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What changed in International Flavors & Fragrances's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of International Flavors & Fragrances's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+390 added−417 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in International Flavors & Fragrances's 2024 10-K

390 paragraphs added · 417 removed · 298 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

49 edited+22 added−27 removed60 unchanged
Biggest changeFor more detailed information about risks related to our supply chain, please refer to Item 1A, “Risk Factors” – Supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), or climate-change events (including severe weather events) may adversely affect our suppliers or our procurement of raw materials, and thus may impact our business and financial results.
Biggest changeFor more detailed information about risks related to our supply chain, please refer to Item 1A, “Risk Factors” – “Supply chain disruptions, geopolitical developments, climate-change events, natural disasters, public health crises, tariffs and trade wars, and other events may adversely affect our business, our procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results.” Sustainability In 2021 , we launched a refreshed and comprehensive sustainability roadmap, the ‘Do More Good Plan’ ( “ the Plan ” ), which aligns with IFF’s strategy for long-term growth and value creation.
Consumer insights science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe make us a market leader in scent products. The Scent segment is comprised of Fragrance Compounds, Fragrance Ingredients and Cosmetic Ingredients.
Consumer insights, science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe make us a market leader in scent products. The Scent segment is comprised of Fragrance Compounds and Fragrance Ingredients.
Ralf Finzel has served as our Executive Vice President, Global Operations Officer since November 1, 2022. Previously, Mr. Finzel served as Vice President of Integrated Supply Chain for Honeywell International Performance Materials and Technologies Business Group in Houston since 2020.
Ralf Finzel has served as our Executive Vice President, Global Operations Officer since November 2022. Previously, Mr. Finzel served as Vice President of Integrated Supply Chain for Honeywell International Performance Materials and Technologies Business Group in Houston since 2020.
Our products, which among other industries, are intended for use in food, beverage, pharmaceutical and dietary supplements, home and personal care, feed, cosmetics industries, are subject to strict quality and regulatory standards and environmental laws and regulations.
Our products, which among other industries, are intended for use in food, beverage, pharmaceutical and dietary supplements, home and personal care, and feed, are subject to strict quality and regulatory standards and environmental laws and regulations.
In order to ensure our supply of raw materials, achieve favorable pricing and provide timely transparency regarding inflationary trends to our customers, we continue to focus on: • purchasing under contract with fixed or formula-based pricing for set time periods; • entering into hedging for raw materials we purchase that can be hedged against liquid commodity assets; • entering into supplier relationships to gain access to supplies we would not otherwise have; • implementing indexed pricing; • reducing the complexity of our formulations; 6 Table of Contents • evaluating the profitability of whether to buy or make an ingredient; • sourcing from local countries with our own procurement professionals; and • periodically assessing our supply base with a view towards greater cost efficiencies and improvements.
In order to ensure our supply of raw materials, achieve favorable pricing and provide timely transparency regarding inflationary trends to our customers, we continue to focus on: • purchasing under contract with fixed or formula-based pricing for set time periods; • entering into hedging for raw materials we purchase that can be hedged against liquid commodity assets; • entering into supplier relationships to gain access to supplies we would not otherwise have; • implementing indexed pricing; • reducing the complexity of our formulations; • evaluating the profitability of whether to buy or make an ingredient; • sourcing from local countries with our own procurement professionals; and • periodically assessing our supply base with a view towards greater cost efficiencies and improvements.
Scent Our Scent segment creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products.
Scent Our Scent segment creates fragrance compounds and fragrance ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products.
Johnson 11 Table of Contents joined DuPont in 2013, where she led the legal team for DuPont’s former Industrial Biosciences business as Associate General Counsel and previously served as Assistant Chief Intellectual Property Counsel for Industrial Biosciences. Prior to joining DuPont, Dr. Johnson was a Partner at the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.
Johnson joined DuPont in 2013, where she led the legal team for DuPont’s former Industrial Biosciences business as Associate General Counsel and previously served as Assistant Chief Intellectual Property Counsel for Industrial Biosciences. Prior to joining DuPont, Dr. Johnson was a Partner at the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.
ITEM 1. BUSINESS. We are a leading creator and manufacturer of food, beverage, health & biosciences, scent and pharma solutions and complementary adjacent products, including cosmetic active and natural health ingredients, which are used in a wide variety of consumer products.
ITEM 1. BUSINESS. We are a leading creator and manufacturer of food, beverage, health & biosciences, scent and pharma solutions and complementary adjacent products, including natural health ingredients, which are used in a wide variety of consumer products.
Our Nourish segment consists of an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications and consists of Ingredients, Flavors and Food Designs.
Our Nourish segment consists of an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications and consists of Ingredients and Flavors.
New product development is driven by a variety of sources including requests from our customers, who are in need of specific products for use in a new or modified consumer product, or as a result of internal initiatives stemming from our consumer insights program.
New product development is driven by a variety of sources including requests from our customers, who are in need of specific products for use in a new or modified consumer product, or as a result of internal initiatives stemming from our 5 Table of Contents consumer insights program.
Manufacturing and Distribution As of December 31, 2023, we had approximately 190 manufacturing facilities, creative centers and application laboratories located in approximately 40 different countries. Our major manufacturing facilities are located in the United States, The Netherlands, Spain, Germany, Indonesia, Turkey, Brazil, Mexico, Slovenia, China, India, Ireland, Norway, Finland, Denmark, Belgium and Singapore.
Manufacturing and Distribution As of December 31, 2024, we had approximately 150 manufacturing facilities, creative centers and application laboratories located in approximately 40 different countries. Our major manufacturing facilities are located in the United States, The Netherlands, Spain, Germany, Indonesia, Turkey, Brazil, Mexico, Slovenia, China, India, Ireland, Norway, Finland, Denmark, Belgium and Singapore.
As of December 31, 2023, we purchased approximately 24,000 different raw materials sourced from an extensive network of domestic and international suppliers and distributors. Natural ingredients are derived from flowers, fruits and other botanical products, as well as from plant, animal and marine products, and commodity crops like wheat, corn and soy.
As of December 31, 2024, we purchased approximately 20,000 different raw materials sourced from an extensive network of domestic and international suppliers and distributors. Natural ingredients are derived from flowers, fruits and other botanical products, as well as from plant, animal and marine products, and commodity crops like wheat, corn and soy.
Michael DeVeau has served as our Senior Vice President, Corporate Finance and Investor Relations since December 2022 and had previously served as Senior Vice President, Chief Investor Relations & Communications Officer from February 2021 to December 2022, Vice President, Investor Relations, Communications, and Chief of Staff from September 2014 to February 2021, as well as divisional Chief Financial Officer, Scent from 2018 to 2020 and head of Corporate Strategy from 2016 to 2018.
DeVeau served as our Senior Vice President, Corporate Finance and Investor Relations from December 2022 to December 2024 and had previously served as Senior Vice President, Chief Investor Relations & Communications Officer from February 2021 to December 2022, Vice President, Investor Relations, Communications, and Chief of Staff from September 2014 to February 2021, as well as Divisional Chief Financial Officer, Scent from 2018 to 2020 and Head of Corporate Strategy from 2016 to 2018.
Our products are sold principally to manufacturers of dairy, meat, beverages, snacks, savory, sweet, baked goods and other foods, personal care products, soaps and detergents, cleaning products, perfumes and cosmetics, dietary supplements, food protection, infant and elderly nutrition, functional food, pharmaceutical and oral care products.
Our products are sold principally to manufacturers of dairy, meat, beverages, snacks, savory, sweet, baked goods, grain processors and other foods, personal care products, soaps and detergents, cleaning products, perfumes, dietary supplements, food protection, infant, elderly and animal nutrition, functional food, pharmaceutical and oral care products.
The business’s enzyme solutions also allow our customers to provide low sugar, high fiber and lactose-free dairy products. Home & Personal Ca re produces enzymes for laundry and dishwashing detergents, cleaning and textiles to help enhance the product and process performance of products in the fabric and home care, textiles and industrials and personal care markets.
The business’s enzyme solutions also allow our customers to provide low sugar, high fiber and lactose-free dairy products. 3 Table of Contents Home & Personal Care produces enzymes for laundry and dishwashing detergents, cleaning and textiles to help enhance the product and process performance of products in the fabric and home care, textiles and industrials and personal care markets.
As a result, we hold global leadership positions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Tastes, Textures, Scents, Nutrition, Enzymes, Cultures, Soy Proteins, Pharmaceutical Excipients and Probiotics categories. Sales in 2023 were approximately $11.479 billion.
As a result, we hold global leadership positions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Tastes, Textures, Scents, Nutrition, Enzymes, Cultures, Soy Proteins, Pharmaceutical Excipients and Probiotics categories. Sales in 2024 were $11.484 billion.
Executive Officers of Registrant Below is a list of the executive officers of the Company and other significant employees who are members of our Executive Leadership Team as of February 28, 2024. 10 Table of Contents Name Age Position J.
Executive Officers of Registrant Below is a list of the executive officers of the Company and other significant employees who are members of our Executive Leadership Team as of February 28, 2025. 9 Table of Contents Name Age Position J.
In 2023, we introduced patented enzymatic polymers that are renewable, biodegradable alternatives to functional ingredients used in home cleaning and beauty care products. Animal Nutrition produces feed enzymes and animal health solutions that help to improve nutrition, welfare, performance and sustainability of livestock animal farming. Grain Processing produces yeasts and enzymes for biofuel production and carbohydrate processing.
The business also produces patented enzymatic polymers that are renewable, biodegradable alternatives to functional ingredients used in home cleaning and beauty care products. Animal Nutrition produces feed enzymes and animal health solutions that help to improve nutrition, welfare, performance and sustainability of livestock animal farming. Grain Processing produces yeasts and enzymes for biofuel production and carbohydrate processing.
Arora joined IFF from Kellogg North America, where he served as the President of the company’s six U.S. categories since April 2021. He was with Kellogg for more than 20 years, beginning in India in 2002 where he held roles in marketing and category management.
Arora served as Executive Vice President and President, Nourish since June 2023. Mr. Arora joined IFF from Kellogg North America, where he served as the President of the company’s six U.S. categories since April 2021. He was with Kellogg for more than 20 years, beginning in India in 2002 where he held roles in marketing and category management.
The market for our products is highly competitive. Our main competitors consist of (1) other large global companies, such as Givaudan, DSM-Firmenich Symrise, Kerry, ADM, Novonesis, (2) mid-sized companies, (3) numerous regional and local manufacturers and (4) consumer product companies who may develop their own competing products.
Our main competitors consist of (1) other large global companies, such as Givaudan, DSM-Firmenich, Symrise, Kerry, ADM, and Novonesis, (2) mid-sized companies, (3) numerous regional and local manufacturers and (4) consumer product companies who may develop their own competing products.
He later assumed roles of increasing responsibility in marketing, brand management and general management upon his relocation to the United States in 2005 and in Singapore from 2012-2015. Deborah Borg has served as our Executive Vice President, Chief Human Resources, Diversity & Inclusion and Communications Officer since August 29, 2022. Ms.
He later assumed roles of increasing responsibility in marketing, brand management and general management upon his relocation to the United States in 2005 and in Singapore from 2012-2015. Deborah Borg has served as our Executive Vice President, Chief People & Culture Officer since August 2022. Ms.
Herriott was Vice President and Global Business Director, Health & Biosciences for the N&B Business and from 2016 to 2019, he served as Global Business Director, Bioactives, Industrial Biosciences and Vice President, Danisco Inc. Mr.
Simon Herriott has served as our President, Health & Biosciences since February 2021. From 2019 to February 2021, Mr. Herriott was Vice President and Global Business Director, Health & Biosciences for the N&B Business and from 2016 to 2019, he served as Global Business Director, Bioactives, Industrial Biosciences and Vice President, Danisco Inc. Mr.
As of December 31, 2023, we have 880 granted U.S. patents and 431 pending U.S. patent applications, as well as numerous other granted patents and pending patent applications around the world. We have developed many unique molecules and delivery systems for our customers that are used as the foundations of successful products around the world.
As of December 31, 2024, we have 894 granted U.S. patents, and 458 pending U.S. patent applications, as well as thousands of other granted patents and pending patent applications around the world. We have developed many unique molecules and delivery systems for our customers that are used as the foundations of successful products around the world.
Flavor ingredients include natural flavor extracts, specialty botanical extracts, distillates, essential oils, citrus products, aroma chemicals and natural gums and resins. Such ingredients are used for food, beverage and flavors, and are often sold directly to food and beverage manufacturers who use them in producing consumer products.
The Flavor Specialty Ingredients business previously comprised of natural flavor extracts, specialty botanical extracts, distillates, essential oils, citrus products, aroma chemicals and natural gums and resins, which are used for food, beverage and flavors, and are often sold directly to food and beverage manufacturers who use them in producing consumer products.
At December 31, 2023, we had approximately 21,500 employees worldwide, of whom approximately 5,200 are employed in the United States. Our workforce plans and talent management programs support our employees to best deliver the business strategy and ensure their development and engagement.
As of December 31, 2024, we had approximately 22,400 employees worldwide, of whom approximately 24% are employed in the United States. Our workforce plans and talent management programs support our employees to best deliver the business strategy and ensure their development and engagement.
Culture and Values Our culture is based on our five corporate values of empowerment, expertise, innovation, integrity and responsibility, and the expression of these values can be seen and felt throughout our history. Our employees appreciate that they contribute to products that touch and enhance the lives of millions of people around the world.
Culture and Values Our culture is based on our four corporate values of passion, partnership, persistence and principled, and the expression of these values can be seen and felt throughout our history. Our employees appreciate that they contribute to products that touch and enhance the lives of millions of people around the world.
As of December 31, 2023, we employed approximately 3,700 people globally in research and development activities. 5 Table of Contents Creative Application Through our global network of creative centers and application laboratories, we create or adapt the basic Nourish, Health & Biosciences, Scent and Pharma Solutions products that we have developed in the research and development process to commercialize for use in our customers’ consumer products.
Creative Application Through our global network of creative centers and application laboratories, we create or adapt the basic Nourish, Health & Biosciences, Scent and Pharma Solutions products that we have developed in the research and development process to commercialize for use in our customers’ consumer products.
For more detailed information about risks related to governmental regulation applicable to the Company, please refer to Item 1A, “Risk Factors” – If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations.
For more detailed information about risks related to governmental regulation applicable to the Company, please refer to Item 1A, “Risk Factors” – “If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations.” Competition The markets for our products are part of a larger market that supplies a wide variety of ingredients and compounds used in consumer products.
Fragrance Compounds are unique and proprietary combinations of multiple fragrance ingredients that are ultimately used by our customers in their consumer goods. Our creative and commercial teams within fragrance compounds are organized into two broad categories: fine fragrances and consumer fragrances.
We completed the divestiture of our Cosmetic Ingredients business, previously within the Scent segment, on April 2, 2024. Fragrance Compounds are unique and proprietary combinations of multiple fragrance ingredients that are ultimately used by our customers in their consumer goods. Our creative and commercial teams within fragrance compounds are organized into two broad categories: fine fragrances and consumer fragrances.
Our business is geographically diverse, with sales in the U.S. representing approximately 28% of sales in 2023. No other country represented more than 7% of sales. Our Product Offerings Our business currently consists of four segments: Nourish, Health & Biosciences, Scent and Pharma Solutions.
Our business is geographically diverse, with sales in the U.S. representing approximately 28% of sales in 2024. No other country represented more than 10% of sales. In 2024, no customer accounted for 10% or more of sales. Our Product Offerings As of December 31, 2024, our business consisted of four segments: Nourish, Health & Biosciences, Scent and Pharma Solutions.
Fyrwald held a number of positions, including Group Vice President of the Agriculture and Nutrition Division at DuPont and Vice President and General Manager of DuPont’s Nutrition and Health Business. Yuvraj Arora has served as our Executive Vice President and President, Nourish since June 19, 2023. Mr.
Fyrwald held a number of positions, including Group Vice President of the Agriculture and Nutrition Division at DuPont and Vice President and General Manager of DuPont’s Nutrition and Health Business. Yuvraj Arora has served as our Chief Commercial Officer and President, Taste since January 2025. Prior to this role, Mr.
Our robust culture ambassador programs continue to engage a broad portion of the IFF community in building common identity and shared purpose and strengthen engagement and motivation by providing programming on IFF values and providing recognition of individuals who exemplify them.
Our robust culture ambassador and colleague community program continues to engage a broad portion of the IFF community in building common identity and shared purpose and strengthen engagement and motivation by providing programming on IFF values and providing recognition of individuals who exemplify them. 8 Table of Contents IFF strives to have a culture on inclusion and belonging where all employees can thrive.
Strzelecki held a variety of leadership positions, including Planning Director - Corporate Planning and M&A, Global Business Director - Electronics & Communications, North America Business Director - Building Innovations, Global Business Director - Industrial Coatings and Global Technology Director for Coatings.
During her 29 year career with DuPont or its formerly affiliated companies, Dr. Strzelecki held a variety of leadership positions, including Planning Director - Corporate Planning and M&A, Global Business Director - Electronics & Communications, North America Business Director - Building Innovations, Global Business Director - Industrial Coatings and Global Technology Director for Coatings.
Those learning resources are integrated into our human capital platform, allowing managers and employees to establish digitalized learning plans that are ultimately captured as a part of their employee profile.
Those learning resources are integrated into our human capital platform, allowing managers and employees to establish digitalized learning plans that are ultimately captured as a part of their employee profile. Further, those offerings complement our talent acquisition strategy and organized and personalized feedback process, supported by industry-leading assessment tools.
We have seen an increase in registration and reporting requirements concerning the use of certain chemicals in a number of countries, such as Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”) regulations in the European Union, as well as similar regulations in other countries.
We have seen an increase in registration and reporting requirements concerning the use of certain chemicals in a number of countries, such as Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”) regulations in the European Union, as well as similar regulations in other countries. 7 Table of Contents In addition, we are subject to various rules relating to health, work safety and the environment at the local and international levels in the various countries in which we operate.
J. Erik Fyrwald has served as our Chief Executive Officer and a member of our Board of Directors since February 6, 2024. Mr. Fyrwald joined us from Syngenta, where he served as Chief Executive Officer since 2016. Prior to his role at Syngenta, Mr.
Fyrwald joined us from Syngenta, where he served as Chief Executive Officer since 2016. Prior to his role at Syngenta, Mr.
During the fourth quarter of 2023, we entered into an agreement to sell our Cosmetic Ingredients business and expect the divestiture to be completed in the first quarter of 2024. 4 Table of Contents Pharma Solutions Our Pharma Solutions segment produces, among other things, a vast portfolio of cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formulations.
Pharma Solutions Our Pharma Solutions segment produces, among other things, a vast portfolio of cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formulations. Our excipients are used in prescription and over-the-counter pharmaceuticals and dietary supplements.
Verma held several other leadership positions at American Express as well as Vice President, Division CIO and management consulting roles with GlaxoSmithKline, Bristol Myers Squibb and PricewaterhouseCoopers. Casper Vroemen has served as our Executive Vice President, Chief Research & Development Officer since September 2023. Dr. Vroemen has been with the N&B Business since 2004.
Verma held several other leadership positions at American Express as well as Vice President, Division CIO and management consulting roles with GlaxoSmithKline, Bristol Myers Squibb and PricewaterhouseCoopers.
Natural food protection ingredients consist of natural antioxidants and anti-microbials used for natural food preservation and shelf-life extension for beverages, cosmetic and healthcare products, pet food and feed additives.
Natural food protection ingredients consist of natural antioxidants and anti-microbials used for natural food preservation and shelf-life extension for beverages, cosmetic and healthcare products, pet food and feed additives. Ingredients also includes savory solutions (such as spices, marinades, mixtures) and inclusion products (such as products combining flavorings with fruit, vegetables and other natural ingredients), formerly part of Food Designs.
Erik Fyrwald (1) 64 Chief Executive Officer and member of our Board of Directors Yuvraj Arora 52 President, Nourish Deborah Borg (1) 47 Executive Vice President, Chief Human Resources, Diversity & Inclusion and Communications Officer Michael DeVeau 43 Senior Vice President, Corporate Finance and Investor Relations Ralf Finzel (1) 60 Executive Vice President, Global Operations Officer Simon Herriott (1) 60 President, Health & Biosciences and Scent Jennifer Johnson (1) 49 Executive Vice President, General Counsel and Corporate Secretary Glenn Richter (1) 62 Executive Vice President, Chief Financial & Business Transformation Officer Angela Strzelecki (1) 57 President, Pharma Solutions Vic Verma 55 Executive Vice President, Chief Information Officer Casper Vroemen 54 Executive Vice President, Chief Research & Development Officer _____________________ (1) These individuals are executive officers and file reports under Section 16 of the Securities Exchange Act of 1934.
Erik Fyrwald (1) 65 Chief Executive Officer and member of our Board of Directors Yuvraj Arora (1) 53 President, Taste and Chief Commercial Officer Deborah Borg (1) 48 Executive Vice President, Chief People & Culture Officer Michael DeVeau (1) 44 Executive Vice President, Chief Financial Officer Ralf Finzel (1) 61 Executive Vice President, Global Operations Officer Leticia Gonçalves (1)(2) 50 President, Health & Biosciences Simon Herriott (1)(2) 61 President, Health & Biosciences Jennifer Johnson (1) 50 Executive Vice President, General Counsel and Corporate Secretary Stephen Landsman 65 Executive Vice President, Business Development Ana Paula Teles de Mendonça (1) 56 President, Scent Andres Muller (1) 60 President, Food Ingredients Angela Strzelecki (1) 58 President, Pharma Solutions Vivek Verma 56 Executive Vice President, Chief Information Officer _____________________ (1) These individuals are executive officers and file reports under Section 16 of the Securities Exchange Act of 1934.
We qualified as a constituent of the Dow Jones Sustainability Index, North America for the fourth consecutive year, a family of best-in-class benchmarks for investors who recognize that sustainable business practices are critical to generating long-term shareholder value. This distinction validates IFF’s leadership position in sustainability performance and underscores our commitment to executing on key ESG priorities.
Across these four pillars, the Company continued to achieve notable recognitions in 2024. For example, we qualified as a constituent of the Dow Jones Sustainability Indices, North America, for the fifth consecutive year, a best-in-class benchmark for investors who recognize that sustainable business practices are critical to generating long-term shareholder value.
During the period covered by this Form 10-K, we made all such materials available through our website as soon as reasonably practicable after filing such materials with the SEC. The SEC maintains an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically with the SEC.
The SEC maintains an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically with the SEC.
Social: Equity & Wellbeing Advancing our commitment to people and communities by strengthening diversity, equity & inclusion within our workforce, while continuously improving our safety program by striving for an injury-free workplace, and achieving world-class safety performance.
Equity & Wellbeing We are advancing our commitment to people and communities by ensuring an equitable and inclusive environment for all employees, while continuously improving our safety program by striving for an injury-free workplace and achieving world-class safety performance. Transparency & Accountability Conducting our business with the highest integrity is essential to fulfilling our Do More Good vision.
We were also awarded the 2023 EcoVadis Platinum sustainability rating for the third time, placing IFF among the top 1% of companies assessed. In addition, following our submission to CDP Climate Change, Water Security and Forests, we maintained our leadership position in CDP Climate Change and achieved management level for CDP Water Security and Forests for 2023.
This distinction validates IFF’s leadership position in sustainability performance and underscores our commitment to executing on key sustainability priorities. We were also awarded the 2024 EcoVadis Platinum sustainability rating for the fourth consecutive time, placing IFF among the top 1% of companies assessed.
Prior to joining Honeywell, he worked in research and plant management roles for Hoechst AG. Simon Herriott has served as our President, Health & Biosciences since February 2021 and President, Scent since June 2023. From 2019 to February 2021, Mr.
Prior to joining Honeywell, he worked in research and plant management roles for Hoechst AG. 10 Table of Contents Leticia Gonçalves will serve as our President, Health & Biosciences starting March 2025. Previously, Ms. Gonçalves was ADM’s President, Precision Fermentation and ADM Ventures from December 2023 to February 2025. Prior to that, Ms.
Glenn Richter has served as our Executive Vice President, Chief Financial & Business Transformation Officer since February 2023. Mr. Richter served as our Executive Vice President, Chief Financial Officer from September 2021 to February 2023. Prior to joining IFF, Mr.
Michael DeVeau has served as our Executive Vice President, Chief Financial Officer since January 2025. Mr.
Angela Strzelecki has served as our President, Pharma Solutions since February 2021. From 2019 to February 2021, Dr. Strzelecki was Global Business Director, Pharma Solutions for the N&B Business. During her 29 year career with DuPont or its formerly affiliated companies, Dr.
After numerous R&D and sales roles, he formed his own flavors and fragrances company, which Bush Boake Allen later acquired in 2000. Angela Strzelecki has served as our President, Pharma Solutions since February 2021. From 2019 to February 2021, Dr. Strzelecki was Global Business Director, Pharma Solutions for the N&B Business.
Our acquisitions have also expanded our reach in products within the functional food ingredient market, including ingredients focused on improving the health and wellness characteristics of a consumer good, the dietary supplement, pharmaceutical ingredient, infant nutrition markets and the cosmetic actives market. 8 Table of Contents The global market for our products has expanded, primarily as a result of an increase in demand for, and an increase in the variety of, consumer products.
The global market for our products has expanded, primarily as a result of an increase in demand for, and an increase in the variety of, consumer products. The market for our products is highly competitive.
Flavors also include value-added spices and seasoning ingredients for meat, food service, convenience, alternative protein and culinary products. Food Designs include savory solution products such as spices, sauces, marinades and mixtures.
Flavors also include value-added spices and seasoning ingredients for meat, food service, convenience, alternative protein and culinary products. Health & Biosciences Our Health & Biosciences segment consists of the development and production of an advanced biotechnology-derived portfolio of enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications.
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Based on 2023 sales, approximately 46% of sales were to global consumer products companies and approximately 54% of sales were to small and mid-sized companies. During 2023, our 25 largest customers accounted for approximately 32% of sales. In 2023, no customer accounted for more than 10% of sales.
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We completed the divestiture of our Flavor Specialty Ingredients business on August 1, 2023.
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Additionally, Food Designs provide inclusion products that help with taste and texture by, among other things, combining flavorings with fruit, vegetables and other natural ingredients for a wide range of food products, such as health snacks, baked goods, cereals, pastries, ice cream and other dairy products. 3 Table of Contents Health & Biosciences Our Health & Biosciences segment consists of the development and production of an advanced biotechnology-derived portfolio of enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications.
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Our Pharma Solutions products also serve a variety of other specialty and industrial end-uses including coatings, inks, electronics, agriculture and consumer products. During March 2024, we entered into an agreement to sell the Pharma Solutions business disposal group, that is primarily made up of most businesses within the Company’s existing Pharma Solutions reportable segment as well as certain adjacent businesses.
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During the fourth quarter of 2022, we announced our entry into an agreement to sell our Flavor Specialty Ingredients business and completed the divestiture on August 1, 2023. Cosmetic Ingredients designs, develops, manufactures and markets innovative ingredients for the cosmetics and personal care industry, while offering active ingredients, functional ingredients, and delivery systems.
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During October 2024, the Company entered into an agreement to sell its nitrocellulose business, which is within the Company’s existing Pharma Solutions reportable operating segment. Both transactions are expected to close in the second quarter of 2025.
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Our excipients are used in prescription and over-the-counter pharmaceuticals and dietary supplements. Our Pharma Solutions products also serve a variety of other specialty and industrial end-uses including coatings, inks, electronics, agriculture and consumer products. Consumer Insights, Research and Product Development Process The markets in which we compete require constant innovation to remain competitive.
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Organization in 2025 As previously announced in 2024, starting January 1, 2025, our Nourish segment has been separated into two newly named business units, Taste and Food Ingredients. With small additional adjustments, our Flavors business, formerly part of Nourish, has been renamed Taste, and our Ingredients business, formerly part of Nourish, has been renamed Food Ingredients.
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Center for Commercial Excellence Our Center for Commercial Excellence utilizes a holistic and centralized approach towards commercial execution by, among other things: • Unlocking value through improved customer experience based on market, customer and pricing insights, digital and advanced analytics, sales enablement, and marketing excellence; • Building further sales force capability to deliver growth targets, own the end-to-end process, and deliver sales synergies using CRM systems, pricing tools, segmentation models, commercial opportunity management, account plan development, training, and incentive plans; • Evaluating and driving new business development opportunities, including analyzing potential markets, assessing client needs, and identifying competitor response strategies; and • Strengthening collaboration across divisions by collecting and disseminating best practices and anchoring business decisions in data-driven insights.
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Thus, 4 Table of Contents starting in the first quarter of 2025, our business segments will consist of Taste, Food Ingredients, Health & Biosciences, Scent, and, until the completion of the sale of the Pharma Solutions business disposal group, Pharma Solutions. Consumer Insights, Research and Product Development Process The markets in which we compete require constant innovation to remain competitive.
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During the last few years in connection with the acquisition of Frutarom, we undertook an initiative to optimize our global operations footprint to efficiently and cost-effectively deliver value to our global customers (the “Frutarom Integration Initiative”). From the inception of the Frutarom Integration Initiative through its completion as of March 31, 2023, we completed the closure of 22 sites.
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As of December 31, 2024, we employed approximately 3,400 people globally in research and development activities (including innovation, creation and design activities).
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Environmental, Social, and Governance Following the integration with Nutrition and Biosciences, Inc.
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Supported by a set of ambitious 2030 goals, the Plan 6 Table of Contents comprises four interconnected pillars that capture the areas where we believe we can have the greatest positive impact: Sustainable Solutions, Climate & Planetary Health, Equity & Wellbeing, Transparency & Accountability.
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( “ N&B ”) , we launched a refreshed and comprehensive Environmental, Social, and Governance ( “ESG” ) roadmap, the ‘Do More Good Plan’ ( “ the Plan ” ), which aligns with IFF’s purpose of applying science and creativity for a better world and our strategy for long term growth and value creation.
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Sustainable Solutions We deliver solutions that seek to transform industries and empower our customers to achieve their sustainability objectives, beginning with our commitment to responsible sourcing and then leveraging our research and development program to drive environmentally and socially-conscious innovation.
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The Plan includes ambitious 2030 goals across four key areas: Environmental, Social, Governance and Sustainable Solutions.
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Climate & Planetary Health Our science-based approach to environmental sustainability across our own operations includes investing in energy-efficient systems and expanding our use of renewable energy as we work to achieve our ambition for net zero greenhouse gas emissions.
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Environmental: Climate & Planetary Health Supporting environmental stewardship across our operations, including commitments to climate action, zero waste to landfill, water stewardship solutions and an acceleration of our responsible sourcing practices by promoting regenerative ecosystems and achieving zero deforestation for strategic raw material supply chains.
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We partner across our value chain to reduce our footprint by advancing our climate action strategies, reducing our water use and striving for zero waste to landfill.
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Within our responsible sourcing program, the Company will continue to promote human rights and animal welfare, while supporting farmers’ livelihoods and ensuring prosperous and equitable value chains.
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Our robust and transparent corporate governance framework is designed to ensure compliance with our policies, as well as with laws and regulations. Our employees are expected to act ethically, speak up and seek advice when in doubt, and our leaders are accountable for upholding our values and advancing toward our goals.
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Governance: Transparency & Accountability Continuing our commitment to good governance which starts with our Board and Executive Leadership Team and is supported by a strong governance framework, including having a robust program to ensure compliance with our Codes of Conduct and adherence to the highest standards of ethics, integrity, honesty and respect in our dealings internally and with our business partners.
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In addition, we continue to support transparency and accountability through our submission to CDP Climate Change, Water Security and Forests. IFF continues to be listed in the FTSE4Good Index series as well as being named as one of America’s Most Responsible Companies by Newsweek.
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To enhance accountability in line with evolving stakeholder expectations, the Company has launched ESG metrics tied to executive compensation, while expanding oversight for ESG at the Board of Directors level.
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Our products are sold principally to manufacturers of dairy, meat, beverages, snacks, savory, sweet, baked goods, grain processors and other foods, personal care products, soaps and detergents, cleaning products, perfumes, dietary supplements, food protection, infant, elderly and animal nutrition, functional food, pharmaceutical and oral care products.
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Sustainable Solutions Focusing on the sustainability value proposition and growth for all new innovations as we assist customers in achieving their own ESG goals by delivering an expanded suite of sustainable solutions for the market. 7 Table of Contents In 2023, our Company continued to achieve notable recognitions in these areas.
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Our programs focus on inclusive talent processes, employee experiences, and external engagement. In 2024 we continued to be recognized by external parties such as EDGE, DisabilityIN and Workplace Pride, and employee sentiment on inclusion increased to 82% (compared with 80% in 2023).
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IFF continues to be listed in the FTSE4Good Index series as well as in the Euronext Vigeo World 120 Index for ESG performance.
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(2) Simon Herriott is stepping down from the role of President, Health & Biosciences and Leticia Gonçalves will be appointed as President, Health & Biosciences effective March 1, 2025. J. Erik Fyrwald has served as our Chief Executive Officer and a member of our Board of Directors since February 2024. Mr.
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In addition, in 2023 IFF further aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) by completing the first phase of a climate scenario analysis to understand and quantify the potential risks and opportunities related to climate change. For more detailed information about our ESG programs and performance, please refer to our annual ESG report.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

130 edited+29 added−42 removed120 unchanged
Biggest changeChanges to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals. 12 Table of Contents • If we are unable to successfully market to our expanded and diverse customer base, our operating results and future growth may be adversely affected. • Our business is highly competitive, and if we are unable to compete effectively our sales and results of operations will suffer. • A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. • We may not successfully develop and introduce new products that meet our customers’ needs, which may adversely affect our results of operations. • International conflicts (such as the Russia-Ukraine war and the Israel-Hamas war), geopolitical events, natural disasters, public health crises (such as the COVID-19 pandemic), trade wars, terrorist acts, labor strikes, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations), accidents and other events could adversely affect our business and financial results, including by disrupting development, manufacturing, distribution or sale of our products. • A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations. • We are subject to risks associated with the potential use of artificial intelligence (“AI”) in our own operations and by third-party partners that we may engage with. • We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks. • The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. • International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth. • Economic uncertainty, including increased inflation, may adversely affect demand for our products which may have a negative impact on our operating results and future growth. • The integration of the N&B Business may continue to present significant challenges, and we may not realize anticipated synergies and other benefits of the N&B Transaction. • If we are unable to react in a timely and cost-effective manner to changes in consumer trends, such as increasing awareness of health and wellness, our results of operations and future growth may be adversely affected. • We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements. • Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances. • Any impairment of our tangible or intangible long-lived assets, including goodwill, may adversely impact our profitability. • If we fail to successfully enter into or close collaborations, joint ventures, partnerships or acquisitions, or successfully manage such transactions, it could adversely affect our business and growth opportunities. • Our funding obligations for our pension and postretirement plans could adversely affect our earnings and cash flows. • The phase out of the London Interbank Offered Rate (“LIBOR”) may impact the interest rates paid on our variable rate indebtedness and could cause our interest expense to increase. • If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations. • Defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities could adversely affect our business, reputation and results of operations. • Failure to comply with environmental protection laws may cause us to close, relocate or operate one or more of our plants at reduced production levels, and expose us to civil or criminal liability, which could adversely affect our operating results and future growth. • We could be adversely affected by violations, by us or our counterparties, of the U.S.
Biggest changeThese risks include, but are not limited to, the following: • We have a substantial amount of indebtedness that could materially adversely affect, among other things, our financial condition, our ability to return capital to our shareholders, needed investments into our business, and our credit ratings. 11 Table of Contents • If we are unable to successfully execute our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition. • Regulatory, consumer and economic trends may result in significant costs or adversely affect demand for our products which may have a negative impact on our operating results and future growth. • Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits. • Supply chain disruptions, geopolitical developments, climate-change events, natural disasters, public health crises, tariffs and trade wars, and other events may adversely affect our business, our procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results. • Inflationary trends and pricing uncertainty, including in the price of our input costs, such as raw materials, transportation and energy, could adversely affect our business and financial results in the short term and result in uncertainties in the long term. • Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances. • Our business is highly competitive, and if we are unable to compete effectively our sales and results of operations will suffer. • A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. • We may not successfully develop and introduce new products that meet our customers’ needs, which may adversely affect our results of operations. • A significant data breach or other disruption to our information technology systems could disrupt our operations, resulting in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or results of operations. • We are subject to risks associated with the potential use of AI in our own operations and by third-party partners that we may engage with. • We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks. • The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. • International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth. • We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements, including adversely affecting our stock price, results of operations and access to capital. • If we fail to successfully enter into or close collaborations, joint ventures, partnerships, acquisitions, or divestitures, or successfully manage such transactions, it could adversely affect our business and growth opportunities. • Our ability to declare and pay dividends is subject to certain considerations. • Our success depends on attracting and retaining talented people within our business and our management team.
We use many different raw materials for our business, such as essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products, raw fruits, organic chemicals and petroleum-based chemicals, as well as, gelatin, glycols, cellulose processed grains, guar, locust bean gum, organic vegetable oils, peels, saccharides, seaweed, soybeans, and sugars and yeasts.
We use many different raw materials for our business, such as essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products, raw fruits, organic chemicals and petroleum-based chemicals, as well as, gelatin, glycols, cellulose products and cellulose processed grains, guar, locust bean gum, organic vegetable oils, peels, saccharides, seaweed, soybeans, and sugars and yeasts.
This regulatory environment is increasingly challenging and may present material obligations and risks to our business, including significantly expanded compliance burdens, restrictions on transfer of personal data, costs and enforcement risks. Many governments have enacted or are enacting new or updated data protection laws, including data localization laws that require data to stay within their borders.
This regulatory environment is increasingly challenging and may present material obligations and risks to our business, including significantly expanded compliance burdens, restrictions on transfer of personal data, costs and enforcement risks. Many governments have enacted or are enacting new or updated data protection laws, including data localization laws that require personal data to stay within their borders.
If other parties were to infringe on our intellectual property rights, or if our intellectual property rights were the subject of unauthorized access leading to competitive pressure or if a third party successfully asserted that we had infringed on their intellectual property rights, it could materially and adversely affect our future results of operations by, among other things, (i) being required to cease production and marketing or reducing the price that we could obtain in the marketplace for products which are based on such rights, (ii) increasing the royalty or other fees that we may be required to pay in connection with such rights, (iii) limiting the volume, if any, of such products that we can sell or (iv) resulting in significant litigation costs and potential liability.
If other parties were to infringe on our intellectual property rights, or if our intellectual property rights were the subject of unauthorized access leading to competitive pressure or if a third party successfully asserted that we had infringed on their intellectual property rights, it could materially and adversely affect our future results of operations by, among other things, (i) us being required to cease production and marketing or reducing the price that we could obtain in the marketplace for products which are based on such rights, (ii) increasing the royalty or other fees that we may be required to pay in connection with such rights, (iii) limiting the volume, if any, of such products that we can sell or (iv) resulting in significant litigation costs and potential liability.
See, also - “We are subject to risks associated with the potential use of AI in our own operations and by third-party partners that we may engage with.” Protecting intellectual property related to biotechnology is particularly challenging because theft can be difficult to detect and biotechnology can be self-replicating. Accordingly, the impact of such theft can be significant.
See, also “—We are subject to risks associated with the potential use of AI in our own operations and by third-party partners that we may engage with.” Protecting intellectual property related to biotechnology is particularly challenging because theft can be difficult to detect and biotechnology can be self-replicating. Accordingly, the impact of such theft can be significant.
If the carrying amount of a reporting unit exceeds its estimated fair value, we record an impairment charge based on the difference of the two. Intangible assets with finite lives are also tested for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
If the carrying amount of a reporting unit exceeds its estimated fair value, we record an impairment charge based on the difference between the two. Intangible assets with finite lives are also tested for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
While we generally require that third-parties we work with agree to our code of conduct, we do not exercise control over our suppliers, distributors, vendors and customers and due to the global nature of our business cannot guarantee their compliance with such ethical and lawful business practices or such legal requirements.
While we generally require that third parties we work with agree to our vendor code of conduct, we do not exercise control over our suppliers, distributors, vendors and customers and due to the global nature of our business cannot guarantee their compliance with such ethical and lawful business practices or such legal requirements.
In addition, from time to time, we have acquired, and we may acquire, only a majority interest in companies and provided or may provide earnouts for the former owners along with the ability, at our option, or obligation, at the former owners’ option, to purchase the minority interests at a future date at an established price.
In addition, from time to time, we have acquired, and we may acquire, only a majority or partial interest in companies and provided or may provide earnouts for the former owners along with the ability, at our option, or obligation, at the former owners’ option, to purchase the minority interests at a future date at an established price.
IFF may be exposed to such risks in cases where IFF utilizes AI in connection with certain business activities now or in the future, in cases where, whether known or unknown to IFF, IFF personnel, use AI for our business or at IFF locations, or in cases where our third-party partners, whether or not known to IFF, use AI in their business activities (which we may not be in a position to control).
IFF may be exposed to risks in cases where IFF utilizes AI in connection with certain business activities now or in the future, in cases where, whether known or unknown to IFF, IFF personnel, use AI for our business or at IFF locations, or in cases where our third-party partners, whether or not known to IFF, use AI in their business activities (which we may not be in a position to control).
If our suppliers are unable to supply us with sufficient quantities of ingredients and raw materials to meet our needs, we would need to seek alternative sources of such materials (which may result in higher transportation or procurement costs) or pursue our own production of such ingredients or direct acquisition of such raw materials.
If our suppliers are unable to supply us with sufficient quantities of ingredients and raw materials to meet our needs, we would need to seek alternative sources of such materials (which may result in higher procurement costs) or pursue our own production of such ingredients or direct acquisition of such raw materials.
The global nature of our business, our increased size and employee count, the significance of our international revenue, our focus on emerging markets and presence in regulated industries create various domestic and local regulatory challenges and subject us to risks associated with our international operations. The U.S.
The global nature of our business, our size and employee count, the significance of our international revenue, our focus on emerging markets and presence in regulated industries create various domestic and local regulatory challenges and subject us to risks associated with our international operations. The U.S.
Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; • risks and costs associated with political and economic instability, bribery and corruption, anti-American sentiment, and social and ethnic unrest in the countries in which we operate; • difficulty in recruiting and retaining trained local personnel; • natural disasters, global or local health crisis, pandemics (such as the COVID-19 pandemic), epidemics or international conflicts (such as the Russia-Ukraine war and Israel-Hamas war) or geopolitical tension (such as deteriorating U.S.-China relations), including terrorist acts, political crisis, national and regional labor strikes in the countries in which we operate, which could endanger our personnel, interrupt our operations or adversely affect the demand for our products, the results of certain regions or our global supply chain; or • the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights.
Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions or competition laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; • risks and costs associated with political and economic instability, bribery and corruption, anti-American sentiment, and social and ethnic unrest in the countries in which we operate; • difficulty in recruiting and retaining trained local personnel; • natural disasters, global or local health crisis, pandemics (such as the COVID-19 pandemic), epidemics or international conflicts (such as the Russia-Ukraine war and Israel-Hamas war) or geopolitical tension (such as deteriorating U.S.-China relations), including trade wars, terrorist acts, political crisis, national and regional labor strikes in the countries in which we operate, which could endanger our personnel, interrupt our operations or adversely affect the demand for our products, the results of certain regions or our global supply chain; or • the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights.
On September 19, 2023, we entered into further amendments to our Revolving Credit Facility and Term Loans that extend certain relief with respect to this financial covenant by providing that during the relief period our leverage ratio shall not exceed as of the end of the fiscal quarter (for the period of the four fiscal quarters then ended): (i) 5.25x for any fiscal quarter ending on or before March 31, 2024, (ii) 4.75x for the fiscal quarter ending June 30, 2024, (iii) 4.50x for the fiscal quarter ending September 30, 2024, (iv) 4.25x for any subsequent fiscal quarter ending on or before March 31, 2025, (v) 4.00x for any subsequent fiscal quarter ending on or before September 30, 2025 and (vi) 3.75x for the fiscal quarter ending December 31, 2025.
On September 19, 2023, we entered into further amendments to our Revolving Credit Facility and Term Loan that extend certain relief with respect to this financial covenant by providing that during the relief period our leverage ratio shall not exceed as of the end of the fiscal quarter (for the period of the four fiscal quarters then ended): (i) 5.25x for any fiscal quarter ending on or before March 31, 2024, (ii) 4.75x for the fiscal quarter ending June 30, 2024, (iii) 4.50x for the fiscal quarter ending September 30, 2024, (iv) 4.25x for any subsequent fiscal quarter ending on or before March 31, 2025, (v) 4.00x for any subsequent fiscal quarter ending on or before September 30, 2025 and (vi) 3.75x for the fiscal quarter ending December 31, 2025.
We will continue to evaluate its impact as further guidance becomes available. The N&B Transaction could result in significant tax liability, and we may be obligated to indemnify DuPont for any such tax liability imposed on DuPont.
We continue to evaluate its impact as further guidance becomes available. The N&B Transaction could result in significant tax liability, and we may be obligated to indemnify DuPont for any such tax liability imposed on DuPont.
Recently, these customers are making inclusion on their “core lists” contingent upon a supplier providing more favorable terms, including rebates, which could adversely affect our margins.
These customers are making inclusion on their “core lists” contingent upon a supplier providing more favorable terms, including rebates, which could adversely affect our margins.
A disruption to our information technology systems could result in the loss of confidential business, customer, supplier or employee information, litigation or fines, and may require substantial investigations, repairs or replacements or impact our ability to summarize and report financial results in a timely manner, resulting in significant financial, legal and relational costs and potentially harming our reputation and adversely impacting our operations, customer service and results of operations.
A disruption to our information technology systems could result in the loss of confidential business, customer, supplier or employee information, litigation or fines, and may require substantial investigations, repairs or replacements or impact our ability to summarize and report financial results in a timely manner, affecting our productivity or resulting in significant financial, legal and relational costs and potentially harming our reputation and adversely impacting our operations, customer service and results of operations.
Our Revolving Credit Facility and Term Loans contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a maximum ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous four fiscal quarters.
Our Revolving Credit Facility and Term Loan contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a maximum ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous four fiscal quarters.
Our results of operations and financial position in future periods could be negatively impacted should future impairments of our long-lived assets, including intangible assets or goodwill occur. At least annually, we assess both goodwill and indefinite-lived intangible assets for impairment. We test for impairment by comparing the estimated fair value of a reporting unit with its carrying amount.
Our results of operations and financial position in future periods could be negatively impacted should future impairments of our long-lived assets, including intangible assets or goodwill occur. At least annually, we assess goodwill for impairment. We test for impairment by comparing the estimated fair value of a reporting unit with its carrying amount.
We are now required to modify our products and/or innovate new solutions to replace microplastics in our products. The EU Green Deal includes a Chemicals Strategy for Sustainability (CSS), which will trigger updates of the main regulations governing chemical substances used in household and cosmetic products or in industrial applications (REACH, CLP, Cosmetic Regulation and Detergent Regulation).
We are now required to modify our products and/or innovate new solutions to replace microplastics in our products. The European Green Deal includes a Chemicals Strategy for Sustainability (CSS), which will trigger updates of the main regulations governing chemical substances used in household and cosmetic products or in industrial applications (REACH, CLP, Cosmetic Regulation and Detergent Regulation).
Failure to comply with these laws and regulations or any future changes to them may result in significant consequences to us, including the need to close or relocate one or more of our production facilities, administrative, civil and criminal penalties, fines, sanctions, litigation, costly remediation measures, liability for damages and negative publicity.
Failure to comply with these laws and regulations or any future changes to them may result in significant consequences to us, including the need to pause or cease production, close or relocate one or more of our production facilities, administrative, civil and criminal penalties, fines, sanctions, litigation, costly remediation measures, liability for damages and negative publicity.
To address the risks to our information technology systems and the associated costs, we maintain an information security program that includes updating technology and information security policies and controls, cybersecurity insurance, cybersecurity governance and compliance, employee/consultant awareness training, table-top exercises, logging and monitoring and routine testing of our information technology systems.
To address the risks to our information technology systems and the associated costs, we maintain an information security program that includes updating technology and information security policies and controls, cybersecurity insurance, cybersecurity governance and compliance, employee/consultant awareness training, table-top exercises, logging and monitoring 18 Table of Contents and routine testing of our information technology systems.
In addition, our existing Revolving Credit Facility and Term Loans are also at variable interest rates, exposing us to potentially material interest rate risk at our current level of indebtedness. Furthermore, our degree of leverage could adversely affect our future credit ratings.
In addition, our existing Revolving Credit Facility and Term Loan are also at variable interest rates, exposing us to potentially material interest rate risk at our current level of indebtedness. Furthermore, our degree of leverage could adversely affect our future credit ratings.
In connection with our manufacturing of our products, we often rely on third party suppliers for raw materials.
In connection with our manufacturing of our products, we often rely on third-party suppliers for such raw materials.
If we were required to indemnify DuPont pursuant to the Tax Matters Agreement as described 29 Table of Contents above, this indemnification obligation may be substantial and could have a material adverse effect on us, including with respect to our financial condition and results of operations. Moreover, we are not indemnified for tax liabilities related to pre-spin-off periods.
If we were required to indemnify DuPont pursuant to the Tax Matters Agreement as described above, this indemnification obligation may be substantial and could have a material adverse effect on us, including with respect to our financial condition and results of operations. Moreover, we are not indemnified for tax liabilities related to pre-spin-off periods.
Changes to regulations or the implementation of additional regulations, especially in certain highly regulated markets we are active in, such as regulatory modernization of food safety laws and evolving standards and regulations affecting pharmaceutical excipients or in reaction to new or next-generation technologies, including advances in protein engineering, biotechnology (e.g., gene editing and gene mapping), novel uses of existing technologies or stricter rules on ingredients produced by biotechnology techniques have required and may in the future require us to reduce or remove certain ingredients, substances or processing aids from the product portfolio and may result in significant costs or capital expenditures or require changes in business practice that could result in reduced margins or profitability.
Changes to regulations or the implementation of additional regulations, especially in certain highly regulated markets we are active in, such as regulatory modernization of food safety laws, increased regulatory scrutiny or uncertainty regarding certain ingredients (including synthetic ingredients), and evolving standards and regulations affecting pharmaceutical excipients or in reaction to new or next-generation technologies, including advances in protein engineering, biotechnology (e.g., gene editing and gene mapping), novel uses of existing technologies or stricter rules on ingredients produced by biotechnology techniques have required and may in the future require us to reduce or remove certain ingredients, substances or processing aids from the product portfolio and may result in significant costs or capital expenditures or require changes in business practice that could result in reduced margins or profitability.
During 2023, approximately 72% of our combined net sales were to customers outside the U.S. and we intend to continue expansion of our international operations. As a result, our business is increasingly exposed to risks inherent in international operations.
During 2024, approximately 72% of our combined net sales were to customers outside the U.S. and we intend to continue expansion of our international operations. As a result, our business is increasingly exposed to risks inherent in international operations.
In addition, our existing Revolving Credit Facility and Term Loans have pricing grids that are based on credit rating, such that our cost of borrowing may increase as our public debt rating decreases. The pricing grid rates have increased by 0.125% for the duration that financial covenant relief (as described below) is provided.
In addition, our existing Revolving Credit Facility and Term Loan have pricing grids that are based on credit rating, such that our cost of borrowing may increase if our public debt rating decreases. The pricing grid rates have increased by 0.125% for the duration that financial covenant relief (as described below) is provided.
As concerns regarding safety, quality and environmental impact become more pressing, we may see new, more restrictive regulations adopted that impact our products. For example, the EC recently adopted a ban on microplastics, including those found in personal care items, detergents and cosmetics, to reduce plastics pollution.
As concerns regarding safety, quality and environmental impact become more pressing, we may see new, more restrictive regulations adopted that impact our products in the U.S. and abroad. For example, the EC recently adopted a ban on microplastics, including those found in personal care items, detergents and cosmetics, to reduce plastics pollution.
For those intellectual property rights that are protected as trade secrets, this litigation could result in even higher costs, and potentially the loss of certain rights, since we would not have a perfected intellectual property right that precludes others from making, using or selling our products or processes.
For those intellectual property rights that are protected as trade secrets, this litigation could result in even higher costs, and potentially the loss of certain rights, since we would not have a perfected intellectual property right that precludes others from 26 Table of Contents making, using or selling our products or processes.
The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. 21 Table of Contents We have significant operations outside the U.S., the results of which are reported in the local currency and then translated into U.S. dollars at applicable exchange rates for inclusion in our consolidated financial statements.
The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. We have significant operations outside the U.S., the results of which are reported in the local currency and then translated into U.S. dollars at applicable exchange rates for inclusion in our consolidated financial statements.
Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class actions lawsuits.
Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits.
In addition, a number of international legislative and regulatory bodies have proposed legislation and begun investigations of the tax practices of multi-national companies and, in the European Union, the tax policies of certain European Union member states.
In addition, a number of international legislative and regulatory bodies have proposed legislation and conducted investigations of the tax practices of multi-national companies and, in the European Union, the tax policies of certain European Union member states.
Foreign Corrupt Practices Act (the “FCPA”) and similar anti-bribery and anti-corruption laws and regulations in other countries generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business or for other commercial advantage.
Foreign Corrupt Practices Act (the “FCPA”) and similar anti-bribery and anti-corruption laws and regulations in other countries generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business or for other commercial 25 Table of Contents advantage.
See “--A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations.” With new and evolving AI comes a continually changing AI regulatory environment, which may create additional compliance costs and risks.
See “—A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or 19 Table of Contents results of operations.” With new and evolving AI comes a continually changing AI regulatory environment, which may create additional compliance costs and risks.
Changes to interest rate policy as managed by the Federal Reserve Bank to counter inflationary trends may further impact such exchange rates. Further volatility or unfavorable movements in currency exchange rates may adversely impact our financial condition, cash flows or liquidity.
Changes to interest rate policy as managed by the Federal Reserve Bank to counter inflationary trends and potential changes in trade policy may further impact such exchange rates. Further volatility or unfavorable movements in currency exchange rates may adversely impact our financial condition, cash flows or liquidity.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and 28 Table of Contents liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws or their interpretation.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws or their interpretation.
In August 2022, the U.S. government enacted legislation commonly referred to as the “Inflation Reduction Act”, which, among other things, imposes a minimum “book” tax on certain corporations effective for taxable years beginning after December 31, 2022 and creates a new excise tax on stock repurchases made by certain publicly traded corporations after December 31, 2022.
In August 2022, the U.S. government enacted legislation commonly referred to as the “Inflation Reduction Act”, which, among other things, imposed a minimum “book” tax on certain corporations effective for taxable years beginning after December 31, 2022 and created a new excise tax on stock repurchases made by certain publicly traded corporations after December 31, 2022.
These risks, which can vary substantially by location, include the following: • governmental laws, regulations and policies adopted to manage national economic and macroeconomic conditions, such as increases in taxes, austerity measures that may impact consumer spending, monetary policies that may impact inflation rates, employment regulations, currency fluctuations or controls and sustainability of resources; • changes in environmental, health and safety permits or regulations, such as regulations related to biodiversity or the continued implementation and evolution of the European Union’s REACH regulations and similar regulations that are being evaluated and adopted in other markets, or the ban on microplastics recently adopted by the European Commission (“EC”) and the burdens and costs of our compliance with such regulations which may differ significantly across jurisdictions; • increased product labeling and ingredient prohibitions in specific markets that may impact consumer preferences, products costs and/or customer acceptance; • the imposition of or changes in customs, tariffs, quotas, trade barriers, other trade protection measures, import or export licensing requirements, and sanctions on trade with certain countries, imposed by the U.S. or other countries, which could adversely affect our cost or ability to import raw materials or export our products to surrounding markets; • risks and costs arising from our ability to cater to local demand and customer preferences, language and cultural differences; • the movement for increased unionization in the U.S. and internationally may lead to labor instability, employee turnover, increased labor costs or production and operation disruptions; • changes in the laws and policies that govern foreign investment in the countries in which we operate, including the risk of expropriation or nationalization, the costs and ability to repatriate the profit that we generate in these countries; • risks and costs associated with complying with anti-money laundering and counter-terrorism financing laws; • risks and costs associated with complying with the U.S.
These risks, which can vary substantially by location, include the following: • governmental laws, regulations and policies adopted to manage national economic and macroeconomic conditions, such as increases in taxes, austerity measures that may impact consumer spending, monetary policies that may impact inflation rates, employment regulations, currency fluctuations or controls and sustainability of resources; • changes in environmental, health and safety permits or regulations, such as regulations related to biodiversity or the continued implementation and evolution of the European Union’s REACH regulations and similar regulations that are 20 Table of Contents being evaluated and adopted in other markets, or the ban on microplastics recently adopted by the European Commission (“EC”) and the burdens and costs of our compliance with such regulations which may differ significantly across jurisdictions; • increased product labeling and ingredient prohibitions in specific markets that may impact consumer preferences, products costs and/or customer acceptance; • the imposition of or changes in customs, tariffs, quotas, trade barriers, other trade protection measures, import or export licensing requirements, and sanctions on trade with certain countries, imposed by the U.S. or other countries, which could adversely affect our cost or ability to import raw materials or export our products to other markets; • risks and costs arising from our ability to cater to local demand and customer preferences, language and cultural differences; • the movement for increased unionization in the U.S. and internationally may lead to labor instability, employee turnover, increased labor costs or production and operation disruptions; • changes in the laws and policies that govern foreign investment in the countries in which we operate, including the risk of expropriation or nationalization, the costs and ability to repatriate the profit that we generate in these countries; • risks and costs associated with negative publicity on social media as a result of increased regulatory scrutiny, potential misinformation and/or targeted campaigns; • risks and costs associated with complying with anti-money laundering and counter-terrorism financing laws; • risks and costs associated with complying with the U.S.
The financial covenant relief provided in these most recent amendments superseded the ratios and step downs set forth in prior amendments to these credit facilities entered into on August 4, 2022 and March 23, 2023.
The financial covenant relief provided in the September 2023 amendments superseded the ratios and step downs set forth in prior amendments to these credit facilities entered into on August 4, 2022 and March 23, 2023.
Increased competition by existing or future competitors, including aggressive price competition, could result in the loss of sales, reduced pricing and margin pressure and could adversely impact our sales and profitability.
Increased competition by existing or future competitors, including aggressive 17 Table of Contents price competition, could result in the loss of sales, reduced pricing and margin pressure and could adversely impact our sales and profitability.
If we are unable to successfully establish and manage these collaborative relationships and majority investments, it could adversely affect our future growth. In addition, from time to time, we evaluate acquisition candidates that may strategically fit our business and/or growth objectives.
If we are unable to successfully establish and manage these collaborative relationships and investments, it could adversely affect our future growth. In addition, from time to time, we evaluate acquisition candidates and conduct acquisitions that may strategically fit our business, our growth or productivity objectives.
In addition, we are subject to product safety and compliance requirements established by governments, non-governmental organizations, including industry or similar oversight bodies, or contractually by our customers, including requirements concerning product safety, quality and efficacy, environmental impacts (including packaging, energy and water use and waste management) and other sustainability or similar issues.
In addition, we are subject to product safety and compliance requirements (including potential site inspections) established by governments, non-governmental organizations, including industry or similar oversight bodies, or contractually by our customers, including requirements concerning product safety, quality and efficacy, environmental impacts (including packaging, energy and water use and waste management), animal welfare and other sustainability or similar issues.
We could be adversely affected by violations, by us or our counterparties, of the U.S. Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations.
We could be adversely affected by violations, by us or our counterparties, of U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions or competition laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations.
Any failure to enter into, complete or potential delays in closing any such transaction, any failure to mitigate or manage the associated costs of such transactions, or obtain appropriate terms for ancillary agreements, could adversely affect the implementation of our portfolio optimization strategy as well as our financial condition, including our leverage ratio.
Any failure to enter into, complete or potential delays in closing any such transaction, any failure to avoid potential post-closing disputes, any failure to mitigate or manage the associated costs of such transactions, or obtain appropriate terms for ancillary agreements, could result in significant costs, adversely affect the successful implementation of our portfolio optimization strategy as well as our financial condition, including our leverage ratio.
If the EC or tax authorities in other jurisdictions were to successfully challenge tax rulings applicable to us in any of the member states in which we are subject to taxation or our internal intercompany arrangements, we could be exposed to increased tax liabilities.
If the EC, tax authorities or other interested parties in other jurisdictions were to successfully challenge tax rulings applicable to us in any of the member states in which we are subject to taxation or our internal intercompany arrangements, we could be exposed to increased tax liabilities or less favorable tax regimes.
Risks Related to Our Business and Industry We have a substantial amount of indebtedness that could materially adversely affect, among other things, our financial condition, our ability to return capital to our shareholders, needed investments into our business and our credit ratings. As of December 31, 2023, our total debt was $10.071 billion.
Risks Related to Our Business and Industry We have a substantial amount of indebtedness that could materially adversely affect, among other things, our financial condition, our ability to return capital to our shareholders, needed investments into our business and our credit ratings. As of December 31, 2024, our total debt was $8.977 billion.
If we are not able to successfully mitigate such supply chain and climate-change related risks, we could experience disruptions in production or increased costs, which may result in decrease in our gross margin or reduced sales, and have a material adverse effect on our business, results of operations and financial condition.
If we are not able to successfully mitigate such risks, we could experience disruptions in production or increased costs, which may result in decrease in our gross margin or reduced sales, and have a material adverse effect on our productivity, business, results of operations and financial condition.
Our business operations and properties procure, make use of, manufacture, sell, and distribute substances that are sometimes considered hazardous and are therefore subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to protection of the environment, including air emissions, sewage discharges, the use of hazardous materials, waste disposal practices and clean-up of existing environmental contamination.
Our business operations and properties procure, make use of, manufacture, sell, and distribute substances that include known and potentially unknown hazards and are therefore subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to protection of the environment, including air emissions, sewage discharges, the use of hazardous materials, waste disposal practices and clean-up of existing environmental contamination.
If the EC determines that a tax ruling or tax regime violates the state aid restrictions, the tax authorities of the affected European Union member state may be required to collect back taxes for the period of time covered by the ruling.
If the EC determines that a tax 27 Table of Contents ruling or an implemented tax regime violates the state aid restrictions, the tax authorities of the affected European Union member state may be required to collect back taxes for the period of time covered by the ruling.
A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. 18 Table of Contents During 2023, our 25 largest customers, a majority of which were multi-national consumer products companies, collectively accounted for approximately 32% of our sales in the aggregate.
A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. During 2024, our 25 largest customers, a majority of which were multi-national consumer products companies, collectively accounted for approximately 33% of our sales in the aggregate.
As a result of our recent acquisitions, including the acquisition of Frutarom and the N&B Transaction, as of December 31, 2023, we recorded approximately $18.992 billion of intangible assets and goodwill, including $4.289 billion of goodwill associated with the acquisition of Frutarom and $11.817 billion of goodwill associated with the merger with the N&B Business, prior to the impact of impairment charges and business divestitures.
As a result of our acquisitions, including the acquisition of Frutarom and the N&B Transaction, as of December 31, 2024, we recorded approximately $15.525 billion of intangible assets and goodwill, including $4.289 billion of goodwill associated with the acquisition of Frutarom and $11.817 billion of goodwill associated with the merger with the N&B Business, prior to the impact of impairment charges and business divestitures.
Geopolitical developments, such as trade wars, the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), could adversely impact, among other things, our raw material, energy and transportation costs, certain of our suppliers, distributors, customers and local markets, global and local macroeconomic conditions, and cause further supply chain disruptions (including by delaying the delivery times of raw materials needed for our business or our products to customers).
Similarly, geopolitical developments, such as the US-China relations, escalating tensions between China and Taiwan, the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), could also impact, among other things, certain raw material, energy and transportation costs, certain of our suppliers, distributors, customers and local markets, global and local macroeconomic conditions, and cause further supply chain disruptions (including by delaying the delivery times of raw materials needed for our business or our products to customers).
If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increase in revenues and operating results, which could have a material adverse effect on our financial results.
If we are unable to successfully identify and acquire such candidates or integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, productivity gains, including any expected increase in revenues and operating results, which could have a material adverse effect on our financial results.
If our research and development activities or the manufacturing of ingredients or products were disrupted, the cost of relocating or replacing these activities or reformulating these ingredients or products may be substantial, which could result in production or development delays or otherwise have an adverse effect on our margins, operating results and future growth.
If our research and development, manufacturing and distribution facilities were disrupted, including due to the risks outlined above, the cost of relocating or replacing these activities or reformulating these ingredients or products may be substantial, which could result in production or development delays or otherwise have an adverse effect on our margins, operating results and future growth.
Furthermore, even if successfully integrated, the acquisition target may fail to further the Company’s business strategy as anticipated, expose the Company to increased competition or other challenges with respect to the Company’s products or geographic markets, and expose the Company to additional liabilities associated with the acquired business, technology or other asset or arrangement.
Furthermore, even if successfully integrated, the acquisition target may fail to further the Company’s business strategy as anticipated, and expose the Company to additional liabilities associated with the acquired business, technology or other asset or arrangement.
Our current level of leverage could increase our vulnerability to sustained, adverse macroeconomic weakness, limit our ability to obtain further financing, lead to a reduction or suspension of our dividend payments, decrease our flexibility in responding to or preparing for changes in the industry in which we operate and our ability to pursue certain operational and strategic projects or opportunities, including necessary investments into our business or large acquisitions.
See Note 14 for additional information on the amendments to the debt agreements. 13 Table of Contents Our current level of leverage could increase our vulnerability to sustained, adverse macroeconomic weakness, limit our ability to obtain further financing, lead to a reduction or suspension of our dividend payments, decrease our flexibility in responding to or preparing for changes in the industry in which we operate and our ability to pursue certain operational and strategic projects or opportunities, including necessary investments into our business or large acquisitions.
As the Russia-Ukraine war has prolonged, it continues to impact our sourcing of certain raw materials for future years, and we continue to look for alternative suppliers or adjust the types of raw materials used in our products.
We maintain operations in both Russia and Ukraine and export products to customers in Russia and Ukraine from operations outside the region. As the Russia-Ukraine war has prolonged, it continues to impact our sourcing of certain raw materials for future years, and we continue to look for alternative suppliers or adjust the types of raw materials used in our products.
Energy prices are in turn subject to significant volatility caused by, among other things, market fluctuations, supply and demand changes, currency fluctuations, production and transportation disruptions, and other world events, as well as geopolitical developments and climate change related conditions discussed above.
Energy prices (including the price of fuel and alternative energy sources) are in and of themselves subject to significant volatility caused by, among other things, market fluctuations, supply and demand changes, currency fluctuations, production and transportation disruptions, and other world events, as well as geopolitical developments and climate change related conditions discussed above.
During the year ended December 31, 2023, we recorded a goodwill impairment charge of $2.623 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss. Refer to Part II, Item 7 and Note 1 and Note 6 to the Consolidated Financial Statements for additional information.
During the year ended December 31, 2024, we recorded a goodwill impairment charge of $64 million in the Consolidated Statements of Income (Loss) and Comprehensive Loss. Refer to Part II, Item 7 and Note 1 and Note 12 to the Consolidated Financial Statements for additional information.
With the completion of the N&B Transaction, our customer base has further increased significantly and, based on 2023 sales, we had approximately 27,000 customers, approximately 54% of which are small and mid-sized companies.
With the completion of the N&B Transaction, our customer base has further increased significantly and, based on 2024 sales, we had approximately 18,300 customers, approximately 67% of which are small and mid-sized companies.
Any of these occurrences could materially and adversely affect our borrowing costs, financial condition and results of operations. 25 Table of Contents Risks Related to Legal and Regulatory Considerations If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations.
Risks Related to Legal and Regulatory Considerations If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations.
To be successful, we must maintain sufficient inventory levels and an appropriate product/sales mix to meet our customers’ demands, without allowing those levels to increase to such an extent that the costs associated with storing and holding other inventory adversely impact our financial results.
Efficient inventory management is a key component of our business success, financial returns and profitability. To be successful, we must maintain sufficient inventory levels and an appropriate product/sales mix to meet our customers’ demands, without allowing those levels to increase to such an extent that the costs associated with storing and holding other inventory adversely impact our financial results.
Any of these events or factors could potentially result in a material adverse impact on our business and results of operations. A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations.
A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or results of operations.
Our success depends on attracting and retaining talented people within our business and our management team. Changes to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals.
Changes to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals.
Any impairment of our tangible or intangible long-lived assets, including goodwill, may adversely impact our profitability. A significant portion of our assets consists of long-lived assets, including tangible assets such as our manufacturing facilities, and intangible assets, including goodwill and customer relationships.
A significant portion of our assets consists of long-lived assets, including tangible assets such as our manufacturing facilities, and intangible assets, including goodwill and customer relationships.
Despite our level of indebtedness, we expect to continue to have the ability to borrow additional debt. There may be circumstances in which required payments of principal and/or interest on our debt could adversely affect our cash flows, our operating results or our ability to return capital to our shareholders.
There may be circumstances in which required payments of principal and/or interest on our debt could adversely affect our cash flows, our operating results or our ability to return capital to our shareholders.
The successful entry into and closing of such transactions is contingent on many factors, including, among other things, the performance of the underlying assets or business as well as the relevant industry dynamics overall, the interest of potential buyers and their ability to finance such transactions (which is also impacted by general economic and financial conditions and market dynamics), requisite regulatory approvals, and related separation activities.
Strategic transactions are generally dependent on many factors which we cannot fully control, including, among other things, relevant industry dynamics or macroeconomic conditions, the interest of potential buyers and their ability to finance such transactions (which is also impacted by general economic and financial conditions and market dynamics), the performance of the underlying assets or business, requisite regulatory approvals, and related separation activities.
Inflationary trends and pricing uncertainty, including in the price of our input costs, such as raw materials, transportation and energy, could adversely affect our business and financial results in the short term and result in uncertainties in the long term. The global economy continues to experience high rates of inflation.
Inflationary trends and pricing uncertainty, including in the price of our input costs, such as raw materials, transportation and energy, could adversely affect our business and financial results in the short term and result in uncertainties in the long term. Inflationary pressure and price uncertainty may continue in 2025.
In addition, our suppliers, similar to us, are subject to risks, inherent in agriculture, manufacturing and distribution on a global scale, including industrial accidents, environmental events, climate change, strikes and other labor disputes, disruptions in supply chain or information systems, disruption or loss of key research or manufacturing sites, product quality control, safety and environmental compliance issues, licensing requirements and other regulatory issues, as well as natural disasters, global or 16 Table of Contents local health crises, international conflicts, terrorist acts, geopolitical developments, trade wars, and other external factors over which neither they nor we have control.
We, directly or indirectly through our suppliers, are subject to risks, inherent in agriculture, development, manufacturing, distribution or sale on a global scale, including natural disasters, global or local health crises, international conflicts, terrorist acts, geopolitical developments, trade wars, industrial accidents, environmental events, climate change events (including severe weather events), strikes and other labor disputes, disruptions in supply chain or information systems, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations or inflation), disruption or loss of key research or manufacturing sites, product quality control, safety and environmental compliance issues, regulatory requirements, as well as other external factors over which neither our suppliers nor we have control.
For example, the U.S., the European Union and other countries have imposed sanctions and export controls on Russia, Belarus and occupied regions of Ukraine. As a result, we have limited our export of ingredients to customers in Russia, Belarus and occupied regions of Ukraine to only those that are permitted and meet the essential needs of people.
As a result, we have limited our export of ingredients to customers in Russia, Belarus and occupied regions of Ukraine to only those that are permitted and meet the essential needs of people.
Defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities could adversely affect our business, reputation and results of operations. 26 Table of Contents Defects in, misuse of, quality issues with respect to (including products recalls) or inadequate disclosure of risks relating to our products, could lead to lost profits and other economic damage, property damage, personal injury or other liability resulting in third-party claims, criminal liability, significant costs, damage to our reputation and loss of business.
Defects in, misuse of, quality issues with respect to (including products recalls) or inadequate disclosure of risks relating to our products, as well as performance or other issues in our customer relationships, could lead to lost profits and other economic damage, productivity losses, property damage, personal injury or other liability resulting in third-party claims, criminal liability, significant costs, damage to our reputation and loss of business.
However, if we do not accurately estimate the amount of raw materials that will be used for the geographic region in which we will need these materials or competitively price our products, our margins could be adversely affected.
However, if we do not accurately estimate the 15 Table of Contents amount of raw materials that will be used for the geographic region in which we will need these materials or competitively price our products, our margins could be adversely affected. Environmental events may affect our facilities, customers or suppliers and the availability, quality and pricing of raw materials.
In addition, our reputation and our customers’ willingness to purchase our products depend in part on our compliance by our suppliers, distributors, customers or other counterparties with ethical employment practices, such as with respect to child labor, wages and benefits, forced labor, discrimination, safe and healthy working conditions, as well as with all legal and regulatory requirements relating to the conduct of their businesses (including the ones mentioned in the preceding paragraphs).
See, also “ —Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits. ” Lastly, our reputation and our customers’ willingness to purchase our products depend in part on our compliance by our suppliers, distributors, customers or other counterparties with ethical employment practices, such as with respect to child labor, wages and benefits, forced labor, discrimination, safe and healthy working conditions, as well as with all legal and regulatory requirements relating to the conduct of their businesses (including the ones mentioned in the preceding paragraphs).
If we are unable to retain our employees or attract new employees in the future, our ability to effectively compete with our competitors and to grow our business could be adversely affected.
Competition for employees can be intense and if we are unable to successfully integrate, motivate and reward our employees, we may not be able to retain them. If we are unable to retain our employees or attract new employees in the future, our ability to effectively compete with our competitors and to grow our business could be adversely affected.
We may face additional civil suits in the United States or elsewhere, relating to such alleged conduct. At this 15 Table of Contents time, we are unable to predict or determine the scope, duration, or outcome of these investigations.
We may face additional civil suits in the United States or elsewhere relating to such alleged conduct. At this time, we are unable to predict or determine the scope, duration, or outcome of these investigations and lawsuits. Antitrust and competition enforcement actions by the U.S. Department of Justice and the U.S.
Assumptions used in determining projected benefit obligations and the fair value of plan assets for our pension and other postretirement benefit plans are determined by us in consultation with outside consultants and advisors.
An adverse change in the funded status of the plans could significantly increase our required contributions in the future and adversely impact our liquidity. Assumptions used in determining projected benefit obligations and the fair value of plan assets for our pension and other postretirement benefit plans are determined by us in consultation with outside consultants and advisors.
Moreover, as a result of the COVID-19 pandemic’s impact on the global supply chain, we have experienced, and may continue to experience, increased costs, delays or limited availability related to raw materials, strain on shipping and transportation resources, and higher energy prices, which have negatively impacted and may continue to negatively impact, our margins and operating results.
Supply chain disruptions, as demonstrated by the disruptions related to the COVID-19 pandemic, may result in increased costs, delays or limited availability related to raw materials, strain on shipping and transportation resources, and higher energy prices, which can negatively impact our margins and operating results.
As part of our growth strategy, we have increased our presence in emerging markets by expanding our manufacturing presence, sales organization and product offerings in these markets, and we expect to continue to expand our business in these markets as part of our new strategic vision announced in December 2022.
We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks. As part of our growth strategy, we have increased our presence in emerging markets by expanding our manufacturing presence, sales organization and product offerings in these markets, and we expect to continue to expand our business in these markets.
Our results of operations, liquidity or financial condition could be adversely impacted by unfavorable outcomes in these or other pending or future claims, disputes, investigations or litigation. Poor results of operations, liquidity or financial condition—particularly as we work towards implementation of our ongoing strategic transformation and our portfolio optimization strategy—may increase the likelihood of shareholder litigation.
Poor results of operations, liquidity or financial condition-particularly as we work towards implementation of our ongoing strategic transformation and our portfolio optimization strategy-may increase the likelihood of shareholder litigation.
During the financial covenant relief period, the Term Loans are subject to a mandatory prepayment provision whereby certain asset sale proceeds must be used to pay down amounts outstanding thereunder. See Note 9 for additional information on the amendments to the debt agreements.
During the financial covenant relief period, the Term Loan is subject to a mandatory prepayment provision whereby certain asset sale proceeds must be used to pay down amounts outstanding thereunder.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed27 unchanged
Biggest changeIt outlines escalation procedures, reporting requirements, incident severity levels, a materiality assessment and roles and responsibilities for key partners, including IT, Legal/Employee Relations, Corporate Communications, Human Resources and other senior leaders.
Biggest changeIt outlines escalation procedures, reporting requirements, incident severity levels, a materiality assessment and roles and responsibilities for key partners, including IT, Legal/Employee Relations, Corporate Communications, Human Resources and other senior leaders. Our escalation procedures include escalation to our Executive Leadership Team, Audit Committee, Disclosure Committee, and Board of Directors, and reporting to regulators, customers, investors, and others.
For more detailed information about risks related to our cybersecurity, refer to Item 1A, “Risk Factors” – “A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations.” Governance The Board of Directors is responsible for overseeing and reviewing with management the Company’s InfoSec risks and the policies and practices established to manage such risks.
For more detailed information about risks related to our cybersecurity, refer to Item 1A, “Risk Factors” —“A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or results of operations.” 29 Table of Contents Governance The Board of Directors is responsible for overseeing and reviewing with management the Company’s InfoSec risks and the policies and practices established to manage such risks.
The CIO and CISO provide, at least, annual updates on IT and InfoSec initiatives to the Board of Directors and quarterly updates to the Audit Committee. 31 Table of Contents
The CIO and CISO provide, at least, annual updates on IT and InfoSec initiatives to the Board of Directors and quarterly updates to the Audit Committee.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy Our comprehensive Incident Response Plan outlines processes to identify, detect, assess, respond to and recover from threats, including cybersecurity threats.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy 28 Table of Contents Our comprehensive Incident Response Plan outlines processes to identify, detect, assess, respond to and recover from threats, including cybersecurity threats.
Removed
Our escalation procedures include escalation to our Executive Leadership Team, Audit Committee, Disclosure Committee, and Board of Directors, and reporting to 30 Table of Contents regulators, customers, investors, and others.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeOur principal owned and leased properties, as of December 31, 2023, are as follows: Europe, Africa & the Middle East North America Greater Asia Latin America Owned Leased Owned Leased Owned Leased Owned Leased Plant 40 16 18 13 22 7 16 4 Office 2 57 — 6 3 20 — 3 Laboratory 7 13 2 15 — 14 — 3 Warehouse 1 11 — 10 — 2 2 8 Other 4 4 — 7 7 3 3 4 54 101 20 51 32 46 21 22 Our principal executive offices are located at 521 West 57th Street, New York, New York and 200 Powder Mill Road, Wilmington, Delaware.
Biggest changeOur principal owned and leased properties, as of December 31, 2024, are as follows: Europe, Africa & the Middle East North America Greater Asia Latin America Owned Leased Owned Leased Owned Leased Owned Leased Plant 37 12 16 13 16 5 12 3 Office 2 53 — 6 1 20 — 5 Laboratory 3 13 1 7 — 12 — 2 Warehouse 2 14 — 9 — 4 2 7 Other 10 5 — 6 10 8 3 2 54 97 17 41 27 49 17 19 Our principal executive offices are located at 521 West 57th Street, New York, New York and 200 Powder Mill Road, Wilmington, Delaware.
Our principal sites include facilities which, in the opinion of its management, are suitable and adequate for their use and have sufficient capacity for its current business needs and expected near-term growth.
Our principal sites include facilities which, in the opinion of our management, are suitable and adequate for their use and have sufficient capacity for its current business needs and expected near-term growth.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeThe Company’s material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 19, “Commitments and Contingencies” under the heading “Litigation.” For more detailed information about risks related to legal proceedings, refer to Item 1A, “Risk Factors” – “Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class actions lawsuits.” ITEM 4.
Biggest changeThe Company’s material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 21, “Commitments and Contingencies” under the heading “Litigation.” For more detailed information about risks related to legal proceedings, refer to Item 1A, “Risk Factors” – “Our results of operations may be negatively impacted by the outcome of 30 Table of Contents uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits.” ITEM 4.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 4. Mine Safety Disclosures 32 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 ITEM 6. [Reserved] 33 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 48
Biggest changeITEM 4. Mine Safety Disclosures 31 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 ITEM 6. [Reserved] 32 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 48

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed4 unchanged
Biggest changeThe total return assumes that dividends were reinvested daily and is based on a $100 investment on December 31, 2018. 32 Table of Contents SOURCE: S&P Capital IQ Year-end Data 2018 2019 2020 2021 2022 2023 International Flavors & Fragrances $ 100.00 $ 98.30 $ 85.19 $ 120.59 $ 86.40 $ 69.58 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Consumer Staples Index $ 100.00 $ 127.61 $ 141.32 $ 167.65 $ 166.61 $ 167.47 S&P 500 Specialty Chemicals Index $ 100.00 $ 118.26 $ 138.57 $ 178.80 $ 129.71 $ 150.65
Biggest changeThe total return assumes that dividends were reinvested daily and is based on a $100 investment on December 31, 2019. 31 Table of Contents SOURCE: S&P Capital IQ Year-end Data 2019 2020 2021 2022 2023 2024 International Flavors & Fragrances $ 100.00 $ 86.66 $ 122.67 $ 87.89 $ 70.78 $ 75.21 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 Consumer Staples Index $ 100.00 $ 110.75 $ 131.38 $ 130.57 $ 131.24 $ 150.76 S&P 500 Specialty Chemicals Index $ 100.00 $ 117.17 $ 151.20 $ 109.69 $ 127.39 $ 125.91
Our Board of Directors may reduce, suspend or discontinue the payment of dividends at any time. See Part II, Item 8 of this Form 10-K in the “Consolidated Statements of Shareholders’ Equity” and in the Notes to Consolidated Financial Statements in Note 12 for additional information. Approximate Number of Equity Security Holders.
Our Board of Directors may reduce, suspend or discontinue the payment of dividends at any time. See Part II, Item 8 of this Form 10-K in the “Consolidated Statements of Shareholders’ Equity” and in the Notes to Consolidated Financial Statements in Note 17 for additional information. Approximate Number of Equity Security Holders.
Title of Class Number of shareholders of record as of February 21, 2024 Common stock, par value 12 1 /2¢ per share 3,249 Issuer Purchases of Equity Securities. None. Performance Graph.
Title of Class Number of shareholders of record as of February 24, 2025 Common stock, par value 12 1 /2¢ per share 2,993 Issuer Purchases of Equity Securities. None. Performance Graph.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+41 added−49 removed32 unchanged
Biggest changeSuch risks, uncertainties and other factors include, among others, the following: • our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to its shareholders; • our ability to successfully execute the next phase of our strategic transformation; • our ability to declare and pay dividends which is subject to certain considerations; • the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation; • inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy; • supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage) or climate-change related events (including severe weather events) that may affect our suppliers or procurement of raw materials; • our ability to attract and retain key employees, and manage turnover of top executives; • our ability to successfully market to our expanded and diverse customer base; • our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs; 46 Table of Contents • changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers; • our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations; • disruption in the development, manufacture, distribution or sale of our products from international conflicts (such as the Russia-Ukraine war and the Israel-Hamas war), geopolitical events, trade wars, natural disasters (such as the COVID-19 pandemic), public health crises, terrorist acts, labor strikes, political or economic crises (such as the uncertainty related to U.S. government funding negotiations), accidents and similar events; • the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad; • our ability to benefit from our investments and expansion in emerging markets; • the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate; • economic, regulatory and political risks associated with our international operations; • the impact of global economic uncertainty (including increased inflation) on demand for consumer products; • our ability to integrate the N&B Business and realize anticipated synergies, among other benefits; • our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness; • our ability to meet increasing customer, consumer, shareholder and regulatory focus on sustainability; • our ability to successfully manage our working capital and inventory balances; • any impairment on our tangible or intangible long-lived assets; • our ability to enter into or close strategic transactions or divestments, or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships; • changes in market conditions or governmental regulations relating to our pension and postretirement obligations; • the impact of the phase out of the London Interbank Offered Rate (“LIBOR”) on our variable rate interest expense; • our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environment impact; • defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities; • our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; • the impact of our or our counterparties’ failure to comply with the U.S.
Biggest changeSuch risks, uncertainties and other factors include, among others, the following: • our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to its shareholders; • our ability to successfully execute our strategic transformation; • the impact of regulatory, consumer, and economic trends for consumer products; • the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation; • supply chain disruptions, geopolitical developments, climate change events, natural disasters, public health crises, tariffs and trade wars, and other events that may affect our suppliers, or procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results; • inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy; 46 Table of Contents • our ability to successfully manage our working capital and inventory balances; • our ability to attract and retain key employees, and manage turnover of top executives; • our ability to successfully market to our expanded and diverse customer base; • our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs; • changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers; • our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations; • the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad; • our ability to benefit from our investments and expansion in emerging markets; • the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate; • economic, regulatory and political risks associated with our international operations; • our ability to declare and pay dividends which is subject to certain considerations; • our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness; • our ability to meet increasing customer, consumer, shareholder and regulatory focus on sustainability; • any impairment on our tangible or intangible long-lived assets; • our ability to enter into or close strategic transactions or divestments, or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships; • changes in market conditions or governmental regulations relating to our pension and postretirement obligations; • our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environment impact; • defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities; • our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; • the impact of our or our counterparties’ failure to comply with the U.S.
During 2022, we determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the year ended December 31, 2022.
During 2022, we determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of Income (Loss) and Comprehensive Loss for the year ended December 31, 2022.
During 2022, based on the quantitative impairment test using the income approach, we determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the year ended December 31, 2022.
During 2022, based on the quantitative impairment test using the income approach, we determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of Income (Loss) and Comprehensive Loss for the year ended December 31, 2022.
Due to the uncertainties related to our operations in Russia and Ukraine, we recorded a charge of approximately $120 million related to the impairment of certain long-lived assets in Russia in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the year ended December 31, 2022. See Note 1 to the Consolidated Financial Statements for additional information .
Due to the uncertainties related to our operations in Russia and Ukraine, we recorded a charge of approximately $120 million related to the impairment of certain long-lived assets in Russia in the Consolidated Statements of Income (Loss) and Comprehensive Loss for the year ended December 31, 2022. See Note 1 to the Consolidated Financial Statements for additional information .
Consumer insights science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe make us a market leader in scent products. The Scent segment is comprised of Fragrance Compounds, Fragrance Ingredients and Cosmetic Ingredients.
Consumer insights, science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe make us a market leader in scent products. The Scent segment is comprised of Fragrance Compounds and Fragrance Ingredients.
We will continue to evaluate the current events and any potential impacts related to this matter, but we do not expect there to be a material impact to our Consolidated Financial Statements. In 2023, total sales to Israeli customers were approximately 1% of total sales.
We will continue to evaluate the current events and any potential impacts related to this matter, but we do not expect there to be a material impact to our Consolidated Financial Statements. In 2024 and 2023, total sales to Israeli customers were approximately 1% of total sales.
Term Loans and Revolving Credit Facility Our credit agreements contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous 12-month period.
Term Loan and Revolving Credit Facility Our credit agreements contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous 12-month period.
In discussing our historical and expected future results and financial condition, we believe it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, as well as the impact of exchange rate fluctuations.
In discussing our historical and expected future results and financial condition, we believe it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, the impact of exchange rate fluctuations, as well as the impact of acquisitions and divestitures.
Our Nourish segment consists of an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications and consists of Ingredients, Flavors and Food Designs.
Our Nourish segment consists of an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications and consists of Ingredients and Flavors.
While we believe that the assumptions used in the impairment test were reasonable, changes in key assumptions, including lower revenue growth, operating margin, terminal growth rates or increase in discount rates could result in a future impairment. Such charge could have a material effect on our Consolidated Statements of Operations and Balance Sheets.
While we believe that the assumptions used in the impairment test were reasonable, changes in key assumptions, including lower revenue growth, adjusted operating EBITDA margin, terminal growth rates or increase in discount rates could result in a future impairment. Such impairment could have a material effect on our Consolidated Statements of Operations and Balance Sheets.
New Accounting Standards See Note 1 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements. Non-GAAP Financial Measures We use non-GAAP financial measures in this Form 10-K, including: (i) currency neutral metrics and (ii) adjusted operating EBITDA and adjusted operating EBITDA margin.
New Accounting Standards See Note 1 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements. Non-GAAP Financial Measures We use non-GAAP financial measures in this Form 10-K, including: (i) currency neutral metrics, (ii) comparable portfolio metrics and (iii) adjusted operating EBITDA and adjusted operating EBITDA margin.
Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; • our ability to protect our intellectual property rights; • the impact of changes in federal, state, local and international tax legislation or policies and adverse results of tax audits, assessments, or disputes; • the impact of any tax liability resulting from the N&B Transaction; and • our ability to comply with data protection laws in the U.S. and abroad.
Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions or competition laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations; • our ability to protect our intellectual property rights; • changes in business and operations related to the adoption of artificial intelligence; • the impact of changes in federal, state, local and international tax legislation or policies and adverse results of tax audits, assessments, or disputes; • the impact of any tax liability resulting from the N&B Transaction; and • our ability to comply with data protection laws in the U.S. and abroad.
Such forward-looking statements are based on management’s current assumptions, estimates and expectations and include statements concerning (i) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; (ii) our ability to execute on our strategic and financial transformation, including the progress and success of our portfolio optimization strategy, through non-core business divestitures and acquisitions, and expectations regarding the implementation of our refreshed growth-focused strategy; (iii) our ability to continue to generate value for, and return cash to, our shareholders; (iv) expectations of the impact of inflationary pressures and the pricing actions to offset exposure to such impacts; (v) the impact of high input costs, including commodities, raw materials, transportation and energy; (vi) the expected impact of global supply chain challenges; (vii) our ability to enhance our innovation efforts, drive cost efficiencies and execute on specific consumer trends and demands; (viii) the growth potential of the markets in which we operate, including the emerging markets; (ix) expectations regarding sales and profit for the fiscal year 2024, including the impact of foreign exchange, pricing actions, raw materials, energy, and sourcing, logistics and manufacturing costs; (x) the impact of global economic uncertainty and recessionary pressures on demand for consumer products; (xi) the success of our integration efforts, following the N&B Transaction, and ability to deliver on our synergy commitments as well as future opportunities for the combined company; (xii) our strategic investments in capacity and increasing inventory to drive improved profitability; (xiii) our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; (xiv) expected capital expenditures in 2024; and (xv) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings.
Such forward-looking statements are based on management’s current assumptions, estimates and expectations including those concerning (i) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; (ii) our ability to execute on our strategic and financial transformation, including the progress and success of our portfolio optimization strategy (including the sale process of our Pharma Solutions disposal group), through non-core business divestitures and acquisitions, and expectations regarding the implementation of our refreshed growth-focused strategy and expectations around our business divestitures; (iii) our ability to continue to generate value for, and return cash to, our shareholders; (iv) expectations of the impact of inflationary pressures and the pricing actions to offset exposure to such impacts; (v) expectations regarding the impact of government actions including tariffs; (vi) the impact of high input costs, including commodities, raw materials, transportation and energy; (vii) the expected impact of global supply chain challenges; (viii) our ability to enhance our innovation efforts, drive cost efficiencies and execute on specific consumer trends and demands; (ix) the growth potential of the markets in which we operate, including the emerging markets; (x) expectations regarding sales and profit for the fiscal year 2025, including the impact of foreign exchange, pricing actions, raw materials, energy, and sourcing, logistics and manufacturing costs; (xi) the impact of global economic uncertainty and recessionary pressures on demand for consumer products; (xii) the success of our integration efforts, following the N&B Transaction, and ability to deliver on our synergy commitments as well as future opportunities for the combined company; (xiii) our strategic investments in capacity and increasing inventory to drive improved profitability; (xiv) our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; (xv) expected capital expenditures in 2025; and (xvi) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings.
Accordingly, as of December 31, 2023, we had a deferred tax liability of approximately $155 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.
Accordingly, as of December 31, 2024, we had a deferred tax liability of approximately $154 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.
As of December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility. See Note 9 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities. Leases The Company has lease arrangements for certain corporate offices, manufacturing facilities, research and development facilities, and certain transportation and office equipment.
As of December 31, 2024, the Company had no borrowings outstanding under the Revolving Credit Facility. See Note 14 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities. Leases The Company has lease arrangements for certain corporate offices, manufacturing facilities, research and development facilities, and certain transportation and office equipment.
Health & Biosciences is comprised of Health, Cultures & Food Enzymes, Home & Personal Care, Animal Nutrition and Grain Processing. Our Scent segment creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products.
Health & Biosciences is comprised of Health, Cultures & Food Enzymes, Home & Personal Care, Animal Nutrition and Grain Processing. 32 Table of Contents Our Scent segment creates fragrance compounds and fragrance ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products.
See “Critical Accounting Policies and Use of Estimates” and Note 6 to the Consolidated Financial Statements for additional information.
See “Critical Accounting Policies and Use of Estimates” and Note 12 to the Consolidated Financial Statements for additional information.
In response to the events in Ukraine, we have limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine. 34 Table of Contents In 2023, total sales to Russian customers were approximately 1% of total sales.
In response to the events in Ukraine, we have limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine. In 2024 and 2023, total sales to Russian customers were approximately 1% of total sales.
As of December 31, 2023, the Company had postretirement obligations of approximately $38 million, with approximately $4 million payable within 12 months. Purchase Commitments The Company has various purchase commitments that include agreements for raw material procurement and contractual capital expenditures.
As of December 31, 2024, the Company had postretirement obligations of approximately $40 million, with approximately $4 million payable within 12 months. Purchase Commitments The Company has various purchase commitments that include agreements for raw material procurement and contractual capital expenditures.
We anticipate that cash flows from operations, cash proceeds generated from planned business divestitures and availability under our existing credit facilities will be sufficient to meet our investing and financing needs, including our debt service requirements.
We anticipate that cash flows from operations, cash proceeds generated from planned business divestitures and availability under our existing credit facilities will be sufficient to meet our investing and financing needs, including our debt service requirements, for the foreseeable future.
In performing the quantitative impairment test, we determined that the fair value of four of the five reporting units exceeded their carrying values and determined that there was no further impairment of goodwill in these reporting units as of November 30, 2023.
In performing the quantitative impairment test, we determined that the fair value of the reporting units exceeded their carrying values and determined that there was no further impairment of goodwill in these reporting units as of November 30, 2024.
From March 23, 2023, the Term Loans and Revolving Credit Facility now bear interest at a base rate or a rate equal to Term SOFR plus an adjustment of 0.10% per annum or, in the case of euro-denominated loans, the Euro interbank offered rate, plus, in each case, an applicable margin based on our public debt rating.
Our Term Loan and Revolving Credit Facility bear interest at a base rate or a rate equal to Term SOFR plus an adjustment of 0.10% per annum or, in the case of euro-denominated loans, the Euro interbank offered rate, plus, in each case, an applicable margin based on our public debt rating.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024.
The cash dividend declared per share in 2023, 2022 and 2021 was $3.24, $3.20 and $3.12, respectively. Our capital allocation strategy is primarily focused on debt repayment to maintain our investment grade rating. We will also prioritize capital investment in our businesses to support the strategic long-term plans.
The cash dividend declared per share in 2024 and 2023 was $1.60 and $3.24, respectively. Our capital allocation strategy is primarily focused on debt repayment to maintain our investment grade rating. We will also prioritize capital investment in our businesses to support the strategic long-term plans.
In 2023 and 2022, we spent approximately $23 million and $30 million on capital projects and $139 million and $135 million in operating expenses and governmental charges, respectively, for the purpose of complying with such regulations. Expenditures for these purposes will continue for the foreseeable future.
In 2024 and 2023, we spent approximately $32 million and $23 million on capital projects and $136 million and $139 million in operating expenses and governmental charges, respectively, for the purpose of complying with such regulations. Expenditures for these purposes will continue for the foreseeable future.
At December 31, 2023 our net debt to credit adjusted EBITDA (1) ratio was 4.51 to 1.0 as defined by the credit facility agreements, which is below the relevant level provided by our financial covenants of existing outstanding debt.
At December 31, 2024, our net debt to credit adjusted EBITDA (1) ratio was 3.84 to 1.0 as defined by the credit facility agreements, which is below the relevant level provided by our financial covenants of existing outstanding debt.
Impact related to the Russia-Ukraine War We maintain operations in both Russia and Ukraine and, additionally, export products to customers in Russia and Ukraine from operations outside the region.
Impact related to the Russia-Ukraine War 33 Table of Contents We maintain operations in both Russia and Ukraine and, additionally, export products to customers in Russia and Ukraine from operations outside the region.
S&A expenses include expenses necessary to support our commercial activities and administrative expenses supporting our overall operating activities including compliance with governmental regulations. 36 Table of Contents 2023 IN COMPARISON TO 2022 Sales performance by segment was as follows: % Change in Sales - 2023 vs. 2022 Reported Currency Neutral (1) Nourish -11 % -9 % Health & Biosciences -11 % -10 % Scent 4 % 6 % Pharma Solutions -3 % -3 % Total -8 % -6 % _______________________ (1) Currency neutral sales is calculated by translating current year invoiced sale amounts at the exchange rates for the corresponding prior year period.
S&A expenses include expenses necessary to support our commercial activities and administrative expenses supporting our overall operating activities including compliance with governmental regulations. 35 Table of Contents 2024 IN COMPARISON TO 2023 Sales performance by segment was as follows: % Change in Sales - 2024 vs. 2023 Reported Currency Neutral (1) Comparable Currency Neutral (1)(2) Nourish -3 % — % 4 % Health & Biosciences 6 % 8 % 8 % Scent 2 % 7 % 12 % Pharma Solutions 2 % 2 % 2 % Total — % 3 % 6 % _______________________ (1) Currency neutral sales are calculated by translating current year invoiced sale amounts at the exchange rates for the corresponding prior year period.
We regularly assess our capital structure, including both current and long-term debt instruments, as compared to our cash generation and investment needs in order to provide ample flexibility and to optimize our leverage ratios. See Note 9 for additional information. Transaction with Nutrition & Biosciences, Inc.
We regularly assess our capital structure, including both current and long-term debt instruments, as compared to our cash generation and investment needs in order to provide ample flexibility and to optimize our leverage ratios. See Note 14 for additional information.
Future interest payments associated with the Notes total approximately $3.965 billion, with approximately $292 million payable within 12 months. The Company also issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. As of December 31, 2023, the Company had no Commercial Paper outstanding.
Future interest payments associated with the Notes total approximately $2.777 billion, with approximately $256 million payable within 12 months. The Company also issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. As of December 31, 2024, the Company had no Commercial Paper outstanding.
Impairment of Goodwill During 2023, we determined that the carrying value of the Nourish reporting unit exceeded its fair value and recorded an impairment charge of $2.623 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the year ended December 31, 2023.
See Note 4 to the Consolidated Financial Statements for additional information. During 2023, we determined that the carrying value of the Nourish reporting unit exceeded its fair value and recorded an impairment charge of $2.623 billion in the Consolidated Statements of Income (Loss) and Comprehensive Loss for the year ended December 31, 2023.
Pension and Other Postretirement Obligations As of December 31, 2023, the Company had pension funding obligations of approximately $854 million, with approximately $138 million payable within 12 months. See Note 15 to the Consolidated Financial Statements for a further discussion of our retirement plans.
Pension and Other Postretirement Obligations As of December 31, 2024, the Company had pension funding obligations of approximately $445 million, with approximately $40 million payable within 12 months. See Note 8 to the Consolidated Financial Statements for a further discussion of our retirement plans.
The Company’s material cash requirements include the following contractual and other obligations. Borrowings and Interest on Borrowings As of December 31, 2023, the Company had outstanding floating and fixed rate notes with varying maturities for an aggregate principal amount of approximately $9.980 billion (collectively the “Notes”), with approximately $885 million payable within 12 months.
The Company’s material cash requirements include the following contractual and other obligations. Borrowings and Interest on Borrowings As of December 31, 2024, the Company had outstanding floating and fixed rate notes with varying maturities for an aggregate principal amount of approximately $8.891 billion (collectively the “Notes”), with approximately $1.413 billion payable within 12 months.
Those areas requiring the greatest degree of management judgment or deemed most critical to our financial reporting involve: Business Combinations From time to time we enter into strategic acquisitions in an effort to better service existing customers and to attain new customers.
Actual results may ultimately differ from these estimates. Those areas requiring the greatest degree of management judgment or deemed most critical to our financial reporting involve: Business Combinations From time to time we enter into strategic acquisitions in an effort to better service existing customers and to attract new customers.
As of December 31, 2023, the Company had fixed lease payment obligations of approximately $926 million, with approximately $122 million payable within 12 months. See Note 8 to the Consolidated Financial Statements for a further discussion of our various lease arrangements.
As of December 31, 2024, the Company had fixed lease payment obligations of approximately $782 million, with approximately $117 million payable within 12 months. See Note 15 to the Consolidated Financial Statements for a further discussion of our various lease arrangements.
A key factor for commercial success is our inclusion on strategic customers’ core supplier lists, which provides opportunities to expand and win new business. We are on the core supplier lists of a large majority of our global and strategic customers.
A key factor for commercial success is our inclusion on strategic customers’ core supplier lists, which provides opportunities to expand and win new business. We are on the core supplier lists of a large majority of our global and strategic customers. In 2024, no customer accounted for 10% or more of sales.
Amortization of Acquisition-Related Intangibles Amortization expenses decreased to $680 million in 2023 compared to $727 million in 2022.
Amortization of Acquisition-Related Intangibles Amortization expenses decreased to $610 million in 2024 compared to $680 million in 2023.
We determined that the carrying value of the Nourish reporting unit exceeded its fair value and recorded an impairment charge of $2.623 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the year ended December 31, 2023.
During 2023, based on the quantitative impairment test using the income approach, we determined that the carrying value of the Nourish reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.623 billion in the Consolidated Statements of Income (Loss) and Comprehensive Loss for the year ended December 31, 2023.
Liquidity and Capital Resources Cash and Cash Equivalents We had cash and cash equivalents of approximately $729 million, inclusive of $26 million currently in Assets held for sale on the Consolidated Balance Sheets, at December 31, 2023 compared to $535 million, inclusive of $52 million in Assets held for sale on the Consolidated Balance Sheets, at December 31, 2022 and of this balance, a portion was held outside the United States.
Liquidity and Capital Resources Cash, Cash Equivalents and Restricted Cash We had cash, cash equivalents and restricted cash of approximately $471 million, inclusive of $2 million currently in Assets held for sale on the Consolidated Balance Sheets, at December 31, 2024 compared to $735 million, inclusive of $26 million in Assets held for sale on the Consolidated Balance Sheets, at December 31, 2023 and of this balance, the majority was held outside the United States.
The most comparable GAAP measure is the total debt to net loss ratio, which was (3.93) to 1.0 at December 31, 2023. _______________________ (1) Credit adjusted EBITDA and net debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements.
The most comparable GAAP measure is the total debt to net income ratio, which was 37.06 to 1.0 at December 31, 2024. _______________________ 41 Table of Contents (1) Credit adjusted EBITDA and net debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements.
(DOLLARS IN MILLIONS) December 31, 2023 Total debt (1) $ 10,096 Adjustments: Cash and cash equivalents (2) 729 Net debt $ 9,367 _______________________ (1) Total debt used for the calculation of net debt consisted of short-term debt, long-term debt, short-term finance lease obligations and long-term finance lease obligations.
(DOLLARS IN MILLIONS) December 31, 2024 Total debt (1) $ 9,005 Adjustments: Cash and cash equivalents (2) 471 Net debt $ 8,534 _______________________ (1) Total debt used for the calculation of net debt consisted of short-term debt, long-term debt, short-term finance lease obligations and long-term finance lease obligations.
Segment Adjusted Operating EBITDA Results by Business Unit We use Segment Adjusted Operating EBITDA for internal reporting and performance measurement purposes. Segment Adjusted Operating EBITDA is defined as (Loss) Income Before Taxes before depreciation and amortization expense, interest expense, restructuring and other charges and certain items that are not related to recurring operations.
See Note 10 for additional information. Segment Adjusted Operating EBITDA Results The Company uses Segment Adjusted Operating EBITDA for internal reporting and performance measurement purposes. Segment Adjusted Operating EBITDA is defined as Income (Loss) Before Taxes before depreciation and amortization expense, interest expense, restructuring and other charges and certain items that are not related to recurring operations.
We assessed the fair value of the reporting units using an income approach. Under the income approach, we determined the fair value by using a discounted cash flow method at a rate of return that reflects the relative risk of the projected future cash flows of each reporting unit, as well as a terminal value.
Under the income approach, we determined the fair value by using a discounted cash flow method at a rate of return that reflects the relative risk of the projected future cash flows of each reporting unit, as well as a terminal value. We used the most current actual and forecasted operating data available.
Based on the quantitative impairment test performed, we determined that the Health & Biosciences, Fragrance Ingredients and Pharma Solutions reporting units had excess fair value over carrying value of less than 25%. The Health & Biosciences, Fragrance Ingredients and Pharma Solutions reporting units had excess fair value over carrying value of approximately 8%, 18% and 8%, respectively.
Based on the quantitative impairment test performed, we determined that the Nourish, Health & Biosciences, Fragrance Compounds and Fragrance Ingredients reporting units had excess fair value over carrying value of approximately 22%, 18%, 169% and 37%, respectively.
Research and Development (R&D) Expenses R&D expenses increased $33 million to $636 million (5.5% of sales) in 2023 compared to $603 million (4.8% of sales) in 2022.
Research and Development (R&D) Expenses R&D expenses increased $35 million to $671 million (5.8% of sales) in 2024 compared to $636 million (5.5% of sales) in 2023.
We used the most current actual and forecasted operating data available. Key estimates and assumptions used in these valuations include revenue growth rates, gross margins, adjusted operating EBITDA margins, terminal growth rates and discount rates.
Key estimates and assumptions used in these valuations include revenue growth rates, gross margins, adjusted operating EBITDA margins, terminal growth rates and discount rates.
Debt Covenants At December 31, 2023, we were in compliance with all financial and other covenants under our credit agreements, including the net debt to credit adjusted EBITDA (1) ratio.
See Note 14 to the Consolidated Financial Statements for additional information on our credit agreements. Debt Covenants At December 31, 2024, we were in compliance with all financial and other covenants under our credit agreements, including the net debt to credit adjusted EBITDA (1) ratio.
Nourish Nourish sales in 2023 decreased $769 million, or 11% on a reported basis, to $6.060 billion compared to $6.829 billion in the 2022 period. On a currency neutral basis, Nourish sales decreased 9% in 2023 compared to the 2022 period as exchange rate variations had an unfavorable impact.
Nourish Nourish sales in 2024 decreased $189 million, or 3% on a reported basis, to $5.871 billion compared to $6.060 billion in 2023. On a currency neutral basis, Nourish sales remained flat in 2024 compared to the 2023 period as exchange rate variations had an unfavorable impact.
Health & Biosciences Health & Biosciences sales in 2023 decreased $258 million, or 11% on a reported basis, to $2.081 billion compared to $2.339 billion in the 2022 period. On a currency neutral basis, Health & Biosciences sales decreased 10% in 2023 compared to the 2022 period as exchange rate variations had an unfavorable impact.
Health & Biosciences Health & Biosciences sales in 2024 increased $131 million, or 6% on a reported basis, to $2.212 billion compared to $2.081 billion in 2023. On a currency neutral basis, Health & Biosciences sales increased 8% in 2024 compared to the 2023 period as exchange rate variations had an unfavorable impact.
We calculate currency neutral numbers by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. We use currency neutral results in our analysis of subsidiary and/or segment performance. We also use currency neutral numbers when analyzing our performance against our competitors.
We provide currency neutral calculations in this report to remove the impact of foreign currency exchange rates fluctuations. We calculate currency neutral numbers by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. We use currency neutral results in our analysis of subsidiary and/or segment performance.
In 2022, total sales to Russian customers were approximately 2% of total sales. In 2023 and 2022, total sales to Ukrainian customers were both less than 1% of total sales. We have a reserve of approximately $3 million related to expected credit losses on receivables from customers located in Russia and Ukraine.
In 2024 and 2023, total sales to Ukrainian customers were both less than 1% of total sales. We have a reserve of approximately $2 million related to expected credit losses on receivables from customers located in Russia and Ukraine. During 2022, we also recorded a charge of $120 million related to the impairment of certain long-lived assets in Russia.
For acquired intangible assets, the remaining useful life of the trade names and trademarks, product formulas, and customer relationships was estimated at the point at which substantially all of the present value of cumulative cash flows have been earned. The Periodic Assessment of Potential Impairment of Goodwill As of December 31, 2023, we have goodwill of approximately $10.635 billion.
For acquired intangible assets, the remaining useful life of the trade names and trademarks, product formulas, and customer relationships was estimated at the point at which substantially all of the present value of cumulative cash flows have been earned.
Contractual Obligations The Company believes its balances of cash and cash equivalents, which totaled approximately $729 million as of December 31, 2023, inclusive of approximately $26 million currently in Assets held for sale on the Consolidated Balance Sheets, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond.
Contractual Obligations The Company believes its balances of cash and cash equivalents, which totaled approximately $471 million as of December 31, 2024, inclusive of approximately $2 million currently in Assets held for sale on the Consolidated Balance Sheets, along with cash generated by ongoing operations and access to the Revolving Credit Facility and Commercial Paper as discussed in Note 14 to the Consolidated Financial Statements, will be sufficient to satisfy its cash requirements and capital 42 Table of Contents return program over the next 12 months and beyond.
Adjusted operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other income (expense), net, restructuring and other charges and certain items unrelated to recurring operations such as impairment of goodwill, impairment of long-lived assets, acquisition, divestiture and integration related costs, strategic initiatives costs, regulatory costs, N&B inventory step-up costs and other costs that are not related to recurring operations.
Adjusted operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other (expense) income, net, restructuring and other charges and certain items unrelated to recurring operations such as impairment of goodwill, gains (losses) on business disposals, loss on assets classified as held for sale, acquisition, divestiture and integration costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.
The notes bear effective interest rates ranging from 1.22% per year to 42 Table of Contents 5.12% per year, with maturities from March 14, 2024 to December 1, 2050. See Note 9 to the Consolidated Financial Statements for additional information.
The notes bear effective interest rates ranging from 1.22% per year to 5.12% per year, with maturities from October 1, 2025 to December 1, 2050. See Note 14 to the Consolidated Financial Statements for additional information. Other Contingencies See Note 21 to the Consolidated Financial Statements for information related to Other Contingencies .
The increase in cash flows from operating activities from 2022 to 2023 was primarily driven by the decrease in working capital, largely related to inventories and accounts receivable, offset in part by lower cash earnings, excluding the impact of non-cash adjustments.
The decrease in cash flows from operating activities from 2023 to 2024 was primarily driven by an increase in working capital, largely related to trade receivables and inventories including amounts held for sale, offset in part by accounts payable and higher cash earnings, excluding the impact of non-cash adjustments.
Cash Flows Provided By Operating Activities Cash flows provided by operating activities in 2023 were $1.439 billion, or 12.5% of sales, compared to $397 million, or 3.2% of sales, in 2022 and $1.437 billion, or 12.3% of sales, in 2021.
Cash Flows Provided By Operating Activities Cash flows provided by operating activities in 2024 were $1.070 billion, or 9.3% of sales, compared to $1.439 billion, or 12.5% of sales, in 2023.
See Note 9 for additional information on the amendments to the credit agreements. As of December 31, 2023, we had no outstanding borrowings under our $2.000 billion Revolving Credit Facility. The amount that we are able to draw down under the Revolving Credit Facility is limited by financial covenants as described in more detail below.
As of December 31, 2024, we had no outstanding borrowings under our $2 billion Revolving Credit Facility. The amount that we are able to draw down under the Revolving Credit Facility is limited by financial covenants as described in more detail below. As of December 31, 2024, our available capacity was $922 million under the Revolving Credit Facility.
The decrease in gross profit was primarily driven by volume decreases, the net impact of the change in business portfolio mix and unfavorable manufacturing absorption primarily related to our inventory reduction program, offset in part by favorable net pricing and productivity gains. 35 Table of Contents RESULTS OF OPERATIONS Year Ended December 31, Change (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net sales $ 11,479 $ 12,440 $ 11,656 (8) % 7 % Cost of goods sold 7,798 8,289 7,921 (6) % 5 % Gross profit 3,681 4,151 3,735 (11) % 11 % Research and development (R&D) expenses 636 603 629 5 % (4) % Selling and administrative (S&A) expenses 1,787 1,768 1,749 1 % 1 % Restructuring and other charges 68 12 41 NMF (71) % Amortization of acquisition-related intangibles 680 727 732 (6) % (1) % Impairment of goodwill 2,623 2,250 — 17 % NMF Impairment of long-lived assets — 120 — (100) % NMF Gains on sale of assets (3) (3) (1) — % 200 % Operating (loss) profit (2,110) (1,326) 585 59 % NMF Interest expense 380 336 289 13 % 16 % Other expense (income), net 28 (37) (58) (176) % (36) % (Loss) income before taxes (2,518) (1,625) 354 55 % NMF Provision for income taxes 45 239 75 (81) % 219 % Net (loss) income (2,563) (1,864) 279 38 % NMF Net income attributable to non-controlling interest 4 7 9 (43) % (22) % Net (loss) income attributable to IFF shareholders $ (2,567) $ (1,871) $ 270 37 % NMF Net (loss) income per share — diluted $ (10.05) $ (7.32) $ 1.10 37 % NMF Gross margin 32.1 % 33.4 % 32.0 % (130) bps 140 bps R&D as a percentage of sales 5.5 % 4.8 % 5.4 % 70 bps (60) bps S&A as a percentage of sales 15.6 % 14.2 % 15.0 % 140 bps (80) bps Operating margin (18.4) % (10.7) % 5.0 % NMF NMF Effective tax rate (1.8) % (14.7) % 21.2 % NMF NMF Segment net sales Nourish $ 6,060 $ 6,829 $ 6,264 (11) % 9 % Health & Biosciences 2,081 2,339 2,329 (11) % — % Scent 2,393 2,301 2,254 4 % 2 % Pharma Solutions 945 971 809 (3) % 20 % Consolidated $ 11,479 $ 12,440 $ 11,656 (8) % 7 % _______________________ NMF: Not meaningful Cost of goods sold includes the cost of materials and manufacturing expenses.
The increase in gross profit was primarily driven by volume increases and productivity gains, offset in part by the effect of exchange rate variations and the net impact of the change in business portfolio mix due to divestitures of $133 million. 34 Table of Contents RESULTS OF OPERATIONS Year Ended December 31, Change (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Net sales $ 11,484 $ 11,479 $ 12,440 — % (8) % Cost of sales 7,360 7,798 8,289 (6) % (6) % Gross profit 4,124 3,681 4,151 12 % (11) % Research and development (R&D) expenses 671 636 603 6 % 5 % Selling and administrative (S&A) expenses 1,995 1,787 1,768 12 % 1 % Restructuring and other charges 29 68 12 (57) % NMF Amortization of acquisition-related intangibles 610 680 727 (10) % (6) % Impairment of goodwill 64 2,623 2,250 (98) % 17 % Impairment of long-lived assets — — 120 NMF (100) % Gains on sale of assets (11) (3) (3) 267 % — % Operating profit (loss) 766 (2,110) (1,326) (136) % 59 % Interest expense 305 380 336 (20) % 13 % (Gains) losses on business disposals (346) 23 (11) NMF — % Loss on assets classified as held for sale 347 — — NMF — % Other expense (income), net 182 5 (26) NMF (119) % Income (loss) before taxes 278 (2,518) (1,625) (111) % 55 % Provision for income taxes 31 45 239 (31) % (81) % Net income (loss) 247 (2,563) (1,864) (110) % 38 % Net income attributable to non-controlling interest 4 4 7 — % (43) % Net income (loss) attributable to IFF shareholders $ 243 $ (2,567) $ (1,871) (109) % 37 % Net income (loss) per share — basic and diluted $ 0.95 $ (10.05) $ (7.32) (109) % 37 % Gross margin 35.9 % 32.1 % 33.4 % NMF (130) bps R&D as a percentage of sales 5.8 % 5.5 % 4.8 % 30 bps 70 bps S&A as a percentage of sales 17.4 % 15.6 % 14.2 % 180 bps 140 bps Operating margin 6.7 % (18.4) % (10.7) % NMF NMF Effective tax rate 11.2 % (1.8) % (14.7) % NMF NMF Segment net sales Nourish $ 5,871 $ 6,060 $ 6,829 (3) % (11) % Health & Biosciences 2,212 2,081 2,339 6 % (11) % Scent 2,440 2,393 2,301 2 % 4 % Pharma Solutions 961 945 971 2 % (3) % Consolidated $ 11,484 $ 11,479 $ 12,440 — % (8) % _______________________ NMF: Not meaningful Cost of sales includes the cost of materials and manufacturing expenses.
We test goodwill for impairment at the reporting unit level as of November 30 every year or more frequently if events or changes in circumstances indicate the asset might be impaired.
The Periodic Assessment of Potential Impairment of Goodwill and Held for Sale Balances As of December 31, 2024, we have goodwill of approximately $9.080 billion. We test goodwill for impairment at the reporting unit level as of November 30 every year or more frequently if events or changes in circumstances indicate the asset might be impaired.
The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies.
The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies. On a comparable basis, currency neutral sales increased 6% driven by volume increases across various business lines.
Gross Profit Gross profit in 2023 decreased $470 million, or 11% on a reported basis, to $3.681 billion (32.1% of sales) compared to $4.151 billion (33.4% of sales) in the 2022 period.
Gross Profit Gross profit in 2024 increased $443 million, or 12% on a reported basis, to $4.124 billion (35.9% of sales) compared to $3.681 billion (32.1% of sales) in the 2023 period.
The fair value estimates are based on available historical information, future expectations and assumptions deemed reasonable by management, but are inherently uncertain. We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.
We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets.
On a currency neutral basis, Pharma Solutions Segment Adjusted Operating EBITDA also decreased 10% in 2023 compared to the 2022 period as the impact of exchange rate variations was flat.
On a currency neutral basis, Pharma Solutions sales also increased 2% in 2024 compared to the 2023 period as the impact of exchange rate variations was flat. Performance in the Pharma Solutions operating segment was driven by volume growth in industrial markets.
Critical Accounting Policies and Use of Estimates Our significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and accompanying disclosures.
As disclosed in Note 1, the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and accompanying disclosures. These estimates are based on management’s best judgment of current events and actions that we may undertake in the future.
Cash Flows Provided By (Used In) Investing Activities Cash flows provided by investing activities in 2023 were $574 million compared to $745 million in 2022 and cash flows used in investing activities of $18 million in 2021.
Cash Flows Provided By Investing Activities Cash flows provided by investing activities in 2024 were $326 million compared to $574 million in 2023.
Scent Segment Adjusted Operating EBITDA Scent Segment Adjusted Operating EBITDA increased $38 million, or 9% on a reported basis, to $461 million (19.3% of segment sales) in 2023 from $423 million (18.4% of segment sales) in the comparable 2022 period.
Scent Segment Adjusted Operating EBITDA Scent Segment Adjusted Operating EBITDA increased $57 million, or 12% on a reported basis, to $518 million (21.2% of segment sales) in 2024 from $461 million (19.3% of segment sales) in 2023.
A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded. 44 Table of Contents We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components.
We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. Components within a segment that have similar economic characteristics have been aggregated as a single reporting unit.
See Note 6 to the Consolidated Financial Statements for additional information. The Periodic Assessment of Potential Impairment of Long-lived Assets We review long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered.
The Periodic Assessment of Potential Impairment of Long-lived Assets We review long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. An estimate of undiscounted future cash flows produced by an asset or group of assets is compared to the carrying value to determine whether impairment exists.
For more detailed information about risks related to COVID-19 pandemic, refer to Item 1A, “Risk Factors” - International conflicts (such as the Russia-Ukraine war and Israel-Hamas war), geopolitical events, natural disasters, public health crises (such as the COVID-19 pandemic), trade wars, terrorist acts, labor strikes, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations), accidents and other events could adversely affect our business and financial results, including by disrupting development, manufacturing, distribution or sale of our products. 2023 Financial Performance Overview For a reconciliation between reported and adjusted figures, please refer to the “Non-GAAP Financial Measures” section.
For more detailed information about risks related to the Russia-Ukraine war and the Israel-Hamas war, refer to Item 1A, “Risk Factors” – “Supply chain disruptions, geopolitical developments, climate-change events, natural disasters, public health crises, tariffs and trade wars, and other events may adversely affect our business, our procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results.” 2024 Financial Performance Overview For a reconciliation between reported and adjusted figures, please refer to the “Non-GAAP Financial Measures” section.
The increase in S&A expenses was primarily driven by higher operating expenses for S&A related activities and legal fees incurred for the ongoing investigations of the fragrance businesses, offset in part by lower professional fees, including consulting costs, and the net impact of the change in business portfolio mix.
The increase in S&A expenses was primarily driven by an increase in incentive compensation expense, professional fees, legal fees and provisions incurred for the ongoing investigations of the fragrance businesses, and divestiture related costs incurred in preparation for the sale of the Pharma Solutions disposal group, offset in part by the change in business portfolio mix due to divestitures.
The decrease in cash flows used in financing activities from 2021 to 2022 was primarily driven by lower repayments of long-term debt and an increase in revolving credit facility and short-term borrowings, offset in part by net repayments of commercial paper, compared to proceeds from issuance of commercial paper in 2021, higher cash dividend payments and higher purchases of redeemable non-controlling interests. 40 Table of Contents We paid dividends totaling $826 million, $810 million and $667 million in 2023, 2022 and 2021, respectively.
The decrease in cash flows used in financing activities from 2023 to 2024 was primarily driven by lower dividends and higher repayments in the prior year period of commercial paper and amounts under the Revolving Credit Facility, offset in part by increased repayments of long-term debt. We paid dividends totaling $514 million and $826 million in 2024 and 2023, respectively.
An estimate of undiscounted future cash flows produced by an asset or group of assets is compared to the carrying value to determine whether impairment exists. If assets are determined to be impaired, the loss is measured based on an estimate of fair value using various valuation techniques, including a discounted estimate of future cash flows.
If assets are determined to be impaired, the loss is measured based on an estimate of fair value using various valuation techniques, including a discounted estimate of future cash flows. There was no impairment recorded of long-lived assets for the years ended December 31, 2024 and 2023.
Sales Sales in 2023 decreased $961 million, or 8% on a reported basis, to $11.479 billion compared to $12.440 billion in the 2022 period. On a currency neutral basis, sales in 2023 decreased 6% compared to the 2022 period. Exchange rate variations had an unfavorable impact on net sales in 2023 of 2%.
Sales Sales in 2024 of $11.484 billion remained flat compared to sales of $11.479 billion in 2023. On a currency neutral basis, sales in 2024 increased 3% compared to 2023. Exchange rate variations had an unfavorable impact on net sales in 2024 of 3%.
The decrease in amortization expense was primarily driven by the reduction in intangible assets as a result of the divestitures of the Microbial Control business unit in 2022, the portion of the Savory Solutions business and FSI business in 2023, an impairment of intangible assets of an asset group that operates primarily in Russia during 2022 and intangible assets of the portion of the Savory Solutions business, FSI business and Cosmetic Ingredients business being classified as “held for sale,” and therefore no longer recognizing amortization expense on those intangible assets.
The decrease in amortization expense was primarily driven by the reduction in intangible assets as a result of the change in business portfolio mix due to divestitures and intangible assets of the Pharma Solutions disposal group being classified as “held for sale,” and therefore no longer recognizing amortization expense on those intangible assets. See Note 4 for additional information.
Our non-GAAP financial measures are defined below. 45 Table of Contents These non-GAAP financial measures are intended 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.
We also provide the non-GAAP measure net debt solely for the purpose of providing information on the Company’s compliance with debt covenants contained in its debt agreements. Our non-GAAP financial measures are defined below. 45 Table of Contents These non-GAAP financial measures are intended to provide additional information regarding our underlying operating results and comparable year-over-year performance.
Significant judgment is required to estimate the intangibles and fair value of fixed assets and in assigning their respective useful lives. Accordingly, we typically engage third-party valuation specialists, who work under the direction of management, to assist in valuing significant tangible and intangible assets acquired.
Significant judgment is required to estimate the fair value of intangibles and fixed assets and in assigning their respective useful lives.
Term Loan Amendment No. 5 and Revolver Amendment No. 4, among other things, extend the period during which a Term Loan Covenant Relief Period and Revolver Covenant Relief Period are provided with respect to the financial covenant contained in the Existing Term Loan Credit Agreement and the Existing Revolving Credit Agreement, respectively, through December 31, 2025, or such earlier date on which the Company elects to terminate such period, by providing that during the Term Loan Covenant Relief Period and Revolver Covenant Relief Period, our consolidated leverage ratio shall not exceed as of the end of the fiscal quarter for the period of the four fiscal quarters then ended: (i) 5.25x for any fiscal quarter ending on or before March 31, 2024, (ii) 4.75x for the fiscal quarter ending June 30, 2024, (iii) 4.50x for the fiscal quarter ending September 30, 2024, (iv) 4.25x for any subsequent fiscal quarter ending on or before March 31, 2025, (v) 4.00x for any subsequent fiscal quarter ending on or before September 30, 2025 and (vi) 3.75x for the fiscal quarter ending December 31, 2025. 41 Table of Contents During the Term Loan Covenant Relief Period and the Revolver Covenant Relief Period, the amendments prohibit us from (i) effecting share repurchases, (ii) declaring and paying dividends in cash on common stock in excess of $0.81 per share per fiscal quarter (for an aggregate amount of $3.24 per fiscal year) and (iii) creating liens to secure debt in excess of the greater of $300 million and 3.65% of Consolidated Net Tangible Assets (as defined in the Term Loan Credit Agreement and Revolving Credit Agreement), in each case subject to certain exceptions set forth therein.
During the Term Loan Covenant Relief Period and the Revolver Covenant Relief Period, the amendments prohibit us from (i) effecting share repurchases, (ii) declaring and paying dividends in cash on common stock in excess of $0.81 per share per fiscal quarter (for an aggregate amount of $3.24 per fiscal year) and (iii) creating liens to secure debt in excess of the greater of $300 million and 3.65% of Consolidated Net Tangible Assets (as defined in the Term Loan Credit Agreement and Revolving Credit Agreement), in each case subject to certain exceptions set forth therein.
Restructuring and Other Charges Restructuring and other charges increased to $68 million in 2023 compared to $12 million in 2022. The increase was driven by higher severance costs incurred as part of the 2023 Restructuring Program, net of reversals of prior severance cost accruals. See Note 2 for additional information.
Restructuring and Other Charges Restructuring and other charges decreased to $29 million in 2024 compared to $68 million in 2023. The 2024 amounts represent costs primarily related to the IFF Productivity Program and the 2023 amounts represent severance costs primarily incurred as part of the 2023 Restructuring Program. See Note 5 for additional information.
Health & Biosciences Segment Adjusted Operating EBITDA Health & Biosciences Segment Adjusted Operating EBITDA decreased $46 million, or 7% on a reported basis, to $588 million (28.3% of segment sales) in 2023 from $634 million (27.1% of segment sales) in the comparable 2022 period.
Health & Biosciences Segment Adjusted Operating EBITDA Health & Biosciences Segment Adjusted Operating EBITDA increased $66 million, or 11% on an adjusted basis, to $654 million (29.6% of segment sales) in 2024 from $588 million (28.3% of segment sales) in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed6 unchanged
Biggest changeBased on a hypothetical decrease or increase of 10% in the value of the U.S. dollar against the Euro, the estimated fair value of our cross currency swaps would change by approximately $152 million. At December 31, 2023, the fair value of our EUR fixed rate debt was $1.384 billion.
Biggest changeBased on a hypothetical decrease or increase of 10% in the value of the U.S. dollar against the Euro, the estimated fair value of our cross currency swaps would change by approximately $143 million. At December 31, 2024, the fair value of our EUR fixed rate debt was $813 million.
These contracts, and the counterparties to which are major international financial institutions, generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months, and are marked-to-market with changes in fair value that are recorded to Other expense (income), net within our Consolidated Statements of (Loss) Income and Comprehensive Loss.
These contracts, and the counterparties to which are major international financial institutions, generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months, and are marked-to-market with changes in fair value that are recorded to Other expense (income), net within our Consolidated Statements of Income (Loss) and Comprehensive Loss.
Based on a hypothetical decrease or increase of 1% in interest rates, our annual interest expense would change by approximately $6 million. We purchase certain commodities, such as natural gas, electricity, petroleum-based products and certain crop related items. We generally purchase these commodities based upon market prices that are established with the vendor as part of the purchase process.
Based on a hypothetical decrease or increase of 1% in interest rates, our annual interest expense would change by approximately $4 million. We purchase certain commodities, such as natural gas, electricity, petroleum-based products and certain crop related items. We generally purchase these commodities based upon market prices that are established with the vendor as part of the purchase process.
For the year ended December 31, 2023, our exposure to market risk was estimated using sensitivity analyses, which illustrate the change in the fair value of a derivative financial instrument assuming hypothetical changes in foreign exchange rates and interest rates.
For the year ended December 31, 2024, our exposure to market risk was estimated using sensitivity analyses, which illustrate the change in the fair value of a derivative financial instrument assuming hypothetical changes in foreign exchange rates and interest rates.
The major foreign currencies involve the markets in the European Union, Great Britain, Mexico, Brazil, China, India, Indonesia, Australia, Russia and Japan, although all regions are subject to foreign currency fluctuations versus the U.S. dollar.
The major foreign currencies involve the markets in the European Union, Great Britain, Mexico, Brazil, China, India, Indonesia, Australia, Japan and Argentina, although all regions are subject to foreign currency fluctuations versus the U.S. dollar.
Based on a hypothetical decrease or increase of 10% in the applicable balance sheet exchange rates (primarily against the U.S. dollar), the estimated fair value of our foreign currency forward contracts would change by approximately $153 million as of December 31, 2023.
Based on a hypothetical decrease or increase of 10% in the applicable balance sheet exchange rates (primarily against the U.S. dollar), the estimated fair value of our foreign currency forward contracts would change by approximately $475 million as of December 31, 2024.
We have entered into certain cross currency swap agreements in order to mitigate a portion of our net European investments from foreign currency risk. As of December 31, 2023, these swaps were in a liability position with an aggregate fair value of $161 million.
We have entered into certain cross currency swap agreements in order to mitigate a portion of our net European investments from foreign currency risk. As of December 31, 2024, these swaps were in a liability position with an aggregate fair value of $90 million.
Based on a hypothetical decrease or increase of 10% in interest rates, the estimated fair value of our US fixed rate debt would change by approximately $623 million. At December 31, 2023, the total amount of our outstanding debt subject to interest rate fluctuations was $895 million.
Based on a hypothetical decrease or increase of 10% in interest rates, the estimated fair value of our US fixed rate debt would change by approximately $634 million. At December 31, 2024, the total amount of our outstanding debt subject to interest rate fluctuations was $413 million.
Based on a hypothetical decrease or increase of 10% in foreign exchange rates, the estimated fair value of our EUR fixed rate debt would change by approximately $143 million. At December 31, 2023, the fair value of our USD fixed rate debt was $6.227 billion.
Based on a hypothetical decrease or increase of 10% in foreign exchange rates, the estimated fair value of our EUR fixed rate debt would change by approximately $90 million. At December 31, 2024, the fair value of our USD fixed rate debt was $6.338 billion.

Other IFF 10-K year-over-year comparisons