Good morning, everyone, and welcome to the Sensient Technologies Corporation 2015 Second Quarter Conference Call. Today's call is being recorded. At this time, for opening remarks, I would like to turn the call over to Mr. Steve Rolfs. Please go ahead, sir.

Good morning. I'm Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation. I would like to welcome all of you to Sensient's conference call to discuss 2015 second quarter financial results. I'm joined this morning by Paul Manning, Sensient's President and Chief Executive Officer. Yesterday, we released our 2015 second quarter financial results. A copy of the release is now available on our website at sensient.com. Before we begin, I would like to remind everyone that comments made this morning, including responses to your questions, may include forward-looking statements as defined in the Securities Litigation Reform Act of 1995. Our statements may be affected by certain factors, including risks and uncertainties, which are discussed in detail in the company's filings with the Securities and Exchange Commission. We urge you to read Sensient's filings for a description of these factors. Please bear these factors in mind when you analyze our comments today. Now, we'll hear from Paul Manning. Paul Manning - President, Chief Executive Officer & Director: Thanks, Steve. Good morning. Sensient reported adjusted earnings per share of $0.80 in the quarter, compared to $0.81 reported in last year's second quarter. Foreign currency translation had a significant impact on the company's second quarter results, reducing adjusted EPS by $0.07 or more than 8%. In local currency, adjusted earnings per share increased by $0.06 or 7.4%. Adjusted operating income was off about 2% in local currency, principally because of soft demand and operating issues at our specialty inks business. The adjusted operating margin was 16.1% for the second quarter, a solid result, but slightly off last year's margin. Most of the Color Groups businesses performed well in the second quarter, but the group delivered disappointing results, because of issues within our specialty inks business. The other Color Group…

Thank you, Paul. Sensient reported revenue of $346 million and operating income of $45.1 million in the second quarter. The reported results include $10.5 million of restructuring and other costs. Excluding these costs, operating income was $55.5 million. Foreign currency translation reduced revenue by approximately 8% and adjusted operating income by 7.3%. The adjusted operating margin was 16.1%. Diluted earnings per share, as reported, were $0.64 compared to $0.62 in last year's second quarter. Restructuring and other costs reduced earnings per share by $0.17 in the current quarter and by $0.20 in last year's second quarter. Adjusted earnings per share were $0.80 in this year's second quarter compared to $0.81 in the comparable period last year. Foreign currency translation had a significant impact on earnings per share, reducing EPS by 8.6% or $0.07 per share. In local currency, adjusted earnings per share grew by 7.4%. For the first half of the year, diluted earnings per share from continuing operations were $1.28 compared to $0.66 in the first half of last year. The reported EPS results included $0.28 of restructuring and other costs for the first half of this year and $0.86 of restructuring and other costs for the first six months of 2014. Adjusted earnings per share were $1.56 in the first half of 2015 and $1.53 in the first half of 2014. In local currency, adjusted earnings per share grew by $0.10 or $0.15 per share in the first half, as foreign currency translation reduced EPS by $0.12 per share. Cash flows from operating activities were $46.3 million in the second quarter and $76.9 million for the first half of 2015. The second quarter cash flow was off last year's results by $3.3 million due to foreign currency translation and higher restructuring-related payments, which were partially offset by working capital improvements. Year-to-date operating cash flows are up more than 10%. Capital expenditures were $23.5 million during the second quarter and we are maintaining our full-year guidance to be in the range of $75 million to $85 million for CapEx. Free cash flow was $22.8 million in the quarter despite the foreign currency headwinds and higher capital expenditures related to restructuring. Our balance sheet remains strong. Our debt currently stands at 2.2 times EBITDA. We plan to keep debt levels in line with an investment-grade profile to maintain the flexibility for capital expenditures, dividend payments, share buybacks and acquisitions. Thank you for your time this morning. We will now open the call for questions.

Today's question-and-answer session will be conducted electronically. Your first question comes from the line of Mike Ritzenthaler with Piper Jaffray.

Good morning, Mike. Paul Manning - President, Chief Executive Officer & Director: Hi, Mike. Mike Ritzenthaler - Piper Jaffray & Co (Broker): In the past, we've discussed, in approximate terms, what portion of the sales within flavors has achieved some of these longer-term margin targets, something approaching to 20% up margins. Could you update us on how that metric has changed over the past three months or maybe six months? And within the context of your – maybe, Paul, your opinion on the pace of new business wins within the sales organization, are you ahead or behind plan on wining new business there? Paul Manning - President, Chief Executive Officer & Director: Okay. First let me apologies, the Thunderbirds are doing a training session outside our office here. So, if you hear some rocketing going by. We asked them to delay it, but they unfortunately couldn't. So, I apologize for that ahead of time. Mike Ritzenthaler - Piper Jaffray & Co (Broker): Interesting. Yeah. No problem. Paul Manning - President, Chief Executive Officer & Director: Yeah. I think, to answer your question, why I feel we're making progress and why I feel these operating margins, these 20% operating margins are achievable, as I've indicated previously, is that we see this in businesses – in a number of our businesses. In fact, what has changed in the last, say, year has been the number of businesses that are operating at that level. And at this point, certainly, the majority of our businesses are very close to or even in excess of that level of profitability. I would tell you that the ones that, perhaps, are struggling at this point to be there have some issues related to restructuring, which obviously provides that eventual uplift that we would be expecting. But I…

Your next question comes from the line of Mike Sison with KeyBanc.

Hey, guys. Nice quarter. Paul Manning - President, Chief Executive Officer & Director: Hey, Mike.

Hey, Mike.

Paul, in terms of Flavors & Fragrances operating margins, you got it to that 16% – close to 16%, congrats on that. But maybe could you frame up that you are – now that you've made a decent move here; A, do you think it's sustainable in the second half? And how do you bridge the remaining 400 basis points to get the 20% over time? What are you looking for in terms of growth and what are you looking for in terms of cost savings to get you there? Paul Manning - President, Chief Executive Officer & Director: Well, I would tell you this. I pledged in February that the Flavor Group would have operating profit growth of mid-single digits and perhaps even a little bit higher, mid- to high-single digit for the year. So, implicit within that estimate would be an improvement in Q3 and Q4 from where we are today. So, I think that is certainly going to provide some of the improvement. And again, the other piece of what I pledged in February was a 100 basis points to 200 basis points improvement in operating margin for the Flavors & Fragrances Group by the end of the year. So, I'm going to continue to make that pledge. I think what I mentioned in the previous commentary is that the new wins that we are generating are aligned very closely to our strategy and what I've been communicating on this call. Those margins – those gross margins are certainly better. As we mentioned, closing a site in Canada, we have three more production sites that will close by the end of the year. Obviously, once we cycle through that inventory, the savings are going to accelerate. We have another $9 million of savings coming in 2016 and…

Great. And then, in order to get to that mid-single digits to high-single digits growth rate for Flavors & Fragrances, is that more due to your new wins and your R&D work or do you need some help from the economy to get there? Can you maybe frame up what needs your – why so confident in getting that type of growth in the second half? Paul Manning - President, Chief Executive Officer & Director: Because I see it; I look at the third quarter, how that's starting out. It's starting out very nicely. We're seeing the new wins and we've had that much more time to continue to execute on our strategy, which, again, we've already indicated is showing signs of life in these businesses. So, on the economy side, sure, I'd love a really robust exciting economy, but I don't want to really – to some markets that we deal in, that may not be coming in the next quarter. So, we want to really condition our businesses to learn how to operate in those new economic environments. And my philosophy is very simple, people aren't eating and drinking less; they're just eating and drinking differently. And so, to the extent we have cast a wide net and have identified those customers, as I think we have in flavors and as well in colors, maybe some of those untouched customers who have all the same technical needs and growth desires as bigger companies, but they are largely underserved, I think, to me, that provides a good opportunity, because that's fundamentally where the growth is. The growth is not coming in many of the big CPG companies at this point. So, instead of sticking our head in the sand, we've been really focused very strongly on a broader range of customers that we feel, again, have those same needs as the big guys, but perhaps are looking to launch products today and rather than deferring products. So, I think, to me, yeah, it would be nice for stronger economic output from some of the bigger companies, but we're going to make do and we're just going to – we're going to attract – we're going to spend our time with the customers that do have the gross prospects.

Great. And then what about, on the external front, acquisitions? How is the pipeline? Is something that – it sounds like you're getting closer and closer maybe to taking a look at some – anything in – and where you're focusing your attention? What's the opportunity given the balance sheet is still in very good shape? Paul Manning - President, Chief Executive Officer & Director: Well, I think the Xennia acquisition is a fairly good indication of the types of companies that we like; very reasonably priced with a good portfolio of products, something that fills in a gap in our portfolio, something that brings us an extra dimension of technical expertise, in this case, ink developers, which they have many very good ones. So, that type of acquisition, I think, works very well for our company. Say, unlike some previous acquisitions, which we had as more or less bolt-on, our approach has changed modestly and is much that we're fully integrating these businesses right from the outset. So, we closed on day one, and on day two, we're having consolidated sales meetings, we are rationalizing production into one site, making those types of changes immediately so that we can make this accretive as quickly as possible and so that we can have a one common voice and view of the market. So, I think that inks market and related products is always very interesting to us. We could certainly see opportunities within the world of cosmetics and fragrances. And now, I feel like as though in most of our flavor businesses, we're in a very good position to potentially take on an acquisition in that range of the market. And so, we're always open. I'm not looking to heap a whole bunch of goodwill on the balance sheet. So, we will need to be very thoughtful about how we do that. So, we will continue to move forward very opportunistically. And from an overall capital allocation standpoint, we're going to balance buybacks with things like acquisitions and where we come out on one may determine where we come out on the other. So, always open, always looking, always have a pipeline. And those business areas that I just mentioned would be the more interesting ones for us to take advantage of.

Great. Thank you. Paul Manning - President, Chief Executive Officer & Director: Okay. Thanks, Mike.

Your next question comes from the line of Christopher Butler with Sidoti & Company. Christopher W. Butler - Sidoti & Co. LLC: Hi. Good morning, everyone. Paul Manning - President, Chief Executive Officer & Director: Hi, Chris.

Hello, Chris. Paul Manning - President, Chief Executive Officer & Director: Good morning. How are you doing, Chris? Christopher W. Butler - Sidoti & Co. LLC: Good. Good. Sort of getting back to something you were talking about just a minute ago, the reports on natural seems to be that you're seeing some of the bigger players move now, because smaller players are taking share. With your strategy to move from ingredients to more sophisticated compounds, do you want the smaller players to win in that contest? Paul Manning - President, Chief Executive Officer & Director: Well, I want the most-competitive market possible and I want the customers that we're most fully aligned with to win. And so, we certainly have relationships with big CPG companies and we certainly have relationships with what would be viewed as sort of smaller and more regional local flavor companies. And so, yeah, I would love to see broad-based winning. Christopher W. Butler - Sidoti & Co. LLC: And as far as the differentiation strategy, you're comfortable that you'd have as much success with the larger players as smaller players, I read that in your comments. Paul Manning - President, Chief Executive Officer & Director: Yes and no. I think we look very – we start off with what value can we create at this customer, what's our value proposition, what makes us different or better in the face of competition. And so some of this will depend on who we may be competing with at any given customer and what product segment we're talking about. So, we always look at that opportunity first. If there is a customer out there, who maybe has one competitor that you feel like you have a better product offering in some other dimensions that are better, we…

Your next question comes from the line of Brett Hundley with BB&T Capital Markets. Brett Michael Hundley - BB&T Capital Markets: Hi, guys. Paul Manning - President, Chief Executive Officer & Director: Hey, Brett. Brett Michael Hundley - BB&T Capital Markets: Paul, I apologize if I am repeating this question, but just so I make sure I heard it correctly on your prepared remarks, it sounds like broadly savings efficiencies related to the restructuring about a third in 2015, third in 2016, third in 2017. Is that how I understand it? Paul Manning - President, Chief Executive Officer & Director: That's about right. Brett Michael Hundley - BB&T Capital Markets: Okay. Paul Manning - President, Chief Executive Officer & Director: Yeah. Brett Michael Hundley - BB&T Capital Markets: And one of your larger competitors on the Flavors & Fragrances side recently called to H2 maybe being a little bit weaker. He talked about large format being a particularly tough area. I just wanted to run that by you and get your thoughts more broadly about the overall landscape. I mean, you talked about some channel expectations that you had and some favorable growth opportunities there. But do you guys see any potential slowing in the back half of the year? Paul Manning - President, Chief Executive Officer & Director: Nothing that I'm seeing right now is giving me any indication of a deteriorating situation. I referenced that July is off to a good start on orders for August. I don't see a deteriorating situation there, either. We've got many new wins teed up. So, I think, to some extent, it's about which companies and which areas you're looking at; whether we're talking about inks or pharma or cosmetics. Yeah, there are definitely customers that are struggling in each one of…

Brett, let me just – this is Steve, let me just add to that. I think we're able to make all of the investments we need in our business right now. So, over the last 12 months, we've invested $87 million in CapEx. We were able to make an acquisition. And so, on top of that, we were able to buy back stock and, as Paul said, increase our dividends. And where our debt is at today, 2.2 times EBITDA, that provides ample flexibility should other opportunities come along. Brett Michael Hundley - BB&T Capital Markets: Good to hear. And just one last one for me. Regarding M&A, this may be tough to answer, but in the areas that you are looking, do you see things for sale out there or is this much more the type of market where you need to identify targets, proactively approach them, et cetera? Paul Manning - President, Chief Executive Officer & Director: We see both. We see companies that are for sale, but we also see companies that may be kind of interesting. And so maybe they're not outwardly or there is not a for-sale sign out in front of them, but clearly there is an interest by that owner or that company in selling that. So, yeah, there is a lot of activity. Typically, by the time that everybody knows about it, you're going to be paying an awful lot of money for it. And so, from that standpoint, auctions may, in fact, raise price premiums significantly, making it very hard to make it a compelling investment case. So, yeah, we do a lot of our own work. I make a lot of visits. I talk to a lot of companies, a lot of owners. And I think that's the best way to go about doing it. And I think that you get to understand the business is very well and you're not necessarily doing that through an intermediary, you're doing that directly with your own staff and your in-house group, because you know your business best and you know how that business that you're looking at may work into it. But am I seeing more than I saw a year ago? Probably not, probably about the same. Am I seeing more than we saw five years ago? I'd say yes. So there's certainly an uptick in that one. So, those would be my comments there. Brett Michael Hundley - BB&T Capital Markets: Okay. Thanks for taking my questions, guys. Paul Manning - President, Chief Executive Officer & Director: Okay. Thanks, Brett.

We've reached the allotted time for questions. I would now turn the conference back to the company for closing remarks.

Okay. I hope we got to everybody's questions. I think we did. If we missed anybody or if anybody has a follow-up question, by all means, please call us at the company, we'll be happy to handle any follow-up. Thank you.

This concludes today's conference call. You may now disconnect.