particular the Argentine peso, where we, like the industry, have indexed pricing to U.S. and or Euro exchange rates that drive pricing changes. Absent this benefit, pricing would have been negative in the quarter, largely in line with our plan.

Glenn Robert Richter: Biosciences and Europe.

Glenn Robert Richter: Pricing was modestly positive inclusive of FX related pricing in emerging markets in particular, the Argentine peso, where we like the industry have index pricing to U S and euro exchange rates that drive pricing changes.

Glenn Robert Richter: Some of this benefit pricing would have been negative in the quarter largely in line with our plan.

Glenn Robert Richter: We delivered strong profitability in the quarter with adjusted operating EBITDA of $578 million. This represents a 20% increase on a comparable year-over-year basis, led by volume growth and the contribution from productivity initiatives. As a result, margins improved by approximately 310 basis points to nearly 20% adjusted operating margin in the quarter. Turning now to slide 9, I'll dive deeper into the business performance across our segments. In Nourish, sales increased by 3% on a comparable currency-neutral basis, with strong double-digit growth in flavors and improvements in both volume and price.

Glenn Robert Richter: We delivered strong profitability in the quarter with adjusted operating EBITDA of $578 million. This represents a 20% increase on a comparable year over year basis led by volume growth and the contribution from productivity initiatives.

Glenn Robert Richter: As a result margins improved by approximately 310 basis points to nearly 20% adjusted operating margin in the quarter.

Speaker Change: Turning now to slide nine I'll dive deeper into the business performance across our segments.

Glenn Robert Richter: <unk> sales increased by 3% on a comparable currency neutral basis with strong double digit growth in flavors with improvements in both volume and price and we saw very strong growth in our flavors business across nearly all markets functional.

Glenn Robert Richter: And we saw very strong growth in our flavors business across nearly all markets. Functional Ingredients Volume was up low single digits for the first time since the fourth quarter of 2021. Overall, comparable currency-neutral sales declined year-over-year due to our planned pricing action.

Glenn Robert Richter: Gradients volume was up low single digits. The first time since the fourth quarter of 2021 overall comparable currency neutral sales declined year over year due to our planned pricing actions in terms of profitability productivity gains and volume growth drove a 13% increase in comparable.

Glenn Robert Richter: In terms of profitability, productivity gains and volume growth drove a 13% increase in comparable adjusted operating EBITDA with solid gross margin improvements in both flavors and functional ingredients. Additionally, our health and bioscience segment had another strong quarter with both top and bottom line growth. Solid performance in our H&B portfolio, led by double-digit sales growth in cultures and food enzymes, animal nutrition, and grain processing, and mid-single-digit growth in home and personal care, drove a 6% increase in comparable currency-neutral sales. Additionally, improved volume and productivity gains led to a 21% increase in year-over-year comparable adjusted operating EBITDA.

Glenn Robert Richter: Adjusted operating EBITDA with solid gross margin improvements in both flavors and functional ingredients.

Glenn Robert Richter: Our health and Bioscience segment had another strong quarter with both top and bottom line growth solid performance in our ATB portfolio led by double digit sales growth in cultures, and food enzymes animal nutrition, and grain processing and mid single digit growth in home and personal care.

Glenn Robert Richter: Drove a 6% increase in comparable currency neutral sales.

Glenn Robert Richter: <unk> volume and productivity gains led to a 21% increase in year over year comparable adjusted operating EBITDA.

Glenn Robert Richter: Scent delivered another excellent quarter, including 16% growth in comparable currency-neutral sales driven by double-digit growth in consumer fragrance and fragrance ingredients and mid-single-digit growth in fine fragrance. This segment also excelled in terms of profitability, primarily led by volume growth and productivity improvements, which delivered an outstanding adjusted operating EBITDA growth of 55% on a comparable basis. Lastly, in Pharma Solutions, while we saw some improvements from productivity initiatives, these were offset by lower volumes driven, as expected, due to continued destocking trends which began late last year.

Glenn Robert Richter: <unk> delivered another excellent quarter, including 16% growth in comparable currency neutral sales driven by double digit growth in consumer fragrance and fragrance ingredients and mid single digit growth in fine fragrances.

Glenn Robert Richter: Segment also excel in terms of profitability.

Glenn Robert Richter: <unk> led by volume growth and productivity improvements, which delivered an outstanding adjusted operating EBITDA growth of 55% on a comparable basis.

Glenn Robert Richter: Lastly in pharma solutions, while we saw some improvements from productivity initiatives. These were offset by lower volumes driven as expected due to continued destocking trends, which began late last year, it's worth noting that part of the Destocking trend in the first quarter was market related and the.

Glenn Robert Richter: It's worth noting that part of the destocking trend in the first quarter was market-related, and the other was due to Pharma Solutions' initiative to reduce reliance on distributors and convert more of its core excipient business into a direct distribution model.

Glenn Robert Richter: Other is due to a pharma solutions initiative to reduce reliance on distributors and convert more of its core excipient business into a direct distribution model. We believe the shift to a more direct approach will enhance our customer relationships reduce supply chain complexity and provide greater access.

Glenn Robert Richter: We believe this shift to a more direct approach will enhance our customer relationships, reduce supply chain complexity, and provide greater access to technical resources, while also improving margins. Also, as mentioned, we agree to divest the Pharma Solutions business as part of our portfolio optimization efforts and are confident the business will be positioned to thrive and succeed in partnership with Roget. Now, on slide 10, I'd like to discuss our cash flow and leverage position.

Glenn Robert Richter: Technical resources, while also improving margins.

Glenn Robert Richter: Also as mentioned, we agreed to divest the pharma solutions business as part of our portfolio optimization efforts and are confident the business will be positioned to thrive and succeed in partnership with roquette.

Glenn Robert Richter: Now on slide 10, I'd like to discuss our cash flow and leverage position.

Glenn Robert Richter: Cash flow from operations totaled $99 million this quarter, while CapEx was $118 million, or roughly 4.1% of sales. In the first quarter, normal seasonality impacted our free cash flow results. As a reminder, Q1 is usually the lowest cash flow quarter of the year as we make annual cash bonus payments in March. Our free cash flow position totaled negative 19 million in the quarter versus negative 48 million in the year-to-go period.

Glenn Robert Richter: Cash flow from operations totaled $99 million this quarter, while capex was $118 million or roughly four 1% of sales.

Glenn Robert Richter: In the first quarter normal seasonality impacted our free cash flow results. As a reminder, Q1 is usually the lowest cash flow quarter of the year as we make annual cash bonus payments in March our free cash flow position totaled negative $19 million in the quarter versus negative $48 million.

Glenn Robert Richter: In the year ago period.

Glenn Robert Richter: We also paid $207 million in dividends through the end of the first quarter. Our cash and cash equivalents total $764 million, including $32 million in assets held for sale. IFF continues to make progress in its deleveraging efforts and reduced its gross debt by almost $1 billion versus a year ago for a net debt-to-credit-adjusted EBITDA ratio of 4.4 times at quarter end, and its trailing 12-month credit-adjusted EBITDA, a total of approximately $2.2 billion. Please note that the proceeds from the sale of LMC of $810 million were received in April and are consequently not reflected in the quarterly results.

Glenn Robert Richter: We also paid $207 million in dividends through the end of the first quarter.

Glenn Robert Richter: Our cash and cash equivalents totaled 764 million, including $32 million assets held for sale.

Glenn Robert Richter: <unk> continues to make progress in our deleveraging efforts and reduced our gross debt by almost 1 billion versus year ago for a net debt to credit adjusted EBITDA ratio of four four times at quarter end.

Glenn Robert Richter: Our trailing 12 month adjusted EBITDA totaled approximately $2 2 billion. Please note that the proceeds from the sale of <unk> of $810 million were received in April and consequently, not reflected in the quarterly results.

Glenn Robert Richter: With the announced pharma solutions transaction, we are confident that we will achieve our net debt to credit adjusted EBITDA target of three times following the transaction close, which we expect will be completed in the first half of 2025. Now, on slide 11, I'd like to now turn to our outlook for 2024. Based on our improved financial and operational performance in the first quarter and our expectations for the balance of the year, we remain cautiously optimistic about the year ahead.

Glenn Robert Richter: With the announced the pharma solutions transaction, we are confident that we will achieve our net debt to credit adjusted EBITDA target of three times.

Glenn Robert Richter: Following the transaction close, which we expect will be completed in the first half of 2025.

Glenn Robert Richter: And, as Eric mentioned, we now expect results to trend towards the higher end of our previously announced guidance ranges. This reflects our belief that volumes will also be towards the high end of our previously announced 0.3% with improving trends across the majority of our portfolio. We also saw pricing increases due to FX-related pricing in emerging markets in the first quarter and therefore raised our previously announced pricing guidance to approximately 1% for the full year 2024 versus the previous expectation that pricing would decline approximately 2.5%. With these foreign exchange rate changes, we now expect currency will have an adverse impact of 3-4% versus 0-1% as previously expected on our sales growth, which is essentially offsetting the FX pricing contribution.

Glenn Robert Richter: On slide 11, I'd like to now turn to our outlook for 2024 based on our improved financial and operational performance in the first quarter and our expectations for the balance of the year. We remain cautiously optimistic about the year ahead and as Eric mentioned now expect results.

Glenn Robert Richter: Trend towards the higher end of our previously announced guidance ranges.

Glenn Robert Richter: It reflects our belief that volumes will also be towards the high end of our previously announced as the euro 3% with improving trends across the majority of our portfolio.

Glenn Robert Richter: We also saw pricing increases due to FX related pricing in emerging markets in the first quarter and therefore raised our previously announced pricing guidance to approximately 1% for the full year 2024 versus previous expectation that pricing will decline approximately two 5% with these <unk>.

Glenn Robert Richter: Exchange rate changes, we now expect currency will have an adverse impact of 3% to 4%.

Glenn Robert Richter: Versus zero to 1% as previously expected on our sales growth, which is essentially offsetting the FX pricing contribution.

Glenn Robert Richter: On the bottom line, for 2024, we are now trending towards the high end of our previously announced adjusted operating EBITDA guidance range of $1.9 to $2.1 billion. This assumes continued improvements in volumes as well as strong productivity. While it is still early in the year, volume trends are encouraging, and consequently, we have increased confidence in our ability to achieve our full-year guidance. For the second quarter, we expect sales to be approximately $2.75 to $2.85 billion, driven by improved volumes, with an adjusted operating EBITDA of approximately $500 to $525 million. I'll now turn it back to Eric for his closing remarks. Thank you, Glenn.

Glenn Robert Richter: On the bottom line for 2024, we are now trending towards the high end of our previously announced adjusted operating EBITDA guidance range of one nine to $2 1 billion.

Glenn Robert Richter: This assumes continued improvements in volumes as well as strong productivity. While it is still early in the year volume trends are encouraging and consequently, we have increased confidence in our ability to achieve our full year guidance.

Glenn Robert Richter: For the second quarter, we expect sales to be approximately $2 75 to 2.85 billion driven by improved volumes with an adjusted operating EBITDA of approximately $500 million to $545 million.

Glenn Robert Richter: Now I'll turn it back to Eric for closing remarks.

Eric: Thank you Glenn.

Jon Erik Fyrwald: Now, as I shared at the start of the call, my first 90 days on Team IFF have been energizing as I see so much potential. We have great talent and capabilities across our global network. And our solid top and bottom line results from the first quarter show that we are building positive momentum. It is an honor to lead IFF during this transformative time, and I am encouraged by our positive start to the year and our outlook.

Eric: Now as I've shared at the top of the call. My first 90 days on team ISS have been energizing because I see so much potential.

Eric: Great talent and capabilities across our global teams and our solid top and bottom line results from the first quarter show that we are building positive momentum.

Eric: And it's an honor to lead ISF. During this transformative time and I am encouraged by our positive start to the year and our outlook.

Jon Erik Fyrwald: Yet, we still have a lot of work to do. As the market continues to be very competitive, we are committed to bringing products and innovation that differentiate us from our peers and give customers what they need to win, and in turn, helps them and us drive sustainable, profitable growth. And with a solid start to the year, I'm excited to see what we can accomplish going forward. And with that, I'd now like to open it up for questions.

Eric: Yet we still have a lot of work to do.

Eric: As the market continues to be very competitive we are committed to bringing products and innovation that differentiate us from our peers.

Eric: And give customers what they need to win.

Eric: And in turn helps them and us drive sustainable profitable growth.

Eric: And with a solid start to the year I am excited to see what we can accomplish going forward.

Speaker Change: And with that I'd like to now open it up for questions.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question. Please press star followed by two.

Jon Erik Fyrwald: We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered, or you wish to remove your question, please press star followed by two.

Speaker Change: As a reminder, we ask that you limit yourself to one question.

Speaker Change: If youre using a speakerphone please pick up your handset before asking your question.

Operator: As a reminder, we ask that you limit yourself to one question. If you are using a speakerphone, please pick up your handset before asking your question. Our first question comes from the line of Kevin McCarthy with Vertical Research Partners. Kevin, your line is now open. Thank you, and good morning. This is Matthew Hettler on behalf of Kevin McCarthy.

Kevin William McCarthy: Our first question comes from the line of Kevin Mccarthy with vertical research partners.

Kevin William McCarthy: Kevin Your line is now open.

Kevin William McCarthy: Thank you and good morning. This is Matthew on for Kevin.

Jon Erik Fyrwald: It's nice to see a strong start to the year. Eric, could you give us some additional context and detail regarding how you've seen the individual businesses react? Operating Philosophy Through the First 90 Days. Yeah, thanks for the question, Matthew. As you probably know, I've been on a listening tour or a discussion tour since right after the January 11th announcement of the change and my joining IFF.

Matthew: Nice to see a strong start in my math here.

Matthew: Eric could you give us some good morning.

Matthew: Could you give us some additional context and details regarding how you've seen the individual businesses react to your new operating philosophy through the first 90 days.

Jon Erik Fyrwald: And it's been really great to hear from our employees all around the world and our customers all around the world. And what I've learned from that is that, you know, we have had multiple companies coming together with different operating models, different philosophies. And there was significant uncertainty about the organization structure and how we were going to do things. And what we've done is the executive leadership team has come together very nicely, I'm very proud of the team, and we've been able to together clarify the structure and operational model that we have going forward and the four pillars that we're focused on to drive our performance. We've had town halls all around the world, both live and via video.

Eric: Yes, thanks for the question Matthew.

Eric: As you probably know I've been on a listening tour and our discussion to our since right. After the January 11th announcement of the change in my joining ISS and it's been really great to hear from our employees all around the world and our customers all around the world.

Matthew: And what.

Matthew: Discerned from that is that we've had multiple companies coming together with different operating models different philosophies and there was a significant uncertainty about the organization structure and how we were going to do things.

Matthew: And what we've done is the executive leadership team has come together very nicely and I'm very proud of the team and we've been able to together clarify the structure and operational model that we have going forward and the four pillars that we're focused on to drive our performance.

Matthew: We've had town halls, all around the world both live and by video we've touched all of our employees.

Jon Erik Fyrwald: We've touched all our employees. We've spent special time with our leadership, and I think we've gotten really clear on how we're moving the company forward. And what I love about it is that I feel the engagement of our people around the world.

Matthew: Spent special special time with our leadership.

Matthew: And I think we've gotten really clear on how we're moving the company forward and what I love about it is I feel the engagement of our people around the world I feel their energy are growing I think there's great acceptance and enthusiasm for the empowered business unit model.

Jon Erik Fyrwald: I feel their energy growing. I think there's a great acceptance and enthusiasm for the Empowered Business Unit model, for the focus on customers, and that the job of all of us is to support our teams to win with customers and help us profitably grow our market share. And then also drive our innovation, that we're, at the core, we're an innovation company, and we need to make sure that we have leading innovation that we're bringing to our customers, and it's innovation that customers value.

Matthew: For the focus on customers.

Matthew: Job of all of US is to support our teams to win with customers and help us profitably grow our market share.

Matthew: And then also drive our innovation that we are.

Matthew: At the core we are an innovation company and we need to make sure that we have leading innovation that we're bringing to our customers and its innovation that customers value.

Jon Erik Fyrwald: And then finally, that we also have healthy productivity, productivity that helps us strengthen the company and invest more in growth and innovation. And doing that with smart productivity, things like reducing consultants, reducing layers, I'm driving functional shared service centers where it makes sense, using technology, information technology. So my feeling is that there are great capabilities, great people in this company, and the executive leadership team is coming together to try and do all we can to unleash the full potential of our people all around the world.

Matthew: And then finally that we also have healthy productivity.

Matthew: Productivity that helps us strengthen the company and invest more in growth and innovation and doing that with smart productivity things like like reducing consultants reducing layers.

Matthew: Driving functional shared service centers that where it makes sense using technology information technology. So my feeling is that there's great capabilities great people in this company.

Matthew: And the executive leadership team is coming together to try and do all we can to unleash the full potential of our people all around the world.

Speaker Change: Thank you.

Jon Erik Fyrwald: Thank you. Thank you. Our next question comes from the line of Nicola Tang with P&B Paribas. Nicola, your line is now open. Eric, you talked there about the portfolio. Can you talk a little bit about it and, you know, following the announcement to divest pharma solutions, do you intend to pursue any further divestments or is that it for now? Another one. Transcribed by https://otter.ai. Could you explain what drove you to make this film? Okay, I'll start and then hand it over to Glenn.

Speaker Change: Thank you. Our next question comes from the line of Nicola Tang with P. M. B P M B per box Nikola.

Nicola Tang: Nicole Your line is now open.

Nicola Tang: Hi, everyone. Thanks for taking the questions.

Speaker Change: Bethany.

Nicola Tang: Eric you talk there about sort of the changed operating model.

Nicola Tang: Can you talk a little bit about portfolio and following the announcement to divest boneless stations do you intend to pursue any further divestments.

Nicole: Is that it for now and then if I could squeeze in another one for Glen on cash flow.

Nicole: Are you still confident in your.

Nicole: Free cash flow target of $500 million 700 million on adjusted basis.

Nicola Tang: Potentially upsides given the upward revision was at the high end you see in terms of the EBITDA guidance.

Speaker Change: Could you explain what drove the increase in trade receivables in the quarter. Thanks a lot.

Jon Erik Fyrwald: And thanks for the question, Nicola, or questions. So on the portfolio, first of all, the Pharma Solutions business will be with us for another year. And we see a lot of opportunity to further strengthen the performance of Pharma Solutions over the next year and then beyond that with Roquette. But then we have the other four business units that we're going to really focus on driving forward, of course, with Nourish, both the flavors and the functional ingredients. We have the scent business, and we have the health and biosciences business.

Speaker Change: Okay, I'll start and then hand, it over to Glen and thanks for the question Nicola questions.

Glen: So on the portfolio first of all the pharma solutions business will be with us for another year and we see a lot of opportunity to further strengthen the performance of pharma solutions over the next year and then beyond that with Roquette.

Glen: But then we have the other four business units.

Speaker Change: That we're going to really focus on driving forwards of course with nourish.

Speaker Change: Both.

Nicola Tang: Flavors and the functional ingredients, we have the <unk> business and we have the health <unk> Biosciences business. All our focus now is on supporting those businesses to perform well.

Jon Erik Fyrwald: All our focus now is on supporting those businesses to perform well, to drive profitable market share growth, to drive healthy productivity, to make sure that we're bringing leading innovation and delivering the best performance we can in the second quarter and full year 2024, but do it in ways that strengthen us for 2025 and beyond. We're also going through a strategy review process for each of the businesses, and we'll take a look at what it takes to win in each of those businesses in the coming years and what we have to do investment-wise to make sure that each of the businesses has the right portfolio to win going forward.

Nicola Tang: To drive profitable market share growth to drive healthy productivity to make sure that we're bringing leading innovation and deliver the best performance. We can in the second quarter full year 2024, but do it in ways that strengthen us for 25 and beyond.

Nicola Tang: We're also going through a strategy review process for each of the businesses and we will take a look at what it takes to win in each of those businesses in the coming years, and what we have to do investment wise and making sure that each of the businesses has the right portfolio.

Nicola Tang: To win going forward, so you'll hear more about that in the coming quarters and years.

Jon Erik Fyrwald: So you'll hear more about that in the coming quarters and years, but right now, our focus is all on making sure we've got the right strategy, the right capabilities in each business, the right collaboration culture across businesses, and are winning with customers by bringing leading innovation. Glenn, thanks.

Nicola Tang: But right now our focus is on making sure. We've got the right strategy the right capabilities in each business the right collaboration culture across businesses, and our winning with customers by bringing leading innovation.

Glenn Robert Richter: Thanks, Eric. Thanks for the question, Nicola. We're actually trending more favorable in terms of our full year outlook for free cash flow and adjusted as well. As you mentioned, a combination of earnings momentum, and working capital is actually performing better than planned, and we expect some improvement. And then just some timing on taxes; we're probably going to be closer to 600 versus 500. But I would note that that also includes higher Reg G costs related to pharma.

Nicola Tang: Glen Thanks, Thanks, Eric Thanks for the question Nicola we're actually trending more favorable in terms of our full year outlook for free cash flow and adjusted as well as you mentioned a combination of earnings momentum actually working capital is actually performing better than planned and we expect actually some improvement and then just some.

Nicola Tang: Timing on taxes, we're probably going to be closer to 600 versus the 500 I would note that Thats also includes higher Reg G costs related to pharma. So we gave you a $200 million number instead that did not include pharma for obvious reasons.

Glenn Robert Richter: So we gave you a $200 million number in FEB that did not include pharma for obvious reasons. The heavy lifting, as Eric mentioned, is the balance of this year separating systems, legal entities, et cetera. That's roughly about 100 million bucks.

Nicola Tang: Heavy lifting as Eric mentioned is the balance of this year separating systems legal entities et cetera, that's roughly about 100 million Bucks. So on adjusted basis 900 on a free cash flow reported basis Directionally six hunter. Thanks for the question.

Glenn Robert Richter: So on an adjusted basis, 900 on a free cash flow reported basis, directionally, 600. Thanks for the question. Thank you. Our next question comes from the line of Josh Spector with UBS. Josh, your line is now open. Yeah, hi. Good morning.

Nicola Tang: Thank you. Our next question comes from the line of Josh Spector with UBS, Josh Your line is now open.

Joshua David Spector: Yeah, Hi, good morning.

Operator: I wanted to ask you about your expectations for volume cadence. I mean, clearly, a very strong first quarter, so congrats on that. But I think some of the comps on a year-over-year basis actually get a bit easier.

Joshua David Spector: I wanted to ask on your expectations of volume cadence I mean, clearly very strong first quarter. So congrats on that but I think some of the comps on a year over year basis actually get a bit easier. So is there something you'd call out that you would say as a headwind we should consider or would you characterize your view as Jessica.

Jon Erik Fyrwald: So is there something you'd call out that you would say is a headwind we should consider, or would you characterize your view as just conservatism? Thanks, Josh. And let me start, and then Glenn can give you more details. But as I see it, you know, still fairly new coming into the company. Clearly, CPG company volumes are still soft in the US and the EU, and so we can't expect a whole lot of market tailwind growth.

Jessica: Services. Thanks.

Jessica: Thanks, Josh Let me start and then Glenn can give you more details, but as I see it.

Jessica: Feel fairly new.

Jessica: Coming into the company.

Speaker Change: Clearly CPG company volumes are still soft in the U S.

Speaker Change: In the EU and so we can't expect a whole lot of market tailwind growth.

Glenn Robert Richter: I do think we've seen the end of most of the Destocking outside of pharma solutions and plan alluded to the pharma solutions Destocking, both market Destocking and our change in channel strategy.

Jon Erik Fyrwald: I do think we've seen the end of most of the destocking outside of Pharma Solutions, and Glenn alluded to the Pharma Solutions destocking, both market destocking, and our change in channel strategy. But the bottom line is, we can't expect a lot of growth from the marketplace, although there are some emerging markets that we're going after that are seeing very attractive volume growth. But overall, our focus has to be growth through leading innovation and winning business with customers. And I've heard a lot already about commercial projects that we're winning, but we're also going to increase the focus on understanding the projects that we didn't win. Why didn't we win them?

Speaker Change: But bottom line is we can expect a lot of growth from the marketplace. Although there are some emerging markets that we're going after that are seeing that.

Speaker Change: Our attractive volume growth.

Speaker Change: But overall, our focus has to be growth through bringing leading innovation and winning business with customers and I've heard a lot already about about commercial projects that we're winning but we're also going to increase the focus on understanding that.

Speaker Change: The projects that we didn't win why didn't we win them what does it take for us to be even more successful with our customers and win even more projects and bring that leading innovation. So that customers are growing their market share profitably and we're growing with them.

Jon Erik Fyrwald: What does it take for us to be even more successful with our customers and win even more projects and bring that leading innovation so that customers are growing, their markets share profitably, and we're growing with them? Thanks, Eric. Again, Josh, I think, as Eric mentioned, until we see a strengthening in the consumer environment, which has yet to appear, and until we have a few more months underneath our belts, it's sort of hard for us to be incredibly optimistic about the second half. As a reference point, the first half volumes are circa four to five percent, and the second half is basically one to two percent.

Speaker Change: Glenn Thanks, Eric again, Josh I think it's.

Glenn Robert Richter: As Eric mentioned until we see a strengthening in the consumer environment, which has yet to appear and until we have a few more months underneath our belt, it's sort of hard for us to be sort of incredibly optimistic on the second half as a reference point the first half with volumes of circa 4% to 5% and the second half basically 1% to two.

Glenn Robert Richter: 2% as a reminder, the first half of last year because of the aggressive destocking was down 9% in the second half down 5%. So a little bit is the lapping as well as we sort of think about providing guidance, but I think the end market as Eric said, we need to see greater strength, there before we're sort of more confident in higher volume growth in the.

Glenn Robert Richter: Second half.

Speaker Change: Thank you. Our next question comes from the line of Mike Sison with Wells Fargo. Mike. Your line is now open.

Glenn Robert Richter: As a reminder, the first half of last year, because of the aggressive de-stocking, was down nine percent, and the second half was down five percent. So a little bit of the lapping as well as we sort of think about, you know, providing guidance. But I think the end market, as Eric said, we need to see greater strength there before we're sort of more confident in higher volume growth in the second half. Our next question comes from Mike Sison with Wells Fargo. Mike, your line is now open. Hey, good morning and a really nice start to the year.

Michael Joseph Sison: Hey, good morning, and a really nice start to the year.

Operator: When I think about the first quarter EBITDA run rate and EBITDA margins, really good improvement at 20%. So we're in this 20% range for the rest of the year and congrats on retirement. Thank you, Mike. I might actually come visit you in Cleveland when I retire, by the way.

Michael Joseph Sison: When I think about the first quarter EBITDA run rate.

Michael Joseph Sison: EBITDA margins really get improvement at 20%.

Michael Joseph Sison: Yes guidance would sort of imply that those levels fall sequentially. So.

Michael Joseph Sison: Yes.

Michael Joseph Sison: Any sort of onetime positives during the first quarter that wouldn't reoccur and just curious if demand and volume levels remained here why wouldnt EBITDA margin stay.

Speaker Change: Sort of in the 20% range for the rest of the year and congrats on retirement.

Speaker Change: Thank you, Mike I might actually come visit here in Cleveland, when I retire by the way.

Glenn Robert Richter: So, good question. So, 20% for Q1, sort of the implied balance of years around 18.5%. That 150 basis points have changed. Half of that's related to volume and mix, you know, inclusive of LMC.

Speaker Change: Good question, so 20% for Q1 sort of the implied balance of the year is around <unk>, 5%.

Speaker Change: About 150 basis points of change half of that is related to volume and mix inclusive of LLC. So LLC you take out about $12 million per quarter and about $25 million of revenue. So it's a relatively high margin. So everything normalize that gets you from the 20 down to basically <unk> 19 in the quarter.

Glenn Robert Richter: So, LMC, you take out about $12 million per quarter and about $25 million in revenue. So, it's a relatively high margin. So, everything normalized, that gets you from the 20 down to basically 19 and a quarter.

Speaker Change: The residual 75 basis points really is a little bit more net price cost realization in Q1 versus the forecast and then just some timing of expenses, but to answer. Your direct question is volumes were to maintain then we should be somewhere in the 19% probably 19% plus range for the balance of the year.

Operator: The residual 75 basis points really is a little bit more net price to cost realization in Q1 versus the forecast and then just some timing of expenses. But to answer your direct question, if volumes were to maintain, then we should be somewhere in the 19%, probably 19% plus, range for the balance of the year. Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Patrick, your line is now open. Hi, good morning. This is Eric Zhang on for Patrick.

Michael Joseph Sison: Thank you. Our next question comes from the line of Patrick Cunningham with City Patrick Your line is now open.

Glenn Robert Richter: What are your expectations for price costs for the full year? The price guide seems to be a bit, to be a small net positive if you net out FX. Are there any areas where you're getting structural pricing, or is this just a way to give back? Yeah, yeah, Eric. You're right.

Michael Joseph Sison: Hi, Good morning, This is Eric Zhang on for Patrick.

Eric Zhang: What are your expectations for price cost for the full year, the price guide seems to be a bit.

Eric Zhang: Seems to be a small net positive if you net out FX are there any areas, where youre getting structural pricing or is this just let's get back then you expected. Thank you.

Glenn Robert Richter: I mean, for the full year, we're expecting a small net positive, as I mentioned, a little more bias towards Q1 than the balance of the year. Our pricing actions, which were largely givebacks this year, were highly focused in the functional ingredients space. We are tracking well against the expectations that we set for the year. We do believe that the improved performance in the business is in part related to these pricing actions on top of the other actions.

Eric Zhang: Eric you are right I mean, the full year, we're expecting a small net positive as I mentioned, a little more bias towards Q1 than the balance of the year our pricing actions.

Eric Zhang: We're largely give backs this year, we're highly focused in the functional ingredients space.

Eric: We are tracking well against the expectations that we set for the year. We do believe that the improved performance in the business is in part related to these pricing actions on top of the other actions and.

Glenn Robert Richter: And we don't see sort of any additional kind of pricing for the balance year at this point in time. And then, in general, if we look at sort of the inflationary environment for the balance of the year, it's pretty stable. I'd say commodities are flattish to maybe a tad higher.

Eric: And we don't see sort of any additional kind of pricing for the balance of year at this point in time and then in general if we look at sort of the inflationary environment for the balance of the year, It's a pretty stable I'd say commodities are flattish to maybe a tad up generally energy is trending down, particularly in Europe and logistics is trending slightly up.

Eric: Ocean freight, but given what's happening in the Red sea, but generally stability and as we mentioned a little more positive net price in the first quarter than the balance of the year.

Glenn Robert Richter: Generally, energy is trending down, particularly in Europe, and logistics is trending slightly up, particularly ocean freight, given what's happening in the Red Sea. But you know, generally stability, and, as we mentioned, a little more positive net price in the first quarter than the balance of the year. Thank you, Eric. Thank you.

Speaker Change: Thank you Eric.

Operator: Thank you. Eric, does the improvement in functional ingredients mark a turn in this business? And looking forward, can the entirety of this business return to prior levels of sales and earnings? Is there some portion of business that will not due to low cost? Thanks for the question, David. And glad to be back with you again after some years.

Speaker Change: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. David Your line is now open.

David L. Begleiter: Thank you.

David L. Begleiter: Eric does improvement in functional ingredients market turn in this business.

David L. Begleiter: And looking forward can the entirety of this business returned to prior levels of sales earnings or is there some portion of business that will not due to low cost Asian competition.

David L. Begleiter: <unk>.

Jon Erik Fyrwald: Absolutely, it marks the beginning of improvement in the functional ingredients business, and I'm very pleased to see that after a long, tough spell. And what I'll say is that we are putting more focus on the functional ingredients business, and I'm very pleased to see the start of what the team is working really hard to make a sustained turnaround. And in addition to better execution, which is happening, we are doing a strategy refresh and looking at all the product families and our systems approach across the functional ingredients business.

David L. Begleiter: Thanks for the question, David and glad to be back with you again.

Eric Zhang: After some years.

Eric: Absolutely it marks the beginning of improvement in the functional ingredients business and I'm very pleased to see that after a long tough spell.

Speaker Change: And what I'll say is that we are putting more focus on the functional ingredients business and I am very pleased to see the start of what the team are working really hard to make a sustained turnaround.

Speaker Change: In addition to better execution, which is happening we are doing our strategy refresh and looking at all the product families and our systems approach across the functional ingredients business and we are focused very much right now on delivering a strong improvement in 2024, but also what it what it takes.

Jon Erik Fyrwald: And we are focused very much right now on delivering a strong improvement in 2024, but also doing what it takes to make sure that that improvement continues into 2025, starting with the second quarter of 24, then the third quarter, but the full year this year, but making sure that we're doing the right things to strengthen for 25 and beyond. And you'll hear more about that in the coming quarters.

Speaker Change: <unk> to make sure that that improvement continues into 2025, starting with the second quarter 'twenty four than the third quarter, but the full year this year, but doing making sure that we're doing the right things to strengthen for 25 and beyond.

Jon Erik Fyrwald: But it is the start of a turnaround. Very pleased with the progress that the team is making, the actions that they're taking, both with customers and on productivity. And we'll see how well we can do in 24. And then we'll focus on 25.

Speaker Change: And you'll hear more about that in the coming quarters, but it is the start of a turnaround very pleased with the progress that the team is making the actions. They are taking both with customers and on productivity and we will see how good we can do in 'twenty four and then we'll focus on 25, but making progress I would just add to that David as we've mentioned in the <unk>.

Jon Erik Fyrwald: But making progress. Yeah, I would just add to that, David, as we've mentioned in the past, we've stated we didn't think we're going to get to sort of full recovery till 25. We're pleased by the start of this year. A lot of the service elements are 100% back to where they should be.

Speaker Change: Pass.

Speaker Change: Stated, we didn't think we're going to get to sort of full recovery until 'twenty five.

Speaker Change: We're pleased by the start of this year lots of service elements are 100% back to where they should be pricing actions have been effective more innovation in the pipeline. The last piece of the equation is on the cost side and we're going through a very extensive review of our manufacturing and procurement operations that probably will be implement late this year into early <unk>.

Glenn Robert Richter: Pricing actions have been effective. More innovation is in the pipeline. The last piece of the equation is on the cost side.

Glenn Robert Richter: And we're going to do a very extensive review of our manufacturing and procurement operations. That probably will be implemented late this year and early next year as the final piece to get to the margin structure in terms of where we need to be. Thanks for the question.

Speaker Change: <unk> is the final piece to get to the margin structure in terms of where we need to be thanks for the question.

Operator: Our next question comes from the line of Adam Samuelson with Goldman Sachs. Adam, your line is now open. Yes, thank you. Good morning, everyone.

Speaker Change: Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Adam Your line is now open.

Adam L. Samuelson: Yes. Thank you good morning, everyone.

Glenn Robert Richter: I'd love to get your perspective on volume trends by region in the first quarter and if there's anything you would call out as notable areas. Outside Strength or Weakness, uh, versus, I probably exclude pharma from that discussion. Again, given that first quarter performance, is there any... Hey, good morning, Adam. Good question.

Adam L. Samuelson: But love to get your perspective on volume trends by region in the first quarter and if there's anything you would call out as notable areas of <unk>.

Adam L. Samuelson: Strength or weakness versus the portfolio as a whole up mid single digits and I think we could probably exclude pharma from that discussion.

Adam L. Samuelson: Again, given that first quarter performance is there anything.

Adam L. Samuelson: There with the regional performance would differ materially kind of over the balance of the year. Thank you.

Glenn Robert Richter: Regionally, we have seen greater strength in a combination of Asia and Latin America, so more emerging markets from a volume standpoint, and sort of across the board, generally a little softer in North America and in EMEA. That's probably not dissimilar from what others are seeing in the marketplace. If we look by business, you know, Scent had a phenomenal start to the year, 9% plus volumes, Nourish, and H&B in the 4% range.

Speaker Change: Hey, good morning, Adam Good question reads.

Speaker Change: Regionally, we have seen greater strength and a combination of Asia and Latam So more of the emerging markets from a volume standpoint.

Speaker Change: And sort of across the board generally a little softer in North America and in EMEA.

Speaker Change: That's probably not too dissimilar than what others are seeing in the marketplace. If we look by business had a phenomenal start.

Speaker Change: <unk> of the year, 9% plus volumes nourish an agent in the 4% range.

Glenn Robert Richter: As we think about the balance of the year, you know, we're not planning on Scent continuing at these very, very high levels, so some softening from those, and then a little bit softer for H&B and Nourish, and then Pharma actually improving, because they were down about 9% in Q1, and actually getting to flattish as we move into Q2 this year. But generally, where we're seeing a regional balance, more emerging markets, we're expecting that to continue at least through the second quarter. Thank you. Our next question comes from the line of John Roberts with Mizuho. John, your line is now open. Thank you and best wishes, Glenn. Thanks for all your help.

Speaker Change: As we think about the balance of the year.

Speaker Change: We're not planning on continuing at these very very high levels.

Speaker Change: Some softening from these and then a little bit softer for <unk>, and then pharma actually improving because they were down about 9% in Q1 and actually getting to flattish as we move into Q2 and the balance of the year, but generally where were seeing the regional balance more emerging market, we're expecting that to continue at least through the second quarter.

Speaker Change: Thank you. Our next question comes from the line of John Roberts with Mizuho. John Your line is now open.

John Ezekiel Roberts: Thank you and best wishes Glenn Thanks for all your help.

Operator: Eric, IFF has had more opportunities than most companies to promote from within for the CEO and CFO positions. Do you think there's anything that needs to change in the organization to develop a deeper bench so these C-suite transitions are smoother? Or is there just a culture on the board to look outside for C-suite positions?

John Ezekiel Roberts: Eric Iff's has had more opportunities than most companies to promote from within for the CEO and CFO positions.

John Ezekiel Roberts: I think there is anything that needs to change in the organization to develop a deeper bench. So the C suite transitions are smoother or is there just a culture on the board to look outside for C suite positions.

Jon Erik Fyrwald: Thanks for the question, Jon, and I think it's a really important one. To me, the most important thing we do as leaders is make sure that we have the right talent in the company, that we develop the right talent, and we give them opportunities through promotion to continue to advance their careers. And so I always prefer internal promotions, but sometimes external talent needs to come in to fill gaps or when we don't have the right talent inside.

Speaker Change: Well thanks for the question, John and I think it's a really important one.

Speaker Change: To me the most important thing we do as leaders is make sure that we have the right talent in the company that we develop the right talent and we give them the opportunities through promotion to continue to advance their careers and so I always prefer internal promotions, but sometimes external talent needs to come in to fill gaps or when we don't have the right.

Speaker Change: Inside.

Speaker Change: But I can tell you that like if syngenta I very much want to have my successor come from inside when I do retire at some point.

Jon Erik Fyrwald: But I can tell you that, like at Syngenta, I very much want my successor to come from inside when I do retire at some point. And also, I'll just point out that the one significant executive leadership change that we've made so far was Ana Paula Mendoza being promoted to run the Scent division as president of Scent. And if you look at her background and talk to people across the company and customers, there was great enthusiasm for her promotion, and I like that.

John Ezekiel Roberts: And also I'll just point out that the one <unk>.

John Ezekiel Roberts: Significant executive leadership changes that we've made so far was Ana Paula Mendosa.

John Ezekiel Roberts: <unk> is being promoted to run the scent division as president of scent and if you look at her background and if you talk to the people across the company and customers. There was great enthusiasm for her promotion.

John Ezekiel Roberts: And I like that so I will continue to work with the executive leadership team and with the board to make sure that we are developing the right talent inside the company.

John Ezekiel Roberts: To make sure that we promote from within wherever we can.

Jon Erik Fyrwald: So I will continue to work with the executive leadership team and with the board to make sure that we're developing the right talent inside the company to make sure that we promote from within wherever we can. Thank you. Our next question comes from the line of Ghansham Panjabi with Baird. Ghansham, your line is now open.

John Ezekiel Roberts: Thank you. Our next question comes from the line of Ghansham Panjabi with Baird Ghansham. Your line is now open.

Operator: Operator, good morning, everybody. You know, Eric, first off, on the, um... The Bulletproof Executive 2013, How would you sort of objectively assess the... And then just related to that, in terms of scent, what did drive the first quarter in terms of scent? The Bulletproof Executive 2013, Thanks, Lawrence. It's also good to be back with you. We have some history that dates back quite a ways.

Ghansham Panjabi: Thank you operator, and good morning, everybody.

Ghansham Panjabi: I guess, Eric first off on the.

Ghansham Panjabi: As you sort of meet with customers and go in your listening tour et cetera, how would you sort of objectively assess the modes of the residual businesses that are going to be part of <unk> going forward and then just related to that in terms of cents. What did drive the first quarter in terms of outperformance, especially consumer fragrances was that sort of share gains and if it was what was.

Operator: Driven by.

Jon Erik Fyrwald: The way I would say it is that, in the businesses that are remaining, we've got a lot of great innovation capability and a lot of really terrific people that understand customers and have great consumer insight capability. So we have the people and the capabilities, including the innovation capabilities, to be very successful. And what I would say is, even talking to our people, but also our customers, we haven't realized our full potential. And that's what it's about.

Speaker Change: Thanks, Laurence it's also good to be back with you.

Speaker Change: <unk> had some history that dates back quite a ways.

Speaker Change: Well the way I would say it is that.

Speaker Change: And the businesses that are remaining we've got a lot of great innovation capability and a lot of really terrific people that understand customers have great consumer insights capability. So we have the people and the capabilities, including the innovation capabilities to be very successful.

Speaker Change: What I would say is and even talking to our people, but also our customers we haven't realized our full potential and that's what it's about it's the leadership team working to unleash the full potential by making things decision, making clear by having businesses be end to end be able to drive clarity in their strategy.

Jon Erik Fyrwald: It's the leadership team working to unleash the full potential by making decision-making clear, by having businesses be end-to-end, able to drive clarity in their strategy and then clarity in their execution. But at the same time, having a collaborative culture so that we can collaborate across businesses wherever it makes sense, to enhance our ability to bring solutions to customers or to drive healthy productivity. And so I believe that we're doing well with that, but we've got a lot more potential to unleash.

Speaker Change: And then clarity in their execution, but.

Jon Erik Fyrwald: But at the same time, having a collaborative culture. So that we can collaborate across businesses wherever it makes sense to enhance our ability to bring solutions to customers or to drive healthy productivity.

Speaker Change: And so I.

Speaker Change: I believe that we're doing well with that but we've got a lot more potential to unleash and I think if you talk to people across the company I think you'll find a lot of enthusiasm about what.

Jon Erik Fyrwald: And I think if you talk to people across the company, I think you'll find a lot of enthusiasm about what IFF is doing and what more we can do going forward. Specifically, on Scent, I think Scent has been a unit that has stayed focused largely on customers and that has brought a lot of innovation to customers. I've spent a lot of time with the perfumers in this company. We have world-class perfumers. And I'm just so proud to be part of this company with such great perfumers that our customers value. I've spent time with the CEOs of leading...

Speaker Change: What <unk>.

Speaker Change: Is doing and what more we can do going forward specifically on <unk> I think <unk> has been a unit that has stayed focused largely on customers and that has brought a lot of innovation at two customers I've spent a lot of time with the perfumes and this company, we've got world class per <unk>.

Speaker Change: Humor's and just I'm, so proud to be part of this company with such great perfume or that our customers value I've spent time with Ceos of leading <unk>.

Jon Erik Fyrwald: Leading CPG companies that have named our perfumers by name because they're so important to their success. And so making sure that we bring not only our perfumers but the whole team around the perfumers to help co-create great new fragrances and fine fragrances or great new consumer products, whether they're shampoos or detergents, laundry detergents, or dishwash detergents, or floor cleaners, or body wash, whatever it is. The scent, I've learned, is such a critical part of the success of the consumer product, and our great perfumers and the teams around them bringing great scent technology and great formulations to help the customers develop leading consumer products has really been what's driven the growth.

Leading CPG companies did have named our <unk> by name.

Speaker Change: Because there is so important to their success and so making sure that we're bringing not only our pro <unk>, but the whole team around the perfumes to help co create great new fragrances, and fine fragrances, or great, new consumer products, whether theyre shampoos or or detergents laundry.

Speaker Change: Detergents, or dishwashing, detergents or floor cleaners or body wash whatever it is.

Jon Erik Fyrwald: The scent I've learned is such a critical part of the success of the consumer product.

Jon Erik Fyrwald: And our great per humor's and the teams around them, bringing great technology and great formulations to help the customer.

Jon Erik Fyrwald: Customers.

Jon Erik Fyrwald: <unk>, leading consumer products has really been whats driven the growth so I expect under leach.

Jon Erik Fyrwald: So I expect that, under Anna's leadership and with the super team that she's got, that continued strong performance to continue. Thank you. Our next question comes from the line of Salvator Tiano with Bank of America. Salvatore, your line is now open.

Salvator Tiano: Leadership and with a super team that she's got I expect that continued strong performance to continue.

Speaker Change: Yeah.

Glenn Robert Richter: Thank you. Our next question comes from the line of Salvator Tiano with Bank of America Salvator. Your line is now open.

Operator: Yes, thank you very much. If I remember correctly, you had talked about 150 million productivity gains for the year. So can you talk a little bit, can you quantify what the benefit was in Q1? What do you expect for the rest of the year? And given obviously the strong gains in the first quarter, is this number increased for the rest of the year? A good question, Salvator.

Salvator Tiano: Thank you very much.

Salvator Tiano: I remember correctly, you had talked about $150 million productivity gains for the year. So can you talk a little bit kind of quantify what was the benefit in Q1.

Salvator: Do you expect for the rest of the year and given obviously the strong gains.

Salvator: First quarter is this number upsides for the rest of the year.

Glenn Robert Richter: We are trending at around $200 million full year in terms of productivity, and hence some of our commentary about guiding towards the higher range of our EBITDA guide. And that's about $50 million per quarter, so it's fairly ratable in terms of the kind of achievement. You know, I would note, as we said in previous calls, we have made tremendous progress with our operations and procurement leadership teams in really driving a very disciplined approach, taking costs out, everything from SKI rationalization to literally looking at plant by plant in terms of best practices.

Operator: A good question Salvator, we were trending at around $200 million full year in terms of productivity and hence some of our.

Glenn Robert Richter: Our commentary about guiding towards the higher range of our EBITDA guide.

Glenn Robert Richter: And that's about $50 million per quarter. So it's fairly ratable in terms of kind of the achievement I would note as we said on previous calls we have made tremendous progress with our operations and procurement leadership teams and really driving a very disciplined approach is taking cost out everything from SKU rationalization too.

Glenn Robert Richter: Looking at plant by plant in terms of best practices.

Glenn Robert Richter: And behind that, and by the way, there's plenty of additional opportunities, as I mentioned, we're taking a zero-paced approach to our ingredients. Thanks for watching. Thank you. Our next question comes from the line of Lisa de Neve with Morgan Stanley. Lisa, your line is now open. Good morning.

Glenn Robert Richter: And behind that and by the way there is plenty of additional opportunities as I mentioned, we're taking a zero based approach to our ingredients.

Glenn Robert Richter: Platform.

Speaker Change: To provide additional opportunities and behind that we've really been looking at opportunities within RSA there've been focused on leveraging our global shared services really focusing on our indirect spend so getting every dollar out we need and then continuing to advanced technology as a way to basically automate eliminate work so that piece of it is actually picking up speed.

Speaker Change: Well, so we feel very good about 200, and I would suggest as we look out into the future. We're going to continue to deliver very strong productivity numbers. Thanks for the question.

Speaker Change: Thank you. Our next question comes from the line of Lisa de Neve with Morgan Stanley. Please state. Your line is now open.

Operator: Thank you for taking my question. Congratulations on the strong first quarter. My first question, so with the announcement of the pharma division, which is expected to complete in the first half of next year, can you just share where you see potential scope for optimizing your balance sheet position and maybe where you see some depth that could be reduced or be up for redemption or that may not require any refinancing? And then I am going to sneak in a second question.

Speaker Change: Good morning, Thank you for taking my question and congratulations on the strong first quarter.

Operator: My first question so with the announcement of the Pharma Division, which is expected to complete in the first half of next year can you just share where you see potential scope for optimizing your balance sheet position and maybe where you see some depth that could be reduced or be up for redemption or that may not require any refinancing and then I'm going to sneak in.

Glenn Robert Richter: So during the presentation, you mentioned that your finance and HR departments, amongst others, are now directly feeding into your divisions. Can you shed some light on their compensation structure, the variable pay they may or may not receive, and what key KPIs they have to deliver on this? Thank you. Sure. Hey, Lisa. Good morning. This is Glenn.

Operator: Second question. So during the presentation, you mentioned that Youll finance and HR departments amongst others are now directly feeding into your divisions can you shed some light on their compensation structure, a desirable paid in may or may not receive and what key kpis. They have to deliver on this thank you.

Glenn Robert Richter: So we're in the early innings of deciding sort of our liability management strategy. As you know, we will bring in circa net proceeds of $2.4 billion from PhRMA. Coincidentally, we have maturities cumulatively for 2025 and 2026 that are $2.4 billion, but we're actually taking a more holistic look, and we're actually going to be balancing the tradeoff between interest cost savings and notional debt repayments, so how do we think about basically bringing in some of the cheaper debt, as well as refinancing risk?

Glenn Robert Richter: Sure Hey, Lisa Good morning. This is Glenn so we're in the early innings of deciding sort of our liability management strategy. As you know we will bring in circa net proceeds of $2 4 billion from pharma Coincidentally.

Glenn Robert Richter: Coincidentally, we have maturities cumulatively for 25, and 26 that are $2 4 billion, but we're actually taking a more holistic look and we're actually going to be balancing the trade off between interest rate interest cost savings.

Glenn Robert Richter: Notional debt repayments. So how do we think about basically bringing in some of the cheaper debt as well as refinancing risks. So we'll think about bringing some towers down as part of that so there'll be more to come as we get closer to finalizing the close of the deal, but we are sort of thinking about not just the immediate maturities, but how the optimize the straw.

Glenn Robert Richter: So we'll think about bringing some towers down as part of that. There will be more to come as we get closer to finalizing the close of the deal, but we are sort of thinking about not just the immediate maturities but how to optimize the structure going forward. So with that, Eric, I'm happy to take the next question. Do you want to take the next question? Yes. So on the functions feeding into the business units and reporting into the business units, it's clearly being done so that the business units can drive their performance. And there will be no changes to the 2024 plan because everybody's set and clear about it, and we're not making changes.

Eric: Structure going forward, so with that Erik I'm happy to take the next question, let's take the next question, yes. So on the functions feeding into the business units reporting into the business units. It's clearly being done so that the business units can drive their performance and there'll be no changes to the 2024 plan because everybody set in.

Eric: Clear about it and we're not making changes but effective in 2025 those functions that were reporting corporately that we'll be reporting into the business units will be incentivized on the business unit performance.

Jon Erik Fyrwald: But effective in 2025, those functions that we're reporting corporately that we'll be reporting into the business units will be incentivized on business unit performance. As a large part of their incentive, they'll also, of course, continue to have a corporate element to encourage overall corporate performance and collaboration across business units and the more senior. I would also say that there will continue to be corporate functional leadership to ensure that we're doing functional best practices across the business units and that each of the functional people has great career opportunities across the company.

Jon Erik Fyrwald: As a large part of their incentive. They are also of course continue to have a corporate element to encourage overall corporate performance and collaboration across business units and the more senior.

Jon Erik Fyrwald: But all the people are the more the corporate component, but clearly what we want to drive his business unit alignment and everybody on that business team driving that business unit's performance, but also collaborating to enhance their business units performance and the total company performance.

Jon Erik Fyrwald: I would also say that there'll continue to be corporate functional leadership that ensure that we're doing functional best practices across the business units.

Jon Erik Fyrwald: And that each of the functional people have great career opportunities across the company.

Jon Erik Fyrwald: So it will be a combination, but clearly, each business unit is going to be highly incented to drive the performance of that business through collaboration that enhances its business performance and the business performance of the other businesses. Thank you. Our next question comes from the line of Mark Astrachan with Stiefel.

Jon Erik Fyrwald: So it will be a combination, but clearly each business unit is going to be highly incentive to drive the performance of that business with collaboration that enhances their business performance and the business performance of the other businesses.

Operator: Mark, your line is now open. Yeah, thanks, and good morning, everybody. For clarification, and a question, so. Sounds like there was a lot of benefit from sent volumes in the quarter. I guess that partly explains the big number and growth rate on your basis. So is it fair to say that, Transcripts provided by Transcription Outsourcing, LLC. Total Business. And if you could maybe, tell us how much.

Jon Erik Fyrwald: Thank you. Our next question comes from the line of Mark Astrachan with Stifel. Mark. Your line is now open.

Speaker Change: Yes, thanks, and good morning, everybody two two clarification.

Mark: Question so.

Operator: It sounds like there was a lot of benefit in <unk>.

Operator: Volumes in the quarter I guess that partly explains the the big EBITDA.

Operator: EBITDA.

Operator: Number in growth rate on a year on year basis. So is it fair to say that debt.

Mark: Specifically, the EBITDA growth will will normalize as we head through the year and I guess.

Operator: <unk> picture same thing on.

Operator: The total business and if you could maybe.

Mark: Tell us how much you think the <unk> volume growth had to do with channel refill from.

Glenn Robert Richter: The 1Q volume growth had to do with channel replenishment. What your customers are ordering from you, that'd be helpful. Thank you.

Glenn Robert Richter: The destocking and how much of it is really.

Glenn Robert Richter: What your customers are ordering for me that'd be helpful. Thank you.

Glenn Robert Richter: Yeah, so hard to your second question mark hard to definitively understand, kind of what's going on downstream in terms of the supply chain. However, I think, in general, there was a little bit of volume that went from Q4 into Q1, but directionally, probably less than half a point. We were We were reducing prices, as you know, in certain segments of customers. We decided to push some orders into Q1, but I think it's fairly de minimis. In general, the feeling is that there's not been any restocking in the marketplace.

Speaker Change: Yes, so hard to your second question Mark hard too.

Speaker Change: <unk> I understand.

Glenn Robert Richter: Kind of what's going on downstream in terms of the supply chain. However, I think in general there was a little bit of volume that went from Q4 into Q1, but directionally probably less than half a point, we were reducing prices as you know in certain segments. So customers decided to push some orders into Q1, but.

Glenn Robert Richter: It is fairly de Minimis in general the feeling is that there is not any restocking in the marketplace. There is an absence of destocking, but theres no view I think generally in terms of the customers are restocking at this point in time.

Glenn Robert Richter: There's an absence of destocking, but there's no view, I think, generally, in terms of customers restocking at this point in time. In terms of your question on scent volumes, scent had a very strong first quarter. Note that it was stronger in consumer versus fine, so that makes that sort of mixed neutral versus the enterprise from the standpoint. And, as mentioned, we're not anticipating that those high single-digit volume gains will continue through the balance of the year, so that is a piece that's basically reflected in our balance of your guide being lower from a volume standpoint. Thank you. Our next question comes from the line of Lauren Lieberman with Barclays. Lauren, your line is now open. Great, thanks.

Lauren Rae Lieberman: In terms of your question on sent volumes had a very strong first quarter note that it was stronger in consumer versus spine. So that makes that sort of mix neutral versus the enterprise from the standpoint.

Lauren Rae Lieberman: And as mentioned we are not anticipating that those high single digit volume gains will continue through the balance of the year. So that is a piece that's basically reflected in our balance of year guide being lower from a volume standpoint.

Lauren Rae Lieberman: Thank you our next.

Glenn Robert Richter: <unk> comes from the line of Lauren Lieberman with Barclays. Lauren Your line is now open.

Operator: I had two questions. The first was just on Nourish's performance in the quarter and volumes being up. Food industry volumes are still quite weak, so I was just kind of curious if you could square for us your performance outside of inventory rebuilding versus kind of what we're seeing in end market demand. And then the second thing was, Eric, it was very helpful to hear kind of the update on the organization structure and the direction you're moving in.

Lauren Rae Lieberman: Great. Thanks, I had two.

Lauren Rae Lieberman: Two questions.

Lauren Rae Lieberman: First was just on the nourish performance in the quarter and volumes being up.

Operator: Food industry volumes are still quite weak. So I was just kind of curious if you could square for us your performance outside of inventory rebuilding versus kind of what we're seeing.

Operator: End market demand.

Operator: And then the second thing was Eric very helpful to hear kind of the update on org structure and the direction you're moving in.

Operator: I was curious, though, to ask a little bit of a backwards question about the organizational structure that was in the process of being set up, and Glenn, you were obviously a part of that. Yeah, yeah, no, no. I'll start, and then Glenn can add to it.

Operator: I was curious, though that's a little bit backwards question.

Speaker Change: The org structure that was in the process of being set up and Glenn you were obviously a part of that.

Speaker Change: I understand the notion that it's not it's been deemed not the right path forward, but there were surely merits to that plan. There were there are elements there that we're going to bring something positive or there was an intention. So I'm just curious what if anything you think you kind of give up or forego.

Operator: Not pursuing that model and if there are ways to kind of bring that into.

Speaker Change: This structure, Eric that youre going to be setting up is that didn't make sense I can try to clarify.

Jon Erik Fyrwald: First of all, in the organization structure, the idea was to have a market-based organization structure. So, for example, health and biosciences would have been split up into four different units. As we've come together as an executive leadership team and talked about it, the belief is that you gain the most by making sure that your innovation, that your R&D engine stays within the business and the manufacturing and the commercial so that you have that end-to-end, and you're going to customers with expertise that they can connect all the way back to R&D and what we call IC&D, the innovation, creation, and design capabilities that we bring.

Speaker Change: No no.

Speaker Change: I'll start and then Glenn can add to it first of all on the organization structure. The idea was to have market based organization structure. So for example, health <unk> Biosciences would've been split up into four different units.

Jon Erik Fyrwald: As we've come together as an executive leadership team and talked about it. The belief is that you gained the most by having making sure that your innovation that your R&D engine is stays within the business and the manufacturing and commercial so that you have that end to end and youre going to customers with expertise that thing.

Jon Erik Fyrwald: They can connect all the way back to R&D and what we call <unk>.

Jon Erik Fyrwald: The innovation creation and design capabilities that we bring that really needs to stay within our business and be their end to end now we have different businesses that hit the same markets. So health excuse me home and personal care.

Jon Erik Fyrwald: That really needs to stay within a business and be there end-to-end. Now, we have different businesses that target the same markets. So health, excuse me, home, and personal care; both our biosciences business and our scent business have a lot in common with customers. So we'll continue to have a global key account leader for large accounts that will represent the company. But then we'll have experts from the business units coming into that account and working with that account, which is what the accounts want.

Jon Erik Fyrwald: Both our biosciences business in our scent business have a lot in common with customers. So we'll continue to have a global key account leader for large accounts.

Jon Erik Fyrwald: They want both that overall IFF relationship, which, by the way, will include the presidents of the businesses will include me and others, but it will be coordinated, but they want to see the experts that really know the details of the innovation that can bring that innovation to them.

Jon Erik Fyrwald: That will represent the company, but then we will have experts from the business units coming into that account and working with that account, which is what the accounts want they want both that overall iff's relationship, which by the way will include the presidents of the businesses will includes me and others, but that coordinated but they want to see the experts that really.

Jon Erik Fyrwald: The innovation details that can bring that innovation to them and that's what the <unk> and business units will enable us to bring.

Glenn Robert Richter: And that's what these end-to-end business units will enable us to bring. So if I can add, you know, the original premise, which actually predates me, Lauren, was that combining flavors and ingredients would represent a significant revenue synergy opportunity through cross sell. And the axis was put on synergies, as opposed to how do you optimize the individual businesses; that is being shifted the other way, where the reality is, these businesses will run much, much better with a single focus, either on flavors or ingredients. As Eric said, there are other mechanisms to help cross out, particularly with the global key accounts as a way to develop long-term plans, etc.

Speaker Change: Yeah, So if I can add.

Jon Erik Fyrwald: The original premise, which actually predates me.

Glenn Robert Richter: Lauren was that combining flavors and ingredients would represent a significant quote revenue synergy opportunity through cross sell.

Glenn Robert Richter: And the access was put on synergies as opposed to how do you optimize the individual businesses that is being shifted the other way where the reality is these businesses will run much much better with a single focus either own flavors are ingredients as Eric said there are other mechanisms to help cross sell particularly with the global key accounts as a way to develop long.

Glenn Robert Richter: But we've seen it just firsthand in terms of the more that we get our ingredients team sort of focused on only ingredients, it does deliver results. So I think that's the big shift from three plus years ago when the deal was put together. And early, to your first question, very early innings, by the way, although cautiously optimistic, our trends in terms of our flavors business were four plus percent volumes, and the ingredients business was three, three and a half percent.

Glenn Robert Richter: Term plans et cetera, but we've seen that just firsthand in terms of the more that we get our ingredients team sort of focused on only ingredients. It does deliver results. So I think that's the big shift from three plus years ago. When the deal was put together.

Glenn Robert Richter: Early to your first question very early innings by the way, although cautiously optimistic.

Glenn Robert Richter: Our trends in terms of our flavors business, we're four plus percent volumes and the ingredients business for 335%.

Glenn Robert Richter: From what we can measure in terms of our competitive set on both sides of the house, we feel that we're at parity or gaining share based on the quarterly results. However, I would caution, particularly in the ingredients business; it is early.

Glenn Robert Richter: From what we can measure in terms of our competitive set on both sides of the house, we feel that we're at parity or gaining share based on the quarterly results I would I'd caution, particularly on the ingredients business. It is early there's a lot of remediation in that business, but it's encouraging that we're starting off relative to our peers in a good place and what I would just add to that.

Glenn Robert Richter: As I think flavors it was it was.

Glenn Robert Richter: Really a good pipeline.

Glenn Robert Richter: The commercial team was able to land and in ingredients. It was a combination of a strengthening pipeline, but also pricing actions that led to regain some share that was lost due to.

Glenn Robert Richter: Big over over pricing increases and now we've recovered some of that with some price give backs.

Speaker Change: Okay great.

Speaker Change: Thank you.

Glenn Robert Richter: There's a lot of remediation in that business, but it's encouraging that we're starting off relative to our peers in a good place. And what I would just add to that is I think flavors was really a good pipeline that the commercial team was able to land. And in ingredients, it was a combination of a strengthening pipeline but also pricing actions that led to a regain of some share that was lost due to big over-pricing increases, and now we've recovered some of that with some price givebacks. Our next question comes from the line of Laurence Alexander with Jeffreys. Laurence, your line is now open. Good morning.

Glenn Robert Richter: Our next question comes from the line of Laurence Alexander with Jefferies. Laurence Your line is now open.

Operator: Just want to follow up on the comment about sort of the inventory dynamics downstream. If you look a little bit farther out, what are you hearing from customers about either them shifting their innovation strategies and therefore having more demand pull for your product, or longer term, they're needing to reset inventory levels in terms of working capital days or other metrics? And then would that be a net tailwind or headwind for you from the current?

Laurence Alexander: Good morning.

Laurence Alexander: Just want to follow up on the comments about sort of the.

Operator: Inventory dynamics downstream, if you look a little bit farther out.

Operator: What are you hearing from customers about either them shifting their innovation strategies, and therefore, having more demand pull for your product.

Operator: Or longer term, they're needing to resets.

Operator: Inventory levels in terms of working capital days or other metrics.

Operator: And then would that be a net tailwind or headwind for you from current level.

Jon Erik Fyrwald: So in the last few months since I joined, I think I've met with more than 20 customers, maybe 30 customers. And very consistently, what we're hearing back is that they're pivoting from being able to grow with price increases to now needing innovation, and innovation being more important than ever. And that's a good part of why it's so important for us to have end-to-end business units that can bring that innovation quickly and aggressively because that's what our customers want. So that they can continue to profitably grow their business, they have to have more innovation.

Operator: So in the last since since I've joined I think I've met with more than 20 customers, maybe 30 customers.

Jon Erik Fyrwald: And very consistently what we are.

Jon Erik Fyrwald: Hearing back is that they are pivoting from being able to grow with price increases to now needing innovation innovation being more important than ever and that's a good part of why it's so important for us to have end to end business units that can bring that innovation quickly and aggressively because thats what.

Jon Erik Fyrwald: Our customers want so that they can continue to profitably grow their business. They have to have more innovation, that's what they're looking for that's what they need and that's what we're going to deliver so thats, how theyre going to grow and that's how we're going to grow.

Jon Erik Fyrwald: That's what they're looking for, that's what they need, and that's what we're going to deliver. So that's how they're going to grow, and that's how we're going to grow. Thank you. Our next question comes from the line of Jeff Zekauskas with JP Morgan. Jeff, your line is now open. Thanks very much.

Jeffrey John Zekauskas: Thank you.

Jeffrey John Zekauskas: Our next question comes from the line of.

Jon Erik Fyrwald: Jeff Zekauskas with Jpmorgan, Jeff Your line is now open.

Jeffrey John Zekauskas: Thanks very much.

Operator: I've been given your revenue forecast for the second quarter, which at the midpoint is down about 5%. Are your April volumes down 5%? on a sequential basis?

Jeffrey John Zekauskas: Given your revenue forecast for the second quarter, which at the midpoint is down about 5%.

Jeffrey John Zekauskas: Are your April volumes down 5% or.

Jeffrey John Zekauskas: On a sequential basis that is or can you talk about what's happened sequentially.

Glenn Robert Richter: Or can you talk about what's happened sequentially? And then second, when you look at your first quarter, your revenues were up about $200 million, and your cost of goods sold was up, I don't know, maybe $30 million. Can you discuss what the dynamic is that allowed your question? Jeff, the second part of your question was Q4 to Q1. What was the reference point?

Jeffrey John Zekauskas: And then second.

Glenn Robert Richter: When you look at your first quarter.

Glenn Robert Richter: Performance versus your fourth quarter performance.

Glenn Robert Richter: Your revenues were up about $200 million.

Glenn Robert Richter: And your cost of goods sold was up I don't know maybe $30 million.

Glenn Robert Richter: Can you discuss what the dynamic is behind that.

Glenn Robert Richter: Which allowed Europe, Jeff Thats really.

Speaker Change: And Jeff just that second part of your question was Q4 to Q1, what was the reference point, yes, exactly right because theres not much change in cost of goods sold in revenues dropped a couple of entre.

Glenn Robert Richter: Yes, exactly right. You know, because there's not much change in the cost of goods sold and revenues for a couple. Yeah, yeah, yeah. Well, there are a number of timing elements in the fourth quarter and sort of the mix of the business in the fourth quarter vis-a-vis Q1. Generally, the productivity and net price dynamics are very similar, so I'd say the fundamentals are, but you really have some mixed dynamics and then some one-time items related to that as we think about Q4 to Q1.

Glenn Robert Richter: Yeah, Yeah well.

Glenn Robert Richter: There are a number of timing elements in the fourth quarter and sort of the mix of the business in the fourth quarter vis vis Q1, generally the productivity and net price dynamics are very similar so I'd say that fundamentals were but you really have some mixed dynamics and then some onetime items related to that as we think about Q4 to Q1.

Glenn Robert Richter: You referenced the sequential decline of about $100 million from Q1 to Q2, about a quarter of that basically is associated with the absence of LMC in the mix. The other part is just sort of the outlook in the business, a little bit of seasonality in terms of the business as well. Versus the prior year, to remind you, this time last year, we had savory solutions, we had FSI, and we also had LMC in the mix, so there's a pretty substantial sort of reduction in revenue on a year-over-year comparison.

Glenn Robert Richter: You referenced the I think the decline decline sequentially is about $100 million from Q1 to Q2 about a quarter of that basically is associated with.

Glenn Robert Richter: The absence of LLC and the mix. The other part is just sort of the outlook and the visit a little bit of seasonality in terms of the business as well versus prior year to remind you. This time last year, we had savory solutions. We had the Ssi. We also had LLC and the mix of there's a pretty substantial sort of reduction in revenue on a year over year comparison.

Glenn Robert Richter: Volume Metrically your question about what we're seeing in the second quarter, we're obviously well into the middle of the core at this point, we are anticipating a 5% to 6%.

Glenn Robert Richter: Volumetrically, your question about what we're seeing in the second quarter, we're obviously well into the middle of the quarter at this point. We're anticipating a 5% to 6% all-in volume growth versus the 4% for Q1. April was an extremely good month, but last year it was an extremely lousy month, so there's a bit of an overlap from the standpoint. But May and, at least, the June book, at this point, are trending towards that basically sort of 5% plus in terms of the performance for the quarter.

Glenn Robert Richter: All in volume growth versus the 4% for Q1 April was an extremely good month, but last year. It was an extremely allows a month. So there's a bit of an overlap from standpoint.

Glenn Robert Richter: But may and at least the June book at this point is trending towards that that basically sort of 5% plus in terms of the performance for the third quarter.

Glenn Robert Richter: There are no questions registered at this time, so I will pass the call back over to Eric for closing remarks. Thank you all for joining today. Let me just close with two comments. First of all, Glenn did announce his pending retirement, but I just want to make sure he's not leaving yet.

Speaker Change: Thanks, Jeff.

Glenn Robert Richter: Thank you there are no questions registered at this time, so I will pass the call back over to Eric for concluding remarks.

Jon Erik Fyrwald: There's lots more work to do, and we're enjoying him as part of the ELT, the executive leadership team, to get us unleashing our full potential. Second point is, it's really great being part of Team IFF. We've got terrific people, great innovation capabilities, and we're going to do all we can to unleash our full potential and try to delight our customers, our employees, and our shareholders.

Eric: Thank you all for joining today, let me just close with two comments first of all Glen.

Jon Erik Fyrwald: Glenn did announced his pending retirement, but I just want to make sure. He is not leaving yet theres lots more work to do and we're enjoying him as part of the ELT to an executive leadership team.

Jon Erik Fyrwald: To get us unleashing our full potential second point is really great being part of team Iaff, We've got terrific people, great innovation capabilities, and we're going to do all we can to unleash our full potential and try to delight our customers our employees and our shareholders. Thank you very much.

Operator: Thank you very much. That concludes today's call. Thank you for your participation. You may now disconnect your line.

Speaker Change: That concludes today's call. Thank you for your participation you may now disconnect your line.