Stephen Rolfs: Sure. So, on the EPS guidance, you hit it on the head. It’s really the interest expense and then we’ll have a slightly higher tax rate this year as well. And that’s the only reason why that guide was not increased. Last quarter, we did say about $3 million more on interest expense. And when you look at the interest rate environment, there seems to be less appetite for interest rate cuts. So if that’s the case, it could be a little bit elevated above the $3 million, it could be a little bit more towards $4 million, is the way we see it. But as Paul mentioned, we’ve got opportunities in inventory and cash flow and so as we bring down leverage, which will be our priority, we could make up for some of that in terms of the interest expense.
Nicola Tang: Got it. And then on the Flavors & Extracts side, I wanted to ask a little bit more about actually the Flavors bit. Whilst it sort of improved sequentially, it seems like you’re lagging a bit some of the bigger F&F players who’ve reported so far. Can you help us understand the discrepancy and perhaps explain a little bit some of the dynamics of what happened in Flavors in Q1?
Paul Manning: Yeah. Well, I guess, any 91-day period, any number of things could happen across a segment or a customer group or that customer’s inventory position or launch. So I wouldn’t take too much away from 91 days. I think as you look at the year for us, we do expect mid single digit growth, most of that being volume. As you reflect back on the last number of years, I think you could see that the volume growth in Sensient was quite robust. And so I think again, it’s one quarter, not indicative of anything in my opinion. We continue to do exceedingly well on the new win front and in fact, new wins continue to be quite robust in the first quarter. So I think it’s just really more of a timing thing than anything else.
Nicola Tang: All right. And then on the input cost side, you mentioned — you sort of talked in the release about higher inputs and I was wondering whether there’s been any change in terms of your outlook on input costs for this year versus how you were thinking a couple of months ago? Perhaps you could talk a little bit about what you’re seeing. And you talked about I think low single digit pricing. Do you think this will be enough to sort of cover input cost inflation this year?
Paul Manning: Yeah. So, let me start off, and then I’ll let Steve add what he would like to there. I think the general picture on input costs is they’re moving in the direction that’s more favorable to us and our profit. As you then liquidate your inventory, you start to enjoy that benefit to your operating profit. So I think the general state of affairs is things remain elevated in many categories. They’re not rising. There are a couple of exceptions, but there’s always a couple of exceptions in any given year. But I think the big picture is stable, declining in some. So I think we’ll start to see those benefits continue through the P&L. I did mention that the one big one on the agricultural side, that improvement we anticipate in the back half of the year, for sure, because that’s driving a lot of the leverage impact in Flavors.
But I think, yeah, the overall story is that our price should capture what we need to capture here and continue to help our customers to promote their own businesses. So, yeah, I think that we feel good about the pricing that we got. So, Steve, I don’t know if you want to add anything to the mix there?
Stephen Rolfs: I would just say that, yeah, there’s not been any big change in our outlook or expectations. As Paul said, we’re seeing an improving picture across a lot of the spend. The one thing that we’ve mentioned a couple of times now is just when you’re dealing with these agricultural products, there can be a lag. And so that’s the only thing I would add. But I think, in general, the picture is improving.
Nicola Tang: Right. Thanks so much.
Paul Manning: Okay. Thank you.
Operator: [Operator Instructions] Our next question will come from David Green with Boldhaven. Please go ahead.
David Green: Hi, everyone.
Paul Manning: Hey, David.
Stephen Rolfs: Hey, David.
David Green: Hey, congratulations, Stephen.
Stephen Rolfs: Thank you.
David Green: I guess just a question around margins. You talked about an expectation for an ongoing sequential improvement in volume. And just to sort of qualify that. So I’m assuming that also means, by definition, we should expect improving sequential performance in margins as well.
Paul Manning: Yeah. I think that’s right. I think the year plays out as I described earlier. I think you would start to see that in Color a bit sooner than Flavors. But in Flavors, you would see that as well. We’re optimistic that Colors begin to knock back on the door at 20%. We’re quite close here in Q1, but Asia will remain very, very profitable. And, of course, Flavors has the most uplift opportunity. And so, yes, is the short answer to your question.
David Green: Right. Many thanks. And then just thinking — just sort of wanted to ask specifically on win rates and obviously, you’ve talked about sort of very high levels. Are there any specific areas where it’s been particularly strong?
Paul Manning: Well, we’ve got a pretty broad-based portfolio, so we generally enjoy success in a lot of different areas. I would tell you that the win rates have grown very nicely in personal care. So this is a market that was hit particularly hard during COVID, particularly our business, which was one of strong focus on makeup. So we’re seeing a lot of nice wins there and we’re seeing an improvement in the win rates in those businesses on the personal care side. We continue to enjoy very nice win rates in our natural color business. We are the largest food color company in the world and so we continue to have very strong and very good access to those types of customers who are converting. And so that’s backed up by a very, very strong innovation program that is a very technically-driven conversion program.
And then, of course, in Flavors, we enjoy very, very good win rates across a lot of the local and regionals. And I think as we continue to expand and raise our specter in the market, we continue to have improved access to some of the larger accounts as well. Segment-wise, you look at the launch activity in Q1 around the world. This is an interesting question that folks are sort of looking at like, hey, what’s going to happen here because there’s a lot of macroeconomic factors, and what’s going to happen in the market? And so I think we’ve seen a little bit of a mixed bag. Overall, launches were down globally in Q1, so what our customers would be launching. Most notably in certain segments like frozen desserts and the like, you can see quite a reduction there.
