Ingredion Boosts Outlook After Strong Q3 Results

• 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)

Estimated factors affecting changes in Reported and Adjusted EPS

** 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

*Represents loss of volume due to the sale of our South Korea business completed on February 1, 2024

Reported Operating Income

Adjusted Operating Income

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

Segment Operating Income

• 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

Segment Operating Income

• 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

Segment Operating Income

• 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

* Represents loss of volume due to the sale of our South Korea business

Segment Operating Income (Loss)

• 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 10^th 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