Sensient Technologies Corporation Reports Earnings for the Year Ended December 31, 2006
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Source: Sensient Technologies Corporation
13/02/2007
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Milwaukee, Feb. 12, 2007 - Sensient Technologies Corporation reported that its consolidated revenue for the year ended December 31, 2006, increased 7.3% to $1.1 billion. Fourth quarter revenue for 2006 was up 7.9% to $272.8 million. The increase in annual revenue was driven by higher Color segment sales and record sales within the Flavors & Fragrances segment. Foreign currency exchange rates had a favorable impact on revenue of .9% and 3.1%, respectively, for the year and the fourth quarter.
Diluted earnings per share for the twelve months ended December 31, 2006, increased 25.2% to $1.44 compared to $1.15 per share before 2005 restructuring and other charges of $.21 per share. Diluted earnings per share for the fourth quarter of 2006 rose 37.5% to $.33 compared to $.24 reported in the prior year's fourth quarter before the 2005 restructuring and other charges. Reported earnings per share for the 2005 full year and fourth quarter were $.94 and $.03, respectively, when restructuring and other charges of $.21 per share are included.
"Our major business segments enjoyed good volume growth and improved product mix during 2006," said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation. "This was an outstanding year and I expect our businesses to continue to perform well in 2007."
BUSINESS REVIEW
The Flavors & Fragrances Group achieved record results in 2006, as revenue for the twelve months increased 9.4% to $733.4 million and operating income increased 26.7% to $104.5 million. Flavors & Fragrances Group revenue grew 9.4% to $185.0 million in the quarter ended December 31, 2006, compared to $169.1 million in the prior year's fourth quarter. Quarterly operating income jumped 42.8% to $27.0 million compared to $18.9 million in the fourth quarter of 2005.
Flavors & Fragrances Group revenue in the year and the quarter benefited from higher volumes and improved pricing, particularly in the United States. Flavor sales in Latin America and sales within the Fragrances product line were also up. Profit was boosted by higher sales, improved product mix and the Company's cost reduction efforts.
Color Group revenue for the twelve months ended December 31, 2006, increased 3.0% to $350.2 million and operating income was up 9.6% to $59.4 million. Color Group revenue for the fourth quarter increased 6.0% to $83.4 million from the comparable quarter in 2005. Fourth quarter operating income rose to $13.8 million, an increase of 19.1% from the 2005 fourth quarter. Annual and quarterly revenues reflect solid growth within the Group's cosmetic and food and beverage product lines. Higher sales drove the increase in operating income, which was enhanced by favorable product mix and an improved cost structure.
2007 OUTLOOK
Sensient expects reported 2007 diluted earnings per share to be between $1.52 and $1.54.
Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)
Consolidated Statements of Earnings
Three Months Ended December 31,
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2006 2005 % Change
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Revenue $ 272,760 $ 252,887 7.9
Cost of products sold (includes
restructuring charges of $4,340 in
2005) 189,036 187,266 0.9
Selling and administrative expenses 53,891 45,912 17.4
Restructuring and other charges - 8,465
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Operating income 29,833 11,244 165.3
Interest expense 8,969 9,291
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Earnings before income taxes 20,864 1,953 968.3
Income taxes 5,497 580
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Net earnings $ 15,367 $ 1,373 1,019.2
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Earnings per common share:
Basic $ 0.33 $ 0.03 1,000.0
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Diluted $ 0.33 $ 0.03 1,000.0
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Average common shares outstanding:
Basic 46,031 46,486 (1.0)
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Diluted 46,511 46,749 (0.5)
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Twelve Months Ended December 31,
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2006 2005 % Change
----------- ----------- ---------
Revenue $1,098,774 $1,023,930 7.3
Cost of products sold (includes
restructuring charges of $4,340 in
2005) 766,506 731,253 4.8
Selling and administrative expenses 202,991 189,998 6.8
Restructuring and other charges - 8,465
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Operating income 129,277 94,214 37.2
Interest expense 35,748 35,737
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Earnings before income taxes 93,529 58,477 59.9
Income taxes 27,104 14,282
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Net earnings $ 66,425 $ 44,195 50.3
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Earnings per common share:
Basic $ 1.45 $ 0.95 52.6
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Diluted $ 1.44 $ 0.94 53.2
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Average common shares outstanding:
Basic 45,900 46,746 (1.8)
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Diluted 46,204 47,067 (1.8)
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Results by Segment
Three Months Ended December 31,
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Revenue 2006 2005 % Change
------------------------------------ ----------- ----------- ---------
Flavors & Fragrances $ 185,046 $ 169,083 9.4
Color 83,372 78,649 6.0
Corporate & Other 10,672 10,761 (0.8)
Intersegment elimination (6,330) (5,606) 12.9
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Consolidated $ 272,760 $ 252,887 7.9
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Operating Income
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Flavors & Fragrances $ 27,001 $ 18,906 42.8
Color 13,824 11,604 19.1
Corporate & Other (10,992) (19,266) (42.9)
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Consolidated $ 29,833 $ 11,244 165.3
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Twelve Months Ended December 31,
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Revenue 2006 2005 % Change
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Flavors & Fragrances $ 733,421 $ 670,594 9.4
Color 350,174 339,939 3.0
Corporate & Other 41,301 41,526 (0.5)
Intersegment elimination (26,122) (28,129) (7.1)
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Consolidated $1,098,774 $1,023,930 7.3
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Operating Income
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Flavors & Fragrances $ 104,457 $ 82,473 26.7
Color 59,384 54,197 9.6
Corporate & Other (34,564) (42,456) (18.6)
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Consolidated $ 129,277 $ 94,214 37.2
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Sensient Technologies Corporation
(In thousands, except per share amounts)
Consolidated Condensed Balance Sheets
December 31, 2006 2005
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Current assets $ 551,702 $ 520,344
Intangibles (net) 463,701 435,165
Property, plant and equipment (net) 391,456 379,380
Other assets 47,208 63,384
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Total Assets $1,454,067 $1,398,273
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Current liabilities $ 260,610 $ 442,087
Long-term debt 441,306 283,123
Accrued employee and retiree benefits 43,957 41,980
Other liabilities 4,090 8,855
Shareholders' equity 704,104 622,228
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Total Liabilities and Shareholders' Equity $1,454,067 $1,398,273
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Consolidated Statements of Cash Flows
Twelve Months Ended December 31, 2006 2005
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Net cash provided by operating activities $ 99,217 $ 110,290
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Cash flows from investing activities:
Acquisition of property, plant and
equipment (39,314) (36,102)
Proceeds from sale of assets 3,321 1,101
Decrease in other assets 2,152 1,033
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Net cash used in investing activities (33,841) (33,968)
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Cash flows from financing activities:
Proceeds from additional borrowings 247,483 80,652
Debt and capital lease payments (290,992) (109,163)
Purchase of treasury stock (4,563) (18,005)
Dividends paid (28,292) (28,276)
Proceeds from options exercised and other
equity transactions 7,681 3,630
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Net cash used in financing activities (68,683) (71,162)
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Effect of exchange rate changes on cash and
cash equivalents 1,274 (335)
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Net (decrease) increase in cash and cash
equivalents (2,033) 4,825
Cash and cash equivalents at beginning of
year 7,068 2,243
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Cash and cash equivalents at end of year $ 5,035 $ 7,068
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Supplemental Information
Twelve Months Ended December 31, 2006 2005
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Depreciation and amortization $ 43,044 $ 44,859
Dividends per share $ 0.61 $ 0.60
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