Sensient Technologies Corp. (SXT) filed Quarterly Report for the period ended 2009-09-30.
Sensient Technologies Corporation is a leading global supplier of colors flavors and fragrances. Using sophisticated technologies at facilities around the world the Company develops unique formulations and ingredients that bring life to its customers' products. Sensient manufactures a full range of ink-jet inks cosmetic and pharmaceutical additives as well as colors and flavors for many of the world's best-known brands. (Press Release) Sensient Technologies Corp. has a market cap of $1.24 billion; its shares were traded at around $25.5 with a P/E ratio of 13.6 and P/S ratio of 1. The dividend yield of Sensient Technologies Corp. stocks is 3%. Sensient Technologies Corp. had an annual average earning growth of 18.1% over the past 10 years.
Highlight of Business Operations:
Revenue for the third quarter of 2009 was $303.2 million compared to $318.6 million recorded in the prior year’s third quarter. For the nine months ended September 30, 2009, revenue was $890.0 million compared to $958.8 million in the prior year’s period. The impact of foreign exchange rates reduced consolidated revenue by 4.2% and 7.3% in the quarter and nine months ended September 30, 2009, respectively. Revenue for the Flavors & Fragrances segment decreased 4.8% and 5.3% for the three and nine months ended September 30, 2009, respectively, from the comparable periods last year. Color segment revenue decreased 8.3% and 12.1% for the third quarter and nine months ended September 30, 2009, respectively, from the comparable periods last year. Corporate and Other revenue increased 8.0% for the quarter ended September 30, 2009, but was down 4.5% for the nine months ended September 30, 2009, from the comparable periods last year. The impact of foreign exchange rates decreased quarterly revenue for the Flavors & Fragrances Group by 3.8%, the Color Group by 5.6% and Corporate and Other by 0.9%. The impact of foreign exchange rates decreased year-to-date revenue for the Flavors & Fragrances Group by 6.7%, the Color Group by 8.7% and Corporate and Other by 6.0%. Additional information on group results can be found in the Segment Information section.
The gross profit margin increased 60 basis points to 30.7% for the quarter ended September 30, 2009, from 30.1% for the same period in 2008. For the nine months ended September 30, 2009 and 2008, the gross profit margin increased 20 basis points to 30.8% from 30.6% in the comparable period in 2008. Higher selling prices and lower energy costs more than offset the increased cost of raw materials in both periods.
Selling and administrative expenses as a percent of revenue were 17.8% and 17.3% in the quarters ended September 30, 2009 and 2008, respectively. For the nine months ended September 30, 2009, selling and administrative expenses as a percent of revenue improved 20 basis points to 17.3%. Higher employee costs combined with the impact of lower revenue were partially offset by lower performance based compensation and professional services in the quarter. For the nine months ended September 30, 2009, the lower performance based compensation and professional services more than offset the increase in other employee related costs.
Operating income was $39.0 million and $40.9 million for the quarters ended September 30, 2009 and 2008, respectively. Operating income was $120.6 million and $125.3 million for the nine months ended September 30, 2009 and 2008, respectively. The impact of foreign exchange rates reduced operating income by 5.2% and 8.7% in the quarter and nine months ended September 30, 2009, respectively. The change in operating income was due to the revenue, margin and expense changes discussed above. Additional information can be found in the Segment Information section.
The effective income tax rates were 31.8% and 26.7% for the quarters ended September 30, 2009 and 2008, respectively. The effective income tax rates were 31.3% and 30.0% for the nine months ended September 30, 2009 and 2008, respectively. The effective tax rates in both 2009 and 2008 were reduced by changes in estimates associated with the finalization of prior year foreign tax items. The Company expects the effective tax rate for the remainder of 2009 to be 32.5%, excluding the income tax expense or benefit related to discrete items, which will be reported separately in the quarter in which they occur.
Operating income for the quarter ended September 30, 2009, was $14.6 million versus $17.7 million in the comparable period last year. The decrease was primarily due to lower profit in non-food colors ($2.6 million) and the unfavorable impact of foreign exchange rates ($0.9 million). These items were partially offset by higher profit in food and beverage colors ($0.4 million). The lower profit in non-food colors was primarily driven by lower volumes combined with increased raw material costs. The higher profit in food and beverage colors was primarily related to an increase in selling prices which offset the impact of raw material and energy costs. Operating income as a percent of revenue was 15.5% compared to 17.3% in the prior year’s quarter.
SXT is in the portfolios of Richard Aster Jr of Meridian Fund.
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