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DATE

Wednesday, May 6, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Erik Fyrwald
  • Chief Financial Officer — Michael DeVeau
  • Vice President, Investor Relations — Michael Bender

TAKEAWAYS

  • Revenue -- Reported at greater than $2.7 billion, reflecting 3% sales growth driven predominantly by volume increases across all business segments.
  • Adjusted Operating EBITDA -- Delivered $568 million, an 8% increase, mainly from volume growth and productivity improvements.
  • Adjusted EBITDA Margin -- Rose by 110 basis points to 20.7%, a company high since 2022, on a currency-neutral basis.
  • Health & Biosciences Sales -- Achieved $595 million, up 5%, all from volume growth, with particular strength in Animal Nutrition and Food Biosciences.
  • Health & Biosciences EBITDA -- Climbed 7% year over year to $153 million, with profitability gains attributed to volume.
  • Taste Segment -- Sales reached $656 million, increasing 2%, with Greater Asia posting mid-single-digit sales gains; adjusted operating EBITDA grew 18% to $153 million primarily from volume, pricing, and productivity.
  • Food Ingredients Segment -- Sales totaled $839 million, up 3%; EBITDA up 12% to $114 million as volume growth reached approximately 5%, the best in several years.
  • Scent Segment -- Sales were $651 million, a 1% increase; adjusted operating EBITDA declined 2% to $148 million, as commodity Fragrance Ingredients were pressured by market softness and unfavorable price-to-input costs.
  • Free Cash Flow -- Reached $92 million, a $144 million improvement year over year, supported by higher profitability and disciplined working capital management.
  • Cash Returned to Shareholders -- Distributed $102 million in dividends and repurchased $35 million of stock to offset dilution.
  • Gross Debt and Cash -- Gross debt declined to $5.85 billion, down by $3 billion from the previous year; cash and equivalents ended at $562 million.
  • Net Debt to EBITDA -- Ratio improved to 2.5x, slightly below last quarter's level.
  • Portfolio Simplification -- Completed the $110 million divestiture of the commodity soy crush, concentrates, and lecithin business to Bunge in March.
  • Food Ingredients Divestiture Update -- Management said, "several potential buyers going through second round of due diligence," with a further update expected by the second quarter call.
  • Latin America Expansion -- Actions included commissioning enzyme production at Areito (Argentina) and opening a household care laboratory in Brazil to support Health & Biosciences regional growth.
  • Full-Year Guidance Reaffirmation -- Sales expected at $10.5 billion to $10.8 billion (1%-4% growth); adjusted operating EBITDA projected at $2.05 billion to $2.15 billion (3%-8% growth), with all divisions expected to grow top line.
  • Pricing and Inflation -- Logistics and energy surcharges are being implemented to address inflation, with the process ongoing and pricing benefits anticipated to build incrementally through the year.
  • Outlook for Q2 -- CFO Michael DeVeau said, “EBITDA dollars in the second quarter to be lower than the $568 million… mostly driven by lower volume, unfavorable price-to-input costs, and weaker mix related to Fine Fragrance softness.”
  • Fine Fragrance Outlook -- “We anticipate that Fine Fragrance volume in the Middle East will be impacted in the second quarter,” with pressure attributed both to demand and temporary supply chain disruptions.
  • Productivity -- Ongoing productivity initiatives remain a key margin lever and may be accelerated in response to inflation not being fully offset by price.
  • Capital Allocation -- Focus remains on keeping leverage disciplined near 2.5x, supporting organic growth, offsetting share dilution, and selectively considering bolt-on M&A and venture investments.

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RISKS

  • Management expects adverse profitability impact in the second quarter from “inflationary trends,” with CFO DeVeau stating, “costs will begin to increase and our pricing actions are not fully implemented.”
  • The Scent segment, particularly Fine Fragrance, is exposed to “a temporary slowdown in Fine Fragrance in the important Middle East due to the factors of what is going on there” due to “slower market demand but also temporary supply chain challenges.”
  • Commodity Fragrance Ingredients business continues to face “market softness and price competition,” resulting in pressured profitability, and management is “de-emphasizing external sales.”

SUMMARY

International Flavors & Fragrances (IFF +16.57%) reported volume-driven growth in all operating segments, with margin gains and broad-based improvement in free cash flow. The company completed the divestiture of its commodity soy crush and related business ahead of schedule, and updates on the planned Food Ingredients sale are expected by the second-quarter call. Inflation in logistics and energy costs is being addressed through surcharges, although management warned these headwinds will pressure Q2 results before mitigation takes full effect. The Scent segment will face both demand and supply chain challenges, especially in the Middle East, impacting profitability in the near term. Strategic discipline in capital allocation and productivity initiatives remain at the center of the company’s operational focus, supporting the continuity of its full-year 2026 guidance.

  • Current net debt to EBITDA leverage is now 2.5x, with material progress in deleveraging supported by both operational performance and asset sales.
  • Adjusted EBITDA margin reached 20.7%, the highest since 2022, underlining progress in productivity and pricing even as mixed pressures persist.
  • Free cash flow conversion has been institutionalized into management incentives, strengthening the commitment to improvement over the year.
  • Guidance now includes only two months of soy business results, after completion of the sale on March 2, which was one month ahead of the original plan.
  • New production and laboratory facilities in Latin America are positioned to support regional growth for Health & Biosciences, signaling geographic expansion in innovation.
  • Management emphasized that any movement to the high or low end of guidance is contingent on shifts in end-market demand and the timing and scale of offsetting inflation via pricing.
  • Long-term improvements in the Scent and Health & Biosciences segments hinge on R&D pipeline execution and further portfolio streamlining by 2027.

INDUSTRY GLOSSARY

  • Inclusions: Customized ingredient components (such as particulates or encapsulated flavors) designed for integration into foods, enhancing taste, texture, or functionality.
  • Fine Fragrance: Segment of the fragrance market that includes perfumes and colognes, distinct from mass-market or household fragrances.
  • Adjusted Operating EBITDA: Company's reported earnings before interest, tax, depreciation, and amortization, excluding certain non-comparable items to enhance period-to-period comparability.
  • Commodity Fragrance Ingredients: Basic or bulk aroma chemicals commonly sourced and subject to significant price competition, differing from specialty or proprietary fragrance ingredients.

Full Conference Call Transcript

Michael Bender: Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to International Flavors & Fragrances Inc.'s First Quarter 2026 Earnings Conference Call. Yesterday afternoon, we issued a press release announcing our financial results. A copy of the release can be found on our IR website at ir.iff.com. Please note that this call is being recorded live and will be available for replay. During the call, we will be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty.

For additional information concerning the factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10-K and press release, both of which can be found on our website. Today's presentation will include non-GAAP financial measures, which exclude items that we believe affect comparability. A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in the press release. Also, please note that all the sales and EBITDA growth numbers that we will be speaking to on the call are on a comparable currency-neutral basis unless otherwise noted. With me on the call today are our CEO, Erik Fyrwald, and our CFO, Michael DeVeau.

We will begin with prepared remarks and then take questions at the end. With that, I would now like to turn the call over to Erik.

Erik Fyrwald: Thanks, Mike, and hello, everyone. Thank you all for joining us today. International Flavors & Fragrances Inc.'s first quarter 2026 results reflect our continued focus on execution, while serving customers with leading innovations and driving productivity and cash flow. Even amid uncertain market conditions around the world, we are making solid progress on our commitments as we continue to strengthen International Flavors & Fragrances Inc. for long-term success. I will start today’s call by briefly summarizing the first quarter, and then I will talk about the key strategic progress we have made so far this year.

I will then turn the call over to Mike, who will provide more details on the first quarter results, segment performance, and our outlook for 2026. Turning to Slide 6. Our team delivered a solid start to the year in the first quarter. Across all our businesses, we delivered solid sales growth driven by volume improvements. Our Health & Biosciences segment led with mid-single-digit sales growth, while Taste, Food Ingredients, and Scent all grew low single digits. This growth, combined with our productivity initiatives, resulted in a higher margin. In the first quarter, we also generated a strong free cash flow improvement compared to last year. This reflects a focus on cash, including working capital.

Over the past few years, we have made significant progress simplifying our portfolio. This strategic effort is resulting in our being able to focus and reinvest in our core and highest growth businesses while achieving our deleveraging targets. In March, we completed the divestiture of our commodity soy crush, concentrates, and lecithin business to Bunge for $110 million. Looking ahead, the sale process for our Food Ingredients business continues to make very good progress. While we do not have any additional information to share today, we are pleased by the strong interest in this business and we will let you know as soon as there is news to share.

In the first quarter, we also announced regional production and added innovation capabilities to better support the continued strong growth of our Health & Biosciences business in Latin America. This includes the startup of our Areito site in Argentina, our first full fermentation-based enzyme production in the region, and we opened a household care application laboratory at the International Flavors & Fragrances Inc. Innovation Center in Brazil. Together, these will improve our speed, reliability, and locally relevant solutions for markets including brewing, animal nutrition, biofuels, and home care. Now, with respect to the macroeconomic environment, including the ongoing Middle East conflict, it is clear that uncertainty and challenges will continue to persist through 2026.

But we remain focused on advancing our commercial and innovation pipelines, driving productivity, and working with customers to offset inflation. This, when combined with our solid start to the year, de-risks the balance of the year and gives us the confidence to reaffirm our full-year 2026 financial guidance ranges despite this uncertain environment. International Flavors & Fragrances Inc.’s diversified portfolio, the essential nature of our business, strong value proposition, and disciplined execution position us well to navigate ongoing volatility. In sum, we are doing what we said we would do with discipline and clarity. International Flavors & Fragrances Inc. is laser focused on achieving the strategic goals we clearly laid out two years ago.

Our leadership team and our highly dedicated IFFers all around the globe are committed to delivering high-value products that anticipate and solve the evolving needs of our customers. While there is more to do, I am proud of our progress and how our global team keeps strengthening how we serve customers to enable us to deliver on our commitments. And with that, I will pass the call over to Mike to offer a closer look at this quarter's consolidated results. Mike?

Michael DeVeau: Thank you, Erik. Thanks, everyone, for joining today. International Flavors & Fragrances Inc. delivered revenue of greater than $2.7 billion in the first quarter, with volume growth across all businesses. This solid performance led to 3% sales growth for the quarter, driven by mid-single-digit growth from Health & Biosciences and low-single-digit increases from Taste, Food Ingredients, and Scent. Adjusted operating EBITDA totaled $568 million for the quarter, an 8% increase driven primarily by volume growth and productivity gains. Our adjusted EBITDA margin also increased by 110 basis points on a currency-neutral basis to 20.7%, our highest EBITDA margin since 2022.

We continue to focus on what we can control, and the strategic progress we have made across all of our segments is clearly visible in these results. On Slide 8, I will provide a closer look at our performance by business segment. In Taste, sales increased 2% to $656 million, growing in all regions with a notable mid-single-digit performance in Greater Asia. The segment also recorded a very strong quarter of profitability improvements with adjusted operating EBITDA of $153 million, an 18% increase from the year-ago period. Profitability gains were primarily driven by volume growth, favorable net pricing, and productivity gains.

Food Ingredients sales were up 3% to $839 million, as growth in nearly all businesses was led by strong double-digit increases in Inclusions and mid-single-digit growth in Systems. Volume growth in the quarter was approximately 5%, the highest it has been in several years. Food Ingredients had a strong quarter profitability-wise as well, delivering an adjusted operating EBITDA of $114 million, a 12% increase year over year, led by volume growth and productivity gains. Our Health & Biosciences segment achieved sales of $595 million, an increase of 5% from the prior year, which was all volume-driven with growth across nearly all businesses, especially in Animal Nutrition and Food Biosciences.

From a profitability standpoint, Health & Biosciences delivered adjusted operating EBITDA of $153 million in the first quarter, an increase of 7% from the prior year, driven primarily by volume growth. Lastly, our Scent segment delivered sales of $651 million, representing 1% growth from the prior year. First-quarter performance was led by growth in Fine Fragrance, which had a strong double-digit year-ago comparable, and Consumer Fragrances. Fragrance Ingredients was down in the quarter as expected due to continued market softness and price competition in the commodity portion of our portfolio.

Adjusted operating EBITDA for this segment decreased 2% to $148 million as benefits from volume growth and productivity gains were more than offset by unfavorable price-to-input costs, specifically in the commodity portion of our Fragrance Ingredients business. Turning to Slide 9. Cash flow from operations totaled $257 million, which is an increase of $130 million year over year, and capex was $165 million year to date, or roughly 6% of sales. Our free cash flow position in the first quarter was $92 million, increasing $144 million year over year.

As mentioned last quarter, we remain disciplined in our execution across all elements of working capital, as it is a key priority in 2026 as we remain focused on driving a meaningful improvement in cash flow this year. During Q1, we also returned $102 million to shareholders through dividends and an additional $35 million through our dilution-cost share repurchase program. Our cash and cash equivalents finished at $562 million at the end of the first quarter. As of March 31, our gross debt totaled $5.85 billion, a significant decrease of more than $3 billion compared to the prior-year period. Our trailing twelve-month credit-adjusted EBITDA totaled approximately $2.1 billion.

Our net debt to credit-adjusted EBITDA ended Q1 at 2.5 times, slightly below last quarter. Disciplined capital allocation remains a core focus for us as we maintain our balance sheet strength through operational execution. Turning to Slide 10, I would like to walk you through our full-year outlook for 2026. We are off to a solid start, with first-quarter results that outperformed our expectations going into the year. This strong performance de-risks the balance of the year and gives us confidence to reaffirm our full-year 2026 financial guidance ranges. We are operating in an unpredictable environment, particularly as it relates to the ongoing conflict in the Middle East.

While we cannot control the macro backdrop, the factors that we can control, including the strength of our commercial pipeline, the depth of our customer partnerships, and our continued productivity gains, give us confidence in our ability to execute through this period. For full-year 2026, we are reiterating our sales expectation of $10.5 billion to $10.8 billion, representing 1% to 4% growth. We expect to deliver top-line growth in all our divisions supported by new wins and a robust innovation pipeline. From a profitability perspective, we continue to expect full-year adjusted operating EBITDA of $2.05 billion to $2.15 billion, representing 3% to 8% growth with solid margin expansion.

We continue to expect foreign exchange to have a roughly one percentage point positive impact on full-year sales growth with a minimal impact on adjusted operating EBITDA growth. Our full-year guidance now reflects only two months of the soy crush, concentrate, and lecithin business, as the divestiture closed about a month ahead of schedule on March 2 versus the April 1 date embedded in our original guidance. As a result of the ongoing Middle East conflict, inflationary pressures are expected to build over the course of 2026. We are proactively working with our customers to offset these pressures through pricing actions, starting with surcharges related to logistics and energy costs, and then building to account for raw material inflation.

In terms of phasing, we expect these inflationary trends to adversely impact profitability in the second quarter of 2026, where costs will begin to increase and our pricing actions are not fully implemented. Post-Q2, we expect this pressure to gradually ease through the back half of the year as pricing actions take full effect. In addition, our most significant exposure to the Middle East conflict, both from a sales and margin perspective, fits within our Scent business—and our Fine Fragrance business in particular.

We anticipate that Fine Fragrance volume in the Middle East will be impacted in the second quarter, in part due to slower market demand but also temporary supply chain challenges our customers are facing, such as getting packaging into the region. When combining these impacts, we expect absolute EBITDA dollars in the second quarter to be lower than the $568 million we reported in the first quarter, mostly driven by lower volume, unfavorable price-to-input costs, and weaker mix related to Fine Fragrance softness. Stepping back, our full-year outlook we are reaffirming today reflects a different shape than what we expected 90 days ago—with a stronger Q1 and a more measured balance of year given the Middle East conflict.

But our full-year goal is unchanged. Behind that consistency is the strategic progress we continue to make at International Flavors & Fragrances Inc. We are applying stronger discipline to direct capital allocation towards higher-value initiatives, strengthening our innovation and R&D pipeline, investing commercially where we have great opportunities, and driving structural productivity that will compound profitability leverage moving forward. We are pleased with what we are building in terms of a more focused, more competitive International Flavors & Fragrances Inc., and that gives us confidence in the value we are creating as we move forward. With that, I would now like to turn the call back to Erik for closing remarks. Thanks, Mike.

Erik Fyrwald: Now to close, I want to reiterate that the core businesses at International Flavors & Fragrances Inc. are strong and performing well. Our Q1 2026 results reflect the continued progress we are making in delivering on our commitments. Even in an uncertain and evolving macroeconomic environment, we have stayed focused on what we can control and doing what we told you two years ago we would do: getting to a focused portfolio of three strong businesses that are performing well with significantly more potential to create value for many years to come.

I continue to spend a lot of time traveling the world to visit our teams and customers, and I am ever more energized and confident about our future based on what I see and hear, including how our commercial and innovation pipelines continue to grow and advance, and I am pleased that our focus allows us to reaffirm our full-year 2026 guidance. We are investing for the future—in innovation, commercial, and supply chain capabilities, and in customer partnerships that matter most. I am confident that we have the right strategy, the right team, and the right innovation to continue to create long-term value. Thank you. We will now open the call for questions.

Operator: We will now begin the Q&A session. If you would like to remove your question, press star followed by 2. Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. As a reminder, we kindly ask that you limit your questions to one question per person. Our first question comes from the line of Ghansham Panjabi with Baird. Ghansham, your line is now open.

Ghansham Panjabi: Thank you, Operator. Good morning, everybody. On the outperformance that you delivered during the first quarter, can you give us more color on the specifics that drove the upside? And also, looking back at the quarter, do you think you benefited from any out-of-pattern ordering due to customer pre-buying, etc.? Thank you.

Michael DeVeau: Good morning, Ghansham. Thanks for the question. The strong top line and operating leverage during the first quarter was driven by, first of all, volume-led growth across all our segments, which was great to see, and continued solid productivity. We continue to strengthen our productivity muscle. Although we do not know all the reasons for specific orders from all of our customers, we have not seen any indication of significant pre-buying.

Operator: Thank you. Our next question comes from the line of Lisa De Neve with Morgan Stanley. Lisa, your line is now open.

Lisa De Neve: Hi. Thank you for my question. You talked a little bit on the call on the Food Ingredients exit, which is helpful. Can you share where you are in the process right now and maybe when you intend or hope to update the market on any potential events? Thank you.

Erik Fyrwald: Thanks, Lisa. We are running a very disciplined process, and it is going very well, with several potential buyers going through second round of due diligence, and the feedback has been very positive so far. The business, as you know, is performing well. It had double-digit EBITDA growth in 2025, and again in the first quarter of this year. That gives us a lot of confidence that we will get through this process in a very positive way. As I said before, we expect to have an update by our second quarter earnings call.

Operator: Thank you. Our next question comes from the line of Nicola Tang with BNP Paribas. Nicola, your line is now open.

Nicola Tang: Thanks. Hi, everyone. I wanted to ask what assumptions on both pricing and input inflation you are baking into your top line and EBITDA outlook. I would love to understand magnitude and how much of the inflation you expect to offset this year. Thank you.

Michael DeVeau: Hi, Nicola. Thank you for the question. You are right. We are seeing inflation across various inputs. Just to dimensionalize, Brent crude is a good indicator, as it is up significantly versus the average of 2025, and that impacts a couple elements of our cost baskets. At first, it starts with energy and logistics inflation, where we are already seeing double-digit increases coming through, and then, over time, it will make its way to some of the raw material costs, which we have not seen a big change in yet, but we expect it to come later this year.

Please remember, we do have inventory on our balance sheet, so we have some protection in the short term as it relates to raw materials. Our focus now is energy and logistics, given it is more real time. We are working with our customers to implement pricing surcharges. This is underway and will build throughout the quarter. As you know, pricing in our industry is a strong part of our algorithm. Consistent with historical inflationary cycles, we collaborate with our customers to fully offset any inflation, and usually it is a 12- to 18-month period. We do not expect anything materially different this time around as we continue to engage with customers.

Operator: Our next question comes from the line of Fulvio Cazzol with Berenberg. Fulvio, your line is now open.

Fulvio Cazzol: Yes, good morning, gents. Thanks for taking my question. Back in February, you anticipated a slow start to 2026 and for organic sales growth to sequentially accelerate through the year, supported by the strong innovation pipeline and the improvement in commercial execution. I understand the comments that you made regarding the Scent business in the second quarter, but for the rest of the segments, is that still your expectation?

Erik Fyrwald: Thanks, Fulvio. The first quarter came in better than expectations with really good execution across all of our businesses. However, we did not anticipate the Middle East challenges. But as you can see, we have developed the ability to deal well with unexpected global challenges over recent years. Our second quarter is challenged due to factors that Mike explained, but we do expect the commercial pipelines to continue to deliver in the second half, and that is why we are confident in our full-year guidance.

Operator: Thank you. Our next question comes from the line of Kristen Owen with Oppenheimer. Kristen, your line is now open.

Kristen Owen: Hi. Good morning. Thank you for the question. Can you discuss some of the scenarios around the remainder of the year given some good color on Q2? Given the strength of the Q1 results, what needs to happen to get you to the high end and the low end of the guide? Thank you.

Michael DeVeau: Thanks, Kristen. We are very pleased, as Erik said earlier on the call, with the start of the year. Volume and profitability came in a bit better than we expected. As we look towards the balance of the year in our forecast, we are cautiously optimistic in terms of the operating environment. For top-line performance, we are assuming there is no fundamental change in the lower consumer demand environment. So for us to achieve the higher end of the range, end-market demand would have to pick up and improve, and conversely to be at the lower end.

Fortunately, we have a very strong innovation pipeline and a commercial pipeline that we are working with our customers on; that is a big part of why we have confidence in the sales guidance range. In terms of EBITDA performance, we remain focused on driving profitability, and our guidance range reflects the now inflationary environment that developed post our original guidance in February. The team is fully focused and committed to working with customers to offset inflation—initially through pricing actions related to surcharges for logistics and energy—but that does take some time. As we progress over the course of the year, we will see an improvement there.

Any material difference between the 3% and the 8% range really is going to come from the pricing aspect to offset the inflation. At the same time, we are working on incremental productivity initiatives. If we have flexibility, we will work to drive profitability over the course of the year. While the environment has changed, we are consistent in what we are trying to achieve and consistent in our outlook for the full year.

Operator: Thank you. Our next question comes from the line of Michael Sison with Wells Fargo. Michael, your line is now open.

Michael Sison: Hey, guys. Nice start to the year. You and the industry had to raise prices; it is pretty obvious why. At what point does this inflation flow through to the consumer and start to impact demand? When I run by duty free, you look at the fragrance prices—they are pretty high. So in the businesses, at what point does demand start to get impacted by the higher prices?

Erik Fyrwald: Thanks, Mike. I expect demand to continue to be solid given everything that we are seeing. In Fine Fragrance, we expect to see continued solid growth for the full year, although less than the double-digit growth we have been seeing. As we discussed, there is a temporary slowdown in Fine Fragrance in the important Middle East due to the factors of what is going on there. In Consumer Fragrance, we have seen the pipeline grow and lots of interest in innovation that we are bringing to the marketplace. Other than the commodity ingredients, which is about half of our Fragrance Ingredients sales, everything else is on a solid base for the full year.

Operator: Thank you. Our next question comes from the line of John Roberts with Mizuho Securities. John, your line is now open.

John Roberts: Thank you. Good morning, everyone. A quick one on Scent. The Ingredients business continues to be the weak link, it seems like. How should we think about that business now, especially with raw materials going up and the hydrocarbon cost? And how are we thinking long term—your position being net long, sending within production?

Erik Fyrwald: Thanks for the question. To reiterate, our Fragrance Ingredients business outside sales is about $500 million a year and is roughly half specialty and half commodity. The specialty side is very attractive, and we will continue to emphasize that part of the business and further strengthen it with a strong R&D pipeline where we are driving for both internal formulation use and external use. We will do more here in specialties. We will do more in naturals, synthetics, and biotech molecules.

On the commodity side, that is the part that is very challenged—challenged by Indian producers and Chinese producers—and it is an area where we need to continue to have competitive costs for our internal formulation use, but we are de-emphasizing external sales. You will see that happen over the coming year or so.

Operator: Thank you. Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Kevin, your line is now open.

Matt Hauer: Hi. This is Matt Hauer on for Kevin McCarthy. With your balance sheet in better shape and incremental cash flow from the divestiture of Food Ingredients on the come, how are you thinking about capital allocation—stock buybacks, R&D investment, bolt-on M&A opportunities, and new ventures like AlphaBio?

Michael DeVeau: Thanks, Matt, for the question. We remain very disciplined in our capital allocation strategy. Our net debt to EBITDA leverage is 2.5 times, and we have implemented a share buyback program to offset dilution. In the event that we do have an influx of cash from a potential divestiture, we will look to maintain our net debt to EBITDA leverage plus or minus 2.5 times. Use of proceeds would focus on opportunities to minimize any potential dilution related to a transaction. At the same time, we will fund organic growth investments that have high return profiles and pursue potential bolt-on acquisitions and ventures that create strong shareholder value.

We will be disciplined in how we allocate capital to ensure we are generating strong shareholder returns.

Operator: Our next question comes from the line of David L. Begleiter with Deutsche Bank. David, your line is now open.

Emily Fusco: Good morning. This is Emily Fusco on for David L. Begleiter. Do you still expect North American Health trends to improve starting in the back half of the year with a full recovery in 2027? Thanks.

Erik Fyrwald: Thanks, Emily. The short answer is yes. As we said earlier, we expect the first-half Health to be flattish and then return to growth in the second half, with acceleration into 2027 as our commercial and innovation pipelines deliver with customers. We are very pleased with the team we have in place now, the efforts they are making, and what we are hearing back from customers.

Operator: Thank you. Our next question comes from the line of Josh Spector with UBS. Josh, your line is now open.

Anoja Shah: Hi. Good morning, everyone. It is Anoja Shah sitting in for Josh. Thank you for the guidance on Q2, but can you give us a little more detail there—maybe some of the moving parts to get to what you are guiding to for Q2?

Michael DeVeau: Sure. Thanks for the question. As you know, we do not give specific quarterly guidance. We are focused on delivering the full-year objectives and results. To help with modeling, in Q2 we expect EBITDA to be lower than our Q1 performance. There are three primary drivers: one, we expect growth to be more moderate in Q2 versus Q1; two, we expect some unfavorability in terms of price to input costs—we are seeing energy and logistics charges rising, and we have not fully implemented our surcharges yet, which will happen over the course of the quarter, creating margin pressure; and three, Fine Fragrance will be under pressure because of the Middle East, which creates a small mix headwind.

As we move through the second half, all three elements should improve, and we expect to finish within our full-year guidance range.

Operator: Thank you. Our next question comes from the line of Laurence Alexander with Jefferies. Laurence, your line is now open.

Laurence Alexander: Erik, if memory serves, one of your goals for the segments was to recoup the share positions that they used to have with a flat to higher gross margin for each of the subunits. Can you give an update on that strategy, what you have seen so far, how long you think it would take to get there, and what it could mean over the next three to five years?

Erik Fyrwald: Sure. Thanks for the question, Laurence. I feel like we are making very good progress across the company. We have done a great job of getting to the right portfolio; the sale of the Food Ingredients business is the next important step. Looking at the three future businesses: in Health & Biosciences, we continue to make really good progress, particularly in enzymes. The one area we are focusing on further improving is Grain Processing, both in enzymes and yeast—there is great opportunity there. Health is the area we talked about needing a turnaround. I think we are well on our way with strong leadership, an increasingly strong commercial pipeline, and a strong innovation pipeline.

We see that starting to turn in the back half of this year and accelerating into 2027. In Scent, we have a very strong position in Fine Fragrance, with some temporary issues we are working through. In Consumer Fragrance, we have a very strong team with a very good pipeline. Our R&D machine has really picked up in the last year; it takes 18 to 24 months to deliver, but we are seeing progress in that pipeline that will deliver in 2027 and beyond. The real issue in Scent is the commodity Ingredients that we talked about, and we are dealing with that.

By 2027, we expect that to go away as a headwind and unleash the full potential of the rest of the Scent business. In Taste, I am very proud of the team. We now have a number of quarters of strong performance ahead of the market, with a good pipeline. Finally, in Food Ingredients, you know about the sales process, and performance has been enhanced by the great work Andy Mueller and his team have delivered. In 2023, we had 9% EBITDA margin; in 2024, they built it to 12%; 2025, 13%; and this year, I think we will exceed 14% EBITDA margin.

As the portfolio was optimized within that organization and focused on higher growth opportunity areas, we have seen a return to top-line growth that we expect for the full year. Overall, solid performance, including in productivity. Are we satisfied? No. We are pleased with the progress, but we know we have so much potential that we are creating a bigger ambition across each business, and we expect to realize that in the coming five years.

Operator: Thank you. Our next question comes from the line of Patrick Cunningham with Citigroup. Patrick, your line is now open.

Alex: Hi. Good morning. This is Alex on for Patrick. With all the different puts and takes now, what are your expectations for free cash flow in 2026?

Michael DeVeau: Thanks for the question. Cash flow improvement is a key priority in 2026. For the year, I continue to expect a meaningful improvement driven by: one, improvements in profitability; two, improvement in working capital; three, lower interest expense; and four, a lower incentive compensation payout year over year versus prior year. We are off to a very good start, but we still have more work to do over the next three quarters. As I explained on our Q4 call, we have also added a compensation metric for the entire organization based on free cash flow conversion to EBITDA, so we are not only driving it strategically, we are also comping on it to drive the right behavior.

In terms of a specific target, I will refrain from providing one until we have clarity on Food Ingredients. The only thing I will say is that I expect it to be better in 2026 than it was in 2025—we will see a year-over-year improvement.

Operator: Thank you. Next question comes from the line of Silke Kueck with JPMorgan. Silke, your line is now open.

Silke Kueck: Hi, good morning. Can you talk about in which segments you think you gained share this quarter, whether it is in Taste or Health & Nutrition? And can you quantify in some way the product launches that are coming in the back half and which areas they will come in?

Erik Fyrwald: Great question. First of all, I think it is unhelpful to just look at one quarter; we need to look at trends over time. I am very pleased with the progress we are making in Health & Biosciences enzymes and in cultures/food biosciences. The area of challenge that we have talked about is Health. I am pleased with the progress we are making to turn that around, and we will start to see some progress in the second half, accelerating into next year. In Scent, we have done very well versus the market in Fine Fragrance; we talked about some temporary challenges there.

On the Consumer Fragrance side, we fell a little bit behind; we now have a really strong team in place, a very strong commercial pipeline, and we are starting to see that turn. You will see that in the second half and into 2027. We have a really good innovation pipeline in our Scent business that we did not have before; you will see that starting to manifest in the marketplace later this year, with real impact in 2027 and beyond. In Taste, very solid performance; we are performing ahead of the market, and I expect that to continue with a very good commercial and innovation pipeline.

In Food Ingredients, the transformation and turnaround continue, performing well against competitors across the business, which is why we expect the sale process to continue to go well. Overall, very pleased. We have a couple of areas—the commodity Scent Ingredients and Health—where we need to get back to performing ahead of the market and deal with the commodity Scent Ingredients business. We are making progress in all those areas—pleased but not satisfied, more to do.

Operator: Thank you. Our next question comes from the line of Christopher S. Parkinson with Wolfe Research. Christopher, your line is now open.

Harris Fein: This is Harris on for Chris. Thanks for taking my question. On the Taste margins, they came in a fair bit better than we were expecting on not a huge amount of organic growth. Can we zoom in on what is happening there? Is it productivity? Is it mix? How should we be thinking about that? Thanks.

Michael DeVeau: Sure. Great question. Thanks, Harris. When I think about the Taste business, they have been doing very well in terms of overall growth performance. Quarter after quarter, whether you compare versus competition or historical trends, they are continuing to deliver—predicated on really good volume growth. At the same time, they have been driving pricing, which has been favorable in terms of net raw material cost, so that is also helping—not only volume leverage, but a favorability in terms of net price to input costs. Third is productivity. The team has done a really good job being disciplined in driving productivity throughout the business to support margin performance.

Regarding Q1 performance on a go-forward basis, timing of inventories and some of that leverage will abate. The 18% currency-neutral EBITDA growth is very high; I would not expect that to persist. It will normalize. The team did a very good job with the hand they were dealt in Q1.

Operator: Our next question comes from the line of Kate Grafstein with Barclays. Kate, your line is now open.

Kate Grafstein: Thanks. As you start to have pricing discussions with your customers, are you noticing any pushback? And at what level of pricing would you need to offset the expected inflation over the next twelve months? I have a follow-up after.

Michael DeVeau: I had the fortune to run pricing in our Taste division for a couple of years at International Flavors & Fragrances Inc., and nothing is fundamentally different. Pricing conversations are always a give-and-take relationship. What is really important is to engage based on facts. From a market standpoint today, nobody can refute logistics and energy increases. We are having tactical conversations specifically on that. We also want to collaborate with our customers; we can offer solutions to help them reduce cost by reformulating and doing different things, and we are absolutely willing to do so. So this is consistent with historical norms.

In terms of the level of pricing, I would categorize it as a modest benefit this year as we work through logistics and energy. As we go forward, we are focused on raw materials; as we go into the back half of this year and into 2027, we will work with our customers there. It is modest over the next couple of quarters in terms of overall price, but it will build over time as we progressively move forward.

Erik Fyrwald: Let me add that having trust with our customers is really important to us. We are being very clear that we are not trying to take advantage of this to increase our margins; we are trying to just pass through the cost increases we are seeing from higher costs and being very clear about the cost. Where we are trying to drive our margin improvement is through great innovation that customers love and that helps them profitably grow, and through productivity.

Kate Grafstein: Thanks. On the productivity piece, it has been very strong—last year and this quarter. Is it possible to accelerate productivity as another lever if pricing does not come through as strong as you expect?

Michael DeVeau: Yes. You can always look at the organization and incremental opportunities. We have a long-term productivity plan that the teams are working on as they think about their margin evolution. In the short term, if there is pressure, we have levers we can pull to drive incremental productivity to help minimize any potential gaps. First and foremost, we are focused on getting the surcharges in place, and as we progress over the course of the year, we will consider whatever we need to do in terms of productivity to cover.

Operator: At this time, I would now like to turn the conference call back over to Erik for any closing remarks.

Erik Fyrwald: Thanks, everybody, for joining. To summarize, two years ago, we laid out our plan and direction. We are executing well—doing what we said we would do. We said we would drive our commercial and innovation pipelines—that is happening. We said we would deliver on productivity—that is happening. I am very proud of Team IFF all around the world for making this happen. We love our customers, and we love bringing them leading innovation that helps them drive profitable growth and enables us to also profitably grow. Thank you.

Operator: Thank you. That will conclude the International Flavors & Fragrances Inc. First Quarter 2026 earnings conference call. Thank you for your participation. You may now disconnect your lines.