Good morning, everyone, and welcome to the Sensient Technologies Corporation 2015 First 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 first quarter financial results. I'm joined this morning by Paul Manning, Sensient's President and Chief Executive Officer. Yesterday, we released our 2015 first 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 $0.76, an increase of 7% compared to the $0.71 reported in last year's first quarter. Foreign currency translation had a significant impact in the quarter and the local currency earnings per share increased by $0.10 or 14%. Operating income increased by 4.5% in local currency and operating margins improved 60 basis points to 15.5%. Cash flow from operating activities increased by more than 50% to $30.6 million in the quarter. Our strong cash flow performance was driven by strong earnings and substantial inventory reductions. We reduced inventory by approximately $23 million in the first quarter, which follows a $15 million reduction in last year's fourth quarter. Working capital reduction will continue to be an area of focus. Sensient's Color…

Thank you, Paul. Sensient reported revenue of $346.2 million and operating income of $46.4 million in the first quarter. The reported results include $7.1 million of restructuring costs in the quarter compared to $46.2 million of restructuring costs in the first quarter of 2014. Excluding these costs, operating income was $53.6 million in the quarter, which is an increase of 4.5% in local currency. Our adjusted operating margin increased 60 basis points to 15.5% in the quarter. Diluted earnings per share as reported were $0.65 in the quarter compared to $0.05 in the first quarter of 2014. Restructuring costs reduced reporting earnings per share by $0.12 in this year's first quarter and by $0.66 in last year's first quarter. Adjusted earnings per share increased 7% to $0.76 per share, which is an increase of 14% in local currency. Foreign currency translation had a significant impact on both revenue and operating income, reducing both by approximately 7% during the quarter. We are continuing our efforts to shift to technology-driven and value-added products while rationalizing non-strategic and low-margin business. Most of this impact was in the Flavors & Fragrances Group. Removing the effect of the rationalized business, consolidated revenue increased 2.1% and the Flavors & Fragrances Group revenue increased 4.1% in local currency terms. Sensient's cash from operating activities increased by 54% in the current quarter. The cash flow improvement was driven by strong earnings and lower inventories as we continue to focus on reducing working capital levels. Capital expenditures were $13.4 million during the quarter; and for the full year, we expect capital expenditures to be in the range of $75 million to $85 million. Free cash flow increased to more than $29 million in the first quarter, which includes $12.6 million from the sale of two facilities. The strong cash…

Today's question-and-answer session will be conducted electronically. Your first question comes from the line of Mike Ritzenthaler with Piper Jaffray. Michael Ritzenthaler - Piper Jaffray & Co (Broker): Yes. Good morning.

Hi, Mike. Michael Ritzenthaler - Piper Jaffray & Co (Broker): First question is around, Paul, I guess around the shifts and realignment within Flavors & Fragrances. I'd be interested in how you are thinking about the changing culture within the sales organization and in selling systems and is that a big shift I guess first of all? And secondly, how would you gauge progress versus your expectations on the sales front? Paul Manning - President, Chief Executive Officer & Director: Well, I would say this, it's a – broadly speaking, it's not terribly dissimilar from what we did in the Color Group over and what we continued to do in the Color Group over the last several years. I think first of all it begins with how we measure our sales people. I think certainly we align their incentive programs. We align their training to executing on those types of sales, the types of sales that involve flavors and technology platforms that we've had and we continue to develop. I think as well, there is a fairly good foundation in most of the businesses. I think – certainly, we have had success in many of these areas. I talk about a number of our businesses that have a very good portfolio, operate at very good profit levels today. So it's not as though we're starting from zero; cupboard was not by any means empty, but it just needed stronger emphasis, more training, additional sales people and sales people that I think have more of a technical background to them. The notion of a sales person executing a sale because the purchasing agent or the technical person likes them I think is a little bit of the thing of the past. I think today it's more along the lines of what…

Yes, thanks, Mike.

Your next question comes from the line of Brett Hundley with BB&T Capital Market. Brett Michael Hundley - BB&T Capital Markets: Hey, good morning, gentlemen. Paul Manning - President, Chief Executive Officer & Director: Hey, Brett.

Good morning, Brett. Brett Michael Hundley - BB&T Capital Markets: Thanks for taking the question. I wanted to follow on Mike's line of questioning on margin performance in Flavors & Fragrances clearly a focus. Given talk of a push over time up towards higher levels and Paul, you've talked about 100 basis points or 200 basis points as you've mentioned as far as improvement. When I adjust your margin in flavors, I get something closer to a 14.3% margin when I adjust for currency. And certainly it's an improvement year-on-year, but I think we'd like to see more of that towards the 100-basis point to 200-basis point level. And so, I'm wondering if you can talk a little bit about the step function there and when that improvement seems to come, if you can attach some timing expectations. I know you also have potentially greater cost savings realization in 2016, but if you can lead us through the rest of 2015, that would be really helpful. Paul Manning - President, Chief Executive Officer & Director: Yeah. So I'll have to get back to you on your 14.3%, but for the time being for the purposes of the call, let me just give a broad sweep on how we generate – conceptually how we generate this margin, and I'll give you a sense to the specifics of your question about what happens this year. Broadly speaking, we will get this operating margin improvement through really some key actions; noteworthy number one would be mix. Again, how do we sell more of the flavors, fewer of the individual ingredients, because the differences in gross margin between those outcomes can be somewhat substantial. So, mix first and foremost; emphasizing that more sophisticated portion of our portfolio, not abandoning it what we sell today,…

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

Hey, guys, nice start to the year. Paul Manning - President, Chief Executive Officer & Director: Hey, thanks Mike.

Paul, just a question for you, Kraft looks like they're gone similar out to Nestle, Hershey, and Frito-Lay, they announced recently they want to replace some of their net synthetic colors with natural colors, I think in mac and cheese for what it's worth. But how big of an opportunity is this trend for you near-term and maybe longer-term? I remember the beverage side that was a big-big plus for you guys, any thoughts, just generally on how much of food is synthetic these days and what the evolution of moving to naturals could be? Paul Manning - President, Chief Executive Officer & Director: Well, as you look at different geographies, there's a different answer for each one of them. If you consider Europe who is many-many years ahead of the rest of the world in terms of converting from synthetic to natural colors, you could see that the majority well above the majority of that market and the market sales that we generate there are coming from natural colors or what is also a different product line called coloring food stuff that we don't need to get into the technicalities here. Let's just say natural colors is predominant in Europe. When you come to the U.S., it's not nearly as large. There has not been a commensurate legislative change, which would effectively obligate our customers to make that conversion, much like occurred in Europe. So in short, the trajectory in the U.S. has been slower, not nearly as much of the market has converted to natural colors, but clearly with the article you referenced, there is an increasing trend and an increasing interest from many of the customers, and then that's really being driven by the end consumer, who wants more natural products whether that's color or flavor or…

Okay, great. And then, as 2Q through 4Q unfolds, this foreign currency issue is kind of unfortunately hurting the reported results for sales. Could you walk us through on a constant currency basis, what you expect Color should be able to do in the remaining quarters as well as Flavors & Fragrances understanding there is some product rationalization there? But just want to make sure I understand what the growth potential is for the next couple of quarters ex-currency as the year goes? Paul Manning - President, Chief Executive Officer & Director: Sure. So, I'll start with flavors. I think certainly I'll stick to the guidance that I provided on the last call. I would see a mid and then perhaps even mid to high single-digit operating profit growth. I mentioned once again, 100 basis point to 200 basis point improvement in operating margin. And I said, flat revenue, I think flat to perhaps slightly positive would be a reasonable guidance with respect to revenue. The culling you look at Q1, we had 3% top line and then 4% with the culling. The culling is not necessarily a steady straight line. You may generate more in one quarter than you would in the next, you may be looking to sell a product line which could accelerate it, so different factors may come into play. And so it's not – we didn't cull as much as I had anticipated we would for several of those reasons. But that aside, I think flat revenue to perhaps slightly positive would be appropriate for flavors. For Colors, as I mentioned on the last call, and I'll emphasize that again, we would guide low single digit OP, but a lot of that when you say FX, it's principally translational, but what we have in colors not as much in flavors, but more in colors. We've talked about Switzerland, but it applies to other currencies as well, the transactional effect of the currency has had a much larger impact on the Color Group than the Flavor Group. So, as you break down colors, food and pharma and cosmetics as we report had very nice quarters Q1. I think those rates can continue for the rest of the year, that mid, mid-to-high single digit revenue and operating profit growth on each one of them. I think our challenge is principally in the technical colors area. And so that it all, some of this depends on that market and the transactional impact. But I think the low single digit OP is what we're anticipating as well as that decline in operating margin again owing to this transactional loss on the FX run. And then Asia Pac, double digit at least in operating profit and then corporate, we continue to expect to take cost out, and I think you'll see those benefits for the rest of the year as well.

Great, thank you. Paul Manning - President, Chief Executive Officer & Director: Yes, thanks Mike.

Your next question comes from the line of Christopher Butler with Sidoti. Christopher W. Butler - Sidoti & Co. LLC: Hi, good morning everyone. Paul Manning - President, Chief Executive Officer & Director: Hey, Chris. Christopher W. Butler - Sidoti & Co. LLC: Just jumping something that you said as you look at the $0.29 hit from currency this year, could you break that out transaction versus translation?

Yeah, I think we had originally said that the transaction I think would be $0.05 to $0.07, and that's largely unchanged, I would say, most of it has come – most of the change has come from the translation element, so, most of the $0.06 change I would attribute to the translation. Christopher W. Butler - Sidoti & Co. LLC: And getting back to kind of big picture strategy, as we look at the Flavors Group, could you give us a sense of how much of that revenue is ingredients versus the complex flavors? And any sort of general sense on the growth in those two sort of sub segments? I'd have to imagine the ingredients are being hurt by culling, but more interested in signs of success on the complex flavors side? Paul Manning - President, Chief Executive Officer & Director: Yes, certainly, we look first – our first bellwether is our pipeline. And our pipelines within the Flavor Group are strongly oriented towards those types of projects. And those are the ones we're spending our time and dedicating sales and technical resources to execute. So, the pipeline certainly speaks to that. And now, it may depend a bit whether you're talking savory, sweet, beverage, fragrance (38:38) they all differ a bit, but I think you can certainly across the board say that the shift in the pipelines has really been well underway and that continues to be the case. I think our growth rate in certainly, the majority of our businesses, we referenced a few of them in the call here, has been the way we're able to get the double-digit operating profit was through those new wins in those, say, projects that are much closer to our strategy. I think in some of our businesses though one…

Yes. I don't have that exact figure, but our – yes, our businesses there are profitable, I would agree. Christopher W. Butler - Sidoti & Co. LLC: All right. I appreciate your time. Paul Manning - President, Chief Executive Officer & Director: Okay. Thanks, Chris.

Your next question comes from the line of Richard O'Reilly with Revere Associates.

Hi, good morning. Thank you. You raised – you increased the currency impact by $0.06, but you lowered your guidance by only $0.02 to $0.03 while you raised the top end of your pre-currency impact. Yet, your statement was that there was no change in the operational outlook. Can you just – without fine-tuning this, can you give an idea why you raised the upper end? Paul Manning - President, Chief Executive Officer & Director: Sure. So, I guess what we wanted to communicate when we said no change in the operational part of the business is that we were not changing our guidance to reflect some gap in sales or cost or something like that that the change was specific to FX. So, just that point to begin, I think – as we continue to move forward and we continue to execute on our plans, I want to make sure I deliver and we want to make sure as an organization, we're pushing the organization and we're doing well by our shareholders. I think that's maybe what drove it.

Okay, okay. So, you – basically, you do see a better year than you had thought back in January by a few pennies for whatever reason? Paul Manning - President, Chief Executive Officer & Director: Sure. I mean, from the standpoint that we were $0.76 that certainly lends some credence to-

Correct. Yeah, you beat the consensus by a few pennies there, right? Paul Manning - President, Chief Executive Officer & Director: Yes.

Okay. And then may be the number of shares outstanding is fewer than what you might have thought going into the year; that make a difference? Paul Manning - President, Chief Executive Officer & Director: Well, we – no would be the first part. I think that we build a range, we build our guidance. If we buyback that may move us to the, closer to the upper end of the guidance. But no, I didn't necessarily do the math on that before we initiated the buyback so much as-

Okay. Paul Manning - President, Chief Executive Officer & Director: I saw it as an opportunistic time to buy the stock.

Okay. Okay. Good. Thanks a lot. Paul Manning - President, Chief Executive Officer & Director: Okay. Thanks, Richard.

At this time, there are no further questions. I will now turn the conference back to the company for closing remarks.

Okay. Thank you again for your time this morning. That will conclude our call. If anyone has any follow-up questions after the call, by all means, feel free to contact the company. Thank you.