Ingredion Incorporated Reports Strong Third Quarter Results and Raises Full-Year Outlook
Third quarter 2024 reported and adjusted* operating income increased 26% and 29% compared to prior year
Third quarter 2024 reported and adjusted EPS were $2.83 and $3.05, an increase of 20% and 31%, respectively
Raising guidance for full-year reported EPS to be in the range of $10.60 to $10.90 and adjusted EPS to be in the range of $10.35 to $10.65
WESTCHESTER, Ill., Nov. 05, 2024 (GLOBE NEWSWIRE) -- Ingredion Incorporated (NYSE:INGR), a leading global provider of ingredient solutions to the food and beverage manufacturing industry, today reported its 2024 third quarter results.
"Texture & Healthful Solutions exhibited robust sales volume growth in the third quarter, which supported double-digit operating income growth for the segment," said Jim Zallie, president and CEO of Ingredion. "Additionally, the food and industrial businesses continued to generate significant operating profit growth. Of note, in our Food & Industrial Ingredients LATAM segment, the exceptional operating profit growth reflects recovery from last year's transition to a more sustainable energy source in Brazil as well as continued strength in Mexico."
"11% sales volume growth in Texture & Healthful Solutions was fueled by solid U.S. market performance in categories such as savory, packaged meals, and frozen prepared foods. Moreover, our European sales volume grew double-digits from an uptick in consumer buying behavior."
"Operating excellence and contract management across each of our Food and Industrial Ingredients segments were also key drivers of exceptional profit growth. As we continued to face input and wage cost inflation, our sales teams worked successfully with customers to adjust multi-year contract pricing, which supported margin recovery. Furthermore, volume recovery improved fixed cost absorption, and our operations and procurement teams have driven structural savings, which is complementing the savings coming from our Cost2Compete program."
"The strong performance across all segments enabled us to deliver our highest-ever third quarter operating income performance along with strong cash flow. We anticipate this momentum carrying through quarter four and into 2025. We believe our Driving Growth Roadmap continues to guide long-term value creation for our shareholders as we realize the benefits of our new segmentation to deepen our customer relationships and drive innovative solutions," Zallie concluded.
* Reported results are in accordance with U.S. generally accepted accounting principles "GAAP." Adjusted financial measures are non-GAAP financial measures. See "II. Non-GAAP Information" in the Supplemental Financial Information that follows the Condensed Consolidated Financial Statements for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures.
Diluted Earnings Per Share (EPS)
3Q23
3Q24
Reported Diluted EPS
$2.36
$2.83
Impairment charges
0.10
0.08
Restructuring and resegmentation costs
—
0.08
Net gain on sale of business
—
(0.21)
Tax items and other matters
(0.13)
0.27
Adjusted Diluted EPS**
$2.33
$3.05
Estimated factors affecting changes in Reported and Adjusted EPS
Third Quarter
Total change in adjusted EPS**
0.72
Total operating items
0.77
Margin
0.93
Volume
(0.12)
Foreign exchange
(0.01)
Other income
(0.03)
Total non-operating items
(0.05)
Other non-operating income
0.01
Financing costs
0.30
Tax rate
(0.37)
Shares outstanding
0.02
Non-controlling interests
(0.01)
** Totals may not sum due to rounding
Other Financial Items
At September 30, 2024, total debt was $1.8 billion, and cash, including short-term investments, was $884 million, respectively, versus $2.2 billion and $409 million at December 31, 2023.
In the third quarter, reported net financing costs were $1 million, compared to $26 million for the year-ago third quarter, driven by lower net interest expense and benefited by $10 million of favorable foreign exchange impacts.
Reported and adjusted effective tax rates for the quarter were 30.8% and 26.9%, respectively, compared to 13.5% and 17.3% for the year-ago period. The increase in the reported effective tax rate was primarily driven by an adverse ruling that generated a multi-year tax contingency in the third quarter of 2024, as well as lapping a prior year retroactive law change to claim certain multi-year foreign tax credits against U.S taxes, and the change in value of the Mexican peso against the U.S. dollar. These impacts were partially offset by the tax treatment on the sale of our South Korea business during 2024.
Net capital expenditures were $170 million year-to-date through September 30, 2024.
Business Review
Total Ingredion
Net Sales
$ in millions
2023
FXImpact
Volume
S. Korea Volume*
PriceMix
2024
Change
Changeexcl. FX
Third Quarter
2,033
(20)
86
(79)
(150)
1,870
(8%)
(7%)
Year-to-Date
6,239
(19)
150
(210)
(530)
5,630
(10%)
(9%)
*Represents loss of volume due to the sale of our South Korea business completed on February 1, 2024
Reported Operating Income
$ in millions
2023
FX Impact
BusinessDrivers
Restructuring/ Impairment
Other
2024
Change
Changeexcl. FX
Third Quarter
213
(1)
64
(4)
(4)
268
26%
26%
Year-to-Date
755
2
—
(28)
(8)
721
(5%)
(5%)
Adjusted Operating Income
$ in millions
2023
FX Impact
BusinessDrivers
2024
Change
Changeexcl. FX
Third Quarter
219
(1)
64
282
29%
29%
Year-to-Date
766
2
—
768
—%
—%
Net Sales
Third quarter net sales were down 8% and year-to-date net sales were down 10% from a year ago. The decreases were driven by 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.
Operating Income
Third quarter reported operating income was $268 million and adjusted operating income was $282 million. The difference in reported versus adjusted operating income was primarily attributable to the impairment charge related to our manufacturing facility in the United Kingdom, where we plan to stop production in the first quarter of next year. Excluding foreign exchange impacts, reported operating income was up 26% and adjusted operating income was up 29% from a year ago.
Year-to-date reported operating income was $721 million and adjusted operating income was $768 million. The difference in reported versus adjusted operating income year-to-date was primarily attributable to impairment of an equity method investment and the impairment related to our manufacturing facility in the United Kingdom. Excluding foreign exchange impacts, reported operating income was down 5% and adjusted operating income was flat from a year ago.
Texture & Healthful Solutions
Net Sales
$ in millions
2023
FXImpact
Volume
PriceMix
2024
Change
Changeexcl. FX
Third Quarter
599
4
64
(67)
600
—%
(1%)
Year-to-Date
1,882
(11)
114
(200)
1,785
(5%)
(5%)
Segment Operating Income
$ in millions
2023
FX Impact
BusinessDrivers
2024
Change
Changeexcl. FX
Third Quarter
86
—
10
96
12%
12%
Year-to-Date
318
(2)
(60)
256
(19%)
(19%)
Third quarter operating income for Texture & Healthful Solutions was $96 million, an increase of $10 million from a year ago, driven by lower input costs and recovering volumes, partially offset by unfavorable price mix. Year-to-date operating income was $256 million, a decrease of $62 million driven by unfavorable price mix and the carry-forward of higher cost inventory, partially offset by improved volumes. Excluding foreign exchange impacts, segment operating income was up 12% for the quarter and down 19% year-to-date from a year ago.
Food & Industrial Ingredients - LATAM
Net Sales
$ in millions
2023
FXImpact
Volume
PriceMix
2024
Change
Changeexcl. FX
Third Quarter
658
(22)
6
(22)
620
(6%)
(2%)
Year-to-Date
1,991
6
18
(149)
1,866
(6%)
(7%)
Segment Operating Income
$ in millions
2023
FX Impact
BusinessDrivers
2024
Change
Changeexcl. FX
Third Quarter
104
(1)
28
131
26%
27%
Year-to-Date
327
5
30
362
11%
9%
Third quarter operating income for Food & Industrial Ingredients - LATAM was $131 million, an increase of $27 million from a year ago, and year-to-date operating income was $362 million, an increase of $35 million from a year ago. The increase in both periods was primarily attributable to lower input costs and catch-up pricing on multi-year contracts. Excluding foreign exchange impacts, segment operating income was up 27% for the quarter and up 9% year-to-date from a year ago.
Food & Industrial Ingredients - U.S./Canada
Net Sales
$ in millions
2023
FX Impact
Volume
PriceMix
2024
Change
Changeexcl. FX
Third Quarter
599
(2)
4
(53)
548
(9%)
(8%)
Year-to-Date
1,811
(4)
(9)
(154)
1,644
(9%)
(9%)
Segment Operating Income
$ in millions
2023
FX Impact
BusinessDrivers
2024
Change
Changeexcl. FX
Third Quarter
79
—
20
99
25%
25%
Year-to-Date
251
(1)
41
291
16%
16%
Third quarter operating income for Food & Industrial Ingredients - U.S./Canada was $99 million, up $20 million from a year ago, and year-to-date operating income was $291 million, up $40 million from a year ago. The increase in both periods was driven by lower raw material and input costs, partially offset by price mix. Excluding foreign exchange impacts, segment operating income was up 25% for the quarter and up 16% year-to-date from a year ago.
All Other**
Net Sales
$ in millions
2023
FX Impact
Volume
S. Korea Volume*
PriceMix
2024
Change
Changeexcl. FX
Third Quarter
177
—
12
(79)
(8)
102
(42%)
(42%)
Year-to-Date
555
(10)
27
(210)
(27)
335
(40%)
(38%)
* Represents loss of volume due to the sale of our South Korea business
Segment Operating Income (Loss)
$ in millions
2023
FX Impact
BusinessDrivers
2024
Change
Changeexcl. FX
Third Quarter
(1)
—
(3)
(4)
N/M
N/M
Year-to-Date
(6)
—
(12)
(18)
N/M
N/M
Third quarter operating (loss) for All Other was $4 million, up $3 million from the prior year, and year-to-date operating (loss) was $18 million, up $12 million from the prior year, primarily driven by the sale of our South Korea business.
** All Other consists of the businesses of multiple operating segments that are not individually or collectively classified as reportable segments. Net sales from All Other are generated primarily by sweetener and starch sales by our Pakistan business, sales of stevia and other ingredients from our PureCircle and Sugar Reduction businesses, and pea protein ingredients from our Protein Fortification business.
Dividends and Share Repurchases
Year-to-date through September 30, 2024, the Company paid $156 million in dividends to shareholders. On August 27, 2024, the Company announced a quarterly dividend of $0.80 per share that was paid on October 22, 2024 (compared to the prior quarterly dividend of $0.78 per share), which represents the 10th consecutive annual increase. During the quarter, the Company repurchased $21 million of outstanding shares of common stock, bringing the year-to-date total of repurchased shares to $87 million.
Updated Full-Year 2024 Outlook
The Company expects full-year 2024 net sales to be down mid-single-digits, excluding the effects of the sale of our South Korea business completed on February 1, 2024.
Reported operating income is expected to be flat and adjusted operating income is now expected to be up high single-digits, excluding the effects of the sale of our South Korea business.
The Company expects its full-year 2024 reported EPS to be in the range of $10.60 to $10.90, which includes the impact of the gain on the sale of our South Korea business. The Company now anticipates adjusted EPS to be in the range of $10.35 to $10.65.
Corporate costs are expected to be flat to the prior year.
For full-year 2024, the Company expects a reported effective tax rate of 28.0% to 29.0% and an adjusted effective tax rate of 26.5% to 27.5%.
Cash from operations for full-year 2024 is expected to be in the range of $1,100 million to $1,250 million. Capital expenditures for the full year are expected to be approximately $310 to $330 million.
Conference Call and Webcast Details
Ingredion will host a conference call on Tuesday, November 5, 2024, at 8 a.m. CT/ 9 a.m. ET, hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real-time and can be accessed at https://ir.ingredionincorporated.com/events-and-presentations. A presentation containing additional financial and operating information will be accessible through the Company's website and available to download a few hours prior to the start of the call. A replay will be available for a limited time at https://ir.ingredionincorporated.com/financial-information/quarterly-results.
About the Company
Ingredion Incorporated (NYSE:INGR), headquartered in the suburbs of Chicago, is a leading global ingredient solutions provider serving customers in more than 120 countries. With 2023 annual net sales of nearly $8 billion, the Company turns grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets. With Ingredion's Idea Labs® innovation centers around the world and approximately 12,000 employees, the Company co-creates with customers and fulfills its purpose of bringing the potential of people, nature and technology together to make life better. Visit ingredion.com for more information and the latest Company news.
Forward-Looking Statements
This news release 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 intends these forward-looking statements to be covered by the safe harbor provisions for such statements.
Forward-looking statements include, among others, any statements regarding our expectations for full-year 2024 reported and adjusted earnings per share, net sales, reported and adjusted operating income, corporate costs, reported and adjusted effective tax rate, cash from operations, and capital expenditures, and any other statements regarding our prospects and our future operations, financial condition, volumes, cash flows, expenses or other financial items, including management's plans or strategies and objectives for any of the foregoing and any assumptions, expectations, or beliefs underlying any of the foregoing.
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."
These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and beyond our control. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, investors are cautioned that no assurance can be given that our expectations will prove correct.
Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various risks and uncertainties, including geopolitical conflicts and actions arising from them, including the impacts on the availability and prices of raw materials and energy supplies, supply chain interruptions, and volatility in foreign exchange and interest rates; changing consumer consumption preferences that may lessen demand for products we make; the effects of global economic conditions and the general political, economic, business, and market conditions that affect customers and consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products, and the impact these factors may have on our sales volumes, the pricing of our products and our ability to collect our receivables from customers; future purchases of our products by major industries which we serve and from which we derive a significant portion of our sales, including, without limitation, the food, animal nutrition, beverage and brewing industries; the risks associated with pandemics; the uncertainty of acceptance of products developed through genetic modification and biotechnology; our ability to develop or acquire new products and services at rates or of qualities sufficient to gain market acceptance; increased competitive and/or customer pressure in the corn-refining industry and related industries, including with respect to the markets and prices for our primary products and our co-products, particularly corn oil; price fluctuations, supply chain disruptions, and shortages affecting inputs to our production processes and delivery channels, including raw materials, energy costs and availability and cost of freight and logistics; our ability to contain costs, achieve budgets and realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget as well as with respect to freight and shipping costs and hedging activities; operating difficulties at our manufacturing facilities and liabilities relating to product safety and quality; the effects of climate change and legal, regulatory, and market measures to address climate change; our ability to successfully identify and complete acquisitions, divestitures, or strategic alliances on favorable terms as well as our ability to successfully conduct due diligence, integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; economic, political and other risks inherent in conducting operations in foreign countries and in foreign currencies; the failure to maintain satisfactory labor relations; our ability to attract, develop, motivate, and maintain good relationships with our workforce; the impact on our business of natural disasters, war, threats or acts of terrorism, or the occurrence of other significant events beyond our control; the impact of impairment charges on our goodwill or long-lived assets; changes in government policy, law, or regulation and costs of legal compliance, including compliance with environmental regulation; changes in our tax rates or exposure to additional income tax liability; increases in our borrowing costs that could result from increased interest rates; our ability to raise funds at reasonable rates and other factors affecting our access to sufficient funds for future growth and expansion; interruptions, security incidents, or failures with respect to information technology systems, processes, and sites; volatility in the stock market and other factors that could adversely affect our stock price; risks affecting the continuation of our dividend policy; and our ability to maintain effective internal control over financial reporting.
Our forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see "Risk Factors" and other information included in our Annual Report on Form 10-K for the year ended December 31, 2023, and our subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
CONTACTS:
Investors: Noah Weiss, 773-896-5242Media: Rick Wion, 708-209-6323
Ingredion IncorporatedCondensed Consolidated Statements of Income(Unaudited)(dollars and shares in millions, except per share amounts)
Three Months EndedSeptember 30,
Change%
Nine Months EndedSeptember 30,
Change%
2024
2023
2024
2023
Net sales
$
1,870
$
2,033
(8%)
$
5,630
$
6,239
(10%)
Cost of sales
1,391
1,612
4,288
4,890
Gross profit
479
421
14%
1,342
1,349
(1%)
Operating expenses
198
203
(2%)
578
578
—%
Other operating expense (income), net
1
(5
)
5
6
Restructuring/impairment charges
12
10
38
10
Operating income
268
213
26%
721
755
(5%)
Financing costs
1
26
30
88
Net gain on sale of business
(8
)
—
(90
)
—
Other non-operating expense
2
2
2
4
Income before income taxes
273
185
48%
779
663
17%
Provision for income taxes
84
25
222
145
Net income
189
160
18%
557
518
8%
Less: Net income attributable to non-controlling interests
1
2
5
6
Net income attributable to Ingredion
$
188
$
158
19%
