SXT 10-K & 10-Q changes, risk factors and insider trading

We develop, manufacture, and sell flavors, flavor enhancers, ingredients, extracts, and bionutrients; essential oils; naturalagricultural ingredients, including dehydrated vegetables and other food ingredients; natural and synthetic food and beverage colors; personal care colors and ingredients; pharmaceutical and nutraceutical excipients and ingredients; and technical colors, specialty colors, and specialty dyes and pigments. We sell these products to customers in industries and markets that are highly competitive. We face intense competition from multiple competitors in each of our business lines. These competitors range from large multinational companies with broad and sophisticated product portfolios and outstanding technological capabilities to smaller more specialized regional companies that focus on a single product line or offering. Our success against these competitors depends upon our ability to continually develop and manufacture safe, high quality, innovative, and legally compliant products across each of our product lines in varying batch sizes, at varying frequencies, and at acceptable prices. We also must provide outstanding product development support, on time delivery, regulatory assistance, and after-sale product support to all of our customers, wherever they are located. If we are unable to do these tasks, or if competitors do any of these tasks better than we do, we may lose part or all of our business with some customers. We do lose business to competitors from time to time. Competition can reduce both our sales and the prices at which we are able to sell our products,products or cause us to incur additional costs to remain competitive, which can negatively affect our results. As we continue to develop new technologies and products to meet customer demands, we may encounter, and have encountered, that our competitors have patented or applied to patent relevant subject matter in our industry. These patents may negatively impact the selection of products that we can offer to our customers or otherwise increase potential risk of an infringement lawsuit if we offer a similar product. Any limitations on our ability to offer a full range of products may increase the likelihood that our customers would purchase from our competitors and adversely affect our results.profitability.

We compete around the world in various geographic regions and product markets. Global economic and political conditions affect our businesses and the businesses of our customers and suppliers. Economic downturns, downturns, changes in interest rates, lower consumer confidence, decreasing employment levels, price instability, inflation, slowing economic growth, and social and political instability in the industries and/or markets where we compete could negatively negatively affect our financial performance in future periods and adversely impact our ability to grow or sustain our business. For example, current macroeconomic and political instability caused by risinghigh interest rates, global supply chain disruptions, disruptions, inflation, ongoing conflicts between Russia and Ukraine as well as in the Middle East, and geopolitical tensions, and the strengthening of the U.S. dollar,tensions have adversely impacted, and could continue to adversely impact, our results of operations. SuppliersSome of our suppliers are located in areas facing significant conflict. For example, suppliers located in Ukraine are our main source of sunflower oil, which is primarily used in our savory and beverage businesses. In addition, we source certain of our crops in Turkey, which could be adversely impacted by the continuing impacts and uncertainties from the continued fighting in Syria and potential political tensions between Turkey and the United States. We have encountered difficulties, and may continue to encounter difficulties, in finding favorable pricing and reliable alternative sources or substitutes for certain of the raw materials we need (including sunflower oil) for certain products. If these difficulties persist, accelerate, or expand, our operations could be adversely affected. In addition, the rapid changes in and unpredictability of certain U.S. policies has caused continuing volatility in global economic and political conditions. It iscontinues alsoto possiblebe increasingly difficult to strategically plan internationally given such volatility. As an international company with long-term sales and supply contracts globally, we may be adversely impacted by any decision of the administration that we were unable to anticipate, or mitigate the continuingresults impactsof, and uncertaintiessuch from the Syrian civil warimpact could adverselyhave impactan adverse effect on our supplyfinancial ofperformance cropsand fromfuture Turkey.growth.

We develop, manufacture, and distribute our products around the world. Generally, our labs and plants are dedicated to particular product lines. For example, many (but by no means all) of our food colors products are developed and manufactured in our St. Louis facility. While we have redundant capabilities across labs and plants for many product lines, in some cases, we only manufacture particular products at one facility. To establish a new manufacturing capability at a plant could require substantial time, money, and numerous governmental and customer approvals. Additionally, because of the complexity and highly specialized nature of many of the products we produce, and the highly customized equipment used to produce such products, it would require a tremendous amount of technical, engineering, and management time and effort to establish the new capability. Manufacturing involves inherent risks such as significant equipment malfunctions, industrial accidents, environmental events, labor disputes, labor shortages, product quality control issues, safety issues, licensing, and regulatory compliance requirements, as well as natural disasters, conflicts, terrorist acts, civil unrest, ERP software issues, cyber-attacks, and other events that we cannot control. For example, our NaturalAgricultural Ingredients business incurred additional costs as a result of equipment inefficiencies in 2024,recent whichyears; while we anticipatehave attempted to be resolved in 2025; however, ifremediate these inefficiencies are not remediated properly,inefficiencies, we may continue to incur additional costs in our business.business if such inefficiencies continue. If one of our research and development or manufacturing facilities is disrupted or impaired, we could cause a supply disruption to our customers, which could cause short and long-term damage to our customer relationships and a reduction in our revenue and an increase in our costs. Such disruption would have an adverse effect on our financial performance and future growth.

The Company has manufacturing facilities located around the world. The Company sells to customers located both inside and outside the countries in which products are manufactured. The Company also depends upon suppliers both inside and outside the countries in which products are manufactured. Tariffs and other trade barriers imposed by the U.S. or other countries have affected and could continue to adversely affect our manufacturing costs, our ability to source and import raw materials, our ability to export our products to other markets, and our ability to compete successfully against other companies that are not impacted by tariffs to the same extent as the Company. Additionally, the uncertainties created by tariffs and other trade barriers have also affected and could continue to affect our customers’ demand for our products because, for example, the customers decide to delay product launches or destock inventory due to these uncertainties. It is difficult to predict the effects of current or future tariffs and other trade barriers and disputes, and the Company’s efforts to reduce the effects of tariffs through pricing and other measures may not be effective. ForWe have generally taken pricing actions example,in response to the tariffs imposed by the Trump administrationadministration. hasThe expressedlegality anof intentsuch tariffs is currently in question and if it is ultimately determined that the tariffs need to usebe tariffs,refunded, orour thecustomers threatmay request some form of tariffs,compensation tofor the furthertariff nationalcosts policythat goals.were passed onto them. The magnitude and timing of repayment of any such amounts could adversely affect our results. Tariffs and turmoil in international trade agreements could reduce demand for products and services, increase costs, reduce profitability, or adversely impact our supply chains, which may adversely impact our business. In some cases, our products, such as U.S. grown garlic and onion, benefit from tariffs levied against foreign products. If these beneficial tariffs were reduced or eliminated, it could adversely affect these businesses; on the other hand, if these tariffs were increased, these businesses might benefit, but our broader business and financial condition could still be adversely impacted by increases in tariffs and restrictions on trade. Conversely, other companies may allege, and in some cases have alleged, dumping by third parties of certain raw materials that we purchase, such as the recent antidumping and countervailing duty case filed involving paprika oleoresin imports from India. Any duties imposed may ultimately lead to higher prices and potential supply issues, which could negatively impact our results.

Although we do not generally make or sell proprietary consumer products, many of our products are sold to companies that develop and market consumer products, either directly or through other commercial and retail outlets. Sales of flavors, colors, personal care ingredients, pharmaceutical and nutraceutical excipients and ingredients, and many of our other products depend in part upon our customers’ ability to create and sell products to consumers in highly competitive markets, all of which are beyond our control. Our sales could also be affected by changing regulations or technologies (including, for example, off-label prescription drug use for weight loss that could change consumer consumption patterns and regulatory restrictions or bans on synthetic food colors) that could impact consumer demand for products that contain our products. Therefore, we depend upon our customers’ ability to create markets for the consumer products that incorporate the products that we manufacture. In addition, if we cannot adequately anticipate and respond to the needs of our customers as they evolve in response to changing consumer preferences, new technologies (including advancements such as artificial intelligence and machine learning, which may become critical in understanding consumer preferences in the future), and price demands, our results could be adversely affected. Additionally, the market pressures on our customers may adversely affect the willingness of these customers to launch new products, to introduce limited time offerings, and to grow or continue to produce existing product lines. Since the beginning of the COVID-19 pandemic, we have seen a reduction in the size of new product launches and fewer limited time offerings from some of our customers. Even after the pandemic receded, this trend has continued to a degree. Any of these actions by our customers can adversely affect our results. Furthermore, effective in 2027, the Food and Drug Administration banned the use of Red 3 in food and beverages,beverages and(effective Californiain passed2027), aWest banVirginia onbanned the use of specified synthetic food colorants (effective January 1, 2028 but currently subject to a preliminary injunction), and numerous states banned the use of synthetic food colorants in school lunches. NumerousSeveral other states also have various legislative proposals to ban or restrict the use of synthetic colors. In addition, the Trump administration has expressed an interest in re-examining the use of synthetic food colorants. While we have a broad portfolio of natural color and applications capabilities that enable us to offer alternatives and replacements for synthetic colors to customers, it is possible that such laws could reduce our revenue if our customers find alternative suppliers or remove color from their products. In addition, uncertainties caused by enjoining, pausing, or otherwise modifying any such bans, such as the current preliminary injunction of the West products.Virginia ban on specified synthetic food colorants, may change the strategies and outlook of our customers and, therefore, potentially our product mix, which could adversely impact our revenues and profitability. Certain states also have pending legislative action restricting ultra-processed foods, which, depending on how defined, may include some of our products or the products of our customers. The Trump administration also indicated it would explore potential rulemaking associated with the GRAS (Generally Recognized as Safe) program. Restrictions on ultra-processed foods and the GRAS program are likely to limit the products that we or our customers are able to sell and, therefore, may have an adverse effect on our financial condition.

Our success depends in part on our ability to maintain an efficient cost structure. We regularly initiate cost-reduction measures that could impact our manufacturing, sales, operations, and information systems functions. If we do not continue to manage costs and achieve additional efficiencies, or we do not successfully implement related strategies, our competitiveness and our profits could decrease. As discussed above, the price pressures in our markets make such cost reduction efforts particularly important. For example, in 2023, the Company beganhas thesubstantially executioncompleted ofall actions contemplated under a Portfolio Optimization Plan to optimize certain production facilities, centralize and eliminate certain production and selling and administrative positions, and improve efficiencies globally within the Company. These types of activities have required, and may continue to require, the devotion of significant resources and management attention and may pose business risks. In addition, these actions may result in a deterioration of employee relations at the impacted locations inHowever, our business. Our ability to realize long-term anticipated cost savings in connection with the Portfolio Optimization Plan may be affected by a number of factors, including our ability to effectively reduce overhead, rationalize manufacturing capacity,capacity and overhead, as well as our ability to effectively produce products at the consolidated facilities. Furthermore, our cost reduction efforts may not be as effective as we had anticipated, which could have an adverse effect on our financial condition.

We generally rely on third party suppliers for various raw materials that we use to make our products. We use many different chemical products, natural products, and other commodities as raw material ingredients. We also use raw materials whose production is energy intensive and dependent on successful farming techniques and favorable climatic and environmental conditions. As the demand for natural products continues to grow, and our business continues to evolve to meet such demand, the risks associated with agriculture, such as reduced crop yields, reduced crop availability, water shortages, increased water costs, reduced access to water, droughts, and other potentially more severe weather events, are becoming increasingly important. In addition, we obtain some raw materials from a single supplier or a limited number of suppliers. Disruptions or other issues with those suppliers could affect the availability of those materials. Even if there are multiple suppliers of a particular raw material, there are occasionally shortages. Constrictions in supply of raw materials can lead to increased costs. We may not be able to pass these costs to customers for a variety of reasons, including the fact that some of our competitors may not be subject to thesuch increased costs. Additionally, government regulatory action against any of our suppliers or particular raw materials could also cause a supply disruption. We have, in the past, dealt with regulators shutting down and excluding from the market suppliers that provided the Company with raw materials. For example, in the recent past, the Chinese government has shut down a chemical park for pollution mitigation. This adversely impacted the supply of raw materials for the affected products and, therefore, impacted our ability to produce products containing these raw materials. Additionally, in recent years, our yields from harvests for onion werehave been adversely impacted by bothdrought, drought and flooding in 2022-23 and by plant diseases, includingexcessive downyrain, mildewand in certain growing areas, in 2024,flooding, resulting in reduced availability of onion products for our NaturalAgricultural Ingredients business inover recentthe priorlast several years. WeIn increased2025, for example, heavy rains and flooding delayed our ability to harvest certain fields on schedule and did result in a loss of crop in certain planting areas. While we can increase the amount of onion and garlic planted in 2024, butfuture periods, there is no certainty that we will achieve greater yields or, if we do increase our yields, that there will be a market for such products. Any future unavailability or shortage of a raw material, however caused, could negatively affect our operations using that raw material and thus adversely affect our results.

Efficient inventory management is essential to our performance. We must maintain appropriate inventory levels and product mix to meet customer demand, without incurring costs related to storing and holding excess inventory. If our inventory management decisions do not accurately predict demand or otherwise result in excess inventory, as has happened in the past, our financial results may be adversely impacted by markdowns, impairment charges, or other costs related to disposal of excess or obsolete inventory. For example, the shelf-life for natural products is generally shorter than synthetic products, so if the demand for natural products slows, it becomes more likely that any excess inventory could need to be written off or subject to markdowns and would have an adverse impact on our revenue and profitability. Additionally, if we do not maintain enough inventory to satisfy the demand of our customers, we may lose business to our competitors, which could adversely affect our results. Conversely, at the end of 2022 and continuing through 2023, our financial performance in 2023 was adversely impacted by customer destocking that resulted from our customers holding large quantities of inventory during the COVID-19 pandemic and then returning to normalized levels. Any future inability to manage our inventory, however caused, could negatively affect our operations and thus adversely affect our results.

We use various energy sources in our production and distribution processes. Commodity and energy prices are subject to significant volatility caused by market fluctuations, supply and demand, currency fluctuation, production and transportation disruption, disruptive world events (such as the Russia-Ukraine and Middle Eastern conflicts discussed above and related disruptions in the Red Sea and Arabian Sea discussed above), and changes in governmental regulations, particularly related to carbon reduction. Commodity, transportation, and energy price increases will raise both our raw material costs and operating costs. Additionally, as many areas move away from using carbon-based sources of energy, we would initially anticipate increases in the cost of energy generated from renewable energy sources as well as potential reliability and continuity issues related to electrical power generation, distribution, and supply. While the long-term environmental impact of these moves is favorable, the shorter and medium-term impact in increased energy prices could adversely affect our profitability.

As mentioned above, our customers are under intense pressure in their markets from competitors and their end customers and as a result of changing consumer preferences. Historically, these combined pressures have resulted in some of the Company’s customers entering bankruptcy or receivership. There is risk that other customers of the Company could enter bankruptcy or receivership in the near-term as several smaller customers did in 2024.recent years. Once in bankruptcy or receivership, these customers are restricted from paying certain outstanding invoices to the Company until later in the bankruptcy process and even when able to pay, may not be able to pay the full amounts owed. Additionally, certain payments made to us prior to a customer declaring for bankruptcy may be, and have been, subject to clawback during the bankruptcy or receivership process. Financially distressed customers may change or reduce ordering patterns, reduce willingness to accept price increases, discontinue or reduce existing product offerings, and introduce fewer new products. Those developments could adversely affect our results.

We report the results of our foreign operations in the applicable local currency and then translate those results into U.S. dollars at applicable exchange rates. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. The applicable exchange rates between and among foreign currencies and the U.S. dollar have fluctuated and will continue to do so in the future. These fluctuations have impacted our results of operations in recent periods as discussed below in more detail under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Such currency exchange rate volatility may also adversely impact our financial condition or liquidity. While we may use forward exchange contracts and foreign currency denominated debt to manage our exposure to foreign exchange risk, such risk management strategies do not insulate us completely from those exposures and may not be effective, and our results of operations could be adversely affected. Exchange rates can be volatile and a substantial weakening of foreign currencies against the U.S. dollar could reduce our profit margin in certain of our businesses outside of the U.S. and adversely impact the comparability of results from period to period. The continued strength of the U.S. dollar could continue to adversely impact our revenue and profit in non-U.S. jurisdictions.

In addition, changes in policies by the United States or foreign governments could negatively affect our operating results due to changes in duties, tariffs, trade regulations,regulations and sanctions, employment regulations, taxes, or limitations on currency or fund transfers. For example, changes in the trade relationship between the U.S. and China has affected, including the UFLPA sanctions (which prohibits importation of products from the Xinjiang region), and may continue affectto adversely impact, the availability and cost of our raw materials and products originating in China, the demand for, as well as the supply of, our products manufactured in China or containing raw materials from China, and the demand from Chinese customers for our products.

Stakeholder and regulatory focus on ESG matters requiresrequire us to continuously monitor various developing standards and reporting requirements and make continuous progress in our efforts to reduce our, as well as our suppliers’, energy consumption, greenhouse gas emissions, water usage, and waste generation. Implementing such monitoring, reporting, and improved sustainability could be costly. Even where we make progress, our ESG practices still may not meet the standards of all of our stakeholders. For example, many of our large, global customers arehave committingcommitted to long-term targets to reduce greenhouse gas emissions within their supply chains. If we are unable to achieve these reductions, or make similar commitments, our customers may seek out alternative suppliers who are better able to support such reductions. Certain of our customers have also indicated that they will require that their suppliers meet a certain score or grade on one or more sustainability platforms. If we are unable to meet such criteria, we may be unable to win new business or lose existing business with those customers. We are also experiencing certain of our customers requesting that we undertake specific sustainability initiatives, some of which may impose significant costs on the Company. If we fail to undertake such initiatives, we may lose business with those customers or, if we do undertake such initiatives and are unable to pass on the additional costs, our profitability could be adversely impacted. In addition, some of our customers and other stakeholders are requiring us to provide information on our plans relating to certain ESG matters, such as greenhouse gas emissions (including product carbon scoresfootprints for particular products we supply), and we expect this trend to continue as more regulations are being adopted.. If we are unable to respond, or we are perceived to be responding inadequately, to the expectations of our stakeholders, our business and reputation could be harmed, our profit and revenue could decline, and it could have a negative impact on the trading price of our common stock.

In addition, the increased focus on ESG matters may result, and has already resulted, in regulations, laws, and demands, such as enhanced sustainability reporting regimes, which could cause us, and has already caused us, to incur additional costs or to make changes to our operations to comply with any such regulations, laws, or demands. Wewe are also likely to incur additional third-party service provider costs, including sustainability platform fees, audit costs, and other service fees from sustainability professionals in order to remain compliant with newly enacted regulations, laws, and demands, including international laws such as the European Union Corporate Sustainability Reporting Directive and Californiastate SBlaws 253 and SB 261,such as amendedthe byCalifornia SBclimate 219.laws. If we are unable to pass on these costs, our profit could decline. Further, our customers and the markets we serve may impose standards, regulations, market-based policies, or preferences that we may not be able to timely meet due to the required level of capital investment or technological advancement, which in the case of the availability of sustainable energy to support our operations is generally outside our control. If we fail to keep up with changing regulations and preferences, or if we fail to innovate or operate in ways that maximize sustainability, our customers may choose more sustainable suppliers. Failing to quickly and cost-efficiently adapt to stakeholder ESG expectations and standards could adversely affect our business and financial condition. Additionally, consumers who buy food and personal care products from our customers may be unwilling to pay the higher prices that could result from the increased costs of products as a result of the increased costs engendered by these sustainability efforts, which could adversely affect our business and financial condition.

World events can adversely affect national, international, and local economies. Economies can also be affected by conflicts, natural disasters, changes in climate, severe weather (including droughts and flooding), epidemics, pandemics, or other catastrophic events. Such events and conditions, as well as uncertainty in or impairment of financial markets, have adversely affected and could continue to affect our revenues and profitability, particularly if they occur in locations in which we or our customers have significant operations. Our natural colors, flavors, extracts, and essential oils businesses are dependent on favorable climatic conditions and the non-occurrence of natural disasters. Adverse weather events could impact our or our growers’ ability to plant, grow, and harvest crops, and such events could also increase the presence of disease and pests on such crops, which may negatively affect our ability to supply certain products. For example, our NaturalAgricultural Ingredients business has significant operations in California, which has been recently dealing with droughtflooding conditions, flooding,and plant diseases, and water supplydisease issues, which such issues had negatively impacted certain of our yields from onion harvests in prior yearsyears, as discussed above. In the event that there is an insufficient supply of water for our operations or the operations of the growers that we contract with, our NaturalAgricultural Ingredients business may be materially materially impacted and could have an adverse effect on our results in future periods. While we make efforts to diversify where we grow products, these efforts may be insufficient to mitigate all adverse effects. In addition, while we have manufacturing manufacturing facilities throughout the world, certain of our facilities are the sole manufacturer of a specific product, and a disruption in manufacturing could lead to increased costs of relocating or replacing the production of a product, or reformulating a product, which could have an adverse effect on our results.

Our facilities and products are subject to many laws and regulations relating to the environment, health, safety, and the content, processing, packaging, storage, distribution, quality, and safety of food, drugs, personal care, other consumer products, and industrial colors. These laws and regulations are administered in the United States by the Department of Agriculture, the Food and Drug Administration, the Environmental Protection Agency, the Department of Labor, and other federal and state governmental agencies. In addition, individual states may also enact regulations prohibiting or limiting the manufacturing and/or sale of goods containing certain of our products (such as the FDA ban on Red 33, andvarious thestates’ California School Food Safety Act’s prohibitionprohibitions on the use of synthetic food colors in school luncheslunches, afterand DecemberWest 31,Virginia’s 2027preliminarily enjoined ban on specified synthetic food colors), which could cause a decrease in our sales of such products and negatively impact our results of operations. We, our suppliers, and our customers are subject to similar governmental regulation and oversight abroad. Compliance with these laws and regulations can be complex and costly and affect our, our suppliers’, and our customers’ operations. Also, if we, our suppliers, or our customers fail to comply with applicable laws and regulations, we could be subject to administrative penalties and injunctive relief, civil and criminal remedies, fines, recalls of products, and private civil lawsuits. Regulatory action against a supplier or customer can create risk for us and negatively affect our operations. As discussed above, actions by regulatory agencies against us and our suppliers can also adversely impact the availability of raw materials. Whenever raw materials become more costly or unavailable due to legal, regulatory, or other governmental actions, our profitability could be adversely impacted.

We are subject to taxes in the U.S. and numerous foreign jurisdictions. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates; changes in the valuation of deferred tax assets and liabilities; changes in liabilities for uncertain tax positions; the costs of repatriations; or changes in tax laws or their interpretation. Any of these changes could negatively impact our results. In addition, thecertain Organisationcountries forhave Economiclevied Co-operationexcise taxes in connection with products that include our ingredients, which may lower consumer demand and Developmentultimately publisheddecrease aour statement updatingsales and finalizing the key components of a two-pillar plan on global tax reform that has now been agreed upon by the majority of OECD members. Pillar Two imposes a global minimum corporate tax rate of 15%. A number of countries enacted legislation to implement the core elements of Pillar Two in fiscal year 2024. Other countries, including the United States and China, have not yet adopted the framework. When and how this framework is adopted or enacted by the various countries in which we do business that have not yet adopted the framework could increase tax complexity and uncertainty and may adversely affect our results of operations. We are continuing to evaluate the impact on future periods of Pillar Two, including legislative updates and adoption by additional countries, which could result in an increase in our effective tax rate.profitability.

We have transfer pricing policies that are a significant component of the management and compliance of our operations across international boundaries and overall financial results. Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, challenge transfer pricing policies aggressively where there is potential non-compliance,non-compliance and impose significant interest charges and penalties where non-compliance is determined. However, governmental authorities could challenge these policies more aggressively in the future and, if challenged, we may not prevail. We could suffer significant costs related to one or more challenges to our transfer pricing policies.

Additionally, many of our key personnel must have access to the Company’s trade secrets to effectively perform their job responsibilities. Although we seek to impose confidentiality, non-solicitation, loyalty, and non-competition obligations on many employees through agreements and our Code of Conduct, these efforts may not be successful. Furthermore, litigation to enforce departing employees’ legal obligations may not be, and has not always been, successful as the legal systems in many jurisdictions disfavor or prohibit restrictions on an employee’s right to change jobs as well as on preemptive measures to prevent the disclosure of a company’s trade secrets and intellectual property before it occurs. It may become more difficult to obtain and enforce non-competition agreements in the future, as there are various federal and state efforts ongoing in the U.S. that would prohibit or limit them. As a result, there is a possibility that certain competitors could attempt to exploit the Company’s trade secrets and confidential information to the Company’s competitive detriment, which could adversely impact our profitability. Additionally, proving the theft of trade secrets in the food ingredient industry is exceedingly difficult.

In addition, strategic transactions may present operational, financial, and managerial challenges, including diversion of management attention from existing businesses, difficulty with integrating or separating personnel and financial and other systems, increased expenses and raw material costs, assumption of unknown liabilities and indemnities that may not be discovered before an acquisition or fully reflected in the price we pay, and potential disputes with the buyers or sellers. If we are unable to consummate such transactions,transactions or successfully integrate and grow acquisitions and achieve contemplated revenue synergies and cost savings, our financial results could be adversely affected. For example, we acquired an extraction company named Mazza in 2018. Because Mazza’s extraction process proved to not be economically viable, we elected to close the former Mazza plant in 2024 as part of our Portfolio Optimization Plan, while retaining retaining the intellectual property for future use in the event it does become economically viable. Divestitures have inherent risks, including potential post-closing liabilities and claims for indemnification, that may impact our ability to fully realize the anticipated benefits of a given divestiture. If any additional post-closing risks materialize, the benefits of such divestitures may not be fully realized, if at all, and our business, financial condition, and results of operations could be negatively impacted.

Our success depends in part on our ability to maintain current information technology platforms, including some managed by third-party providers, for our businesses to operate effectively, reliably, and securely. We routinely review and upgrade our information technology and cybersecurity systems in order to better manage, report, and protect the information related to our formulas, research and development, manufacturing processes, trade secrets, sales, products, customers, personnel, and other operations. If we do not continue to maintain our information technology and cybersecurity platforms and successfully implement upgrades to systems to protect our vital information as well as our facilities and IT systems, our competitiveness and profits could decrease. In addition, as artificial intelligence capabilities and other new and evolving technologies improve and gain widespread use, the cybersecurity threats we face and incidents we experience from time to time may become even more challenging to prevent, detect, and mitigate to the extent they increasingly use artificial intelligence or other new and evolving technologies. These attacks could be designed to directly attack information systems with increased speed and/or efficiency or create more effective phishing techniques. It is also possible for a threat to be introduced as a result of our customers and third-party providers using the output of an artificial intelligence tool or other new and evolving technologies that includesunwittingly incorporate a threat, such as introducing malicious code by incorporating artificial intelligence-generated source code.

In addition, the Company is subject to a variety of laws and regulations in the United States and other jurisdictions regarding privacy, cybersecurity, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. Compliance with and interpretation of various data privacy and cybersecurity regulations continue to evolveevolve, and any violation could subject the Company to legal claims, regulatory penalties, and damage to its reputation. Our failure to comply with these evolving regulations, whether as a result of a cyber-attack or otherwise, could expose us to fines, sanctions, penalties, and other costs that could harm our reputation and adversely impact our financial results.

Sensient Technologies Corporation (the Company or Sensient) is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. The Company uses advanced technologies at facilities around around the world to develop specialty food and beverage systems; personal care, essential oils, pharmaceutical, and nutraceutical systems; specialty colors; and other specialty and fine chemicals. The Company’s three reportable segments are the Flavors & Extracts Group and the Color Group, which are both managed on a product line basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s corporate expenses, share-based compensation,compensation (except for share-based compensation expense associated with stock grants to certain business unit leaders), restructuring and other charges, including the Portfolio Optimization Plan costs, and other costs are included in the “Corporate & Other” category.

Interest expense was $29.6 million in 2025 and $28.8 million in 2024 and $25.2 million in 2023.2024. The increase in expense was primarily due to an increase in the average interestoutstanding rate.debt balance.

The effective income tax rate was 24.3% in 2025 and 23.4% in 2024 and 28.1% in 2023.2024. The effective tax rates in both 20242025 and 20232024 were impacted by the release of valuation allowances related to net operating losses,losses (NOLs), changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, the mix of foreign earnings, and the limited tax deductibility of costs related to the Portfolio Optimization Plan. The effective tax rate in 20232025 was furtheralso impacted by the releasechange of a valuation allowance related toin the foreignGerman tax credit carryover.rate. See Note 11, Income Taxes, in the Notes to Consolidated Financial Statements included in this report for additional information.

The Company’s Felinfach site willwas continueshut todown operatein untilMay 2025, and all production activities have successfullybeen transferred to other locations,locations. The Company began marketing the Felinfach site for sale in June 2025. As a result, the Company met all of the assets held for sale criteria for the Felinfach land and thenbuilding willassets bein closed.June 2025, which have been recorded as the only balance in Fixed assets held for sale on the Company’s Consolidated Balance Sheets. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.

The Company determines its operating segments based on information utilized by its chief operating decision maker to allocate resources and assess performance. Segment performance is evaluated on operating income income before any applicable share-based compensation,compensation acquisition,(except for share-based compensation expense associated with stock grants to certain business unit leaders), restructuring and other costs, including the Portfolio Optimization Plan costs, and other costs (which are reported in Corporate & Other), interest expense, and income taxes.

Flavors & Extracts segment revenue was $786.9 million in 2025 and $793.7 million in 20242024, anda $741.1 million in 2023, an increasedecrease of approximately 7%.1%. The higherlower segment revenue was a result of lower revenue in Agricultural Ingredients, partially offset by higher revenue in Natural Ingredients and Flavors, Extracts & Flavor Ingredients. The lower revenue in Agricultural Ingredients was due to lower volumes, partially offset by higher selling prices. The higher revenue in Flavors, Extracts & Flavor Ingredients was primarily due to higher volumesselling prices and selling prices.volumes. Foreign exchange rates had an immaterial impact on segment revenue.

Flavors & Extracts segment operating income was $100.7 million in 2025 and $97.1 million in 2024 and $87.8 million in 2023,2024, an increase of approximately 11%.4%. Foreign exchange rates had an immaterial impact on segment operating income. The higher segment operating income was a result of higher operating income in Flavors, Extracts & Flavor Ingredients, partially offset by lower operating income in NaturalAgricultural Ingredients. The higher operating income in Flavors, Extracts & & Flavor Ingredients was primarily due to lower raw material costs, higher selling prices, higher volumes, and a favorable product mix. The lower operating income in Natural Ingredients was primarily due to higher selling prices and volumes, partially offset by higher manufacturing and other costs. The lower operating income in Agricultural Ingredients was due to higher raw material costs, lower volumes, a one-time charge stemming from the impact of atmospheric river events late in the year that disrupted the harvest and production, and higher manufacturing and other costs, partially offset by higher volumes and selling prices. Segment operating income as a percent of revenue was 12.2%12.8% and 11.8%12.2% for 20242025 and 2023,2024, respectively.

Segment revenue for the Color segment revenue was $700.6 million in 2025 and $647.9 million in 2024 and $608.0 million in 2023,2024, an increase of approximately 7%.8%. The higher segment revenue was a result of higher revenue in Food & Pharmaceutical Colors and Personal CareCare. The higher revenue in Food & Pharmaceutical Colors was primarily due to higher volumes and selling prices,prices. The higher revenue in Personal Care was primarily due to higher selling prices and the acquisition of Biolie SAS, partially offset by lower volumes. Segment revenue was further increased by the unfavorablefavorable impact of foreign exchange rates, which decreasedincreased segment revenue by approximately 1%.

SegmentColor segment operating income forwas the$141.3 Colormillion segmentin was2025 and $119.5 million in 2024 and $105.4 million in 2023,2024, an increase of approximately 13%.18%. The higher segment operating income was a result of higher operating income in Personal Care and Food & Pharmaceutical Colors.Colors, Thepartially higheroffset by lower operating income in Personal Care was primarily due to higher volumes and selling prices and a favorable product mix.Care. The higher operating income in Food & Pharmaceutical Colors was primarily due to higher volumes and selling prices and volumes, a favorable product mix, and the favorable impact of foreign exchange rates, which increased segment operating income by approximately 1%, partially offset by higher raw material and manufacturing and other costs. TheseThe increaseslower wereoperating income in Personal Care was primarily due to higher raw material and manufacturing and other costs, partially offset by thehigher unfavorableselling impact of foreign exchange rates, which decreased segment operating income by approximately 1%.prices. Segment operating income as a percent of revenue was 18.4%20.2% and 17.3%18.4% for 20242025 and 2023,2024, respectively.

Segment revenue for the Asia Pacific segment revenue was $168.2 million and $162.5 million and $146.1 million for 20242025 and 2023,2024, respectively, an increase of approximately 11%.4%. Segment revenue was higher than the prior year primarily due to higher volumesselling prices and selling prices, partially offset by the unfavorablefavorable impact of foreign exchange rates, which decreasedincreased segment revenue by approximately 2%.1%, partially offset by lower volumes largely driven by tariff-related impacts.

Segment operating income for the Asia Pacific segment operating income was $36.6 million in 2025 and $34.5 million in 2024 and $30.8 million in 2023,2024, an increase of approximately 12%.6%. The increase in segment operating income was a result of higher volumes and selling prices, a favorable product mix, and the favorable impact of foreign exchange rates, which increased segment operating income by approximately 3%, partially offset by higher raw material and manufacturing and other costs and the unfavorable impact of foreign exchange rates, which decreased segment operating income by approximately 2%.costs. Segment operating income as a percent of revenue was 21.8% in 2025 and 21.2% in 2024 and 21.1% in 2023.2024.

The Corporate & Other operating loss was $71.5 million in 2025 and $59.5 million in 2024 and $68.9 million in 2023.2024. The lowerhigher operating loss was primarily a result of lowerhigher Portfolio Optimization Plan costs,costs partially offset byand higher performance-based performance-based compensation costs in 2024.2025. See the Portfolio Optimization Plan section above for further information.

The Company’s financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of December 31, 2024.2025. The Company expects its cash flow flow from operations and its existing debt capacity can be used to meet anticipated future cash requirements for operations, capital expenditures, and dividend payments, as well as potential acquisitions and stock repurchases. However, the Company anticipates to increase its existing debt capacity over the coming years to further support the increased cash requirements for operations and capital expenditures associated with the natural colors conversion activity. The Company’s Company’s contractual obligations consist primarily of operational commitments, which we expect to continue to be able to satisfy through cash generated from operations, and debt. The Company has various series of notes outstanding that mature from 2025 2026 through 2029, with approximately $56$35 million coming due in 2025.2026. The Company believes that it has the ability to refinance or repay all of its obligations through a combination of cash flow from operations, issuance of additional notes, and substantial borrowing capacity of approximately $257$261 million under the Company’s revolving credit facility, which matures in 2026.2030.

Net cash provided by operating activities was $157.2$127.8 million and $169.7$157.2 million in 20242025 and 2023,2024, respectively. Operating cash flow provided the primary source of funds for operating needs, capital expenditures, and shareholder dividends. The decrease in net cash provided by operating activities in 20242025 was primarily due to aan decreaseincrease in the cash providedused by accountsinventory receivable,and partiallyan offset by a decreaseincrease in cash used for performance-based compensation payments (which are determined based on prior year performance) made during 20242025 compared to 2023.2024, partially offset by an increase in cash provided by accounts receivable.

Net cash used in investing activities was $59.2$92.7 million and $87.6$59.2 million in 20242025 and 2023,2024, respectively. Capital expenditures were $89.4 million in 2025 and $59.2 million in 20242024. andIn $87.92025, million in 2023. Thethe Company paid $1.7$4.9 million in 2023 related to a purchase price holdback associated withfor the acquisition of EndemixBiolie Doğal Maddeler A.Ş. and Teknoloji Yatırımları ve Danışmanlık Sanayi ve Ticaret A.Ş.SAS.

Net cash used in financing activities was $81.5$35.0 million and $82.0$81.5 million in 20242025 and 2023,2024, respectively. The Company had a net increase in debt of $38.9 million and a net decrease in debt of $7.8 million in 2025 and $3.52024, millionrespectively. The cash proceeds from the increase in 2024net anddebt 2023,in respectively.2025 were primarily used to support capital expenditure investments related to natural color conversion efforts during the year. For the purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. The Company has paid uninterrupted quarterly cash dividends since commencing public trading of its stock in 1962. Dividends paid per share were $1.64 in 20242025 and 2023.2024. Total dividends paid were $69.4$69.6 million and $69.2$69.4 million in 20242025 and 2023,2024, respectively.

The Company reviews the carrying value of goodwill annually utilizing several valuation methodologies, including a discounted cash flow model. The Company completed its annual goodwill impairment test under Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, in the third quarter of 2024.2025. In conducting its annual test for impairment, the Company performed a qualitativequantitative assessment of itsthe previously calculated fair values for each of its reporting units.units and compared each of these values to the net book value of each reporting unit. Fair value is estimated using both a discounted cash flow analysis and an analysis of comparable company market values. If the fair value of a reporting unit exceeds its net book value, no impairment exists. The Company’s three reporting units each had goodwill recorded and were tested for impairment. All three reporting units had fair values that were above their respective net book values by at least 75%. Changes in estimates of future cash flows caused by items such as unforeseen events or changes in market conditions could negatively affect the reporting units’ fair value and result in an impairment charge.

The Company’s inventories contain a variety of inventory types with varying characteristics that would impact potential inventory obsolescence. The Company estimates any required write-downs for inventory obsolescence by examining inventories on a quarterly basis to determine if there are any damaged items or slow-moving products in which the carrying values could exceed net realizable value. Inventory write-downs are recorded as the difference between the cost of inventory and its estimated market value. The Company recorded non-cash charges of $0.7$4.3 million and $3.1$0.7 million in 20242025 and 2023,2024, respectively, in Cost of Products Sold related to the Portfolio Optimization Plan. The non-cash charges in 2025 reduced the carrying value of certain inventories, as they were determined to be excess, and the non-cash charges in 2024 were primarily related to trial production runs that did not meet quality specifications and thus were disposed of, and the non-cash charges in 2023 reduced the carrying value of certain inventories, as they were determined to be excess.disposed. While significant judgment is involved in determining the net realizable value of certain inventories with shorter expirations, the Company believes that inventory is appropriately stated at the lower of cost or net realizable value.

This report contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results. Forward-looking statements include statements in the future tense, statements referring to any period after MarchJune 31,30, 2026, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or conditions. The The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other other factors that could cause actual events to differ materially from those expressed in the forward-looking statements. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results. These factors and assumptions include, among others, the Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and the conflicts between Russia and Ukraine and in the Middle East; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; the availability and cost of labor, logistics, and transportation; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences, changing technologies, and changing regulations; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and Portfolio Optimization Plan; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; the Company’s ability to enhance its innovation efforts and drive cost efficiencies; currency exchange rate fluctuations; and the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Except to the extent required by applicable law, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

Revenue was $435.8$462.1 million and $392.3$414.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Revenue was $897.9 million and $806.6 million for the six months ended June 30, 2026 and 2025, respectively. The increase in revenue for the three and six months ended June 30, 2026 was primarily due to higher volumes,volumes and selling prices and the favorable impact of foreign exchange rates that increased revenue by approximately 4%,2% and favorable3%, pricing.respectively.

The Company’s gross margin was 35.0%37.4% and 33.6%34.5% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The Company’s gross margin was 36.2% and 34.0% for the six months ended June 30, 2026 and 2025, respectively. For the three and six months ended MarchJune 31,30, 2025, Portfolio Optimization Plan costs totaling $1.8 million and $3.6 million, respectively, decreased gross margin by 40 and 50 basis points.points, respectively. See Portfolio Optimization Plan below for further information. For the three and six months ended June 30, 2026, the Company received $4.8 million of tariff refunds that improved gross margin by 100 and 50 basis points, respectively. The Company’s gross marginmargins wasfor the three and six months ended June 30, 2026 were further impacted by the favorablehigher pricingvolumes and higherselling volumes,prices, partially offset by higher raw material costs.

Selling and administrative expense as a percent of revenue was 19.7%20.8% and 19.9%20.6% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. For the three months ended March 31, 2026, sellingSelling and administrative expenses were decreased by $0.4 million, or approximately 10 basis pointsexpense as a percent of revenue,revenue fromwas 20.3% for both the gainsix onmonths theended saleJune 30, of the Felinfach land2026 and building assets.2025. For the three and six months ended MarchJune 31,30, 2025, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.1$1.6 and $2.6 million, respectively, which increased selling and administrative expenses as a percent of revenue by approximately 2040 basis points.points for each period. See Portfolio Optimization Plan below for further information. After the effects of the Portfolio Optimization Costs in 2025, the increase in selling and administrative expense as a percent of revenue for the three and six months ended June 30, 2026 was primarily due to higher performance-based executive compensation costs incurred in 2026.

Operating income was $66.7$76.7 million and $53.5$57.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Operating margins were 15.3%16.6% and 13.6%13.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Operating income was $143.4 million and $111.2 million for the six months ended June 30, 2026 and 2025, respectively. Operating margins were 16.0% and 13.8% for the six months ended June 30, 2026 and 2025, respectively. The tariff refunds increased operating margins by approximately 100 and 50 basis points for the three and six months ended June 30, 2026, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 80 basis points for both the three and six months ended MarchJune 31, 30, 2025. The increase inCompany’s operating marginmargins wasfor primarilythe due to favorable pricingthree and six months ended June 30, 2026 were further impacted by the higher volumes,volumes and selling prices, partially offset by higher raw material costs and higher performance-based executive compensation costs incurred in 2026.

Interest expense was $7.9$8.2 million and $7.3$7.4 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $16.1 million and $14.7 million for the six months ended June 30, 2026 and 2025, respectively. The increase in expense for both the three and six months ended June 30, 2026 was primarily due to an increase in the average outstanding debt balance.

The effective income tax rates for the three months ended MarchJune 31,30, 2026 and 2025 were 24.9%25.1% and 25.4%,25.3%, respectively. For the six months ended June 30, 2026 and 2025, the effective income tax rates were 25.0% and 25.3%, respectively. The effective tax rates for the three and six months ended MarchJune 31,30, 2026 and 2025 were both impacted by the mix of foreign earnings and changes in estimates associated with the finalization of prior year foreign tax items and the mix of foreign earnings.items.

The Company’s Felinfach site was shut down in May 2025, and all production activities have been transferred to other locations. The Company began marketing the Felinfach site for sale in June 2025.2025, Asat awhich result, the Company met all ofpoint the assets held for sale criteria forwas met. These are the Felinfach land and buildingsole assets in June 2025, which have been recorded as the only balance in Fixed assets held for sale on the Company’s Consolidated Balance Sheet at December 31, 2025. The Company sold the land and building assets in February 2026 for approximately $2.0 million, resulting in a $0.4 million gain recognized in Selling and Administrative Expenses on the Company’s Consolidated Statements of Earnings.Earnings during the three months ended March 31, 2026. The Company has completed all actions contemplated under the Portfolio Optimization Plan.

For the three and six months ended MarchJune 31,30, 2025, the Company incurred costs of $2.9$3.3 million and $6.2 million, respectively, related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for dual plant operating costs, professional services, non-cash inventory charges, professional services,decommissioning costs, and employee separation costs. The Company did not incur any costs related to the Portfolio Optimization Plan for the three or six months ended MarchJune 31,30, 2026.

The following table summarizes the percentage change for the results of the three and six months ended MarchJune 31,30, 2026, compared to the results for the three and six months ended MarchJune 31,30, 2025, in the respective financial measures.

Flavors & Extracts segment revenue was $201.8$213.2 million and $193.7$203.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of approximately 4%.5%. The increase was primarily a result of higher revenue in Agricultural Ingredients and Flavors, Extracts & Flavor Ingredients. The higher revenue in Agricultural Ingredients was due to higher volumes and selling prices. The higher revenue in Flavors, Extracts & Flavor Ingredients was primarily due to higher selling prices and the favorable impact of foreign exchange rates that increased segment revenue by approximately 3%, favorable pricing, and higher volumes.1%.

AsiaFlavors Pacific& Extracts segment revenue was $45.3$415.0 million and $41.9$396.9 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of approximately 8%.5%. The increase was a result of higher revenue in Flavors, Extracts & Flavor Ingredients and Agricultural Ingredients. The higher revenue in Flavors, Extracts & Flavor Ingredients was primarily due to higher selling prices and volumes and the favorable impact of foreign exchange rates that increased segment revenue by approximately 3%.2%. The higher revenue in Agricultural Ingredients was due to higher volumes and selling prices.

AsiaFlavors Pacific& Extracts segment operating income was $11.2$30.4 million and $9.4$28.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of approximately 18%.7%. The increasehigher segment operating income was primarily a result of higher operating income in Agricultural Ingredients, primarily due to higher selling prices and the favorable impactproduct ofmix, foreignpartially exchange rates, which increased segment operating incomeoffset by approximatelyhigher 4%.raw material costs. Segment operating income as a percent of revenue was 24.7%14.3% in the current quarter compared andto 22.5%14.0% in the prior year’s comparable quarter. Foreign exchange rates increased segment operating income by approximately 1% for the three months ended June 30, 2026.

The Corporate & Other operating expense was $13.3$19.2 million and $15.8$18.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The lowerhigher operating expense was primarily due to higher performance-based executive compensation costs incurred in 2026, partially offset by Portfolio Optimization Plan costs totaling $2.9 $3.3 million in the three months ended MarchJune 31,30, 2025. See the Portfolio Optimization Plan section above for further information.

The Company’s financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of MarchJune 31,30, 2026. The Company expects to increase its existing indebtedness in the short-term to further support the increased cash requirements for operations and capital expenditures associated with the natural colors conversion activity. In the long-term, the Company anticipates that its cash flow from operations and debt capacity can be used to meet anticipated future cash requirements for operations, capital expenditures, and dividend payments, as well as potential acquisitions and stock repurchases. The Company’s contractual contractual obligations consist primarily of operational commitments, which we expect to continue to be able to satisfy through cash generated from operations, and debt. The Company has various series of notes outstanding that mature from 2026 through 2030. The Company believes that it has the ability to refinance or repay these obligations through a combination of cash flow from operations, issuance of additional notes, and sufficient borrowing capacity under the Company’s revolving credit facility, which matures in 2030.

As a result of our ability to manage the impact of inflation through pricing and other actions, the impact of inflation was not material to the Company’s financial position and its results of operations for the three months ended MarchJune 31,30, 2026. 2026. The Company has experienced increased costs for certain inputs, such as raw materials, energy, shipping and logistics, packaging, and labor-related costs. We continue to expect to manage these impacts in the near term, but persistent, accelerated, or expanded inflationary conditions, including any heightened inflationary pressures resulting from the conflict between the United States and Iran,Iran and its aftermath, could exacerbate these challenges and impact our profitability.

The UnitedCompany Statescontinues implementedto significantmonitor developments with respect to tariffs onand importsother trade policy matters closely, including impacts from athe wide range of countries in 2025. On February 20, 2026, theU.S. Supreme Court ofdecision that struck down tariffs imposed under the UnitedInternational StatesEmergency ruledEconomic Powers Act (“IEEPA”) and other litigation, as well as the implementation of additional tariffs. As of June 30, 2026, we have received approximately $5 million of IEEPA tariff refunds, which included applicable interest. We do not anticipate receiving any further tariff refunds in the future. The tariffs imposed by the United States in reliance on the International Emergency Economic Powers Act during 2025 were unconstitutional. On the same day, the Trump administration temporarily imposed 10% tariffs on imports from all countries for 150 days. On February 21, 2026, the Trump administration announced the tariff rate will be increased to 15%. These actions,States, and retaliatory tariffs imposed by other countries on United States exports, have led to significant volatility and uncertainty in global markets. TheAs a result of these ongoing tariff-related actions, the Company anticipates incurring incremental tariff costs on certain raw materials to produce our products and certain finished goods shipped to customers. However, the Company expects to manage the impact of the increased tariff costs through pricing actions. To the extent the Company is unable to offset the increased tariff costs, or the tariffs negatively impact demand, or other trade barriers are implemented, the Company’s revenue and profitability would be adversely impacted. If additional tariffs are adopted, the Company would incur additional tariff costs that could be material.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes a broad range of tax reform provisions, such as the extension of certain expiring provisions, modifications to the international tax framework, and the continuation of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions implemented through 2027. These provisions did not have a material impact on our effective tax rate for the three or six months ended MarchJune 31,30, 2026. We will continue to assess the OBBBA tax provisions and their impacts on our consolidated financial statements.

Net cash usedprovided inby operating activities was $13.6$34.8 million and $9.0$39.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease in net cash usedprovided inby operating activities was primarily due to an increase in cash used by inventory during 2026 compared to 2025 and a decrease in cash provided by accounts receivable.receivable, partially offset by an increase in cash provided by accounts payable and other accrued expenses.

Net cash used in investing activities was $26.9$65.8 million and $21.3$41.5 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Capital expenditures were $28.7$67.5 million and $16.9$38.0 million during the threesix months ended MarchJune 31, 30, 2026 and 2025, respectively. TheIn 2026, the Company received $2.0 million for the sale of the Felinfach land and building assetsassets. duringIn 2025, the three months ended March 31, 2026. The Company paid $4.3$4.9 million for the acquisition of Biolie SAS during the three months ended March 31, 2025.SAS.

Net cash provided by financing activities was $42.4$23.5 million and $36.0$26.0 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Net debt increased by $63.3$62.8 million and $55.7$63.3 million for the threesix months ended MarchJune 31,30, 2026 and 2025, 2025,respectively. respectively.The cash proceeds from the increase in net debt in the current period were primarily used to support natural color conversion capital expenditure investments during the six months ended June 30, 2026. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $17.4$34.9 million and $34.7 million were paid during both the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Total dividends of $0.82 per share were paid for both the six months ended June 30, 2026 and 2025. Dividends paid per share were $0.41 for both the three months ended March 31, 2026 and 2025.

There have been no material changes in the Company’s critical accounting policies during the quarter ended MarchJune 31,30, 2026. For additional information about the Company’s critical accounting policies, refer to “Critical Accounting Policies” under under Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.