Ingredion Inc 10-Q for FY2021 Q1

Ingredion Inc (INGR)

10-Q 2021-05-07 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

Ingredion Inc filed this 10-Q on May 7, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.61B; up 4.6% from $1.54B a year earlier
Net loss: $246M; compared with net income of $75M a year earlier
Diluted EPS: -$3.66; compared with $1.11 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	INGR	New York Stock Exchange




Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐


Class		Outstanding at April 30, 2021
Common Stock, $.01 par value		66,975,448 shares

		Page
Part I

Item 1	Financial Statements	3
	Condensed Consolidated Statements of (Loss) Income	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Equity and Redeemable Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s discussion and analysis of financial condition and results of operations	25
Item 3	Quantitative and qualitative disclosures about market risk	33
Item 4	Controls and procedures	33

Part II

Item 1	Legal proceedings	34
Item 2	Unregistered sales of equity securities and use of proceeds	34
Item 6	Exhibits	35
Signatures		37


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2021		2020
Net sales	$	1,614	$	1,543
Cost of sales		1,263		1,220
Gross profit		351		323

Operating expenses		153		154
Other (income) expense, net		(2)		2
Restructuring/impairment charges		370		14

Operating (loss) income		(170)		153

Financing costs, net		19		18
Other, non-operating (income), net		(1)		(1)

(Loss) income before income taxes		(188)		136
Provision for income taxes		55		58
Net (loss) income		(243)		78
Less: Net income attributable to non-controlling interests		3		3
Net (loss) income attributable to Ingredion	$	(246)	$	75

Weighted average common shares outstanding:
Basic		67.3		67.1
Diluted		67.3		67.8

Earnings per common share of Ingredion:
Basic	$	(3.66)	$	1.12
Diluted	$	(3.66)	$	1.11


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net (loss) income	$	(243)	$	78
Other comprehensive income:
Gains (losses) on cash flow hedges, net of income tax effect of $7 and $12, respectively		22		(34)
(Gains) losses on cash flow hedges reclassified to earnings, net of income tax effect of $ — and $2, respectively		(1)		4
Currency translation adjustment		(52)		(134)
Comprehensive loss		(274)		(86)
Less: Comprehensive income attributable to non-controlling interests		5		—
Comprehensive loss attributable to Ingredion	$	(279)	$	(86)


	March 31,		December 31,
(in millions, except share and per share amounts)	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	576	$	665
Short-term investments		1		—
Accounts receivable, net		1,025		1,011
Inventories		950		917
Prepaid expenses		58		54
Total current assets		2,610		2,647

Property, plant and equipment, net of accumulated depreciation of $3,165 and $3,175, respectively		2,355		2,455
Goodwill		899		902
Other intangible assets, net of accumulated amortization of $235 and $229, respectively		437		444
Operating lease assets		182		173
Deferred income tax assets		24		23
Other assets		296		214
Total assets	$	6,803	$	6,858

Liabilities and equity
Current liabilities:
Short-term borrowings	$	448	$	438
Accounts payable and accrued liabilities		932		1,020
Total current liabilities		1,380		1,458

Non-current liabilities		219		227
Long-term debt		1,749		1,748
Non-current operating lease liabilities		145		136
Deferred income tax liabilities		219		217
Liabilities held for sale		337		—
Total liabilities		4,049		3,786

Share-based payments subject to redemption		21		30
Redeemable non-controlling interests		70		70

Ingredion stockholders’ equity:
Preferred stock — authorized 25,000,000 shares — $0.01 par value, none issued		—		—
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at March 31, 2021 and December 31, 2020, respectively		1		1
Additional paid-in capital		1,155		1,150
Less: Treasury stock (common stock: 10,737,015 and 10,795,346 shares at March 31, 2021 and December 31, 2020, respectively) at cost		(1,022)		(1,024)
Accumulated other comprehensive loss		(1,164)		(1,133)
Retained earnings		3,667		3,957
Total Ingredion stockholders’ equity		2,637		2,951
Non-redeemable non-controlling interests		26		21
Total equity		2,663		2,972
Total liabilities and equity	$	6,803	$	6,858


	Total Equity
													Non-
													Redeemable		Share-based		Redeemable
					Additional				Accumulated Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income (loss) attributable to non-controlling interests														4				(1)
Dividends declared												(44)
Repurchases of common stock, net								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive (loss) income										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70



(in millions)		PureCircle
Working capital (excluding cash)	$	60
Property, plant and equipment		91
Other, net		(22)
Identifiable intangible assets		68
Goodwill		85
Total fair value, net of cash		282
Less: Non-redeemable non-controlling interests		74
Total purchase price, net of cash	$	208



(in millions)	March 31, 2021
Cash and cash equivalents	$	2
Accounts receivable, net		36
Inventories		26
Prepaid expenses		1
Property, plant and equipment, net		57
Other assets		1
Impairment provision to record at fair value, less cost to sell		(49)
Assets held for sale	$	74

Accounts payable	$	22
Accrued liabilities		4
Impairment provision related to cumulative translation losses		311
Liabilities held for sale	$	337


Balance in severance accrual as of December 31, 2020	$	12
Joint venture related		1
Payments made to terminated employees		(4)
Balance in severance accrual as of March 31, 2021	$	9


Derivatives in Cash Flow Hedging Relationships		Gains (Losses) included in AOCL
(in millions)		March 31, 2021	December 31, 2020
Commodity contracts, net of income tax effect of $24 and $16, respectively	$	67	$	47
Foreign currency contracts, net of income tax effect of $1 and $ — , respectively		-		(1)
Interest rate contracts, net of income tax effect of $1		(4)		(4)
Total	$	63	$	42


	Fair Value of Hedging Instruments as of March 31, 2021
	Designated Hedging Instruments (in millions)						Non-Designated Hedging Instruments (in millions)
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	54	$	1	$	55	$	3	$	7	$	10
Other assets		1		1		2		—		1		1
Assets		55		2		57		3		8		11
Accounts payable and accrued liabilities		2		4		6		1		10		11
Non-current liabilities		1		—		1		—		1		1
Liabilities		3		4		7		1		11		12
Net (Liabilities)/Assets	$	52	$	(2)	$	50	$	2	$	(3)	$	(1)


	As of		As of
(in millions)	March 31, 2021		December 31, 2020
2.900% senior notes due June 1, 2030	$	594	$	594
3.200% senior notes due October 1, 2026		497		497
3.900% senior notes due June 1, 2050		390		390
6.625% senior notes due April 15, 2037		253		253
Revolving credit facility		—		—
Other long-term borrowings		15		14
Total long-term debt		1,749		1,748
Term loan credit agreement due April 12, 2021		—		380
Amended term loan credit agreement due March 15, 2022		380		—
Other short-term borrowings		68		58
Total short-term borrowings		448		438
Total debt	$	2,197	$	2,186


	As of		As of
(in millions)	March 31, 2021		December 31, 2020
Finished and in process	$	573	$	584
Raw materials		283		236
Manufacturing supplies and other		94		97
Total inventories	$	950	$	917


	Three Months Ended March 31,
	2021		2020
Expected life (in years)	5.5		5.5
Risk-free interest rate	0.6	%	1.4	%
Expected volatility	23.2	%	19.8	%
Expected dividend yield	2.9	%	2.9	%


	Number of Options (in thousands)	Weighted Average Exercise Price per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020	2,238	$	86.55	5.15	$	14
Granted	358		87.12
Exercised	(154)		56.35
Cancelled	(27)		94.39
Outstanding as of March 31, 2021	2,415	$	88.68	5.89	$	20
Exercisable as of March 31, 2021	1,775	$	88.90	4.66	$	19


Derivatives in Cash Flow	Gains (Losses) Recognized in OCL on Derivatives				Income	Gains (Losses) Reclassified from AOCL into Income
Hedging Relationships	Three Months Ended March 31,				Statement	Three Months Ended March 31,
(in millions)	2021		2020		Location	2021		2020
Commodity contracts	$	27	$	(37)	Cost of sales	$	(1)	$	7
Foreign currency contracts		2		(5)	Net sales/Cost of sales		2		(1)
Interest rate contracts		—		(4)	Financing costs, net		—		—
Total	$	29	$	(46)		$	1	$	6


	As of March 31, 2021								As of December 31, 2020
(in millions)	Total		Level 1 (a)		Level 2 (b)		Level 3 (c)		Total		Level 1 (a)		Level 2 (b)		Level 3 (c)
Available for sale securities	$	12	$	12	$	—	$	—	$	11	$	11	$	—	$	—
Derivative assets		68		53		15		—		69		53		16		—
Derivative liabilities		19		2		17		—		29		3		26		—
Long-term debt		1,919		—		1,919		—		1,751		—		1,751		—


	Three Months Ended
Lease Cost	March 31,
(in millions)	2021		2020
Operating lease cost	$	14	$	13
Variable operating lease cost		7		8
Short term lease cost		1		1
Lease cost	$	22	$	22


Operating Leases		As of
(in millions)		March 31, 2021
2021 (Excluding the three months ended March 31, 2021)	$	39
2022		45
2023		35
2024		25
2025		17
Thereafter		53
Total future lease payments		214
Less imputed interest		24
Present value of future lease payments		190
Less current lease liabilities		45
Non-current operating lease liabilities	$	145
Operating lease assets	$	182


	Three Months Ended
Other Information	March 31,
($ in millions)	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14		$	13
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	21		$	8
	As of			As of
	March 31, 2021			December 31, 2020
Weighted average remaining lease term:
Operating leases		6.3 years			5.5 years
Weighted average discount rate:
Operating leases		4.6	%		4.9	%


	Three Months Ended March 31,
	U.S. Plans				Non-U.S. Plans
(in millions)	2021		2020		2021		2020
Service cost	$	1	$	1	$	1	$	1
Interest cost		2		3		3		3
Expected return on plan assets		(5)		(5)		(2)		(2)
Amortization of actuarial loss		—		—		1		—
Net periodic benefit cost (a)	$	(2)	$	(1)	$	3	$	2


	Three Months Ended
	March 31,
(dollars in millions, except per share)	2021		2020
Weighted average grant date fair value of stock options granted (per share)	$	12.31	$	11.48
Total intrinsic value of stock options exercised	$	5	$	4


(RSUs in thousands)	Number of Restricted Shares	Weighted Average Fair Value per Share
Non-vested as of December 31, 2020	418	$	96.45
Granted	214		87.25
Vested	(83)		126.67
Cancelled	(12)		91.19
Non-vested as of March 31, 2021	537	$	88.28


(in millions)	Cumulative Translation Adjustment		Hedging Activities		Pension and Postretirement Adjustment		Accumulated Other Comprehensive Loss
Balance, December 31, 2020	$	(1,114)	$	42	$	(61)	$	(1,133)
Other comprehensive (loss) gain before reclassification adjustments		(52)		29		—		(23)
(Gain) reclassified from accumulated OCL		—		(1)		—		(1)
Tax (provision)		—		(7)		—		(7)
Net other comprehensive (loss) income		(52)		21		—		(31)
Balance, March 31, 2021	$	(1,166)	$	63	$	(61)	$	(1,164)


	Total Equity
													Non-
									Accumulated				Redeemable		Share-based		Redeemable
					Additional				Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income attributable to non-controlling interests														4				(1)
Dividends declared, common stock ($0.64/share)												(44)
Repurchases of common stock								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive loss										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70


	Three Months Ended March 31, 2021					Three Months Ended March 31, 2020
(in millions, except per share amounts)	Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount
Basic EPS	$	(246)	67.3	$	(3.66)	$	75	67.1	$	1.12

Effect of Dilutive Securities:
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards			—					0.7
Diluted EPS	$	(246)	67.3	$	(3.66)	$	75	67.8	$	1.11


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales	$	1,614	$	1,543	$	71	5	%
Cost of sales		1,263		1,220		(43)	(4)	%
Gross profit		351		323		28	9	%

Operating expenses		153		154		1	1	%
Other (income) expense, net		(2)		2		4	200	%
Restructuring/impairment charges		370		14		(356)	(2,543)	%

Operating (loss) income		(170)		153		(323)	(211)	%

Financing costs, net		19		18		(1)	(6)	%
Other, non-operating (income), net		(1)		(1)		—	—	%

(Loss) income before income taxes		(188)		136		(324)	(238)	%
Provision for income taxes		55		58		3	5	%
Net (loss) income		(243)		78		(321)	(412)	%
Less: Net income attributable to non-controlling interests		3		3		—	—	%
Net (loss) income attributable to Ingredion	$	(246)	$	75	$	(321)	(428)	%


				Maximum Number
				(or Approximate
			Total Number of	Dollar Value) of
	Total	Average	Shares Purchased as	Shares That May Yet
	Number	Price	Part of Publicly	be Purchased Under
	of Shares	Paid	Announced Plans or	the Plans or Programs
(shares in thousands)	Purchased	per Share	Programs	at End of Period
January 1 – January 31, 2021	—	—	—	5,855 shares
February 1 – February 28, 2021	—	—	—	5,855 shares
March 1 – March 31, 2021	158,065	89.59	158,065	5,697 shares
Total	158,065	89.59	158,065


Number		Description of Exhibit

10.1		Second Amended and Restated Term Loan Credit Agreement, dated as of March 16, 2021, among Ingredion Incorporated, as Borrower, the Lenders party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 18, 2021, filed on March 18, 2021 (File No. 1-13397)).

10.2*†		Form of Performance Share Award Agreement for use in connection with awards under the Stock Incentive Plan.

10.3*†		Form of Restricted Stock Units Award Agreement for use in connection with awards under the Stock Incentive Plan.

31.1†		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2†		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1††		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2††		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101.INS†		XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH†		Inline XBRL Taxonomy Extension Schema Document.
101.CAL†		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF†		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB†		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE†		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104†		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document, which is contained in Exhibit 101).


		INGREDION INCORPORATED


DATE:	May 7, 2021	By	/s/ James D. Gray
		James D. Gray
		Executive Vice President and Chief Financial Officer

Payout Level	Average ROIC Goal	Percent of ROIC Shares Earned
Maximum	11.5% or more	200%
Target	10.0%	100%
Threshold	8.0%	50%
Below Threshold	Less than 8.0%	0%


Date: May 7, 2021	/s/ James P. Zallie
	James P. Zallie
	President and Chief Executive Officer


/s/ James P. Zallie
James P. Zallie
Chief Executive Officer
May 7, 2021


/s/ James D. Gray
James D. Gray
Chief Financial Officer
May 7, 2021