At this time, I would like to welcome everyone to the International Flavors & Fragrances Second Quarter 2015 Earnings Conference Call. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. Participants will be announced by their name and company. In order to give all participants an opportunity to ask their questions, we request a limit of one question per person. I would now like to introduce Michael DeVeau, Vice President, Global Corporation Communication and Investor Relations. You may begin. Michael DeVeau - VP, Global Corporate Communications & Investor Relations: Thank you and good morning, good afternoon, and good evening everyone. Welcome to IFF's second quarter 2015 conference call. Yesterday, we distributed a press release announcing our financial results. A copy of the release can be found on our IR website at www.iff.com. This call is being recorded live and will be available for replay on our website. Please take a moment to review our forward-looking statements. During the call, we will be making forward-looking statements about the company's performance, particularly with regard to our outlook for the third quarter and full-year 2015. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause actual results to differ materially from forward-looking statements, please refer to our cautionary statement and risk factors contained in our 10-K filed on March 2, 2015 and our press release that we filed yesterday, all of which are available on our website. Today's presentation will include non-GAAP financial measures, which exclude those items that affect comparability. A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in our press release. With me on the call today is our Chairman and CEO, Andreas…

And your first question comes from Mark Astrachan with Stifel. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Yeah. Thanks. Good morning, everybody. I wanted to ask about North America. So, growth slowed in Flavors, excluding acquisitions, also has remained remaining weak in Fragrances. I know you talked about expecting an improvement in Flavors. So maybe talk a bit about company category dynamics, drivers, expectations over the balance of the year, including that improvement. And did that improvement include the benefit from the acquisition in terms of having a full three months' worth of benefit? Andreas Fibig - Chairman & Chief Executive Officer: Mark, thank you for the question. I give it to Matthias.

Good morning, Mark. This is Matthias speaking. Excluding the transaction, the core business was soft, as we previously communicated at Investor Day, principally due to underlying trends with select customers. I also would like to mention here that we have comparables not only relative to last year in Q2, but also in Q1 this year. We were posting a 10% growth in Q1 this year. When it comes to the overall performance by category, we mainly faced some challenges in the category of Savory and we are well confident that in Q3 we are getting back to growth and we will be posting low single-digit growth, and I would be also very confident for the entire balance of the year that we are going to be positive for the year. And this is organically, this is all excluding Ottens. So what we shared with you was like-for-like excluding the acquisition of Ottens. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Great. And then on the Fragrances side, maybe talk a bit about that too, please. Andreas Fibig - Chairman & Chief Executive Officer: Sure. Nicolas?

Yes. Good morning, Mark. It's Nicolas here. So first of all, I will divide the dynamic between the two segments. North America, for Consumer Fragrances, we had a very, very strong growth last year of 8.2% for the full year. So we knew we had gained market share. Here, we expect to be still positive for this year. And so we will be growing above market. So I think that we have gained market share. Here, we see that we came also after a very, very strong growth of 15% last year in Q2, so we know that the market is not growing at that speed. So it was really difficult comp for Q2. In Fine Fragrances, we are facing with some of the launch that took place last year that were not as successful as expected. So we had a very, very strong pipeline last year and we didn't have the same reorder leading to these wins from last year. So it's putting pressure on our top line. But obviously, as you know, most of the activity and market share growth in North America is taking place with European brands. And as you can see, we've been able to capture a significant part of the new launches, and we know that all our European-based customers are manufacturing in Europe for the world including North America. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Great. And just following up on that, Nicolas, so the Ingredients piece, weak now for a couple of quarters, you talked about a specific customer. So is it fair to assume that that business doesn't improve until you start cycling the loss of whatever that piece of business is of that customer?

Yes. That is correct. We don't expect growth for the remainder of the year, and so we will be still challenged. I think what was important in what Alison shared with you is that if you exclude that customer, we will be up mid single-digits. So that's very, very good. And also regarding the strategic linkage between Ingredients and Fragrance Compounds, overall volume in our plants of ingredient is up double-digits. So you can see that there is a significant benefit of having the vertical integration, and I think that what is really important is that the continued performance and success that we're having in Consumer Fragrances is largely supported by our Ingredients. So the focus of our Ingredients business is really to support our continued growth in Compounds. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Okay, great. And just switching gears, global expenses has been extremely volatile in the last few quarters. How much of the decline year-to-date has been due to incentive comp? How should we think about that in the back half of the year? And then is it fair to assume that assuming the top line trends get back into sort of the midrange of the 4% to 6% organic next year that that resets and potentially is a higher number on a go-forward basis sort of more in line with what we've seen in recent years? Alison A. Cornell - Chief Financial Officer & Executive Vice President: I'm sorry, could you repeat the question? Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Yeah. I'm asking about global expenses. So they have been down a lot year-to-date in terms of that line item. So I'm trying to figure out how much of that has to do with incentive compensation. And then trying to think about how much this year is an exception relative to what should be more of a normalized run rate for that segment going forward? Richard O’Leary - Interim Chief Financial Officer, International Flavors & Fragrances, Inc.: Hey, Mark. It's Rich. Two things, I think. The two biggest – two big drivers that are in that corporate category. One is the AIP and the incentive comp piece. The second is the cash flow hedging. And so I think there's a couple of things you got to think about. I think the AIP differential, I think the second quarter, that'll continue through the third and fourth quarter relative year-over-year performance. The cash flow hedging impact, as we've talked about, is back-ended, so that'll grow in the second half of the year relative to where it was in the first half of the year. So I think when you look at 2015 as a whole, it is below – I'll call it below normal, given the incentive comp trends trending below expectations and cash flow hedging being positive compared to prior years where it was negative. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Got it. Great. Thanks, Rich.

Your next question comes from Lauren Lieberman with Barclays.

Thanks. Good morning. I was hoping you... Andreas Fibig - Chairman & Chief Executive Officer: Good morning.

Good morning. I was hoping you could bridge the gap for us between reported sales being down 1% and EBIT being up 4%. I'm guessing obviously incentive comp is a piece of it, but even still the implication is some pretty big acceleration on profits and productivity. So if you can give us a little information on that it would be great. Alison A. Cornell - Chief Financial Officer & Executive Vice President: So, Lauren, it's a combination of incentive comp, as you mentioned. Our raw materials are down. Our productivity savings are up. So those are the main drivers.

I mean, is there anything specific, though, because honestly I would have thought that with the Vision 2020 being laid out that the bias is to invest sooner rather than later. And so the implication for currency-neutral EBIT growth is the high-end of your long-term range. So, I guess, wondering if there's any sort of holding back on some of those investment plans, given how rough currency is. Also, maybe the magnitude of how much the compensation is really driving that swing in expenses? And then also I would have thought there would have been greater expenses given the plant issues, the emissions thing you're putting in, in China, that that would have been incremental expense. Alison A. Cornell - Chief Financial Officer & Executive Vice President: So let me chunk it up a bit. So our forecast for China – full year forecast plus our second quarter includes everything we know about it at this point in time. So we're closely monitoring what's going on in China. We have plans in place too for the odor abatement as quickly as possible, but everything we know at this point is included in our forecast. The other items impacting the difference is also hedging, which I neglected to mention, so I want to include that in terms of the things that are positively impacting bottom line performance. But then also I want to address in terms of our investment. I mean, we're fully committed and fully moving forward on Vision 2020 investment, and so there's no holding back associated with that. I think it's really just the combination of multiple factors that are helping the bottom line appear much greater. But nevertheless, I think each item has a support in and of itself. I think it's really just in combination you get the outcome.

Okay. And then I know it is very early, but knowing what you know today about how your hedges work, if currency stayed at today's levels, do you have a sense for what the drag from currency would be next year? Because I know the hedging kind of gives you a lagged effect. Alison A. Cornell - Chief Financial Officer & Executive Vice President: So I would say 3% to 4% headwind.

On EBIT next year? Alison A. Cornell - Chief Financial Officer & Executive Vice President: 2016, yes.

Yes. Okay. Great. At today's spot. Thank you so much.

Your next question comes from Jeff Zekauskas with JPMorgan.

Good morning. I was wondering whether I could touch one more time on the issues in North American Flavors. And that is if you strip out the acquisition benefit, the North American Flavors business was down, put us back maybe 4%. And I know you grew very strongly in the first quarter. But even if you averaged it out, it means that maybe you grew 3% on a local currency basis excluding acquisitions and last year you were down 4%. And your comparisons in the fourth quarter are becoming difficult again because there was volume growth of 7%. And obviously, there are some implications to the – to EBIT level as well because your sales – your overall flavor sales this quarter dropped $3 million, but your EBIT was down 7%. And so, I was wondering whether you can sort of like – shed some thought on that as like what the issues are in the North American Flavors business and why you're confident that – outside of cost control, things should be better in the back half of the year. Secondly, I was wondering like how much of your share repurchase program you made complete in 2015 and in 2016.

Okay. This is Matthias speaking. Let me answer the first question. H1, year-to-date, our number for North America will be up. They are growing at low-single digits. We had challenges in the second quarter, indeed and particularly as outlined before in the category of Savory. We also recognized that the larger accounts, the very large international accounts where we have a very high index in North America they are not growing as fast as the smaller, more agile companies which are probably more the mid-tier manufacturers in the food and beverage industry. It's exactly the reason that part of the strategic rationale why IFF has a very strong interest and we feel very pleased and privileged to have Ottens being part of our portfolio. It will give us a vehicle where we can differentiate ourselves, where we can keep the agility, the speed, the responsiveness and the ownership for those accounts to make tailored solutions which have a faster growth rate in North America. So overall, I feel confident that we will be posting full-year growth, excluding Ottens like-for-like sales. And I believe together with Ottens, we will further accelerate in the quarters to come. Andreas Fibig - Chairman & Chief Executive Officer: Okay. Share repurchase? Alison A. Cornell - Chief Financial Officer & Executive Vice President: Okay. Sure. In terms of share repurchase, for the remainder of 2015, we would expect to spend about $40 million to $50 million and then $100 million each year thereafter.

Thanks very much.

Your next question comes from Faiza Alwy with Deutsche Bank.

Yes. Hi. Good morning. So I wanted to talk about Latin America. I know you mentioned that this was the seventh quarter of double-digit growth in Flavors, in particular. And I know you talked about the delivery systems. So I was wondering if you could expand on that a little bit. I know the categories you mentioned were Beverages in particular, but it would be helpful to learn more about who these customers are. Are you gaining share or is market growth just as strong, just anything else that you can add to that? Andreas Fibig - Chairman & Chief Executive Officer: Well, thank you for the question. I firmly believe we are gaining share in Latin America. It's not a coincidence that we are posting the seventh consecutive double-digit growth. We are really travelling well. Our approach of pipeline is very strong. And when I was referring to our unique delivery system technology, I'm referring here to a product which increases authenticity, naturalness of the taste and it's mainly used, not only, but mainly used in beverages. In addition, we have a lot of great inroads we made in other categories such as Savory, thanks again to our technologies in Savory Modulation. And frankly, I feel very good about our performance even going forward and it makes us feel good that we are investing in Vision 2020 in exactly those areas which are truly differentiating ourselves in competition.

Okay. And other customers – is it a mix of multi-national and local customers or is there more contribution from one of those? Andreas Fibig - Chairman & Chief Executive Officer: We have very strong growth across the account base irrespective whether these are the strategic accounts or the larger accounts or even smaller accounts which are more local in Latin America.

Okay. And then, Alison, just a clarification from you and also the local currency operating profit growth you said was going to be 9% including acquisitions. And then, I think you said it was 8% excluding acquisitions, is that right? Alison A. Cornell - Chief Financial Officer & Executive Vice President: For the outlook or – I mean, for the...

Yeah. For the year – for 2015. Alison A. Cornell - Chief Financial Officer & Executive Vice President: So currency neutral is 9% growth and adjusted operating profit... Michael DeVeau - VP, Global Corporate Communications & Investor Relations: Ex the acquisition... Alison A. Cornell - Chief Financial Officer & Executive Vice President: Yeah. Ex the acquisition is 8%.

Okay. Great. I just wanted to clarify that. Thank you.

Your next question comes from John Roberts with UBS.

Good morning. Andreas Fibig - Chairman & Chief Executive Officer: Good morning, John.

Are cosmetic actives sold in a briefing process? And for cosmetic active that's fragrance as well or a cosmetic product that is actives and is fragrance, would a customer brief the actives and fragrances together as a package? Andreas Fibig - Chairman & Chief Executive Officer: Okay. John, I'll give it to Nicolas. Nicolas?

Yes. Good morning, John. You have a briefing process, but the active ingredient is very much innovation-led. So, you really create the opportunity through a consumer insight and really a development of very specific solution leading to the trend in the market. So, you create the growth opportunity instead of really waiting for a brief. So, it's slightly different than ours. And if you look at the dynamic, because the customer base is very, very similar, we believe that through encapsulation technologies, through our consumer insight, we will be able to actually increase the market access of the Lucas Meyer portfolio and provide additional solution for the future.

So, just as a follow-up, if you brought a new active for cosmetic product to a customer, will they still brief the Fragrance part of it?

It can be. Usually, it's in separate activities. But today, the fact that we can provide a joint solution might create some new opportunities.

Okay. And if you could just remind me, the year-over-year increase in the performance comp in Flavors that was primarily because of the year-ago being below plan? It was not really related to a change in the accrual rate for the current year? Alison A. Cornell - Chief Financial Officer & Executive Vice President: Yes, that's correct.

Correct. Thank you.

Your next question comes from Heidi Vesterinen with Exane.

Wondered if you could update us on the cross listing, please. What was the rationale, and are you taking any actions to improve liquidity there? Thank you. Michael DeVeau - VP, Global Corporate Communications & Investor Relations: Hi, Heidi. It's Mike. Yes, we absolutely are. As we discussed, we begin trading on, I think early June with our cross-listing in Euronext. I think now we're in the process of working with several banks in Europe based in Paris to see if we can improve our liquidity. We would expect through the balance of this summer to probably have some news in September, probably middle to end of September.

Thank you.

Your next question comes from Mike Sison, KeyBanc.

Hey, good morning. Nice quarter, guys. I wanted to just to ask about in Flavors, currency neutral, operating income growth was up 1% despite currency-neutral sales up 7%, so can you talk about some of the headwinds that sort of took away from the operating leverage? Clearly, you tend to have better operating leverage, so I think you flushed out some, but I don't know if you could share any specifics. Alison A. Cornell - Chief Financial Officer & Executive Vice President: This is Alison. So there was an impact – I'd say the biggest impact in terms of offsetting that profitability going to the bottom line was increased incentive compensation. Beyond that, we had the intangible impacts of $1.2 million, was also mentioned. And that was somewhat offset by productivity and cost control initiatives, but that was the biggest – those were the two biggest impacts. And then we also mentioned China, which is also included as a negative impact from the bottom line.

Right. And would you think that the currency-neutral growth would be better in the second half for Flavors? Andreas Fibig - Chairman & Chief Executive Officer: Well, Mike, we expect to have continued additional cost in China also in Q3 and for H2 in general, i.e., it is all factored into our forecast though. They will not be higher than what we had for the quarter in Q2. In terms of productivity, it is very high on our agenda. It obviously stands or falls a lot on how much we can possibly further accelerate our top line. While we are still early in the quarter, I feel good that we will deliver a solid top-line growth that can offset some of the pressures Alison has alluded to before. Alison A. Cornell - Chief Financial Officer & Executive Vice President: Mike, just another comment. So for the second half of the year too, AIP will continue to be a headwind from a profit perspective.

Okay. Got it. And then, just a quick one on encapsulation. That business sounds like it's really gaining some momentum here. Where do you think you're at in terms of penetration in sort of these other markets like toiletries and personal wash? And is that an area that's going to continue to grow double digits for the next, whatever, quarters or several years? Andreas Fibig - Chairman & Chief Executive Officer: Nicolas?

Yes. Good morning, Mike. As you know, encapsulation has been really one of the key drivers of the continued growth and success in Consumer Fragrances. So I will say the majority of the revenues from encapsulation at this stage are really in Fabric Care. But it's really one of the key pillars of the driver and a driver of our Vision 2020. That's where we are really investing significantly right now in resources and in capacity, and with the goal, obviously, to enlarge the offering to other category. So we have early success in other categories, we're pleased. That's why it's growing fast be it on a small base. So, for the foreseeable future, really the growth will be coming from Fabric augmented progressively with the other categories.

Okay. Thank you. Andreas Fibig - Chairman & Chief Executive Officer: Thank you.

You have a follow-up question from Mark Astrachan with Stifel. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Yeah. Thanks for the follow-up. Two questions. One, Alison, if you could give us an update on interest expense over the balance of the year, inclusive of the two acquisitions. And then just broadly, wondering if you could comment on category growth dynamics. Overall, you plus your competitors seem to have slowed a little bit second quarter relative to 1Q and relative to growth in 2014. So, I guess, just curious what you're seeing from a customer standpoint just sort of broadly, and then an expectation on a go-forward basis relative to where you were maybe a quarter or so ago? I know you have slightly revised the sales guidance towards the low end. So obviously, within that, what you're sort of seeing today relative to what you were seeing maybe three or six months ago and how you sort of think about that normalizing over time? Andreas Fibig - Chairman & Chief Executive Officer: So, Mark, on a total company question for your part two, on guidance? Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Yeah. Andreas Fibig - Chairman & Chief Executive Officer: Okay. Alison A. Cornell - Chief Financial Officer & Executive Vice President: Okay. So, first, let me answer the interest-related question. There will be a $2 million increase, which was included in our guidance. So that's reflective. In terms of overall outlook, at our Investor Day, we've guided toward a currency-neutral range of 4% to 6%, so we expect this year's performance to be in line with our long-term guidance of 4% to 6%. We still believe that's the case, albeit at the low end of the range due to pressure from ingredients, which Nicolas had spoken about, as well as some uncertainty in Fine Fragrances.

Your next question comes from Alec Patterson with AGI.

Hi. Good morning. I just had a couple of quick ones. The Latin America mid-teens growth in Fragrances and Flavors, is it all volume or volume mix? I know you tend to price in dollars, but I just wanted to get clarification. Andreas Fibig - Chairman & Chief Executive Officer: Matthias?

Thank you for the question. In Latin America, as I outlined before, we are really travelling very well and very strong. We have a lot of new win. We have also good volume growth, but a lot is driven really by new wins, even new customers. We are moving into new geographies also in Latin America. You may recall that we have opened a new affiliate in Chile, for example. This gives us leverage and we feel very good with the traction which we gain. Thanks to technology, increased customer intimacy and additional accounts.

And just curious, China has been an issue especially for wholesale inventory management for a lot of your customer base. What are you seeing there? And then lastly a question, just could you round out or update us on some of the gross margin drivers, the raw material trends, that sort of thing?

Talking about China, frankly we see the same, we see challenges as well and we see mainly very large international accounts being challenged. We see volumes decreasing. We see retail destocking and we are (55:22) mainly have a similar symptom as we have in North America that smaller accounts seem to be more agile and probably have a softer, innovative resolutions which are more tailored for the market in China. As we're aware of it, we try to expand. We work with the commercial teams in China to increase our customer portfolio and to ensure that we are again more relevant in the marketplace. I however would like to remind, as we see challenges in China, we have comparables of what we are comparing to last year irrespective whether it's Q2 or even H1 we are comparing to very solid single-digit growth. So, we mainly had slown down the last three quarters in China. Alison A. Cornell - Chief Financial Officer & Executive Vice President: And in terms of the – your second part of your question, in terms of raw materials, we expect to see a relatively stable raw material environment for the remainder of 2015. Michael DeVeau - VP, Global Corporate Communications & Investor Relations: Anymore questions, operator?

You do have a question from the line of Jeff Zekauskas. Andreas Fibig - Chairman & Chief Executive Officer: Okay. Jeff?

It's Silke Kueck one more time for Jeff. I was wondering whether you can just share your thoughts on sort of like the competitive environment and that is the – there is obviously now, like, a new entrant in the industry with ADM acquiring Wild Flavors. Like, it seems there's a little bit of like a roll-up on the – in the food industry, like, Heinz acquiring Kraft, and like, Tyson is acquiring Hillshire Brands. In the fragrance industry, P&G is divesting its beauty care business, and that's going now to Coty. So, I was wondering whether you can discuss a little bit on what the competitive trends are like. Andreas Fibig - Chairman & Chief Executive Officer: Well, thank you for the question. I think what we experience these days is what will probably start using a long time ago, we see consolidation on the account base. I think consolidation is such on the accounts is also a great opportunity for us. It's really an opportunity to ensure that we are truly partnering at a very early stage. And I outlined once at the Investor's Day, as soon as we are partnering at the very early stage with our customers, our win rates and the chance that we are really submitting a value creation and value addition to them is much higher. Nowadays, our customers, they are not looking for vendors and suppliers anymore. They are really looking for two partners, and I really see this as a great opportunity. When it comes to North America, what we outlined with Ottens, we all said that we want to create a vehicle for us to truly differentiate ourselves to keep the agility, the speeds, the ownership. But above all, the very longstanding history Ottens has built here in North America and to back it together with latest technology from IFF. We are firm of the belief that this will help us to accelerate our growth rate to penetrate into a segment that is growing faster of what we believe in the very large account here in North America and see it as a great opportunity. Maybe, Nicolas, do you want to add something, provide some color to Fragrance?

Yes. Silke, it's Nicolas. A very similar trend in terms of the customer dynamic moving to strategic partnership. So every consolidation provide additional upside opportunities. And here, it is obviously – or you need to support and provide consumer insight, and to identify growth opportunities for the portfolios and reaching significant scale. So, we believe it is a positive outlook for us.

I appreciate the thoughts. Thank you.

We'd now like to turn the call back over to Andreas for closing remarks. Andreas Fibig - Chairman & Chief Executive Officer: Thank you very much for the question. As we said, we had a good first half year. We're in the middle of the execution of our Vision 2020 which works very well. We basically finished the two acquisitions for this year as well which will help us to differentiate and accelerate our growth going to the future. So, thank you very much for the questions again, and let me end the call right now. Thank you.

Thank you for joining today's conference. You may now disconnect.