Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

OR

Commission file number: 001-07626

Sensient Technologies Corporation

(Exact name of registrant as specified in its charter)

777 EAST WISCONSIN AVENUE, MILWAUKEE, WISCONSIN53202-5304

(Address of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

SENSIENT TECHNOLOGIES CORPORATION

INDEX

Index

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands except per share amounts)

(Unaudited)

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands, except share and per share amounts)

(Unaudited)

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Expenses are charged to operations in the period incurred.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires the Company to disclose segment expenses that are significant and regularly provided to the Company's chief operating decision maker (CODM). In addition, this ASU requires the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this standard in the fourth quarter of 2024 using a retrospective transition method, and the adoption did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU will also require the Company to disaggregate its income taxes paid disclosure by federal, state, and foreign taxes, with further disaggregation required for significant individual jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024. The Company will adopt this ASU in the fourth quarter of 2025 using a prospective transition method. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements and its related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses, which will require the Company to disclose disaggregated information about certain income statement expense line items. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements and its related disclosures.

Please refer to the notes in the Company's annual consolidated financial statements for the year ended December 31, 2024, for additional details of the Company's financial condition and a description of the Company's accounting policies, which have been continued without change.

3.	Portfolio Optimization Plan

During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.

The Company's Felinfach site will continue to operate until all production activities have successfully transferred to other locations, and then will be closed. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.

The Company recorded $2.5 million of accrued liabilities in Other Accrued Expenseson the Company's Consolidated Balance Sheet related to this plan as of both March 31, 2025 and December 31, 2024. The Company expects this plan will cost approximately $40 million, of which $37.3 million has been incurred through March 31, 2025, primarily related to non-cash impairment charges and proposed employee separation costs, and upon completion would reduce annual operating costs by approximately $8 million to $10 million, with the full benefit expected to be achieved after 2025. The Company anticipates it would reduce headcount by approximately 90 positions, primarily in the Flavors & Extracts and Color segments, related to certain production and selling and administrative positions.

The following table summarizes the Portfolio Optimization Plan expenses by segment for the three months ended March 31, 2025:

(In thousands)		Flavors & Extracts				Color				Consolidated
Non-cash charges - Cost of products sold		$	855			$	-			$	855
Employee separation - Selling and administrative expenses			246				8				254
Other production costs - Cost of products sold			959				-				959
Other costs - Selling and administrative expenses(1)			791				5				796
Total		$	2,851			$	13			$	2,864

(1)

Other costs include professional services and other related costs.

4.	Trade Accounts Receivable

5.	Inventories

Accounting Standards Codification 820, Fair Value Measurement, defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The carrying values of the Company's cash and cash equivalents, trade accounts receivable, trade accounts payable, accrued expenses, and short-term borrowings were approximately the same as the fair values as of March 31, 2025 and December 31, 2024. The net fair value of the forward exchange contracts based on current pricing obtained for comparable derivative products (Level 2 inputs) was an asset of $0.3 million and a liability of $0.8 million as of March 31, 2025 and December 31, 2024, respectively. The fair value of the Company's long-term debt, including current maturities, is estimated using discounted cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements (Level 2 inputs). The carrying value of the long-term debt at March 31, 2025 and December 31, 2024, was $683.5 million and $613.7 million, respectively. The fair value of the long-term debt at March 31, 2025 and December 31, 2024, was $691.5 million and $622.0 million, respectively.

The Company evaluates performance based on operating income before share-based compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders); restructuring and other charges, including Portfolio Optimization Plan costs; interest expense; and income taxes (segment operating income). Total revenue and segment operating income by business segment and geographic region include both sales to customers, as reported in the Company's Consolidated Statements of Earnings, and intersegment sales, which are accounted for at prices that approximate market prices and are eliminated in consolidation.

Assets by business segment and geographic region are those assets used in the Company's operations in each segment and geographic region. Segment assets reflect the allocation of goodwill to each segment. Corporate & Other assets consist primarily of accounts receivables from the securitization program, investments, deferred tax assets, and fixed assets.

The Company determines its operating segments based on information utilized by its chief operating decision maker (CODM) to allocate resources and assess performance. The Company's CODM is the President and Chief Executive Officer. The CODM uses segment operating income or loss to allocate resources, which includes employees, financial, or capital resources, predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual and year-over-year variances on a monthly basis for segment operating income or loss when allocating capital and personnel resources to the segments. Segment performance is evaluated based on operating income of the respective business units before share-based compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders) and restructuring and other charges, including the Portfolio Optimization Plan costs, which are reported in Corporate & Other.

The Company's three reportable segments are the Flavors & Extracts and Color segments, which are both managed on a product line basis, and the Asia Pacific segment, which is managed on a geographic basis. The Company's Flavors & Extracts segment produces flavor, extracts, and essential oils products that impart a desired taste, texture, aroma, or other characteristics to a broad range of consumer and other products. The Color segment produces natural and synthetic color systems for foods, beverages, pharmaceuticals, and nutraceuticals; colors, ingredients, and systems for personal care; and technical colors for industrial applications. The Asia Pacific segment is managed on a geographic basis and produces and distributes color, flavor, and essential oils products for the Asia Pacific countries. The Company's corporate expenses, share-based compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders), and restructuring and other charges, including Portfolio Optimization Plan costs, are included in the "Corporate & Other" category.

Operating results by segment for the periods presented are as follows:

(In thousands)		Flavors & Extracts				Color				Asia Pacific				Corporate & Other				Consolidated
Three months ended March 31, 2025:
Total segment revenue		$	193,681			$	167,750			$	41,901			$	-			$	403,332
Intersegment revenue			(5,883	)			(5,114	)			(10	)			-				(11,007	)
Consolidated revenue from external customers			187,798				162,636				41,891				-				392,325
Cost of products sold			137,934				96,437				24,363				1,814				260,548
Selling and administrative expense			24,875				31,347				8,086				13,939				78,247
Operating income (loss)			24,989				34,852				9,442				(15,753	)			53,530
Interest expense																			7,341
Earnings before income taxes																		$	46,189
Assets			811,518				852,073				125,110				303,967				2,092,668
Capital expenditures			12,535				3,522				175				622				16,854
Depreciation and amortization			7,640				5,936				548				950				15,074
Three months ended March 31, 2024:
Total segment revenue		$	193,092			$	160,025			$	40,306			$	-			$	393,423
Intersegment revenue			(5,070	)			(3,661	)			(22	)			-				(8,753	)
Consolidated revenue from external customers			188,022				156,364				40,284				-				384,670
Cost of products sold			138,982				95,003				24,029				107				258,121
Selling and administrative expense			25,362				29,682				7,479				14,620				77,143
Operating income (loss)			23,678				31,679				8,776				(14,727	)			49,406
Interest expense																			7,045
Earnings before income taxes																		$	42,361
Assets			785,024				840,433				106,980				273,245				2,005,682
Capital expenditures			4,581				5,217				390				842				11,030
Depreciation and amortization			7,620				5,440				636				1,013				14,709

Product Lines

(In thousands)		Flavors & Extracts				Color				Asia Pacific				Consolidated
Three months ended March 31, 2025:
Flavors, Extracts & Flavor Ingredients		$	130,181			$	-			$	-			$	130,181
Natural Ingredients			63,500				-				-				63,500
Food & Pharmaceutical Colors			-				124,600				-				124,600
Personal Care			-				43,150				-				43,150
Asia Pacific			-				-				41,901				41,901
Intersegment Revenue			(5,883	)			(5,114	)			(10	)			(11,007	)
Total revenue from external customers		$	187,798			$	162,636			$	41,891			$	392,325
Three months ended March 31, 2024:
Flavors, Extracts & Flavor Ingredients		$	124,805			$	-			$	-			$	124,805
Natural Ingredients			68,287				-				-				68,287
Food & Pharmaceutical Colors			-				117,058				-				117,058
Personal Care			-				42,967				-				42,967
Asia Pacific			-				-				40,306				40,306
Intersegment Revenue			(5,070	)			(3,661	)			(22	)			(8,753	)
Total revenue from external customers		$	188,022			$	156,364			$	40,284			$	384,670

Geographic Markets

(In thousands)		Flavors & Extracts				Color				Asia Pacific				Consolidated
Three months ended March 31, 2025:
North America		$	149,627			$	78,669			$	1			$	228,297
Europe			28,157				47,723				22				75,902
Asia Pacific			4,522				16,626				40,764				61,912
Other			5,492				19,618				1,104				26,214
Total revenue from external customers		$	187,798			$	162,636			$	41,891			$	392,325
Three months ended March 31, 2024:
North America		$	146,952			$	75,120			$	-			$	222,072
Europe			32,157				46,162				46				78,365
Asia Pacific			3,706				17,419				38,685				59,810
Other			5,207				17,663				1,553				24,423
Total revenue from external customers		$	188,022			$	156,364			$	40,284			$	384,670

The Company's components of annual benefit cost for the defined benefit plans for the periods presented are as follows:

		Three Months Ended March 31,
(In thousands)		2025				2024
Service cost		$	369			$	372
Interest cost			444				401
Expected return on plan assets			(265	)			(242	)
Recognized actuarial gain			(72	)			(91	)
Total defined benefit expense		$	476			$	440

The Company's non-service cost portion of defined benefit expense is recorded in Interest Expenseon the Company's Consolidated Statements of Earnings. The Company's service cost portion of defined benefit expense is recorded in Selling and Administrative Expenseson the Company's Consolidated Statements of Earnings.

The Company may use forward exchange contracts and foreign currency denominated debt to manage its exposure to foreign exchange risk in order to reduce the effect of fluctuating foreign currencies on short-term foreign currency denominated intercompany transactions, non-functional currency raw material purchases, non-functional currency sales, and other known foreign currency exposures. These forward exchange contracts generally have maturities of less than 18 months. The Company's primary hedging activities and their accounting treatment are summarized below.

Forward exchange contracts- Certain forward exchange contracts have been designated as cash flow hedges. The Company had $55.3 million and $70.3 million of forward exchange contracts designated as cash flow hedges outstanding as of March 31, 2025 and December 31, 2024, respectively. For the three months ended March31, 2025 and 2024, the amounts reclassified into net earnings in the Company's Consolidated Statements of Earnings that offset the underlying transactions' impact on earnings in the same period were not material. In addition, the Company utilizes forward exchange contracts that are not designated as cash flow hedges. The results of these transactions were not material to the financial statements.

Net investment hedges- The Company has designated certain foreign currency denominated long-term borrowings as partial hedges of the Company's foreign currency net asset positions. As of March31, 2025 and December 31, 2024, the total value of the Company's net investment hedges was $308.1 million and $295.3 million, respectively. These net investment hedges included Euro and British Pound denominated long-term debt. Changes in the fair value of this debt attributable to changes in the spot foreign exchange rate are recorded in foreign currency translation in Accumulated Other Comprehensive Income(OCI). For the three months ended March 31, 2025 and 2024, the impact of foreign exchange rates on these debt instruments increased debt by $12.8 million and decreaseddebt by$6.6 million, respectively, which has been recorded as foreign currency translation in OCI.

The effective income tax rates for the three months ended March 31, 2025 and 2024, were 25.4% and 27.0%, respectively. The effective tax rates for the three months ended March 31, 2025 and 2024 were both impacted by changes in estimates associated with the finalization of prior year foreign tax items and the mix of foreign earnings. The effective tax rate for the three months ended March 31, 2024 was further impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan.

The following table summarizes the changes in OCI during the three-month periods ended March 31, 2025 and 2024:

(In thousands)		Cash Flow Hedges (1)				Pension Items (1)				Foreign Currency Items				Total
Balances at December 31, 2024		$	(310	)		$	(2,348	)		$	(224,181	)		$	(226,839	)
Other comprehensive income before reclassifications			1,008				-				14,200				15,208
Amounts reclassified from OCI			(189	)			(54	)			-				(243	)
Balances at March 31, 2025		$	509			$	(2,402	)		$	(209,981	)		$	(211,874	)

(In thousands)		Cash Flow Hedges (1)				Pension Items (1)				Foreign Currency Items				Total
Balances at December 31, 2023		$	997			$	(2,079	)		$	(171,035	)		$	(172,117	)
Other comprehensive income (loss) before reclassifications			702				-				(4,023	)			(3,321	)
Amounts reclassified from OCI			(222	)			(68	)			-				(290	)
Balances at March 31, 2024		$	1,477			$	(2,147	)		$	(175,058	)		$	(175,728	)

12.	Commitments and Contingencies

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that reflect management's current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results. Forward-looking statements include statements in the future tense, statements referring to any period after March 31, 2025, and statements including the terms "expect," "believe," "anticipate," and other similar terms that express expectations as to future events or conditions. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that could cause actual events to differ materially from those expressed in the forward-looking statements. A variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results. These factors and assumptions include, among others, the Company's ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company's supply chain, and the conflicts between Russia and Ukraine and in the Middle East; industry, regulatory, legal, and economic factors related to the Company's domestic and international business; the effects of tariffs, trade barriers, and disputes; the availability and cost of labor, logistics, and transportation; the pace and nature of new product introductions by the Company and the Company's customers; the Company's ability to anticipate and respond to changing consumer preferences, changing technologies, and changing regulations; the Company's ability to successfully implement its growth strategies; the outcome of the Company's various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and Portfolio Optimization Plan; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; the Company's ability to enhance its innovation efforts and drive cost efficiencies; currency exchange rate fluctuations; and the matters discussed under Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Except to the extent required by applicable law, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

OVERVIEW

Revenue

Revenue was $392.3 million and $384.7 million for the three months ended March 31, 2025 and 2024, respectively. The increase in revenue was primarily due to favorable pricing and higher volumes, partially offset by the unfavorable impact of foreign exchange rates that decreased revenue by approximately 2%.

Gross Margin

The Company's gross margin was 33.6% and 32.9% for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, Portfolio Optimization Plan costs totaling $1.8 million decreased gross margin by 50 basis points. Portfolio Optimization Plan costs for the three months ended March 31, 2024 had an immaterial impact on gross margin. See Portfolio Optimization Plan below for further information. The Company's gross margin was further impacted by the favorable pricing and higher volumes, partially offset by higher raw material costs.

Selling and Administrative Expenses

Selling and administrative expense as a percent of revenue was 19.9% and 20.1% for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.1 million and $2.7 million, respectively, which increased selling and administrative expenses as a percent of revenue by approximately 20 and 70 basis points, respectively. See Portfolio Optimization Plan below for further information. The decrease in Portfolio Optimization Plan costs as a percent of revenue was offset by higher performance-based executive compensation costs incurred in 2025.

Operating Income

Operating income was $53.5 million and $49.4 million for the three months ended March 31, 2025 and 2024, respectively. Operating margins were 13.6% and 12.8% for the three months ended March 31, 2025 and 2024, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 80 basis points for both the three months ended March 31, 2025 and 2024. The increase in operating margin was primarily due to favorable pricing and higher volumes, partially offset by higher raw material costs and higher performance-based executive compensation costs incurred in 2025.

Interest Expense

Interest expense was $7.3 million and $7.0 million for the three months ended March 31, 2025 and 2024, respectively. The increase in expense was primarily due to an increase in the average interest rate.

Income Taxes

The effective income tax rates for the three months ended March 31, 2025 and 2024, were 25.4% and 27.0%, respectively. The effective tax rates for the three months ended March 31, 2025 and 2024 were both impacted by changes in estimates associated with the finalization of prior year foreign tax items and the mix of foreign earnings. The effective tax rate for the three months ended March 31, 2024 was further impacted by the limited tax deductibility of costs related to the Portfolio Optimization Plan.

Acquisition

On February 14, 2025, the Company acquired Biolie SAS, a natural color extraction business located in France. The Company paid $4.8 million in cash for this acquisition, which is net of $0.2 million in debt assumed, with $0.5 million of such amount being held back by the Company for 60 days to satisfy any necessary working capital and net debt adjustments. The assets acquired and liabilities assumed were recorded at their estimated fair value as of the acquisition date. The Company acquired net assets of $0.3 million, with the remaining $4.5 million allocated to goodwill. This business is part of the Color segment.

Portfolio Optimization Plan

During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.

The Company's Felinfach site will continue to operate until all production activities have successfully transferred to other locations, and then will be closed. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.

For the three months ended March 31, 2025, the Company incurred costs of $2.9 million related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for dual plant operating costs, non-cash inventory charges, professional services, and employee separation costs. For the three months ended March 31, 2024, the Company incurred costs of $2.8 million related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for costs associated with employee separation and impairment of fixed assets.

NON-GAAP FINANCIAL MEASURES

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including the Portfolio Optimization Plan costs, (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA, which excludes restructuring and other costs, including the Portfolio Optimization Plan costs, and non-cash share based compensation expense.

The Company has included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this report. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and the Company believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

(1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.

Portfolio Optimization Plan costs are discussed under "Portfolio Optimization Plan" above and Note 3, Portfolio Optimization Plan, in the Notes to the Consolidated Financial Statements included in this report.

Note: Earnings per share calculations may not foot due to rounding differences.

The following table summarizes the percentage change for the results of the three months ended March 31, 2025, compared to the results for the three months ended March 31, 2024, in the respective financial measures.

(1)

Adjustments consist of Portfolio Optimization Plan costs.

Note:

Refer to table above for a reconciliation of these non-GAAP measures.

SEGMENT INFORMATION

The Company determines its operating segments based on information utilized by its chief operating decision maker to allocate resources and assess performance. Segment performance is evaluated on operating income before share-based compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders); restructuring and other costs, including the Portfolio Optimization Plan costs (which are reported in Corporate & Other); interest expense; and income taxes.

The Company's reportable segments consist of the Flavors & Extracts, Color, and Asia Pacific segments.

Flavors & Extracts

Flavors & Extracts segment revenue was $193.7 million and $193.1 million for the three months ended March 31, 2025 and 2024, respectively, an immaterial increase. Foreign exchange rates decreased segment revenue by approximately 1%.

Flavors & Extracts segment operating income was $25.0 million and $23.7 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 6%. The higher segment operating income was a result of higher operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower operating income in Natural Ingredients. The higher operating income in Flavors, Extracts & Flavor Ingredients was primarily due to higher volumes and selling prices. The lower operating income in Natural Ingredients was primarily due to higher raw material costs and lower volumes, partially offset by higher selling prices. Foreign exchange rates decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 12.9% in the current quarter compared to 12.3% in the prior year's comparable quarter.

Color

Segment revenue for the Color segment was $167.8 million and $160.0 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 5%. The increase was primarily a result of higher revenue in Food & Pharmaceutical Colors, primarily due to higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 3%.

Segment operating income for the Color segment was $34.9 million and $31.7 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 10%. The higher segment operating income was a result of higher operating income in Food & Pharmaceutical Colors, partially offset by lower operating income in Personal Care. The higher operating income in Food & Pharmaceutical Colors was primarily due to higher selling prices and volumes, partially offset by higher raw material costs and the unfavorable impact of foreign exchange rates that decreased segment operating income by approximately 4%. The lower operating income in Personal Care was primarily due to higher manufacturing and other costs. Segment operating income as a percent of revenue was 20.8% and 19.8% for the three months ended March 31, 2025 and 2024, respectively.

Asia Pacific

Segment revenue for the Asia Pacific segment was $41.9 million and $40.3 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 4%. The increase was primarily due to higher volumes, partially offset by the unfavorable impact of foreign exchange rates that decreased segment revenue by approximately 1%.

Segment operating income for the Asia Pacific segment was $9.4 million and $8.8 million for the three months ended March 31, 2025 and 2024, respectively, an increase of approximately 8%. Foreign exchange rates increased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 22.5% in the current quarter and 21.8% in the prior year's comparable quarter.

Corporate & Other

The Corporate & Other operating expense was $15.8 million and $14.7 million for the three months ended March 31, 2025 and 2024, respectively. The higher operating expense was primarily due to higher performance-based executive compensation costs in 2025. Portfolio Optimization Plan costs totaling $2.9 million and $2.8 million also negatively impacted the three months ended March 31, 2025 and 2024, respectively. See the Portfolio Optimization Plan section above for further information.

LIQUIDITY AND FINANCIAL CONDITION

Financial Condition

The Company's financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of March 31, 2025. The Company expects its cash flow from operations and its existing debt capacity can be used to meet anticipated future cash requirements for operations, capital expenditures, and dividend payments, as well as potential acquisitions and stock repurchases. The Company's contractual obligations consist primarily of operational commitments, which we expect to continue to be able to satisfy through cash generated from operations and debt. The Company has various series of notes outstanding that mature from 2025 through 2029. The Company believes that it has the ability to refinance or repay these obligations through a combination of cash flow from operations, issuance of additional notes, and sufficient borrowing capacity under the Company's revolving credit facility, which matures in 2026.

As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company's financial position and its results of operations for the three months ended March 31, 2025. The Company has experienced increased costs for certain inputs, such as raw materials, shipping and logistics, and labor-related costs. We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions could exacerbate these challenges and impact our profitability.

In the second quarter of 2025, the United States implemented significant new tariffs on imports from a wide range of countries. These actions, and retaliatory tariffs imposed by other countries on United States exports, have led to significant volatility and uncertainty in global markets. The Company anticipates incurring incremental tariff costs on certain raw materials to produce our products and certain finished goods shipped to customers. However, the Company expects to manage the impact of the increased tariff costs through pricing actions. To the extent the Company is unable to offset the increased tariff costs or the tariffs negatively impact demand, the Company's revenue and profitability would be adversely impacted. If additional tariffs are adopted, the Company would incur additional tariff costs that could be material.

Cash Flows from Operating Activities

Net cash used in operating activities was $9.0 million and net cash provided by operating activities was $15.1 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in net cash provided by operating activities was primarily due to an increase in the cash used for performance-based compensation payments (which are determined based on prior year performance) made during 2025 compared to 2024 and a decrease in cash provided by inventory during 2025 compared to 2024, partially offset by an increase in cash provided by accounts receivable.

Cash Flows from Investing Activities

Net cash used in investing activities was $21.3 million and $10.9 million during the three months ended March 31, 2025 and 2024, respectively. Capital expenditures were $16.9 million and $11.0 million during the three months ended March 31, 2025 and 2024, respectively. In 2025, the Company paid $4.3 million for the acquisition of Biolie SAS.

Cash Flows from Financing Activities

Net cash provided by financing activities was $36.0 million and net cash used in financing activities was $9.1 million for the three months ended March 31, 2025 and 2024, respectively. Net debt increased by $55.7 million and $11.0 million for the three months ended March 31, 2025 and 2024, respectively. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $17.4 million and $17.3 million were paid during the three months ended March 31, 2025 and 2024, respectively. Dividends paid per share were $0.41 for both the three months ended March 31, 2025 and 2024.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company's critical accounting policies during the quarter ended March 31, 2025. For additional information about the Company's critical accounting policies, refer to "Critical Accounting Policies" under Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes in the Company's exposure to market risk during the quarter ended March 31, 2025. For additional information about market risk, refer to Part II, Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, under the supervision and with the participation of management, including the Company's Chairman, President, and Chief Executive Officer and its Vice President and Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report, of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, the Company's Chairman, President, and Chief Executive Officer and its Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting: There have been no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II.

OTHER INFORMATION

See Part I, Item 1, Note 12, Commitments and Contingencies, of this report for information regarding legal proceedings in which the Company is involved.

ITEM 1A.

RISK FACTORS

On October 19, 2017, the Board of Directors authorized the repurchase of up to three million shares (2017 Authorization). As of March 31, 2025, 1,267,019 shares had been repurchased under the 2017 Authorization. There is no expiration date for the 2017 Authorization. The 2017 Authorization may be modified, suspended, or discontinued by the Board of Directors at any time. As of March 31, 2025, the maximum number of shares that may be purchased under publicly announced plans is 1,732,981. No shares were purchased by the Company during the three months ended March 31, 2025.

During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

The exhibits listed in the following Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

SENSIENT TECHNOLOGIES CORPORATION

EXHIBIT INDEX

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2025

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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