Ingredion Inc

Previous wording

Unless otherwise indicated or the context otherwise requires, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “Ingredion,” “we,” “us,” and “our” and similar terms refer to Ingredion Incorporated and its consolidated subsidiaries. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and related notes included elsewhere in this report and with the audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See “Forward-Looking Statements” at the end of this discussion.

Current wording

Unless otherwise indicated or the context otherwise requires, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “Ingredion,” “we,” “us,” and “our” and similar terms refer to Ingredion Incorporated and its consolidated subsidiaries. This discussion should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and related notes included elsewhere in this report and with the audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained or implied in any forward-looking statements. See “Forward-Looking Statements” at the end of this discussion.

Previous 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.

Current wording

During the third quarter of 2024, operating income, net income and diluted earnings per share increased when compared to the same quarter last year while net sales decreased. Net sales decreased primarily due to price mix from lower pass-through of raw material costs to customers as well as volumes associated with the sale of our South Korea business in 2024. Operating income increased during the third quarter primarily due to lower raw material and input costs. Net income and diluted earnings per share increased primarily due to lower financing costs and lower raw material and input costs, partially offset by a higher effective tax rate for the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Net sales. Net sales decreased 9 percent to $1,878 million for the second quarter of 2024 compared to $2,069 million for the second quarter of 2023. The decrease was due primarily from price mix from lower raw material costs and lost sales volume from the sale of South Korea, partly offset by volume increases.

Current wording

Net sales. Net sales decreased 8 percent to $1,870 million for the third quarter of 2024 compared to $2,033 million for the third quarter of 2023. The decrease was due primarily due to price mix primarily from lower raw material costs and lost sales volume from the sale of our South Korea business, partially offset by volume increases.

Previous 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.

Current wording

Cost of sales. Cost of sales decreased 14 percent to $1,391 million for the third quarter of 2024 compared to cost of sales of $1,612 million for the third quarter of 2023. The decrease was due primarily to lower raw material and input costs which decreased at a faster rate than sales leading to gross profit margin increasing to 26 percent for the third quarter of 2024 compared to 21 percent for the third quarter of 2023.

Previous 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.

Current wording

Operating expenses. Operating expenses decreased 3 percent to $198 million for the third quarter of 2024 compared to $203 million for the third quarter of 2023. Operating expenses as a percentage of net sales were 11 percent for the third quarter of 2024 and 10 percent for the third quarter of 2023.

Previous wording

Other operating (income) expense. Other operating (income) was $(8) million for the second quarter of 2024 compared to other operating expense of $2 million for the second quarter of 2023. The change was primarily due to income from our Argentina joint venture.

Current wording

Other operating expense (income). Other operating expense was $1 million for the third quarter of 2024 compared to other operating (income) of $(5) million for the third quarter of 2023. The change was primarily due to insurance recoveries in the third quarter of 2023, whereas there were no such recoveries in the third quarter of 2024.

Previous wording

Restructuring and impairment charges. Restructuring and impairment charges were $23 million for the second quarter of 2024 compared to an insignificant amount for the second quarter of 2023. During the second quarter of 2024, we recorded an $18 million other-than-temporary-impairment on an equity method investment in addition to costs incurred related to restructuring activities and the resegmentation of the business.

Current wording

Restructuring and impairment charges. Restructuring and impairment charges were $12 million for the third quarter of 2024 compared to $10 million for the third quarter of 2023. During the third quarter of 2024, we recorded an impairment charge related to property, plant and equipment associated with manufacturing operations in the United Kingdom, where we plan to stop production in the first quarter of next year. During the third quarter of 2023, we recorded an impairment charge on an equity method investment.

Previous 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.

Current wording

Financing costs. Financing costs decreased 96 percent to $1 million for the third quarter of 2024 compared to $26 million for the third quarter of 2023. The decrease was primarily due to lower average outstanding debt balances for the third quarter of 2024 compared to the third quarter of 2023, as well as favorable foreign exchange impacts.

Previous wording

Net income attributable to Ingredion. Net income attributable to Ingredion for the second quarter of 2024 decreased to $148 million from $163 million for the second quarter of 2023. The decrease was primarily due to lower volumes, higher restructuring costs and a less favorable effective tax rate, partially offset by lower input costs and reduced financing costs.

Current wording

Net income attributable to Ingredion. Net income attributable to Ingredion for the third quarter of 2024 increased to $188 million from $158 million for the third quarter of 2023. The increase was primarily due to lower input costs and reduced financing costs, partially offset by a less favorable effective tax rate.

Previous 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.

Current wording

Net sales. T&HS net sales remained flat at $600 million for the third quarter of 2024 compared to $599 million for the third quarter of 2023. An increase in volume of 11 percent were offset by unfavorable price mix of 11 percent.

Previous 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.

Current wording

Operating income. T&HS operating income increased 12 percent to $96 million for the third quarter of 2024 from $86 million for the third quarter of 2023. The increase was primarily due to lower input costs and recovering volumes, partially offset by unfavorable price mix.

Previous wording

Net sales. F&II - LATAM net sales decreased 5 percent to $630 million for the second quarter of 2024 from $666 million for the second quarter of 2023. The decrease was primarily due to unfavorable price mix of 10 percent, partially offset by an increase of 4 percent in volume and favorable foreign exchange impacts of 1 percent.

Current wording

Net sales. F&II - LATAM net sales decreased 6 percent to $620 million for the third quarter of 2024 from $658 million for the third quarter of 2023. The decrease was primarily due to unfavorable price mix of 4 percent and unfavorable foreign exchange impacts of 3 percent, partially offset by an increase of 1 percent in volume.

Previous 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.

Current wording

Net sales. F&II - U.S./Canada net sales decreased 9 percent to $548 million for the third quarter of 2024 from $599 million for the third quarter of 2023. The decrease was due to unfavorable price mix of 9 percent.

Previous wording

Operating income. F&II - U.S./Canada operating income increased 31 percent to $105 million for the second quarter of 2024 from $80 million for the second quarter of 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.

Current wording

Operating income. F&II - U.S./Canada operating income increased 25 percent to $99 million for the third quarter of 2024 from $79 million for the third quarter of 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.

Previous wording

Net sales. All Other net sales decreased 42 percent to $105 million for the second quarter of 2024 from $181 million for the second quarter of 2023. Excluding the sale of the South Korea business, net sales increased 2 percent.

Current wording

Net sales. All Other net sales decreased 42 percent to $102 million for the third quarter of 2024 from $177 million for the third quarter of 2023. The decrease is due to the sale of our South Korea business during 2024. Excluding the sale of our South Korea business, net sales increased 8 percent.

Previous wording

Operating (loss) income. All Other operating (loss) income was $(10) million for the second quarter of 2024 compared to $3 million for the second quarter of 2023. The decrease was primarily due to the sale of the South Korea business.

Current wording

Operating (loss). All Other operating (loss) was $(4) million for the third quarter of 2024 compared to $(1) million for the third quarter of 2023. The decrease was primarily due to the sale of our South Korea business.

Previous wording

Net sales. Net sales decreased 11 percent to $3,760 million for year-to-date 2024 compared to $4,206 million for year-to-date 2023. The decrease was primarily due to price mix from lower raw material costs and lost sales volume from the sale of South Korea, partially offset by volume increases.

Current wording

Net sales. Net sales decreased 10 percent to $5,630 million for year-to-date 2024 compared to $6,239 million for year-to-date 2023. The decrease was primarily due to price mix from lower raw material costs and lost sales volume from the sale of our South Korea business, partially offset by increased volumes in the rest of the business.

Previous wording

Cost of sales. Cost of sales decreased 12 percent to $2,897 million for year-to-date 2024 compared to cost of sales of $3,278 million for year-to-date 2023. The decrease was primarily due to lower raw material and input costs. Our gross profit margin of 23 percent for year-to-date 2024 increased from 22 percent for year-to-date 2023.

Current wording

Cost of sales. Cost of sales decreased 12 percent to $4,288 million for year-to-date 2024 compared to $4,890 million for year-to-date 2023. The decrease was primarily due to lower raw material and input costs which decreased at a faster rate than sales leading to an increase in gross profit margin to 24 percent for year-to-date 2024 compared to 22 percent for year-to-date 2023.

Previous wording

Operating expenses. Operating expenses increased 1 percent to $380 million for year-to-date 2024 compared to $375 million for year-to-date 2023. The increase was primarily due to general cost inflation. Operating expenses as a percentage of net sales were 10 percent for year-to-date 2024 and 9 percent for year-to-date 2023.

Current wording

Operating expenses. Operating expenses were flat at $578 million for year-to-date 2024 compared to $578 million for year-to-date 2023. Operating expenses as a percentage of net sales were 10 percent for year-to-date 2024 and 9 percent for year-to-date 2023.

Previous wording

Other operating expense. Other operating expense was $4 million for year-to-date 2024 compared to $11 million for year-to-date 2023. The decrease was primarily due to charges related to a U.S.-based work stoppage for year-to-date 2023 that were not incurred for year-to-date 2024.

Current wording

Other operating expense. Other operating expense was $5 million for year-to-date 2024 compared to $6 million for year-to-date 2023.

Previous wording

Financing costs. Financing costs decreased 53 percent to $29 million for year-to-date 2024 compared to $62 million for year-to-date 2023. The decrease was primarily due to lower average outstanding debt balances during the year-to-date 2024 compared to year-to-date 2023, as well as foreign exchange impacts.

Current wording

Financing costs. Financing costs decreased 66 percent to $30 million for year-to-date 2024 compared to $88 million for year-to-date 2023. The decrease was primarily due to lower average outstanding debt balances during the year-to-date 2024 compared to year-to-date 2023, as well as foreign exchange impacts.

Previous 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.

Current wording

Net gain on sale of business. Net gain on sale of business was $90 million for year-to-date 2024 to reflect the sale of our South Korea business, which was completed on February 1, 2024. There was no such gain recorded year-to-date 2023.

Previous wording

Provision for income taxes. Our effective income tax rate for year-to-date 2024 increased to 27.3 percent from 25.1 percent for year-to-date 2023. The increase was primarily due to depreciation of the Mexican peso against the U.S. dollar for year-to-date 2024 compared to an appreciation for year-to-date 2023 and the impairment of an equity method investment during the second quarter of 2024. These impacts were partially offset by favorable tax treatment on the sale of the South Korea business during the first quarter of 2024.

Current wording

Provision for income taxes. Our effective income tax rate for year-to-date 2024 increased to 28.5 percent from 21.9 percent for year-to-date 2023. The increase was primarily due to the change in value of the Mexican peso against the U.S. dollar and an adverse ruling that generated a multi-year tax contingency in the third quarter of 2024. These impacts were partially offset by the tax treatment on the sale of our South Korea business during the first quarter of 2024.

Previous 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.

Current wording

Net income attributable to Ingredion. Net income attributable to Ingredion for year-to-date 2024 increased to $552 million from $512 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, partially offset by a less favorable effective tax rate.

Previous wording

Net sales. T&HS net sales decreased 8 percent to $1,185 million for year-to-date 2024 from $1,283 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix of 10 percent and unfavorable foreign exchange of 2 percent, partially offset by increased volume of 4 percent.

Current wording

Net sales. T&HS net sales decreased 5 percent to $1,785 million for year-to-date 2024 from $1,882 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix of 11 percent, partially offset by increased volumes of 6 percent.

Previous wording

Operating income. T&HS operating income decreased 31 percent to $160 million for year-to-date 2024 from $232 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix and higher input costs, partially offset by improved volume.

Current wording

Operating income. T&HS operating income decreased 19 percent to $256 million for year-to-date 2024 from $318 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix and the carry-forward of higher cost inventory, partially offset by improved volumes.

Previous wording

Operating income. F&II - U.S./Canada operating income increased 12 percent to $192 million for year-to-date 2024 from $172 million for year-to-date 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.

Current wording

Operating income. F&II - U.S./Canada operating income increased 16 percent to $291 million for year-to-date 2024 from $251 million for year-to-date 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.

Previous wording

Net sales. All Other net sales decreased 38 percent to $233 million for year-to-date 2024 from $378 million for year-to-date 2023. Excluding the sale of the South Korea business, net sales were down 4 percent.

Current wording

Net sales. All Other net sales decreased 40 percent to $335 million for year-to-date 2024 from $555 million for year-to-date 2023. Excluding the sale of our South Korea business, net sales were up 1 percent.

Previous wording

Operating (loss). All Other operating (loss) increased 180 percent to $(14) million for year-to-date 2024 compared to $(5) million for year-to-date 2023. The increase was primarily due to the sale of the South Korea business.

Current wording

Operating (loss). All Other operating (loss) increased 200 percent to $(18) million for year-to-date 2024 compared to $(6) million for year-to-date 2023. The increase was primarily due to the sale of our South Korea business in 2024.

Previous 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.

Current wording

As of September 30, 2024, we had total available liquidity of $2.5 billion. Domestic liquidity of $1.3 billion consisted of $289 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 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.

Current wording

As of September 30, 2024, we had international liquidity of $1.2 billion, consisting of $588 million of cash and cash equivalents and $7 million of short-term investments held by our operations outside the U.S., as well as $642 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 $40 million as of September 30, 2024. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

Previous 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.

Current wording

As of September 30, 2024, we had total debt outstanding of $1.8 billion, or $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 4.0 percent for year-to-date 2024 and approximately 4.4 percent for year-to-date 2023.

Previous 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.

Current wording

Our cash provided by operating activities was $1.0 billion for year-to-date 2024 compared to cash provided by operating activities of $647 million for year-to-date 2023. The increase was primarily due to a $371 million change in working capital due to decreases in inventory and trade accounts receivable, and increases in accounts payable and accrued liabilities.

Previous 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.

Current wording

We used $170 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities during year-to-date 2024 compared to $233 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 between $310 million and $330 million.

Previous 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.

Current wording

We used $601 million of cash for financing activities during year-to-date 2024 compared to cash used for financing activities of $301 million for year-to-date 2023. The difference was primarily due to a net $327 million reduction of our commercial paper borrowings during year-to-date 2024 from $57 million 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 $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.

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 $156 million during year-to-date 2024 compared to $143 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 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.

Current wording

During the third quarter and year-to-date 2024, we repurchased 185 thousand and 762 thousand outstanding shares of common stock in open market transactions at a net cost of $21 million and $87 million. During the third quarter and year-to-date 2023, we repurchased 1.0 million outstanding shares of common stock at a net cost of $101 million. During year-to-date 2024, we purchased shares in our subsidiary PureCircle from minority shareholders for $40 million, which increased our ownership to 98 percent as of September 30, 2024.

Previous wording

This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Ingredion Incorporated intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

Current wording

This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Ingredion Incorporated intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

Previous wording

These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,” “propels,” “opportunities,” “potential,” “provisional,” or other similar expressions or the negative thereof. All statements other than statements of historical facts therein are “forward-looking statements.”

Current wording

These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,”