We're gonna get started, so next up, we have International Flavors and Fragrances, and really happy to have the company's CEO, Erik Fyrwald, with us. Erik, it's your first time at the conference, so really glad you're here, so before we get into some of the near-term and kind of more strategic questions, since it's a broader staples audience here and listening who may be less familiar with your background in particular, I thought it'd be great if you could kind of introduce yourself, maybe talk a little bit about what drew you to IFF. Sure. And how your prior experiences, including 25 years at DuPont, or over 25 years, is kind of informing your leadership of what is now the largest specialty ingredients company? Great. Thank you, and great to be here. My background, chemical engineer by training. I worked in the chemical and biological industries for 42 years. Of that, eight years running DuPont Nutrition and Health, so the DuPont Food Ingredients business, and 16 years as a CEO, and 18 years on the board of a company called Eli Lilly, which does a lot of biotech and chemistry for health. A lot of background in the chemistry, biology area, businesses. What drew me to IFF was, I think it's a terrific company with a very important purpose of bringing ingredients to consumer goods companies and working together to create consumer products that bring joy to consumers, bring health, and do it with a big, positive environmental sustainability impact. Great. Let's move on to the maybe some near-term things. Sure. So last month, you'd mentioned that July had been off to a solid start. But that I also loved that you said, "Typically, the way order patterns work, the first month in the quarter is strong, and the subsequent months can get weaker." And the reason I point out that I love that is that I've covered IFF a very long time, and very, you know, very many times we've also heard, "Quarter's starting great," and then things progress. So, clearly, you know the business you are running and, you know, the way things can progress. So I just did wanna, though, check in on anything you might wanna share on August, any notable changes in customer order patterns, as a broad look? I tend to look longer than one month- Sorry ... periods. But I want... You know, we wanna build a company that delivers this quarter and delivers this year, but in a way that builds for 2025, 2026, and beyond. So we're heavily focused on. You know, we've got two quarters in a row now of solid performance, solid growth. So we're working on finishing the third quarter, which has continued to be solid, but then making sure we do that in a way that we deliver the fourth quarter and build for 2025 and beyond. So directionally, things are in the right direction, but we've got a lot more work to do. As you said, that over the years, we have disappointed, and we wanna make sure now that when we give guidance, that it's guidance under any reasonable scenario we're able to achieve. Okay, that's great. In the second quarter, the volume growth of 8%, very strong, in line with the peers on average. But mathematically, a lot of that, I think, is just driven by easy comps, right? There's some realities of the comparisons. So I'd be curious if we could talk a little bit about underlying improvement you're starting to see in the business, you know, areas where you've got green shoots, commercialization, win rates, and so on. Yeah. First of all, part of it is driven by easier comps. Part of it is driven by, I think, some of the supply chains are being... We're went a little bit light and too much reduction and now filling up. But I also think I'm really proud of our IFF team. I mean, we're-- our team is out there working hard with customers, getting back to basics, focus on serving customers well, winning projects with customers, and creating and delivering leading innovation to help customers create great products. And also, at the same time, focusing on healthy productivity, of doing-- cutting costs where it strengthens our ability to serve customers, not cutting things like research and development, but cutting costs that are waste to do that. And so I think that's helping our performance as well as the market. Mm-hmm. Where we're seeing green shoots, I mean, there's a number of areas, exciting areas. I think the whole health area is an exciting area, and we've stumbled a bit, and our health business slowed down, but we're now back to growth in the health business. Another really interesting area I found is I've been in the nutrition business, the food business, for many years. The scent business is new to me, and the importance of scent to any consumer product, whether it's a home and personal care product or a fine fragrance product, how it evokes emotions, positive emotions, is really great, and the importance to product superiority. Also this whole dynamic about scents and how more younger people and... are using scents and how people are using them more often, and I'll give you an example. Charlotte Tilbury, who we work closely with, has come out with a line of fragrances that one promotes joy, one promotes energy, maybe in the morning, joy throughout the day, relaxation for the afternoon, romance for the evening, so different scents, and she's obviously very popular on social media. It's great that she's on social media talking about how she worked with IFF and our AI tool to create these scents that evoke these emotions in our world-class perfumers, and so that, playing into that desire for mental health, mental energy, you know, the benefits of scent in energy is fantastic. Another interesting area is alcohol-free beer and alcohol-free spirits. And to get a rum that tastes like rum but is alcohol-free is a flavors challenge, but it's a really hot area. It's another example. And I would say lastly is the area around health for whether it's GLP-1, people that are using GLP-1s and need protein and need good taste or need their gut health, or people that just want more protein for health. That's another strong positive dynamic. Great. Let me ask one more short-term question. Sure. Sure. I can't promise, but I think it's one more. Just in terms of the guidance, the back half guidance is for volumes up 4% in the third quarter and flat in the fourth quarter, which I believe implies no underlying change in trend on a two-year stack, kind of when you think about that fourth quarter flat. Is there any risk to the fourth quarter volume conversation if consumer demand weakens further? 'Cause like, all week, what we've been hearing so far at the conference is, you know, more pressure on the certainly low-end consumer in the U.S. Doesn't sound like things have worsened much, though, since midsummer. Right. But sort of the malaise continues, with no one really expecting much improvement in the back half. So I don't know how that fits in with your expectations on order patterns and customer inventory levels. Back to building the trust of our investors and our broader shareholders, but also our employees, you know, we're committed to achieving what we say we're gonna achieve. So we said this year we would get in the range of 3%-5% volume growth. First half has been ahead of that. As I said before, the third quarter is off to a good start. We haven't finished it yet. We've got another month. But the trends are headed in the right way, but there is softness in the end markets, and we're just assuming very low end market growth. The fourth quarter will be a stronger comparison year-over-year. The fourth quarter of last year was stronger than the third quarter of last year. So we're just looking at all that, all the uncertainties in the world and saying that, you know, we wanna do what we say we're gonna do, so our guidance reflects that. Okay, perfect. Just moving to some questions by segment. So in functional ingredients, you've made the decision to bring down pricing this year, down high single digits, I think it was, in the second quarter. So I guess, what are the tools you're using or the approach in deciding how you are doing this? You know, kind of in terms of rolling back pricing, that it's the right decision for the long term, that it's not effectively conceding in the name of volume, but how are you walking that line? So in our functional ingredients business, we're putting a lot of emphasis on where do we have healthy business within that unit, and where do we have unhealthy business? And we overpriced back in 2022, and then going into 2023, we lost a significant amount of business. We didn't price well, we weren't intelligent about how we did it, and we paid the price. So now what we're doing, starting last year and into this year, is looking across each product line, each customer, each market, and seeing where we're out of line with the market and where we need to adjust, and where we want business, and coming back to the market. That's what we're doing to get back customers that want to work with IFF, where we're bringing value. They wanna be with us, but we've just overpriced versus the market. So we're surgically doing that. We're not one size fits all, but the benefits of that have been positive. That, plus significant productivity efforts, have that business starting to turn around, and it's headed in the right direction. We've got a lot more work to do, but at least it's off to a good start for the year. We've got a couple of good quarters behind us, and we've got to keep working it and then figure out, you know, long term, what's the strategy that makes sure that that business is fully competitive and doing well? Okay. Are there, areas of the business where you're deciding not to adjust price because also sort of fresh set of eyes on the business, like, maybe this just isn't a contract, a piece of business, an area we want to be in? So is there also effectively like a portfolio pruning that's happening, Yeah. You know? There, there's absolutely a portfolio optimization. There's parts of that business that are very high value, that we're working with customers that want more of our product - Yeah ... and are willing to pay for the value that we're bringing, and therefore, the prices aren't going down at all. And there's other parts of the business which are more commodity, which we've got to respond to the commodity markets. Okay. But being in some of those commodity businesses, does that make sense over the long term? I think for us, what's really important is that we are in businesses where innovation really matters. When you think about our flavors business, our fragrance business, and our health and biosciences businesses, all three of them, innovation is the core determiner of success, and that's exactly fit with the IFF model... and functional ingredients, we've got parts of that business that fit that model, and we've got parts of it that don't. So we've got to figure out how to work through that, and can we get the more commoditized pieces to be more responsive to innovation? And if not, those pieces need to be dealt with. But, you know, we have to be a company that's there because we're bringing great innovation to our customers. Okay. But in the interim, you'd rather bring the business back and then make the decision over time? Absolutely. The entire business is turning around. Yep. Now we're strategically figuring out what does the functional ingredients business need to look like for the long term? Okay. Okay, great. Let's go back to scent, which, you know, you brought up, you brought up. But, your growth in consumer fragrances has been in the double-digit range since the beginning of 2023, accelerated in the first half of this year. While interestingly, fine fragrances has actually decelerated to mid-singles, and those two things are very different than what we see in the end markets, right? In terms of what we see in terms of the broad strokes, like HPC, where the consumer fragrance would be, and then fine fragrance from an end market standpoint has remained very strong, probably more like double digits. So how do you reconcile the disconnect, you know, between your performance and then what we're seeing in the end markets? First of all, let's take the more difficult side, the fine fragrances, which is mid-single digits, which, by the way, mid-single digits isn't so bad, and it- I didn't say it was bad. Very good margins. It was different. But I think the challenge there has been that we had strong double digits a few years before, so the comparisons are very, very more difficult. But I can tell you that Sabrya Meflah and her fine fragrance team are out there working really hard to make sure that we stay single digits and above growth rates going forward. And Ana Mendonça, who's now our president of our scent business, is also out a lot with customers, and our perfumers are working hard. So we've got a great team making sure that we continue to grow nicely and with or ahead of the market in fine fragrances, which has very good market dynamics. In home and personal care, I'm very proud of our team there that have been able to come out with great fragrances that make home and personal care products, whether it's body wash, shampoo, other products, smell great, which makes those products superior and has enabled us to grow market share and grow our business with very attractive margins, but in ways that help our customers grow their market share, which is really what's important. Yeah. Okay. It's been interesting because that's the consumer fragrance business for IFF has been remarkably resilient, above resilient, right, throughout all the tumult of the last several years. Do you think that fine, knowing there have been management changes, right, so it's about the look forward, but if we just take a moment and look back, did fine feel orphaned? You know, did fine feel as the business mix was shifting post acquiring or merging with N&B, that IFF was changing and fine wasn't going to be a focus area, and that created opportunity for competitors? I think there was some concern about that. Yeah. Absolutely, and I would say even across scent division. Okay. So in February, when Ana Mendonça was named president of Scent, and by the way, she's hugely respected across the company and the industry, I think that was a great relief and a great sign that not only is Scent an important business, it's a critically important business to the company. And our shift to end-to-end business model, where instead of corporate functions across each of the functions and the businesses really being commercial units, that each of the businesses now is an end-to-end model with research, operations, commercial, and all of that accountability. That also, I think, has energized not only our Scent business, but all of our other businesses. I think if you go out to IFF people, you'll find that the engagement is high, the energy is high. People love being focused back on basics, serving customers with great innovation. That's motivating to all twenty-two thousand of our people. Yeah. Okay. Was the resilience of consumer fragrances, is the technology platform just that much stronger than it was able to remain as strong as it was, even with these, let's call it, cultural concerns prior to the management change? Yeah, we've got great perfumers. We've got great people that call on our customers that are passionate about it. My appointment was announced January sixth or something. Yep. I was supposed to join the company February sixth. The first thing I did was go to the ACI in Florida, the American Cleaning Institute, where many of our home and personal care customers were there. I got a chance to visit with the Procter & Gambles of the world, the Unilevers, and the Reckitts, many others. It was really great for me to hear from them how important we are to the success of their products. Mm-hmm. Before I even joined the company, so that made me committed to supporting our people to drive this innovation and get that customer focus, and so all we're doing is unleashing our people to do what they know how to do, and IFF has done historically. I mean, IFF, for many, many years, has been the clear leader in flavors and fragrances, and the nutrition and biosciences business of DuPont, formerly partly NNB, was also a leader. We just need to get back to focusing on the basics and reestablishing a leadership position. Okay, great. Let's talk a bit about some of the more sort of strategic changes that have been underway, so we've started to hear you talk a bit more about stepping up reinvestment. Yeah. You know, commercial talent, R&D, innovation. I'd say I'd just love maybe a little bit more specificity or the, for, because I'm just not aware of, on priority areas. You know, I know it's not functional ingredients in terms of where that money is going, per se. But just getting a little bit more granular, you know, what are the biggest kind of gaps in competitiveness today, maybe, and where you're focusing or prioritizing the reinvestment? Great. So what we've been clear on is that we're going to invest aggressively in flavors, scent, and health and biosciences. All three businesses have excellent margins, have great innovation, but we need to make sure that we're investing to strengthen our leadership capabilities. So in health and biosciences, particularly, R&D investment and capital investment to make sure that we've got plenty of capacity as we grow that business. In flavors and fragrances, making sure that we're investing in commercial capability, and we've got plenty of people to serve existing customers and to go after new geographies and end markets. I'm going to China next week. The Chinese economy is challenged, but there's still lots of opportunity in China. And then in the scent business, new molecules, both naturals, biology, biotech molecules, and synthetic chemistry molecules. We need to strengthen our pipeline there, so we're adding research capability there. The good news is that we're leaders in biotech, so with our biotech and chemistry people, R&D people coming together in scent, we should have a really strong future in biotech molecules for the scent industry. Okay. Awesome. And then in terms of the reinvestment, how much would you say about the turnaround plan, as it stands today, is about money being spent that has a longer-term payback, sort of, in that, that pipeline, for example, versus a change in approach and the, like, the operating model changes you described, where it's just that leveraging the resources and the IP that the company already has? So what we've done is we're developing strategies and five-year plans for each of the business units. We didn't really have clear strategies or five-year plans, and so if things got tough, you would just cut across the board equally, regardless of the business and situation. With these five-year plans, we're figuring out where to invest, where the highest priority areas are to invest, and where we need to meet customer needs and to be competitive. So I think that's really important because from that strategy, the five-year plan guides where we put the additional resources. At the same time, we're focused on healthy productivity so that we can invest even more than our growth rate into innovation and into capital investments to make sure we've got plenty of product, most reliable, highest quality, sustainable production facilities. So all that's coming together now as we develop our new strategies and our five-year plans and make them happen. And even this year, we're not waiting for next year. Even this year, because we've got some market tailwinds, because our team is performing very well in this market, we've got some headroom to invest in growth. So we're not waiting till next year in a new budget. We're spending ahead of plan this year in R&D and in commercial resources to strengthen the three high-growth businesses. That's the benefit of that is coming in 2025, 2026, and 2027, but the other benefit right now is our people are seeing that instead of cutting, we're investing, and that brings energy to our people to wake up every day and feel better about what they're doing, and from that, you just get benefits. Yeah. You get better customer service. You get better engagement in projects. You get... everything goes better when people are excited, passionate, and unleashed to do what they know they need to do. When do you think the last time is that employees had that feeling? The feeling that that there is investment being made in this business. How long has it been? I don't I mean- ... I wasn't here, so I can't really say, but I think there's been a lot of frustration since the Frutarom deal- Mm-hmm. and the complexities that that brought, and then the DuPont Nutrition & Biosciences deal and the added complexities that brought, and that the effort was around, okay, how do we get synergies from this? So there were a lot of consultants, advisors, corporate staffs being built to drive the synergies, rather than saying, "Okay, we've got these businesses. Now, businesses, what are your strategies? Go out and win and work together, help each other, collaborate, and not be so complicated with all these corporate structures and corporate complexity and all these advisors." There were people who were telling me that they were spending 30% of their time talking to consultants, and then the consultants were coming back with recommendations that they didn't agree with. Mm-hmm. So getting back to basics, we're about serving customers, bringing great innovation to those customers, operational excellence, plants that run well, healthy productivity, and people. Each business has its strategy, and then we collaborate across businesses. It's simple, it's straightforward, and then all brought together by our purpose of we bring ingredients to consumer goods companies to help them make superior products that bring consumers joy and health, and make the planet more sustainable. Mm-hmm. That simplicity, that clarity unleashes our people. By the way, our executive team has really come together well. Having an executive team that works well together, that runs the different businesses and functions, but do it together to make sure that IFF is doing the right thing for IFF, is really important part of this. Okay. You talk about timeline of reinvestment. We talk about a bit on payback starts to come in 2025 and 2026. As you think about multiyear margin trajectory, or let's talk about structural profitability potential of the business, there have been lots of targets set out there since, well, all the mergers, let's put it that way, somewhere between 23% and 26% in terms of EBITDA margins. What do you think is the structural profitability of this company longer- without even putting a time on it, just- I think the way to look at it, the way we're looking at it is, we're improving, and the whole idea is let's continuously improve. Let's keep getting better. I like to benchmark the different businesses with leading competitors. So in our health and biosciences business, what we're doing, not just me, but the company and the health and biosciences business, is saying: Okay, how's Novonesis doing? Mm-hmm. Both in growth rates and in margins. And we've got some gaps, and we're understanding where those are, and we're working to have that motivate us to better serve customers and bring better innovation. On the flavors and scent side, Givaudan has better margins than we do, and they've historically grown faster than we have through all this, not in the scent business, but certainly in the flavors and combined, and at higher margins. Why is that? And let's use that to motivate us about how we can grow faster, but also narrow the gap in margins by bringing great innovation and great customer service and great products. Okay. When you're talking about motivating people, I'm curious about compensation changes that have been made or will be made. I don't know if you've given... You know, what you're ready to share in terms of, you know, you've had the operating model changes. I don't believe there's been any kind of formal restructuring or announced cost savings that's attached with that ongoing end-to-end, but I'd like to know if there's something coming on that front, and then compensation changes. You know, what kind of metrics should the business units be measured by, going forward? So let me start with the restructuring question. Yeah. I don't see us doing any corporate restructuring. I just, I've seen many announced, and I think it would create even more confusion and internal focus versus focusing on customers. So every business unit, go out and focus on customers, and every corporate function, focus on serving the businesses to serve customers and check our impact and our cost effectiveness versus competition. Mm-hmm. So that we're competitive cost-wise, but let's win with customers, and then every business unit has a productivity leader. Every corporate function has a productivity leader. Make sure that we're cost competitive, so go and do it in your unit and figure out how to grow into it or whatever you need to do, but no corporate restructuring, because I don't think they work well. I think they're distracting, and kind of along the lines of some of our synergy targets in the past of a corporate effort versus, you know, you go out and do it in your unit. Okay. Compensation? So on compensation, I think it's really important to compensate for growth, so for revenue growth, but it has to be attractive revenue growth. You know, as you mentioned before, we have some more commoditized businesses. If they're not returning good returns, we don't want to incentivize growth in those areas. So we're trying to figure out how do we incentivize just the attractive growth areas? How do we incentivize healthy productivity? And how do we incentivize, or how do we first measure and then incentivize innovation pipelines? I mentioned before, I'm on the board of a pharmaceutical company, and that company started incentivizing the pipeline development. Mm-hmm. And everybody in the company could see that, and everybody in the company became more interested in making sure that they supported the pipeline development. So we're thinking about how do we make sure that we can measure the progress that we're making with our innovation pipeline and somehow reward that. Okay, great. I wanted to switch gears for a moment and ask a broader industry question around scale and consolidation. Knowing you were not at IFF when, you know, kind of went through the, you know, Frutarom, even the small deals before that and, and of course, N&B. But we've also seen competitors make pretty similar moves, right? There's just been an enormous amount of consolidation in the industry in the last, you know, two, three years. So what's your take on the importance of scale in this industry, scale versus specialization as sort of two ends of the, of the spectrum? I think scale with specialization is what matters, and I think that, so one of the things I feel great about being at IFF is, really great, is that the flavors, the scent, and the health and biosciences business, and the ingredients business need to be the best at what they do. But there's also synergies between them, and all my experience is, if a business is really good at what they do and really focused and really expert, then synergies by collaborating inside and outside are a lot easier. When the business isn't performing as it should, synergies, if you're forcing them corporately, actually become a negative because they distract you from what you need to do to be good. But once you're good, if you're really good at flavors and health and biosciences, you have a health and biosciences business, you can open doors at customers from health and biosciences for flavors or vice versa. You can have combined projects if there's something that needs both. I mean, there's huge benefits of being in these really good businesses and multiple businesses if you're able to keep the businesses really good. So I feel great about having these four businesses as we get really good at them. And the secret is, you gotta make sure that each one is good as the best competitor, and that the synergies are created to make them stronger, not because of some corporate edict or some corporate complexity, bureaucracy issue. And that's what we're trying to do. Okay. We hear a lot from people, like, you know, investor-wise, this is a super attractive industry. Would you say it's more complex than people think? I'm not saying it's unattractive, but is it, you know, maybe more complex than people appreciate? Yeah, but I think we made it more complex than it needs to be. I think by all these acquisitions and not cleaning it up and not being clear about accountability, for example, there was a lot of confusion about, you know, who makes decisions, and so decisions were very slow, and sometimes they never even got made. I mean, my first day, we cut the dividend in half, for a couple reasons. One, we were borrowing money to pay a dividend, and we were not investing in things that we needed to invest in that were huge, great return investments. But I also wanted to just signal to everybody, 'cause I kept hearing it, we can make decisions, and then got the executive team together and said: Okay, what other decisions do we need to make? And if you remember, back in December of 2022, there was an organization change announced that we never did. So when I get there in 2024, people were asking me: What about this organization change that was announced in 2022? Well, the executive team got together and said, "Okay, let's be very clear about the organization." So we waited a month so that it didn't look like it was knee-jerk, but we announced here, here's how we're gonna operate as a company, and here's the clarity around accountability, decision-making, et cetera. So it takes a little bit of time to get that machinery going, but I think we're headed in the right direction. I would encourage you or anybody else, if you're interested, talk to IFF people, talk to anybody, talk to people in our plants, talk to salespeople, talk to research people, talk to our perfumers, talk to our flavorists. How do they feel about IFF today, and are we getting back to the basics, and are we getting back to the great history of where IFF was a strong leader and very reliable performer? Yeah. Okay, wonderful. Last question. Hopefully, you join us again next year, that this has been- Sure. An okay interaction for you. Yeah. And you come back. But what does success look like for you? We're sitting here a year from now, what are kind of the one or two things that, you know, you're worried could derail you? What are you excited about, hopefully, a year from now, being able to point to as successes? We've continued to improve, and we're on a continuous improvement track, where we're winning more with customers, we're strengthening our innovation pipeline further, our productivity is stronger, our people are excited, and we've figured out our strategy on how we're going to what we're gonna do long term with our functional ingredients business, how to do that right. Okay, great. We will wrap there. Please join me in thanking Erik and IFF for being at the conference this year. Thank you.