Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

(UNLESS INDICATED OTHERWISE, DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

OVERVIEW

Company Background

On February 1, 2021, the Company completed its Merger with Nutrition & Biosciences, Inc. (“N&B”), a subsidiary of DuPont formed to hold the Nutrition and Biosciences business (the “N&B Business”, and such transaction, the "N&B Transaction") pursuant to an Agreement and Plan of Merger (the "Merger Agreement") with DuPont de Nemours, Inc. ("DuPont"). The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.

As a result of the N&B Transaction, and following our 2018 acquisition of Frutarom Industries Ltd., we have expanded our global leadership positions, which now include high-value ingredients and solutions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Taste, Texture, Scent, Nutrition, Enzymes, Cultures, Soy Proteins, Pharmaceutical Excipients, Biocides and Probiotics categories.

We are now organized in four segments: Nourish, Health & Biosciences, Scent, and Pharma Solutions. The Company’s consolidated financial information for the three and nine months ended September 30, 2021 reflects the results of N&B effective February 1, 2021, whereas the Company’s consolidated financial information for the three and nine months ended September 30, 2020 do not include amounts related to N&B.

Nourish segment consists of most of our legacy Taste segment, N&B’s Food & Beverage division and the food protection business of N&B’s Health & Biosciences division. This segment comprises an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications.

Health & Biosciences segment consists of N&B’s Health & Biosciences division, with the exception of food protection, which is part of our Nourish segment, as well as parts of our Nutrition and Specialty Ingredients offerings. This segment is the biotechnology-driven portfolio of the N&B Business, where enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications are developed and produced. The Health & Biosciences business includes a biotechnology-driven probiotics portfolio, that produces cultures for use in fermented foods such as yogurt, cheese and fermented beverages. It also uses industrial fermentation to produce enzymes and microorganisms that provide product and process performance benefits to household detergents, animal feed, ethanol production and brewing.

Scent segment consists of our legacy Scent segment as well as, effective January 2, 2021, our Flavor Ingredients business.

Pharma Solutions segment consists of N&B’s Pharma Solutions division, one of the world’s largest producers of cellulosics and alginates-based pharma excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enable the development of more effective pharma solutions.

Financial Measures — Currency Neutral

Changes in our financial results include the impact of changes in foreign currency exchange rates. We provide currency neutral calculations in this report to remove the impact of these items. Beginning in the first quarter 2021, we elected to change the method in which we calculate currency neutral numbers to now be calculated by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. Previously we calculated currency neutral numbers by comparing current year results to the prior year results restated at exchange rates in effect for the current year based on the currency of the underlying transaction. We use currency neutral results in our analysis of subsidiary or segment performance. We also use currency neutral numbers when analyzing our performance against our competitors and believe the change in method better allows us to do so.

Due to the Merger with N&B, for the fiscal year 2021 we will not be presenting currency neutral impacts for the Nourish, Health & Biosciences and Pharma Solution operating segments as the performance in these operating segments includes effects of N&B in 2021, while the 2020 period does not and thus the periods are not comparable. We present the currency neutral impacts for the Scent operating segment as this operating segment does not have any effects of N&B.

Impact of COVID-19 Pandemic

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Various policies and initiatives have been implemented around the world to reduce the global transmission of COVID-19. Although there continue to be minor disruptions, all of IFF’s manufacturing facilities remain open and continue to manufacture products.

The COVID-19 pandemic remains a serious threat to the health of the world's population and certain countries and regions continue to suffer from outbreaks or have seen a recurrence of infections, especially with the emergence of new variants of the virus. Accordingly, the Company continues to take the threat from COVID-19 seriously even as the adverse financial impact of COVID-19 on the Company has lessened. The impact that COVID-19 will have on our consolidated results of operations for the remainder of 2021 remains uncertain. Due to the length and severity of COVID-19, there is continued volatility as a result of retail and travel, consumer shopping and consumption behavior. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

Although IFF does not currently anticipate any impairment charges related to COVID-19, the continuing effects of a prolonged pandemic could result in increased risk of asset write-downs and impairments. Any of these events could potentially result in a material adverse impact on IFF’s business and results of operations.

Financial Performance Overview

For a reconciliation between reported and adjusted figures, please refer to the "Non-GAAP Financial Measures" section.

Sales

Sales in the third quarter of 2021 increased $1.803 billion, or 142% on a reported basis, to $3.071 billion compared to $1.268 billion in the 2020 period. Performance was primarily driven by $1.640 billion of incremental sales that were attributable to the inclusion of N&B, which was merged and consolidated into our results of operations effective February 1, 2021. In addition, sales performance was driven by volume increases across the Nourish, Health & Biosciences and Scent operating segments.

Gross Profit

Gross profit in the third quarter of 2021 increased $566 million, or 108% on a reported basis, to $1.090 billion (36% of sales) compared to $524 million (41% of sales) in the 2020 period. The increase in gross profit was primarily driven by the inclusion of N&B, along with sales volume increases in the business. The decrease in gross profit margin, as a percentage of sales, was due to higher raw material costs and difference in product portfolio mix of the new N&B Business compared to the historical IFF product portfolio mix.

Adjusted Operating EBITDA

Adjusted operating EBITDA in the third quarter of 2021 increased $372 million, or 135% on a reported basis, to $648 million (21% of sales) compared to $276 million (22% of sales) in the comparable 2020 period. The increase in adjusted operating EBITDA was primarily driven by the inclusion of N&B, along with sales volume increases in the business. The decrease in adjusted operating EBITDA, as a percentage of sales, was due to an increase in cost of goods sold.

RESULTS OF OPERATIONS


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2021			2020			Change		2021			2020			Change
Net sales	$	3,071		$	1,268		142	%	$	8,625		$	3,814		126	%
Cost of goods sold	1,981			744			166	%	5,871			2,242			162	%
Gross profit	1,090			524			108	%	2,754			1,572			75	%
Research and development (R&D) expenses	156			89			75	%	463			256			81	%
Selling and administrative (S&A) expenses	436			235			86	%	1,299			695			87	%
Amortization of acquisition-related intangibles	195			48			NMF		547			145			277	%
Restructuring and other charges	6			1			NMF		34			8			NMF
(Gains) losses on sales of fixed assets	(1)			1			(200)	%	(1)			2			(150)	%
Operating profit	298			150			99	%	412			466			(12)	%
Interest expense	74			35			111	%	216			99			118	%

Other (income) expense, net	(26)			10			NMF		(44)			5			NMF
Income before taxes	250			105			138	%	240			362			(34)	%
Provision for income taxes	53			19			179	%	53			61			(13)	%
Net income	$	197		$	86		129	%	$	187		$	301		(38)	%
Net income attributable to noncontrolling interests	3			1			200	%	7			5			40	%
Net income attributable to IFF stockholders	$	194		$	85		128	%	$	180		$	296		(39)	%
Diluted EPS(1)	$	0.76		$	0.75		—	%	$	0.75		$	2.64		(72)	%
Gross margin	35.5		%	41.3		%	(580)	bps	31.9		%	41.2		%	(930)	bps
R&D as a percentage of sales	5.1		%	7.0		%	(190)	bps	5.4		%	6.7		%	(130)	bps
S&A as a percentage of sales	14.2		%	18.5		%	(430)	bps	15.1		%	18.2		%	(310)	bps
Operating margin	9.7		%	11.8		%	(210)	bps	4.8		%	12.2		%	(740)	bps

Effective tax rate	21.2		%	18.1		%	310	bps	22.1		%	16.9		%	520	bps
Segment net sales
Nourish	$	1,662		$	712		133	%	$	4,638		$	2,174		113	%
Health & Biosciences	618			31			NMF		1,683			99			NMF
Scent	580			525			10	%	1,699			1,541			10	%
Pharma Solutions	211			—			NMF		605			—			NMF
Consolidated	$	3,071		$	1,268				$	8,625		$	3,814

(1) The percentage change in diluted EPS between the three months ended September 30, 2021 and 2020 cannot be recalculated due to rounding.

NMF: Not meaningful

Cost of goods sold includes the cost of materials and manufacturing expenses. R&D includes expenses related to the development of new and improved products and technical product support. S&A expenses include expenses necessary to support our commercial activities and administrative expenses supporting our overall operating activities including compliance with governmental regulations.

THIRD QUARTER 2021 IN COMPARISON TO THIRD QUARTER 2020

Sales

Sales for the third quarter of 2021 increased $1.803 billion, or 142% on a reported basis, to $3.071 billion, compared to $1.268 billion in the prior year quarter. Performance was primarily driven by $1.640 billion of incremental sales that was attributable to the inclusion of N&B, which was merged and consolidated into our results of operations effective February 1, 2021. In addition, sales performance reflected volume increases for the Nourish, Health & Biosciences and Scent operating segments.

Sales Performance by Segment


	% Change in Sales - Third Quarter 2021 vs. Third Quarter 2020
	Reported		Currency Neutral(1)
Nourish	133	%	NMF
Health & Biosciences	NMF		NMF
Scent	10	%	9	%
Pharma Solutions	NMF		NMF
Total	142	%	NMF

(1)Currency neutral sales growth is calculated by translating current year invoiced sale amounts at the exchange rates for the corresponding prior year period.

NMF: Not meaningful

Nourish

Nourish sales in 2021 increased $950 million, or 133% on a reported basis, to $1.662 billion, compared to $712 million in the prior year period. Performance in the Nourish operating segment was primarily driven by $842 million of incremental sales that was attributable to the inclusion of N&B, along with volume increases, particularly in Flavors.

Health & Biosciences

Health & Biosciences sales in 2021 was $618 million compared to $31 million in the prior year period. Performance in the Health & Biosciences operating segment was primarily driven by $587 million of incremental sales that was attributable to the inclusion of N&B, as the majority of this operating segment consists of the new N&B Business. In addition, sales performance reflected volume increases in the operating segment.

Scent

Scent sales in 2021 increased $55 million, or 10% on a reported basis, to $580 million, compared to $525 million in the prior year period. Scent sales in 2021 also increased 9% on a currency neutral basis. Sales growth in the Scent operating segment was primarily driven by volume increases in both Fragrance Compounds and Fragrance Ingredients.

Pharma Solutions

Pharma Solutions sales in 2021 was $211 million. This was a new operating segment of the Company as a result of the Merger with N&B and did not exist in the comparable 2020 period.

Cost of Goods Sold

Cost of goods sold, as a percentage of sales, increased 5.8% in the third quarter of 2021 to 64.5% compared to 58.7% in the third quarter of 2020, primarily driven by higher raw material costs, volume increases in the business and impact of the difference in product portfolio mix of the new N&B Business compared to the historical IFF product portfolio mix.

Research and Development (R&D) Expenses

Overall R&D expenses, as a percentage of sales, decreased to 5.1% in the third quarter of 2021 versus 7.0% in the third quarter of 2020. The decrease, as a percentage of sales, in 2021 was primarily due to the impact of the Merger with N&B that led to an increase in R&D expenses, offset by a larger increase in sales.

Selling and Administrative (S&A) Expenses

S&A expenses increased $201 million to $436 million (14.2% of sales) in the third quarter of 2021 compared to $235 million (18.5% of sales) in the third quarter of 2020. Adjusted S&A expense increased by $185 million to $379 million (12.3% of sales) in 2021 compared to $194 million (15.3% of sales) in 2020. The increase in S&A expenses was primarily due to the impact of the Merger with N&B, employee separation costs and business divestiture costs consisting mainly of legal and professional fees.

Restructuring and Other Charges

Restructuring and other charges increased to $6 million in the third quarter of 2021 compared to $1 million in the third quarter of 2020. The increase was primarily driven by fixed asset write-offs incurred in the third quarter of 2021 (see Note 4 for additional information).

Amortization of Acquisition-Related Intangibles

Amortization expenses increased to $195 million in the third quarter of 2021 compared to $48 million in the third quarter of 2020 primarily due to the Merger with N&B (see Notes 3 and 5 for additional information).

Interest Expense

Interest expense increased to $74 million in the third quarter of 2021 compared to $35 million in the 2020 period. The increase was primarily driven by the debt assumed in the Merger with N&B (see Note 7 for additional information). Average cost of debt was 2.5% for the 2021 period compared to 3.1% for the 2020 period.

Other (Income) Expense, Net

In the third quarter of 2021, we recognized other income, net, of $26 million compared to other expense, net, of $10 million in the 2020 period. The change of $36 million includes approximately $17 million in income to correct net income amounts related to certain defined benefit plans in prior years. In addition, the change was due to lower foreign exchange losses.

Income Taxes

The effective tax rate for the three months ended September 30, 2021 was 21.2% compared to 18.1% for the three months ended September 30, 2020. The adjusted effective tax rate for the three months ended September 30, 2021 was 19.9% compared to 18.2% for the third quarter of 2020. The increase in effective tax rate and adjusted effective tax rate was primarily due to an unfavorable mix of earnings and higher repatriation costs.

Segment Adjusted Operating EBITDA Results by Business Unit

Effective in the first quarter of 2021, management elected to change the profit or loss measure of the Company's reportable segments from Segment Operating Profit to Segment Adjusted Operating EBITDA for internal reporting and performance measurement purposes. Segment Adjusted Operating EBITDA is defined as Income Before Taxes before depreciation and amortization expense, interest expense, restructuring and other charges and certain non-recurring items. Prior period amounts have been recast to reflect these changes in segment profitability measures. Our determination of reportable segments was made on the basis of our strategic priorities within each segment and corresponds to the manner in which our Chief Operating Decision Maker reviews and evaluates operating performance to make decisions about resources to be allocated to the segment. In addition to our strategic priorities, segment reporting is also based on differences in the products and services we provide. As a result, we added two new reportable segments - Health & Biosciences and Pharma Solutions. Nourish is composed of most of IFF’s legacy Taste division and N&B’s Food & Beverage division. The Scent and Health & Biosciences segments include a component of the legacy Taste segment.


	Three Months Ended September 30,
(DOLLARS IN MILLIONS)	2021			2020
Segment Adjusted Operating EBITDA
Nourish	$	327		$	148
Health & Biosciences	151			10
Scent	130			118
Pharma Solutions	40			—
Total	648			276
Depreciation & Amortization	(297)			(83)
Interest Expense	(74)			(35)
Other income (expense), net	26			(10)
Frutarom Integration Related Costs	(1)			(2)
Restructuring and Other Charges	(6)			(1)
Gains (Losses) on Sale of Assets	1			(1)

Business Divestiture Costs	(16)			—
Employee Separation Costs	(22)			—
Frutarom Acquisition Related Costs	—			(1)
Compliance Review & Legal Defense Costs	—			(1)
N&B Inventory Step-Up Costs	14			—
N&B Transaction Related Costs	—			(8)
N&B Integration Related Costs	(23)			(29)

Income Before Taxes	$	250		$	105
Segment Adjusted Operating EBITDA margin:
Nourish	19.7		%	20.8		%
Health & Biosciences	24.4		%	32.3		%
Scent	22.4		%	22.5		%
Pharma Solutions	19.0		%	—		%
Consolidated	21.1		%	21.8		%

Nourish Segment Adjusted Operating EBITDA

Nourish Segment Adjusted Operating EBITDA increased $179 million to $327 million in the third quarter of 2021 (19.7% of segment sales) from $148 million (20.8% of segment sales) in the comparable 2020 period. The increase primarily reflected the inclusion of N&B, along with volume increases in the operating segment. The decrease in segment adjusted operating EBITDA margin, as a percentage of sales, was due to the difference in product portfolio mix of the new Nourish operating segment, as a result of the Merger with N&B, compared to the historical Taste operating segment, and higher raw material costs.

Health & Biosciences Segment Adjusted Operating EBITDA

Health & Biosciences Segment Adjusted Operating EBITDA increased $141 million to $151 million in the third quarter of 2021 (24.4% of segment sales) from $10 million (32.3% of segment sales) in the comparable 2020 period. The increase primarily reflected the inclusion of N&B, as the majority of this operating segment consists of the new N&B Business.

Scent Segment Adjusted Operating EBITDA

Scent Segment Adjusted Operating EBITDA increased $12 million to $130 million in the third quarter of 2021 (22.4% of segment sales) from $118 million (22.5% of segment sales) in the comparable 2020 period. The increase primarily reflected volume increases in the operating segment.

Pharma Solutions Segment Adjusted Operating EBITDA

Pharma Solutions Segment Adjusted Operating EBITDA was $40 million in the third quarter of 2021 (19.0% of segment sales). This was a new operating segment of the Company as a result of the Merger with N&B and did not exist in the comparable 2020 period.

FIRST NINE MONTHS 2021 IN COMPARISON TO FIRST NINE MONTHS 2020

Sales

Sales for the first nine months of 2021 increased $4.811 billion, or 126% on a reported basis, to $8.625 billion, compared to $3.814 billion in the comparable 2020 period. Performance was primarily driven by $4.409 billion of incremental sales that was attributable to the inclusion of N&B, which was merged and consolidated into our results of operations effective February 1, 2021. In addition, sales performance reflected volume increases for the Nourish, Health & Biosciences and Scent operating segments.

Sales Performance by Segment


	% Change in Sales - First Nine Months 2021 vs. First Nine Months 2020
	Reported		Currency Neutral
Nourish	113	%	NMF
Health & Biosciences	NMF		NMF
Scent	10	%	8	%
Pharma Solutions	NMF		NMF
Total	126	%	NMF

Nourish

Nourish sales in 2021 increased $2.464 billion, or 113% on a reported basis, to $4.638 billion, compared to $2.174 billion in the prior year period. Performance in the Nourish operating segment was primarily driven by $2.224 billion of incremental sales that was attributable to the inclusion of N&B, along with volume increases, particularly in Flavors.

Health & Biosciences

Health & Biosciences sales in 2021 was $1.683 billion compared to $99 million in the prior year period. Performance in the Health & Biosciences operating segment was primarily driven by $1.580 billion of incremental sales that was attributable to the inclusion of N&B, as the majority of this operating segment consists of the new N&B Business. In addition, sales performance reflected volume increases in the operating segment.

Scent

Scent sales in 2021 increased $158 million, or 10% on a reported basis, to $1.699 billion, compared to $1.541 billion in the prior year period. Scent sales in 2021 also increased 8% on a currency neutral basis. Sales growth in the Scent operating segment was primarily driven by volume increases in both Fragrance Compounds and Fragrance Ingredients.

Pharma Solutions

Pharma Solutions sales in 2021 was $605 million. This was a new operating segment of the Company as a result of the Merger with N&B and did not exist in the comparable 2020 period.

Cost of Goods Sold

Cost of goods sold, as a percentage of sales, increased 9.3% in the first nine months of 2021 to 68.1% compared to 58.8% in the 2020 period, primarily driven by N&B inventory step-up costs, higher raw material costs, volume increases in the business and impact of the difference in product portfolio mix of the new N&B Business compared to the historical IFF product portfolio mix.

Research and Development (R&D) Expenses

Overall R&D expenses, as a percentage of sales, decreased to 5.4% in the first nine months of 2021 versus 6.7% in the 2020 period. The decrease, as a percentage of sales, in 2021 was primarily due to the impact of the Merger with N&B that led to an increase in R&D expenses, offset by a larger increase in sales.

Selling and Administrative (S&A) Expenses

In the first nine months of 2021, S&A expenses increased $604 million to $1.299 billion (15.1% of sales) compared to $695 million (18.2% of sales) in the 2020 period. Adjusted S&A expenses increased by $479 million to $1.077 billion (12.5% of sales) in the 2021 period compared to $598 million (15.7% of sales) in 2020. The increase in S&A expenses was primarily due to the impact of the Merger with N&B and the related transaction and integration costs consisting of legal and professional fees and consulting fees, respectively, employee separation costs and business divestiture costs consisting mainly of legal and professional fees.

During the first quarter of 2020, we recognized approximately $6 million in income related to the expected recoveries of previously paid indirect taxes in Brazil. The income was recorded as a reduction in S&A expenses during the first nine months of 2020.

Restructuring and Other Charges

Restructuring and other charges increased to $34 million in the first nine months of 2021 compared to $8 million in the first nine months of 2020. The increase was primarily driven by severance costs incurred in the first nine months of 2021 (see Note 4 for additional information).

Amortization of Acquisition-Related Intangibles

Amortization expenses increased to $547 million in the first nine months of 2021 compared to $145 million in the 2020 period primarily due to the Merger with N&B (see Notes 3 and 5 for additional information).

Interest Expense

Interest expense increased to $216 million in the first nine months of 2021 compared to $99 million in the 2020 period. The increase was primarily driven by the debt assumed in the Merger with N&B (see Note 7 for additional information). Average cost of debt was 3.1% for the 2021 period compared to 3.0% for the 2020 period.

Other (Income) Expense, Net

In the first nine months of 2021, we recognized other income, net, of $44 million compared to other expense, net, of $5 million in the comparable 2020 period. The change of $49 million includes approximately $17 million in income to correct net income amounts related to certain defined benefit plans in prior years. In addition, the change was due to lower foreign exchange losses and higher interest income.

Income Taxes

The effective tax rate for the nine months ended September 30, 2021 was 22.1% compared to 16.9% for the nine months ended September 30, 2020. The year-over-year increase was primarily due to an unfavorable mix of earnings and higher repatriation costs, partially offset by a higher level of reversals of loss provisions.

Excluding the $128 million tax benefit associated with the pre-tax restructuring and other charges, shareholder activism related costs, business divestiture costs, employee separation costs, pension income adjustment, N&B inventory step-up costs, N&B transaction related costs and N&B integration related costs, the adjusted effective tax rate for the nine months ended September 30, 2021 was 21.4%.

For the nine months ended September 30, 2020, the adjusted effective tax rate was 17.0% excluding the $19 million tax benefit associated with the pre-tax Frutarom integration related costs, restructuring and other charges, losses on sale of assets, Frutarom acquisition related costs, N&B transaction related costs and N&B integration related costs.

Segment Adjusted Operating EBITDA Results by Business Unit


	Nine Months Ended September 30,
(DOLLARS IN MILLIONS)	2021			2020
Segment Adjusted Operating EBITDA
Nourish	$	921		$	466
Health & Biosciences	469			29
Scent	375			323
Pharma Solutions	131			—
Total	1,896			818
Depreciation & Amortization	(861)			(244)
Interest Expense	(216)			(99)
Other income (expense), net	44			(5)
Frutarom Integration Related Costs	(3)			(9)
Restructuring and Other Charges	(34)			(8)
Gains (Losses) on Sale of Assets	1			(2)
Shareholder Activism Related Costs	(7)			—
Business Divestiture Costs	(21)			—
Employee Separation Costs	(28)			—
Frutarom Acquisition Related Costs	—			(1)
Compliance Review & Legal Defense Costs	—			(2)
N&B Inventory Step-Up Costs	(363)			—
N&B Transaction Related Costs	(91)			(24)
N&B Integration Related Costs	(77)			(62)

Income Before Taxes	$	240		$	362
Segment Adjusted Operating EBITDA margin:
Nourish	19.9		%	21.4		%
Health & Biosciences	27.9		%	29.3		%
Scent	22.1		%	21.0		%
Pharma Solutions	21.7		%	—		%
Consolidated	22.0		%	21.4		%

Nourish Segment Adjusted Operating EBITDA

Nourish Segment Adjusted Operating EBITDA increased $455 million to $921 million in the first nine months of 2021 (19.9% of segment sales) from $466 million (21.4% of segment sales) in the comparable 2020 period. The increase primarily reflected the inclusion of N&B, along with volume increases in the operating segment. The decrease in segment adjusted operating EBITDA margin, as a percentage of sales, was due to the difference in product portfolio mix of the new Nourish operating segment, as a result of the Merger with N&B, compared to the historical Taste operating segment, and higher raw material costs.

Health & Biosciences Segment Adjusted Operating EBITDA

Health & Biosciences Segment Adjusted Operating EBITDA increased $440 million to $469 million in the first nine months of 2021 (27.9% of segment sales) from $29 million (29.3% of segment sales) in the comparable 2020 period. The increase primarily reflected the inclusion of N&B, as the majority of this operating segment consists of the new N&B Business.

Scent Segment Adjusted Operating EBITDA

Scent Segment Adjusted Operating EBITDA increased $52 million to $375 million in the first nine months of 2021 (22.1% of segment sales) from $323 million (21.0% of segment sales) in the comparable 2020 period. The increase primarily reflected volume increases in the operating segment.

Pharma Solutions Segment Adjusted Operating EBITDA

Pharma Solutions Segment Adjusted Operating EBITDA was $131 million in the first nine months of 2021 (21.7% of segment sales). This was a new operating segment of the Company as a result of the Merger with N&B and did not exist in the comparable 2020 period.

Liquidity

Cash and Cash Equivalents

We had cash and cash equivalents of $672 million at September 30, 2021 compared to $650 million at December 31, 2020 and of this balance, a portion was held outside the United States. Cash balances held in foreign jurisdictions are, in most circumstances, available to be repatriated to the United States.

In connection with the Merger with N&B, the Company's cash balance increased by approximately $193 million.

Effective utilization of the cash generated by our international operations is a critical component of our strategy. We regularly repatriate cash from our non-U.S. subsidiaries to fund financial obligations in the U.S. As we repatriate these funds to the U.S. we will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of September 30, 2021, we had a deferred tax liability of $65 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.

Restricted Cash

Restricted cash of $123 million relates, principally, to cash proceeds received in advance of sale of our fruit preparation business.

Cash Flows Provided By Operating Activities

Cash flows provided by operations for the nine months ended September 30, 2021 was $1.126 billion, or 13.1% of sales, compared to cash provided by operations of $415 million, or 10.9% of sales, for the nine months ended September 30, 2020. The increase in cash provided by operating activities during 2021 was primarily driven by higher cash earnings, excluding the impact of depreciation and amortization and amortization of N&B inventory step-up costs, and changes related to accounts payable, accrued expenses and accrual for incentive compensation.

Working capital (current assets less current liabilities) totaled $3.553 billion and $1.156 billion at September 30, 2021 and December 31, 2020, respectively.

We have various factoring agreements in the U.S. and The Netherlands under which we can factor up to approximately $100 million in receivables. In addition, we have factoring agreements sponsored by certain customers. Under all of the arrangements, we sell the receivables on a non-recourse basis to unrelated financial institutions and account for the transactions as a sale of receivables. The applicable receivables are removed from our Consolidated Balance Sheets when the cash proceeds are received.

The impact on cash provided by operations from participating in these programs increased approximately $3 million and increased approximately $4 million for the nine months ended September 30, 2021 and 2020, respectively. The cost of participating in these programs was approximately $2 million and $1 million for the three months ended September 30, 2021 and 2020, and $5 million and $3 million for the nine months ended September 30, 2021 and 2020, respectively.

Cash Flows Provided By (Used In) Investing Activities

Net investing activities during the first nine months of 2021 provided $75 million compared to $119 million utilized in the prior year period. The increase in cash provided by investing activities, compared to cash utilized in investing activities in the prior year period, was primarily driven by the increase in cash provided by the Merger with N&B and higher net proceeds received in advance of sale of the fruit preparation business, offset by higher spending on property, plant and equipment in the current year.

We have evaluated and re-prioritized our capital projects and expect that capital spending in 2021 will be about 4.5% of sales (net of potential grants and other reimbursements from government authorities), up slightly from 4% in 2020.

Cash Flows Used In Financing Activities

Cash used in financing activities in the first nine months of 2021 was $1.022 billion compared to $418 million in the prior year period. The increase in cash used in financing activities was primarily driven by higher cash dividend payments, higher repayments of both short-term and long-term debt, higher employee taxes paid and higher contingent considerations paid, partially offset by proceeds from issuance of commercial paper.

We paid dividends totaling $466 million in the 2021 period. We declared a cash dividend per share of $0.79 in the third quarter of 2021 that was paid on October 5, 2021 to all shareholders of record as of September 24, 2021.

Our capital allocation strategy seeks to maintain our investment grade rating while investing in the business and continuing to pay dividends and repaying debt. We make capital investments in our businesses to support our operational needs and strategic long term plans. We are committed to maintaining our history of paying a dividend to investors which is determined by our Board of Directors at its discretion based on various factors.

We currently have a board approved stock repurchase program with a total remaining value of $280 million. As of May 7, 2018, we have suspended our share repurchases.

Capital Resources

Operating cash flow provides the primary source of funds for capital investment needs, dividends paid to shareholders and debt service repayments. We anticipate that cash flows from operations and availability under our existing credit facilities will be sufficient to meet our investing and financing needs. We regularly assess our capital structure, including both current and long-term debt instruments, as compared to our cash generation and investment needs in order to provide ample flexibility and to optimize our leverage ratios. We believe our existing cash balances are sufficient to meet our debt service requirements.

Transaction with Nutrition & Biosciences, Inc.

On February 1, 2021, N&B funded the N&B Term Loan Facility, which provided for a senior unsecured term loan credit facility in an aggregate principal amount of $1.250 billion, comprised of a $625 million three-year tranche (“2024 Term Loan Facility”) and a $625 million five-year tranche (“2026 Term Loan Facility”). Following the Merger, we assumed the indebtedness incurred by N&B in the debt financings, which included (i) the 2024 Term Loan Facility and 2026 Term Loan Facility and (ii) a series of Senior Notes in the aggregate amount of $6.250 billion with maturities ranging from 2 to 30 years. N&B’s indebtedness raised prior to the Merger was used to finance the Special Cash Payment to DuPont, which has been paid, and for the satisfaction of the related transaction fees and expenses.

Upon completion of our combination with N&B, pursuant to the Merger Agreement, DuPont shareholders own approximately 55.4% of the shares of IFF, and existing IFF shareholders own approximately 44.6% of the shares of IFF.

Refer to Note 3 and Note 7 for additional information.

Revolving Credit Facility and Term Loans

As of September 30, 2021, we had no outstanding borrowings under our $2.000 billion Revolving Credit Facility and $200 million outstanding in borrowings under the 2022 Term Loan Agreement. The amount that we are able to draw down under the Revolving Credit Facility is limited by financial covenants as described in more detail below. As of September 30, 2021, our draw down capacity was $1.718 billion under the Revolving Credit Facility.

Refer to Note 7 of this Form 10-Q and Part IV, Item 15, "Exhibits and Financial Statement Schedules," Note 9 of our 2020 Form 10-K, filed on February 22, 2021, for additional information.

Debt Covenants

At September 30, 2021, we were in compliance with all financial and other covenants, including the Net Debt to Credit Adjusted EBITDA ratio. At September 30, 2021 our Net Debt/Credit Adjusted EBITDA(1) ratio was 4.10 to 1.0 as defined by the credit facility agreements, which is below the financial covenants of existing outstanding debt.

(1)Credit Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to Credit Adjusted EBITDA and Net Debt used by other companies. Reconciliations of Credit Adjusted EBITDA to net income and net debt to total debt are as follows:


(DOLLARS IN MILLIONS)	Twelve Months Ended September 30, 2021
Net income	$	54
Interest expense	301
Income taxes	19
Depreciation and amortization	1,430
Specified items (1)(3)	792
Non-cash items (2)(3)	54
Credit Adjusted EBITDA	$	2,650

(1)Specified items for the 12 months ended September 30, 2021 of $792 million, consisted of Frutarom integration related costs, restructuring and other charges, shareholder activism related costs, business divestiture costs, employee separation costs, pension income adjustment, pension settlement, Frutarom acquisition related costs, compliance review & legal defense costs, N&B inventory step-up costs, N&B transaction related costs, N&B integration related costs and other N&B specified items.

(2)Non-cash items represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including losses on disposal of assets and stock-based compensation.

(3)Specified and non-cash items may not include all eligible add-back items from the Merger with N&B, for the purposes of the Credit Adjusted EBITDA calculation, due to availability of the information.


(DOLLARS IN MILLIONS)	September 30, 2021
Total debt (1)	$	11,542
Adjustments:
Cash and cash equivalents	672
Net debt	$	10,870

(1)Total debt used for the calculation of Net debt consists of short-term debt, long-term debt, short-term finance lease obligations and long-term finance lease obligations.

Senior Notes

As of September 30, 2021, we had $9.769 billion aggregate principal amount outstanding in senior unsecured notes, with $1.519 billion principal amount denominated in EUR and $8.250 billion principal amount denominated in USD, which includes the N&B Senior Notes assumed as a result of the Merger. The notes bear interest ranging from 0.69% per year to 5.12% per year, with maturities from September 2021 to December 1, 2050. See Note 7 for additional information.

Contractual Obligations

We expect to contribute a total of $4 million to our U.S. pension plans and a total of $25 million to our non-U.S. pension plans during 2021. During the nine months ended September 30, 2021, there were no contributions made to the qualified U.S. pension plans, $18 million of contributions were made to the non-U.S. pension plans, and $3 million of benefit payments were made with respect to our non-qualified U.S. pension plan. We also expect to contribute $4 million to our postretirement benefits other than pension plans during 2021. During the nine months ended September 30, 2021, $3 million of contributions were made to postretirement benefits other than pension plans.

As discussed in Note 15 to the Consolidated Financial Statements, at September 30, 2021, we had entered into various guarantees and had undrawn outstanding letters of credit from financial institutions. These arrangements reflect ongoing business operations, including commercial commitments, and governmental requirements associated with audits or litigation that are in process with various jurisdictions. Based on the current facts and circumstances, these arrangements are not reasonably likely to have a material impact on our consolidated financial condition, results of operations, or cash flows.

New Accounting Standards

Refer to Note 1 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Non-GAAP Financial Measures

We use non-GAAP financial measures in this Form 10-Q, including: (i) currency neutral metrics, (ii) adjusted gross margin, (iii) adjusted selling and administrative expenses (adjusted S&A), (iv) adjusted operating EBITDA and adjusted operating EBITDA margin and (v) adjusted effective tax rate. We also provide the non-GAAP measure net debt solely for the purpose of providing information on the extent to which the Company is in compliance with debt covenants contained in its debt agreements. Our non-GAAP financial measures are defined below.

These non-GAAP financial measures are intended to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. In discussing our historical and expected future results and financial condition, we believe it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, as well as the impact of exchange rate fluctuations. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of the Company’s results under GAAP and may not be comparable to other companies’ calculation of such metrics.

Adjusted gross profit excludes employee separation costs, Frutarom acquisition related costs, N&B inventory step-up costs and N&B integration related costs.

Adjusted selling and administrative expenses exclude Frutarom integration related costs, restructuring and other charges, shareholder activism related costs, business divestiture costs, employee separation costs, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs.

Adjusted operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other income (expense), net, restructuring and other charges and certain non-recurring items such as Frutarom integration related costs, (gains) losses on sale of assets, shareholder activism related costs, business divestiture costs, employee separation costs, Frutarom acquisition related costs, compliance review & legal defense costs, N&B inventory step-up costs, N&B transaction related costs, N&B integration related costs and the impact of the Merger with N&B.

Adjusted effective tax rate excludes Frutarom integration related costs, restructuring and other charges, (gains) losses on sale of assets, shareholder activism related costs, business divestiture costs, employee separation costs, pension income adjustment, Frutarom acquisition related costs, compliance review & legal defense costs, N&B inventory step-up costs, N&B transaction related costs and N&B integration related costs.

Net Debt to Credit Adjusted EBITDA is the leverage ratio used in our credit agreement and defined as Net Debt divided by Credit Adjusted EBITDA. However, as Credit Adjusted EBITDA for these purposes was calculated in accordance with the provisions of the credit agreement, it may differ from the calculation used for adjusted operating EBITDA.

A. Reconciliation of Non-GAAP Metrics


Reconciliation of Gross Profit
	Three Months Ended September 30,
(DOLLARS IN MILLIONS)	2021		2020
Reported (GAAP)	$	1,090	$	524
Employee Separation Costs (c)	1		—
N&B Inventory Step-Up Costs	(14)		—
N&B Integration Related Costs (h)	3		—












Adjusted (Non-GAAP)	$	1,080	$	524


Reconciliation of Selling and Administrative Expenses
	Three Months Ended September 30,
(DOLLARS IN MILLIONS)	2021		2020
Reported (GAAP)	$	436	$	235
Frutarom Integration Related Costs (a)	(1)		(2)
Business Divestiture Costs (b)	(16)		—
Employee Separation Costs (c)	(20)		—
Frutarom Acquisition Related Costs (e)	—		(1)
Compliance Review & Legal Defense Costs (f)	—		(1)
N&B Transaction Related Costs (g)	—		(8)
N&B Integration Related Costs (h)	(20)		(29)








Adjusted (Non-GAAP)	$	379	$	194


Reconciliation of Net Income
	Three Months Ended September 30,
	2021								2020
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	Income before taxes		Provision for income taxes (j)		Net Income Attributable to IFF (k)		Diluted EPS (l)		Income before taxes		Provision for income taxes (j)		Net Income Attributable to IFF (k)		Diluted EPS (l)
Reported (GAAP)	$	250	$	53	$	194	$	0.76	$	105	$	19	$	85	$	0.75
Frutarom Integration Related Costs (a)	1		—		1		—		2		—		2		0.01
Restructuring and Other Charges	6		1		5		0.02		1		—		1		0.01
(Gains) Losses on Sale of Assets	(1)		—		(1)		—		1		—		1		—
Business Divestiture Costs (b)	16		4		12		0.05		—		—		—		—
Employee Separation Costs (c)	22		1		21		0.08		—		—		—		—
Pension Income Adjustment (d)	(17)		(4)		(13)		(0.05)		—		—		—		—
Frutarom Acquisition Related Costs (e)	—		—		—		—		1		1		—		0.01
Compliance Review & Legal Defense Costs (f)	—		—		—		—		1		—		1		0.01
N&B Inventory Step-Up Costs	(14)		(3)		(11)		(0.04)		—		—		—		—
N&B Transaction Related Costs (g)	—		—		—		—		8		—		8		0.07
N&B Integration Related Costs (h)	23		5		18		0.07		29		7		22		0.20
Redemption value adjustment to EPS (i)	—		—		—		—		—		—		—		(0.01)




Adjusted (Non-GAAP)	$	286	$	57	$	226	$	0.88	$	148	$	27	$	120	$	1.06


(a)			Represents costs related to the integration of the Frutarom acquisition. For 2021, costs primarily related to performance stock awards. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards.
(b)			Represents costs related to the Company's planned sales of businesses, primarily legal and professional fees.
(c)			Represents costs related to severance, including accelerated stock compensation expense, for certain employees and executives who have been separated or will separate from the Company.
(d)			Represents catch-up of net pension income from prior periods that had been excluded from their respective periods.
(e)			Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity.
(f)			Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.
(g)			Represents transaction costs and expenses related to the transaction with N&B, primarily includes legal and professional fees.
(h)			Represents costs primarily related to advisory services for the integration of the transaction with N&B, primarily consulting fees.
(i)			Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value.
(j)			The income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for the relevant jurisdiction, except for those items which are non-taxable or subject to valuation allowances for which the tax expense (benefit) was calculated at 0%. The tax benefit for amortization is calculated in a similar manner as the tax effects of the non-GAAP adjustments.


(k)			For 2021 and 2020, net income is reduced by income attributable to noncontrolling interest of $3 million and $1 million, respectively.
(l)			The sum of these items does not foot due to rounding.


Reconciliation of Gross Profit
	Nine Months Ended September 30,
(DOLLARS IN MILLIONS)	2021		2020
Reported (GAAP)	$	2,754	$	1,572
Employee Separation Costs (d)	1		—
Frutarom Acquisition Related Costs (f)	—		1
N&B Inventory Step-Up Costs	363		—
N&B Integration Related Costs (i)	3		—















Adjusted (Non-GAAP)	$	3,121	$	1,573


Reconciliation of Selling and Administrative Expenses
	Nine Months Ended September 30,
(DOLLARS IN MILLIONS)	2021		2020
Reported (GAAP)	$	1,299	$	695
Frutarom Integration Related Costs (a)	(2)		(8)
Restructuring and Other Charges	(1)		—
Shareholder Activism Related Costs (b)	(7)		—
Business Divestiture Costs (c)	(21)		—
Employee Separation Costs (d)	(26)		—
Frutarom Acquisition Related Costs (f)	—		(1)
Compliance Review & Legal Defense Costs (g)	—		(2)
N&B Transaction Related Costs (h)	(91)		(24)
N&B Integration Related Costs (i)	(74)		(62)










Adjusted (Non-GAAP)	$	1,077	$	598


Reconciliation of Net Income
	Nine Months Ended September 30,
	2021								2020
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	Income before taxes		Provision for income taxes (k)		Net Income Attributable to IFF (l)		Diluted EPS (m)		Income before taxes		Provision for income taxes (k)		Net Income Attributable to IFF (l)		Diluted EPS (m)
Reported (GAAP)	$	240	$	53	$	180	$	0.75	$	362	$	61	$	296	$	2.64
Frutarom Integration Related Costs (a)	3		—		3		0.01		9		2		7		0.06
Restructuring and Other Charges	34		7		27		0.11		8		2		6		0.06
(Gains) Losses on Sale of Assets	(1)		—		(1)		—		2		1		1		0.01
Shareholder Activism Related Costs (b)	7		2		5		0.02		—		—		—		—
Business Divestiture Costs (c)	21		5		16		0.07		—		—		—		—
Employee Separation Costs (d)	28		2		26		0.11		—		—		—		—
Pension Income Adjustment (e)	(17)		(4)		(13)		(0.05)		—		—		—		—
Frutarom Acquisition Related Costs (f)	—		—		—		—		1		(1)		2		0.02
Compliance Review & Legal Defense Costs (g)	—		—		—		—		2		—		2		0.01
N&B Inventory Step-Up Costs	363		79		284		1.19		—		—		—		—
N&B Transaction Related Costs (h)	91		19		72		0.30		24		1		23		0.21
N&B Integration Related Costs (i)	77		18		59		0.25		62		14		48		0.42
Redemption value adjustment to EPS (j)	—		—		—		0.01		—		—		—		(0.04)








Adjusted (Non-GAAP)	$	846	$	181	$	658	$	2.75	$	470	$	80	$	385	$	3.38


(a)			Represents costs related to the integration of the Frutarom acquisition. For 2021, costs primarily related to performance stock awards. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards.
(b)			Represents shareholder activist related costs, primarily professional fees.
(c)			Represents costs related to the Company's planned sales of businesses, primarily legal and professional fees.
(d)			Represents costs related to severance, including accelerated stock compensation expense, for certain employees and executives who have been separated or will separate from the Company.
(e)			Represents catch-up of net pension income from prior periods that had been excluded from their respective periods.
(f)			Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity.
(g)			Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.
(h)			Represents transaction costs and expenses related to the transaction with N&B, primarily includes legal and professional fees.
(i)			Represents costs primarily related to advisory services for the integration of the transaction with N&B, primarily consulting fees.
(j)			Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value.
(k)			The income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for the relevant jurisdiction, except for those items which are non-taxable or subject to valuation allowances for which the tax expense (benefit) was calculated at 0%. The tax benefit for amortization is calculated in a similar manner as the tax effects of the non-GAAP adjustments.
(l)			For 2021 and 2020, net income is reduced by income attributable to noncontrolling interest of $7 million and $5 million, respectively.
(m)			The sum of these items does not foot due to rounding.

Cautionary Statement Under the Private Securities Litigation Reform Act of 1995

Statements in this Form 10-Q, which are not historical facts or information, are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current assumptions, estimates and expectations including those concerning (i) the impacts of COVID-19 and our plans to respond to its implications; (ii) expectations regarding sales and profit for the fiscal year 2021, including the impact of foreign exchange, pricing actions, raw materials, and sourcing, logistics and manufacturing costs; (iii) the divestiture of our microbial control business and the progress of our portfolio optimization strategy, through non-core business divestitures; (iv) our combination with N&B, including the expected cost benefits and synergies of the N&B Transaction, the success of our integration efforts and ability to deliver on our synergy commitments as well as future opportunities for the combined company; (v) our ability to manage through supply-chain challenges and cost increases; (vi) the growth potential of the markets in which we operate, including the emerging markets; (vii) expected capital expenditures; (viii) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings; (ix) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; (x) our ability to drive reductions in expenses; (xi) our strategic investments in capacity and increasing inventory to drive improved profitability; (xii) the impact of inflation and other macroeconomic factors; (xiii) our ability to innovate and execute on specific consumer trends and demands; and (xiv) our ability to continue to generate value for, and return cash to, our shareholders. These forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Certain of such forward-looking information may be identified by such terms as “expect”, “anticipate”, “believe”, “intend”, “outlook”, “may”, “estimate”, “should”, “predict” and similar terms or variations thereof. Such forward-looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve significant risks, uncertainties and other factors, including assumptions and projections, for all forward periods. Our actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, the following:

disruption in the development, manufacture, distribution or sale of our products from COVID-19 and other public health crises;
risks related to the integration of N&B and the Frutarom business, including whether we will realize the benefits anticipated from the acquisitions in the expected time frame;
unanticipated costs, liabilities, charges or expenses resulting from the Frutarom acquisition and the N&B Transaction;
risks related to the restrictions that we are required to abide by in connection with the N&B Transaction;
our ability to provide the same types and level of services to the N&B Business that historically have been provided by DuPont, and our ability to maintain relationships with third parties and pre-existing customers of N&B.
our ability to realize expected cost savings and increased efficiencies of the Frutarom integration and our ongoing optimization of our manufacturing facilities;
our ability to successfully establish and manage acquisitions, collaborations, joint ventures or partnership and to manage and complete divestitures or dispositions;
the increase in our leverage resulting from the additional debt incurred to pay a portion of the consideration for Frutarom and its impact on our liquidity and ability to return capital to its shareholders;
our ability to successfully market to our expanded and diverse Nourish customer base;
our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs;
our ability to retain key employees;
changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers;
our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations;
disruption in the development, manufacture, distribution or sale of our products from natural disasters, public health crises, international conflicts, terrorist acts, labor strikes, political crisis, accidents and similar events;
the impact of a disruption in our supply chain, including the inability to obtain ingredients and raw materials from third parties;
volatility and increases in the price of raw materials, energy and transportation;
the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad;
unprecedented increases and volatility in sourcing and logistical costs;
our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environmental impact;
our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness;
our ability to meet consumer, customer and regulatory sustainability standards;
our ability to benefit from our investments and expansion in emerging markets;
the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate;
economic, regulatory and political risks associated with our international operations;
the impact of global economic uncertainty on demand for consumer products;
our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws;
our ability to successfully manage our working capital and inventory balances;
the impact of the failure to comply with U.S. or foreign anti-corruption and anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act;
any impairment on our tangible or intangible long-lived assets, including goodwill associated with the acquisition of Frutarom and Merger with N&B;
our ability to protect our intellectual property rights;
the impact of the outcome of legal claims, regulatory investigations and litigation, including current and future developments involving tax matters in Brazil;
changes in market conditions or governmental regulations relating to our pension and postretirement obligations;
the impact of changes in federal, state, local and international tax legislation or policies, including the Tax Cuts and Jobs Act, with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes;
the impact of the United Kingdom’s departure from the European Union; and
the impact of the phase out of the London Interbank Offered Rate (LIBOR) on interest expense.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the Company (such as in our other filings with the SEC or in company press releases) for other factors that may cause actual results to differ materially from those projected by the Company. Please refer to Part I. Item 1A., Risk Factors of the 2020 Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and cash flow.

We intend our forward-looking statements to speak only as of the time of such statements and do not undertake or plan to update or revise them as more information becomes available or to reflect changes in expectations, assumptions or results. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this report or included in our other periodic reports filed with the SEC could materially and adversely impact our operations and our future financial results.

Any public statements or disclosures made by us following this report that modify or impact any of the forward-looking statements contained in or accompanying this report will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this report.

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