Ingredion Inc

Previous wording

We are a leading global ingredients solutions provider that transforms grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets. Our innovative ingredient solutions help customers stay on trend with simple ingredients and other in-demand ingredients. In November 2023, we announced a strategic reorganization of our business. Under the new structure, effective January 1, 2024, we have three reportable business segments that we operate and manage as strategic business units: Texture & Healthful Solutions (“T&HS”), Food & Industrial Ingredients (“F&II”) - Latin America (“LATAM”), and F&II - U.S./Canada. In All Other, we include the business in Pakistan, PureCircle, Sugar Reduction, Protein Fortification, and the South Korea business until its sale on February 1, 2024.

Current wording

We are a leading global ingredients solutions provider that transforms grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets. Our innovative ingredient solutions help customers stay on trend with simple ingredients and other in-demand ingredients.

Previous wording

During the quarter ended March 31, 2024, net sales, operating income, net income and diluted earnings per share decreased when compared to the same quarter last year. The decrease in our net sales was driven by price mix and lower volumes, which were partly offset by favorable impacts of foreign exchange rates. Cost of sales decreased primarily due lower input costs and lower volume. These factors led to lower gross profit and lower operating income compared to the first quarter of 2023.

Current wording

During the second quarter of 2024, net sales, operating income, net income and diluted earnings per share decreased when compared to the same quarter last year. Excluding the impact from the sale of our business in South Korea, the decrease in our net sales was driven by both raw material deflation and price mix impacts, partially offset by volume increases. Cost of sales decreased primarily due to lower raw material and input costs, partially offset by price mix, and these factors led to increased gross profit and higher gross margins. Operating income decreased during the second quarter primarily due to an other-than-temporary impairment charge and restructuring activities. Net income and diluted earnings per share decreased primarily due to lower financing costs and a higher effective tax rate for the second quarter of 2024 compared to the second quarter of 2023.

Previous wording

The following discusses our results for our three reportable segments effective January 1, 2024, consisting of: T&HS, F&II - LATAM and F&II - U.S./Canada. In addition, we discuss the results of All Other. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ net sales and expenses. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, net sales and expenses denominated in the functional currencies of these subsidiaries are translated into U.S. dollars at the applicable average exchange rates for the period.

Current wording

The following discusses our results for our three reportable segments consisting of Texture & Healthful Solutions (“T&HS”), Food & Industrial Ingredients (“F&II”) - Latin America (“LATAM”), and F&II - U.S./Canada. In addition, we discuss the results of All Other. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ net sales and expenses. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, net sales and expenses denominated in the functional currencies of these subsidiaries are translated into U.S. dollars at the applicable average exchange rates for the period.

Previous wording

Cost of sales. Cost of sales decreased 11 percent to $1,465 million during the first quarter of 2024 compared to cost of sales of $1,650 million during the first quarter of 2023. The decrease in cost of sales was due primarily to lower volumes, partially offset by carryover of higher cost inventory. Our gross profit margin of 22 percent during the first quarter of 2024 decreased from 23 percent for the first quarter of 2023.

Current wording

Cost of sales. Cost of sales decreased 12 percent to $1,432 million for the second quarter of 2024 compared to cost of sales of $1,628 million for the second quarter of 2023. The decrease was due primarily to lower raw material and input costs. Our gross profit margin of 24 percent for the second quarter of 2024 increased from 21 percent for the second quarter of 2023.

Previous wording

Operating expenses. Operating expenses increased 1 percent to $189 million during the first quarter of 2024 compared to $187 million during the first quarter of 2023. The increase in operating expenses was primarily attributable to increased compensation cost. Operating expenses as a percentage of net sales were 10 percent and 9 percent for the first quarter of 2024 and 2023.

Current wording

Operating expenses. Operating expenses increased 2 percent to $191 million for the second quarter of 2024 compared to $188 million for the second quarter of 2023. The increase was primarily due to general cost inflation. Operating expenses as a percentage of net sales were 10 percent and 9 percent for the second quarter of 2024 and 2023.

Previous wording

Financing costs. Financing costs decreased 41 percent to $19 million during the first quarter of 2024 compared to $32 million during the first quarter of 2023. The decrease in financing costs was primarily due to lower average outstanding debt balances during the first quarter of 2024 compared to the first quarter of 2023.

Current wording

Financing costs. Financing costs decreased 67 percent to $10 million for the second quarter of 2024 compared to $30 million for the second quarter of 2023. The decrease was primarily due to lower average outstanding debt balances for the second quarter of 2024 compared to the second quarter of 2023, as well as foreign exchange impacts.

Previous wording

Net sales. T&HS net sales decreased 10 percent to $597 million during the first quarter of 2024 from $665 million during the first quarter of 2023. The decrease was primarily driven by an unfavorable price mix of 9 percent and foreign exchange impacts of 1 percent.

Current wording

Net sales. T&HS net sales decreased 5 percent to $588 million for the second quarter of 2024 from $618 million for the second quarter of 2023. The decrease was primarily due to unfavorable price mix of 12 percent and unfavorable foreign exchange of 1 percent, partially offset by an increase of 8 percent in volume.

Previous wording

Operating income. T&HS operating income decreased 42 percent to $74 million during the first quarter of 2024 from $127 million during the first quarter of 2023. The decrease was primarily driven by unfavorable price mix and the carry-forward of higher cost inventory.

Current wording

Operating income. T&HS operating income decreased 18 percent to $86 million for the second quarter of 2024 from $105 million for the second quarter of 2023. The decrease was primarily due unfavorable price mix, partially offset by recovering volumes and lower input costs.

Previous wording

Net sales. F&II- LATAM net sales decreased 8 percent to $616 million in the first quarter of 2024 from $667 million in the first quarter of 2023. The decrease was primarily driven by an unfavorable price mix of 9 percent, and a reduction in volume of 2 percent, which were partially offset by favorable foreign exchange impacts of 3 percent.

Current wording

Net sales. F&II - U.S./Canada net sales decreased 8 percent to $555 million for the second quarter of 2024 from $604 million for the second quarter of 2023. The decrease was due to unfavorable price mix of 10 percent, partially offset by an increase of 2 percent in volume.

Previous wording

Net gain on sale of business. Net gain on sale of business was $82 million during the first quarter of 2024 to reflect the sale of our South Korea business, which was completed on February 1, 2024. There was no such gain recorded in the first quarter of 2023.

Current wording

Net gain on sale of business. Net gain on sale of business was $82 million for year-to-date 2024 to reflect the sale of the South Korea business, which was completed on February 1, 2024. There was no such gain recorded year-to-date 2023.

Previous wording

Net income attributable to Ingredion. Net income attributable to Ingredion for the first quarter of 2024 increased to $216 million from $191 million for the first quarter of 2023. The increase in net income was primarily due to the gain on the sale of our South Korea business and reduced financing costs.

Current wording

Net income attributable to Ingredion. Net income attributable to Ingredion for year-to-date 2024 increased to $364 million from $354 million for year-to-date 2023. The increase was primarily due to the gain on the sale of our South Korea business and reduced financing costs.

Previous wording

As of March 31, 2024, we had total available liquidity of $2.0 billion. Domestic liquidity of $996 million consisted of $12 million in cash and cash equivalents and $984 million available through a $1.0 billion commercial paper program that had $16 million of outstanding borrowings. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement.

Current wording

As of June 30, 2024, we had total available liquidity of $2.1 billion. Domestic liquidity of $1.1 billion consisted of $84 million in cash and cash equivalents and $1.0 billion available through our commercial paper program. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement.

Previous wording

As of March 31, 2024, we had international liquidity of $1.0 billion, consisting of $578 million of unused operating lines of credit, $426 million of cash and cash equivalents, and $7 million of short-term investments. As the parent company, we guarantee certain obligations of our consolidated subsidiaries. These guarantees totaled $41 million as of March 31, 2024. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

Current wording

As of June 30, 2024, we had international liquidity of $1.0 billion, consisting of $421 million of cash and cash equivalents and $5 million of short-term investments held by our operations outside the U.S., as well as $608 million of unused operating lines of credit in foreign countries where we operate. As the parent company, we guarantee certain obligations of our consolidated subsidiaries. These guarantees totaled $39 million as of June 30, 2024. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

Previous wording

As of March 31, 2024, we had total debt outstanding of $1.9 billion, or $1.7 billion excluding the outstanding commercial paper and other short-term borrowings. Our outstanding debt consists of senior notes that do not require principal repayment until 2026 through 2050. The weighted average interest rate on our total indebtedness was approximately 4.1 percent and 4.3 percent for the first quarter of 2024 and 2023.

Current wording

As of June 30, 2024, we had total debt outstanding of approximately $1.9 billion, or approximately $1.7 billion excluding other short-term borrowings. Of our outstanding debt, $1.7 billion consists of senior notes that do not require principal repayment until 2026 through 2050. The weighted average interest rate on our total indebtedness was approximately 4.2 percent for year-to-date 2024 and approximately 4.3 percent for year-to-date 2023.

Previous wording

The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and commercial paper program and raise funds in the capital markets. During the first quarter of 2024, we supplemented liquidity from these sources with $247 million of proceeds from our divestiture of our South Korea business. We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other operating, investing and financing activities for at least the next twelve months and for the foreseeable future thereafter. Our future cash flow needs will depend on many factors, including our rate of revenue growth, cost of raw materials, changing working capital requirements, the timing and extent of our expansion into new markets, the timing of introductions of new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions. We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions.

Current wording

The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and commercial paper program and to raise funds in the capital markets. We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other operating, investing and financing activities for at least the next twelve months and for the foreseeable future thereafter. Our future cash flow needs will depend on many factors, including our rate of revenue growth, cost of raw materials, changing working capital requirements, the timing and extent of our expansion into new markets, the timing of introductions of new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions. We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions.

Previous wording

Our cash provided by operating activities was $209 million during the first quarter of 2024 compared to cash used for operating activities of $51 million during the first quarter of 2023. The increase was primarily due to changes in working capital and current period net income. Cash provided by changes in working capital increased $285 million during the first quarter of 2024 compared to the first quarter of 2023 primarily due to decreases in inventory and trade accounts receivable.

Current wording

Our cash provided by operating activities was $521 million for year-to-date 2024 compared to cash provided by operating activities of $279 million for year-to-date 2023. The increase was primarily due to changes in working capital. Cash provided by changes in working capital increased by $280 million for year-to-date 2024 compared to year-to-date 2023 primarily due to decreases in inventory and increases in accounts payable and accrued liabilities, partially offset by an increase in trade accounts receivable and prepaid expenses.

Previous wording

Our cash provided by investing activities was $181 million during the first quarter of 2024 compared to cash used for investing activities of $81 million during the first quarter of 2023. The increase was primarily due to our receipt of $247 million of proceeds from the sale of our South Korea business completed on February 1, 2024. We used $65 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities during the first quarter of 2024, compared to $76 million that we paid during the first quarter of 2023 for the same purposes. Capital investment commitments for 2024 are anticipated to be approximately $340 million.

Current wording

We used $120 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities during year-to-date 2024, compared to $154 million that we paid during year-to-date 2023 for the same purposes. Capital investment commitments for the remainder of 2024 are anticipated to be approximately $340 million.

Previous wording

Our cash used for financing activities was $347 million during the first quarter of 2024 compared to cash provided by financing activities of $113 million during the first quarter of 2023. The decrease was primarily attributable to a net $312 million reduction of our commercial paper borrowings during the first quarter of 2024, as compared to $107 million net borrowings of commercial paper during the first quarter of 2023.

Current wording

We used $526 million of cash for financing activities during year-to-date 2024 compared to cash used for financing activities of $97 million for year-to-date 2023. The difference was primarily attributable to a net $327 million reduction of our commercial paper borrowings during year-to-date 2024 from zero net borrowings of commercial paper during year-to-date 2023.

Previous wording

We declare and pay cash dividends to our common stockholders of record on a quarterly basis. Dividends paid, including those to non-controlling interests, was $51 million during the first quarter of 2024 compared to $47 million during the first quarter of 2023. The increase in dividend payments was due to an increase in our quarterly dividend rate to $0.78 per share of common stock during the first quarter of 2024 from $0.71 per share during the first quarter of 2023. On December 12, 2023, our Board of Directors declared a quarterly cash dividend of $0.78 per share of common stock, which was paid on January 23, 2024 to stockholders of record at the close of business on January 2, 2024.

Current wording

We declare and pay cash dividends to our common stockholders of record on a quarterly basis. Dividends paid, including those to non-controlling interests, was $104 million during year-to-date 2024 compared to $95 million during year-to-date 2023. The increase in dividend payments was due to an increase in our quarterly dividend to $0.78 per share during year-to-date 2024 from $0.71 per share during year-to-date 2023.

Previous wording

During the first quarter of 2024, we repurchased 5 thousand outstanding shares of common stock in open market transactions at a net cost of $1 million. During the first quarter of 2023, there were zero shares of common stock repurchased.

Current wording

During the second quarter and year-to-date 2024, we repurchased 572 thousand and 577 thousand outstanding shares of common stock in open market transactions at a net cost of $65 million and $66 million. During the second quarter and year-to-date 2023, we did not repurchase any shares of common stock. During the second quarter of 2024, we purchased shares in PureCircle from minority shareholders for $40 million, which increased our ownership to 98 percent as of June 30, 2024.

Previous wording

Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no changes to our critical accounting policies and estimates during the first quarter of 2024.

Current wording

Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no changes to our critical accounting policies and estimates during year-to-date 2024.