Ingredion Inc

Previous wording

While we identify the impacts of acquisitions and investments on our results, our discussion below also addresses results of operations excluding those impacts, where appropriate, to provide a more comparable and meaningful analysis.

Current wording

While we identify the impacts of divestitures, acquisitions and investments, including investments in joint ventures that we account for as equity method investments, on our results, our discussion below also addresses results of operations excluding those impacts, where appropriate, to provide a more comparable and meaningful analysis.

Previous wording

We have operations in four reportable business segments: North America, South America, Asia-Pacific and EMEA. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ revenues and expenses. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, revenues 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

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

For 2023, net sales increased 3 percent to $8.2 billion from $7.9 billion for 2022. Our operating income of $957 million for 2023 increased by 26 percent from operating income of $762 million for 2022. Net income attributable to Ingredion for 2023 was $643 million, or $9.60 diluted earnings per share, which represented an increase of 31 percent from $492 million, or $7.34 diluted earnings per share, for 2022. The increases in net sales and operating income were primarily due to favorable price mix, partially offset by volume declines and foreign exchange impacts. The increase in net income was driven by these factors in addition to a more favorable effective tax rate.

Current wording

Our business performed well and remained resilient throughout fiscal year 2024. Our net income and diluted earnings per share increased in fiscal year 2024 compared to fiscal year 2023. For 2024, net sales decreased 9 percent to $7.4 billion from $8.2 billion for 2023. The decrease in net sales was primarily due to unfavorable price mix, including the pass through of lower corn costs, reduced net sales from the sale of our South Korea business, which closed on February 1, 2024, and foreign exchange impacts, partially offset by T&HS favorable volumes. Our operating income of $883 million for 2024 decreased by 8 percent from operating income of $957 million for 2023. The decrease in operating income was primarily due to impairment charges for the cessation of operations at our Vanscoy, Canada; Goole, United Kingdom; and Alcantara, Brazil manufacturing facilities. Net income attributable to Ingredion for 2024 was $647 million, or $9.71 diluted earnings per share, which represented an increase of 1 percent from $643 million, or $9.60 diluted earnings per share, for 2023. The increase in net income and diluted earnings per share was primarily drive by the above in addition to lower financing costs, partially offset by a higher effective tax rate for 2024.

Previous wording

Net sales. Net sales increased 3 percent to $8.2 billion for 2023 compared to $7.9 billion for 2022. The increase in net sales was driven by price and customer mix, partially offset by lower volumes and unfavorable foreign exchange impacts.

Current wording

Net sales. Net sales decreased 9 percent to $7.4 billion for 2024 compared to $8.2 billion for 2023. The decrease in net sales was driven by lower price mix, including the pass through of lower corn costs, reduced net sales from the sale of our South Korea business, which closed on February 1, 2024, and foreign exchange impacts, partially offset by T&HS favorable volumes.

Previous wording

Cost of sales. Cost of sales decreased 1 percent to $6.4 billion for 2023 compared to $6.5 billion for 2022. The decrease in cost of sales primarily reflected lower volumes, partially offset by higher input costs. Our gross profit margin increased to 21 percent in 2023 compared to 19 percent in 2022. The increase in gross profit margin was driven by higher net sales in addition to a decrease in cost of sales.

Current wording

Cost of sales. Cost of sales decreased 12 percent to $5.6 billion for 2024 compared to $6.4 billion for 2023. The decrease in cost of sales primarily reflected lower corn input costs, reduced costs from the sale of our South Korea business, and were partially offset by input costs for higher volumes. Our gross profit margin increased to 24 percent in 2024 compared to 21 percent in 2023. The increase in gross profit margin was driven by favorable raw material and lower input costs.

Previous wording

Operating expenses. Operating expenses increased 10 percent to $789 million for 2023 compared to $715 million for 2022. The increase in operating expenses during 2023 was primarily attributable to higher compensation costs and spending to build long-term capabilities. Operating expenses as a percentage of net sales was 10 percent in 2023 and 9 percent in 2022.

Current wording

Operating expenses. Operating expenses decreased 1 percent to $782 million for 2024 compared to $789 million for 2023. Operating expenses as a percentage of net sales was 11 percent in 2024 and 10 percent in 2023.

Previous wording

Other operating (income) expense. Other operating (income) expense was $8 million of income for 2023 compared to $13 million of expense for 2022. The 2023 income was primarily attributable to income in our Argentina joint venture. The 2022 expense was primarily attributable to charges resulting from a U.S.-based work stoppage.

Current wording

Other operating (income) expense, net. Other operating (income) expense, net was $1 million of income for 2024 compared to $8 million of income for 2023. Both 2024 and 2023 income were primarily attributable to our share of income in our Argentina joint venture.

Previous wording

Restructuring/impairment charges. Restructuring and impairment charges increased to $11 million for 2023 from $4 million for 2022, which primarily reflected an other-than-temporary-impairment to our equity method investments. The 2022 charges were the result of the completion of our Cost Smart restructuring program.

Current wording

Restructuring/impairment charges. Restructuring and impairment charges increased to $127 million for 2024 from $11 million for 2023, which primarily reflected impairment charges related to the cessation of operations at our Vanscoy, Canada, Goole, United Kingdom, and Alcantara, Brazil manufacturing facilities. The 2023 charges were primarily related to impairments of our equity method investments.

Previous wording

Net income attributable to non-controlling interests. Net income attributable to non-controlling interests decreased to $8 million for 2023 from $10 million for 2022.

Current wording

Net income attributable to non-controlling interests. Net income attributable to non-controlling interests decreased to $7 million for 2024 from $8 million for 2023.

Previous wording

Net Income attributable to Ingredion. Net income attributable to Ingredion for 2023 increased to $643 million from $492 million for 2022. The increase in net income was primarily due to price and customer mix and a more favorable effective tax rate, which was partially offset by lower volumes.

Current wording

Net Income attributable to Ingredion. Net income attributable to Ingredion for 2024 increased to $647 million from $643 million for 2023. The increase in net income was primarily due to reduced financing costs and gain from the sale of our South Korea business, partially offset by restructuring and impairment charges.

Previous wording

As of December 31, 2023, we had total available liquidity of $1.7 billion. Domestic liquidity of $705 million consisted of $32 million in cash and cash equivalents and $673 million available through our $1.0 billion commercial paper program that had $327 million of outstanding borrowings. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement that we entered on June 30, 2021 as described below.

Current wording

As of December 31, 2024, we had total available liquidity of $2.6 billion. Domestic liquidity of $1.5 billion consisted of $548 million in cash and cash equivalents and $1.0 billion available through our commercial paper program that had no outstanding borrowings as of December 31, 2024. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement that we entered on June 30, 2021, as described below.

Previous wording

As of December 31, 2023, we had international liquidity of $1.0 billion, consisting of $369 million of cash and cash equivalents and $8 million of short-term investments held by our operations outside the U.S., as well as $652 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. As of December 31, 2023, our guarantees aggregated $49 million. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

Current wording

As of December 31, 2024, we had international liquidity of $1.1 billion, consisting of $449 million of cash and cash equivalents and $11 million of short-term investments held by our operations outside the U.S., as well as $622 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. As of December 31, 2024, our guarantees aggregated $35 million. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

Previous wording

Our commercial paper program allows us to issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1.0 billion outstanding at any time. The notes may be sold from time to time on customary terms in the U.S. commercial paper market. We use and intend to continue using the note proceeds for general corporate purposes. During 2023, the average amount of commercial paper outstanding was $397 million with a weighted average interest rate of 5.30 percent over a weighted average maturity of 11 days. As of December 31, 2023, we had $327 million of commercial paper outstanding with a weighted average interest rate of 5.50 percent over a weighted average maturity of 11 days. The amount of commercial paper outstanding under this program in 2024 is expected to fluctuate.

Current wording

Our commercial paper program allows us to issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1.0 billion outstanding at any time. The notes may be sold from time to time on customary terms in the U.S. commercial paper market. We intend to continue using the note proceeds for general corporate purposes. During 2024, the average amount of commercial paper outstanding was $31 million with a weighted average interest rate of 5.51 percent over a weighted average maturity of eight days. As of December 31, 2024, no commercial paper was outstanding. The amount of commercial paper outstanding under this program in 2025 is expected to fluctuate.

Previous wording

As of December 31, 2023, we had total debt outstanding of $2.2 billion, or $1.7 billion excluding the outstanding commercial paper and other short-term borrowings. Our outstanding debt consists of senior notes where repayment will occur commencing in 2026 through 2050. In December 2023, we paid in full without penalty the $200 million principal outstanding on our term loan that was due on December 16, 2024 (“Term Loan”). The weighted average interest rate on our total indebtedness was 4.5 percent for 2023 and 3.5 percent for 2022.

Current wording

As of December 31, 2024, we had total debt outstanding of $1.8 billion. Our outstanding debt consists primarily of senior notes under which repayment will commence in 2026 through 2050. In 2023, we paid in full without penalty the $200 million principal outstanding on our term loan that was due on December 16, 2024. The weighted average interest rate on our total indebtedness was 4.02 percent for 2024 and 4.50 percent for 2023.

Previous wording

Our cash provided by operating activities increased to $1,057 million in 2023 from $152 million in 2022. The increase in cash provided by operating activities was primarily attributable to changes in working capital and current period net income, which excluded net assets and net liabilities we classified as held for sale for the February 1, 2024 sale of our South Korea business. Cash provided by working capital increased to $77 million in 2023, as compared to cash used for working capital of $664 million in 2022. This increase in cash provided by working capital was primarily due to decreases in inventory and trade accounts receivable, which was partially offset by decreases in accounts payable and accrued liabilities during 2023.

Current wording

Our cash provided by operating activities increased to $1,436 million in 2024 from $1,057 million in 2023. The increase in cash provided by operating activities was primarily due to changes in working capital, which excluded net assets and net liabilities we classified as held for sale. Cash provided by working capital increased to $417 million in 2024, as compared to cash provided by working capital of $77 million in 2023. This increase in cash provided by working capital was primarily due to decreases in inventory and trade accounts receivable.

Previous wording

Our cash used for investing activities increased to $329 million in 2023 from $320 million in 2022, primarily due to increased capital expenditures in 2023. In 2023, we used $316 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities, compared to $300 million we paid in 2022 for the same purposes. Capital investment commitments for 2024 are anticipated to be approximately $340 million.

Current wording

Our cash used for investing activities decreased to $47 million in 2024 from $329 million in 2023, primarily due to the proceeds from the sale of our South Korea business of $255 million, partially offset by decreased capital expenditures in 2024. In 2024, we used $301 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities, compared to $316 million we used in 2023 for the same purposes. Capital investment commitments for 2025 are anticipated to be approximately $450 million.

Previous wording

Also included in cash for financing activities are cash dividends we pay to our common stockholders of record on a quarterly basis. Dividends paid, including those to non-controlling interests, increased 7 percent to $194 million during 2023 from $181 million during 2022. The increase was due to an increase in our quarterly dividend rate per share of common stock, which typically occurs during the third quarter of each fiscal year. During 2023, we also repurchased 1.0 million outstanding shares of our common stock in open market transactions at a net cost of $101 million.

Current wording

We used $765 million of cash for financing activities in 2024 compared to cash used for financing activities of $569 million in 2023. The difference includes a net $264 million reduction of our commercial paper borrowings during 2024. Cash used for financing activities also includes cash dividends that we pay to our common stockholders of record on a quarterly basis. Dividends paid, including those to non-controlling interests, increased 8 percent to $210 million during 2024 from $194 million during 2023. The increase was due to an increase in our quarterly dividend rate per share of common stock, which typically occurs during the third quarter of each fiscal year. During 2024, we also repurchased 1.7 million outstanding shares of our common stock in open market transactions at a net cost of $216 million.

Previous wording

We use certain key financial performance metrics to monitor our progress towards achieving our long-term strategic business objectives. These metrics relate to our ability to drive profitability, create value for stockholders and monitor our financial leverage. We assess whether we are achieving our profitability and value creation objectives by measuring our

Current wording

We use certain key financial performance metrics to monitor our progress towards achieving our long-term strategic business objectives. These metrics relate to our ability to drive profitability, create value for stockholders and monitor our financial leverage. We assess whether we are achieving our profitability and value creation objectives by measuring our Adjusted Return on Invested Capital (“Adjusted ROIC”). We monitor our financial leverage by regularly reviewing our ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization (“Net Debt to Adjusted EBITDA”). We believe these metrics provide valuable information to help us run our business and are useful to investors.

Previous wording

The metrics Adjusted ROIC and Net Debt to Adjusted EBITDA include certain financial measures (Adjusted operating income, net of tax, and Adjusted EBITDA, respectively) that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). We also have presented below the most comparable financial measures calculated using components determined in accordance with GAAP. Management uses these non-GAAP financial measures internally for strategic decision-making, forecasting future results and evaluating current performance. Management believes that the non-GAAP financial measures provide a more consistent comparison of our operating results and trends for the periods presented. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business. The non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Current wording

The metrics Adjusted ROIC and Net Debt to Adjusted EBITDA include certain financial measures (Adjusted operating income, net of tax, and Adjusted EBITDA) that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). We also have presented below the most comparable financial measures calculated using components determined in accordance with GAAP. Management uses these non-GAAP financial measures internally for strategic decision-making, forecasting future results and evaluating current performance. Management believes that the non-GAAP financial measures provide a more consistent comparison of our operating results and trends for the periods presented. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business. The non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Previous wording

In accordance with our long-term strategy, we set certain objectives relating to these key financial performance metrics that we strive to meet. However, no assurance can be given that we will continue to meet our financial performance metric targets. See Item 1A. Risk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk for a discussion of factors that could affect our ability to meet those targets. The objectives reflect our current aspirations in light of our present plans and existing circumstances. We may change these objectives from time to time to address new opportunities or changing circumstances as appropriate to meet our long-term needs and those of our stockholders.

Current wording

In accordance with our long-term strategy, we set certain objectives relating to these key financial performance metrics that we strive to meet. We cannot provide assurance, however, that we will continue to meet our financial performance metric targets. See Item 1A. Risk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk for a discussion of factors that could affect our ability to meet those targets. The objectives reflect our current aspirations in light of our present plans and existing circumstances. We may change these objectives from time to time to address new opportunities or changing circumstances as appropriate to meet our long-term needs and those of our stockholders.

Previous wording

A reconciliation of non-GAAP historical financial measures to the most comparable GAAP measure is below.

Current wording

A reconciliation of non-GAAP historical financial measures to the most comparable GAAP measure is presented below.

Previous wording

Adjusted ROIC is a financial performance ratio not defined under GAAP, and it should be considered in addition to, and not as a substitute for, GAAP financial measures. Ingredion defines Adjusted ROIC as Adjusted operating income, net of tax, divided by average end-of-year balances for current year and prior year Total net debt and equity. Similarly named measures may not be defined and calculated by other companies in the same manner. Ingredion believes Adjusted ROIC is meaningful to investors as it focuses on profitability and value-creating potential, taking into account the amount of capital invested. The most comparable measure calculated using components determined in accordance with GAAP is Return on Invested Capital, which Ingredion defines as Net income, divided by average end-of-year balances for current year and prior year Total net debt and equity, as shown in the table below.

Current wording

Adjusted ROIC is a financial performance ratio not defined under GAAP, and it should be considered in addition to, and not as a substitute for, GAAP financial measures. We define Adjusted ROIC as Adjusted operating income, net of tax, divided by average end-of-year balances for current year and prior year Total net debt and equity. Similarly named measures may not be defined and calculated by other companies in the same manner. We believe Adjusted ROIC is meaningful to investors as it focuses on profitability and value-creating potential, taking into account the amount of capital invested. The most comparable measure calculated using components determined in accordance with GAAP is ROIC, which we define as Net income, divided by average end-of-year balances for current year and prior year Total net debt and equity, as shown in the following table.

Previous wording

(iii)In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was partially offset by $4 million of insurance recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage.

Current wording

(iii)This amount primarily related to tornado damage incurred at a U.S. warehouse in 2024. In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage, which was partially offset by $4 million of insurance recoveries.

Previous wording

(iv)The effective income tax rate was 24.9 percent for 2023 and 27.0 percent for 2022.

Current wording

(v)The effective income tax rate was 26.4 percent for 2024 and 24.9 percent for 2023.

Previous wording

Our long-term objective is to maintain an Adjusted ROIC in excess of 10.0 percent. For 2023, we achieved an Adjusted ROIC of 13.3 percent as compared to 11.0 percent for 2022.

Current wording

Our long-term objective is to maintain an Adjusted ROIC in excess of 10.0 percent. For 2024, we achieved an Adjusted ROIC of 14.8 percent as compared to 13.3 percent for 2023.

Previous wording

Net Debt to Adjusted EBITDA is a financial performance ratio that is not defined under GAAP, and should be considered in addition to, and not as a substitute for, GAAP financial measures. Ingredion defines this measure as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Adjusted EBITDA. Similarly named measures may not be defined and calculated by other companies in the same manner. Ingredion believes Total net debt to Adjusted EBITDA is meaningful to investors as it focuses on Ingredion’s leverage on a comparable Adjusted EBITDA basis and helps investors better understand the time required to pay back Ingredion’s outstanding debt. The most comparable ratio calculated using components determined in accordance with GAAP is Total net debt to Income before income taxes, calculated as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Income before income taxes, as shown in the table below.

Current wording

Net Debt to Adjusted EBITDA is a financial performance ratio that is not defined under GAAP, and should be considered in addition to, and not as a substitute for, GAAP financial measures. We define this measure as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Adjusted EBITDA. Similarly named measures may not be defined and calculated by other companies in the same manner. We believe Total net debt to Adjusted EBITDA is meaningful to investors as it focuses on our leverage on a comparable Adjusted EBITDA basis and helps investors better understand the time required to pay back our outstanding debt. The most comparable ratio calculated using components determined in accordance with GAAP is Total net debt to Income before income taxes, calculated as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Income before income taxes, as shown in the following table.

Previous wording

(iii)In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was partially offset by $4 million of insurance recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage.

Current wording

(iii)This amount primarily relates to tornado damage incurred at a U.S. warehouse in 2024. In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage, which was partially offset by $4 million of insurance recoveries.

Previous wording

Our long-term objective is to target a ratio of Net Debt to Adjusted EBITDA of 2.5 or less. As of December 31, 2023 and 2022, the ratio was 1.5 and 2.2, respectively.

Current wording

Our long-term objective is to target a ratio of Net Debt to Adjusted EBITDA of 2.5 or less. As of December 31, 2024 and 2023, the ratio was 0.7 and 1.5.

Previous wording

We have substantial investments in property, plant and equipment (“PP&E”) and definite-lived intangible assets. For PP&E, we recognize the cost of depreciable assets in operations over the estimated useful life of the assets and evaluate the recoverability of these assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. For definite-lived intangible assets, we recognize the cost of these amortizable assets in operations over their estimated useful life and evaluate the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The carrying values of PP&E and definite-lived intangible assets at December 31, 2023 were $2.4 billion and $242 million, respectively.

Current wording

We have substantial investments in property, plant and equipment (“PP&E”) and definite-lived intangible assets. For PP&E, we recognize the cost of depreciable assets in operations over the estimated useful life of the assets and evaluate the recoverability of these assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. For definite-lived intangible assets, we recognize the cost of these amortizable assets in operations over their estimated useful life and evaluate the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The carrying values of PP&E and definite-lived intangible assets at December 31, 2024 were $2.3 billion and $215 million, respectively.

Previous wording

To optimize our operations, we continually review whether to further consolidate our manufacturing facilities or redeploy assets for other uses when we believe we can achieve a higher return on our investment. This review may result in closing or sale of certain manufacturing facilities, which could have a significant negative impact on our results of operations in the period we decide to close or sell the facility.

Current wording

To optimize our operations, we continually review whether to further consolidate our manufacturing facilities or redeploy assets for other uses when we believe we can achieve a higher return on our investment. This review may result in the closure or sale of certain manufacturing facilities, which could have a significant negative impact on our results of operations in the period in which we decide to close or sell the facility.

Previous wording

We have certain indefinite-lived intangible assets in the form of tradenames and trademarks. Our methodology for allocating the purchase price of acquisitions is based on established valuation techniques that reflect the consideration of a number of factors, including valuations performed by third-party appraisers when appropriate. Goodwill is measured as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed. We have identified several reporting units for which cash flows are determinable and to which goodwill may be allocated. Goodwill is either assigned to a specific reporting unit or allocated between reporting units based on the relative excess fair value of each reporting unit. The carrying value of indefinite-lived intangible assets and goodwill at December 31, 2023 was $143 million and $918 million, respectively, compared to $143 million and $900 million, respectively, at December 31, 2022.

Current wording

We have certain indefinite-lived intangible assets in the form of tradenames and trademarks. Our methodology for allocating the purchase price of acquisitions is based on established valuation techniques that reflect the consideration of a number of factors, including valuations performed by third-party appraisers when appropriate. Goodwill is measured as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed. We have identified several reporting units for which cash flows are determinable and to which goodwill may be allocated. Goodwill is either assigned to a specific reporting unit or allocated between reporting units based on the relative excess fair value of each reporting unit. The carrying value of indefinite-lived intangible assets and goodwill at December 31, 2024 was $143 million and $906 million, respectively, compared to $143 million and $918 million, respectively, at December 31, 2023.

Previous wording

We assess indefinite-lived intangible assets and goodwill for impairment as of July 1 each year (or more frequently if impairment indicators arise). We first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired, which include net sales derived from these intangibles and certain market and industry conditions. After assessing the qualitative factors, if we determine that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater than its carrying amount, then we are not required to compute the fair value of the indefinite-lived intangible asset. If the qualitative assessment leads us to conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASC subtopic 350-30, Intangibles – Goodwill and Other. Based on our assessment's results, we concluded that as of July 1, 2023, there were no impairments in our indefinite-lived intangible assets.

Current wording

We assess indefinite-lived intangible assets and goodwill for impairment as of July 1 each year (or more frequently if impairment indicators arise such as the resegmentation that occurred on January 1, 2024). We first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired, which include net sales derived from these intangibles and certain market and industry conditions. After assessing the qualitative factors, if we determine that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater than its carrying amount, then we are not required to compute the fair value of the indefinite-lived intangible asset. If the qualitative assessment leads us to conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASC subtopic 350-30, Intangibles – Goodwill and Other. Based on our assessment’s results, we concluded that as of January 1, 2024 and July 1, 2024 there were no impairments in our indefinite-lived intangible assets.

Previous wording

When we test goodwill for impairment, we make certain estimates and judgments, which include identifying reporting units and determining the reporting units' fair values based on both discounted cash flow analyses and an analysis of market multiples. To determine the fair value of reporting units, we use significant assumptions and estimates for discount and long-term net sales growth rates, in addition to operating and capital expenditure requirements. We consider changes in discount rates for the reporting units based on current market interest rates and specific risk factors within each geographic region. We also evaluate qualitative factors, such as legal, regulatory or competitive forces, in estimating the impact to the fair value of the reporting units, noting no significant changes that would result in any reporting unit failing the impairment test. Changes in assumptions concerning projected results or other underlying assumptions could have a significant impact on the fair value of the reporting units in the future. Based on the results of the annual assessment, we concluded that as of July 1, 2023, there were no impairments in our reporting units.

Current wording

When we test goodwill for impairment, we make certain estimates and judgments, which include identifying reporting units and determining the reporting units’ fair values based on both discounted cash flow analyses and an analysis of market multiples. To determine the fair value of reporting units, we use significant assumptions and estimates for discount and long-term net sales growth rates, in addition to operating and capital expenditure requirements. We consider changes in discount rates for the reporting units based on current market interest rates and specific risk factors within each geographic region. We also evaluate qualitative factors, such as legal, regulatory or competitive forces, in estimating the impact to the fair value of the reporting units, noting no significant changes that would result in any reporting unit failing the impairment test. Changes in assumptions concerning projected results or other underlying assumptions could have a significant impact on the fair value of the reporting units in the future. Based on the results of both the resegmentation and the annual assessment, we concluded that as of January 1, 2024 and July 1, 2024 there were no impairments in our reporting units.

Previous wording

We and our subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of employees in the U.S. and Canada, and certain employees in other countries. We also provide healthcare and life insurance benefits for retired employees in the U.S., Canada and Brazil. In order to measure the expense and obligations associated with these benefits, our management must make a variety of estimates and assumptions, including discount rates, expected long-term rates of return, rate of compensation increases, employee turnover rates, retirement rates, mortality rates and other factors. We review our actuarial assumptions on an annual basis as of December 31 (or more frequently if a significant event requiring remeasurement occurs) and modify our assumptions based on current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss (“AOCL”). We believe the assumptions utilized in recording our obligations under our plans, which are based on our experience, market conditions and input from our actuaries, are reasonable. We use third-party specialists to assist management in evaluating our assumptions and estimates, as well as to appropriately measure the costs and obligations associated with our retirement benefit plans. Had we used different estimates and assumptions for these plans, our retirement benefit obligations and related expense could vary from the actual amounts recorded and such differences could be material. Additionally, adverse changes in investment returns earned on pension assets and discount rates used to calculate pension and postretirement benefit related liabilities or changes in required funding levels may have an unfavorable impact on future expense and cash flow. Net periodic pension and postretirement benefit cost for all of our plans was $12 million in 2023 and $6 million in 2022.

Current wording

We and our subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a portion of employees in the U.S. and Canada, and certain employees in other countries. We also provide healthcare and life insurance benefits for retired employees in the U.S., Canada and Brazil. In order to measure the expense and obligations associated with these benefits, our management must make a variety of estimates and assumptions, including discount rates, expected long-term rates of return, rate of compensation increases, employee turnover rates, retirement rates, mortality rates and other factors. We review our actuarial assumptions on an annual basis as of December 31 (or more frequently if a significant event requiring remeasurement occurs) and modify our assumptions based on current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into non-operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss (“AOCL”). We believe the assumptions utilized in recording our obligations under our plans, which are based on our experience, market conditions and input from our actuaries, are reasonable. We use third-party specialists to assist management in evaluating our assumptions and estimates, as well as to appropriately measure the costs and obligations associated with our retirement benefit plans. Had we used different estimates and assumptions for these plans, our retirement benefit obligations and related expense could vary from the actual amounts recorded and such differences could be material. Additionally, adverse changes in investment returns earned on pension assets and discount rates used to calculate pension and postretirement benefit related liabilities or changes in required funding levels may have an unfavorable impact on future expense and cash flow. Net periodic pension and postretirement benefit cost for all of our plans was $9 million in 2024 and $12 million in 2023.

Previous wording

We determine our assumption for the discount rate used to measure year-end pension and postretirement obligations based on high-quality fixed-income investments that match the duration of the expected benefit payments, which has been benchmarked using a long-term, high-quality AA corporate bond index. We use a full yield curve approach in the estimation of the service and interest cost components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The weighted average discount rate used to determine our obligations under U.S. pension plans as of December 31, 2023 and 2022, was 5.00 percent and 5.19 percent, respectively. The weighted average discount rate used to determine our obligations under non-U.S. pension plans as of 2023 and 2022, was 5.24 percent and 5.66 percent, respectively. The weighted average discount rate used to determine our obligations under our postretirement plans as of December 31, 2023 and 2022, was 7.37 percent and 7.30 percent, respectively.

Current wording

We determine our assumption for the discount rate used to measure year-end pension and postretirement obligations based on high-quality fixed-income investments that match the duration of the expected benefit payments, which has been benchmarked using a long-term, high-quality AA corporate bond index. We use a full yield curve approach in the estimation of the service and interest cost components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The weighted average discount rate used to determine our obligations under U.S. pension plans as of December 31, 2024 and 2023 was 5.64 percent and 5.00 percent. The weighted average discount rate used to determine our obligations under non-U.S. pension plans as of December 31, 2024 and 2023 was 5.42 percent and 5.24 percent. The weighted average discount rate used to determine our obligations under our postretirement plans as of December 31, 2024 and 2023 was 7.75 percent and 7.37 percent.

Previous wording

A one percentage point decrease in the discount rates at 2023, would have increased the accumulated benefit obligation and projected benefit obligation by the following amounts (millions):

Current wording

A one percentage point decrease in the discount rates at December 31, 2024, would have increased the accumulated benefit obligation and projected benefit obligation by the following amounts (in millions):

Previous wording

Our investment approach and related asset allocation for the U.S. and Canadian plans is a liability-driven investment approach by which a higher proportion of investments will be in interest-rate sensitive investments (fixed income) under an active-management approach. The approach seeks to protect the current funded status of the plans from market volatility with a greater asset allocation to interest-rate sensitive assets. The greater allocation to interest-rate sensitive assets is expected to reduce volatility in plan-funded status by more closely matching movements in asset values to changes in liabilities.

Current wording

Our investment approach and related asset allocation for the U.S. and Canadian plans is a liability-driven investment approach by which a higher proportion of investments will be in interest-rate sensitive investments (fixed income) under an active-management approach. The approach seeks to protect the current funded status of the plans from market volatility with a greater asset allocation to interest-rate sensitive assets, which is expected to reduce volatility in plan-funded status by more closely matching movements in asset values to changes in liabilities.

Previous wording

Our current investment policy for our pension plans is to balance risk and return through diversified portfolios of actively managed equity index instruments, fixed income index securities and short-term investments. Maturities for fixed income securities are managed so that sufficient liquidity exists to meet near-term benefit payment obligations. The asset allocation is reviewed regularly, and portfolio investments are rebalanced to the targeted allocation when considered appropriate or to raise sufficient liquidity when necessary to meet near-term benefit payment obligations. For 2023, net periodic pension cost, we assumed an expected long-term rate of return on assets, which is based on the fair value of plan assets, of 5.50 percent for U.S. plans and approximately 4.66 percent for Canadian plans. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of U.S. and Canadian debt and equity securities, management evaluated historical rates of return achieved on plan assets and the asset allocation of the plans, input from our independent actuaries and investment consultants, and historical trends in long-term inflation rates. Projected return estimates made by such consultants are based upon broad equity and bond indices. We also maintain several funded pension plans in other international locations. The expected returns on plan assets for these plans are determined based on each plan’s investment approach and asset allocations. A hypothetical 25 basis point decrease in the expected long-term rate of return assumption would increase 2024 net periodic pension cost for the U.S. and Canadian plans by approximately $1 million each.

Current wording

Our current investment policy for our pension plans is to balance risk and return through diversified portfolios of actively managed equity index instruments, fixed income index securities and short-term investments. Maturities for fixed income securities are managed so that sufficient liquidity exists to meet near-term benefit payment obligations. The asset allocation is reviewed regularly, and portfolio investments are rebalanced to the targeted allocation when considered appropriate or to raise sufficient liquidity when necessary to meet near-term benefit payment obligations. For 2024 net periodic pension cost, we assumed an expected long-term rate of return on assets, which is based on the fair value of plan assets, of 5.50 percent for U.S. plans and approximately 4.58 percent for Canadian plans. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of U.S. and Canadian debt and equity securities, management evaluated historical rates of return achieved on plan assets and the asset allocation of the plans, input from our independent actuaries and investment consultants, and historical trends in long-term inflation rates. Projected return estimates made by such consultants are based upon broad equity and bond indices. We also maintain several funded pension plans in other international locations. The expected returns on plan assets for these plans are determined based on each plan’s investment approach and asset allocations. A hypothetical 25 basis point decrease in the expected long-term rate of return assumption would increase 2025 net periodic pension cost for the U.S. and Canadian plans by approximately $1 million each.

Previous wording

Healthcare cost trend rates are used in valuing our postretirement benefit obligations and are established based on actual health care cost trends and consultation with actuaries and benefit providers. At December 31, 2023, the health care cost trend rate assumptions for the next year for the U.S., Canadian and Brazilian plans were 7.80 percent, 5.04 percent and 8.94 percent, respectively.

Current wording

Healthcare cost trend rates are used in valuing our postretirement benefit obligations and are established based on actual health care cost trends and consultation with actuaries and benefit providers. At December 31, 2024, the health care cost trend rate assumptions for the next year were 8.40 percent for the U.S. plans, 5.25 percent for the Canadian plans, and 8.42 percent for the Brazilian plans.