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What changed in SENSIENT TECHNOLOGIES CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SENSIENT TECHNOLOGIES CORP'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.

+215 added−210 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-22)

Top changes in SENSIENT TECHNOLOGIES CORP's 2024 10-K

215 paragraphs added · 210 removed · 175 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

40 edited+10 added−9 removed31 unchanged
Biggest changeRaw Materials The Company uses a wide range of raw materials in producing its products. Chemicals used to produce certified colors are obtained from several domestic and foreign suppliers. Raw materials for natural colors, such as carmine, beta-carotene, annatto, and turmeric, are sourced internally at our Lima, Peru facility or purchased from overseas and U.S. sources.
Biggest changeRaw materials for natural colors, such as carmine, beta-carotene, annatto, and turmeric, are sourced internally at our Lima, Peru facility or purchased from overseas and U.S. sources. Since October 2022, the Company has owned a natural food colorings business located near Istanbul, Turkey, and has vertically integrated production and processing capacity in black carrot and other natural color products.
The main products of the Group are systems products, including flavor-delivery systems, and compounded and blended products. In addition, the Group has strong positions in selected ingredient products such as essential oils, natural and synthetic flavors, and natural extracts. The Group serves food and non-food industries.
The main products of the Group are systems products, including flavor-delivery systems, and compounded and blended products. In addition, the Group has strong positions in selected ingredient products such as natural and synthetic flavors, natural extracts, and essential oils. The Group serves food and non-food industries.
The Company provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for personal care, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, such as colors, flavors, coatings, and nutraceutical ingredients; and technical colors for industrial applications.
The Company provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for personal care, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, such as colors, flavors, and coatings; and technical colors for industrial applications.
Manufacturing operations are located in Australia, China, India, Japan, Thailand, New Zealand, and the Philippines, with sales offices also located in the India and Thailand facilities. The Asia Pacific Group maintains additional offices for local technical support and sales in China and Indonesia as well as for research and development in Singapore.
Manufacturing operations are located in Australia, China, India, Japan, Thailand, New Zealand, and the Philippines, with sales offices also located in India and Thailand. The Asia Pacific Group maintains additional offices for local technical support and sales in China and Indonesia as well as for research and development in Singapore.
The Company’s research, development, and quality assurance personnel support the Company’s efforts to improve existing products and develop new products tailored to customer needs, while providing ongoing technical support and know-how to the Company’s manufacturing activities.
The Company’s research, development, agronomy, and quality assurance personnel support the Company’s efforts to improve existing products and develop new products tailored to customer needs, while providing ongoing technical support and know-how to the Company’s manufacturing activities.
Research and Development/Quality Assurance The development of specialized products and services is a complex technical process calling upon the combined knowledge and talents of the Company’s research, development, and quality assurance personnel.
Research and Development/Quality Assurance The development of specialized products and services is a complex technical process calling upon the combined knowledge and talents of the Company’s research, development, agronomy, and quality assurance personnel.
Corporate Corporate provides management, administrative, and support services to the Company from its headquarters in Milwaukee, Wisconsin. The Company’s corporate expenses, divestiture & other related costs and income, share-based compensation, restructuring and other charges, including operational improvement plan costs and income and portfolio optimization plan costs, and other costs, are included in the “Corporate & Other” category.
Corporate Corporate provides management, administrative, and support services to the Company from its headquarters in Milwaukee, Wisconsin. The Company’s corporate expenses, divestiture & other related income, share-based compensation, restructuring and other charges, including the Portfolio Optimization Plan costs, and other costs, are included in the “Corporate & Other” category.
Competition for the supply of dehydrated vegetables is based principally on product quality, customer service, and price. • Color. Competition in the color market is diverse, with the majority of the Company’s competitors specializing in either synthetic dyes and pigments or natural colors or coloring foodstuffs (in Europe).
Competition for the supply of dehydrated vegetables is based principally on product quality, customer service, and price. • Color. Competition in the color market is diverse, with the majority of the Company’s competitors specializing in either synthetic dyes and pigments, natural colors, or coloring foods (in Europe).
The Company’s corporate expenses, divestiture & other related costs and income, share-based compensation, restructuring and other charges, including operational improvement plan costs and income and portfolio optimization plan costs, and certain other costs are included in the “Corporate & Other” category as described in this report.
The Company’s corporate expenses, divestiture & other related income, share-based compensation, restructuring and other charges, including the Portfolio Optimization Plan costs, and certain other costs are included in the “Corporate & Other” category as described in this report.
The advanced dehydration technologies utilized by our Natural Ingredients business permit fast and effective rehydration of ingredients used in many of today’s popular convenience foods. As of December 31, 2023, the Group’s principal manufacturing plants are located in California, Illinois, Michigan, Wisconsin, New Mexico, Belgium, Costa Rica, Mexico, Germany, and the United Kingdom.
The dehydration technologies utilized by our Natural Ingredients business permit fast and effective rehydration of ingredients used in many of today’s popular convenience foods. As of December 31, 2024, the Group’s principal manufacturing plants are located in California, Illinois, Michigan, Wisconsin, New Mexico, Belgium, Costa Rica, Mexico, Germany, and the United Kingdom.
The Flavors & Extracts Group produces flavor, extracts, and essential oils products that impart a desired taste, texture, aroma, or other characteristics to a broad range of consumer and other products. This Group includes the Company’s natural ingredients business, which produces dehydrated garlic, onion, and other natural ingredients for food processors.
The Flavors & Extracts Group produces flavor, extract, and essential oil products that impart a desired taste, texture, aroma, or other characteristics to a broad range of consumer and other products. This Group includes the Company’s natural ingredients business, which produces dehydrated garlic, onion, and other natural ingredients for food processors.
For 2023, the Company’s three reportable segments were the Flavors & Extracts Group and the Color Group, which are managed on a product line basis, and the Asia Pacific Group, which is managed on a geographic basis.
For 2024, the Company’s three reportable segments were the Flavors & Extracts Group and the Color Group, which are managed on a product line basis, and the Asia Pacific Group, which is managed on a geographic basis.
Examples of actions taken to demonstrate our commitment and progress toward achieving our goal of providing a safe workplace include: (i) Corporate Environmental, Health and Safety (EHS) Department oversight of safety and compliance matters at all Company facilities; (ii) periodic EHS audits conducted at Company facilities by third parties at the direction of the Corporate Legal Department to determine the state of facility compliance with applicable safety laws and regulations; (iii) implementation of “best-practice” programs and management systems across all business units worldwide; (iv) ongoing capital investments aimed at continually improving standards for environment, health, and safety in each of our plants around the world; (v) meaningful use of metrics to apply leading and lagging indicators toward incremental improvement and sustainable results; (vi) regular communication and engagement with employees on safety topics through safety committee meetings, plant-wide communication meetings, and “tool box” meetings; and (vii) root cause analysis of all injuries and near misses to ensure that lessons learned can be applied across the entire organization.
Examples of specific practices demonstrating our commitment and progress toward achieving this goal include: (i) Corporate Environmental, Health and Safety (EHS) Department oversight of safety and compliance matters at all Company facilities; (ii) periodic EHS audits conducted at Company facilities by third parties at the direction of the Corporate Legal Department to determine the state of facility compliance with applicable safety laws and regulations; (iii) implementation of “best-practice” programs and management systems across all business units worldwide; (iv) ongoing capital investments aimed at continually improving standards for environment, health, and safety in each of our plants around the world; (v) meaningful use of metrics to apply leading and lagging indicators toward incremental improvement and sustainable results; (vi) regular communication and engagement with employees on safety topics through safety committee meetings, plant-wide communication meetings, and “tool box” meetings; and (vii) root cause analysis of all injuries and near misses to ensure that lessons learned can be applied across the entire organization.
The Company believes that it gains a competitive advantage as the only major basic manufacturer of a full range of color products, including synthetic dyes and pigments as well as natural colors.
The Company believes that it gains a competitive advantage as the only major basic manufacturer of a full range of color products, including synthetic dyes and pigments, and a full range of natural colors and coloring foods.
The Company is also one of the largest producers and distributors of chili powder, paprika, chili pepper, and dehydrated vegetables such as parsley, celery, and spinach. The Company sells dehydrated products to food manufacturers for use as ingredients and also for repackaging under private labels for sale to the retail market and to the food service industry.
The Company is also one of the largest producers and distributors of chili powder, paprika, chili pepper, and parsley. The Company sells dehydrated products to food manufacturers for use as ingredients and also for repackaging under private labels for sale to the retail market and to the food service industry.
The Company’s efforts also include the development of proprietary seed lines, sometimes in partnership with other business partners, for its natural ingredients and natural colors business lines. The Company employed 760 people in research and development, quality assurance, quality control, and lab technician positions as of December 31, 2023.
The Company’s efforts also include the development of proprietary seed lines, sometimes in partnership with other business partners, for its natural ingredients and natural colors business lines. The Company employed 772 people in research and development, quality assurance, agronomy, quality control, and lab technician positions as of December 31, 2024.
We continue to develop, and improve upon, our on-boarding process to differentiate ourselves from our competitors and help enable our employees to succeed. We generally track our progress through weekly pre-hire team on-boarding calls, new hire surveys, new hire interviews, hiring manager surveys, and a monthly report of our results to senior leadership.
We continue to develop, and improve upon, our onboarding process to differentiate ourselves from our competitors and help enable our employees to succeed. We generally track our progress through weekly pre-hire team onboarding calls, new hire surveys, new hire check-ins, hiring manager surveys, and a monthly report of our results to senior leadership.
We also promote regular 1:1 meetings between non-production employees and their supervisors. In order to continue to develop and retain our key talent, we offer training programs based upon the employee’s role in the Company.
We also require regular 1:1 meetings between non-production employees and their supervisors. In order to continue to develop and retain our key talent, we offer training and project work based upon the employee’s role in the Company.
We also maintain personalized career planning, ongoing coaching and development by Corporate and local leadership, and a “High Potential Program,” which ensures our key talent learns from and gains exposure to senior leadership. Performance reviews and succession planning occur company-wide on an annual basis.
We also maintain personalized career planning, ongoing coaching and development by Corporate and local leadership, and focused programming that ensures our key talent learns from and gains exposure to senior leadership. Performance reviews and succession planning occur company-wide on an annual basis.
Employees throughout the organization know these expectations as the “Three Rules.” Under the Three Rules, all of our employees are expected to exhibit and promote integrity and professionalism in the workplace. All of our employees must adhere to these non-negotiable expectations for appropriate behavior.
Employees throughout the organization know these expectations as the “Four Rules.” Under the Four Rules, all of our employees are expected to exhibit and promote integrity, safety, professionalism, and a customer-centric mentality in the workplace. All of our employees must adhere to these non-negotiable expectations for appropriate behavior.
Our Corporate Creed, set forth at the beginning of our Code of Conduct, sets forth three non-negotiable rules: (1) Always tell the truth; (2) Always produce safe, high-quality products in safe and secure facilities; and (3) Always be professional.
Our Corporate Creed, set forth at the beginning of our Code of Conduct, sets forth four non-negotiable rules: (1) Always tell the truth; (2) Always produce safe, high-quality products in safe and secure facilities; (3) Always be professional; and (4) Find a way to say “yes” to customers.
We also challenge ourselves to take a broad view of talent acquisition, regularly seeking talent from non-traditional backgrounds and from outside our industry, and moving beyond restrictive pedigree requirements in favor of skills and the ability to learn.
We also challenge ourselves to take a broad view of talent acquisition, regularly seeking talent from non-traditional backgrounds and from outside our industry, and moving beyond restrictive pedigree requirements in favor of skills and the ability to learn. After hiring a candidate, we believe that an effective onboarding is a critical factor in whether a new employee succeeds or fails.
The Company’s flavor formulations are used in many of the world’s best-known consumer products. Under the unified brand names of Sensient Flavors and Sensient Natural Ingredients, the Group is a supplier to multinational and regional companies. As noted above, during the second quarter of 2021, the Company divested its fragrances product line (excluding its essential oils product line).
The Company’s flavor formulations are used in many of the world’s best-known consumer products. Under the unified brand names of Sensient Flavors and Sensient Natural Ingredients, the Group is a supplier to multinational and regional companies.
We perform annual, company-wide training on our Code of Conduct, as well as for all new hires. The CEO personally provides instruction on the Three Rules during leadership training conducted each year throughout the organization. To further reinforce our expectations, the CEO internally publishes anonymized quarterly reports of Code of Conduct violations and their consequences.
We perform annual, company-wide training on our Code of Conduct, as well as for all new hires. The CEO personally provides instruction on the Four Rules during leadership training conducted each year throughout the organization and his company-wide Town Halls.
Within the Color Group, development activity for food and beverage product lines is focused on value-added products derived from synthetic dyes and pigments, natural food and beverage colors, and color systems. The Company also produces a diverse line of colors and ingredients for personal care, pharmaceutical, and nutraceutical applications, and technical colors for industrial applications.
Within the Color Group, development activity for food and beverage product lines is focused on value-added products derived from natural food and beverage colors, synthetic dyes and pigments, and color systems.
The Company believes that its advanced process technology, state-of-the-art laboratory facilities and equipment, world-class application chemists, and a complete range of synthetic and natural color products constitute the basis for its market leadership position. Asia Pacific Group The Asia Pacific Group focuses on marketing the Company’s diverse product lines in the Pacific Rim under the Sensient name.
The Company believes that its advanced process technology, state-of-the-art laboratory facilities and equipment, world-class application chemists, agronomy program, and complete range of natural and synthetic color products constitute the basis for its market leadership position.
The businesses are not materially dependent upon any particular patent, trademark, or formula; however, trademarks, patents, and formulae are important to the business of the Company. Human Capital As of December 31, 2023, the Company employed 3,956 persons worldwide. Approximately 43% of our employees were employed in the United States, and approximately 57% were employed outside of the United States.
Patents, Formulae, and Trademarks The Company owns or controls many patents, formulae, and trademarks related to its businesses. The businesses are not materially dependent upon any particular patent, trademark, or formula; however, trademarks, patents, and formulae are important to the business of the Company. Human Capital As of December 31, 2024, the Company employed 4,014 persons worldwide.
As part of the Company’s effort to attract and motivate employees, we offer compensation and comprehensive benefits that we believe are competitive in the markets in which we operate and compete for talent.
In furtherance of this goal, our primary areas of focus remain: (i) talent acquisition, (ii) onboarding, (iii) coaching, development, and retention, and (iv) integrity and professionalism. As part of the Company’s effort to attract and motivate employees, we offer compensation and comprehensive benefits that we believe are competitive in the markets in which we operate and compete for talent.
The majority of the proprietary processes and formulae developed by the Company are maintained as trade secrets and protected through internal physical and information technology controls and confidentiality agreements with customers as well as confidentiality and non-competition agreements with employees. 7 Index Within the Flavors & Extracts Group, development activity is focused on ingredients, flavors, natural extracts, and essential oils as well as flavor systems that are responsive to consumer trends and the processing needs of our food and beverage customers.
Within the Flavors & Extracts Group, development activity is focused on flavors, natural extracts, ingredients, and essential oils as well as flavor systems that are responsive to consumer trends and the processing needs of our food and beverage customers.
Financial information regarding the Company’s three reportable segments and the operations included within Corporate & Other is set forth in Note 12, Segment and Geographic Information , in the Notes to Consolidated Financial Statements included in this report.
Financial information regarding the Company’s three reportable segments and the operations included within Corporate & Other is set forth in Note 12, Segment and Geographic Information , in the Notes to Consolidated Financial Statements included in this report. Acquisitions On October 3, 2022, the Company acquired Endemix Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş.
On October 3, 2022, the Company acquired Endemix Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş. (collectively, Endemix), a natural colors business located in Turkey. The Company paid $23.3 million in cash for this acquisition, which is net of $1.3 million in debt assumed. This business is part of the Color segment.
(collectively, Endemix), a natural colors business located in Turkey. The Company paid $23.3 million in cash for this acquisition, which is net of $1.3 million in debt assumed.
Operating through its Natural Ingredients business, which we formerly referred to as our Dehydrated Ingredients business, the Company believes it is the second largest producer (by sales) of dehydrated onion and garlic products in the United States.
In food industries, markets include savory, beverage, and sweet flavors, as well as certain bioingredients. In non-food industries, the Group supplies essential oil products to the personal, homecare, and bioingredients markets. Operating through its Natural Ingredients business, the Company believes it is the second largest producer (by sales) of dehydrated onion and garlic products in the United States.
As of December 31, 2023, the Group’s principal manufacturing plants are located in Missouri, Brazil, Canada, China, France, Germany, Italy, Mexico, Peru, Turkey, and the United Kingdom. 6 Index The Color Group operates under the following trade names: ● Sensient Food Colors (food and beverage colors); ● Sensient Pharmaceutical Coating Systems (pharmaceutical and nutraceutical colors and coatings); ● Sensient Cosmetic Technologies (personal care colors, ingredients, and systems); and ● Sensient Specialty Markets (paper colors and industrial colors for plastics, leather, wood stains, antifreeze, landscaping, and other uses).
The Color Group operates under the following trade names: ● Sensient Food Colors (food and beverage colors); ● Sensient Pharmaceutical (pharmaceutical and nutraceutical colors and coatings); ● Sensient Beauty (personal care colors, ingredients, and systems); and ● Sensient Specialty Markets (paper colors and industrial colors for plastics, leather, wood stains, antifreeze, landscaping, and other uses).
Our Board of Directors oversees our human capital management program, in consultation with our CEO and Vice President, Human Resources. The Board also has routine contact with all Company officers and periodically receives presentations from the Group Presidents and Vice President as well as select General Managers.
The Board also has routine contact with all Company officers and periodically receives presentations from the Group Presidents and Vice President as well as select General Managers. 8 Index Talent Acquisition and Talent Development We are committed to the recruitment, retention, and continued development of people who thrive and succeed in our culture.
On April 1, 2021, the Company completed the sale of the fragrances product line (excluding its essential oils product line) for $36.3 million of net cash. Flavors & Extracts Group The Company is a global developer, manufacturer, and supplier of flavor systems for the food, beverage, and personal care industries.
This business is part of the Color segment. 5 Index Divestitures In 2022, the Company received $2.5 million of net cash related to the previously completed sale of its yogurt fruit preparations product line. Flavors & Extracts Group The Company is a global developer, manufacturer, and supplier of flavor systems for the food, beverage, and personal care industries.
These raw materials are obtained from domestic and foreign suppliers. Flavor enhancers and secondary flavors are produced from brewers’ yeast and vegetable materials such as corn and soybeans. Chili peppers, onion, garlic, and other vegetables are acquired under annual contracts with numerous growers in the western United States and China.
Onion, garlic, chili peppers, and other vegetables are acquired under annual production contracts with numerous growers in the western United States.
Competition is based upon reliability in product quality, service, and price as well as technical support available to customers.
Competition is based upon reliability in product quality, service, and price as well as technical support available to customers. Foreign Operations Additional information regarding the Company’s foreign operations is set forth in Note 12, Segment and Geographic Information , in the Notes to Consolidated Financial Statements included in this report.
The Company also makes industrial colors and other dyes and pigments used in a variety of non-food applications.
The Company also makes industrial colors and other dyes and pigments used in a variety of non-food applications. As of December 31, 2024, the Group’s principal manufacturing plants are located in Missouri, Brazil, Canada, China, France, Germany, Italy, Mexico, Peru, Turkey, and the United Kingdom.
In addition, we strictly apply principles of non-discrimination, which are foundational to our non-negotiable expectations of integrity and professionalism, in all employment-related decisions. 9 Index Health and Safety We take pride in our strong and continually improving health and safety programs, which we view as important aspects of our economic health and core values.
Health and Safety We take pride in our strong and continually improving health and safety programs, which we view as important aspects of our economic health and core values, and we expect each employee to actively participate in and contribute to our goal of always providing a safe work place.
Of our 3,956 employees worldwide, we had 505 general administration employees ( e.g. , accounting, administrative, regulatory compliance, IT, human resources, etc.), 2,459 production employees, 465 research and development employees, and 527 sales and marketing employees. We believe that our future success is dependent upon our continued ability to attract, retain, and motivate successful employees.
Approximately 44% of our employees were employed in the United States, and approximately 56% were employed outside of the United States. Of our 4,014 employees worldwide, we had 507 general administration employees ( e.g. , accounting, administrative, regulatory compliance, IT, human resources, etc.), 2,502 production employees, 458 research and development employees, and 547 sales and marketing employees.
Removed
Acquisitions On July 15, 2021, the Company acquired substantially all of the assets of Flavor Solutions, Inc ., a flavors business located in New Jersey. 5 Index The purchase price for this acquisition was $14.9 million in cash. This business is part of the Flavors & Extracts segment.
Added
Given its broad portfolio of natural colors and applications capabilities, the Company believes it has the capability to successfully adapt to any regulatory restrictions on synthetic colors. 6 Index Asia Pacific Group The Asia Pacific Group focuses on marketing the Company’s diverse product lines in the Pacific Rim under the Sensient name.
Removed
Divestitures In 2021, the Company received $1.5 million of net cash related to the previously completed sales of its yogurt fruit preparations and inks product lines. In 2022, the Company received $2.5 million of net cash related to its previously completed sale of its yogurt fruit preparations product line.
Added
The majority of the proprietary processes and formulae developed by the Company are maintained as trade secrets and protected through internal physical and information technology controls and confidentiality agreements with customers as well as confidentiality and non-competition agreements with employees (where permitted).
Removed
In food industries, markets include savory, beverage, and sweet flavors, as well as certain bioingredients. Through April 1, 2021, in non-food industries, the Group supplied fragrances and essential oil products to the personal, homecare, and bioingredients markets.
Added
The Company also produces a diverse line of colors and ingredients for personal care, pharmaceutical, and nutraceutical applications, and technical colors for industrial applications. 7 Index Raw Materials The Company uses a wide range of raw materials in producing its products. Chemicals used to produce certified colors are obtained from several domestic and foreign suppliers.
Removed
After the divestiture of the fragrances product line on April 1, 2021, the Group still produces and supplies essential oils to the personal care market.
Added
In the production of flavors, extracts, and essential oils, the principal raw materials include essential oils, botanicals, extracts, fruits, and juices. These raw materials are obtained from domestic and foreign suppliers. Flavor enhancers and secondary flavors are produced from brewers’ yeast and vegetable materials such as corn and soybeans.
Removed
As of October 2022, the Company owns a natural food colorings business located near Istanbul, Turkey, and has vertically integrated production and processing capacity in black carrot and other natural color products. In the production of flavors, extracts, and essential oils, the principal raw materials include essential oils, botanicals, extracts, fruits, and juices.
Added
We believe that our future success is dependent upon our continued ability to attract, retain, and motivate successful employees. Our Board of Directors oversees our human capital management program, in consultation with our CEO and Vice President, Human Resources.
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Foreign Operations Additional information regarding the Company’s foreign operations is set forth in Note 12, Segment and Geographic Information , in the Notes to Consolidated Financial Statements included in this report. 8 Index Patents, Formulae, and Trademarks The Company owns or controls many patents, formulae, and trademarks related to its businesses.
Added
To further reinforce our expectations, the CEO internally publishes anonymized quarterly reports of Code of Conduct violations and their consequences, which invariably means termination of employment. In addition, we strictly apply principles of non-discrimination, which are foundational to our non-negotiable expectations of integrity and professionalism, in all employment-related decisions.
Removed
Talent Acquisition and Talent Development We are committed to the recruitment, retention, and continued development of people who thrive and succeed in our culture. In furtherance of this goal, our primary areas of focus remain: (i) talent acquisition, (ii) on-boarding, (iii) coaching, development, and retention, and (iv) integrity and professionalism.
Added
The Board of Directors also receives a report on personnel safety related issues at each of its meetings. 9 Index Food Safety We maintain a robust program related to food safety, including proactive, preventive measures to ensure the quality of our products.
Removed
With our sales and technical roles, we have implemented a gamified AI-based platform to identify candidates, without bias, who share the behavioral and cognitive attributes of our most successful sales and technical employees from around the world. After hiring a candidate, we believe that an effective on-boarding is a critical factor in whether a new employee succeeds or fails.
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Examples of processes in place to ensure that we provide safe products to our customers include the following: (i) comprehensive and robust raw material approval processes; (ii) analyses of raw materials and finished goods for compliance with specifications prior to use and shipment, respectively; and (iii) established guidelines for Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP).
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We expect each employee to actively participate in and contribute to this philosophy.
Added
Since 1999, the Company has conducted comprehensive product safety audits, including GMP/HACCP audits, at all of its food ingredient manufacturing facilities. The Company also conducts key vendor quality assurance inspections directly or by third-party accredited auditing organizations and develops and implements corrective action plans for all internal, customer, and third-party audit deficiencies.
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In addition, the Company has strong reporting mechanisms in place, including a written policy that sets forth specific reportable events and a timeline for required notification to the Company’s Board of Directors when a product safety issue occurs. The Board of Directors also receives a report on food safety related issues at each of its meetings.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+23 added−16 removed93 unchanged
Biggest changeFor example, current macroeconomic and political instability caused by rising interest rates, global supply chain disruptions, inflation, ongoing conflicts between Russia and Ukraine as well as Israel and Hamas and related disruptions in the Red Sea and region, geopolitical tensions, and the strengthening of the U.S. dollar, have adversely impacted, and could continue to adversely impact, our results of operations. 10 Index We have experienced, and could continue to experience, increased raw material and energy cost inflation, as well as disruptions and delays in our supply chain, as a result of global macroeconomic trends, including increased global demand, labor shortages, geopolitical and economic tensions, including the conflicts between Russia and Ukraine and in the Middle East, which has grown out of the Israel and Hamas conflict.
Biggest changeFor example, current macroeconomic and political instability caused by rising interest rates, global supply chain disruptions, inflation, ongoing conflicts between Russia and Ukraine as well as in the Middle East, geopolitical tensions, and the strengthening of the U.S. dollar, have adversely impacted, and could continue to adversely impact, our results of operations.
In addition, if other parties were to infringe on our intellectual property rights, or if a third party successfully asserted that we had infringed on their intellectual property rights, it could have an adverse impact on our business. • Our ability to successfully maintain and upgrade our information technology systems, and to respond effectively to failures, disruptions, compromises, or breaches of our information technology systems, may adversely affect our competitiveness and profitability.
In addition, if other parties were to infringe on our intellectual property rights, or if a third party successfully asserted that we infringed their intellectual property rights, it could have an adverse impact on our business. • Our ability to successfully maintain and upgrade our information technology systems, and to respond effectively to failures, disruptions, compromises, or breaches of our information technology systems, may adversely affect our competitiveness and profitability.
We sell these products to customers in industries and markets that are highly competitive. We face intense competition from multiple competitors in each of our business lines. These competitors range from large multinational flavor companies with broad and sophisticated product portfolios and outstanding technological capabilities to smaller more specialized regional companies that focus on a single product line or offering.
We sell these products to customers in industries and markets that are highly competitive. We face intense competition from multiple competitors in each of our business lines. These competitors range from large multinational companies with broad and sophisticated product portfolios and outstanding technological capabilities to smaller more specialized regional companies that focus on a single product line or offering.
We and third parties we utilize as vendors to support our business and operations have experienced such attacks in the past and while there has been no material impact on our business, any such attacks in the future could have an adverse impact on our business.
We and third parties we utilize as vendors to support our business and operations have experienced such attacks in the past and while there has been no material impact on our business to date, any such attacks in the future could have an adverse impact on our business.
While the long-term environment impact of these moves is favorable, the shorter and medium-term impact in increased energy prices could adversely affect our profitability. • The financial condition of our customers may adversely affect their ability to buy products from us at current levels, to accept price increases, or to pay for products that they have already purchased.
While the long-term environmental impact of these moves is favorable, the shorter and medium-term impact in increased energy prices could adversely affect our profitability. • The financial condition of our customers may adversely affect their ability to buy products from us at current levels, to accept price increases, or to pay for products that they have already purchased.
For example, our Natural Ingredients business has significant operations in California, which has been dealing with drought conditions, flooding, and water supply issues, which such issues had negatively impacted certain of our yields from onion harvests in prior years as discussed above.
For example, our Natural Ingredients business has significant operations in California, which has been dealing with drought conditions, flooding, plant diseases, and water supply issues, which such issues had negatively impacted certain of our yields from onion harvests in prior years as discussed above.
These factors might adversely impact our ability to make certain products as well as our profitability on the products that can be made. • We could be adversely affected by violations of anti-bribery and anti-corruption laws and regulations. Our business is subject to the U.S.
These factors might adversely impact our ability to make certain products as well as our profitability on the products that can be made. 16 Index • We could be adversely affected by violations of anti-bribery and anti-corruption laws and regulations. Our business is subject to the U.S.
We increased the amount of onion and garlic planted in 2023, but there is no certainty that we will achieve greater yields or, if we do increase our yields, that there will be a market for such products.
We increased the amount of onion and garlic planted in 2024, but there is no certainty that we will achieve greater yields or, if we do increase our yields, that there will be a market for such products.
Additionally, the commercial outlets for many of our customers are also under intense competitive pressure, which has caused many such commercial outlets to be resistant to price increases from their suppliers.
Additionally, the commercial outlets for many of our customers are also under intense competitive or political pressure, which has caused many such commercial outlets to be resistant to price increases from their suppliers.
Manufacturing involves inherent risks such as industrial accidents, environmental events, labor disputes, labor shortages, product quality control issues, safety issues, licensing, and regulatory compliance requirements, as well as natural disasters, conflicts, terrorist acts, civil unrest, ERP software issues, cyber-attacks, and other events that we cannot control.
Manufacturing involves inherent risks such as significant equipment malfunctions, industrial accidents, environmental events, labor disputes, labor shortages, product quality control issues, safety issues, licensing, and regulatory compliance requirements, as well as natural disasters, conflicts, terrorist acts, civil unrest, ERP software issues, cyber-attacks, and other events that we cannot control.
For example, suppliers located in Ukraine are our main source of sunflower oil, which is primarily used in our savory and beverage businesses. We have encountered difficulties, and may continue to encounter difficulties, in finding favorable pricing and reliable alternative sources or substitutes for certain of the raw materials we need (including sunflower oil) for certain products.
S uppliers located in Ukraine are our main source of sunflower oil, which is primarily used in our savory and beverage businesses. We have encountered difficulties, and may continue to encounter difficulties, in finding favorable pricing and reliable alternative sources or substitutes for certain of the raw materials we need (including sunflower oil) for certain products.
We are also likely to incur additional third-party service provider costs, including sustainability platform fees, audit costs, and other service fees from sustainability professionals in order to remain compliant with newly enacted regulations, laws, and demands, including the European Union Corporate Sustainability Reporting Directive and California SB 253 and SB 261.
We are also likely to incur additional third-party service provider costs, including sustainability platform fees, audit costs, and other service fees from sustainability professionals in order to remain compliant with newly enacted regulations, laws, and demands, including the European Union Corporate Sustainability Reporting Directive and California SB 253 and SB 261, as amended by SB 219.
We have seen our interest expense rise as a result of increased interest rates, and a continued increase in such rates may negatively affect our results. • A disruption in our manufacturing operations could adversely affect our profitability. We develop, manufacture, and distribute our products around the world. Generally, our labs and plants are dedicated to particular product lines.
We have seen our interest expense rise as a result of higher interest rates, and continued high rates may negatively affect our results. • A disruption in our manufacturing operations could adversely affect our profitability. We develop, manufacture, and distribute our products around the world. Generally, our labs and plants are dedicated to particular product lines.
Additionally, consumers who buy food and personal care products from our customers may be unwilling to pay the higher prices that could result from the increased costs of products as a result of the increased costs engendered by these sustainability efforts, which could adversely affect our business and financial condition. • World events and natural disasters are beyond our control and could affect our results.
Additionally, consumers who buy food and personal care products from our customers may be unwilling to pay the higher prices that could result from the increased costs of products as a result of the increased costs engendered by these sustainability efforts, which could adversely affect our business and financial condition.
If one of our development or manufacturing facilities is disrupted or impaired, we could cause a supply disruption to our customers, which could cause short and long-term damage to our customer relationships.
If one of our development or manufacturing facilities is disrupted or impaired, we could cause a supply disruption to our customers, which could cause short and long-term damage to our customer relationships and a reduction in our revenue and an increase in our costs.
The Company sells to customers located both inside and outside the countries in which products are manufactured. The Company also depends upon suppliers both inside and outside the countries in which products are manufactured.
The Company also depends upon suppliers both inside and outside the countries in which products are manufactured.
In addition, the increased focus on ESG matters may result in new or increased regulations, laws, and demands, such as carbon tax and tariff programs and enhanced sustainability reporting regimes, which could cause us to incur additional costs or to make changes to our operations to comply with any such regulations, laws, or demands.
In addition, the increased focus on ESG matters may result, and has already resulted, in regulations, laws, and demands, such as enhanced sustainability reporting regimes, which could cause us, and has already caused us, to incur additional costs or to make changes to our operations to comply with any such regulations, laws, or demands.
World events can adversely affect national, international, and local economies. Economies can also be affected by conflicts, natural disasters, changes in climate, severe weather (including droughts and flooding), epidemics, pandemics, or other catastrophic events.
Economies can also be affected by conflicts, natural disasters, changes in climate, severe weather (including droughts and flooding), epidemics, pandemics, or other catastrophic events.
As mentioned above, our customers are under intense pressure in their markets from competitors and their end customers and as a result of changing consumer preferences. Historically, these combined pressures have resulted in some of the Company’s customers entering bankruptcy or receivership. There is risk that other customers of the Company could enter bankruptcy or receivership in the near-term.
As mentioned above, our customers are under intense pressure in their markets from competitors and their end customers and as a result of changing consumer preferences. Historically, these combined pressures have resulted in some of the Company’s customers entering bankruptcy or receivership.
In addition, individual states may also enact regulations prohibiting or limiting the manufacturing and/or sale of goods containing certain of our products (such as the California Food Safety Act’s prohibition on red dye 3), which could cause a decrease in our sales of such products and negatively impact our results of operations.
In addition, individual states may also enact regulations prohibiting or limiting the manufacturing and/or sale of goods containing certain of our products (such as the FDA ban on Red 3 and the California School Food Safety Act’s prohibition on the use of synthetic food colors in school lunches after December 31, 2027), which could cause a decrease in our sales of such products and negatively impact our results of operations.
While we maintain liability insurance against these risks, coverage may be unavailable or incomplete. A significant product defect, product recall, or product liability judgment can negatively impact our profitability for a period of time depending on the insurance coverage, costs, adverse publicity, product availability, scope, competitive reaction, and consumer attitudes.
A significant product defect, product recall, or product liability judgment can negatively impact our profitability for a period of time depending on the insurance coverage, costs, adverse publicity, product availability, scope, competitive reaction, and consumer attitudes.
In addition, while we have manufacturing facilities throughout the world, certain of our facilities are the sole manufacturer of a specific product, and a disruption in manufacturing could lead to increased costs of relocating or replacing the production of a product, or reformulating a product, which could have an adverse effect on our results.
In addition, while we have manufacturing facilities throughout the world, certain of our facilities are the sole manufacturer of a specific product, and a disruption in manufacturing could lead to increased costs of relocating or replacing the production of a product, or reformulating a product, which could have an adverse effect on our results. 15 Index Litigation and Regulatory Risks • Many of our products are used in items for human consumption and contact.
The applicable exchange rates between and among foreign currencies and the U.S. dollar have fluctuated and will continue to do so in the future.
We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. The applicable exchange rates between and among foreign currencies and the U.S. dollar have fluctuated and will continue to do so in the future.
Additionally, our yields from harvests for onion were adversely impacted in 2021 and 2022 by both drought and flooding, resulting in reduced availability of onion products for our Natural Ingredients business in recent prior years.
Additionally, our yields from harvests for onion were adversely impacted by both drought and flooding in 2022-23 and by plant diseases, including downy mildew in certain growing areas, in 2024, resulting in reduced availability of onion products for our Natural Ingredients business in recent prior years.
If inflationary conditions persist, accelerate, or expand, it will become more difficult to manage these challenges without adverse impacts to our revenues and profitability. We use various energy sources in our production and distribution processes.
Increasing our prices also may reduce sales volume and related profitability and cause us to lose customers. If inflationary conditions persist, accelerate, or expand, it will become more difficult to manage these challenges without adverse impacts to our revenues and profitability. 13 Index We use various energy sources in our production and distribution processes.
We sell flavors, colors, and other specialty ingredients that are used in foods, beverages, pharmaceuticals, personal care, nutraceuticals, and other items for human consumption or contact. These products involve risks such as contamination or spoilage, tampering, defects, and other adulteration.
We may be subject to product liability claims and product recalls, which could negatively impact our profitability and corporate image. We sell flavors, colors, and other specialty ingredients that are used in foods, beverages, pharmaceuticals, personal care, nutraceuticals, and other items for human consumption or contact. These products involve risks such as contamination or spoilage, tampering, defects, and other adulteration.
To establish a new manufacturing capability at a plant could require substantial time, money, and numerous governmental and customer approvals. Additionally, because of the complexity and highly specialized nature of many of the products we produce, it would require a tremendous amount of technical, engineering, and management time and effort to establish the new capability.
Additionally, because of the complexity and highly specialized nature of many of the products we produce, and the highly customized equipment used to produce such products, it would require a tremendous amount of technical, engineering, and management time and effort to establish the new capability.
Acquisitions also could have a dilutive effect on our financial results. Acquisitions also generally result in goodwill, which would need to be written off against earnings in the future if it becomes impaired. Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses, and expenses.
Acquisitions also generally result in goodwill, which would need to be written off against earnings in the future if it becomes impaired. Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses, and expenses. Technology and Cybersecurity Risks • Our ability to protect our intellectual property rights is key to our performance.
Additionally, many of our key personnel must have access to the Company’s trade secrets to effectively perform their job responsibilities. Although we seek to impose confidentiality, non-solicitation, loyalty, and non-competition obligations on many employees through agreements and our Code of Conduct, these efforts may not be successful.
Although we seek to impose confidentiality, non-solicitation, loyalty, and non-competition obligations on many employees through agreements and our Code of Conduct, these efforts may not be successful.
These consolidations have often produced large, sophisticated customers with increased buying power who are more capable of resisting price increases or vertically integrating. If the larger size or greater buying power of those customers results in additional negotiating strength, the prices we are able to charge could be negatively affected and our profitability could decline.
If the larger size or greater buying power of those customers results in additional negotiating strength, the prices we are able to charge could be negatively affected and our profitability could decline.
In such events, we may incur losses, or our results of operations, financial condition, or liquidity could otherwise be adversely affected. 13 Index • The impact of currency exchange rate fluctuation may negatively affect our results.
In such events, we may incur losses, or our results of operations, financial condition, or liquidity could otherwise be adversely affected. • The impact of currency exchange rate fluctuation may negatively affect our results. We report the results of our foreign operations in the applicable local currency and then translate those results into U.S. dollars at applicable exchange rates.
Additionally, if we do not maintain enough inventory to satisfy the demand of our customers, we may lose business to our competitors, which could adversely affect our results. During the COVID-19 pandemic, we held large quantities of raw material and finished goods inventory to minimize disruptions to our customers.
Additionally, if we do not maintain enough inventory to satisfy the demand of our customers, we may lose business to our competitors, which could adversely affect our results.
Since the beginning of the COVID-19 pandemic, we have seen a reduction in the size of new product launches and fewer limited time offerings from some of our customers. Any of these actions by our customers can adversely affect our results. • If we do not maintain an efficient cost structure, our profitability could decrease.
Since the beginning of the COVID-19 pandemic, we have seen a reduction in the size of new product launches and fewer limited time offerings from some of our customers. Even after the pandemic receded, this trend has continued to a degree. Any of these actions by our customers can adversely affect our results.
As a result, there is a possibility that certain competitors could attempt to exploit the Company’s trade secrets and confidential information to the Company’s competitive detriment, which could adversely impact our profitability. • We face risks associated with strategic transactions that we have completed and may pursue in the future, which could adversely affect our operating results.
As a result, there is a possibility that certain competitors could attempt to exploit the Company’s trade secrets and confidential information to the Company’s competitive detriment, which could adversely impact our profitability.
We could incur significant costs in asserting our intellectual property rights or defending ourselves from third party intellectual property claims. The laws of some of the countries in which we operate do not protect intellectual property rights to the same extent as the laws of the United States.
The laws of some of the countries in which we operate do not protect intellectual property rights to the same extent as the laws of the United States.
Our success depends in large part on the continued service and availability of our key management and technical personnel, and on our ability to attract and retain qualified new personnel. The competition for these individuals can be significant and if we are unable to successfully integrate, motivate, and reward our employees, we may not be able to retain them.
The competition for these individuals can be significant and if we are unable to successfully integrate, motivate, and reward our employees, we may not be able to retain them. The loss of key employees or inability to attract new employees in the future could harm our business.
The loss of key employees or inability to attract new employees in the future could harm our business. In addition, we need to provide for smooth transitions when replacing key management and technical personnel positions. Our operations and results may be negatively affected if we are not able to do so.
In addition, we need to provide for smooth transitions when replacing key management and technical personnel positions. Our operations and results may be negatively affected if we are not able to do so. Additionally, many of our key personnel must have access to the Company’s trade secrets to effectively perform their job responsibilities.
When and how this framework is adopted or enacted by the various countries in which we do business could increase tax complexity and uncertainty and may adversely affect our results of operations. 16 Index We are also subject to the routine examination of our income tax returns by tax authorities in those countries in which we operate, and we may be subject to assessments or audits in the future in any of these countries.
When and how this framework is adopted or enacted by the various countries in which we do business that have not yet adopted the framework could increase tax complexity and uncertainty and may adversely affect our results of operations.
We have, in the past, dealt with regulators shutting down suppliers that provided the Company with raw materials. 12 Index This adversely impacted the supply of raw materials for the affected products and, therefore, impacted our ability to produce products containing these raw materials.
This adversely impacted the supply of raw materials for the affected products and, therefore, impacted our ability to produce products containing these raw materials.
If these difficulties persist, accelerate, or expand, our operations could be adversely affected. These increased costs, or any potential shortage of energy or raw materials, could adversely affect our profitability.
If these difficulties persist, accelerate, or expand, our operations could be adversely affected. It is also possible that the continuing impacts and uncertainties from the Syrian civil war could adversely impact our supply of crops from Turkey. 10 Index These increased costs, or any potential shortage of energy or raw materials, could adversely affect our profitability.
In additi o n , s om e of our cu s tomers and other s tak e holders are requiring us to pro v ide information on our plans relating to certain ESG matter s, such as greenhouse gas emissions (including carbon scores for particula r product s we s uppl y ) , and we expect this trend to continue as more regulations are being adopted.
In addition, some of our customers and other stakeholders are requiring us to provide information on our plans relating to certain ESG matters, such as greenhouse gas emissions (including carbon scores for particular products we supply), and we expect this trend to continue as more regulations are being adopted.
Our sales could also be affected by changing regulations or technologies (including, for example, off-label prescription drug use for weight loss) that could impact consumer demand for products that contain our products. Therefore, we depend upon our customers’ ability to create markets for the consumer products that incorporate the products that we manufacture.
Our sales could also be affected by changing regulations or technologies (including, for example, off-label prescription drug use for weight loss that could change consumer consumption patterns and regulatory restrictions or bans on synthetic food colors) that could impact consumer demand for products that contain our products.
It is also possible for a threat to be introduced as a result of our customers and third-party providers using the output of an artificial intelligence tool or other new and evolving technologies that includes a threat, such as introducing malicious code by incorporating artificial intelligence-generated source code.
It is also possible for a threat to be introduced as a result of our customers and third-party providers using the output of an artificial intelligence tool or other new and evolving technologies that includes a threat, such as introducing malicious code by incorporating artificial intelligence-generated source code. 18 Index Because of the nature of our business, and the importance of our proprietary information and manufacturing facilities, we face threats and experience cybersecurity incidents and attempts from time to time, not only from hackers that are intent on theft and disruption, but also from malicious insiders that may attempt to steal Company information or negligent employees.
From time to time, we or our customers have withdrawn or recalled products in the event of contamination, product defects, or perceived quality problems.
From time to time, we or our customers have withdrawn or recalled products in the event of contamination, product defects, or perceived quality problems. If our customers withdraw or recall products related to ingredients that we provide to them, as has occurred in the past, they may make claims against us.
For example, changes in the trade relationship between the U.S. and China as well as potential regulatory actions by the Chinese government may affect the availability and cost of our raw materials and products originating in China, the demand for, as well as the supply of, our products manufactured in China or containing raw materials from China, and the demand from Chinese customers for our products.
For example, changes in the trade relationship between the U.S. and China may affect the availability and cost of our raw materials and products originating in China, the demand for, as well as the supply of, our products manufactured in China or containing raw materials from China, and the demand from Chinese customers for our products. 14 Index These kinds of restrictions could be adopted with little to no advanced notice, and we may not be able to effectively mitigate the adverse impacts from such measures.
If we are unable to consummate such transactions, or successfully integrate and grow acquisitions and achieve contemplated revenue synergies and cost savings, our financial results could be adversely affected. Divestitures have inherent risks, including potential post-closing liabilities and claims for indemnification, that may impact our ability to fully realize the anticipated benefits of a given divestiture.
Divestitures have inherent risks, including potential post-closing liabilities and claims for indemnification, that may impact our ability to fully realize the anticipated benefits of a given divestiture. If any additional post-closing risks materialize, the benefits of such divestitures may not be fully realized, if at all, and our business, financial condition, and results of operations could be negatively impacted.
If any additional post-closing risks materialize, the benefits of such divestitures may not be fully realized, if at all, and our business, financial condition, and results of operations could be negatively impacted. 17 Index We may also need to finance future acquisitions, and the terms of any financing, and the need to ultimately repay or refinance any indebtedness, may have negative effects on us.
We may also need to finance future acquisitions, and the terms of any financing, and the need to ultimately repay or refinance any indebtedness, may have negative effects on us. Acquisitions also could have a dilutive effect on our financial results.
Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, challenge transfer pricing policies aggressively where there is potential non-compliance, and impose significant interest charges and penalties where non-compliance is determined. However, governmental authorities could challenge these policies more aggressively in the future and, if challenged, we may not prevail.
We have transfer pricing policies that are a significant component of the management and compliance of our operations across international boundaries and overall financial results. Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, challenge transfer pricing policies aggressively where there is potential non-compliance, and impose significant interest charges and penalties where non-compliance is determined.
Technology and Cybersecurity Risks • Our ability to protect our intellectual property rights is key to our performance. We protect our intellectual property rights as trade secrets, through patents, under confidentiality agreements, and through internal and external physical and cyber-security policies and systems.
We protect our intellectual property rights as trade secrets, through patents, under confidentiality agreements, and through internal and external physical and cyber-security policies and systems. We could incur significant costs in asserting our intellectual property rights or defending ourselves from third party intellectual property claims.
Although we attempt to manage these challenges through pricing and other actions, we may not be able to increase our product prices enough to offset these increased costs. Increasing our prices also may reduce sales volume and related profitability and cause us to lose customers.
In addition, we have experienced inflationary increases in the costs of raw materials, energy, transportation, and labor. Although we attempt to manage these challenges through pricing and other actions, we may not be able to increase our product prices enough to offset these increased costs.
In addition, as artificial intelligence capabilities and other new and evolving technologies improve and gain widespread use, we may experience cyber-attacks created using artificial intelligence or other new and evolving technologies, which may be difficult to detect and mitigate against.
In addition, as artificial intelligence capabilities and other new and evolving technologies improve and gain widespread use, the cybersecurity threats we face and incidents we experience from time to time may become even more challenging to prevent, detect, and mitigate to the extent they increasingly use artificial intelligence or other new and evolving technologies.
We have experienced challenges as a result of ongoing domestic and global supply chain issues, particularly with respect to raw materials, logistics, and labor. In addition, we have experienced inflationary increases in the costs of raw materials, energy, transportation, and labor.
Any future inability to manage our inventory, however caused, could negatively affect our operations and thus adversely affect our results . • Raw material, energy, labor, and transportation cost volatility may reduce our profitability. We have experienced challenges as a result of ongoing domestic and global supply chain issues, particularly with respect to raw materials, logistics, and labor.
It is difficult to predict the effects of current or future tariffs and other trade barriers and disputes, and the Company’s efforts to reduce the effects of tariffs through pricing and other measures may not be effective. In some cases, our products, such as U.S. grown garlic and onion, benefit from tariffs levied against foreign products.
It is difficult to predict the effects of current or future tariffs and other trade barriers and disputes, and the Company’s efforts to reduce the effects of tariffs through pricing and other measures may not be effective. For example, the Trump administration has expressed an intent to use tariffs, or the threat of tariffs, to further national policy goals.
We could suffer significant costs related to one or more challenges to our transfer pricing policies. Structural and Organizational Risks • We depend on certain key personnel, and the loss of these persons may harm our business, including the loss of trade secrets.
Structural and Organizational Risks • We depend on certain key personnel, and the loss of these persons may harm our business, including the loss of trade secrets. Our success depends in large part on the continued service and availability of our key management and technical personnel, and on our ability to attract and retain qualified new personnel.
Any of these events could increase the cost of our products, create disruptions to our supply chain, and impair our ability to effectively operate and compete in the countries where we do business. • The impact of tariffs and other trade barriers may negatively affect our results. The Company has manufacturing facilities located around the world.
Those developments could negatively affect our results. 11 Index • The impact of tariffs and other trade barriers may negatively affect our results. The Company has manufacturing facilities located around the world. The Company sells to customers located both inside and outside the countries in which products are manufactured.
The enhanced stakeholder and regulatory focus on ESG matters requires us to continuously monitor various developing standards and reporting requirements and make continuous progre ss in our e ffort s to reduce our , as w e ll as our suppliers ’ , energ y consumption , gr e enhous e gas emi ss ion s, water usage , and wa s te generation.
Stakeholder and regulatory focus on ESG matters requires us to continuously monitor various developing standards and reporting requirements and make continuous progress in our efforts to reduce our, as well as our suppliers’, energy consumption, greenhouse gas emissions, water usage, and waste generation. Implementing such monitoring, reporting, and improved sustainability could be costly.
Those developments could negatively affect our results. 11 Index • Consolidation has resulted in customers with increased buying power, which can affect our profitability. Many of our customers have consolidated in recent years and we expect the combination trend to continue in many business lines.
Many of our customers have consolidated in recent years and we expect the combination trend to continue in many business lines. These consolidations have often produced large, sophisticated customers with increased buying power who are more capable of resisting price increases or vertically integrating.
If our customers withdraw or recall products related to ingredients that we provide to them, as has occurred in the past, they may make claims against us. 15 Index Although we vigorously defend against claims when they are made, there can be no assurance that any claims or recalls will not be material.
Although we vigorously defend against claims when they are made, there can be no assurance that any claims or recalls will not be material. While we maintain liability insurance against these risks, coverage may be unavailable or incomplete.
If these beneficial tariffs were reduced or eliminated, it could adversely affect our business and financial condition. • Various stakeholders’ increasing and changing expectations and new laws and regulations with respect to Environmental, Social, and Governance (ESG) matters may impose additional costs on us or expose us to additional risks. 14 Index Stakeholder expectations in connection with ESG matters have been, and continue to be, rapidly evolving and increasing.
Any of these events could increase the cost of our products, create disruptions to our supply chain, and impair our ability to effectively operate and compete in the countries where we do business. • Various stakeholders’ increasing and changing expectations and new laws and regulations with respect to Environmental, Social, and Governance (ESG) matters may impose additional costs on us or expose us to additional risks.
If w e fail to und e rtak e s uch initiati v es , we ma y lo s e business with tho se cu s tom e r s or , if w e do undertak e s uch initiatives and are unable to pa ss on the additional cost s, our profitability could b e adversel y impacted.
If we fail to undertake such initiatives, we may lose business with those customers or, if we do undertake such initiatives and are unable to pass on the additional costs, our profitability could be adversely impacted.
I f we are unable to re s pond , or w e ar e perceived to be re s ponding inad e quatel y , to th e expectations o f our stakeholder s, our busin es s and r e putation could b e harmed , our profit and rev e nue could decline , and it could ha v e a n e gati v e impact on the trading pric e of our common s tock.
If we are unable to respond, or we are perceived to be responding inadequately, to the expectations of our stakeholders, our business and reputation could be harmed, our profit and revenue could decline, and it could have a negative impact on the trading price of our common stock.
Removed
The COVID-19 pandemic and ongoing economic uncertainty have impacted consumer behavior in numerous ways and it is difficult to predict whether these changes will persist over the long term and how they will impact our customers.
Added
To establish a new manufacturing capability at a plant could require substantial time, money, and numerous governmental and customer approvals.
Removed
As we continue to emerge from the pandemic, we may not be as effective as we intend in reducing our inventory to more normal levels. As we saw starting at the end of 2022 and continuing through 2023, many of our customers are also reducing their inventory to more normal levels.
Added
For example, our Natural Ingredients business incurred additional costs as a result of equipment inefficiencies in 2024, which we anticipate to be resolved in 2025; however, if these inefficiencies are not remediated properly, we may continue to incur additional costs in our business.
Removed
This has had an adverse impact on our ability to reduce our inventory at an optimal rate and may continue to have such an impact in the future. • Raw material, energy, labor, and transportation cost volatility, including inflation in prices due to ongoing supply chain challenges and other macroeconomic forces, may reduce our profitability.
Added
Tariffs and turmoil in international trade agreements could reduce demand for products and services, increase costs, reduce profitability, or adversely impact our supply chains, which may adversely impact our business. In some cases, our products, such as U.S. grown garlic and onion, benefit from tariffs levied against foreign products.
Removed
We report the results of our foreign operations in the applicable local currency and then translate those results into U.S. dollars at applicable exchange rates. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure.
Added
If these beneficial tariffs were reduced or eliminated, it could adversely affect these businesses; on the other hand, if these tariffs were increased, these businesses might benefit, but our broader business and financial condition could still be adversely impacted by increases in tariffs and restrictions on trade. • Consolidation has resulted in customers with increased buying power, which can affect our profitability.
Removed
These kinds of restrictions could be adopted with little to no advanced notice, and we may not be able to effectively mitigate the adverse impacts from such measures.
Added
Therefore, we depend upon our customers’ ability to create markets for the consumer products that incorporate the products that we manufacture.
Removed
Implementing such monitoring , reporting , and impro ve d s u s tainabilit y could be costl y . Even wh e re we make progre s s , our ESG practice s still may not meet the standards o f all of our s tak e hold e r s .
Added
Furthermore, effective in 2027, the Food and Drug Administration banned the use of Red 3 in food and beverages, and California passed a ban on the use of synthetic food colorants in school lunches. Numerous other states also have various legislative proposals to ban or restrict the use of synthetic colors.
Removed
For e xample , man y of our large , global custom e r s are committing to long-tern1 targets to r e duce greenhou s e ga s emis s ion s within their suppl y chains.
Added
In addition, the Trump administration has expressed an interest in re-examining the use of synthetic food colorants.
Removed
I f w e are unable to achie v e the se r e ducti o n s, our cu s tomer s may see k out alt e rnati v e s upp l i e r s who are better able to s upport s uch reductions.
Added
While we have a broad portfolio of natural color and applications capabilities that enable us to offer alternatives and replacements for synthetic colors to customers, it is possible that such laws could reduce our revenue if our customers find alternative suppliers or remove color from their products. 12 Index • If we do not maintain an efficient cost structure, our profitability could decrease.
Removed
Certain of our customers hav e al s o indicated that th e y will r e quir e that their supplier s meet a certain s core or grade on one or more sustainability platforms.
Added
We have, in the past, dealt with regulators shutting down and excluding from the market suppliers that provided the Company with raw materials. For example, in the recent past, the Chinese government has shut down a chemical park for pollution mitigation.
Removed
I f we are unable to meet such criteria , w e ma y be unable to win new busine ss or lose existing busine ss with tho s e cu s t o mers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese individuals collectively have over 85 years of prior work experience in various roles in the information security field, including managing and implementing effective information technology and cybersecurity programs, as well as relevant degrees and certifications, including a Certified Information Systems Security Professional certification.
Biggest changeThese individuals collectively have over 88 years of prior work experience in various roles in the information security field, including managing and implementing effective information technology and cybersecurity programs, as well as relevant degrees and certifications, including a Certified Information Systems Security Professional certification.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeInternational – Jundiai, Brazil*; Delta, British Columbia, Canada*; Kingston, Ontario, Canada; Saint Ouen L’Aumone, France; Geesthacht, Germany; Reggio Emilia, Italy; Lerma, Mexico; Lima, Peru*; Johannesburg, South Africa; Gebze, Turkey; and Kings Lynn, United Kingdom. Flavors & Extracts Group: U.S. – Livingston and Turlock, California; Amboy, Illinois; Harbor Beach, Michigan; Juneau, Wisconsin; and Deming, New Mexico.
Biggest changeInternational – Jundiai, Brazil*; Kingston, Ontario, Canada; Saint Ouen L’Aumone, France; Geesthacht, Germany; Reggio Emilia, Italy; Lerma, Mexico; Lima, Peru*; Johannesburg, South Africa; Gebze, Turkey; and Kings Lynn, United Kingdom. Flavors & Extracts Group: U.S. – Livingston and Turlock, California; Amboy, Illinois; Harbor Beach, Michigan; Juneau, Wisconsin; and Deming, New Mexico.
We own a part, and lease a part, of our Flavors & Extracts Group headquarters offices located in Hoffman Estates, Illinois. As of December 31, 2023, the locations of our production properties by reportable segment are as follows: Color Group: U.S. – St. Louis, Missouri.
We own a part, and lease a part, of our Flavors & Extracts Group headquarters offices located in Hoffman Estates, Illinois. As of December 31, 2024, the locations of our production properties by reportable segment are as follows: Color Group: U.S. – St. Louis, Missouri.
All properties are owned except as otherwise indicated above. All facilities are considered to be in good condition (ordinary wear and tear excepted) and suitable and adequate for the Company’s requirements.
All properties are owned except as otherwise indicated above. All facilities are considered to be in good condition (ordinary wear and tear excepted) and suitable and adequate for the Company’s requirements. 20 Index

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeRolfs 59 Senior Vice President and Chief Financial Officer Tobin Tornehl 50 Vice President, Controller and Chief Accounting Officer The Company has employed all of the individuals named above, in substantively their current positions, for at least the past five years except as follows: • Mr.
Biggest changeManning 56 Senior Vice President, General Counsel, and Secretary Steve Morris 61 President, Flavors & Extracts Group Tobin Tornehl 51 Vice President and Chief Financial Officer Adam Vanderleest 42 Vice President, Controller, and Chief Accounting Officer The Company has employed all of the individuals named above, in substantively their current positions, for at least the past five years except as follows: • Mr.
Item 4. Mine Safety Disclosure. Not applicable. 20 Index Information About Our Executive Officers The executive officers of the Company and their ages as of February 22, 2024 are as follows: Name Age Position Paul Manning 49 Chairman, President, and Chief Executive Officer Amy M. Agallar 46 Vice President and Treasurer Michael C.
Item 4. Mine Safety Disclosure. Not applicable. Information About Our Executive Officers The executive officers of the Company and their ages as of February 19, 2025 are as follows: Name Age Position Paul Manning 50 Chairman, President, and Chief Executive Officer Amy M. Agallar 47 Vice President, Investor Relations, Global Procurement, and Treasurer Michael C.
Morris has held his present office since January 1, 2024, and previously served as General Manager, Sweet and Beverage Flavors North America (August 2017 – December 2023). Mr. Paul Manning (Chairman, President, and Chief Executive Officer) and Mr. John J. Manning (Senior Vice President, General Counsel, and Secretary) are brothers. 21 Index PART II
Vanderleest has held his present office since July 1, 2024, and previously served as Group Controller, Color Group (April 2021 – June 2024). Mr. Paul Manning (Chairman, President, and Chief Executive Officer) and Mr. John J. Manning (Senior Vice President, General Counsel, and Secretary) are brothers. 21 Index PART II
Geraghty 62 President, Color Group Thierry Hoang 43 Vice President, Asia Pacific Group Amy Schmidt Jones 54 Vice President, Human Resources and Senior Counsel John J. Manning 55 Senior Vice President, General Counsel, and Secretary Steve Morris 60 President, Flavors & Extracts Group Stephen J.
Geraghty 63 President, Color Group Thierry Hoang 44 Vice President, Asia Pacific Group Amy Schmidt Jones 55 Vice President, Human Resources and Senior Counsel John J.
Added
Morris has held his present office since January 1, 2024, and previously served as General Manager, Sweet and Beverage Flavors North America (August 2017 – December 2023). • Mr. Tornehl has held his present office since July 1, 2024, and previously served as Vice President, Controller, and Chief Accounting Officer (November 2018 – June 2024). • Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDecember 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Sensient Technologies Corporation $ 100 $ 121 $ 139 $ 192 $ 143 $ 132 S&P Midcap Specialty Chemicals Index 100 118 127 151 135 151 S&P Midcap Food Products Index 100 117 128 150 147 134 S&P 500 Index 100 131 156 200 164 207 Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services, LLC.
Biggest changeDecember 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Sensient Technologies Corporation $ 100 $ 115 $ 159 $ 118 $ 109 $ 121 S&P Midcap Specialty Chemicals Index 100 108 128 114 127 125 S&P Midcap Food Products Index 100 110 128 125 115 121 S&P 500 Index 100 118 152 125 157 197 Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services, LLC.
On October 19, 2017, the Board of Directors authorized the repurchase of up to three million shares (2017 Authorization). As of December 31, 2023, 1,267,019 shares had been repurchased under the 2017 Authorization. There were no repurchases of shares by the Company during 2023. There is no expiration date for the 2017 Authorization.
On October 19, 2017, the Board of Directors authorized the repurchase of up to three million shares (2017 Authorization). As of December 31, 2024, 1,267,019 shares had been repurchased under the 2017 Authorization. There were no repurchases of shares by the Company during 2024. There is no expiration date for the 2017 Authorization.
The 2017 Authorization may be modified, suspended, or discontinued by the Board of Directors at any time. As of December 31, 2023, the maximum number of shares that may be purchased under publicly announced plans is 1,732,981.
The 2017 Authorization may be modified, suspended, or discontinued by the Board of Directors at any time. As of December 31, 2024, the maximum number of shares that may be purchased under publicly announced plans is 1,732,981.
The graph assumes a $100 investment made on December 31, 2018, and reinvestment of dividends. The stock performance shown on the graph is not necessarily indicative of future price performance.
The graph assumes a $100 investment made on December 31, 2019, and reinvestment of dividends. The stock performance shown on the graph is not necessarily indicative of future price performance.
Since 1962, the Company has paid, without interruption, a quarterly cash dividend. During fiscal 2023, the Company paid aggregate cash dividends of $1.64 per share to our shareholders, and the Company most recently declared a dividend of $0.41 per share payable on March 1, 2024 to shareholders of record on February 6, 2024.
Since 1962, the Company has paid, without interruption, a quarterly cash dividend. During fiscal 2024, the Company paid aggregate cash dividends of $1.64 per share to our shareholders, and the Company most recently declared a dividend of $0.41 per share payable on March 3, 2025 to shareholders of record on February 4, 2025.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “SXT.” The number of shareholders of record of the Company’s common stock on February 8, 2024 was 1,932.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “SXT.” The number of shareholders of record of the Company’s common stock on February 13, 2025 was 1,837.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThese non-GAAP measures may not be comparable to similarly titled measures used by other companies. 24 Index Twelve Months Ended December 31, (In thousands except per share amounts) 2023 2022 % Change Operating Income (GAAP) $ 155,023 $ 196,751 (21.2 )% Portfolio optimization plan costs – Cost of products sold 3,135 - Divestiture & other related income – Selling and administrative expenses - (2,532 ) Portfolio optimization plan costs – Selling and administrative expenses 24,706 - Adjusted operating income $ 182,864 $ 194,219 (5.8 )% Net Earnings (GAAP) $ 93,394 $ 140,887 (33.7 )% Divestiture & other related income, before tax - (2,532 ) Tax impact of divestiture & other related income (1) - 636 Portfolio optimization plan costs, before tax 27,841 Tax impact of portfolio optimization plan costs (1) (415 ) Adjusted net earnings $ 120,820 $ 138,991 (13.1 )% Diluted Earnings Per Share (GAAP) $ 2.21 $ 3.34 (33.8 )% Divestiture & other related income, net of tax - (0.04 ) Portfolio optimization plan costs, net of tax 0.65 - Adjusted diluted earnings per share $ 2.86 $ 3.29 (13.1 )% (1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.
Biggest changeThese non-GAAP measures may not be comparable to similarly titled measures used by other companies. 24 Index Twelve Months Ended December 31, (In thousands except per share amounts) 2024 2023 % Change Operating Income (GAAP) $ 191,579 $ 155,023 23.6 % Portfolio Optimization Plan costs – Cost of products sold 1,362 3,135 Portfolio Optimization Plan costs – Selling and administrative expenses 5,269 24,706 Adjusted operating income $ 198,210 $ 182,864 8.4 % Net Earnings (GAAP) $ 124,666 $ 93,394 33.5 % Portfolio Optimization Plan costs, before tax 6,631 27,841 Tax impact of Portfolio Optimization Plan costs (1) (4,156 ) (415 ) Adjusted net earnings $ 127,141 $ 120,820 5.2 % Diluted Earnings Per Share (GAAP) $ 2.94 $ 2.21 33.0 % Portfolio Optimization Plan costs, net of tax 0.06 0.65 Adjusted diluted earnings per share $ 3.00 $ 2.86 4.9 % Operating Income (GAAP) $ 191,579 $ 155,023 23.6 % Depreciation and amortization 60,329 57,820 Share-based compensation expense 10,084 8,933 Portfolio Optimization Plan costs, before tax 6,631 27,841 Adjusted EBITDA $ 268,623 $ 249,617 7.6 % (1) Tax impact adjustments were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.
CRITICAL ACCOUNTING POLICIES In preparing the financial statements in accordance with accounting principles generally accepted in the U.S., management is required to make estimates and assumptions that have an impact on the asset, liability, revenue, and expense amounts reported. These estimates can also affect supplemental information disclosures of the Company, including information about contingencies, risk, and financial condition.
CRITICAL ACCOUNTING ESTIMATES In preparing the financial statements in accordance with accounting principles generally accepted in the U.S., management is required to make estimates and assumptions that have an impact on the asset, liability, revenue, and expense amounts reported. These estimates can also affect supplemental information disclosures of the Company, including information about contingencies, risk, and financial condition.
Changes in estimates of future cash flows caused by items such as unforeseen events or changes in market conditions could negatively affect the reporting units’ fair value and result in an impairment charge. Income Taxes The Company estimates its income tax expense in each of the taxing jurisdictions in which it operates.
Changes in estimates of future cash flows caused by items such as unforeseen events or changes in market conditions could negatively affect the reporting units’ fair value and result in an impairment charge. 27 Index Income Taxes The Company estimates its income tax expense in each of the taxing jurisdictions in which it operates.
Goodwill Valuation The Company reviews the carrying value of goodwill annually utilizing several valuation methodologies, including a discounted cash flow model. The Company completed its annual goodwill impairment test under Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other , in the third quarter of 2023.
Goodwill Valuation The Company reviews the carrying value of goodwill annually utilizing several valuation methodologies, including a discounted cash flow model. The Company completed its annual goodwill impairment test under Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other , in the third quarter of 2024.
Management believes the Company’s most critical accounting estimates and assumptions are in the following areas: 27 Index Revenue Recognition The Company recognizes revenue at the transfer of control of its products to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled.
Management believes the Company’s most critical accounting estimates and assumptions are in the following areas: Revenue Recognition The Company recognizes revenue at the transfer of control of its products to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled.
Segment performance is evaluated on operating income before any applicable divestiture & other related income, share-based compensation, acquisition, restructuring and other costs, including the portfolio optimization plan costs, and other costs (which are reported in Corporate & Other), interest expense, and income taxes.
Segment performance is evaluated on operating income before any applicable share-based compensation, acquisition, restructuring and other costs, including the Portfolio Optimization Plan costs, and other costs (which are reported in Corporate & Other), interest expense, and income taxes.
LIQUIDITY AND FINANCIAL POSITION Financial Condition The Company’s financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of December 31, 2023.
LIQUIDITY AND FINANCIAL POSITION Financial Condition The Company’s financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of December 31, 2024.
For a discussion of the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 17, 2023, which is incorporated herein by reference.
For a discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 22, 2024, which is incorporated herein by reference.
The Company’s contractual obligations consist primarily of operational commitments, which we expect to continue to be able to satisfy through cash generated from operations, and debt. The Company has various series of notes outstanding that mature from 2024 through 2029, with approximately $82 million coming due in 2024.
The Company’s contractual obligations consist primarily of operational commitments, which we expect to continue to be able to satisfy through cash generated from operations, and debt. The Company has various series of notes outstanding that mature from 2025 through 2029, with approximately $56 million coming due in 2025.
This section generally discusses the results of our operations for the year ended December 31, 2023, compared to the year ended December 31, 2022.
This section generally discusses the results of our operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.
NEW PRONOUNCEMENTS Refer to the “ Recently Issued Accounting Pronouncements ” section within Note 1, “ Summary of Significant Accounting Policies ,” in the Notes to Consolidated Financial Statements included in this report for additional details. 28 Index
NEW PRONOUNCEMENTS Refer to the “ Recently Adopted Accounting Pronouncements ” and “ Recently Issued Accounting Pronouncements ” section within Note 1, “ Summary of Significant Accounting Policies ,” in the Notes to Consolidated Financial Statements included in this report for additional details.
See Note 11, Income Taxes , in the Notes to Consolidated Financial Statements included in this report for additional information. 2023 2022 Rate before portfolio optimization plan and discrete items 25.5 % 25.8 % Portfolio optimization plan impact 4.7 % - Discrete items (2.1 %) (3.1 %) Reported effective tax rate 28.1 % 22.7 % The 2024 effective income tax rate is estimated to be between 24% and 25%.
See Note 11, Income Taxes , in the Notes to Consolidated Financial Statements included in this report for additional information. 2024 2023 Rate before Portfolio Optimization Plan and discrete items 25.2 % 25.5 % Portfolio Optimization Plan impact 0.3 % 4.7 % Discrete items (2.1 %) (2.1 %) Reported effective tax rate 23.4 % 28.1 % The 2025 effective income tax rate is estimated to be between 24% and 26%.
NON-GAAP FINANCIAL MEASURES Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude the divestiture & other related income and restructuring and other costs, including the portfolio optimization plan costs and (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars, the divestiture & other related income, and restructuring and other costs, including the portfolio optimization plan costs.
NON-GAAP FINANCIAL MEASURES Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including the Portfolio Optimization Plan costs, (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA, which excludes restructuring and other costs, including the Portfolio Optimization Plan costs, and non-cash share based compensation expense.
The Company’s corporate expenses, divestiture & other related costs and income, share-based compensation, restructuring and other charges, including operational improvement plan costs and portfolio optimization plan costs, and other costs are included in the “Corporate & Other” category.
The Company’s corporate expenses, share-based compensation, restructuring and other charges, including the Portfolio Optimization Plan costs, and other costs are included in the “Corporate & Other” category.
The lower segment operating income was a result of lower operating income in Personal Care, partially offset by higher operating income in Food & Pharmaceutical Colors. The lower operating income in Personal Care was primarily due to higher raw material and manufacturing and other costs and lower volumes, partially offset by higher selling prices.
The higher operating income in Personal Care was primarily due to higher volumes and selling prices and a favorable product mix. The higher operating income in Food & Pharmaceutical Colors was primarily due to higher volumes and selling prices and a favorable product mix, partially offset by higher raw material and manufacturing and other costs.
The effective tax rates in both 2023 and 2022 were impacted by the release of valuation allowances related to the foreign tax credit carryover and net operating losses, changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, and mix of foreign earnings.
The effective tax rates in both 2024 and 2023 were impacted by the release of valuation allowances related to net operating losses, changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, the mix of foreign earnings, and the limited tax deductibility of costs related to the Portfolio Optimization Plan.
Management has recorded valuation allowances to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized. As of December 31, 2023, the Company recorded gross deferred tax assets of $117.4 million with an associated valuation allowance of $34.1 million.
Management has recorded valuation allowances to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized. As of December 31, 2024, the Company recorded gross deferred tax assets of $112.3 million with an associated valuation allowance of $29.7 million.
The increase in expense was primarily due to an increase in the average interest rate and average debt outstanding. 23 Index Income Taxes The effective income tax rate was 28.1% in 2023 and 22.7% in 2022.
The increase in expense was primarily due to an increase in the average interest rate. 23 Index Income Taxes The effective income tax rate was 23.4% in 2024 and 28.1% in 2023.
The lower operating income in Natural Ingredients was primarily due to higher raw material costs, lower volumes, and an unfavorable product mix, partially offset by higher selling prices and lower manufacturing and other costs.
The higher operating income in Flavors, Extracts & Flavor Ingredients was primarily due to lower raw material costs, higher selling prices, higher volumes, and a favorable product mix. The lower operating income in Natural Ingredients was primarily due to higher raw material costs, partially offset by higher volumes and selling prices.
Segment revenue was higher than the prior year primarily due to higher selling prices, partially offset by lower volumes and the unfavorable impact of foreign exchange rates, which decreased segment revenue by approximately 2%. Segment operating income for the Asia Pacific segment was $30.8 million in 2023 and $29.5 million in 2022, an increase of approximately 4%.
Asia Pacific Segment revenue for the Asia Pacific segment was $162.5 million and $146.1 million for 2024 and 2023, respectively, an increase of approximately 11%. Segment revenue was higher than the prior year primarily due to higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates, which decreased segment revenue by approximately 2%.
Selling and administrative expenses as a percent of revenue was further impacted by lower performance-based compensation in 2023. Operating Income Operating income was $155.0 million in 2023 and $196.8 million in 2022. Operating margins were 10.6% in 2023 and 13.7% in 2022.
Selling and administrative expenses as a percent of revenue was further impacted by higher performance-based compensation costs in 2024. Operating Income Operating income was $191.6 million in 2024 and $155.0 million in 2023. Operating margins were 12.3% in 2024 and 10.6% in 2023.
Portfolio optimization plan costs decreased operating margins by approximately 200 basis points in 2023 and divestiture & other related income improved operating margins by approximately 20 basis points in 2022. Additional information on segment results can be found in the Segment Information section. Interest Expense Interest expense was $25.2 million in 2023 and $14.5 million in 2022.
Portfolio Optimization Plan costs decreased operating margins by approximately 40 basis points and 200 basis points in 2024 and 2023, respectively. Additional information on segment results can be found in the Segment Information section. Interest Expense Interest expense was $28.8 million in 2024 and $25.2 million in 2023.
As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company is evaluating the potential closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the potential closure of its sales office in Granada, Spain, and the potential centralization and elimination of certain selling and administrative positions, with such proposals remaining subject to information and consultation processes in certain countries.
As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the centralization and elimination of certain selling and administrative positions.
Twelve Months Ended December 31, 2023 Total Foreign Exchange Rates Adjustments (1) Adjusted Local Currency Revenue Flavors & Extracts 0.4 % 1.2 % N/A (0.8 %) Color 0.7 % 1.6 % N/A (0.9 %) Asia Pacific 1.7 % (1.8 %) N/A 3.5 % Total Revenue 1.4 % 1.1 % N/A 0.3 % Operating Income Flavors & Extracts (16.7 %) 0.6 % 0.0 % (17.3 %) Color (8.1 %) 1.5 % 0.0 % (9.6 %) Asia Pacific 4.4 % (1.9 %) 0.0 % 6.3 % Corporate & Other 30.6 % 0.0 % 56.3 % (25.7 %) Total Operating Income (21.2 %) 1.0 % (15.4 %) (6.8 %) Diluted Earnings per Share (33.8 %) 0.9 % (20.7 %) (14.0 %) (1) For Operating Income and Diluted Earnings per Share, adjustments consist of divestiture & other related income in 2022 and portfolio optimization plan costs in 2023.
Twelve Months Ended December 31, 2024 Total Foreign Exchange Rates Adjustments (1) Adjusted Local Currency Revenue Flavors & Extracts 7.1 % 0.0 % N/A 7.1 % Color 6.6 % (0.7 %) N/A 7.3 % Asia Pacific 11.2 % (1.8 %) N/A 13.0 % Total Revenue 6.9 % (0.5 %) N/A 7.4 % Operating Income Flavors & Extracts 10.6 % (0.2 %) 0.0 % 10.8 % Color 13.4 % (0.8 %) 0.0 % 14.2 % Asia Pacific 11.9 % (2.2 %) 0.0 % 14.1 % Corporate & Other (13.7 %) 0.0 % (42.4 %) 28.7 % Total Operating Income 23.6 % (1.0 %) 15.3 % 9.3 % Diluted Earnings per Share 33.0 % (1.4 %) 28.5 % 5.9 % Adjusted EBITDA 7.6 % (0.7 %) N/A 8.3 % (1) Adjustments consist of Portfolio Optimization Plan costs.
The Company recognizes related insurance reimbursement when receipt is deemed probable. The Company’s estimate of liabilities and related insurance recoveries may change as further facts and circumstances become known.
The Company’s estimate of liabilities and related insurance recoveries may change as further facts and circumstances become known.
Foreign exchange rates decreased segment operating income by approximately 2%. The increase in segment operating income was a result of higher selling prices, partially offset by higher raw material costs and lower volumes.
The increase in segment operating income was a result of higher volumes and selling prices, partially offset by higher raw material and manufacturing and other costs and the unfavorable impact of foreign exchange rates, which decreased segment operating income by approximately 2%. Segment operating income as a percent of revenue was 21.2% in 2024 and 21.1% in 2023.
The Company’s diluted earnings per share were $2.21 in 2023 and $3.34 in 2022. 2023 results were negatively impacted by $27.8 million ($27.4 million after tax, $0.65 per share) of portfolio optimization plan costs. 2022 results were positively impacted by $2.5 million ($1.9 million after tax, $0.04 per share) of divestiture & other related income.
The Company’s diluted earnings per share were $2.94 in 2024 and $2.21 in 2023. 2024 results were negatively impacted by $6.6 million ($2.5 million after tax, $0.06 per share) of Portfolio Optimization Plan costs. 2023 results were negatively impacted by $27.8 million ($27.4 million after tax, $0.65 per share) of Portfolio Optimization Plan costs.
The Company believes that it has the ability to refinance or repay all of its obligations through a combination of cash flow from operations, issuance of additional notes, and substantial borrowing capacity of approximately $318 million under the Company’s revolving credit facility, which matures in 2026.
The Company believes that it has the ability to refinance or repay all of its obligations through a combination of cash flow from operations, issuance of additional notes, and substantial borrowing capacity of approximately $257 million under the Company’s revolving credit facility, which matures in 2026. 26 Index As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company’s financial position and its results of operations in 2024.
The Company paid $1.7 million and $21.7 million in 2023 and 2022, respectively, for the acquisition of Endemix Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş. and $1.0 million in 2022 related to a purchase price holdback associated with the acquisition of Flavor Solutions, Inc.
The Company paid $1.7 million in 2023 related to a purchase price holdback associated with the acquisition of Endemix Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş. Cash Flows from Financing Activities Net cash used in financing activities was $81.5 million and $82.0 million in 2024 and 2023, respectively.
Selling and administrative expense as a percent of revenue increased by approximately 170 basis points and decreased by approximately 20 basis points in 2023 and 2022, respectively, as a result of these expenses and income. See Divestitures and Portfolio Optimization Plan below for further information.
Selling and administrative expenses in 2024 and 2023 were increased by Portfolio Optimization Plan costs totaling $5.3 million and $24.7 million, respectively. Selling and administrative expense as a percent of revenue increased by approximately 40 basis points and 170 basis points in 2024 and 2023, respectively, as a result of these costs. See Portfolio Optimization Plan below for further information.
The Company estimates any required write-downs for inventory obsolescence by examining inventories on a quarterly basis to determine if there are any damaged items or slow-moving products in which the carrying values could exceed net realizable value. Inventory write-downs are recorded as the difference between the cost of inventory and its estimated market value.
The Company’s inventories contain a variety of inventory types with varying characteristics that would impact potential inventory obsolescence. The Company estimates any required write-downs for inventory obsolescence by examining inventories on a quarterly basis to determine if there are any damaged items or slow-moving products in which the carrying values could exceed net realizable value.
The decrease in gross margin was primarily due to higher raw material costs, lower volumes, and portfolio optimization plan costs, which decreased gross margin 20 basis points in 2023, partially offset by higher selling prices in 2023. Selling and Administrative Expenses Selling and administrative expense as a percent of revenue was 21.0% in 2023 and 20.3% in 2022.
Gross Profit The Company’s gross margin was 32.6% in 2024 and 31.6% in 2023. The increase in gross margin was primarily due to higher volumes and selling prices, partially offset by higher raw material costs. Selling and Administrative Expenses Selling and administrative expense as a percent of revenue was 20.3% in 2024 and 21.0% in 2023.
For the purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. The Company has paid uninterrupted quarterly cash dividends since commencing public trading of its stock in 1962. Dividends paid per share were $1.64 in 2023 and 2022. Total dividends paid were $69.2 million and $68.9 million in 2023 and 2022, respectively.
The Company had a net decrease in debt of $7.8 million and $3.5 million in 2024 and 2023, respectively. For the purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. The Company has paid uninterrupted quarterly cash dividends since commencing public trading of its stock in 1962.
See Note 14, Divestitures , in the Notes to Consolidated Financial Statements included in this report for additional information. Portfolio Optimization Plan During the fourth quarter of 2023, the board of directors of the Company approved a portfolio optimization plan (Portfolio Optimization Plan) to undertake an effort to optimize certain production facilities and improve efficiencies within the Company.
Portfolio Optimization Plan During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan).
Adjusted diluted earnings per share, which exclude the divestiture & other related income and the portfolio optimization plan costs, were $2.86 in 2023 and $3.29 in 2022 (see discussion below regarding non-GAAP financial measures). Additional information on the results is included below.
Adjusted diluted earnings per share, which exclude the Portfolio Optimization Plan costs, were $3.00 in 2024 and $2.86 in 2023 (see discussion below regarding non-GAAP financial measures). Additional information on the results is included below. RESULTS OF OPERATIONS 2024 vs. 2023 Revenue Sensient’s revenue was approximately $1.6 billion and $1.5 billion in 2024 and 2023, respectively.
The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment. See Note 16, Portfolio Optimization Plan , in the Notes to Consolidated Financial Statements included in this report for additional information.
See Note 15, Portfolio Optimization Plan , in the Notes to Consolidated Financial Statements included in this report for additional information.
The higher operating loss was primarily a result of portfolio optimization plan costs totaling $27.8 million negatively impacting 2023 and divestiture & other related income totaling $2.5 million favorably impacting 2022, partially offset by lower performance-based compensation in 2023. See the Divestitures and Portfolio Optimization Plan sections above for further information.
Corporate & Other The Corporate & Other operating loss was $59.5 million in 2024 and $68.9 million in 2023. The lower operating loss was primarily a result of lower Portfolio Optimization Plan costs, partially offset by higher performance-based compensation costs in 2024. See the Portfolio Optimization Plan section above for further information.
The higher revenue in Food & Pharmaceutical Colors was primarily due to higher selling prices, the acquisition of Endemix Doğal Maddeler A.Ş. , and the favorable impact of foreign exchange rates, partially offset by lower volumes.
The higher segment revenue was a result of higher revenue in Food & Pharmaceutical Colors and Personal Care due to higher volumes and selling prices, partially offset by the unfavorable impact of foreign exchange rates, which decreased segment revenue by approximately 1% .
Foreign exchange rates increased segment operating income by approximately 1%. The lower segment operating income was a result of lower operating income in Natural Ingredients and Flavors, Extracts & Flavor Ingredients.
Flavors & Extracts segment operating income was $97.1 million in 2024 and $87.8 million in 2023, an increase of approximately 11%. Foreign exchange rates had an immaterial impact on segment operating income. The higher segment operating income was a result of higher operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower operating income in Natural Ingredients.
Estimating liabilities and costs associated with these matters requires the judgment of management, who rely in part on information from Company legal counsel. When it is probable that the Company has incurred a liability associated with claims or pending or threatened litigation matters and the Company’s exposure is reasonably estimable, the Company records a charge against earnings.
When it is probable that the Company has incurred a liability associated with claims or pending or threatened litigation matters and the Company’s exposure is reasonably estimable, the Company records a charge against earnings. The Company recognizes related insurance reimbursement when receipt is deemed probable.
Divestiture & other related income is discussed under “Divestitures” above and Note 14, Divestitures, in the Notes to the Consolidated Financial Statements included in this report. Portfolio optimization plan costs are discussed under “Portfolio Optimization Plan” above and Note 16, Portfolio Optimization Plan, in the Notes to the Consolidated Financial Statements included in this report.
Portfolio Optimization Plan costs are discussed under “Portfolio Optimization Plan” above and Note 15, Portfolio Optimization Plan, in the Notes to the Consolidated Financial Statements included in this report. Note: Earnings per share calculations may not foot due to rounding differences .
Note: Earnings per share calculations may not foot due to rounding differences . The following table summarizes the percentage change in the 2023 results compared to the 2022 results in the respective financial measures.
The following table summarizes the percentage change in the 2024 results compared to the 2023 results in the respective financial measures.
Cash Flows from Investing Activities Net cash used in investing activities was $87.6 million and $98.4 million in 2023 and 2022, respectively. Capital expenditures were $87.9 million in 2023 and $79.3 million in 2022. In 2022, the Company received $2.5 million of proceeds from the divestiture of the yogurt fruit preparations product line.
Cash Flows from Investing Activities Net cash used in investing activities was $59.2 million and $87.6 million in 2024 and 2023, respectively. Capital expenditures were $59.2 million in 2024 and $87.9 million in 2023.
Segment operating income as a percent of revenue was 17.3% and 19.0% for 2023 and 2022, respectively. Asia Pacific Segment revenue for the Asia Pacific segment was $146.1 million and $143.6 million for 2023 and 2022, respectively, an increase of approximately 2%.
Segment operating income as a percent of revenue was 12.2% and 11.8% for 2024 and 2023, respectively. Color Segment revenue for the Color segment was $647.9 million in 2024 and $608.0 million in 2023, an increase of approximately 7%.
The Company recorded non-cash charges of $3.1 million in 2023 in Cost of Products Sold related to the portfolio optimization plan. The charges reduced the carrying value of certain inventories, as they were determined to be excess.
Inventory write-downs are recorded as the difference between the cost of inventory and its estimated market value. The Company recorded non-cash charges of $0.7 million and $3.1 million in 2024 and 2023, respectively, in Cost of Products Sold related to the Portfolio Optimization Plan.
While significant judgment is involved in determining the net realizable value of inventory, the Company believes that inventory is appropriately stated at the lower of cost or net realizable value. Commitments and Contingencies The Company is subject to litigation and other legal proceedings arising in the ordinary course of its businesses or arising under applicable laws and regulations.
While significant judgment is involved in determining the net realizable value of certain inventories with shorter expirations, the Company believes that inventory is appropriately stated at the lower of cost or net realizable value.
The lower revenue in Flavors, Extracts & Flavor Ingredients was primarily due to lower volumes, partially offset by higher selling prices and the favorable impact of foreign exchange rates, which increased segment revenue by approximately 1%. Flavors & Extracts segment operating income was $87.8 million in 2023 and $105.4 million in 2022, a decrease of approximately 17%.
Flavors & Extracts Flavors & Extracts segment revenue was $793.7 million in 2024 and $741.1 million in 2023, an increase of approximately 7%. The higher segment revenue was a result of higher revenue in Natural Ingredients and Flavors, Extracts & Flavor Ingredients due to higher volumes and selling prices. Foreign exchange rates had an immaterial impact on segment revenue.
Color Segment revenue for the Color segment was $608.0 million in 2023 and $604.0 million in 2022, an increase of approximately 1%. Foreign exchange rates increased segment revenue by approximately 2%. The higher segment revenue was a result of higher revenue in Food & Pharmaceutical Colors, partially offset by lower revenue in Personal Care.
Segment operating income for the Color segment was $119.5 million in 2024 and $105.4 million in 2023, an increase of approximately 13%. The higher segment operating income was a result of higher operating income in Personal Care and Food & Pharmaceutical Colors.
The Company’s share repurchase program has no expiration date. These authorizations may be modified, suspended, or discontinued by the Board of Directors at any time. There were no shares of Company stock repurchased in 2023 or 2022. Cash Flows from Operating Activities Net cash provided by operating activities was $169.7 million and $12.1 million in 2023 and 2022, respectively.
In October 2017, the Board of Directors authorized the repurchase of up to three million shares. As of December 31, 2024, 1,732,981 shares were available to be repurchased under the existing authorization. The Company’s share repurchase program has no expiration date. These authorizations may be modified, suspended, or discontinued by the Board of Directors at any time.
In addition, in the Color segment, the Company’s proposals include closing a manufacturing facility in Delta, British Columbia, Canada, closing a sales office in Argentina, and centralizing and eliminating certain production positions as well as potentially eliminating some selling and administrative positions, with such proposals remaining subject to information and consultation processes in certain countries.
In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.
The effective tax rate in 2023 was also impacted by the limited tax deductibility of costs related to the portfolio optimization plan.
The effective tax rate in 2023 was further impacted by the release of a valuation allowance related to the foreign tax credit carryover.
Operating cash flow provided the primary source of funds for operating needs, capital expenditures, and shareholder dividends. The increase in net cash provided by operating activities in 2023 was primarily due to a decrease in the cash used for inventory investments during 2023 compared to 2022 and an increase in cash provided by accounts receivable.
The decrease in net cash provided by operating activities in 2024 was primarily due to a decrease in the cash provided by accounts receivable, partially offset by a decrease in cash used for performance-based compensation payments (which are determined based on prior year performance) made during 2024 compared to 2023.
We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions could exacerbate these challenges and impact our profitability. In October 2017, the Board of Directors authorized the repurchase of up to three million shares. As of December 31, 2023, 1,732,981 shares were available to be repurchased under the existing authorization.
The Company has experienced increased costs for certain inputs, such as raw materials, shipping and logistics, and labor-related costs. We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions could exacerbate these challenges and impact our profitability.
The lower revenue in Personal Care was primarily due to lower volumes, partially offset by higher selling prices and the favorable impact of foreign exchange rates. Segment operating income for the Color segment was $105.4 million in 2023 and $114.6 million in 2022, a decrease of approximately 8%.
These increases were partially offset by the unfavorable impact of foreign exchange rates, which decreased segment operating income by approximately 1%. Segment operating income as a percent of revenue was 18.4% and 17.3% for 2024 and 2023, respectively.
Removed
RESULTS OF OPERATIONS 2023 vs. 2022 Revenue Sensient’s revenue was approximately $1.46 billion and $1.44 billion in 2023 and 2022, respectively. Gross Profit The Company’s gross margin was 31.6% in 2023 and 34.0% in 2022.
Added
T he Company’s Felinfach site will continue to operate until all production activities have successfully transferred to other locations, and then will be closed. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.
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Selling and administrative expenses in 2023 were increased by portfolio optimization plan costs totaling $24.7 million and in 2022 were reduced by divestiture & other related income totaling $2.5 million.
Added
Segment operating income for the Asia Pacific segment was $34.5 million in 2024 and $30.8 million in 2023, an increase of approximately 12%.
Removed
Acquisitions On October 3, 2022, the Company acquired Endemix Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş. (collectively, Endemix), a natural colors business located in Turkey. The Company paid $23.3 million in cash for this acquisition, which is net of $1.3 million in debt assumed. This business is part of the Color segment.
Added
There were no shares of Company stock repurchased in 2024 or 2023. Cash Flows from Operating Activities Net cash provided by operating activities was $157.2 million and $169.7 million in 2024 and 2023, respectively. Operating cash flow provided the primary source of funds for operating needs, capital expenditures, and shareholder dividends.
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See Note 2, Acquisitions , in the Notes to Consolidated Financial Statements included in this report for additional information. Divestitures In 2022, the Company received $2.5 million of net cash related to the previously completed sale of its yogurt fruit preparations product line.
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Dividends paid per share were $1.64 in 2024 and 2023. Total dividends paid were $69.4 million and $69.2 million in 2024 and 2023, respectively.
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Flavors & Extracts Flavors & Extracts segment revenue was $741.1 million in 2023 and $738.0 million in 2022. The higher segment revenue was due to higher revenue in Natural Ingredients, partially offset by lower revenue in Flavors, Extracts & Flavor Ingredients. The higher revenue in Natural Ingredients was primarily due to higher selling prices, partially offset by lower volumes.
Added
The non-cash charges in 2024 were primarily related to trial production runs that did not meet quality specifications and thus were disposed of, and the non-cash charges in 2023 reduced the carrying value of certain inventories, as they were determined to be excess.
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The lower operating income in Flavors, Extracts & Flavor Ingredients was primarily due to higher raw material and manufacturing and other costs and lower volumes, partially offset by higher selling prices. Segment operating income as a percent of revenue was 11.8% and 14.3% for 2023 and 2022, respectively.
Added
Commitments and Contingencies The Company is subject to litigation and other legal proceedings arising in the ordinary course of its businesses or arising under applicable laws and regulations. Estimating liabilities and costs associated with these matters requires the judgment of management, who rely in part on information from Company legal counsel.
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The higher operating income in Food & Pharmaceutical Colors was primarily due to higher selling prices and the favorable impact of foreign exchange rates, which increased segment operating income by approximately 2%, partially offset by higher raw material and manufacturing and other costs, lower volumes, and an unfavorable product mix.
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Segment operating income as a percent of revenue was 21.1% in 2023 and 20.5% in 2022. 26 Index Corporate & Other The Corporate & Other operating loss was $68.9 million in 2023 and $52.8 million in 2022.
Removed
As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company’s financial position and its results of operations in 2023. The Company has experienced increased costs for certain inputs, such as raw materials, shipping and logistics, and labor-related costs.
Removed
Cash Flows from Financing Activities Net cash used in financing activities was $82.0 million in 2023, and net cash provided by financing activities was $86.2 million in 2022. The Company had a net decrease in debt of $3.5 million in 2023 compared to a net increase in debt of $157.2 million in 2022.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBecause the Company manufactures and sells its products throughout the world, it is exposed to movements in foreign currency exchange rates. The major foreign currency exposures include the markets in Western Europe, Latin America, Canada, and Asia.
Biggest changeNote 1 and Note 7 to the Consolidated Financial Statements include discussions of the Company’s accounting policies for financial instruments. 28 Index Because the Company manufactures and sells its products throughout the world, it is exposed to movements in foreign currency exchange rates. The major foreign currency exposures include the markets in Western Europe, Latin America, Canada, and Asia.
These non-derivative debt instruments act as partial hedges of the Company’s Euro and British Pound net asset positions. The potential increase or decrease in the annual U.S. dollar equivalent interest expense of the Company’s outstanding foreign currency-denominated debt, assuming a hypothetical 10% fluctuation in the currencies of such debt, would be approximately $1.1 million at December 31, 2023.
These non-derivative debt instruments act as partial hedges of the Company’s Euro and British Pound net asset positions. The potential increase or decrease in the annual U.S. dollar equivalent interest expense of the Company’s outstanding foreign currency-denominated debt, assuming a hypothetical 10% fluctuation in the currencies of such debt, would be approximately $1.1 million at December 31, 2024.
At December 31, 2023, the potential increase or decrease in annual interest expense of floating rate debt, assuming a hypothetical 10% fluctuation in interest rates, would be $1.0 million. The Company is the purchaser of certain commodities, such as vanilla, corn, sugar, soybean meal, and fruits.
At December 31, 2024, the potential increase or decrease in annual interest expense of floating rate debt, assuming a hypothetical 10% fluctuation in interest rates, would be $1.0 million. The Company is the purchaser of certain commodities, such as vanilla, corn, sugar, soybean meal, and fruits.
The net fair value of these instruments, based on dealer quotes, was an asset of $1.0 million and a liability of $0.2 million as of December 31, 2023 and 2022 , respectively.
The net fair value of these instruments, based on dealer quotes, was a liability of $0.8 million and an asset of $1.0 million as of December 31, 2024 and 2023 , respectively.
At December 31, 2023, the potential gain or loss in the fair value of the Company’s outstanding foreign exchange contracts, assuming a hypothetical 10% fluctuation in the currencies of such contracts, would be approximately $3.5 million.
At December 31, 2024, the potential gain or loss in the fair value of the Company’s outstanding foreign exchange contracts, assuming a hypothetical 10% fluctuation in the currencies of such contracts, would be approximately $2.1 million.
The financial impacts of these hedging instruments are offset by corresponding changes in the underlying exposures being hedged. The Company does not hold or issue derivative financial instruments for trading purposes. Note 1 and Note 7 to the Consolidated Financial Statements include discussions of the Company’s accounting policies for financial instruments.
The financial impacts of these hedging instruments are offset by corresponding changes in the underlying exposures being hedged. The Company does not hold or issue derivative financial instruments for trading purposes.

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