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

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

The following management’s discussion and analysis should be read in conjunction with the management’s discussion and analysis of financial condition and results of operations, liquidity and capital resources included in our 2023 Annual Report on Form 10-K, filed on February 28, 2024 with the SEC (“2023 Form 10-K”).

OVERVIEW

Company Background

With the Merger with N&B in 2021 and our acquisition of Frutarom Industries Ltd. in 2018, 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 and Probiotics categories.

We are organized into four reportable operating segments: Nourish, Health & Biosciences, Scent and Pharma Solutions.

Our Nourish segment consists of 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 and consists of Ingredients, Flavors and Food Designs.

Our Health & Biosciences segment consists of the development and production of an advanced biotechnology-derived portfolio of enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications. Among many other applications, this biotechnology-driven portfolio includes cultures for use in fermented foods such as yogurt, cheese and fermented beverages, probiotic strains, many with documented clinical health claims for use as dietary supplements and through industrial fermentation the production of enzymes and microorganisms that provide product and process performance benefits to household detergents, animal feed, ethanol production and brewing. Health & Biosciences is comprised of Health, Cultures & Food Enzymes, Home & Personal Care, Animal Nutrition and Grain Processing.

Our Scent segment creates fragrance compounds and fragrance ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products. Consumer insights science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe these make us a market leader in scent products. The Scent segment is comprised of Fragrance Compounds and Fragrance Ingredients. We completed the divestiture of our Cosmetic Ingredients business on April 2, 2024.

Our Pharma Solutions segment produces, among other things, a vast portfolio of cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formulations. Our excipients are used in prescription and over-the-counter pharmaceuticals and dietary supplements. Our Pharma Solutions products also serve a variety of other specialty and industrial end-uses including coatings, inks, electronics, agriculture and consumer products. On March 19, 2024, we announced the sale process and entered into an agreement to sell the Pharma Solutions business disposal group, that is primarily made up of most businesses within the Company's existing Pharma Solutions reportable segment as well as certain adjacent businesses. During October 2024, the Company entered into an agreement to sell its nitrocellulose business, which is within the Company's existing Pharma Solutions reportable operating segment. See Note 3 for additional information.

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. We calculate currency neutral numbers by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. We use currency neutral results in our analysis of subsidiary and/or segment performance. We also use currency neutral numbers when analyzing our performance against our competitors.

Impact related to the Israel-Hamas War

We maintain operations in Israel and, additionally, export products to customers in Israel from operations outside the region. We will continue to evaluate the current events and any potential impacts related to this matter, but we do not expect there to be a material impact to our Consolidated Financial Statements.

For each of the three and nine months ended September 30, 2024 and 2023, total sales to Israeli customers were less than 1% of total sales.

Impact related to the Russia-Ukraine War

We maintain operations in both Russia and Ukraine and, additionally, export products to customers in Russia and Ukraine from operations outside the region. In response to the events in Ukraine, we have limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine.

For each of the three and nine months ended September 30, 2024 and 2023, sales to Russian customers were approximately 1% of total sales.

For each of the three and nine months ended September 30, 2024 and 2023, sales to Ukrainian customers were less than 1% of total sales.

We have a reserve of approximately $2 million related to expected credit losses on receivables from customers located in Russia and Ukraine. For additional information, refer to Note 1 and Part I, Item 1A, “Risk Factors,” of our 2023 Form 10-K.

Financial Performance Overview

Sales

Sales in the third quarter of 2024 increased $105 million, or 4% on a reported basis, to $2.925 billion compared to $2.820 billion in the 2023 period. On a currency neutral basis, sales in the third quarter of 2024 increased 7% compared to the 2023 period. Exchange rate variations had an unfavorable impact on net sales for the third quarter of 2024 of 3%. The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies. The increase in currency neutral sales was primarily driven by volume increases across various businesses, offset by divestiture impacts of approximately $23 million from the sale of the Cosmetic Ingredients business.

Gross profit in the third quarter of 2024 increased $128 million, or 14%, to $1.052 billion (36.0% of sales) compared to $924 million (32.8% of sales) in the 2023 period. The increase in gross profit was primarily driven by volume increases and favorable net pricing, offset in part by unfavorable exchange rate variations and divestiture impacts from the sale of the Cosmetic Ingredients business.

RESULTS OF OPERATIONS

			Three Months Ended																		Nine Months Ended
			September 30,																		September 30,
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)			2024						2023						Change						2024						2023						Change
Net sales			$	2,925					$	2,820					4		%				$	8,713					$	8,776					(1)		%
Cost of Sales			1,873						1,896						(1)		%				5,569						5,955						(6)		%
Gross profit			1,052						924						14		%				3,144						2,821						11		%
Research and development (R&D) expenses			162						157						3		%				501						479						5		%
Selling and administrative (S&A) expenses			495						444						11		%				1,478						1,343						10		%
Amortization of acquisition-related intangibles			146						170						(14)		%				467						513						(9)		%
Impairment of goodwill			—						—						NMF						64						—						NMF
Restructuring and other charges			1						2						(50)		%				6						61						(90)		%
(Gains) losses on sale of assets			(1)						1						(200)		%				(11)						(1)						NMF
Operating profit			249						150						66		%				639						426						50		%
Interest expense			74						90						(18)		%				236						291						(19)		%
(Gains) losses on business disposals			20						10						100		%				(348)						29						NMF
Loss on assets classified as held for sale			32						—						NMF						314						—						NMF
Other expense (income), net			28						(9)						NMF						44						(17)						NMF
Income before income taxes			95						59						61		%				393						123						220		%
Provision for income taxes			35						32						9		%				100						77						30		%
Net income			$	60					$	27					122		%				$	293					$	46					NMF
Net income attributable to non-controlling interests			1						2						(50)		%				4						3						33		%
Net income attributable to IFF shareholders			$	59					$	25					136		%				$	289					$	43					NMF
Net income per share - diluted			$	0.23					$	0.10					130		%				$	1.13					$	0.16					NMF
Gross margin			36.0		%				32.8		%				NMF						36.1		%				32.1		%				NMF
R&D as a percentage of sales			5.5		%				5.6		%				(10) bps						5.8		%				5.5		%				30		bps
S&A as a percentage of sales			16.9		%				15.7		%				120		bps				17.0		%				15.3		%				170		bps
Operating margin			8.5		%				5.3		%				NMF						7.3		%				4.9		%				240		bps
Effective tax rate			36.8		%				54.2		%				NMF						25.4		%				62.6		%				NMF
Segment net sales
Nourish			$	1,486					$	1,449					3		%				$	4,460					$	4,666					(4)		%
Health & Biosciences			570						518						10		%				1,659						1,553						7		%
Scent			613						615						—		%				1,861						1,815						3		%
Pharma Solutions			256						238						8		%				733						742						(1)		%
Consolidated			$	2,925					$	2,820											$	8,713					$	8,776

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NMF: Not meaningful

Cost of goods sold includes the cost of materials and manufacturing expenses. R&D expenses include 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 2024 IN COMPARISON TO THIRD QUARTER 2023

Sales Performance by Segment

			% Change in Sales - Third Quarter 2024 vs. Third Quarter 2023
			Reported						Currency Neutral**(1)**
Nourish			3		%				6		%
Health & Biosciences			10		%				12		%
Scent			0		%				5		%
Pharma Solutions			8		%				8		%
Total			4		%				7		%

---

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

Nourish

Nourish sales in 2024 increased $37 million, or 3% on a reported basis, to $1.486 billion compared to $1.449 billion in the prior year period. On a currency neutral basis, Nourish sales increased 6% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. Performance in the Nourish operating segment was driven by volume increases across various business units.

Health & Biosciences

Health & Biosciences sales in 2024 increased $52 million, or 10% on a reported basis, to $570 million compared to $518 million in the prior year period. On a currency neutral basis, Health & Biosciences sales increased 12% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. Performance in the Health & Biosciences operating segment was driven by volume increases across all business units.

Scent

Scent sales in 2024 remained flat at $613 million compared to $615 million in the prior year period. On a currency neutral basis, Scent sales increased 5% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. Performance in the Scent operating segment was driven by price increases in the fragrance compounds business unit and volume increases in the fragrance compounds and fragrance ingredients business units, offset in part by the divestitures of the Cosmetic Ingredients business with an impact of approximately $23 million.

Pharma Solutions

Pharma Solutions sales in 2024 increased $18 million, or 8% on a reported basis, to $256 million compared to $238 million in the prior year period. On a currency neutral basis, Pharma Solutions sales increased by 8% as exchange rate variations were flat in 2024 compared to the prior year. Performance in the Pharma Solutions operating segment was driven by volume increases across Pharma and Industrial end markets.

Cost of Goods Sold

Cost of goods sold decreased $23 million to $1.873 billion (64.0% of sales) in the third quarter of 2024 compared to $1.896 billion (67.2% of sales) in the third quarter of 2023. The decrease in cost of goods sold was primarily driven by lower raw material costs and manufacturing expenses, lower unfavorable manufacturing absorption compared to the prior year period, offset in part by volume increases in sales.

Research and Development (R&D) Expenses

R&D expenses increased $5 million to $162 million (5.5% of sales) in the third quarter of 2024 compared to $157 million (5.6% of sales) in the third quarter of 2023. The increase in R&D expenses was primarily driven by an increase in incentive compensation expense.

Selling and Administrative (S&A) Expenses

S&A expenses increased $51 million to $495 million (16.9% of sales) in the third quarter of 2024 compared to $444 million (15.7% of sales) in the third quarter of 2023. The increase in S&A expenses was primarily driven by increased incentive compensation expense and divestiture related costs incurred in preparation for the sale of the Pharma Solutions disposal group.

Amortization of Acquisition-Related Intangibles

Amortization expenses decreased to $146 million in the third quarter of 2024 compared to $170 million in the third quarter of 2023. The decrease in amortization expense was primarily driven by the reduction in intangible assets as a result of the change in business portfolio mix due to divestitures and intangible assets of the Pharma Solutions disposal group being classified as “held for sale”, and therefore no longer recognizing amortization expense on those intangible assets. See Note 3 for additional information.

Restructuring and Other Charges

Restructuring and other charges was $1 million in the third quarter of 2024 compared to $2 million in the third quarter of 2023. The decrease was driven by lower severance costs incurred compared to the prior year period. See Note 4 for additional information.

Interest Expense

Interest expense decreased to $74 million in the third quarter of 2024 compared to $90 million in the third quarter of 2023. The decrease in interest expense was due to lower debt outstanding. See Note 13 for additional information.

Losses on Business Disposals

Losses on business disposals increased to $20 million in the third quarter of 2024 compared to $10 million in the third quarter of 2023. The increase was primarily driven by the loss recognized on the F&E UK divestiture. See Note 3 for additional information.

Loss on Assets Classified as Held for Sale

Loss on assets classified as held for sale was $32 million in the third quarter of 2024. This is related to assets classified as held for sale for the Pharma Solutions disposal group and the portion of the Savory Solutions business in Turkey. See Note 3 for additional information.

Other Expense (Income), Net

Other expense (income), net, was $28 million in the third quarter of 2024 compared to $(9) million in the third quarter of 2023. The increase of $37 million was primarily due to higher foreign exchange losses in 2024. See Note 8 for additional information.

Income Taxes

The effective tax rate for the three months ended September 30, 2024 was 36.8% compared to 54.2% for the three months ended September 30, 2023. The quarter-over-quarter decrease was primarily driven by an increase in pre-tax income, changes in the mix of earnings and in tax charges on business divestitures.

Segment Adjusted Operating EBITDA Results

The Company uses 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 items that are not related to recurring operations. 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.

			Three Months Ended September 30,
(DOLLARS IN MILLIONS)			2024						2023
Segment Adjusted Operating EBITDA:
Nourish			$	206					$	178
Health & Biosciences			173						150
Scent			127						131
Pharma Solutions			62						47
Total			568						506
Depreciation & Amortization			(248)						(292)
Interest Expense			(74)						(90)
Other (Expense) Income, net			(28)						9
Restructuring and Other Charges			(1)						(2)
Gains (Losses) on Business Disposals			(20)						(10)
Loss on Assets Classified as Held for Sale			(32)						—
Acquisition, Divestiture and Integration Costs			(55)						(42)
Strategic Initiatives Costs			(6)						(6)
Regulatory Costs			(10)						(13)
Other			1						(1)
Income Before Taxes			$	95					$	59
Segment Adjusted Operating EBITDA margin:
Nourish			13.9		%				12.3		%
Health & Biosciences			30.4		%				29.0		%
Scent			20.7		%				21.3		%
Pharma Solutions			24.2		%				19.7		%
Consolidated			19.4		%				17.9		%

Nourish Segment Adjusted Operating EBITDA

Nourish Segment Adjusted Operating EBITDA increased $28 million, or 16% on a reported basis, to $206 million in the third quarter of 2024 (13.9% of segment sales) from $178 million (12.3% of segment sales) in the comparable 2023 period. On a currency neutral basis, Nourish Segment Adjusted Operating EBITDA increased 25% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. In addition, the performance was primarily driven by volume increases and favorable net pricing.

Health & Biosciences Segment Adjusted Operating EBITDA

Health & Biosciences Segment Adjusted Operating EBITDA increased $23 million, or 15% on a reported basis, to $173 million in the third quarter of 2024 (30.4% of segment sales) from $150 million (29.0% of segment sales) in the comparable 2023 period. On a currency neutral basis, Health & Biosciences Segment Adjusted Operating EBITDA increased 19% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. In addition, the performance was primarily driven by volume increases and favorable net pricing.

Scent Segment Adjusted Operating EBITDA

Scent Segment Adjusted Operating EBITDA decreased $4 million, or 3% on reported basis, to $127 million in the third quarter of 2024 (20.7% of segment sales) from $131 million (21.3% of segment sales) in the comparable 2023 period. On a currency neutral basis, Scent Segment Adjusted Operating EBITDA increased 13% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. In addition, the performance was primarily driven by volume increases and favorable net pricing, offset in part by the impact of the divestiture of the Cosmetic Ingredients business.

Pharma Solutions Segment Adjusted Operating EBITDA

Pharma Solutions Segment Adjusted Operating EBITDA increased $15 million, or 32% on a reported basis, to $62 million in the third quarter of 2024 (24.2% of segment sales) from $47 million (19.7% of segment sales) in the comparable 2023 period. On a currency neutral basis, Pharma Solutions Segment Adjusted Operating EBITDA increased 31% in 2024 compared to the prior year period as exchange rate variations were flat. The increase was primarily driven by volume increases, improved utilization and productivity gains.

FIRST NINE MONTHS 2024 IN COMPARISON TO FIRST NINE MONTHS 2023

Sales

Sales for the first nine months of 2024 decreased $63 million, or 1% on a reported basis, to $8.713 billion compared to $8.776 billion in the 2023 period. On a currency neutral basis, sales for the first nine months of 2024 increased 3% compared to the 2023 period, as exchange rate variations had an unfavorable impact on net sales in the first nine months of 2024. The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies. In addition, the decrease in sales was primarily driven by the divestiture impacts of the portion of the Savory Solutions business, Flavors Specialty Ingredients (“FSI”) business, and Cosmetic Ingredients business (“change in business portfolio mix due to divestitures”), which was approximately $314 million, offset in part by volume increases across various business lines.

Sales Performance by Segment

			% Change in Sales - First Nine Months 2024 vs. First Nine Months 2023
			Reported						Currency Neutral**(1)**
Nourish			-4		%				-1		%
Health & Biosciences			7		%				9		%
Scent			3		%				8		%
Pharma Solutions			-1		%				-1		%
Total			-1		%				3		%

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

Nourish

Nourish sales in 2024 decreased $206 million, or 4% on a reported basis, to $4.460 billion compared to $4.666 billion in the prior year period. On a currency neutral basis, Nourish sales decreased 1% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. In addition, performance in the Nourish operating segment was driven by the divestiture of the portion of the Savory Solutions business with an impact of approximately $222 million and price decreases, offset in part by volume increases across all business units.

Health & Biosciences

Health & Biosciences sales in 2024 increased $106 million, or 7% on a reported basis, to $1.659 billion compared to $1.553 billion in the prior year period. On a currency neutral basis, Health & Biosciences sales increased 9% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. Performance in the Health & Biosciences operating segment was driven by volume increases across all business units and price increases across Cultures & Food Enzymes and Grain Processing business units.

Scent

Scent sales in 2024 increased $46 million, or 3% on a reported basis, to $1.861 billion compared to $1.815 billion in the prior year period. On a currency neutral basis, Scent sales increased 8% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. Performance in the Scent operating segment was driven by price increases in the Fragrance Compounds business unit and volume increases across all business units, offset in part by the divestiture of the FSI business and Cosmetic Ingredients business, with an impact of approximately $92 million.

Pharma Solutions

Pharma Solutions sales in 2024 decreased $9 million, or 1% on a reported basis, to $733 million compared to $742 million in the prior year period. On a currency neutral basis, Pharma Solutions sales also decreased 1% in 2024 compared to the prior year period as exchange rate variations had no impact. Performance in the Pharma Solutions operating segment was driven by price decreases offset in part by volume growth in industrial markets.

Cost of Goods Sold

Cost of goods sold decreased $386 million to $5.569 billion (63.9% of sales) in the first nine months of 2024 compared to $5.955 billion (67.9% of sales) in the 2023 period. The decrease in cost of goods sold was primarily driven by the change in business portfolio mix due to divestitures which was approximately $206 million, lower raw material costs and manufacturing expenses, lower unfavorable manufacturing absorption compared to the prior year period, positive net pricing and productivity compared to the prior year period, offset in part by volume increases.

Research and Development (R&D) Expenses

R&D expenses increased $22 million to $501 million (5.8% of sales) in the first nine months of 2024 compared to $479 million (5.5% of sales) in the 2023 period. The increase in R&D expenses was primarily driven by an increase in incentive compensation expense, offset in part by the net impact of the change in business portfolio mix due to divestitures.

Selling and Administrative (S&A) Expenses

S&A expenses increased $135 million to $1.478 billion (17.0% of sales) in the first nine months of 2024 compared to $1,343 million (15.3% of sales) in the 2023 period. The increase in S&A expenses was primarily driven by an increase in incentive compensation expense, professional fees, legal fees and provisions incurred for the ongoing investigations of the fragrance businesses, and divestiture related costs incurred in preparation for the sale of the Pharma Solutions disposal group, offset in part by the change in business portfolio mix due to divestitures.

Amortization of Acquisition-Related Intangibles

Amortization expenses decreased to $467 million in the first nine months of 2024 compared to $513 million in the 2023 period. The decrease in amortization expense was primarily driven by the reduction in intangible assets as a result of the change in business portfolio mix due to divestitures and intangible assets of the Pharma Solutions disposal group being classified as “held for sale”, and therefore no longer recognizing amortization expense on those intangible assets. See Note 3 for additional information.

Impairment of Goodwill

The impairment of goodwill was $64 million in the first nine months of 2024. See Note 3 for additional information.

Restructuring and Other Charges

Restructuring and other charges decreased to $6 million in the first nine months of 2024 compared to $61 million in the 2023 period. The decrease was driven by higher severance costs incurred as part of the 2023 Restructuring Program, net of reversals of prior severance cost accruals, in the first nine months of 2023. See Note 4 for additional information.

Interest Expense

Interest expense decreased to $236 million in the first nine months of 2024 compared to $291 million in the 2023 period. The decrease in interest expense was due to lower debt outstanding (see Note 13 for additional information).

(Gains) Losses on Business Disposals

(Gains) losses on business disposals increased to $(348) million in the first nine months of 2024 compared to $29 million in the 2023 period. The net gain on business disposals in 2024 primarily relates to the gain recognized on the sale of the Cosmetic Ingredients business, offset in part by the loss recognized on the sale of the F&E UK business. The loss in the 2023 period relates to the sale of the FSI business, the sale of a portion of the Savory Solutions business, and liquidation of a business in Russia for the sale of the portion of the Savory Solutions business. See Note 3 for additional information.

Loss on Assets Classified as Held for Sale

Loss on assets classified as held for sale was $314 million in the first nine months of 2024. This related to assets classified as held for sale for the Pharma Solutions disposal group and the portion of the Savory Solutions business in Turkey. See Note 3 for additional information.

Other Expense (Income), Net

Other expense (income), net, was $44 million in the first nine months of 2024 compared to $(17) million in the 2023 period. The change of $61 million was primarily due to increased foreign exchange losses, in addition to the gain recognized on the China facility relocation in the 2023 period. See Note 8 for additional information.

Income Taxes

The effective tax rate for the nine months ended September 30, 2024 was 25.4% compared to 62.6% for the nine months ended September 30, 2023. The year-over-year decrease was primarily driven by an increase in pre-tax income, changes in the mix of earnings and in tax charges on business divestitures.

Segment Adjusted Operating EBITDA Results

The Company uses 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 items that are not related to recurring operations. 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.

			Nine Months Ended September 30,
(DOLLARS IN MILLIONS)			2024						2023
Segment Adjusted Operating EBITDA:
Nourish			$	654					$	567
Health & Biosciences			497						426
Scent			421						353
Pharma Solutions			162						173
Total			1,734						1,519
Depreciation & Amortization			(772)						(855)
Interest Expense			(236)						(291)
Other (Expense) Income, net			(44)						17
Restructuring and Other Charges			(6)						(61)
Impairment of Goodwill			(64)						—
Gains (Losses) on Business Disposals			348						(29)
Loss on Assets Classified as Held for Sale			(314)						—
Acquisition, Divestiture and Integration Costs			(172)						(118)
Strategic Initiatives Costs			(22)						(28)
Regulatory Costs			(64)						(32)
Other			5						1
Income Before Taxes			$	393					$	123
Segment Adjusted Operating EBITDA margin:
Nourish			14.7		%				12.2		%
Health & Biosciences			30.0		%				27.4		%
Scent			22.6		%				19.4		%
Pharma Solutions			22.1		%				23.3		%
Consolidated			19.9		%				17.3		%

Nourish Segment Adjusted Operating EBITDA

Nourish Segment Adjusted Operating EBITDA increased $87 million, or 15% on a reported basis, to $654 million in the first nine months of 2024 (14.7% of segment sales) from $567 million (12.2% of segment sales) in the comparable 2023 period. On a currency neutral basis, Nourish Segment Adjusted Operating EBITDA increased 29% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. The performance was primarily driven by favorable net pricing, productivity gains and volume increases, offset in part by the impact of the divestiture of the portion of the Savory Solutions business.

Health & Biosciences Segment Adjusted Operating EBITDA

Health & Biosciences Segment Adjusted Operating EBITDA increased $71 million, or 17% on a reported basis, to $497 million in the first nine months of 2024 (30.0% of segment sales) from $426 million (27.4% of segment sales) in the comparable 2023 period. On a currency neutral basis, Health & Biosciences Segment Adjusted Operating EBITDA increased 19% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. The performance was primarily driven by volume increases and favorable net pricing.

Scent Segment Adjusted Operating EBITDA

Scent Segment Adjusted Operating EBITDA increased $68 million, or 19% on a reported basis, to $421 million in the first nine months of 2024 (22.6% of segment sales) from $353 million (19.4% of segment sales) in the comparable 2023 period. On a currency neutral basis, Scent Segment Adjusted Operating EBITDA increased 41% in 2024 compared to the prior year period as exchange rate variations had an unfavorable impact. The performance was primarily driven by favorable net pricing, productivity gains and volume increases, offset in part by the impact of the divestiture of the FSI business and Cosmetic Ingredients business.

Pharma Solutions Segment Adjusted Operating EBITDA

Pharma Solutions Segment Adjusted Operating EBITDA decreased $11 million, or 6% on a reported basis, to $162 million in the first nine months of 2024 (22.1% of segment sales) from $173 million (23.3% of segment sales) in the comparable 2023 period. On a currency neutral basis, Pharma Solutions Segment Adjusted Operating EBITDA decreased 6% in 2024 compared to the prior year period as exchange rate variations remained flat. The decreased performance was primarily driven by higher costs including favorable one-off items in the 2023 period which did not recur in the 2024 period.

Liquidity

Cash and Cash Equivalents

We had cash and cash equivalents of $569 million, inclusive of $2 million currently in Assets held for sale on the Consolidated Balance Sheets, at September 30, 2024 compared to $729 million, inclusive of $26 million in Assets held for sale on the Consolidated Balance Sheets, at December 31, 2023 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.

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., there will be required income taxes payable in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of September 30, 2024, we had a deferred tax liability of approximately $167 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.

Cash Flows Provided By Operating Activities

Cash flows provided by operating activities for the nine months ended September 30, 2024 was $702 million, or 8.1% of sales, compared to $795 million, or 9.1% of sales, for the nine months ended September 30, 2023. The decrease in cash flows from operating activities during 2024 was primarily driven by an increase in working capital, largely related to accounts receivable and inventories including amounts held for sale, offset in part by accounts payable and higher cash earnings, excluding the impact of non-cash adjustments.

Cash Flows Provided By Investing Activities

Cash flows provided by investing activities for the nine months ended September 30, 2024 was $586 million compared to $638 million in the prior year period. The decrease in cash flows provided by investing activities was primarily driven by lower net proceeds received from business divestitures compared to the prior year period, offset in part by decreased additions to property, plant and equipment.

We have evaluated and re-prioritized our capital projects and expect that capital spending in 2024 will be approximately 4.8% of sales (net of potential grants and other reimbursements from government authorities), up from 4.4% in 2023.

Cash Flows Used In Financing Activities

Cash flows used in financing activities for the nine months ended September 30, 2024 was $1,444 million compared to $1,293 million in the prior year period. The increase in cash flows used in financing activities was primarily driven by higher repayments of long-term debt, offset in part by lower dividends and higher repayments in the prior year period of commercial paper and amounts under the Revolving Credit Facility.

We paid dividends totaling $411 million in the 2024 period. We declared a cash dividend per share of $0.40 in the third quarter of 2024 that was paid on October 9, 2024 to all shareholders of record as of September 20, 2024.

Our capital allocation strategy seeks to maintain our investment grade rating while investing in the business and continuing to pay dividends and repaying debt. The Company does not have any rating downgrade triggers that would accelerate the maturity dates of its senior unsecured debt. However, any downgrade in our credit rating may, depending on the extent of such downgrade, negatively impact our ability to raise additional debt capital, our liquidity and capital position, and may increase our cost of borrowing for new capital raises. In addition, our existing Revolving Credit Facility and Term Loans have pricing grids that are based on credit rating, such that our cost of borrowing may increase as our credit rating decreases. 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.

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, cash proceeds generated from planned business divestitures and availability under our existing credit facilities will be sufficient to meet our investing and financing needs, including our debt service requirements for the foreseeable future. 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. See Note 13 for additional information.

Term Loans and Revolving Credit Facility

Our credit agreements contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous 12-month period.

Our Term Loans and Revolving Credit Facility bear interest at a base rate or a rate equal to Term SOFR plus an adjustment of 0.10% per annum or, in the case of euro-denominated loans, the Euro interbank offered rate, plus, in each case, an applicable margin based on our public debt rating. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

Based on the amendments entered into on September 19, 2023 for our Term Loans and Revolving Credit Facility, we were provided with a financial covenant relief period through December 31, 2025, or such earlier date on which we elect to terminate such period, by providing that during the financial covenant relief period, our net debt to credit adjusted EBITDA ratio shall not exceed as of the end of the fiscal quarter for the period of the four fiscal quarters then ended: (i) 5.25x for any fiscal quarter ending on or before March 31, 2024, (ii) 4.75x for the fiscal quarter ending June 30, 2024, (iii) 4.50x for the fiscal quarter ending September 30, 2024, (iv) 4.25x for any subsequent fiscal quarter ending on or before March 31, 2025, (v) 4.00x for any subsequent fiscal quarter ending on or before September 30, 2025 and (vi) 3.75x for the fiscal quarter ending December 31, 2025. During the financial covenant relief period, the amendments prohibit us from (i) effecting share repurchases, (ii) declaring and paying dividends in cash on common stock in excess of $0.81 per share per fiscal quarter (for an aggregate amount of $3.24 per fiscal year) and (iii) creating liens to secure debt in excess of the greater of $300 million and 3.65% of Consolidated Net Tangible Assets (as defined in the amendments to our Term Loans and Revolving Credit Facility), in each case subject to certain exceptions set forth therein.

As of September 30, 2024, we had no outstanding borrowings under our $2.000 billion Revolving Credit Facility. 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, 2024, our available capacity was $1.347 billion under the Revolving Credit Facility.

Refer to Note 13 of this Form 10-Q and Part IV, Item 15, “Exhibits and Financial Statement Schedules,” Note 9 of our 2023 Form 10-K for additional information.

Debt Covenants

At September 30, 2024, we were in compliance with all financial and other covenants, including the net debt to credit adjusted EBITDA(1) ratio. At September 30, 2024, our net debt to credit adjusted EBITDA(1) ratio was 3.89 to 1.0 as defined by the credit facility agreements, which is below the relevant level provided by our financial covenants of existing outstanding debt. The most comparable GAAP measure is the total debt to net loss ratio, which was (3.93) to 1.0 at September 30, 2024.

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(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 loss and net debt to total debt are as follows:

(DOLLARS IN MILLIONS)			Twelve Months Ended September 30, 2024
Net loss			$	(2,321)
Interest expense			325
Income taxes			68
Depreciation and amortization			1,059
Specified items(1)			3,038
Non-cash items(2)			32
Credit Adjusted EBITDA			$	2,201

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(1)Specified items consisted of restructuring and other charges, impairment of goodwill, acquisition, divestiture and integration costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.

(2)Non-cash items consisted of losses (gains) on sale of assets, losses (gains) on business disposals, losses on assets classified as held for sale, gain on China facility relocation, write-down of inventory related to Locust Bean Kernel and stock-based compensation.

(DOLLARS IN MILLIONS)			September 30, 2024
Total debt(1)			$	9,127
Adjustments:
Cash and cash equivalents(2)			569
Net debt			$	8,558

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

(2)Cash and cash equivalents included approximately $2 million currently in Assets held for sale on the Consolidated Balance Sheets.

Senior Notes

As of September 30, 2024, we had $8.544 billion aggregate principal amount outstanding in senior unsecured notes, with $894 million principal amount denominated in EUR and $7.650 billion principal amount denominated in USD. The notes bear effective interest rates ranging from 1.22% per year to 5.12% per year, with maturities from October 1, 2025 to December 1, 2050. See Note 13 for additional information.

Contractual Obligations

We expect to contribute a total of $5 million to our U.S. pension plans and a total of $23 million to our non-U.S. pension plans during 2024. During the nine months ended September 30, 2024, $1 million of contributions were made to the qualified U.S. pension plans, $14 million of contributions were made to the non-U.S. pension plans and $3 million of contributions were made with respect to the non-qualified U.S. pension plan. We also expect to contribute $4 million to our postretirement benefits other than pension plans during 2024. During the nine months ended September 30, 2024, $2 million of benefit payments were made to postretirement benefits other than pension plans.

As discussed in Note 17 to the Consolidated Financial Statements, at September 30, 2024, 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.

Critical Accounting Policies and Use of Estimates

There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, except with respect to our goodwill impairment assessment. As discussed in Note 3, the Company performed a quantitative goodwill impairment assessment of the Pharma Solutions disposal group. We estimated the fair value of the Pharma Solutions disposal group, based on the price at which the Company has agreed to sell the disposal group including the fair value of contingent consideration expected to be received in the form of earn outs. The fair value of the earn outs were based on a Monte Carlo simulation. The fair value estimation uses Level 3 unobservable inputs as categorized within the ASC Topic 820 fair value hierarchy. This method considers the terms and conditions of the earn outs as described in the relevant transaction agreements, our best estimates of forecasted EBITDA for the earn out periods as applicable, and assumptions such as risk-adjusted discount rate, EBITDA volatility, counterparty discount rate and risk-free rate. The simulation consists first in risk-adjusting the EBITDA projections using a risk-adjusted discount rate and then simulating a range of EBITDAs over the applicable period using the estimate of EBITDA volatility. The fair value of the earn outs are estimated as the present value of the potential range of payouts averaged across the range of simulated EBITDAs using the counterparty discount rate. A 10% increase or decrease in the fair value of contingent consideration would not have a material impact to the impairment charge.

During the second quarter of 2024, the Company performed quantitative goodwill impairment assessments of its Pharma Solutions reporting unit before and after classification of the disposal group as held for sale. Goodwill allocated to the Pharma Solutions reporting unit was $1.2 billion before classification of the disposal group as held for sale and $74 million after classification of the disposal group as held for sale. Neither test resulted in goodwill impairment. For the pre-classification impairment assessment, we estimated the fair value of the Pharma Solutions reporting unit based upon the fair value of the held for sale disposal group as described above and the estimated fair value of the portion of the Pharma Solutions reporting unit that was not classified as held for sale (“remaining Pharma Solutions reporting unit”). For both the pre- and post-classification impairment assessments, we estimated the fair value of the remaining Pharma Solutions reporting unit based upon the estimated sale proceeds we would expect to receive in a transaction between willing market participants.

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 and (ii) adjusted operating EBITDA and adjusted operating EBITDA margin. 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 operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other (expense) income, net, restructuring and other charges and certain items unrelated to recurring operations such as impairment of goodwill, gains (losses) on business disposals, loss on assets classified as held for sale, acquisition, divestiture and integration related costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.

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.

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 and include statements concerning (i) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; (ii) our ability to execute on our strategic and financial transformation, including the progress and success of our portfolio optimization strategy (including the sale process for our Pharma Solutions disposal group), through non-core business divestitures and acquisitions, and expectations regarding the implementation of our refreshed growth-focused strategy and expectations around our business divestitures; (iii) our ability to continue to generate value for, and return cash to, our shareholders; (iv) expectations of the impact of inflationary pressures and the pricing actions to offset exposure to such impacts; (v) the impact of high input costs, including commodities, raw materials, transportation and energy; (vi) the expected impact of global supply chain challenges; (vii) our ability to enhance our innovation efforts, drive cost efficiencies and execute on specific consumer trends and demands; (viii) the growth potential of the markets in which we operate, including the emerging markets; (ix) expectations regarding sales and profit for the fiscal year 2024, including the impact of foreign exchange, pricing actions, raw materials, energy, and sourcing, logistics and manufacturing costs; (x) the impact of global economic uncertainty and recessionary pressures on demand for consumer products; (xi) the success of our integration efforts, following the N&B Transaction, and ability to deliver on our synergy commitments as well as future opportunities for the combined company; (xii) our strategic investments in capacity and increasing inventory to drive improved profitability; (xiii) our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; (xiv) expected capital expenditures in 2024; and (xv) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings. 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:

• our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to its shareholders;

• our ability to successfully execute the next phase of our strategic transformation;

• our ability to declare and pay dividends which is subject to certain considerations;

• the impact of the outcomes of legal claims, disputes, regulatory investigations and litigation;

• inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy;

• supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage) or climate-change related events (including severe weather events in the U.S. and abroad) that may affect our suppliers or procurement of raw materials;

• our ability to attract and retain key employees, and manage turnover of top executives;

• our ability to successfully market to our expanded and diverse customer base;

• our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs;

• 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 international conflicts (such as the Russia-Ukraine war and the Israel-Hamas war), geopolitical events, trade wars, natural disasters, public health crises (such as the COVID-19 pandemic), terrorist acts, labor strikes, political or economic crises (such as the uncertainty related to U.S. government funding negotiations), accidents and similar events;

• 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;

• 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 (including increased inflation) on demand for consumer products;

• our ability to integrate the N&B Business and realize anticipated synergies, among other benefits;

• 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 increasing customer, consumer, shareholder and regulatory focus on sustainability;

• our ability to successfully manage our working capital and inventory balances;

• any impairment on our tangible or intangible long-lived assets;

• our ability to enter into or close strategic transactions or divestments, or successfully establish and manage acquisitions, collaborations, joint ventures or partnerships;

• changes in market conditions or governmental regulations relating to our pension and postretirement obligations;

• the impact of the phase out of the London Interbank Offered Rate (“LIBOR”) on our variable rate interest expense;

• our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environment impact;

• defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities;

• our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws;

• the impact of our or our counterparties’ failure to comply with the U.S. Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations;

• our ability to protect our intellectual property rights;

• the impact of changes in federal, state, local and international tax legislation or policies and adverse results of tax audits, assessments, or disputes;

• the impact of any tax liability resulting from the N&B Transaction; and

• our ability to comply with data protection laws in the U.S. and abroad.

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 2023 Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and liquidity.

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.