At this time, I would like to welcome everyone to the IFF Second Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. I would now like to introduce Michael DeVeau, Head of Investor Relations. You may begin. Michael DeVeau - International Flavors & Fragrances, Inc.: Thank you. Good morning, good afternoon and good evening, everyone. Welcome to IFF's second quarter 2020 conference call. Yesterday evening, we distributed a press release announcing our financial results. A copy of the release can be found on our IR website at ir.iff.com. Please note that this call is being recorded live and will be available for replay. Please take a moment to review our forward-looking statements. During the call, we'll be making forward-looking statements about the company's performance, particularly with regard to our outlook for the third quarter and full year 2020. 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 our forward-looking statements, please refer to our cautionary statement and risk factors contained in our 10-K filed on March 3, 2020 and in our press release, all of which are on our website. Today's presentation will include non-GAAP financial measures, which exclude those items that we believe affect comparability. A reconciliation of these non-GAAP financial measures to their respective GAAP measures is set forth in our press release that we issued yesterday and which is posted on our website. With me on the call is our Chairman and CEO, Andreas Fibig; and our Executive Vice President and CFO, Rustom Jilla. We will begin with prepared remarks and then take any questions that you may have. With that, I would now…

We'll take our first question from Mark Astrachan with Stifel. Please go ahead. Your line is open.

Hey, good morning, everybody. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning.

I guess just to start. So, if you look at the broader share trend, even normalizing for how you're accounting for FX relative to peers, it seems there's a bit of an increasing divergence in your results for sales versus those of the largest F&F peers. I guess, I'm curious. Do you see the same thing, or it seems somewhat obvious to the folks from the outside in? So, I'd be curious to that perspective. And then if so, what is driving it and when should we anticipate those trends to normalize? And sort of related to that, it would seem, maybe, to trace back to the Frutarom deal. So, if true, what are you doing, best practices and such that you're putting in place, so as to not repeat those when you close the DNB (28:09) deal early next year. Andreas Fibig - International Flavors & Fragrances, Inc.: Sure. Thank you, Mark, for the question. I'll take it. As you alluded, certainly, it's good to take the FX reported numbers and compare apple-to-apples. I think that's number one. Number two I would say, we should judge our performance beyond just one quarter and should look at multiple quarters. And if you see, for example, in the first quarter, we led our industry in growth. I think that's a topic. The second one is, if you look at Q2, the emerging markets were pretty much under pressure. And you see that we are a bit over-indexed in the emerging markets. For example, India, we're a market leader in India with our Taste business, for example. That was actually a pretty bad hit on that business, which is, by the way, rebounding. And then we are – certainly, we're winning some smaller customers, which plays a role here as well. Fundamentally,…

Sure. Thank you. I guess just somewhat related to that, maybe sticking on the commentary about June versus July. So, I guess, I was surprised a bit that June was worse, given that most of your customers kind of talked about sequentially improving trends through the second quarter. So, maybe why, beyond the obvious, the comparisons for you are easier in 3Q, why did you see this improvement beginning in July? Why was June a bit worse? Does it speak to inventory levels for customers? Is it just simply third quarter, people started ordering more product? Where do you think inventory levels are for those customers? And how do you think about the durability of what you just said about July through the quarter? Andreas Fibig - International Flavors & Fragrances, Inc.: Look, on inventory levels of the customers, it's tough to comment on, because we see huge differences from customer-to-customer, from region-to-region, and category-to-category. That's a big difference. I would say July is better for us because some of the categories which were hard hit in the second quarter, like Food Service, are improving better. That's certainly helping and that some of the emerging markets like India, for example, are performing much, much better. In July, we have actually a double-digit growth going forward and that helped us a lot. Why June had a little bit of a dip even compared to May? If I look at our daily sales, it's not so much. I think it's a comparable. I would not take this too – I think it depends also on the order pattern and what we see right now, as I said, July pretty strong for us and the order book for the third quarter is up mid-single to high-single digits as well. So, I believe that the trend will continue. So, it's a bit of phasing in there as well. But, Rustom, you please or Mike, you please comment. Rustom F. Jilla - International Flavors & Fragrances, Inc.: No. I agree, Andreas. I would just – you've seen the phasing, you've seen the average daily sales. There's no deceleration in the numbers. And then coming through into July, I mean, you've seen a very nice – we've seen a very nice in comparative terms pickup in areas that were like Fine Fragrances where – compared to where they were going through May, and then June, and where July is, and then Food Service, as Andreas said. So, nothing, but reiterating what he said really there. Andreas Fibig - International Flavors & Fragrances, Inc.: Okay.

Thank you. We'll take our next question from Faiza Alwy with Deutsche Bank. Please go ahead.

Yes. Hi. Good morning. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning.

So, I wanted to just shift gears a little bit actually, and talk about N&B because it feels like – so you have your shareholder vote at the end of this month, and it feels to me that the deal might close soon after that, maybe earlier than your target. And I'm looking at slide 17 and I was wondering, Andreas, maybe if you could give us a little bit more color around how do you expect to go from at close, like the second to last box that you have on that slide to the revenue and cost synergy capture by end of year three. So, I'm sure we'll get into it in more detail as time goes on, but I was wondering if you could give us a little bit of a preview of how you are expecting things to play out from here. Andreas Fibig - International Flavors & Fragrances, Inc.: Yeah. So, first of all, our assumption is still that we're closing first quarter next year. That's actually the plan also for the carve-out of the business. I think that's important. And right now, we are focusing a lot on, let's say, closing on our food integration. So, the remaining piece of it, which will happen in the early part of the fourth quarter, I think that's important. On the N&B side, as we said, we are progressing actually absolutely according to plan, in some of the areas even a couple of days ahead, which is quite interesting during the COVID environment. I think the teams are doing really a fantastic job. We see also – and just as a remark on the N&B business, you have seen when they reported, actually a bit of growth with 1%, a strong mix. 85% of the portfolio is…

Thank you. And we'll take our next question from John Roberts with UBS. Please go ahead.

Thanks. You noted double-digit growth in Consumer Fragrance. I assume that included a decline in emerging markets outside of China. So, maybe you could peel that apart, how much was emerging markets, excluding China, down in Consumer Fragrance? And then how – actually how high was the rest of the portfolio? Andreas Fibig - International Flavors & Fragrances, Inc.: Yeah. Sure. So, we see actually a good rebound in our China business, that's for sure. But we have to say that it's not just China, we saw, for example, in July already, actually, a very strong performance of our Consumer Fragrance business in India. Actually, it might just because we looked at the numbers, it was more than 40% for July, which was kind of amazing. But it is because we had a couple of good wins and it's going very well. And we have actually a quite significant and good performance in Latin America as well, believe it or not. So, it's not just China, it is also on the Consumer Fragrance side, some of the emerging markets. Not all of them, but some of the emerging markets are actually performing better than we have expected as well. But maybe, Rustom, you give even more details. Rustom F. Jilla - International Flavors & Fragrances, Inc.: Sure. So, the emerging markets, there's – John, there's variation between the emerging markets rather than treating them as a particular group, right. India has been the outlier in terms of underperformance. But we have also had an impact in Latin America, in Brazil, and where we have switching from Consumer from – into Fine, where we have a significant market over there that we have seen come off. We don't really think that what's going on in emerging markets is necessarily predictive of…

And we'll take our next question from Adam Samuelson with Goldman Sachs. Please go ahead. Adam Samuelson - Goldman Sachs & Co. LLC: Oh, yes. Thank you. Good morning, everyone. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning. Adam Samuelson - Goldman Sachs & Co. LLC: A lot of ground's been covered on the revenue side, so maybe just switching to the cost side a little bit, a lot of moving pieces in the second quarter given the volume declines in mix and COVID costs. And I'm just trying to make sure I understand kind of what happened in 3Q, if we're back to organic revenue growth. Price cost, just how do we think about that dynamics playing out over the balance of the year? Kind of what's the incremental COVID-related cost expenses you expect to be absorbing in the next couple of quarters? And just thinking about kind of the operating leverage that is or is not in the business if the revenue growth is back to the trend you saw in July? Rustom F. Jilla - International Flavors & Fragrances, Inc.: So, let me... Andreas Fibig - International Flavors & Fragrances, Inc.: Sure. Absolutely. We take this. Rustom, you take it. Rustom F. Jilla - International Flavors & Fragrances, Inc.: Yes. Thanks. Yeah. So, let me break it up and give you a thing. First of all, I'll give you the COVID-related costs, okay? And then primarily procurement, logistics and manufacturing costs. And in Q2, they were about $6 million, okay? $6 million and we would expect this to start declining as we go through the rest of the year, right? Because Q2, as we've already said, is when we thought we had the highest point. There will still be some continuing manufacturing, because as Andreas…

And we'll take our next question from Jeffrey Zekauskas with JPMorgan. Please go ahead.

Thanks very much. So first, could you update us on regulatory developments on Nutrition & Biosciences transaction in Europe? Why haven't we received a ruling from Europe and do you expect to get one before the shareholder vote? Andreas Fibig - International Flavors & Fragrances, Inc.: We expect actually in the August-September timeframe the ruling. We were going back and forth with them to answer the questions before the summer break. And I think in the next couple of weeks, we should get the clearance in Europe. That's what our lawyers are telling us. So I think we should be on track. Whether we can make it before the shareholder vote, I'm not 100% sure, but early September will be my best guess right now.

And then secondly, it looks like your Fine Fragrance business in the first half was down, I don't know, 25%, and maybe your key Swiss competitor was down 16%. Can you talk about the differences in like-for-like sales growth? Rustom F. Jilla - International Flavors & Fragrances, Inc.: Yeah. Look, the differences, I would say, are, probably, with the customers. If you look at many of our big Fine Fragrance customers, you see even worse performance than the minus 20%, 25% and that's what's driving it. Because the win rate in our Fine Fragrance business is still pretty good. We see also a good influx of new projects coming. And, as we said, the start into the third quarter was actually pretty encouraging, what we have seen for Fine Fragrances. So, I would say the main differences is the customer structure and how much the customers are selling of their actual products. But I actually expect that this will normalize over the course of the year, because in general, I think our win rate in that area is a very, very good one. And we will see the – and just the – the most important season is right before the holidays, that's where we sell most of our Fine Fragrances. So, end of third quarter, early fourth quarter is actually – that's where you win the year. And that's what we have to watch and I hope when we have the third quarter announcement, that we can give you more news on that one as well. I hope that helps.

And we'll take our next question from Lauren Lieberman with Barclays. Please go ahead.

Thanks. Good morning. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning.

I just wanted to – good morning. I wanted to ask a bit first about the US. So, the business was down slightly in the second quarter. It was a sequential improvement, because it was down closer to 1% in the first quarter. But can you talk a little bit about what's going on there because given the first half performance, it wouldn't seem to be specifically COVID-related? All consumer packaged goods sales are through the roof, when you kind of look at what's going on from an end market standpoint. So, what's going on in that business? Maybe have you lost any big contracts or things like that, because it's kind of fallen off because the performance there is, candidly, a bit surprising still? Thanks. Andreas Fibig - International Flavors & Fragrances, Inc.: Yeah. So, Rustom, can you take the numbers? Rustom F. Jilla - International Flavors & Fragrances, Inc.: So, yeah. I mean, I think you're – are you comparing – are you including sales of Consumer Fragrances in there as well, with the Fine Fragrances or what (51:56)?

I'm just looking at just US sales. Andreas Fibig - International Flavors & Fragrances, Inc.: In general, Taste and Fragrances, everything?

Correct. Rustom F. Jilla - International Flavors & Fragrances, Inc.: In general, our North American business has held up relatively well. I mean, we have seen – if you look at Taste and you look at some of the performance that we've had there, we haven't really seen any big disappointments. We did have the impact in Fine, specifically in North America and Europe. And that could be coloring part of our numbers there because that's where our large global customers are concentrated, right. And in terms of our Consumer business, our Consumer business did well across the board. I mean, in developed markets and I don't have the North American number in my fingertips, but if you look at developed markets, it was in the high-teens, the growth in Q2, Consumer specifically. So, I mean... (52:52)

Okay. Yeah. I think the numbers in the Q suggested the US entirely did not grow in the second quarter, nor in the first, and North America, in total, was like 1% or 2%. So, again, it is a huge contrast to what the majority of the customers are doing. But we'll look back at the Q and double check I haven't misread something that's in the filing. Thanks. Rustom F. Jilla - International Flavors & Fragrances, Inc.: Sure. Sure. And we can always follow up. We can always follow up later as well, too.

Yes. Andreas Fibig - International Flavors & Fragrances, Inc.: Yeah. That would be good. Let's follow up on that one.

We'll take our next question from James Targett with Berenberg. Please go ahead. James Targett - Joh. Berenberg, Gossler & Co. KG (United Kingdom): Hi. Good morning. Two questions for me. Just, firstly, on innovation, you mentioned that you see the project pipeline improving as restrictions are minimized. But just generally, could you talk about what you're seeing in terms of customer appetite for innovation, new product launches, generally? Obviously, we're hearing a lot of CPG companies talk about rationalizing their innovation programs, cutting tail innovations, SKUs, et cetera. So, any color you can give on your position that'd be great. And secondly, just on the – sort of the recovery momentum you're seeing in July. Can you maybe talk about a little – any sort of differences you're seeing between the momentum in your large customers, your global customers versus your smaller or more local ones? Thank you. Andreas Fibig - International Flavors & Fragrances, Inc.: Sure. Absolutely. If I touch on innovation, what we have seen actually when the COVID crisis was on its peak in Europe and in the US, so starting in March, April, even parts of parts of May, we've seen a slowdown in our innovation pipeline. Also, driven by the demand of some of the packaged food, for example, or some of the Consumer Fragrances. So, everybody was trying to get the existing product on the shelf as fast as they could. Since then actually, starting with May, we have seen actually a continuous influx of new projects, actually across the board, in all of our different categories we are playing in and there's more coming. We saw it first, obviously, in China, because that was the first country basically out of the gates in – after the COVID crisis for them and they…

We'll take our final question today from Mark Connelly with Stephens. Please go ahead.

Thank you. Just two quick things. How much differently would you run your operations if we did have a long-term shift to more meals at home, a limited restaurant recovery? I'm wondering how big a restructuring that would be for you. And second, I was just hoping you could help me understand your exposure between quick serve and regular restaurants, and whether those two trended differently as you started to see recovery. Andreas Fibig - International Flavors & Fragrances, Inc.: Look, for the meals at home, actually, we are pretty well positioned with our Savory Solutions business because we have an extra culinary area, which we're using for that area. We certainly would look and double down what we can develop here. So, I think that's an important aspect. So, I think it – I wouldn't say it would benefit us more, but it would be certainly very manageable for us as well. On QSR and retail restaurants, we have almost a similar mix. I think that's an important one. And what we see is that some of the quick service restaurants are really coming back now, which is good and it's helping us on the Food Service area as well. But, Rustom, you may comment if you have any more insights. Rustom F. Jilla - International Flavors & Fragrances, Inc.: No. I mean, it's a mix of those two. I mean, we're actually seeing the restaurants coming back as well too, if you looked at our most recent Food Service numbers. But apart from that, the quick service is clearly coming back faster.

Very good.

Thank you. And this will conclude today's Q&A session. I'll return the floor to Andreas for closing remarks. Andreas Fibig - International Flavors & Fragrances, Inc.: Yes. Thank you very much for your time. And these are very exciting times. I hope we gave you good insights on how we see the business, even beyond the second quarter. And we are looking forward to the one-on-ones. Thank you very much. Take care and stay healthy.

We'll conclude today's program. Thanks for your participation. You may now disconnect. Have a great day.