SENSIENT TECHNOLOGIES CORP (SXT)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results. Forward-looking statements include
statements in the future tense, statements referring to any period after June 30, 2026, and statements including the terms “expect,” “believe,” “anticipate,” and other similar terms that express expectations as to future events or conditions. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other
factors that could cause actual events to differ materially from those expressed in the forward-looking statements. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results. These
factors and assumptions include, among others, the Company’s ability to manage general business, economic, and capital market conditions, including actions taken by customers in response to such market conditions, and the impact of recessions and
economic downturns; the impact of macroeconomic and geopolitical volatility, including inflation and shortages impacting the availability and cost of raw materials, energy, and other supplies, disruptions and delays in the Company’s supply chain, and
the conflicts between Russia and Ukraine and in the Middle East; industry, regulatory, legal, and economic factors related to the Company’s domestic and international business; the effects of tariffs, trade barriers, and disputes; the availability
and cost of labor, logistics, and transportation; the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to anticipate and respond to changing consumer preferences, changing technologies,
and changing regulations; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts, acquisition and divestiture activities, and Portfolio
Optimization Plan; growth in markets for products in which the Company competes; industry and customer acceptance of price increases; actions by competitors; the Company’s ability to enhance its innovation efforts and drive cost efficiencies;
currency exchange rate fluctuations; and the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Except to the extent required by applicable law, the Company does not undertake to publicly
update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

OVERVIEW

Revenue

Revenue was $462.1 million and $414.2 million for the three months ended June 30, 2026 and 2025, respectively. Revenue was $897.9 million and $806.6 million for the six months ended June 30, 2026 and 2025, respectively. The increase in revenue for
the three and six months ended June 30, 2026 was primarily due to higher volumes and selling prices and the favorable impact of foreign exchange rates that increased revenue by approximately 2% and 3%, respectively.

Gross Margin

The Company’s gross margin was 37.4% and 34.5% for the three months ended June 30, 2026 and 2025, respectively. The Company’s gross margin was 36.2% and 34.0% for the six months ended June 30, 2026 and 2025, respectively. For the three and six
months ended June 30, 2025, Portfolio Optimization Plan costs totaling $1.8 million and $3.6 million, respectively, decreased gross margin by 40 and 50 basis points, respectively. See Portfolio Optimization Plan below

for further information. For the three and six months ended June 30, 2026, the Company received $4.8 million of tariff refunds that improved gross margin by 100 and 50 basis points, respectively. The Company’s gross margins for the three and six
months ended June 30, 2026 were further impacted by the higher volumes and selling prices, partially offset by higher raw material costs.

Selling and Administrative Expenses

Selling and administrative expense as a percent of revenue was 20.8% and 20.6% for the three months ended June 30, 2026 and 2025, respectively. Selling and administrative expense as a percent of revenue was 20.3% for both the six months ended June
30, 2026 and 2025. For the three and six months ended June 30, 2025, selling and administrative expenses were increased by Portfolio Optimization Plan costs totaling $1.6 and $2.6 million, respectively, which increased selling and administrative
expenses as a percent of revenue by approximately 40 basis points for each period. See Portfolio Optimization Plan below for further information. After the effects of the Portfolio Optimization Costs in
2025, the increase in selling and administrative expense as a percent of revenue for the three and six months ended June 30, 2026 was primarily due to higher performance-based executive compensation costs incurred in 2026.

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Operating Income

Operating income was $76.7 million and $57.7 million for the three months ended June 30, 2026 and 2025, respectively. Operating margins were 16.6% and 13.9% for the three months ended June 30, 2026 and 2025, respectively. Operating income was
$143.4 million and $111.2 million for the six months ended June 30, 2026 and 2025, respectively. Operating margins were 16.0% and 13.8% for the six months ended June 30, 2026 and 2025, respectively. The tariff refunds increased operating margins by
approximately 100 and 50 basis points for the three and six months ended June 30, 2026, respectively. Portfolio Optimization Plan costs decreased operating margins by approximately 80 basis points for both the three and six months ended June 30,
2025. The Company’s operating margins for the three and six months ended June 30, 2026 were further impacted by the higher volumes and selling prices, partially offset by higher raw material costs and higher performance-based executive compensation
costs incurred in 2026.

Interest Expense

Interest expense was $8.2 million and $7.4 million for the three months ended June 30, 2026 and 2025, respectively, and $16.1 million and $14.7 million for the six months ended June 30, 2026 and 2025, respectively. The increase in expense for both
the three and six months ended June 30, 2026 was primarily due to an increase in the average outstanding debt balance.

Income Taxes

The effective income tax rates for the three months ended June 30, 2026 and 2025 were 25.1% and 25.3%, respectively. For the six months ended June 30, 2026 and 2025, the effective income tax rates were 25.0% and 25.3%, respectively. The effective
tax rates for the three and six months ended June 30, 2026 and 2025 were both impacted by the mix of foreign earnings and changes in estimates associated with the finalization of prior year foreign tax items.

Acquisition

On February 14, 2025, the Company acquired Biolie SAS, a natural color extraction business located in France. The Company paid $4.9 million in cash for this acquisition, which is net of $0.2 million in
debt assumed. The assets acquired and liabilities assumed were recorded at their estimated fair value as of the acquisition date. The Company acquired net assets of $0.3 million, with the remaining $4.6 million allocated to goodwill. This business is
part of the Color segment.

Portfolio Optimization Plan

During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization
Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the
centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in
Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.

The Company’s Felinfach site was shut down in May 2025, and all production activities have been transferred to other locations. The Company began marketing the Felinfach site for sale in June 2025, at which point the held
for sale criteria was met. These are the sole assets recorded in Fixed assets held for sale on the Company’s Consolidated Balance Sheet at December 31, 2025. The Company sold the land and building assets in
February 2026 for approximately $2.0 million, resulting in a $0.4 million gain recognized in Selling and Administrative Expenses on the Company’s Consolidated Statements of Earnings during the three months
ended March 31, 2026. The Company has completed all actions contemplated under the Portfolio Optimization Plan.

For the three and six months ended June 30, 2025, the Company incurred costs of $3.3 million and $6.2 million, respectively, related to the Portfolio Optimization Plan recorded in Corporate & Other, primarily for dual plant operating costs,
professional services, non-cash inventory charges, decommissioning costs, and employee separation costs. The Company did not incur any costs related to the Portfolio Optimization Plan for the three or six months ended June 30, 2026.

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NON-GAAP FINANCIAL MEASURES

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude restructuring and other costs, including
the Portfolio Optimization Plan costs, (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result from translating its international operations into
U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA, which excludes restructuring and other costs, including the Portfolio Optimization Plan costs, and
non-cash share based compensation expense.

The Company has included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in
accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information
included in this report. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and the Company
believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those statements
(Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024,
compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31,
2024, filed with the Securities and Exchange Commission on February 19, 2025, which is incorporated herein by reference.

OVERVIEW

Sensient Technologies Corporation (the Company or Sensient) is a leading global manufacturer and marketer of colors, flavors, and other specialty ingredients. The Company uses advanced technologies at facilities
around the world to develop specialty food and beverage systems; personal care, essential oils, pharmaceutical, and nutraceutical systems; specialty colors; and other specialty and fine chemicals. The Company’s three reportable segments are
the Flavors & Extracts Group and the Color Group, which are both managed on a product line basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s corporate expenses, share-based compensation (except
for share-based compensation expense associated with stock grants to certain business unit leaders), restructuring and other charges, including the Portfolio Optimization Plan costs, and other costs are included in
the “Corporate & Other” category.

The Company’s diluted earnings per share were $3.16 in 2025 and $2.94 in 2024. 2025 results were negatively impacted by $15.8 million ($13.8 million after tax, $0.32 per share) of Portfolio Optimization Plan costs.
2024 results were negatively impacted by $6.6 million ($2.5 million after tax, $0.06 per share) of Portfolio Optimization Plan costs. Adjusted diluted earnings per share, which exclude the Portfolio Optimization Plan costs, were $3.48 in 2025
and $3.00 in 2024 (see discussion below regarding non-GAAP financial measures).

Additional information on the results is included below.

RESULTS OF OPERATIONS

2025 vs. 2024

Revenue

Sensient’s revenue was approximately $1.61 billion and $1.56 billion in 2025 and 2024, respectively.

Gross Profit

The Company’s gross margin was 33.5% in 2025 and 32.6% in 2024. The increase in gross margin was primarily due to higher selling prices and volumes, partially offset by higher raw material costs and higher Portfolio
Optimization Plan costs. Gross profit in 2025 and 2024 was negatively impacted by Portfolio Optimization Plan costs totaling $7.5 million and $1.4 million, respectively, which decreased gross margin by approximately 40 basis points and 10 basis
points in 2025 and 2024, respectively. See Portfolio Optimization Plan below for further information.

Selling and Administrative Expenses

Selling and administrative expense as a percent of revenue was 20.6% in 2025 and 20.3% in 2024. Selling and administrative expenses in 2025 and 2024 were increased by Portfolio Optimization Plan costs totaling $8.3
million and $5.3 million, respectively. Selling and administrative expense as a percent of revenue increased by approximately 50 basis points and 40 basis points in 2025 and 2024, respectively, as a result of these costs. See Portfolio Optimization Plan below for further information.

Operating Income

Operating income was $207.1 million in 2025 and $191.6 million in 2024. Operating margins were 12.8% in 2025 and 12.3% in 2024. Portfolio Optimization Plan costs decreased operating margins by approximately 100 basis
points and 40 basis points in 2025 and 2024, respectively.

Operating margins were positively impacted by the higher selling prices and volumes, partially offset by higher raw material costs.

Additional information on segment results can be found in the Segment Information section.

Interest Expense

Interest expense was $29.6 million in 2025 and $28.8 million in 2024. The increase in expense was primarily due to an increase in the average outstanding debt balance.

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Income Taxes

The effective income tax rate was 24.3% in 2025 and 23.4% in 2024. The effective tax rates in both 2025 and 2024 were impacted by the release of valuation allowances related to net operating losses (NOLs),
changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, the mix of foreign earnings, and the limited tax deductibility of costs related to the Portfolio Optimization Plan. The
effective tax rate in 2025 was also impacted by the change in the German tax rate. See Note 11, Income Taxes, in the Notes to Consolidated
Financial Statements included in this report for additional information.

The 2026 effective income tax rate is estimated to be between 24% and 25%.

Acquisition

On February 14, 2025, the Company acquired Biolie SAS, a natural color extraction business located in France. The Company paid $4.9 million in cash for this acquisition, which is net of $0.2 million
in debt assumed. This business is part of the Color segment.

See Note 2, Acquisition, in the Notes to Consolidated Financial Statements included in this report for additional information.

Portfolio Optimization Plan

During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio
Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in
Granada, Spain, and the centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the
closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate &
Other segment.

The Company’s Felinfach site was shut down in May 2025, and all production activities have been transferred to other locations. The Company began marketing the Felinfach site for sale in June 2025. As a result, the
Company met all of the assets held for sale criteria for the Felinfach land and building assets in June 2025, which have been recorded as the only balance in Fixed assets held for sale on the Company’s
Consolidated Balance Sheets. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.

See Note 14, Portfolio Optimization Plan, in the Notes to Consolidated Financial Statements included in this
report for additional information.

NON-GAAP FINANCIAL MEASURES

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted earnings per share, which exclude
restructuring and other costs, including the Portfolio Optimization Plan costs, (2) percentage changes in revenue, operating income, and diluted earnings per share on an adjusted local currency basis, which eliminate the effects that result
from translating its international operations into U.S. dollars and restructuring and other costs, including the Portfolio Optimization Plan costs, and (3) adjusted EBITDA, which excludes restructuring and other costs, including the Portfolio
Optimization Plan costs, and non-cash share based compensation expense.

The Company has included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is
supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together
with GAAP measures and the rest of the information included in this report. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into
underlying operating and performance trends, and the Company believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

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The following table summarizes the percentage change in the 2025 results compared to the 2024 results in the respective financial measures.

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