International Flavors & Fragrances Inc. (IFF) Q3 2026 Earnings Call Transcript

Operator: At this time, I would like to welcome everyone to the ISS Third Quarter 26 Earnings Conference Call. To ask a question at that time, please press 1 on your telephone keypad. If you would like to remove your name from the queue, please press 2. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of 1 question per person. I would now like to introduce Michael Bender. Head of investor relations. You may begin.

Michael Bender: Thank you. Good morning, good afternoon, and good evening, everyone. Welcome to IFF's third quarter 26 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 factors that can cause actual results to differ materially, please refer to our cautionary statement and risk factors contained in our 10 ks and press release of which can be found on our website. Today's presentation will include non GAAP financial measures, which exclude those 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 sales and EBITDA growth numbers that we will be speaking to on the call are all on a comparable currency neutral basis unless otherwise noted. With the announced divestiture of Food Ingredients, we discussed the results and guidance on a continuing operations basis unless otherwise noted. Our P&L financials are presented on a continuing operations basis while cash flow, net debt to credit adjusted EBITDA leverage and CapEx are presented on a total company basis. Which includes both continuing operations and discontinued operations. With me on the call today is our CEO, J. 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 Eric.

J. Erik Fyrwald: Thanks, Mike, and hello, everyone. Thank you for joining us today. IFF delivered strong results in the third quarter, with year over year growth across every business segment. We drove increased revenue and improved profitability across all divisions with particularly strong performances in taste and scent, Our progress through the first 9 months of 2026 is evidence that our portfolio transformation is better positioning IFF for strong growth and sustained healthy margins. This solid year to date performance gives us the confidence to raise the lower end of our full year guidance ranges even when factoring in the ongoing macroeconomic uncertainty the world is facing. In short, our team is executing on our strategy and we have momentum delivering value for our customers, and for our shareholders. I will start today's call by briefly summarizing our results and providing an update on our strategic progress and continued portfolio transformation efforts. I will then turn the call over to Michael DeVeau, who will provide more details on the third quarter results, segment performance, and our outlook for the remainder of 2026. Turning to Slide 6. I am encouraged by IFF's strong performance over the first 9 months of 2026. Sales grew 4% and EBITDA rose 7% delivering a 50 basis points improvement in adjusted operating EBITDA margin all on a currency neutral basis. In the third quarter, we delivered both top and bottom line growth across all segments. Our solid third quarter was led by mid single digit sales growth contributions from Taste and Scent, and modest sales growth in Health & Biosciences, driven by contributions from new wins and from existing business. For the first 9 months of 2026, free cash flow $371 million and this represents a gain of $245 million versus last year, supported by improved net working capital an area of focus for us as we came into 2026. We also recently completed our accelerated share repurchase plan returning $500 million to shareholders. Underscoring our confidence in the direction of the business and our strategic plan. At the same time, we continue to invest in our highest growth opportunities which positions us well for the years ahead. With the strength of our volume growth, and our strong year to date performance, we are raising the low end of both full year guidance ranges, We are controlling what we can control and delivering the financial commitments we set out earlier in the year. A testament to the resilience of our business amid changing macroeconomic conditions and their impact on input costs currencies, interest rates, and consumer demand. Our updated outlook incorporates some near term profitability softness in the fourth quarter particularly in Health & Biosciences. Where we are seeing higher costs and continued market softness. At the same time, the team remains fully focused on strengthening the business through reinvestment. We are also working with customers on pricing and driving productivity to mitigate higher costs. Positioning us well going forward and giving us confidence that we can deliver financial results within our guidance range. At IFF, we are delivering for our customers advancing our strategy, and building a more focused innovative, and stronger company. I want to recognize that this would not be possible without the dedication of our global team. Our results demonstrate the impact of our volume growth initiatives and productivity. While our disciplined approach to capital allocation continues to create value for shareholders, and we remain focused on building on this progress and executing with discipline through the year end and beyond. Now moving to slide 7. I want to step back from the quarter and update you on our progress against the growth oriented simplification strategy introduced in early 23. Throughout the year, we have focused on keeping this strategy at the center of our decision making. Continuing to strengthen our position as a global industry leader while sharpening our portfolio focus on high value consumer centric ingredients markets. As we shared last quarter, we agreed to sell the food ingredients business to CBC Capital Partners for about $4.3 billion. The separation is progressing well, and we remain on track to close the transaction by the end of the first half of 27. As the separation advances, our focus remains with CDC on achieving the planned closing timeline. We will continue to balance speed with rigor ensuring that the transaction readiness and ongoing business priorities move forward together. While a separation of this scale and complexity requires significant focus and effort, we have aligned the team with incentives to reinforce disciplined execution, maintain momentum, and move with appropriate speed. We also completed the sale of soy crush concentrates and lecithin or SCL and agreed to divest the nonstrategic botanical extracts vitamins, minerals and food enhancement businesses which we expect to close by year end. With food ingredients and SCL, now reported as discontinued operations, Our continuing operations are taste, scent, and Health & Biosciences. Our portfolio now reflects our commitment to a sharper, high quality portfolio with stronger growth and margin potential aligned to the long term megatrends that shape demand across our industries. In the wake of this transformation, we are utilizing our capital in the most efficient and effective ways possible to drive our growth potential. We announced a $2.5 billion share repurchase authorization including a $500 million accelerated share repurchase that we have already completed. At the same time, we are investing in profitable growth opportunities while doubling down on the innovative creativity and technology solutions expertise our customers expect from IFF. Recent milestones include opening a vanilla innovation center in Madagascar, launching a home care application lab in Brazil, and expanding our fermentation based enzyme capabilities in Argentina. We will also launch a new state of the art scent creative center in Mumbai in December. And together, they show IFF's distinctive blend of science and creativity at work. With a simpler operating model, and strengthening manufacturing network, we will be better positioned to accelerate innovation improve execution, enhance free cash flow conversion, and deliver a stronger long term growth and margin profile. Our shared naturals and biosciences capabilities power growth opportunities across taste, scent, and Health & Biosciences. The progress we are delivering confirms that our strategy is working and positions IFF to create sustainable value However, there is more work ahead as we look to continue this journey. Now with that, I will pass the call to Mike for a closer look at this quarter's consolidated results. Mike?

Michael DeVeau: Thank you, Eric, and thanks, everyone, for joining us today. On slide 8, we take a closer look at our Q3 consolidated results. IFF generated revenues of just under $2 billion in the third quarter up roughly 5% on a comparable currency neutral basis, with growth across all businesses This strong performance was led by mid single digit growth in scent and taste, and a low single digit performance in Health and Biosciences. Growth was primarily driven by volume, on contributions from both new wins and growth on existing business. EBITDA was $403 million for the quarter, up 6% driven by volume contributions, and EBITDA margin was 20.8% up 20 basis points. Both of which are on a comparable currency neutral basis. These results show the progress we are making executing our volume and productivity focused strategy and importantly, the combination of sales growth and margin expansion demonstrates our ability to translate volume gains into improved earnings. On slide 9, I will provide a closer look at the performance of each business segment. In Taste, sales increased 6% to $687 million with growth across all regions once again. Greater Asia led the way with double digit growth followed by LATAM, which was up high single digits, EMEA up mid single digits, and North America up low single digits. Looking at profitability in taste, the segment delivered EBITDA of $128 million, a 7% increase from the year ago period. Driven by volume growth. In scent, sales grew a strong 6% to $689 million Third quarter performance was driven by a high single digit increase in Consumer Fragrance, and mid single digit performances in fragrance ingredients and fine fragrance, which was up against a strong double digit year ago comparable. Scent's profitability was also strong with EBITDA growing 10% to $139 million Volume growth was the primary driver of the increase in profitability. Lastly, Health and Biosciences grew 1% to $566 million mid single digit growth in Food Biosciences and Grain Processing more than offset a decline in health where the market conditions are challenged. As Eric noted, the team continues to work on the health turnaround, and we remain focused on the factors within our control. This includes sharpening our execution, advancing self help initiatives, and investing selectively to strengthen the business to position the health business for improved performance as market recovers. Health and Biosciences EBITDA increased 2% to $139 million driven by volume growth as well as some favorability in net price to input cost. Turning to slide 10. Cash flow from operations $820 million and year to date CapEx was $449 million, representing about 5.4% of sales. Our free cash flow position in the first 9 months of the year was $371 million up $245 million from last year. During the first 9 months of 2026, we returned $306 million to shareholders through dividends, and $584 million through share repurchases. As Eric noted, we recently completed our $500 million accelerated share repurchase program, where we repurchased approximately 5.8 million shares or approximately 2.3% of our shares outstanding. With the completion of this first accelerated share repurchase program, we are not planning to repurchase additional shares for the fourth quarter of 26. At the end of the third quarter, cash and cash equivalents were $519 million including $242 million in discontinued operations, and $5 million held for sale. Gross debt totaled approximately $6.3 billion Trailing 12 month credit adjusted EBITDA remains above $2 billion while net debt to credit adjusted EBITDA increased modestly to 2.75x. As of September 30th. As discussed last quarter, the increase reflects short term debt used to fund our initial $500 million share repurchase program. We expect to repay net debt with proceeds from the Food Ingredients transaction when it closes and we remain committed to disciplined capital allocation in maintaining a strong balance sheet. Turning to slide 11, let me walk you through our outlook. We have delivered strong results year to date executed consistently. Giving us confidence to raise the low end of our full year guidance ranges. Despite continued macroeconomic uncertainty, we believe we are well positioned to deliver results within our ranges. For the full year, we now expect sales of approximately $7.5 billion to $7.6 billion and adjusted operating EBITDA of $1.55 billion to $1.6 billion The increase in the low end of both of our ranges reflects our year to date performance and continued volume momentum into the fourth quarter. In Q4, we expect continued sales growth driven by volume increases. As Eric has highlighted, our Health business within Health and Biosciences remains challenged as end markets are soft. Fortunately, the rest of our business remains solid so the impact on Q4 sales growth is limited. Q4 profitability margin is expected to moderate sequentially, partly due to seasonality where Q4 margin is the lowest of the year but also due to higher costs and investments, specifically in Health & Biosciences. We are working closely with our customers on targeted pricing actions and driving productivity where we can to improve profitability moving forward. We remain focused on the factors within our control which include advancing commercial opportunities converting our innovation pipeline, executing targeted pricing, and driving productivity across the organization. These actions support our confidence in continued momentum while strengthening the business for long term sustainable growth. We have made strong progress this year, and results demonstrate that we are delivering on our commitments. We intend to finish 2026 with the same discipline and focus setting us up well as we head into 2027. With that, I would now like to turn the call back over to Eric for closing remarks.

J. Erik Fyrwald: Thanks, Mike. Now let me close with this. IFF has delivered strong performance across our businesses, and we are following through on our commitments. We have made meaningful progress on our strategic priorities and the results show that our efforts to simplify the portfolio and position IFF for stronger growth and higher margins are taking hold. We know the environment remains uncertain, but IFF is built to navigate periods like this. We are staying focused on what we can control, serving our customers through innovation and new product development, driving productivity, and strengthening cash flow. We are taking the right steps to deliver on our 2026 commitments, while building a stronger, more focused IFF positioned for sustained long term performance. Thank you for your time today, and we will now open the line for questions.

Operator: Thank you, Eric. We will now begin the Q&A session. If you would like to ask a question, please press Star followed by 1 on your telephone keypad. If for any reason you would like to remove your question, please press Star followed by 2. Again, to ask a question, please press Star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to register. Our first question will go to the line of Joshua Spector with UBS. Joshua, your line is open.

Anoja Shah: Good morning, everyone. it is Anoja Shah sitting in for Joshua. I wanted to just get some more detail on the step down in health You call that slowing growth, but could you also talk about the cost that might be needed to turn around that business? What steps exactly are you taking, and how does that impact your expectations for 2027? Thank you.

J. Erik Fyrwald: Thanks for the question, Anoja. This is definitely a market situation. Consumers in The U. S. And Europe have reduced spending on dietary supplements. Due to the economic pressures that many of us are feeling. And as I have been saying for a while now, our response is to, first of all, strengthen our commercial capabilities. We are making good progress there. Diversify our customer base. We are also making good progress there. And work closely with our customers to help better position the clinically proven benefits of our products. And we are making progress there. But we are also strengthening our innovation pipeline, and we just launched our first new product in quite a few years, GUT-X, and the customer interest has been very strong. Starting out of the gate for that. So a lot of things going right that we can control but the market is very soft. And so what I can tell you is that the need for our types of products I believe, is very strong. So we are going to get through this. it is just taking time. And, you know, some of the economic pressures have to be overcome by showing people that need the products that our products will do the job. So we are working on that and making progress. Thank you.

Operator: The next question will go to the line of Ming Tang with BNP Paribas. Nicolas, your line is open.

Ming Tang: Hi, everyone. Thanks for taking the question. Wanted to ask about the higher costs that you indicated in the outlook did the higher costs simply relate to the higher oils derived raw materials, and energy costs? And what is your outlook for input inflation into 2027? This morning, DSM-Firmenich mentioned a 3. expectation for 3% raw material, inflation for 2027. I was wondering if that resonates with you as well. Thanks.

Michael DeVeau: Thanks, Ming. A great question. Yes. The largest increases we are seeing are related to higher oil derivatives, including the impact on energy and logistics. it is pretty broad based. We are seeing it across all the 3 continuing operations business. As we look into 2027, it is-- it is early to comment to it, but the number you mentioned, call it that 3%ish number, feels right. it is consistent with the trends that we are seeing today. So not a big material difference, again, across the continued operations part of our business. Part of this is related to the run rate impact of having higher Brent crude prices, which is impacting Petro's logistics and energies, but we are also seeing some inflation in raw material cost overall. The good thing is, as you know, the industry really well, we are engaging with our customers now on pricing actions, and we will continue to work with them to recover this impact over time. And that is very consistent to what we have done in the past. Thank you.

Operator: Next question will go to the line of Ghansham Panjabi with Baird. Ghansham, your line is open.

Ghansham Panjabi: Yes. Thank you, operator. Good morning, everybody. Just following up on Ming's last question on cost inflation. Can you just update us on where you are on pricing as it relates to the timeline to achieve parity? Obviously, you know, this is a very dynamic environment. Your customers are feeling a lot of pressure, and that permeates all the way through the supply chain to the consumer as well. So what is a reasonable time line to achieve that parity, in terms of price cost? Thank you.

Michael DeVeau: Yes. Thanks, Ghansham. it is a great build on the previous question. Without getting into too much of the specifics, as I said, we are actively engaging with our customers now to fully to-- to fully recover the impact. Good thing is the timing is now. We are in the middle of pricing discussions, which happens during this time of the year and will continue into December. In Q4, we are expecting net price to input costs to be unfavorable due to some of this lag impact we expect as we move through 2027, we will close this gap and improve over time. In terms of the calendarization aspect of it, I would expect to see an improvement each quarter as we progress through. So the biggest gap in Q1, and then as we progress through the year, we should close that gap and then hopefully flip to a positive number on a go forward basis. And so in addition to that, though, we are also working through driving some additional productivity across the business and specifically in procurement to also help balance and minimize and offset that impact as well in conjunction with the pricing actions. So still more work to be done, but team is fully engaged and are acting on it right now. Thank you.

Operator: The next question will go to the line of Kevin McCarthy with Vertical Research Partners. Kevin, your line is open.

Matthew Hettwer: Hi. This is Matthew Hettwer on for Kevin McCarthy. Can you walk us through your third quarter results in the scent business? what is driving the strength in consumer fragrances and are further R&D investments needed to accelerate growth within fine fragrance and fragrance ingredients.

J. Erik Fyrwald: Sure. Thanks for the question, Matthew. First of all, consumer fragrance unit had high single digit growth in the quarter. And both Fine and Ingredients Fragrance had mid single digit growth. Now to start with the consumer fragrance business, it is a solid market right now for consumer fragrances. But we are getting more than our fair share. We have got a very strong team led by Jan Bechtel, and we have been strengthening our innovation as we have been talking about for the last 2 years. Charbel Boulos leads that group, and he is doing a great job with his team. To strengthen that innovation and starting to get it out into the marketplace. We have great perfumers. So with that combination, we have had new wins with both globals and regionals, and, a very solid position with our consumer fragrance. Unit. In Fine Fragrance, we are coming off of a very high double-digit comp-- Comparison last year, and we delivered mid single digit this quarter. And I think it is very solid progress that we are making there with new wins in both Europe and North America. Very attractive wins that I think will show growth going forward. And we are starting to see a bit of a turnaround in the Middle East. So solid performance by Fine Fragrance and Ingredients, We continue to focus on our higher value specialties and less focus on the commodities that is working and our strong-- innovation pipeline the starting to deliver new products to enable us to continue to move on that strategy. So overall, solid growth in scent. And I believe that with all the investments that we have made and are making, that will continue. Thank you.

Operator: Our next question will go to the line of Abigail Eberts with Wells Fargo. Abigail, your line is open.

Abigail Eberts: Thanks for taking my question. Hope I am not beating a dead horse here, but another 1 on profitability headwinds in Health & Biosciences for Q4. Just wondering if you can give us a little bit more color there. what is coming from cost inflation versus what is coming from reinvestments in the business? And then on the cost side, if you could give us a little bit more specific color on what you are seeing in your raw material basket, versus freight versus energy cost? Thanks.

Michael DeVeau: Hi, Abigail. Great question, and congrats on the new role. I think Eric did a really good job at summarizing this. So let me recap I apologize if it is a little repetitive, but I do think it is important In Q4, the margin and profitability performance in H&B is really, in my mind, impacted by 3 things. 1, we see some volume softness within the health business. And so remember, health is 1 of our stronger margin business. So there is a mixed dynamic. that is point number 1. Point number 2, we are seeing unfavorable net price to input costs, and, really, that is a logistics and energy piece. The raw material piece is pretty benign. And, really, so what is flowing through the P&L, which you are seeing now is logistics and energy cost. And then the third 1 for me is really just the timing impact. And, again, it is timing impact of reinvestment. In R&D and commercial within H&B. So when I think through those 3, I believe, you know, as we move forward, we will see improvement. Right? Inflation, we will we will cover in terms of overall price and productivity. And the timing of reinvestment will eventually go away as it is temporary in nature. And so then when you layer on the fact, some of the work that the team is doing within H&B, they are working very hard to strengthen that health business, that when the market does recover, we will be in a strong position to capture more than our fair share of upside going forward. So that is kind of how I would contextualize. The overall performance. Thank you.

Operator: The next question will go to the line of John Ezekiel Roberts with Mizuho. John, your line is open.

John Ezekiel Roberts: Thank you. IFF just published another review of the GLP-1 opportunity. Is there a way to quantify the commercial opportunity for taste or how big the category could be? And maybe your thoughts on ultra process labeling as well. If there is been any update there?

J. Erik Fyrwald: Right. Thanks for the question, John. We got a lot of questions about a year and a half ago about the negative impacts of GLP-1s. I can just tell you that helped by my Eli Lilly board experience, we leaned into GLP ones early across IFF. Not just in taste, but also in food biosciences and in our food ingredients business. The results-- the resulting desire of users-- the GLP-1 users for higher protein products that taste great has been an opportunity for us. And what I would say is this desire for more protein has also become a broader trend, and we do not think it is a fad. We think it is a real trend. And then they also-- on top of that is the desire for more fiber and I would say lower sugar and lower sodium. And we are able to help our customers develop great tasting food products that meet those needs, not only for GLP-1 users, but for broader people that want great tasting products that are also healthy. Because of that focus, our taste business has been able to grow consistently ahead of the market as well as our food biosciences business also. So we see that as the GLP-1 goes from today very small to much higher, we see that opportunity continuing to be there, and we will continue to go after it and seize the day. Thank you.

Operator: The next question will go to the line of David Begleiter with Deutsche Bank. David, your line is open.

David Begleiter: Thank you. Good morning. Eric, just in Q4, what is driving the potentially slower currency neutral sales growth? In the quarter versus the 5-6% you posted in Q2 and Q3? Is this due to maybe just some destocking or customer inventory management at the end of the quarter? Thank you.

Michael DeVeau: Hey, Eric. Maybe I will jump in on this 1. Hi, David. How are you? Thanks. A couple of things. 1, Let me start by just saying that Q4 sales trends are currently solid. While there is a lot of going on in the world right now, the trend remains favorable. And we expect to finish Q4 around that 3%ish number plus or minus. And so I think the fundamental volume story is still intact, and it is strong. You know, this is a solid number that as we consider relative to the year ago comparison, which gets harder in the fourth quarter. So, again, David, I look at it on a 2 year basis. When you add them and divide by 2 simply, it is almost the same number Q3 Q4 versus Q3. And so what that means in our view is that do not believe there is any material customer inventory management at this time. That all being said, we are totally focused on making sure we are working with our customers on the pricing aspect but also helping them build their business more closely going forward. And so, really, that is something that ISF is really, really focused on. As we go into 2027. Thank you.

Operator: The next question will go to the line of Patrick Cunningham with Citi. Patrick, your line is open.

Patrick Cunningham: Hi. Good morning. Maybe just coming back to Fine Fragrance. You know, how would you characterize the strong growth that you have seen there? Are there any particularly strong region? And have you seen any sort of stabilization or recovery in Middle East demand? Yes. Thanks for the question, Patrick.

J. Erik Fyrwald: The U. S. And Europe were particularly strong. With some exciting new wins with major fragrance houses. And I would say that, the demand or the desire from consumers continues in those regions. In terms of the Middle East, we have seen stabilization of the business and some indications of growth. But given the very unstable geopolitical situation, we remain cautious about the about the future, but we are working with our customers there. To launch really great new products that I think will be also exciting growth opportunities. But there are challenges, as you know. Thank you.

Operator: The next question will go to the line of Laurence Alexander with Jefferies. Laurence, your line is open.

Analyst: Hi. it is Dennis on for Laurence. So the food ingredient separation, I think you have identified, like, roughly $100 million in stranded cost. With about 2-thirds expected to be eliminated within 12 months. I was just saying what actions you. Are already underway what are the principal execution risks, and could reinvestment elsewhere delay some of the net savings?

Michael DeVeau: Hi, Dennis. Another great question. Maybe I will take this 1. In terms of the overall stranded costs, the team is actively working to eliminate exactly what you said, 2-thirds of the cost within the first 12 months of closing. So nothing has changed there. The key actions underway in my mind are third party contract renegotiations transferring some of our work to our GBS organization to really leverage scale and efficiency there. Also, implementing technology across the business to try to make sure we get some more efficiency there, and then ultimately looking at the organization and making sure our structure is appropriate for the RemainCo part of IFF. So as we step down in size, we wanna make sure that we are fully structured to be successful from that standpoint. In terms of execution risk, again, the team is fully committed. The 1 thing that I remind everybody on is that we are rapidly working to close the transaction in Q2 of 27 or by the end of 27. So we need to get that right. Now at the same time, they are simultaneously addressing the stranded costs. And so really, the focus internally is how do we balance the short term separation piece but also making sure we are doing it in an effective way that our stranded cost elimination program is well underway. We have confidence that we can do both. But that is the only area that we are keeping an eye on. We are watching and making sure we could do both successfully on a go-forward basis. Another good question you had was on the reinvestment piece to it. As I as I think about the business, there was not much overlap, but there was some entanglement between H&B and the food ingredients. This may involve some modest investment. Okay? But it is small. it is-- and when I think about it, it is CapEx related to some lab separations maybe some commercial resources. But in the grand scheme of things, it is minimal. The team is really, really focused. So when we think about the net number of the stranded cost number is something we are committing to and we are driving very hard to achieve. Thank you.

Operator: The next question will go to the line of Salvator Tiano with KeyBanc. Salvator, your line is open.

Salvator Tiano: Yes. Thank you very much, and good morning. So just on the fragrance ingredients, you had continued growth in Q3. Has anything changed fundamentally with regard to, I guess, the supply and demand backdrop that you know, a year or 2 ago was getting worse, or is the growth still driven by Middle East disruptions? And if it is the latter, when do you expect things to normalize there?

J. Erik Fyrwald: Thanks for the question, Salvator. We continue to focus fragrance ingredient sales on the higher value specialties, including naturals. And the strengthening pipeline that I talked about before has started to deliver not only for fine fragrance and consumer fragrance, but also for fragrance ingredients. And we see that pipeline continuing to advance and we will deliver more in 2027 and beyond. So that. that is our strategy. We are turning it into execution, and that will continue. And that will, I believe, will lead to more consistent, higher levels of growth with better margin. Thank you.

Operator: The next question will go to the line of Matthew DeYoe with Bank of America. Matthew, your line is open.

Matthew DeYoe: Good morning, everyone. I just want to kind of take an inning check on Taste. Right? Clearly, Eric, you have stepped in and started to reset the portfolio. We are now 3 quarters into pretty good organic growth traction. And some big disparities versus what we are seeing on, like, CPG trends. And so as you look at your sales channel and you engage your customers, like, how much of this do you think is the majors just trying to innovate products in a tough tape? How much do you think is coming from smaller independent brands that are finding white space and maybe just any trends in particular you would note and what inning do you think you are in this kind of current innovation cycle?

J. Erik Fyrwald: Thanks for the question, Matthew. I think we are still early in the game. But we are doing well. We are off to some very good hits. What I would say is we continue to do well with the global key accounts. We just got really great recognition from a number of key accounts in their annual supplier events, supplier partner events. That really makes us pleased. And we have we have done really well on making sure that we stay on core lists. Get on new core lists that we wanna be on. So all that is going well with global key accounts, and their focus on innovation clean labels, high protein, high fiber, all that is been very favorable to our taste business. At the same time, Yuvraj, the president of taste and his team have put a lot of emphasis on strengthening our capabilities with regionals and locals. And we have just had a really amazing, event. Our Taste Point model had something called first And we had a 135 customers in New Jersey that saw our new innovations and very, very excited about it. What was amazing is it started with dinner the night before and ended at 4 p.m. the next day, and nobody left. And it was just a really great excitement. And so I feel that we are we are continuing to build on the strength that we have got with global key accounts. But we are also stepping up our game a lot with regionals and locals and we are starting to see the benefits of that. And I think there are many innings to come for that. Thank you.

Operator: The next question will go to the line of Kristen Owen with Oppenheimer. Kristen, your line is open.

Kristen Owen: Good morning. Thank you for the question. Somewhat of a follow-up on that last 1. Eric, I think this is the third quarter in which you have talked about new wins. I am wondering if you can just expand on those new wins. And just given the reinvestment and innovation over the last few years, if there is any way to quantify the percentage of growth or maybe profitability coming from those new products? I am thinking in the form of a vitality index or something like that. Thank you.

J. Erik Fyrwald: Yeah. So the new ones have been very exciting. We have had some great new wins in fine fragrance. as-- where there is a great dynamic in that industry. We have been winning with naturals, with modulation. With a lot of the tailwind opportunities where our customers are looking for better innovation. Sent with consumer fragrances. You know, the consumer fragrance companies want to grow again, and they see the scent as being a critical enabler of that growth. So our great perfumers and both fine and in consumer fragrance are helping make that happen. Our new innovation is helping make that happen. And our great flavorists and taste and the innovation that Adam Janczak and the R&D team are delivering to the flavorists are also making that happen. what is really great is I spent a lot of time with customers with global key accounts, but also with a number of regionals and locals. They are all looking for innovation. And they love the passion of IFFers to work with them to bring great innovation so that we are helping-- We are working together to bring products that customers love and benefit customers. And so I just think there is a lot going on in that area. Can I quantify it? I can tell you that a lot of our growth is coming from the new wins. And the new wins are coming at the base or higher margins. And that will continue. And we are we are measuring it also, and we are doing a better and better job of measuring the commercial pipelines, and the innovation pipelines, and they are growing. and that will-- so that will continue to give us confidence for 2027 and beyond. Thank you.

Operator: The next question will go to the line of Jeffrey Zekauskas with JPMorgan. Jeffrey, your line is open.

Jeffrey Zekauskas: Thanks very much. When you look out over the next 12 or 15 months, do you think that the fragrances market is growing faster than flavors? Flavors faster than fragrances? How would you compare the growth in the 2 businesses And then for Mike, when you look at accounts payable, they seem to be moving down and limiting your free cash flow. Are payables going to go up in the fourth quarter or are they going to stay low?

J. Erik Fyrwald: Thanks for the question, Jeffrey. I will take the first piece. And that is the scent and taste growth rates, I believe, will continue to be solid. And we have guided to the-- in a normalized environment, the 4-6% top line range I see that as doable. I see it as doable for both businesses. And across healtH&Biosciences as well. So I think that the market will continue to be strong for both scent and taste.

Michael DeVeau: Yeah. Great. And maybe I will take the payables piece, Jeffrey. And maybe to start, this year, we put into our incentive compensation a definition on free cash flow that we have, which is EBITDA minus change in net working capital minus CapEx over divided by EBITDA. So the team is doing a really good job at managing that When I look across all the elements of the core working capital pieces, we are seeing strong improvements. Specifically to your point, when we look at the payables piece, we made some good progress. This year. I would assume that number is probably flattish as we go into the fourth quarter as some of the impact of the stand related to food ingredients may require us to prepay some invoices to ensure we have successful stand. And so I am holding in my head roughly flat. At the end of the day. But going forward, that is probably our biggest area of improvement we can really drive. Is how do we actually extend our payment terms, with our customers overall. So fully focused, fully working on that, and I think that is a big part of the IFF story going forward is this improving cash dynamic. As we move past the food ingredients business. I misspoke. Thank you. Thank you.

Operator: Our final question will go to the line of Christopher Parkinson with Wolfe Research. Christopher, your line is open.

Christopher Parkinson: Great. Thank you so much. Growth across the enzymes portfolio does not necessarily, at least through some of your peers, does not seem necessarily uniform right now. So I would love to hear your perspectives on kind of the varying substrates of what you are seeing in your portfolio across, you know, F&B, nutrition, grain processing, so on and so forth. And just how you think these trends are going to further evolve into 2027. Just any considerations would be greatly appreciated. Thank you.

J. Erik Fyrwald: Thanks for the question, Christopher. I see-- or we see biosciences continuing to grow high single digits, very strong. And I would say across our enzymes portfolio, solid growth. The health is the challenged area. We have discussed that. We have covered it. We are working hard on turning that around. In a very tough market, but we are making progress. With the commercial capability and the innovation, internal and external. We have got a great team. Leticia Goncalves and her team are really strong. They are focused. And they are going to make sure that we deliver as we say we are going to deliver. And, I am very pleased with the progress that we are making. I think you will see that in the future. Thank you.

Operator: With that, we will conclude the Q and A session. I would now like to pass the conference back over to you, Eric, for any additional remarks.

J. Erik Fyrwald: Yeah. I just want to close by thanking you all for joining. I want to say that I think we have made a lot of progress on getting the company to be what we want to be. Which is high innovation, high value, less cyclical, high cash flow businesses and we will close the food ingredients transaction by the second quarter. Of next year. And with that, we will be highly focused. Total focus will be on the remaining 3 businesses and I think that total focus will enable us to deliver very strong results And I think we have got a great team in place right now. We just had our engagement score results for the year. And they have continued to increase. They were very low a few years ago. They have gone up consistently over the last 3 years and now are very high. Despite a lot of work that is going on to separate food ingredients and the other businesses that we have separated and sold. I am very pleased with the progress. I think the best is yet to come, and, I just wanna. To thank all of our employees and our customers for being there and enabling us to unleash the potential of IFF is starting to happen. Thank you.

Operator: Thank you, Eric. That concludes today's conference call. Thank you for your participation, and I hope you enjoy the rest of your day.