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Sensient Technologies Corporation (NYSE:SXT)
Q2 2021 Earnings Call
Jul 23, 2021, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Sensient Technologies Corporation 2021 Second Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Mr. Steve Rolfs. Please go ahead, sir.

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Good morning. Welcome to Sensient's Second Quarter Earnings Call. I'm Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation. I'm joined this morning by Paul Manning, Sensient's Chairman, President and Chief Executive Officer. Earlier this morning, we released our 2021 second quarter financial results. A copy of the release and our investor presentation is available on our website at sensient.com.

During our call today, we will be explaining the differences between our GAAP results and our adjusted results. The adjusted results for 2021 and 2020 remove the impact of the divestiture-related costs, the operations divested and the impact of the costs related to our operational improvement plan. We believe the removal of these items provides investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods. This also reflects how management reviews and evaluates the company's operations and performance. These non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is available in our press release.

We encourage investors to review these reconciliations in connection with the comments we make this morning. I would also like to remind everyone that comments made this morning, including responses to your questions, may include forward-looking statements. Our actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action and the timing of a return of more normal economic activity. We urge you to read Sensient's previous SEC filings and our forthcoming 10-Q for a description of additional factors that could potentially impact our financial results. Please bear these factors in mind when you analyze our comments today.

Now, we'll hear from Paul Manning.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Thanks, Steve. Good morning. This morning, we released our second quarter results. Each of our groups delivered solid adjusted revenue and operating and adjusted operating profit growth in the quarter. Our Flavors & Extract group had another outstanding quarter reporting 9% adjusted local currency revenue growth and 13% adjusted local currency operating profit growth. Our Personal Care business rebounded substantially contributing to the Color Groups 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth. Asia Pacific had another strong quarter, delivering 11% adjusted local currency revenue growth and over 22% adjusted local currency operating profit growth.

On a consolidated basis, we reported 9% consolidated adjusted local currency revenue growth and mid-single-digit adjusted EBITDA growth in the quarter. I'm pleased with our results for the second quarter and for the first half of this year. Last week, we completed the acquisition of a company called Flavor Solutions. This business brings a number of technology platforms and Savory Flavors, shelf life extenders and taste modulation, and it expands our portfolio for clean label flavors. This acquisition aligns with our goal to continue to grow our value-added flavor technologies. We continue to look at other acquisition opportunities that support our strategic initiatives within our core product lines of food, pharmaceutical excipients and personal care.

In each group, our new sales wins, sales pipeline and sample activity continue to be strong, and they are good bellwethers of future product development activity and launches. We are also seeing increased in-person customer visits in many of our markets, and we anticipate that these visits will continue to increase as companies return to in-person work.

As mentioned during our first quarter call, we are encountering an increase in supply chain challenges, but we continue to manage through these matters. We are also seeing an increase in certain input costs, including raw material and transportation, and we expect these costs to remain elevated for the remainder of the year. COVID-19 continues to impact certain geographic regions and product lines. Despite the varied impacts of COVID-19 throughout the world, our Food Colors and Flavor product lines continue to see robust growth. As expected and discussed during our last quarterly call, our Personal Care business has begun to strongly rebound in the second quarter. In pharma, we see headwinds due to Top 2020 comparables in our nutraceutical and pharmaceutical product lines. Overall, I'm pleased with the growth across the company and the more recent improvements in our Personal Care business, which I anticipate to continue to improve in the second half of this year.

Turning to the group results. Flavors & Extracts Group had another outstanding quarter with 9% adjusted local currency revenue growth and 13% adjusted local currency profit growth. This growth is on top of the strong quarter the group achieved in last year's second quarter. During the second quarter, the Flavors & Extracts Group generated strong growth in almost all product lines. We are benefiting from a robust sales and customer service focus and a continued transition to more value-added product solutions. The group's adjusted operating profit margin increased 50 basis points in the quarter compared to last year's second quarter. We are well on track to achieve 50 basis points to 100 basis point improvement to operating profit margin this year. Noteworthy within the Flavors & Extracts Group is our ice cream product line. This product line continues to grow in both the US and Europe as a result of its integrated product sales and strong application capabilities. We continue to invest in this product line. I'm optimistic about its future growth prospects.

Our savory business is also having an outstanding year. This business continues to grow and win new sales opportunities as a result of its strong flavor technologies and exceptional customer service. Our savory business is well positioned in the market, and I expect it to have a strong year and future. The Color Group had an exceptional rebound this quarter, delivering 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth. The group benefited from success in both Food Colors and Personal Care. Revenue in the Food and Pharmaceutical product line was up mid-single-digits for the quarter. The group's focus on sales execution and customer service, as well as its strong technology platforms positions us to capitalize on the consumer demand for natural colors, while continuing to maintain our strong synthetic colors business.

The Food and Pharmaceutical business had good growth in almost all geographies and that's experienced improvement in Europe and Latin America, areas in which we had seen softer markets in recent quarters. Revenue within the Personal Care business was up double-digits in the quarter. As noted during our last quarterly call, we are seeing a recovery within this business and anticipate continued improvement in the second half of the year and into next year. People return to travel and other social activities that continue to be optimistic about the improvement within our Personal Care business.

The Asia Pacific Group delivered 11% adjusted local currency revenue growth and 22% adjusted local currency profit growth. The group continues to drive revenue growth in almost all regions. This growth is a result of our focus on customer service, new sales wins and utilization of our technology platforms. The group's operating profit growth and margin improvement are a direct result of volume growth. We delivered another good quarter and strong first half of the year. The markets we have chosen to compete in, our recent divestiture activity, our robust customer service model and our technology platform are each providing the foundation for growth with our customers. We are winning new sales opportunities, and our sales pipelines remain very healthy.

We are well on track for our full year guidance, and we are currently operating at or above the top end of this guidance. Over the long term, I continue to expect Flavors & Extracts to deliver mid-single-digit revenue growth and 50 basis points to 100 basis points annual improvement to operating profit margin over the foreseeable future. I also expect the Color Group to deliver mid-single-digit revenue growth, along with an operating profit margin at or above 20%. And I expect Asia Pacific Group to deliver mid-single to high-single-digit revenue growth over the long term. [Technical Issues] continue to remain very optimistic about the year and the future of our business.

Steve will now provide you with additional details on the second quarter results.

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Thank you, Paul. Our second quarter GAAP diluted earnings per share was $0.61. Included in these results are $7 million or approximately $0.16 per share of costs related to the divestitures and the cost of the operational improvement plan. In addition, our GAAP earnings per share this quarter include approximately $2.2 million of revenue or $0.01 of costs related to the results of the divested operations. Last year's second quarter GAAP results include a gain related to the reclassification of accumulated foreign currency translation as a result of the sale of the Inks business and other divestiture-related costs. The combination of these items were included within the divestiture and other related costs, which increased last year's second quarter net earnings by $1 million or approximately $0.02 per share.

In addition, our GAAP earnings per share in the second quarter of 2020 include approximately $28.2 million of revenue and an immaterial amount of net earnings related to the divested product lines. Excluding these items, consolidated adjusted revenue was $333.6 million, an increase of 9.1% in local currency compared to the second quarter of 2020. Our adjusted local currency EBITDA was up approximately 6% for the quarter, and our adjusted local currency EPS was up 8.6% for the quarter.

Our cash flow from operations was down in the second quarter, primarily due to an increase in sales activity in the second quarter of 2021 and the resulting use of cash to fund our working capital in the current quarter. While we are currently making strategic investments in our inventory positions to support our forecasted growth, we continue to remain focused on optimizing our working capital levels.

In terms of capital expenditures, we continue to expect our spend to be around $65 million for the year. During the second quarter, we bought back approximately $11 million of company's stock. As Paul stated earlier, we completed the acquisition of Flavor Solutions last week, and we are actively reviewing other potential acquisitions. Our leverage ratios are 2 times debt-to-adjusted EBITDA, down from 2.7 a year ago, leaving our balance sheet in a solid position to support potential acquisitions, share repurchases as well as our dividend payout. The company will continue to be prudent in our approach to our capital allocation strategy. Based on current trends and the current tax law, we are reconfirming our previously issued GAAP EPS, adjusted EPS and adjusted local currency EBITDA guidance. As Paul stated earlier, we do believe we are operating near the top end of this guidance.

Our GAAP EPS guidance calls for mid-to-high single-digit growth compared to our 2020 reported GAAP EPS of $2.59. Our full-year guidance for 2021 includes approximately $0.25 of divestiture-related costs, operational improvement plan costs and the impact of the divested businesses. On an adjusted basis, our EPS guidance for the year calls for mid-single-digit local currency growth compared to our 2020 adjusted EPS of $2.79. Based on current corporate tax law, we expect our adjusted tax rate to be approximately 22% for the last six months of 2021. We now expect our 2021 adjusted local currency revenue to grow at a mid-single-digit rate. This is up from our previous guidance of a low-to-mid single-digit growth rate for 2021. We continue to expect our adjusted local currency EBITDA to grow at a mid-single-digit rate. Given current proposals related to changes in the corporate tax law, we continue to believe that our adjusted local currency EBITDA metric, instead of EPS, provides a more reliable measure for our underlying business growth. Our reported results include the impact of currency. And based on current exchange rates, we expect our earnings to benefit by approximately $0.10 due to currency for the year.

Thank you for your time this morning. We will now open the call for questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ghansham Panjabi with Baird. Please go ahead.

Ghansham Panjabi -- Robert W. Baird -- Analyst

Hey guys. Good morning.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Good morning, Ghansham.

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Good morning.

Ghansham Panjabi -- Robert W. Baird -- Analyst

Yes. So just in context, as we kind of cycled through the back half of the year, we're seeing an increase in mobility and certain parts of the world, including the US, some lockdowns in Asia. A lot of companies have talked about raw material scarcity. There is an extreme weather event on the West Coast and so on. So can you sort of update us on a) your sort of updated outlook on volumes for the three segments as we cycle into the back half of the year? And then, also on the raw material side, what do you think at this point from a raw material inflation standpoint?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

So I think for the back half -- your first question, the back half looks very good for us in each of the groups. I think that certainly, there are certain -- while there are geographies that are far more open than others, but in all cases, we see product launches continuing. We see good customer activity. Fundamentals of our business remain very good. Whether there is a pandemic or not, folks need to eat. They need to drink. And in many cases, they continue to use personal care items as well. So I think that trend is always going to be solid for us, but there's certainly a sufficient activity in each of our markets that I feel very good about the back half of the year. I feel very good about the mid-single-digit growth rate. Volumes look good. The fact -- most of the growth in Q2 here and in Q1 has been volume related. To your point about raw material, a hallmark of our business is that input costs can go up, but we have a very strong ability to price those input costs into the market.

And so, in some cases, we perhaps may even reformulate the products, but in the vast majority of cases, we can take pricing and cover our costs. And in fact, we can take pricing and cover our margins, has tended to be how the company has operated over the years. So I wouldn't tell you that this -- what we're in right now would be any different from any other point in our history. From our standpoint, there's some very obvious increases in propylene glycol and coconut oil and soy, and things of this nature. I don't really believe a lot of those are permanent. I think some of these will regress back to the mean, but certainly, there is inflation with respect to transportation, but again, these are things in -- they're a little bit more abnormal than normal, but business is always that to contend with input costs coming up. So we feel very, very confident in the formula that we use from a pricing standpoint. And I feel very good about the back half. And I do not believe inflation is an issue for this company as we move forward.

Ghansham Panjabi -- Robert W. Baird -- Analyst

Okay. And then, just my second question on the contribution margins, I mean, just looking at color -- just looking on Slide 13, local currency adjusted revenues, plus 7% and operating income up 5%, why was it a more substantial just given that Personal Care is coming back for you?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Yeah. So that's a great question. There should be more operating leverage as we go into the back half of the year. A couple of factors there. The big one is that Personal Care volumes have really just been down for about the last year. So without getting into accounting gobbledygook, you can just see that as lower utilized plants, but we were hitting the inflection point kind of as we speak maybe even a little bit at the end of Q2. So you'll see a much bigger uplift from the growth in Personal Care to the profit line as we get into the back half of the year. And then, as we go through our pricing, the timing between input costs going up and pricing being effective, there is oftentimes a little bit of a gap there. So that might have compressed the margin 1 point or 2 points, but I would say that the bigger impact there on Personal Care is just less than normally utilized plants carrying in, but you can project that out pretty cleanly and see as we get into Q3 and Q4 that the operating leverage will be quite a bit better in the Color Group for the rest of the year and then, of course driving us to maybe even beyond the 20% OP margin.

Ghansham Panjabi -- Robert W. Baird -- Analyst

Got it. Thanks so much.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Thank you.

Operator

The next question is from Mark Connelly with Stephens. Please go ahead. Thanks.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Hi, Mark.

Mark Connelly -- Stephens Inc. -- Analyst

Paul, can you talk a little bit about product development relative to normal and what customers are saying? You did mention the increased sampling, but we're still seeing categories like foodservice holding back on introducing new products. So maybe you could help us understand sort of the early and sort of later stage how that feels like it's coming back.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Yeah. So general comment, if I were to compare 2020 to 2019, you would see that the total number of launches in places like the US and Europe -- the total number of launches were about the same. So companies launched X number of products in 2019. They also launched like X number of products in 2020. And so, what really the dynamic that changed there is who is making the launches. And we saw a disproportionate number of launches for more of those local and regional customers, what I call, the B&C folks.

There are more launches coming from that group of customers than the larger, whatever you want to, a) multinational-type customers. So that dynamic continued into 2021. I mean, certainly, there has been some improvement there, more launch activity or certainly indications at other multinationals of increased launched activity as we get into 2021, but that's probably the biggest dynamic at play there. But I would tell you that there is certainly more activity. Many of these largest companies are, we see more activity with their employees coming back to their labs to develop products. It was very, very hard for many of them to do that in the last year as many of their folks are at home, but we see that improving in the US. We see that improving in parts of Europe. We see that improving in parts of Asia Pacific as well. China for all intents and purposes is open for business. And there is pretty much nearly universal access to customers and customers coming to us. So if you look at that as a continuum and as much as China-based much of COVID in the early stages, it provides maybe a good template for what we could expect to see in other parts of the world.

Mark Connelly -- Stephens Inc. -- Analyst

That's helpful. And just a second question, the weather the Ghansham mentioned, are you concerned about the impact on your dehydrated natural products business? Do we have to worry about weather extremes creating more volatility there?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Well, weather moves in cycles. And so, we've had to respond to that for decades in that business. And so, like any agricultural company, you had times where the yield is what you expect and sometimes, it's a little bit more. Sometimes, it's a little bit less. And so, the early indications for this year's crops are good in terms of yields. And so, we grow at a fairly broad area. So while there may be drought like conditions in some other parts where we're growing may be just fine. And so, I think the footprint for where we're growing is diversified enough at this point that I wouldn't -- I would not be ringing any alarm bells for our business there and as much as we talk about the other parts of our business, say, natural colors for example or extracts where we're either growing or we're working with contract growers, there again having a diversified growing base has been a big, big part of our strategy for many years for this very reason. So I think we're very well prepared for it. And again, I think the biggest factor there is the footprint. It could really safeguard against any really catastrophic weather event that we could face.

Mark Connelly -- Stephens Inc. -- Analyst

Sure. If I could just squeeze at a quick one for Steve, last quarter, we had a couple of unusual impacts on cash flow with the incentives. Is there anything like that this quarter, or that we should be thinking about for the second half?

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

No. So, you're right. Year-to-date, if you look at our cash flow, it is down partly because of the incentive payments early in the year versus last year. But the main impact to see in this quarter is just with the rising sales, a little bit of working capital usage, particularly on receivables. So last year, Personal Care sales were declining. This year, they're increasing. So that is the main factor. And I don't have any things to call out other than that for the rest of the year.

Mark Connelly -- Stephens Inc. -- Analyst

It's good news. Thank you very much.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Thanks, Mark.

Operator

The next question is from Heidi Vesterinen with Exane BNP. Please go ahead.

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

Good morning.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Hi, Heidi.

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

First question. Hi. My first question on your upgraded top line guidance, which segment is driving this? And is this driven by volume or price or both? That's the first question.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. So I would tell you it's pretty broad based. We're seeing good growth in flavors, in natural colors, we're seeing it in Personal Care. I would say, Personal Care is probably going to be a little bit higher than the others at this point, because there's a fair amount of recovery built into that number. Up until now, it's really been volume. I would suggest there was very little price impact in the first half of the year, but as we get into the second half, it's going to be volume than price. That's going to be driving that top line.

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

And digging into Personal Care, so you sound very upbeat on the outlook. Can you talk about what you're seeing in each region? And do you have a view on when we might get back to pre-pandemic levels in each region, please?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

So yeah, the regions have kind of been in very interesting cycles. We had seen -- and we break it up really into four. We talked Latin America, Europe, Asia, and North America. The strongest recovery we're seeing right now is in Europe and North America. We're seeing a very, very strong recovery in color cosmetics and in hair care. I think skincare has been pretty steady throughout for those regions. Latin America has been a very strong factor -- growing factor for us. They had an outstanding year last year. And so, we're seeing a little bit of the slowdown now really driven a lot by COVID activity. So even though COVID was alive and well in the region in 2020, we were able and our customers were able to really manage through that very well. And we had a very, very strong year there. Now, we're starting to see more of those impacts from COVID on our customers on the populations.

And so, growth has sort of tapered off a little bit in Latin America for the moment, but Asia, a lot of it depends on the country. I mean, overall, they did OK last year. They took a little bit, but they can take ups and downs depending on what lockdowns may be in place in Asia, and that's what's really driving a lot of the topsy-turvy outcomes here in Asia that lockdowns will go away. And then, they will come back and then they will go away and they will come back again. But overall, I think Asia should be in pretty good position for the back half of the year, but the short answer again is largely Europe and North America is going to lead the outsized growth in the back half of the year. Latin America, I hope they will kind of weather through some of their COVID storms and resume to be in a much better position as we get into 2022. And then, Asia really -- again, it could be up, it could be down a little bit, but net-net for Personal Care, we're going to have a very good second half. Now, that we've got better utilization on the plants, you're going to see better operating leverage coming out of that group as well, and that's going to feed a lot of the top line and the bottom line growth for the Color Group, but I don't want to discount the very nice growth we're also having in natural colors as well, which is going to continue to drive this growth.

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

Thank you. And then, as a final one, when we look at Flavors, Extracts and Flavor Ingredients, very nice double-digit growth. Could you give some color on the three parts?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Sure. So you're right. Flavors has -- traditional flavors, your traditional sweet savory beverage, up double-digits. And then, more or less in most regions, we're doing very, very well there. We continue to emphasize that part of our product line. Our ingredients were up. It looks like right at -- I'm looking at the sheet right in front of me, kind of, high-single-digits. And then, within our S&I, we were looking more like about mid-single-digit growth. So overall, that put us in the high-single-digit category as you're gathering from that pretty good growth across the board, but we got a lot of work to do. There are a lot more customers we can sell to. There's is a lot more wins we're going to capitalize on. And so, I feel very, very good about their growth prospects moving forward.

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

Thank you.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Thanks, Heidi.

Operator

[Operator Instructions] The next question is from Mitra Ramgopal with Sidoti. Please go ahead.

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

Yes. Hi, good morning, Paul and thanks for taking the questions. First, I just want to follow back up a little more on the Personal Care side. I know you're very upbeat in terms of outlook there. One thing, I think there's concern for some is with the surge in Delta variant, places like [Indecipherable] that has already had a difficult time, people into the office, etc., despite sort of [Indecipherable]. And I'm just wondering if we do have that kind of a situation, if you still feel very upbeat or bullish in terms of that business recovering even faster than you've seen so far.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Well, I don't want to get into a public policy commentary about how governments may respond to the Delta variant or any other changes in COVID, but I think there is a critical mass of countries, customers that I think that will drive a lot of this growth. Really as you look at 2020, I mean, we really kind of bottomed out in that business, but now with big parts of the world opened and other parts opening or open enough that consumers are using these products, I feel good about that.

Now, Asia is a bit of a -- it was a little bit of what you're getting at there as lockdowns come and go, that can certainly impact the market, and we have seen that in Asia, but in my opinion, Europe and the Americas, maybe more specifically in North America, I think that momentum is going to continue. And as we look at our pipeline, as we look at customer launch activity, sample request, they are all pointing in that direction of good back half, good first half of 2022. And so, as I'm sitting here today on July 23, that's kind of the way I'm seeing in the world. We continue to diversify this product line as well.

You may recall that historically, we had a very, very strong -- part of our portfolio was color cosmetics, but over time, we really diversified more into hair care, skincare, oral care, even bath and shower type products. And so, I think we continue to diversify the business, those product lines. Some of them did actually quite well during 2020 because they weren't incumbent on somebody socializing being outside, skincare, for example. So I would tell you that for all those reasons, I think the back half is going to be as good as I'm thinking it is. As I sit here, well, I can tell you daily sales look like right now. Mitra, I got right in front of me and it looks good. And it looks good for July, and it looks good for August, and it looks good for September. So yeah, that's what. Again, the confidence is very well founded and looking at the numbers and seeing what the customers' activity is.

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

Okay. That's great. And then, just -- I think you might have made necessarily, but as it relates to this approach, chain challenges, some companies have [Indecipherable] for example, manned is not an issue, just getting the product out, just a short in terms of chips [Phonetic] or get there to move the products. I'll just bring if you have any of those additions [Phonetic] on your end.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Yeah. So on the -- I'm sorry -- I was just that your call, you came in a little bit broken on that one, but I think your question is overall supply chain, it's hard to get stopped. It's hard to get carriers. You're reading a lot of the stuff in the paper, but yeah, hey, listen, friction is part of managing a business, and we expect our managers and the folks who were running our plants and our supply chains to deliver the goods. And whether it's tough times or easy times, you got to deliver the goods or you're not working in the right place. And so, our expectation and our focus around on-time delivery and meeting our customers' expectations has not faltered. The big part of why we won a lot last year and why we're winning a lot this year. And so, we expect our businesses to manage through that. In some cases, we do that with additional safety stock.

In other cases, we -- well, let's just say there is a lot of ways that you can manage your supply chain to meet your customers' expectations. And so, sure, it's tough out there, but you know what, that's why we have people and leadership positions to overcome those. And I would tell you that we're overcoming those very well. And they are -- you read about labor shortages. Well, what recruiters recruit, and whether it's hard or easy, if you're any good as a recruiter, if you're going to be able to recruit in any environment and if you good as a plant manager, you're going to be able to produce in any environment. And those are the expectations we have of our employees. We have very high expectations and they meet them. And so, I feel good about our ability to navigate through whether it's inflation, whether it's shipping challenges, whatever it may be, we work from the office, we operate with a lot of dedicated employees. And for us, it's about results. And so, I think that culture permeates all of our locations in all of our business lines. And so, our employees know the expectation is, you deliver the goods to the customers, no excuses. And this time is a perfect example of putting that into practice.

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

Okay. That's great. And then, finally, just if you could provide maybe a little more color on the Flavor Solutions acquisition, now with the divestitures pretty much behind you, the appetite for being even more aggressive on that front, and if it's going to be more technology-driven like we saw with Flavor Solutions?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Yeah. Flavor Solutions is -- there is a lot of things we like about it. It's about $10 million in revenue. It helps us to extend some of our technology platforms. As I've said many times before on these calls, there is no flavor company in the world that has a lock on every taste-modulation technology. So for example, labor company X may have a really good sweetness enhancement for this particular drink, but that doesn't mean it works in every suite-related application. And so, the ability to have complementary technologies and an expansive list of solutions really is what makes you a good flavor company. And so, Flavor Solutions adds to our capabilities there. They have a very nice library of reaction flavors. They have very good customer relationships. We, oftentimes, think it's only the big flavor companies that have access to really good customers, and that's just simply not the case. And so, Flavor Solutions that builds up some really good customer relationships over the years and they're able to deliver very good products to them too. So a couple of the reasons why we like them.

And then, of course, as I've always said, we want something that we can integrate without a lot of headache and cultural issues. There is a very strong cultural connection. I think we very much see the importance of managing, and we see the importance of putting our customers first. And those things are very, very clear in both Sensient and Flavors Solutions. And so, I feel very, very good about Flavors Solutions. I've also said in the past about acquisitions, we want to make them reasonable. They should be purchased for reasonable multiples, and you can integrate them and you can build upon your business. And I think it checks the box on each one of those expectations that we have. And so then, looking forward, sure, I've got a pipeline of businesses that we're interested in and maybe, we'll have more to talk about later in the year, but again, we're not going to rush things and we're not going to do anything that doesn't make sense strategically or financially with the companies. So we're going to maintain our discipline there, but sure, we may have some other things to talk about as we move into the future.

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

Okay. That's great. Thanks for taking the questions. And before I go, congratulations on the Bucks. Great.

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Congratulations on the Bucks.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Oh, yes. Thank you. I can't say I had much to do with that, but I enjoy watching them on TV.

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

It's nice to enjoy. There you go.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Thanks, Mitra.

Operator

The next question is from Leigh Ferst with HighTower Advisors. Please go ahead.

Leigh Ferst -- Hightower Advisors -- Analyst

Good morning. I have a follow-up question about inflation. I understand you can usually pass along inflation on the price, and I understand that I'm moving target with the supply chain right now, but is there any ingredient or any price point where you would get concern that you could not pass along price and production margin?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Yeah, I'm not going to tell you that a 100% of products to a 100% of customers lands in the place that both parties are happy with. And so, in some cases, I think another hallmark of our business is we have the ability to formulate something different, formulate an alternative to what we've been using. That can certainly be the case. But I think overall, we're going to -- I think we're going to land in a good spot here. I've got a great deal of confidence with that. Again, that's born off actually seeing what's happening in the market, seeing what our performance has been with pricing over the years. So I don't think there's anything out there that's really going to be a problem. There is no one raw material to this company that's going to bring us to our knees. And so, that's yet another great feature of these ingredient businesses as you have a highly diversified raw material supply base, which also provides some level of insulation in the face of a pretty broad-based inflation. So in short, we're managing through this. And I don't have any concerns about our ability to manage through this, just as we've managed through many of these before now.

Leigh Ferst -- Hightower Advisors -- Analyst

Thank you. And in terms of the acquisition, can you give us any more insight into their end-markets or end products that they're complementary to what you're doing already if there's something new, and also what is the deal environment, if they're more competition for acquisitions right now?

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Sure. So I think speaking about Flavor Solutions, I mean a lot of the technology, the complementary technologies in the realm of taste modulation, so things that help you have sweetness without using as much sugar, for example, help you have that salty sensation without as much salt actually being used. So yeah, they would provide some enhancement to, for example, our savory flavors platform. So that would be an example for you. With respect to other companies that could be on the horizon or it could be something that we're interested in, yeah, I mean, a lot of companies that there are auction processes, but in other companies, you forged a relationship over time that may then lead to an acquisition. In some cases, you made -- they're not acquired at all.

You may just license because then you get what you need without going through the dynamics of an acquisition. And so, I wouldn't tell you that it's any more or less competitive now to buy a company than it was a couple of years ago. It's really just a matter of whether a seller is interested in selling. Not every company is for sale contrary to some folks who believe that is the case. Many companies are family owned for many generations, and they have no interest whatsoever in selling to anybody at any price, but then, there are many others that it's a matter of timing and it's a matter of a win-win on a -- from a financial standpoint. So yeah, I wouldn't say there's anything necessarily unique about this time in place with respect to the types of businesses that we are looking at. Maybe others have a different opinion on that, but that's what I have seen for the last year.

Leigh Ferst -- Hightower Advisors -- Analyst

Thank you.

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Okay. Thank you.

Operator

There are no further questions at this time. I will turn the conference back over to the company for any closing remarks.

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Okay. Thank you very much for your time this morning. That will conclude our call.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Stephen J. Rolfs -- Senior Vice President and Chief Financial Officer

Paul Manning -- Chairman of the Board, President and Chief Executive Officer

Ghansham Panjabi -- Robert W. Baird -- Analyst

Mark Connelly -- Stephens Inc. -- Analyst

Heidi Vesterinen -- EXANE BNP Paribas -- Analyst

Mitra Ramgopal -- Sidoti & Company, LLC -- Analyst

Leigh Ferst -- Hightower Advisors -- Analyst

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