Earnings Call: Q2 2026

Aug 11, 2026

Summary

Record H1 and Q2 sales and profit growth reflected strong organic demand, especially in fragrance. Two strategic acquisitions expanded North American and fine-fragrance capabilities, while production constraints in specialty ingredients and integration synergies shape the near-term outlook.

the question and answer session. If you have a question, you can enter it on the Q&A box within the Zoom platform, and we will visit them after the management presentation. I would like to remind everyone that this conference call is being recorded, and the recording will be available from a link on the earnings press release and on Turpaz's website from tomorrow. With me today on the call is Ms. Keren Cohen-Katzon, CEO, and Mr. Guy Gill, Executive Vice President and CFO. Keren will begin with a short introduction, as well as a summary of the quarter, and Gill will provide a summary of the financials. We will then open the call for the question and answer session. You should have all by now received the company's press release. If not, please view it on the company's website or be in touch with the investor relations team at the company, and we will add you to the mailing list. I would like to remind everyone that the safe harbor statement is on this slide, and the safe harbor statement in the press release that we issued earlier today also covers the contents of this conference call and this presentation. Now, I would like to hand over to Keren for her introduction. Keren, please go ahead. Welcome, everybody, and thank you for joining us for the call. I will be happy to present you Turpaz and, of course, the first half and the second quarter of 2026 results. Turpaz is a fast-growing F&F company with a current annual sales rate of $380 million. Our revenue, our record revenue for the first half was $174 million, grew 40.5% year-to-year growth, with an adjusted EBITDA margin of 23%. In the last 10 years, we did 28 successful acquisitions. Our net debt to EBITDA is 1.8%, and that means that we have a strong balance sheet and a very good cash generation. We are selling in more than 100 countries to more than 4,900 customers. Turpaz has a very clear roadmap how to double the sales revenue every four years or less. We already did it twice in less than four years, and we believe that we will do it as well in less than four years. Turpaz is not only acquiring companies, but we are acquiring the companies and then doing PMI and leverage the synergies between the companies that we are acquiring to the companies that are in the group, in the R&D, in the procurement, in the sales, in the finance, in the IT, and regulatory. Turpaz is a traded company in Tel Aviv Stock Exchange, in TA-125, and focus in the markets of the SMB. Next. I think this slide speaks by itself. I do not need even to add any words to it, but the CAGR on the first half of 2023 to 2026 shows 41.4%, which is on the sales. This is really, I would say, an amazing growth percentage. It grew also in the EBITDA and in the adjusted EBITDA and in the EBIT, not only on the sales. The first half highlight was the record sales of $174 million, strong organic growth of 8.1%, adjusted EBITDA, which reached to $40 million, with an EBITDA margin of 23%. Cash flow generation of $16 million grew 20.1% compared to the same period last year. Gross profit increased 50.2% compared to the same period last year and reached to $72.5 million with a 41.7% margin. The net profit non-GAAP margin reached to 13.5% and was $23.4 million, 52.7% growth. Next. Again, I love this slide because I need to speak less. The sales CAGR for Q2 2023 to 2026 was 43.4%, reached on the record sales for Q2 was $90.2 million, with an adjusted EBITDA of $20.6 million and EBIT of $12.1 million. Next. If I look on the Q2 highlights, as I said a minute ago, the record sales reached to $90.2 million, year-to-year growth of 42.3%. I repeat, 42.3%. Strong organic growth of 7.3% and adjusted EBITDA reached to $20.6 million with a growth of 40.9%. EBITDA margin of 22.9%. The cash flow generation grew to $10 million on the quarter, and the gross profit reached to $37.4 million, and 41.5% margin. The net profit, non-GAAP, reached to $11.7 million, grew 56.9% compared to the same period last year, with a margin of 13%. You can move to the next one. Turpaz is presented globally. So we are today presented in Europe, in South Africa, in India, in Vietnam, in North America, and in the U.K. Turpaz, on the second quarter of 2026, acquired and, I would say, deepened their footprint in the North American market by acquiring Phoenix. Our sales revenue percentage in North America today is 17.7%, which was increased very nicely compared to the same period last year. We continue in the future to increase and to enlarge our footprint in North America, in Asia, and in Central and Latin America in the future. Today, we have 30 production and R&D sites in the world, which is producing flavors, fragrance, and specialty fine ingredients. We are serving 4,900 customers in more than 100 countries in the world. If we will look on sales by segment, we will see that we increase our segment of fragrances and reach today to almost 29% from our total revenue, and we will continue on that trend of increasing fragrance as well as flavors, and we will try to reach to another balance of around 55% in flavors and grow our fragrance pillar in the future. Also, we are looking to increase our capabilities to offer to our customers some specialties and unique natural product, and a product which are connecting to health and to wellness. Turpaz, in the last 10 years, acquired 28 successful businesses and acquisition in the world. I would say that every time when I look on this slide, I am flattered and smiling, and I believe, and I know, that it will continue with the same path in the next 10 years and more. We are a long-term company, which our strategy and vision is to double our sales every four years and to become one of the top 10 F&F companies in the world. Our strategy is combined by M&A, combined with organic growth. When we are doing our M&A and adjusting a new company into the group, adding a new one, we are going through a process of PMI and leveraging the synergies every time between the company that is acquired or the business that is acquired to the rest of the businesses and companies in the world by leveraging synergies in procurement, sales, R&D, regulation, finance, all whatever we can bring to the company, and of course, cross-selling. We take product that is produced in one company and offer it to all our customers in the other parts of the world. We think global, but we act local, because our main market is SMB, which is the, I would say, the accelerate market, which is growing. This is the acceleration. I'm moving now to Guy to share with you the financial results in the segments and of the total and all the company. Thank you, Keren. Hello, everyone. For H1, if we look at our segments, we start with the core business. The core business grew by 45% with 8.5% of organic growth. The growth came with a very high growth in the fragrance division, with almost 17% of organic growth, and also a very nice growth in taste of almost 7%. From profitability point of view, you can see that there is a small decline in the profitability in both segment and also in the core business. The reason for this decline is all of the acquisition that we have done in 2025 and in 2026, which generate amortization of know-how and the customer relationship, which is a non-cash amortization, which reduce our margin. When looking at the EBITDA, you will see that the EBITDA increases in the first half from 22.8% to 23% because then this amortization is being neutralized. All in all, we feel safe with our profitability, and we also think that there are a lot of synergies that were not yet utilized, especially from the latest two acquisition that were consolidated from May this year. You will see those improvement in the coming quarters. The specialty fine ingredients grew by 7.4% with organic growth of 4.5% and increased the profitability from 1.2% to 1.3% and with a margin of 8.1%. The second quarter shows more or less the same picture in the core business. In total, the organic growth is 8% with almost 50% increase in sales. This quarter, we have a high record organic growth in the fragrance with almost 15% and 5% in the taste division. Specialty fine ingredients were flat this quarter. The reason is that we launched some new molecule, and we had some issues with the production to produce those molecule. The demand for those molecule in the market is very high. We are now adjusting some of the line to have a better yield and better production, and we believe that in the coming quarters, this will come into effect when you will see the growth in sales. As far as our balance sheet, I would say that the first thing is our total balance sheet today is around $800 million. I will not be surprised if by the end of the year, we will already reach $1 billion. We have a net debt to EBITDA of 1.8. Our covenant is up to 3.5, so we still have a lot of room to do more acquisition. We are working with five leading banks. Three of them are Israeli, two of them are from outside of Israel, and all five of them are very happy to continue to work with us and to support our goals. First I would like to thank you for joining again this call. If I have to summarize, record second Q2 and the first half of 2026 in sales, in gross margin, in all financial parameters, net profit, adjusted EBITDA, and cash flow generation. Turpaz acquired on the first half or on the second quarter of 2026, two strategic acquisition. One is Phoenix, which gave us the, I would say, the right platform in the North American market, which is extremely important for us to continue the growth there, and in the fine fragrance in South of France, and enlarge our capabilities in the fine fragrance, which is a big trend and a growing engine in the whole fragrance segment. On the clear strategy we have, we continue the same journey by doubling the revenues every four years by acquisition and combined with organic growth all over. We have a very large pipeline of acquisition of M&A, which we are working on it. I believe that in the coming months, we will all meet again and hear about the new members in the Turpaz Group which will join us. We would like to increase our activity and our presence in Asia and in North America, Central America, and South America. I think they are growing markets and important to be part of them with the Turpaz Group to serve the SMB markets. On behalf of the management and all the Turpaz team, I would like to thank our shareholder, our partners for the journey, on believing in us and supporting us in the market. Thank you, Kenny, thank you, Guy, and thank you all the Turpaz management that will continue to bring this kind of results to the market. Okay. Thank you, Keren. Thank you, Guy. We will now open the call for questions and answer session. If anyone has a question, please write it in the Q&A box, and we will go through your questions. We will give a minute to collect some questions. Okay. The first question we have is about acquisitions. Are there any geographies that you specifically feel are lacking and you want to add some more? Yes. We would like very much to add to our foot presence Southeast Asia, China, Central America, and South America, and of course, to increase our presence and our abilities in North America. Okay. I guess a follow-on question on acquisitions. What does the current pipeline look like? What opportunities are you seeing? What sort of sizes? It is a very good question because we see, I would say, a variety of opportunities from $10 million, $12 million, $15 million, and $20 million revenues of companies to $60 million, $80 million, $100 million, and even bigger stakes. Okay. Also, there's a follow-up question related. Can your balance sheet support additional financings, additional acquisitions, even the larger ones? At what point will you need to raise more money for acquisitions? As I said, right now, we can support further acquisition. We have until 3.5 debt to EBITDA. This is our covenant with the bank. Once we will be close to this amount, we will find a solution either with the bank or by raising funds. As long as we will continue to do the acquisition around the years with not deals which are above $200 million, we can continue to do it without the need of placing or fundraising. Okay. Thank you, Gil. Okay, Guy. All right. Again, if you have questions, please write them in the Q&A box. Okay. We have a question about market trends. The fragrance market was strong in the quarter. Where is that coming from? What are the trends driving it? Do you expect it to continue? First, yes, we expect it to continue. It's coming from two major First, the whole fragrance segment is growing. I think the majority growth is coming from fine fragrance and from consumer fragrance. Okay. It is continuing, and it will continue. Okay. So another question for Guy about the gross margin. So what drove the increase in gross margin in the quarter? The increase in gross margin is driven by basically two things. First of all, when you get 8% or 7% of organic growth, you immediately increase your profitability because inside the cost of goods sold, there are a lot of fixed expense, like all of the rent expense. Also, a large part of the payroll expense is more or less fixed, depreciation is fixed. So once you reach high growth, you immediately improve your profitability. This is one thing. The second thing is all of the steps and activities that we are doing on leveraging the synergy within the group also helped us to increase our profitability. Okay. So we have a question here about the specialty ingredients segment. So it was flat. When did the new molecules start ramping? When will the production issues be sorted out and you should see increases there? The new molecules are already produced, and the demand is much higher compared to what we are producing. When we are launching the new molecules into the production and into the market, it is taking, I would say, few months until you reach to the most, I would say, the most efficient. It is not only efficient, it is smooth running of production. Generally, it is taking few months. We have more demand compared to what we were being able to supply. We are now working in order to make it that the demand and the production will be the same, and we will have even more ability for production. But when you are launching, you do not expect that the demand will be so high, so you do not invest or you do not On the first day, you know that you will be able to produce 10% of the market, but the demand is high. It is good news, and now we are adjusting to make sure that we will be able to supply to all our customers in the world the demand. Okay. A question about currency, dollar weakness. How does the ILS strength, the USD weakness impact you? Do you have hedging? Basically, we believe in natural hedging. Each of our subsidiary is working with its local currency or regional currency, like within the EU, and we are trying to have natural hedging within the single subsidiary. Once we cannot achieve it on the single subsidiary level, we try to do it on the group level to hedge the currency risk. Basically, we had in the first half 7.2% of currencies effect, which increased our sales, and 4.3% in the quarter. It is just a translation of the EUR and the PLN and the ILS into USD. It is just a translation issue. You do not see it in the P&L as an expense or something like this. As far as the ILS and the USD, I can divide Israel into two. Half of our activity in Israel is a local activity, and it is not affected by it, only the translation, same like the euro. The other half is slightly affected because they export all of their sales, and then we have slightly higher amount of expense because of the translation of the ILS into USD. But we cope with it, and we are okay with it. Okay. Another question about operating cash flow grew very strongly to $10 million. What was behind the sharp increase in operating cash flow? First of all, we improved our working capital. Secondly, we dramatically increased our activities. The increase in sales, the increase in the net profit from $28 million to $40 million also generate an increase in the cash flow. Okay. Again, any questions, please write them in the box. I think we have one last question on the synergies from the recent acquisitions. What synergies have you already extracted? What do you still have to come? First, leveraging synergies is an ongoing process. We shared that the operational synergies will be ended by the end of the year. We started to leverage the synergies immediately on finance, on procurement, on IT, on sales, but the operational one will be till the end of the year. That we advised, we shared even when we did the acquisition, and there will be for sure more with the business, with the fine fragrance, with the R&D, which will be ongoing cross-selling, ongoing all the time, and will continue every quarter. But the operational one will be till the end of the year. This is part of the saving. Okay. That looks like the end of the Q&A. Keren, would you like to make a concluding statement? First, again, thank you very much to everybody. I am very proud and happy to share with you our record results for Q2 2026 and the first half of 2026, and I am looking forward for our next call on the next acquisition and on the next record results for the future quarters and the year. Okay. Thank you very much. Thank you very much. That will end our call. Again, the link to the call will be on the website starting from tomorrow. Thank you. Thank you. Bye-bye.