Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Christopher Butler from Sidoti & Co.
Christopher Butler – Sidoti & Co.
Hi, good morning guys.
Kenneth Manning
Good morning, Chris.
Christopher Butler – Sidoti & Co.
I just wanted to start with the inventory destocking and get a feel for where that’s been. Now I was under the impression that the third quarter that was going to be far less, if not negligible, headwind. As we look into the fourth quarter, are we seeing a continuation through the end of the year at this point?
Kenneth Manning
We are a little cautious, Chris. As we look at the reports from our competitors and from our traditional customer base, we are a little cautious about the next couple quarters as far as moving things out of the pipelines that Sensient has developed with these customers and gotten into the pipelines. Neil Cracknell, the President, wants to talk a little bit about the market and where he sees it right now.
Neil Cracknell
Yes, Chris. If we start off in the food and beverage segment, we did see a slow down or softness in demand coming in the North American market in August. There was some back in September, but it wasn't sufficient to recover from that softness. Overall, our customers are being very cautious. Product launches have slowed down and customers are focusing their efforts elsewhere. So, yes, we want to keep our projections at a cautious level. And, yes, we think that the recovery will be somewhat slower coming than perhaps where we indicated in the previous quarter.
Christopher Butler – Sidoti & Co.
Help me understand the impact of new product launches here. If you have a customer that is not necessarily rolling out new products, wouldn't an old product still be used and theoretically a Sensient flavor or color be in that older product still?
Neil Cracknell
That's true. There's two factors here, Chris. Obviously, there's the ongoing consumer softness. And I think there is some softness in the demand for the existing products. But there is always some attrition in products and new products being launched. And the launch of new products is important to our business in driving our top line. And if you look over the course of the year, new product launches are down close to 50%. And certain segments, particularly the beverage segment, are impacted more significantly than that. So that certainly impacts the development of our sales.
- To read the full transcript on Seeking Alpha, click here »
