At this time, I would like to welcome everyone to the International Flavors & Fragrances' Second Quarter 2017 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. 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 2017 conference call. Yesterday evening, we distributed our 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 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 2017. 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 February 28, 2017 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 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 Chairman and CEO, Andreas Fibig; and our Executive Vice President and CFO, Rich O'Leary. We will start with prepared remarks and then take any questions that…

Your first question comes from the line of Mark Astrachan with Stifel, Nicolaus. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: Good morning, everybody. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Good morning, Mark. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: I guess, first question is on the sales guidance for the year, and specifically, for the back half of the year. So, what gives confidence that you're going to be able to achieve the anticipated acceleration that's implied by the numbers? It would seem like you'd have to get to at least close to 4% in the back half of the year on an organic basis? Andreas Fibig - International Flavors & Fragrances, Inc.: Okay. Mark, thank you for the question. First of all, we see in terms of our win performance going forward is one argument. The second thing is that we had at least on the fragrance side actually a pretty good and favorable comparison for the third quarter. And we had with all the uncertainties around the third quarter, but we had a pretty good start into the third quarter already. Rich, do you want to add? Richard A. O’Leary - International Flavors & Fragrances, Inc.: Yes. I think a couple extra comments, Mark, from my side. I think, we do expect on the fragrance compound side to benefit from a couple things: one, some new product launches and wins that are expected to hit in the third quarter or early fourth quarter. We are starting to see signs of stabilization in Latin America. And we do expect to see some reduced headwinds in Greater Asia. And as Andreas talked about, I think we are starting to see signs of stabilization…

Your next question comes from the line of Gunther Zechmann with Bernstein.

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

Just on raw materials, can you confirm the 3% cost inflation for this year that you highlighted with Q1? And add onto that, given the currency moves we've seen recently, is this guidance is in dollar or in euro terms? Thanks, guys. Andreas Fibig - International Flavors & Fragrances, Inc.: Okay. So for the first one, I think we still see input cost in the 3% range for the full year. There will obviously be some timing impacts related to that when it flows through from a P&L standpoint. The increase is, again, primarily driven by naturals on both business units, whether it's vanilla or citrus, those are impacting both business units. From a currency standpoint, it's based on our current – our guidance that I gave you is based on existing exchange rate, the latest exchange rate. So call it roughly a $1.18 euro-dollar exchange rate, as that flows through, that's embedded in the guidance. And that's on a – the dollar basis will be, what I talked about, net of currency, that will be on a reported dollar basis.

That's, great. Thanks. Have a nice day. Andreas Fibig - International Flavors & Fragrances, Inc.: Okay.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

Good morning. How are you? Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Good morning, Silke.

I was trying to like puzzle out your results in the Flavor division excluding the acquisitions. So David Michael, this is like $85 million in annual sales and PowderPure like $15 million and $20 million. So if you distribute it through the second quarter, did your North American business grow or didn't it grow because it looks like it's all acquisition growth. It looks like the underlying growth was negative? Richard A. O’Leary - International Flavors & Fragrances, Inc.: No, I mean North America, remember PowderPure, we only had it for a portion of the quarter. It had, on a total company basis a negligible impact in terms of sales growth in the quarter, I would say less than probably 30 basis points at a total company basis. When you look at North America for flavors, I mean the organic business grew mid-single digits and the balance of that relates to the contribution of David Michael's.

Mid-single digits, okay. Where did the growth in flavors come from on the mid-single digit range? Richard A. O’Leary - International Flavors & Fragrances, Inc.: I think it's growth across all the categories. Particularly I would say we had double-digit growth in snacks and dairy and mid-single digit growth in sweet.

Okay. Richard A. O’Leary - International Flavors & Fragrances, Inc.: And it's all driven – it's primarily driven by new wins. Andreas Fibig - International Flavors & Fragrances, Inc.: And we are actually pretty proud because you know just a year and half backwards, you saw that we had not so good of an organic performance in Flavors North America, and team has turned this around quite significantly. And that has led to the mid-single digit growth in North America and on top of it we have the great performance of Tastepoint as well, and that makes it actually a very good and sustainable business for us.

Thank you. And I wanted to ask one question on your cash flows if I may. And I was wondering if you had sort of like an operating cash flow targets for the year. So, in the quarter like I understand even if we strip out the litigation settlement, like your operating cash flows were like $114 million versus $173 million last year. So if you leave all the items in like what is your operating cash flow target for the year? Richard A. O’Leary - International Flavors & Fragrances, Inc.: Yes. Look the specific target I'll have to get back to you. I don't think we have that said or communicated that. I would tell you that the decrease year-over-year was roughly on a year-to-date basis $115 million. So $56 million of that is the settlement on ZoomEssence. We've got lower income, including the non-cash gain on the derivative or liquidation of the subsidiary. So that was two combined about $20 million, $10 million in incentive comps year-over-year and there's another $10 million roughly associated with deferred taxes and indirect taxes.

Thanks for the clarification. I'll get back in the queue.

Your next question comes from Faiza Alwy with Deutsche Bank.

Hi, good morning. So I was wondering, Rich Richard A. O’Leary - International Flavors & Fragrances, Inc.: Hey, Faiza, good morning.

Hi, Rich, if you could try and quantify for us the impact this quarter from the destocking and how that offset the new win performance that would be really helpful. Richard A. O’Leary - International Flavors & Fragrances, Inc.: The specifics are – it's hard to specifically identify the impact. I will tell you that we saw a pretty sizable increase in back-outs in the last week, the week and half of the quarter. I will say that on top of that we have seen – we're encouraged by the start to the third quarter.

Okay. And then could you just remind us – you're spending a lot in CapEx. I think you said 4.5% of sales. Could you just remind us sort of where you're building new facilities or sort of where that is going? Richard A. O’Leary - International Flavors & Fragrances, Inc.: It's principally around the facilities in Greater Asia and the deployment of technologies around delivery systems and some of the capacity. But we've got a big piece in China. We've got two new facilities that are going on there. We're going to have to continue. And as you know, we've talked that we're going to have some peaks in next year, this year, next year, and 2019 around 5% because not only do we have China, but we've got Indonesia and India that we have to deal with. Andreas Fibig - International Flavors & Fragrances, Inc.: And in particular, India is important to us because it's a high growth market for us, and we really have to make sure that we have state-of-the art facilities in India, and we will invest in two more manufacturing plants in India and we are well underway to do that.

Okay. Great. And then, Andreas, if you could just expand a little bit more on Tastepoint. Sort of just practically what's the difference in terms of how you're approaching your high growth, medium-sized customers versus what it was maybe before Tastepoint? Andreas Fibig - International Flavors & Fragrances, Inc.: Yes. So I would say that our exposure, and particular in the U.S., towards this middle market was not so good before we acquired actually Ottens two years ago. And we saw it with all the changing trends and the struggle of many of the bigger multinational global companies that we have to change our exposure towards the more dynamic markets. And with the entrance of Ottens, we saw that that's a very, very good hub for us. And we have combined this now with David Michael, made it Tastepoint, and that's creating actually our outlet in terms of customer segmentation towards exactly that dynamic middle market. They have the flexibility of a small company, but they can use the great technology we can give them from IFF, and that makes them uniquely positioned for that marketplace. And what we see so far is, first of all, the launch at IFT in Vegas went very well. The people are very motivated and our customers are very excited about this opportunity to work with us. What we see so far is probably two times to three times of growth we have in our organic business. So I think it's really important. And I would say, as we always say, it's small enough, but still big enough to help with technology.

Okay, great. Thank you.

Your next question comes from the line of Adam Samuelson with Goldman Sachs. Adam Samuelson - Goldman Sachs & Co. LLC: Yes. Thanks. Good morning, everyone. Maybe first on the gross margin side. I'm wondering if you can give a little more color on maybe the price/cost headwinds specifically that you absorbed in the quarter, or if the gross margin decline will be on a percent basis is attributable to acquisitions and confident that can actually flip positive later this year as you get right side up on price/costs. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Let me try to answer that in the following manner. I'll talk to the overall return on sales profile for the two businesses. Flavors improved by roughly 90 basis points year-over-year. It's principally driven by productivity, cost, and volume. And price to input cost net were slightly favorable. And those were offset by unfavorable mix. And to a certain extent and slightly by FX. When you look at the Fragrance return on sales profile, it went down about 140 basis points. Price to input cost and M&A, which is principally related to Fragrance Resources, those were each about 1 point of headwind year-over-year and mix was probably another I'm going to call it 20 basis points. So those three items more than offset the benefits associated with volume and productivity gains. Adam Samuelson - Goldman Sachs & Co. LLC: Okay. And as you think about those pieces moving forward. I mean, Fragrance Resources that impact was fully layered in for the balance of the year. But I presume if there is an expectation of a reacceleration in organic in the back half that you should start to get then some tailwinds on the gross margin line as well. Is that fair? Richard…

Your next question comes from Katie Grafstein with Barclays.

Hi, thanks. So, first I was just wondering, what drove the strong performance in Ingredients this quarter, especially in Latin America and Europe? And then I was just wondering if you could also talk a little bit about the unfavorable price to input cost dynamic in Fragrances. I know it's been going on for some time, but just curious if the level of rebates have changed or if that dynamic has improved at all since last quarter? Andreas Fibig - International Flavors & Fragrances, Inc.: Okay. Let me take the first part and Rich takes the second part. So, the Ingredients business we have done probably a year ago quite some changes, how we approach our customers. We have also changed a bit our portfolio where we're working with it, we have changed our sales team, we have increased the sales productivity here as well and that has led already to a quite significant turnaround of our Fragrance and Ingredients business, and then we report the active cosmetics in that as well, which has yielded a double-digit growth for last quarter as well. So, all-in-all, actually it's an amazing turnaround story from lackluster performance for couple of years to a good growth engine for now and for going forward as well. Rich? Richard A. O’Leary - International Flavors & Fragrances, Inc.: Okay. So, Katie, let me go back to the pricing input. I'd say overall for the company was basically flat, favorable by about 1 point in Flavors and unfavorable by about 1 point in Fragrances. Your point about has the dynamic changed from last quarter, I would tell you that the pricing impact of Q2 for Fragrances compared to Q1 has improved by about 70%. Andreas Fibig - International Flavors & Fragrances, Inc.: Okay.

Your next question comes from the line of Brett Hundley with Vertical Group.

Hey, good morning, guys. Andreas Fibig - International Flavors & Fragrances, Inc.: Good morning. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Hey, Brett.

My question was centered on Fragrance in Asia, and specifically Fine Fragrance in Asia accelerating during the quarter. And certainly, when you do the math, there's a portion of that that comes from Fragrance Resources in China, but the math also suggests that your legacy business is supplying nice gains in the region as well. And I think you mentioned that in your prepared remarks, so I just wanted to delve further into that and understand your organic performance in the region, and maybe even China specifically, and talking about whether or not that's coming from new wins, improved growth at existing accounts, any color you can give us there might be helpful. Andreas Fibig - International Flavors & Fragrances, Inc.: So, probably, let's start with a general comment is, if you look at Asia and the Fine Fragrance business, it's still a very, very small business. And the part of Fragrance Resources, we have bought into that was even smaller and it was actually a split between consumer and fine here as well. So, we see some movements in Asia, even in terms of Fine Fragrances, which is good for us to see because in the past, it was never a market which was very exposed to that category. We will see how it's going forward, particularly also in geographies like Japan, but certainly also China. So, still a small business, a very small piece of it is also Fragrance Resources and, yeah, we will see how we are going forward. In general, maybe backing off the just Fine Fragrance part going to the Consumer Fragrance, it's a tough environment we see in Asia and also in China, because we see that particularly for some of our bigger customers are that the market is changing and they have to adapt and we have to adapt as well, and here probably also compared with the question we had before on smaller customers, that plays a role as well that you have a good standing with some of the smaller or mid-sized customers in these markets as well. I don't know, Rich, whether you want to add? Richard A. O’Leary - International Flavors & Fragrances, Inc.: Yeah. I mean, as Andreas was talking, I'll talk total Fragrance compounds for Greater Asia, I think keep in mind there was a strong double-digit comp in the prior year. So, if I look at it on an organic basis, it's down mid single-digits in the region, primarily driven by China, which is also down mid single-digits. And then, some of the same pressures we saw and mentioned regarding Indonesia impact, and Flavors also impacted Fragrances.

Okay. And Rich, just quickly, do you have any update on some of the Fragrance Ingredient plant discussions and actions that you are taking in China this year. I think we're around the timing where you are in discussions with the government on a facility and maybe you've been taking some actions to move around some production there as well, do you guys have any update there? Richard A. O’Leary - International Flavors & Fragrances, Inc.: I will say, Brett, that we're still in the discussions, it hasn't been formalized yet. I think it keeps – to be honest, it's kind of kicked out a couple of months effectively. So, we expect it to be in a position to talk about it now, it's going to have to be fourth quarter now.

Okay. Thank you.

Your next question comes from the line of John Roberts with UBS.

Thank you. I assume there's not a Tastepoint equivalent on the Fragrance side. I mean, there are obviously some small dynamic customers there, but there's not really any Ottens or David Michaels to acquire to serve that market I would assume? Andreas Fibig - International Flavors & Fragrances, Inc.: John, actually it's an interesting question because if you look at our Fragrance Resources acquisition, that's actually why we did it for actually two markets. One is in the U.S. because they have some of the smaller customers and we are capitalizing on it. And believe it or not in my home country in Germany, they are serving a lot of smaller customers out of the Hamburg facility as well, and that's very welcome because we were not very strong in Germany despite a good engagement with Henkel. And so, you see Fragrance Resources is a bit an entry into these smaller customer base like Tastepoint.

And then, Rich, if you look at your full year currency guidance and compare it to the first half realized currency, at the EPS level, it looks like in the second half it's roughly neutral year-over-year in currency, and is there a significant difference between the third and fourth quarter? Richard A. O’Leary - International Flavors & Fragrances, Inc.: As I said, when I look at the second half, keep in mind we had a favorable – in relation to our guidance for the full year for tax rate, call it, 22.5%, we were favorable in the first half of the year, that obviously then turns around in the second half of the year. As I also mentioned that I would see more pressure on EPS growth year-over-year in Q3, particularly related to the interest expense dynamic that I mentioned earlier.

I was asking about currency that's there. The currency year-over-year in the first half was significantly higher than full year currency effect? Richard A. O’Leary - International Flavors & Fragrances, Inc.: Yeah. So currency, in general, will be favorable in the second half of the year, more of that coming in Q3 than Q4.

Okay, thank you. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Sorry.

Your next question comes from Gunther Zechmann with Bernstein.

Yeah. I have a spectacular question, actually you just touched on it a little bit. What's your guidance on tax rate? Richard A. O’Leary - International Flavors & Fragrances, Inc.: That's the reason for the second question, okay. Sorry.

Just a short one I promise. It's been quite volatile, what's your guidance on tax rate for the last two quarters of the year, please? Richard A. O’Leary - International Flavors & Fragrances, Inc.: So again, I think my guidance for tax rate hasn't changed since the beginning of the year it's about 22.5%. The calendarization of that of quarter-by-quarter, there is volatility in that depending upon specific items that occur in the mechanics in terms of how we have to report some of the items relative to the pre-tax in the quarter. So in general, the second half will be higher than the first half, but I'm still comfortable with the guidance of full year at 22.5%.

Great. Thank you.

Your next question comes from Mark Astrachan with Stifel, Nicolaus. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: Hey, guys, again thanks for the second question. I guess just broadly Andreas, what are your thoughts on industry consolidation given slowing customer volumes and maybe more specifically, how do you think about bolt-on versus larger scale M&A sort of given where we are and you've done a bunch of smaller deals and yeah, a broader context there would be helpful. Andreas Fibig - International Flavors & Fragrances, Inc.: Sure. Mark, if you look at our M&A strategy, you know that we were not very active for many, many years. We've done now in the last two years round about five acquisitions and they have different, let's say, strategic reasons for it. Three of these acquisitions are basically to look whether we can broaden our exposure to small and midsize customers to grow on that front. Another one is basically going into an adjacent area like active cosmetic ingredients and PowderPure is a pure technology play because it gives us access to a technology which we had not before, which can help us to grow in certain segments of the business. So all of these things we have experienced. We are very happy with all of the five acquisitions and we're very happy that they are actually performing at or above the business case we have given, which is actually pretty, pretty good, if you look at five of these acquisitions. So, we certainly, certainly will go ahead with the bolt-on strategy because it just has paid off and we will make sure that that we continue that path. I certainly can't tell you how many and how big these are because it's a bit opportunistic as well. But that's certainly…

There are no further questions at this time. I'd now like to turn the conference back over to Andreas for closing remarks. Andreas Fibig - International Flavors & Fragrances, Inc.: Yeah. Thank you very much for all the insightful question. I guess, we will talk to, to many of you during our one-on-one calls, as well. Have a good day. Thank you, bye-bye. Richard A. O’Leary - International Flavors & Fragrances, Inc.: Thank you.

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