What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-07 · 136 added, 168 removed, 51 unchanged (86% of the section changed)

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Forward-looking statements include

statements in the future tense, statements referring to any period after September 30, 2023, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or

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 economic and capital 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;

statements in the future tense, statements referring to any period after March 31, 2024, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or conditions.

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 Israel and Hamas and other parties in the Middle East;

the availability and cost of labor, logistics, and transportation;

the impact and uncertainty created by the COVID-19

pandemic and efforts to manage it on the global economy, including, but not limited to, its effects on our employees, facilities, customers, and suppliers, governmental regulations and restrictions, and general economic conditions;

the uncertain

impacts of the ongoing conflict between Russia and Ukraine on our supply chain, input costs, including energy and transportation, and on general economic conditions;

the pace and nature of new product introductions by the Company and the

Company’s customers;

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 and changing technologies;

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the outcome of the Company’s various

productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and operational improvement plan;

productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and Portfolio Optimization Plan;

industry, regulatory, legal, and economic factors related to the Company’s domestic and international business;

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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, 2022.

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.

Revenue was $363.8 million and $361.1 million for the three months ended September 30, 2023 and 2022, respectively.

The increase in revenue for the three months ended September 30, 2023, was primarily due to increased pricing, offset by lower

Revenue was $1.1 billion for both the nine months ended September 30, 2023 and 2022.

Revenue for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was impacted by higher prices, partially

offset by lower volumes.

For the three and nine months ended September 30, 2023, the impact of foreign exchange rates increased consolidated revenue by approximately 3% and 1%, respectively.

The Company’s gross margin was 31.2% and 33.7% for the three months ended September 30, 2023 and 2022, respectively.

The Company’s gross margin was 32.6% and 34.7% for the nine months ended September 30, 2023 and 2022, respectively.

decrease in gross margin for both the three and nine months ended September 30, 2023, was primarily due to the lower volumes, higher input costs, and unfavorable product mix, partially offset by higher prices.

and the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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.

Revenue was $384.7 million and $369.0 million for the three months ended March 31, 2024 and 2023, respectively.

The increase in revenue was primarily due to higher volumes and favorable pricing.

For the three months ended March 31, 2024,

foreign exchange rates had an immaterial impact on revenue.

The Company’s gross margin was 32.9% and 33.8% for the three months ended March 31, 2024 and 2023, respectively.

The decrease in gross margin was primarily due to higher raw material costs, partially offset by an increase in pricing.

Selling and Administrative Expenses

Selling and administrative expense as a percent of revenue was 19.0% and 20.6% for the three months ended September 30, 2023 and 2022, respectively.

Selling and administrative expense as a percent of revenue was 19.3% and 20.4% for the nine

months ended September 30, 2023 and 2022, respectively.

The decrease in selling and administrative expense as a percent of revenue for the three and nine months ended September 30, 2023, was primarily due to lower performance-based compensation

expense in 2023.

Selling and administrative expense as a percent of revenue was 20.1% and 20.0% for the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024, selling and administrative expenses were increased by

Portfolio Optimization Plan costs totaling $2.7 million, which increased selling and administrative expenses as a percent of revenue by approximately 70 basis points.

See Portfolio Optimization Plan below

for further information.

This increase was largely offset as a percent of revenue due to increased operating leverage due to revenue growth without corresponding increases in selling and administrative expenses.

Operating Income

Operating income was $44.5 million and $47.5 million for the three months ended September 30, 2023 and 2022, respectively.

Operating margins were 12.2% and 13.2% for the three months ended September 30, 2023 and 2022, respectively.

decreases in operating income and operating margin were primarily due to lower volumes, higher input costs, and unfavorable product mix, partially offset by higher pricing and lower performance-based compensation expense in 2023 .

Operating income was $147.0 million and $155.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Operating margins were 13.3% and 14.3% for the nine months ended September 30, 2023 and 2022, respectively.

decreases in operating income and operating margin were primarily due to higher input costs, lower volumes, and unfavorable product mix, partially offset by higher pricing and lower performance-based compensation expense in 2023.

Operating income was $49.4 million and $50.8 million for the three months ended March 31, 2024 and 2023, respectively.

Operating margins were 12.8% and 13.8% for the three months ended March 31, 2024 and 2023, respectively.

Optimization Plan costs decreased operating margins by approximately 80 basis points for the three months ended March 31, 2024.

Interest Expense

Interest expense was $6.3 million and $3.7 million for the three months ended September 30, 2023 and 2022, respectively, and $18.6 million and $9.7 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase in

interest expense for the three and nine months ended September 30, 2023, was primarily due to an increase in the average interest rate and average debt outstanding.

The effective income tax rates for the three months ended September 30, 2023 and 2022, were 17.5% and 17.7%, respectively.

The effective income tax rates for the nine months ended September 30, 2023 and 2022, were 22.7% and 23.3%,

respectively.

The effective tax rates for the three and nine months ended September 30, 2023 and 2022, were impacted by changes in estimates associated with changes in valuation allowances, the finalization of prior year foreign tax items, and

the mix of foreign earnings.

On October 3, 2022, the Company acquired Endemix Doğal Maddeler A.Ş.

and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş.

(collectively, Endemix), a natural colors business located in Turkey.

The Company paid $23.3 million

in cash for this acquisition, which is net of $1.3 million in debt assumed, with $1.7 million of such amount being held back by the Company for 12 months to satisfy any indemnification claims that may arise.

This business is part of the Color

Interest expense was $7.0 million and $6.0 million for the three months ended March 31, 2024 and 2023, respectively.

The increase in expense was primarily due to an increase in the average interest rate.

The effective income tax rates for the three months ended March 31, 2024 and 2023, were 27.0% and 24.9%, respectively.

The effective tax rates for the three months ended March 31, 2024 and 2023, 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 also impacted by the limited tax deductibility of costs related to the Portfolio

Optimization Plan.

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 began evaluating the potential closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the potential closure of its sales office in Granada, Spain,

and the potential centralization and elimination of certain selling and administrative positions, with such proposals remaining subject to information and consultation processes in certain countries.

In addition, in the Color segment, the Company’s

proposals include closing a manufacturing facility in Delta, British Columbia, Canada, closing a sales office in Argentina, and centralizing and eliminating certain production positions as well as potentially eliminating some selling and

administrative positions, with such proposals remaining subject to information and consultation processes in certain countries.

The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.

In the three months ended March 31, 2024, the Company incurred $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 table, the Company reports certain non-GAAP financial measures, including percentage changes in revenue, operating income, and diluted earnings per share on a local currency basis, which eliminate the effects that result

from translating its international operations into U.S.

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, and (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.

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.

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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.

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.

The following table summarizes the percentage change for the results of the three and nine months ended September 30, 2023, compared to the results for the three and nine months ended September 30, 2022, in the respective financial measures.

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Three Months Ended March 31,

(In thousands except per share amounts)

Operating Income (GAAP)

Portfolio Optimization Plan costs – Cost of products sold

Portfolio Optimization Plan costs – Selling and administrative expenses

Adjusted operating income

Net Earnings (GAAP)

Portfolio Optimization Plan costs, before tax

Tax impact of Portfolio Optimization Plan costs (1)

Adjusted net earnings

Diluted Earnings Per Share (GAAP)

Portfolio Optimization Plan costs, net of tax

Adjusted diluted earnings per share

(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 2, Portfolio Optimization Plan, in the Notes to the Consolidated Financial Statements included in

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, 2024, compared to the results for the three months ended March 31, 2023, in the respective financial measures.

Three Months Ended March 31, 2024

Adjustments (1)

Flavors & Extracts

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Diluted Earnings per Share

Adjustments consist of Portfolio Optimization Plan costs.

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 and other costs (which are reported in Corporate & Other), interest expense, and income taxes.

Segment performance is evaluated on operating income before share-based compensation;

restructuring and other costs, including the Portfolio Optimization Plan costs and other 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 $191.0 million and $187.0 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately 2%.

The increase was primarily a result of higher revenue in

Natural Ingredients due to higher selling prices and volumes.

Flavors & Extracts segment revenue was $193.1 million and $178.9 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 8%.

The increase was primarily a result of higher revenue in Natural

Ingredients, primarily due to higher volumes.

Foreign exchange rates increased segment revenue by approximately 1%.

Flavors & Extracts segment revenue was $558.1 million and $559.1 million for the nine months ended September 30, 2023 and 2022, respectively.

The decrease was primarily a result of lower revenue in Natural Ingredients, partially offset by

higher revenue in Flavors, Extracts & Flavor Ingredients.

The lower revenue in Natural Ingredients was primarily due to lower volumes, partially offset by higher selling prices.

The higher revenue in Flavors, Extracts & Flavor Ingredients

was primarily due to higher selling prices and the favorable impact of foreign exchange rates that increased segment revenue by approximately 1%, partially offset by lower volumes.

Flavors & Extracts segment operating income was $23.1 million and $26.3 million for the three months ended September 30, 2023 and 2022, respectively, a decrease of approximately 12%.

The decrease was primarily a result of lower segment

operating income in Natural Ingredients and Flavors, Extracts & Flavor Ingredients.

The lower segment operating income in Natural Ingredients was primarily a result of higher raw material costs and an unfavorable product mix, partially offset

by higher selling prices.

The lower segment operating income in Flavors, Extracts & Flavor Ingredients was primarily a result of higher raw material costs, lower volumes, and an unfavorable product mix, partially offset by higher selling

Flavors & Extracts segment operating income was $23.7 million and $22.2 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 7%.

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 lower raw material

costs and higher selling prices.

The lower operating income in Natural Ingredients was primarily due to higher raw material costs, partially offset by higher volumes.

Foreign exchange rates increased segment operating income by approximately 1%.

Segment operating income as a percent of revenue was 12.3% in the current quarter compared to 12.4% in the prior year’s comparable quarter.

Flavors & Extracts segment operating income was $69.7 million and $83.9 million for the nine months ended September 30, 2023 and 2022, respectively, a decrease of approximately 17%.

The decrease was primarily a result of lower segment

operating income in Natural Ingredients and Flavors, Extracts & Flavor Ingredients.

The lower segment operating income in Natural Ingredients was primarily a result of higher raw material costs, lower volumes, and an unfavorable product mix,

partially offset by higher selling prices and lower manufacturing and other costs.

The lower segment operating income in Flavors, Extracts & Flavor Ingredients was primarily a result of higher raw material and manufacturing and other costs

and lower volumes, partially offset by higher selling prices.

Foreign exchange rates increased segment operating income by approximately 1%.

Segment operating income as a percent of revenue was 12.5% in the current nine month period compared to

15.0% in the prior year’s comparable nine month period.

Color segment revenue was $144.9 million and $151.5 million for the three months ended September 30, 2023 and 2022, respectively, a decrease of approximately 4%.

The decrease was a result of lower revenue in Food & Pharmaceutical Colors

and Personal Care due to lower volumes, partially offset by higher selling prices and the favorable impact of foreign exchange rates that increased segment revenue by approximately 4%.

The lower volumes in Food & Pharmaceutical Colors were

also partially offset by the favorable impact of the acquisition of Endemix in October 2022.

Color segment revenue was $466.6 million and $456.2 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of approximately 2%.

The increase was a result of higher revenue in Food & Pharmaceutical Colors,

partially offset by lower revenue in Personal Care.

The higher revenue in Food & Pharmaceutical Colors was primarily due to higher selling prices, the acquisition of Endemix in October 2022, and the favorable impact of foreign exchange rates

that increased segment revenue by approximately 1%, partially offset by lower volumes.

The lower revenue in Personal Care was primarily due to lower volumes, partially offset by higher selling prices.

Segment operating income for the Color segment was $22.9 million and $28.2 million for the three months ended September 30, 2023 and 2022, respectively, a decrease of approximately 19%.

The decrease in segment operating income was a result of

lower operating income in Food & Pharmaceutical Colors and Personal Care.

The lower operating income in Food & Pharmaceutical Colors was due to higher raw material costs and lower volumes, partially offset by higher selling prices and

lower manufacturing and other costs.

The lower operating income in Personal Care was due to higher raw material and manufacturing and other costs and lower volumes, partially offset by higher selling prices.

Foreign exchange rates increased

segment operating income by approximately 5%.

Segment revenue for the Color segment was $160.0 million and $161.2 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 1%.

The decrease was primarily a result of lower revenue in Food &

Pharmaceutical Colors, primarily due to lower volumes, partially offset by the favorable impact of foreign exchange rates that increased segment revenue by approximately 1%.

Segment operating income for the Color segment was $31.7 million and $31.9 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 1%.

Foreign exchange rates increased segment operating income by

approximately 1%.

Segment operating income as a percent of revenue was 19.8% for both the three months ended March 31, 2024 and 2023.

Segment revenue for the Asia Pacific segment was $40.3 million and $40.1 million for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately 1%.

Foreign exchange rates decreased segment revenue by approximately

Segment operating income for the Asia Pacific segment was $8.8 million and $9.2 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 5%.

Foreign exchange rates decreased segment operating income

by approximately 4%.

Segment operating income as a percent of revenue was 21.8% in the current quarter and 23.1% in the prior year’s comparable quarter.

Segment operating income for the Color segment was $84.0 million and $90.0 million for the nine months ended September 30, 2023 and 2022, respectively, a decrease of approximately 7%.

The decrease in segment operating income was a result of

lower operating income in Personal Care, partially offset by higher operating income in Food & Pharmaceutical Colors.

The lower operating income in Personal Care was primarily due to higher raw material and manufacturing and other costs and

lower volumes, partially offset by higher selling prices.

The higher operating income in Food & Pharmaceutical Colors was primarily due to higher selling prices, partially offset by higher raw material costs, lower volumes, and an unfavorable

Foreign exchange rates increased segment operating income by approximately 1%.

Segment operating income as a percent of revenue was 18.0% in the current nine month period and 19.7% in the prior year’s comparable period.

Segment revenue for the Asia Pacific segment was $36.8 million and $35.2 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately 4%.

The increase was primarily a result of higher selling

Foreign exchange rates had an immaterial impact on segment revenue for the three months ended September 30, 2023.

Segment revenue for the Asia Pacific segment was $112.9 million and $109.0 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of approximately 4%.

The increase was primarily a result of higher selling

prices, partially offset by the unfavorable impact of foreign exchange rates, which decreased segment revenue by approximately 3%.

Segment operating income for the Asia Pacific segment was $8.1 million and $7.0 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately 16%.

The increase was primarily a result of higher

selling prices and the favorable impact of foreign exchange rates that increased segment operating income by approximately 1%, partially offset by higher raw material costs.

Segment operating income as a percent of revenue was 22.0% in the

current quarter and 19.7% in the prior year’s comparable quarter.

Segment operating income for the Asia Pacific segment was $24.9 million and $22.9 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of approximately 9%.

The increase was primarily a result of higher

selling prices, partially offset by higher raw material costs and the unfavorable impact of foreign exchange rates that decreased segment operating income by approximately 3%.

Segment operating income as a percent of revenue was 22.1% in the

current nine month period and 21.0% in the prior year’s comparable period.

Corporate & Other

The Corporate & Other operating expense was $9.6 million and $14.0 million for the three months ended September 30, 2023 and 2022, respectively.

The Corporate & Other operating expense was $31.7 million and $41.3 million for the nine

months ended September 30, 2023 and 2022, respectively.

The lower operating expense for both the three and nine months ended September 30, 2023, was primarily due to lower performance-based compensation expense in 2023.

The Corporate & Other operating expense was $14.7 million and $12.5 million for the three months ended March 31, 2024 and 2023, respectively.

The higher operating expense was primarily a result of Portfolio Optimization Plan costs totaling

$2.8 million negatively impacting the three months ended March 31, 2024.

See the Portfolio Optimization Plan section above for further information.

LIQUIDITY AND FINANCIAL CONDITION

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The Company’s financial position remains strong.

The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of September 30, 2023.

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 is in compliance with its loan covenants calculated in accordance with applicable agreements as of March 31, 2024.

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 2024 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

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 or nine months ended

September 30, 2023.

The Company continues to experience elevated costs for certain inputs, such as labor, raw materials, energy, and certain agricultural 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.

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.

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.

Cash Flows from Operating Activities

Net cash provided by operating activities was $106.8 million and $14.9 million for the nine months ended September 30, 2023 and 2022, respectively.

The increase in net cash from operating activities was primarily due to a decrease in cash used

for inventory investments during 2023 compared to 2022 and an increase in cash provided by accounts receivable.

Net cash provided by operating activities was $15.1 million and net cash used in operating activities was $3.0 million for the three months ended March 31, 2024 and 2023, respectively.

The increase in net cash provided by operating activities

was primarily due to a decrease in the cash used for performance-based compensation payments made during 2024 compared to 2023 and an increase in cash provided by inventory during 2024 compared to 2023, partially offset by a decrease in cash

provided by accounts receivable.

Cash Flows from Investing Activities

Net cash used in investing activities was $65.6 million and $51.7 million during the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2022, the Company paid $1.0 million related to the

acquisition of Flavors Solutions, Inc .

Capital expenditures were $67.7 million and $51.7 million during the nine months ended September 30, 2023 and 2022, respectively.

Net cash used in investing activities was $10.9 million and $22.9 million during the three months ended March 31, 2024 and 2023, respectively.

Capital expenditures were $11.0 million and $22.3 million during the three months ended March 31, 2024

and 2023, respectively.

Cash Flows from Financing Activities

Net cash used in financing activities was $36.4 million for the nine months ended September 30, 2023, and net cash provided by financing activities was $46.3 million for the nine months ended September 30, 2022.

Net debt increased by $23.5

million and $100.1 million for the nine months ended September 30, 2023 and 2022, respectively.

The cash proceeds from the increase in net debt in the current period were primarily used to support capital expenditure investments during the nine

months ended September 30, 2023.

Net cash used in financing activities was $9.1 million and net cash provided by financing activities was $24.6 million for the three months ended March 31, 2024 and 2023, respectively.

Net debt increased by $11.0 million and $49.5 million for

the three months ended March 31, 2024 and 2023, respectively.

For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates.

Dividends of $51.9 million and $51.7 million were paid during the nine months ended September 30, 2023 and

2022, respectively.

Dividends paid were $1.23 per share for both the nine months ended September 30, 2023 and 2022.

Dividends of $17.3 million were paid during each of the three months ended

March 31, 2024 and 2023.

Dividends paid per share were $0.41 for both the three months ended March 31, 2024 and 2023.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s critical accounting policies during the quarter ended September 30, 2023.

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, 2022.

There have been no material changes in the Company’s critical accounting policies during the quarter ended March 31, 2024.

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, 2023.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk during the quarter ended September 30, 2023.

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, 2022.

There have been no material changes in the Company’s exposure to market risk during the quarter ended March 31, 2024.

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, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis