At this time, I would like to welcome everyone to the IFF Second Quarter 2022 Earnings Conference Call. . I would now like to introduce Michael DeVeau, Head of Investor Relations. You may begin.

Thank you. Good morning, good afternoon and good evening, everyone. Welcome to IFF's Second Quarter 2022 Conference Call. Yesterday afternoon, 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're making forward-looking statements about the company's performance, particularly with regard to the outlook for the second half and full year 2022. 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 and press release, both of which can be found 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. With me on the call today is our CEO, Frank Clyburn; and our Executive Vice President and CFO, Glenn Richter. We will begin with prepared remarks and then take any questions you have at the end. With that, I would now like to turn the call over to Frank.

Thank you, Mike, and hello, everyone, and thank you for joining us today. Before I dive into our first half results, I want to take a moment to acknowledge the tremendous progress we have made over the last 3 months. Under a challenging operating environment, our global teams continued to display their steadfast commitment to our customers and passion for innovative discoveries as IFF delivered profitable growth. Since joining IFF, I have consistently been impressed by the caliber of the work, innovation and expertise our people deliver as well as the creative culture that underpins our success. I once again thank our teams around the world for their hard work. I will begin today's call with an update on our strategy refresh process and value creation opportunities we are focusing on for the near and long term, as well as IFF's recent accomplishments as we execute on our operational priorities. This includes delivering $70 million of cost savings in the first half of the year, taking swift and aggressive pricing action to cover inflation, exiting our Microbial Control business and ensuring that we have the right talent in the right roles. I will then turn the call over to Glenn to provide a detailed look at our second quarter financial results and discuss our outlook for the rest of 2022. We will then open the call up for questions. Beginning with Slide 6, I'd like to provide an update on our efforts to refresh our long-term strategic plan. While we are pleased that IFF holds strong positions across many of our business segments today, we are committed to evaluating and fine-tuning both our strategy and execution to best position the business for long-term profitable growth. I am pleased to share that we are making meaningful progress in moving quickly to…

Thank you, Frank, and good morning and good afternoon to everyone. Accelerating our productivity and expense synergy efforts represents one of our top priorities, and is increasingly important in a more challenging economic environment in order to maximize financial performance. To this end, we want to provide additional transparency to our multi-year productivity program and the expected results. First of all, let me describe the scope of our efforts. Overall, we have established 4 productivity efforts that cover approximately 85% of IFF's total cost structure, focused primarily on operations and overhead expenses. The 4 teams include supply chain, which includes our procurement and global logistics operations. Opportunities include driving additional efficiencies in direct and indirect material spending through enhanced procurement strategies and demand management, particularly for indirect spend and reduced logistics costs driven by improved global S&OP processes. The second team is focused on end-to-end manufacturing operations and includes a broad-based set of initiatives, including accelerating our digital manufacturing efforts, driving yield improvements, system-wide best practices and energy savings programs. The third initiative is our economic profit team that is focused on leveraging improved technology and disciplined processes to optimize product mix, rationalize SKUs and enhance make versus buy decisions. And our fourth team is focused on building out our global shared service platform in with technology, to drive increased centralization and process standardization to drive efficiencies across our administrative and business support functions. In total, the combined programs are targeting a preliminary net annualized P&L impact of $250 million to $300 million that we expect to be achieved between 2023 and 2025. Two important notes. First, this $250 million to $300 million annual impact is net of reinvestments that are targeted to strengthen our innovation pipeline, expand our commercial efforts across key products, customers and regions, deepen our technology and digital capabilities and strengthen our talent. Secondly, the net savings will be slightly more skewed to 2024 and 2025. We look forward to sharing more details with you at our Investor Day in December. With that, I'll turn it back to Frank.

Thank you, Glenn. As I said, we will provide more specifics on this program at our Investor Day in December, but wanted to share an early indication with you as we committed to provide more details on this topic during our Q1 earnings call. More importantly, at our Investor Day, we will also provide you with a clear and more detailed road map for growth, including our incremental revenue opportunities from our combination with N&B. We remain confident that we have significant opportunities ahead, confirmed by our initial commercial wins and positive customer feedback as well as our competitors following our lead. I know that realization of these benefits have been slower than expected due to external factors, including COVID, supply chain disruption, customer bandwidth, pricing initiatives and constrained capacity. However, since joining, I have launched a focused initiative to reinforce our emphasis and address existing gaps. Specifically, we are developing a set of prioritized opportunities, each with clear financial impact, owner and time line to provide confidence in our ability to deliver. This will be a significant focus for me going forward as I'm committed to delivering the value proposition of our combined portfolio and will be personally involved, dedicating significant time and engagement with the business to drive performance. I am pleased to say that we continue to see steady wins across our portfolio. Recently, we co-collaborated with a leading alternative protein producer to improve commercial and technical collaboration, essentially upstreaming the incorporation of Heritage IFF flavors into Heritage N&B Protein-Based, exceeding our customers' expectation for plant-based burgers. This resulted in IFF being awarded as a core supplier, one of three, increasing our market share and enjoying a long-term relationship. In addition, we are seeing the value of integrated solutions between our Nourish and H&B divisions. The Dairy…

Thanks again, Frank. Turning first to our consolidated second quarter results. IFF generated more than $3 billion in sales, representing 11% year-over-year increase on comparable currency-neutral basis, primarily driven by double-digit growth in Nourish and Pharma solutions. In terms of our growth contribution, pricing represented the majority, with volumes up modestly. Our focus coming into 2022 was to fully recover inflation through pricing actions, and for the full year, we are on track to recover approximately $1 billion in cost inflation. We are doing so in a very thoughtful and strategic manner, over on lower margin and capacity-constrained businesses. While foreign exchange rates have had an adverse impact on our sales and EBITDA in the second quarter, I'm pleased to report that adjusted operating EBITDA grew 3% year-over-year on a reported basis or 7% on a comparable currency neutral basis driven by productivity gains and pricing actions we implemented in the quarter. We also achieved solid year-over-year earnings per share growth of 3%, excluding amortization. Before moving on, I wanted to share that during the second quarter of '22, we took an impairment charge of $120 million within certain entities in Russia due to a number of factors, including reduced business focus as we have restricted our operations to essential consumer products that include food, hygiene and medicine, supply chain issues, reduced product demand and exchange rate volatility, all as the result of the Russia-Ukraine conflict. It was determined that such declines in operating performance were not expected to reverse in the near future, and future expected growth is expected to be limited given the operating conditions in Russia. This non-cash impairment charge was allocated pro rata to intangible assets and property, plant and equipment within the asset group in the amount of approximately $92 million and $28 million, respectively.…

Thanks, Glenn. Before I wrap up today's call, I want to say I am proud of the efforts of our global teams as we continue to execute amid challenging market conditions. We've achieved strong performance in the first half of 2022 and increased our dividend for the 13th consecutive year. I am confident in our ability to achieve our full year financial targets as we continue executing against our operational priorities and control what we can control. At the same time, we are committed to advancing our strategic transformation efforts, deploying innovation, refining our portfolio and strengthening our culture to deliver strong value creation for all of our stakeholders. Moving through the second half of the year, we will be intensely and urgently focused on protecting and growing our business, identifying new strategic value creation opportunities, and communicating our refreshed operating model across the business and the market to position IFF for long-term success. I look forward to sharing more at our upcoming Capital Markets Day in early December. I'd now like to open the call for any questions. Thank you.

. And we will take our first question from Mark Astrachan with Stifel.

I wanted to ask about the productivity program and how you're thinking about balancing margin versus volume growth especially given, I think, what you said, Glenn, of modest volume growth in this period, sort of how do you think about that going forward? And how do we think about net savings as it relates to long-term targets, including implied margin expansion? I think the math would get you something north of 200 basis points in implied margins. How do we think about that longer term?

Mark, this is Frank. A couple of comments. I'll start with first, the productivity program that we've announced, we see that as really important not only near-term, Mark, but really building a continuing productivity mindset. We want that build into the company. We also want to be able to use that to be able to invest in our growth opportunities. What we're trying to achieve, Mark, is really sustainable, profitable growth, and to start to really get leverage throughout the P&L. We think that's going to be really important for us from a profile perspective. This is why we've also done the ROIC work, Mark, on our portfolio, and we'll be able to share with you in December some of the specific targets from a financial perspective.

And we'll take our next question from Heidi Vesterinen with BNP Paribas Exane.

So if we look at your Q2 currency-neutral growth, I understand this is mainly price. While we see that most of your peers had strong volumes this quarter, why do you think you weren't able to grow volumes? And perhaps you could comment on the exit rate in Q2 in terms of volumes and momentum into Q3, please? And then somewhat linked to that, what was the reason for not upgrading your full year guidance after such a strong H1 in terms of EBITDA?

Heidi, this is Glenn. Thanks for the questions. Relative to sort of volume comparatives, I would sort of maybe answer it 3 ways. One is, as you're well aware, the comparatives are difficult given the apples to oranges sometimes comparisons of the business. But I would say that if you really kind of strip our business down and look at sort of the first half results, most of our core businesses actually are doing quite well. So Flavors, Scents are both mid-single digit in terms of volume growth. Core business units within H&B, Health is up high single digit. Cultures, Food Enzymes, Animal Nutrition, mid-single digits. Pharma is up low single digits. So the difference is, as we've discussed throughout the year, we're being very thoughtful regarding a balance between volume and profitability. So we've been very strategic and thoughtful relative to margin enhancement actions and focusing on those businesses that have both capacity constraints and/or are lower-margin businesses, so that's the difference. We're very specifically trying to focus on making sure we deliver good outcomes for our shareholders as well as our customers from performance. And then lastly, I would note that this is very consistent with what we signaled. We've said very early in the year, we were planning basically the balance of the year to be relatively flattish to 1 point, and this is very consistent with the strategy and how we're implementing it. Relative to kind of guidance, the reality is the pace in which sort of inflationary pressures flow through raw materials into our cost of goods, it does vary by business. So there's a little bit of a lag here in terms of how that's hitting quarter-to-quarter. That explains some of the overperformance in the quarter, third quarter relative to kind of the full year outlook. And consequently, because of that lag and just generally a perspective on cautionary outlook given the macro environment, we're being sort of realistic in terms of how we guide, and consequently, we're sticking to the same guidance. So hopefully, that's helpful.

And we'll take our next question from Gunther Zechmann with Bernstein.

Frank, Glenn, and Mike. Can you talk about the volume contribution within Nourish that you expect in Q3? And how much revenue synergies and integrated solutions are included in that place? And then secondly, what is your updated inflation forecast for the year, and any insight that you can share into 2023, please?

Gunther, it's Frank. I'll get started. So first, with regards to revenue synergies, and as Glenn mentioned, we did see really good performance, especially within Flavors, within Nourish, and we're excited about the significant opportunity we believe we have there. We also highlighted on the call some examples, Gunther, that we are really encouraged by some of the wins that we're seeing where we're utilizing our legacy N&B expertise, as well as legacy IFF expertise for vanilla flavor is an important win there. We highlighted an important win with regards to plant-based burgers. We're seeing good cross-selling opportunities. So overall, we're starting to see revenue synergies and we're hearing good positive feedback from our customers. With that said, Gunther, there's work to be done, and I highlighted that on the prepared remarks. This is something that's going to be a significant area of focus for myself personally as well as the executive team. We're going to be leaning into how we bring our broader platform portfolio technology to our customers. So this is something we'll share a lot more about in our December Capital Markets Day. Glenn, I don't know if you want to maybe touch on the inflation?

Sure. Yes. Definitely Gunther. Relative to 2022, it's still choppy, but in general, no change to our outlook relative to the impact of inflation. Generally, energy has been slightly better. Logistics has been slightly better. Raw materials have been slightly worse in pockets. But generally, things are sort of stable. I would also note that just the nature of the time it takes raw materials to go through inventory and show up in the P&L, any additional impact for the balance of the year is likely to be muted to 0 and really hit 2023. We are taking a very deep look at '23. We've run through a preliminary scenario, we're doing an update in the coming weeks here as we plan for 2023. And our perspective at this point is we do anticipate another, I'll say, meaningful round of cost increase from inflation. That's going to be concentrated in our view more on raw materials. So there's a number of areas including soy, oils, obviously, certain commodity groups such as agricultural grains and those sort of things, we're seeing pretty significant inflation. Energy is choppy, but likely to also be some increase modestly in energy prices and logistics as well. We're likely to see some sort of modest increase as well. So kind of overall, we are expecting probably '23 not to the same degree as '22, but we are expecting additional inflationary pressures for next year.

We'll go next to Mike Sison with Wells Fargo.

Nice quarter and outlook. In terms of free cash flow performance for 2Q, any more color maybe by segment? What's sort of driving that consumption? And then I think you were hoping to do about $1 billion in positive free cash flow in '22. Can you make up some of this in the second half of the year?

Yes. So good question, Mike. The sole impact is -- well, there's seasonality, as you know. So typically, in the first half of the year, first quarter, there's a build on working capital, namely inventories. Secondarily, there's the year-end of compensation that basically gets paid out, et cetera. We are running actually worse on cash flow than anticipated to the tune of about $200 million. That is 100% attributable to higher inventory levels that is principally related to basically higher costs. So as you may recall, when we entered the year, we had our kind of Wave 1 inflation subsequent very early in the year. We identified another significant round of inflation coming through. That is rolling into inventory. So as a byproduct of that, we had guided to the full year that we'd be relatively flat to prior year from a free cash flow standpoint of about $1 billion-ish. We're sort of targeting to be probably about $200 million less than that at this point in time. That being said, we are implementing a series of very important initiatives largely against the legacy N&B businesses. In terms of putting in new S&OP processes and enhancements, we're hopeful that those will drive some efficiencies, i.e., be able to bring some inventory levels. But I'd say best guess at this point is probably 800-ish versus the original $1 billion.

And we'll go next to Adam Samuelson with Goldman Sachs.

So I guess I wanted to come back to the inflation and cost question. I appreciate there's a business, but help us just balance, think about the price cost balance in the second half specifically? I think you entered the year having been behind on price cost from '21, and hoping you'd be catching up to that into '23. Is there still -- do you still see -- or still have line of sight to recapturing kind of that price-cost imbalance on a cumulative basis in '23? And I guess, along those lines, can you talk about the actions you're taking to try to shorten some of the price lags in some of the businesses, and probably see it a little bit more in the Scent segment this quarter? But how -- what can we do to maybe compress that -- the length of those inventories in cost cycles?

Adam, thanks for the question. I'd say a couple of answers. One is just relative to this year, I'll say we're slightly ahead, i.e. price versus cost, back to the how things roll through inventory slightly behind the second half of the year. That's part of the reason for the -- how one thinks about the balance of the year implied guidance versus kind of the first half of the year. So that's a piece of it. We -- normally, 18 months would be the full lag from inflation to capture. You can see that it's sort of manifesting itself differently by business. Scent is the one that's the furthest behind from a timing, given the nature of the relatively large customers and generally are indices tag to the contracts from the standpoint. And we would fully expect that to continue to be the case. The only question mark here is how one thinks about '23. So as I just mentioned, my prior answer to Mike is that we probably are going to see another round of inflation come through. So from that standpoint, it may be 18 months from the first round, but we may have a continued set of rounds of inflation we need to catch up, which would suggest probably late '23 or even '24, if that's the case. But to your last part of your question, obviously, we've all been in a very unprecedented environment relative to pricing, and that's required us to sort of rethink traditional contracts. And the way we've been rethinking them is, to some extent, just having realistic discussions with our customers on these -- level of inflation and having to share the burden. And then in addition, just rethinking contracts in terms of the frequency, so as opposed to annual, semi-annual or other type of sort of more open agreements relative to changes in the marketplace. So that's been a bigger factor of relative to the contracts we put in place, and I suspect it will prevail in the future as well as we think about '23.

And we will take our next question from John Roberts with Credit Suisse.

Glenn. I think you earlier quantified it's 3 or 4 divestments for $1.5 billion to $1.7 billion in expected proceeds. Is that still the right ballpark target as you look at the portfolio? And then to your comments on inflation and higher working capital. So the way to think about how much is just oil prices working their way down the supply chain, and it's just taking time to get to you versus structural, European gas constraints in China, rotating lockdowns and logistics stuff? Can you separate oil prices or commodity prices versus the structural issues you're facing?

Yes. Good question, John. So relative to our outlook for divestitures, we still think the $1.5 billion to $1.7 billion gross proceeds, 3 to 4 transactions completed by the end of next year is in the right ballpark. The market, as you're well aware, has slowed down, so the level of M&A activity is substantially less with the ball in the credit markets that has made it more difficult, particularly for private equity investors. However, the size of our transactions, you can just do the simple math, aren't that large. They tend to be sort of nice strategic fits for other businesses. So from an initial dialogue standpoint, the interest level seems very good. So we think that things may be a little slower from a process standpoint, but we're still fairly confident that we will hit our target. Relative to sort of broader global supplies or how one thinks about inventory over the longer cycle, about half of our growth, of our dollar growth of inventories is related to inflation this year, and about half is related to higher inventory levels. Those higher inventory levels, if you recall, would basically improve our customer service levels because we had low inventories, again, the legacy N&B businesses. I will say, though, I'm increasingly confident that through the implementation of improved S&OP processes across a number of our businesses, that will allow us actually to reduce some of those higher inventories. The third thing you mentioned is really the global supply chain. Clearly, we, like everybody, have an extended supply chain, i.e., there's more products sitting on the water for longer times. There's more inventory buffer stock in our system, et cetera, that basically accommodate for the volatility of the market. We're actually thinking about what that means longer term in terms of working capital. And I suspect by the end of this year, we'll be able to sort of come back and provide some visibility on that. But I do think at the end of the day, that will be a meaningful improvement opportunity not just for ourselves, but for everyone as the supply chain gets back to order.

And we'll take our next question from David Begleiter with Deutsche Bank.

Frank and Glenn, where are you seeing initial signs of demand weakness, either by geography or by business? And second, if we were to go into a deeper downturn, what levers can, would you pull to offset that downturn?

David, it's Frank. Thanks for the question. A couple of thoughts. From the demand weakness perspective, the geography that we are seeing is probably no surprises. Really China, we had the lockdowns, and we did see an impact clearly in the second quarter. And just to recall, David, China is our second largest market, so that's been somewhat of a challenge for us. And then if you think about our portfolio, on the positive side, as Glenn mentioned, we did see good growth in Health, Cultures & Food Enzymes, Flavors, Fine and Consumer Fragrance as well, so that's the positive. If you think about the resiliency of our portfolio, we feel overall cautiously optimistic. One would anticipate as pressures continue to , Fine Fragrances may be somewhat of a challenge. As we think about the additional levers, and this is what we're really staring into. But if you listen to some of our prepared remarks, clearly, productivity is going to be continuously important for us, and that's something that we are spending a lot of time on as a team and thinking about levers there. Glenn has already spoken about our pricing and our working with customers to really do everything we can to recoup the inflation that we're seeing. And then the other lever we have is really staying close to our customers, our global key account teams, our customer insight teams, really trying to be as quick and agile as possible. Working with our customers to make sure we have good connection with them to understand kind of what we're seeing in the marketplace. So those are all levers that we are focused on, but it's also why we feel good on our recommitment of our guidance. Both the top line at 9% to 12% growth range, and then also our EBITDA range of 48%. So that's why we feel comfortable and confident in reconfirming our guidance today.

We'll take our next question from Ghansham Panjabi with Baird.

I just wanted to first up, follow up on the last question as it relates to new product development. Have you seen any signs of slowing as major customers sort of worry about consumer elasticity on a global basis? And then on Slide 16, Frank, we talked about preparing for more uncertain market conditions, including a recession. How do you think the portfolio is positioned as we potentially go into some level of macroeconomic slowdown? And I'm just asking in context of your leverage profile occurred.

Yes. So on the resiliency, as I mentioned, we feel overall cautiously optimistic on the portfolio. Clearly, there's a lot of moving pieces right now. But if you think about Food and Beverage, you think about Health, you think about what we are seeing resiliency from our Pharma business, so we feel overall that the portfolio going into possibly some challenging times is really well positioned overall. And I've kind of highlighted that Fine Fragrances may be an area that we start to see some pullback from a demand perspective. As far as the innovation question in our portfolio, there are some customers that are going to really focus on our core offerings, that they're going to maybe not think about new offerings at this point in time. However, we still are seeing very strong signals of customers wanting to innovate, co-develop and work with us, and we're really excited about our pipeline and portfolio. And my belief is that's still going to be critically important for the future. It's something that we'll spend time in December really sharing with you why we're excited about our pipeline portfolio, but that's going to be really key for us. So yes, you'll see some customers focus in the near term maybe on core offerings. However, as we look out, we're still seeing signals from customers that are working with us on innovation. It's going to be really important to the future.

Yes. And if I could maybe just add to that relative to the leverage question, Ghansham, is that as Frank indicated, as you're well aware, this business is highly resilient through cycles. So you may be down a couple percent, you may have some temporary transition quarter or 2 as customers sort of destock inventories, but in general, you don't see massive swings in terms of volume. Secondarily, very importantly, we do believe that sort of the pricing resiliency and being able to continue to sustain passing inflation through, which is helpful. Third, productivity, as we've mentioned, is sort of a major driver here to sort of offset some of the potential demand drop in the marketplace. And then in general, a slowdown probably helps other elements of working capital, such as inventory is more stable as well, and maybe even slower CapEx investments. So not only from a P&L standpoint, but from a cash flow, very resilient to sort of managing the cycle, particularly with the success in pricing and the focus on productivity.

We'll take our next question from Josh Spector with UBS.

I just wanted to follow up on Nourish, and particularly in the quarter, segment margins were much higher than our expectations, I believe, higher than your expectations. You talked about the visibility of raw materials flowing through your system. So I'm curious really what went better in the quarter, and why can't something like that occur in the next couple of quarters? What's different versus what happened this quarter?

Yes, good question, Josh. It really is related to the sort of the matching of the build in inventories relative to the flow-throughs of sales. And as mentioned, we've sort of built inventories. And at this point, we think we're going to be fairly -- i.e., the raw materials have come through. Raw materials are generally sort of static from a cost standpoint. So we do expect them to sort of run through the next quarter or so, and we wouldn't expect to have this, I'll say, artificial pickup from a timing standpoint.

And we'll take our next question from Chris Parkinson with Mizuho.

We've hit on price cost, we've hit on productivity. When we look out -- obviously, there's some uncertainty in the second half of the year. But when we look out into '23, '24, and Frank, now that you've had some time to look at your 4 primary businesses, can you talk about just any potential mix enrichment, specifically in H&B, and anything else that could really help us try to compartmentalize your longer-term margin opportunities across segments? Just any quick thoughts?

Yes, Chris, just -- I mean, we'll spend some time in December around the portfolio, in particular. This is why we have really looked at our business through the ROIC lens that we've spoken about. And you can see the 3 categories that we highlighted, Invest to Grow and then also maintaining our business, and then some that we actually have to really improve or exit. We're excited that we have significant opportunities within the Invest to Grow area. And I've highlighted Flavors, we've highlighted Health, our Food & Culture Enzyme businesses. So there is, we think, significant profitable opportunities for very good growth, big categories. The categories are growing, very strong end markets. So we're excited about that, Chris. And then also, we will continue to take a very disciplined approach overall to areas where we do not think we are the best owners. And Glenn highlighted our divestiture strategy, we'll continue to do that as well. So all in all, we feel good about the portfolio. And like I said, we'll impact a lot more of that when we get to December.

And we'll go next to Jeffrey Zekauskas with JPMorgan.

The margin compression in Scent was weaker from the first to the second quarter, that is weaker sequentially. That seems to be the one business where you've not had the same profit resiliency. Why is that? And for Glenn, your deferred tax line in your funds flow was an outflow of $178 million. And for the full year last year, it was an outflow of $236 million. What's going on with your taxes so that you have this cash outflow?

Jeff, you want me to answer the first question or second question?

You can go.

Okay. Sorry. Okay. So your first question was relative to the Scent trend and --

Market performance.

The reality is that -- 2 things. One, there were some one-time expenses in the second quarter relative to Scents. Secondarily, as we mentioned, that there's been 2 rounds of inflation. So as we talked, it's a little more of a lag in that business from a standpoint. So if you think about the 2 rounds of impact that's basically coming through and there's a bit of delay. And relative to taxes, there's lots of -- every year, Jeffrey, there's lots of ebbs and flows, depending on what's happening across various parts of the globe in terms of our tax positions and settlements. So everything is actually trending fine versus sort of our expectations at this point in time. There's nothing sort of abnormal from a year-over-year standpoint. But I do appreciate the question.

And we take our...

We can go to the next one.

Okay. We'll take the final question from Matthew DeYoe with Bank of America.

If I were to look at the top line kind of just on a rough cut basis, what percent of your sales or businesses fall into the invest category versus maximize versus optimized?

And thanks for that question. And that's something that at this time, we're not prepared to share the different cuts percentage-wise. What I would share is that we do have really good opportunities in the Invest to Grow category. And as I mentioned, we'll clearly unpack that a little bit more as we get into December and Investor Day, and really share the excitement we have around the portfolio as well as the opportunities. But right now, we're not prepared to share the specific percentages, okay?

And there are no further questions at this time. I'll turn the call back over to Frank Clyburn for any closing remarks.

So I would like to just thank everyone for joining the call, and also thank all of our IFF colleagues once again around the world. We feel very proud of our first half business performance and results, and we know that the teams around the world continue to work with our customers to bring innovation and to help our customers to be successful in the marketplace. And we look forward to seeing at our third quarter call as well as, once again, our Capital Markets Day on December 7, and hope everyone has a good rest of the morning. Thank you.

Thank you, and this does conclude today's program. Thank you for your participation. You may disconnect at any time.