Ingredion Inc 10-Q for FY2024 Q2
Ingredion Inc (INGR)
10-Q
2024-08-08
For: 2024-06-30
View Original
Added on
April 11, 2026
About this 10-Q
Ingredion Inc filed this 10-Q on August 8, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.88B
- down 9.2% from $2.07B a year earlier
- Net income
- $148M
- down 9.2% from net income of $163M a year earlier
- Diluted EPS
- $2.22
- down 8.3% from $2.42 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended June 30, 2024
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to
Commission file number 1-13397
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code (708 ) 551-2600
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | |||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at August 5, 2024 | |||||||
| Common Stock, $0.01 par value | ||||||||
INGREDION INCORPORATED
FORM 10-Q
TABLE OF CONTENTS
| Page No. | ||||||||
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Ingredion Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(dollars and shares in millions, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Other operating (income) expense | ( | |||||||||||||||||||||||||
| Restructuring/impairment charges | ||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||
| Financing costs | ||||||||||||||||||||||||||
| Net gain on sale of business | ( | |||||||||||||||||||||||||
| Other non-operating expense | ||||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||
| Less: Net income attributable to non-controlling interests | ||||||||||||||||||||||||||
| Net income attributable to Ingredion | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings per common share attributable to Ingredion common shareholders: | ||||||||||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
| Earnings per common share of Ingredion: | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
See the Notes to the Condensed Consolidated Financial Statements.
3
Ingredion Incorporated
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||
| Other comprehensive income: | ||||||||||||||||||||||||||
(Losses) on cash flow hedges, net of income tax effect of $ | ( | ( | ( | ( | ||||||||||||||||||||||
Losses on cash flow hedges reclassified to earnings, net of income tax effect of $ | ||||||||||||||||||||||||||
Gains (losses) on pension and other post-employment benefits, net of income tax effect of $ | ( | ( | ||||||||||||||||||||||||
| Cumulative translation adjustment | ( | ( | ||||||||||||||||||||||||
| Comprehensive income | ||||||||||||||||||||||||||
| Less: Comprehensive income (loss) attributable to non-controlling interests | ( | ( | ||||||||||||||||||||||||
| Comprehensive income attributable to Ingredion | $ | $ | $ | $ | ||||||||||||||||||||||
See the Notes to the Condensed Consolidated Financial Statements.
4
Ingredion Incorporated
Condensed Consolidated Balance Sheets
(dollars and shares in millions, except per share amounts)
| June 30, 2024 | December 31, 2023 | |||||||||||||
| (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Short-term investments | ||||||||||||||
| Accounts receivable, net | ||||||||||||||
| Inventories | ||||||||||||||
| Prepaid expenses and assets held for sale | ||||||||||||||
| Total current assets | ||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | ||||||||||||||
Intangible assets, net of accumulated amortization of $ | ||||||||||||||
| Other non-current assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Short-term borrowings | $ | $ | ||||||||||||
| Accounts payable | ||||||||||||||
| Accrued liabilities and liabilities held for sale | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| Share-based payments subject to redemption | ||||||||||||||
| Redeemable non-controlling interests | ||||||||||||||
| Ingredion stockholders’ equity: | ||||||||||||||
Preferred stock — authorized | ||||||||||||||
Common stock — authorized | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
Less: Treasury stock (common stock: | ( | ( | ||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Retained earnings | ||||||||||||||
| Total Ingredion stockholders’ equity | ||||||||||||||
| Non-redeemable non-controlling interests | ||||||||||||||
| Total stockholders' equity | ||||||||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||||||||
See the Notes to the Condensed Consolidated Financial Statements.
5
Ingredion Incorporated
Condensed Consolidated Statements of Equity and Redeemable Equity
(Unaudited)
(in millions)
| Total Equity | Share-based Payments Subject to Redemption | Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non- Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, net | — | — | — | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair market value adjustment to non-controlling interests | — | — | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of non-controlling interests | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Total Equity | Share-based Payments Subject to Redemption | Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non- Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair market value adjustment to non-controlling interests | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
See the Notes to the Condensed Consolidated Financial Statements.
6
Ingredion Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
| Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Cash from operating activities | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Non-cash charges to net income: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Mechanical stores expense | ||||||||||||||
| Net gain on sale of business | ( | |||||||||||||
| Other non-cash charges | ||||||||||||||
| Changes in working capital: | ||||||||||||||
| Accounts receivable and prepaid expenses | ||||||||||||||
| Inventories | ( | |||||||||||||
| Accounts payable and accrued liabilities | ( | ( | ||||||||||||
| Margin accounts | ( | ( | ||||||||||||
| Other | ( | ( | ||||||||||||
| Cash provided by operating activities | ||||||||||||||
| Cash from investing activities | ||||||||||||||
| Capital expenditures and mechanical stores purchases | ( | ( | ||||||||||||
| Proceeds from disposal of manufacturing facilities and properties | ||||||||||||||
| Proceeds from sale of business | ||||||||||||||
| Other | ( | ( | ||||||||||||
| Cash provided by (used for) investing activities | ( | |||||||||||||
| Cash from financing activities | ||||||||||||||
| Proceeds from borrowings | ||||||||||||||
| Payments on debt | ( | ( | ||||||||||||
| Commercial paper borrowings, net | ( | |||||||||||||
| Repurchases of common stock, net | ( | |||||||||||||
| Issuances of common stock for share-based compensation, net | ||||||||||||||
| Purchases of non-controlling interests | ( | |||||||||||||
| Dividends paid, including to non-controlling interests | ( | ( | ||||||||||||
| Cash (used for) financing activities | ( | ( | ||||||||||||
| Effects of foreign exchange rate changes on cash and cash equivalents | ( | ( | ||||||||||||
| Increase in cash and cash equivalents | ||||||||||||||
| Cash and cash equivalents, beginning of period | ||||||||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||||||||
See the Notes to the Condensed Consolidated Financial Statements.
7
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Unless the context otherwise requires, all references herein to the “Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion Incorporated and its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2023. The significant accounting policies and estimates used in preparing these Condensed Consolidated Financial Statements were applied on the same basis consistent with those reflected in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2023.
The unaudited Condensed Consolidated Financial Statements as of June 30, 2024 and for the second quarter and year-to-date June 30, 2024 and 2023 included herein were prepared by us on the same basis as our audited Consolidated Financial Statements for the year ended December 31, 2023 and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) that are, in our opinion, necessary for the fair presentation of the Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows. The results for the interim period are not necessarily indicative of the results expected for the full year or any other future period.
Effective January 1, 2024, there are three
New Accounting Standards
In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The amendments require filers to disclose information about supplier finance programs that is sufficient to allow financial statement users to understand their nature, activity during the period, changes from period to period and potential magnitude. The amendments in this ASU are effective for annual periods beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We adopted this ASU at the beginning of our 2023 fiscal year and adopted the amendment on rollforward information at the beginning of our 2024 fiscal year. The disclosures required by this ASU are reflected in Note 12.
In August 2023, the FASB issued ASU No. 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60). The amendments in this ASU require that a joint venture apply a new basis of accounting upon formation. By applying a new basis of accounting, a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in this ASU are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. A joint venture that was formed before January 1, 2025 may elect to apply the amendments retrospectively. We will adopt this ASU on a prospective basis at the beginning of our 2025 fiscal year and do not believe it will have a material impact on the Condensed Consolidated Financial Statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280). The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Entities must apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. We are currently assessing the impact of this ASU on the Condensed Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, the amendment requires information pertaining to taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes with further disaggregation for specific jurisdictions to the extent the related amounts exceed a quantitative
8
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
threshold. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently waiting for additional guidance to be issued on the quantitative thresholds before we can assess the impact of this ASU on the Condensed Consolidated Financial Statements.
PureCircle Non-Controlling Interests Acquisition
During the second quarter of 2024, we purchased shares from minority shareholders in PureCircle Limited (“PureCircle”) for $40 million, which increased our ownership percentage from 88 percent as of December 31, 2023 to 98 percent as of June 30, 2024.
South Korea Divestiture
On February 1, 2024, we completed the sale of our South Korea business, which we reported in All Other for segment purposes, for a total consideration of 384.0 billion South Korean won, or approximately $294 million. We received 330.0 billion South Korea won, or $247 million net of certain transaction costs, when the transaction closed, and we will receive the remaining consideration in equal annual payments through February 2027. As a result, we recognized a pre-tax net gain of $82 million within Net gain on sale of business in the Condensed Consolidated Statements of Income.
Goodwill represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed.
The original carrying value of goodwill by reportable segment and All Other as of June 30, 2024 is presented below. There were no accumulated impairment charges by reportable segment.
| T&HS | F&II - LATAM | F&II - U.S./Canada | All Other | Total | ||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Cumulative translation adjustment | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance as of June 30, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Investments as of June 30, 2024 and December 31, 2023 are as follows:
| June 30, 2024 | December 31, 2023 | |||||||||||||
| Equity investments | $ | $ | ||||||||||||
| Equity method investments | ||||||||||||||
| Marketable securities | ||||||||||||||
| Total investments | $ | $ | ||||||||||||
Our investments classified as equity investments do not have readily determinable fair values. Beginning on the dates we entered into the agreements for equity method investments, our share of income from these investments is included within Other operating (income) expense in the Condensed Consolidated Statements of Income. During the second quarter of 2024, we recorded $18 million in Restructuring/impairment charges in the Condensed Consolidated Statements of Income, which represented an other-than-temporary impairment on our equity method investments.
9
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Argentina Joint Venture
Commodity price hedging: We had outstanding futures and option contracts that hedged the forecasted purchase of approximately 77 million and 109 million bushels of corn as of June 30, 2024 and December 31, 2023. We also had outstanding swap contracts that hedged the forecasted purchase of approximately 26 million and 28 million mmbtus of natural gas as of June 30, 2024 and December 31, 2023.
Foreign currency hedging: We hedge certain assets using foreign currency derivatives not designated as hedging instruments, which had a notional value of $404 million and $694 million as of June 30, 2024 and December 31, 2023. We also hedge certain liabilities using foreign currency derivatives not designated as hedging instruments, which had a notional value of $120 million and $182 million as of June 30, 2024 and December 31, 2023.
We hedge certain assets using foreign currency cash flow hedging instruments, which had a notional value of $394 million and $449 million as of June 30, 2024 and December 31, 2023. We also hedge certain liability positions using foreign currency cash flow hedging instruments, which had a notional value of $465 million and $621 million as of June 30, 2024 and December 31, 2023.
Interest rate hedging: We periodically enter into T-Locks to hedge our exposure to interest rate changes. We have settled T-Locks associated with the issuance of our senior notes due in 2030 and 2050. The realized loss upon settlement of these T-Locks was recorded in Accumulated other comprehensive loss (“AOCL”) and is amortized into earnings over the term of the senior notes. We did not have outstanding T-Locks as of either June 30, 2024 or December 31, 2023.
The derivative instruments designated as cash flow hedges included in AOCL as of June 30, 2024 and December 31, 2023 are as follows:
| (Losses) included in AOCL as of | ||||||||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||
Commodity contracts, net of income tax effect of $ | $ | ( | $ | ( | ||||||||||
Foreign currency contracts, net of income tax effect of $ | ||||||||||||||
Interest rate contracts, net of income tax effect of $ | ( | ( | ||||||||||||
| Total | $ | ( | $ | ( | ||||||||||
As of June 30, 2024, AOCL included $46 million of net losses (net of income taxes of $16 million) on commodities-related derivative instruments, T-Locks and foreign currency hedges designated as cash flow hedges that are expected to be reclassified into earnings during the next twelve months.
10
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
The fair value and balance sheet location of our derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are as follows:
| Fair Value of Hedging Instruments as of June 30, 2024 | ||||||||||||||||||||||||||||||||||||||
| Designated Hedging Instruments | Non-Designated Hedging Instruments | |||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | Commodity Contracts | Foreign Currency Contracts | Total | Commodity Contracts | Foreign Currency Contracts | Total | ||||||||||||||||||||||||||||||||
| Accounts receivable, net | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Other non-current assets | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Accounts payable | ||||||||||||||||||||||||||||||||||||||
| Other non-current liabilities | ||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Net Assets/(Liabilities) | $ | ( | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Fair Value of Hedging Instruments as of December 31, 2023 | ||||||||||||||||||||||||||||||||||||||
| Designated Hedging Instruments | Non-Designated Hedging Instruments | |||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | Commodity Contracts | Foreign Currency Contracts | Total | Commodity Contracts | Foreign Currency Contracts | Total | ||||||||||||||||||||||||||||||||
| Accounts receivable, net | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Other non-current assets | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Accounts payable | ||||||||||||||||||||||||||||||||||||||
| Other non-current liabilities | ||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Net Assets/(Liabilities) | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||
Additional information relating to our derivative instruments is as follows:
| (Losses) Gains Recognized in AOCL on Derivatives | (Losses) Gains Reclassified from AOCL into Income | |||||||||||||||||||||||||||||||
| Derivatives in Cash Flow | Three Months Ended June 30, | Income Statement | Three Months Ended June 30, | |||||||||||||||||||||||||||||
| Hedging Relationships | 2024 | 2023 | Location | 2024 | 2023 | |||||||||||||||||||||||||||
| Commodity contracts | $ | ( | $ | ( | Cost of sales | $ | ( | $ | ( | |||||||||||||||||||||||
| Foreign currency contracts | ( | Net sales/Cost of sales | ( | |||||||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
| (Losses) Gains Recognized in AOCL on Derivatives | (Losses) Gains Reclassified from AOCL into Income | |||||||||||||||||||||||||||||||
| Derivatives in Cash Flow | Six Months Ended June 30, | Income Statement | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| Hedging Relationships | 2024 | 2023 | Location | 2024 | 2023 | |||||||||||||||||||||||||||
| Commodity contracts | $ | ( | $ | ( | Cost of sales | $ | ( | $ | ( | |||||||||||||||||||||||
| Foreign currency contracts | Net sales/Cost of sales | |||||||||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
11
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
We measure certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Below is a summary of the hierarchy levels:
•Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data.
•Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Assets and liabilities measured at fair value on a recurring basis are presented below:
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||
| Marketable securities | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Derivative assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||||
12
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Presented below are our debt carrying amounts, net of related discounts, premiums and debt issuance costs, as of June 30, 2024 and December 31, 2023:
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||
| $ | $ | |||||||||||||
| Revolving credit agreement | ||||||||||||||
| Other long-term borrowings | ||||||||||||||
| Total long-term debt | ||||||||||||||
| Commercial paper | ||||||||||||||
| Other short-term borrowings | ||||||||||||||
| Total short-term borrowings | ||||||||||||||
| Total debt | $ | $ | ||||||||||||
We maintain a commercial paper program under which we may issue senior unsecured notes of short-term 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 the note proceeds for general corporate purposes. During year-to-date 2024, the average amount of commercial paper outstanding was $63 million with an average interest rate of 5.51 percent and a weighted average maturity of eight days . During year-to-date 2023, the average amount of commercial paper outstanding was $468 million with an average interest rate of 5.13 percent and a weighted average maturity of ten days . As of June 30, 2024, we had no commercial paper outstanding. As of December 31, 2023, $327 million of commercial paper was outstanding with an average interest rate of 5.50 percent and a weighted average maturity of eleven days . The amount of commercial paper outstanding under this program for the remainder of 2024 is expected to fluctuate.
Other short-term borrowings as of June 30, 2024 and December 31, 2023 primarily include amounts outstanding under various unsecured local country operating lines of credit.
Components of net periodic cost consist of the following for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | |||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net periodic cost (a) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
We anticipate that we will make cash contributions of $1 million and $4 million to the U.S. and non-U.S. pension plans in 2024. For the year-to-date 2024, we made cash contributions of an insignificant amount to the U.S. pension plans and $2 million to the non-U.S. pension plans.
13
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
The following table sets forth the components of net postretirement benefit cost for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| Interest cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Amortization of prior service cost | ||||||||||||||||||||||||||
Net periodic cost (a) | $ | $ | $ | $ | ||||||||||||||||||||||
_______________________________________
(a)The service cost component of net periodic cost is presented within either Cost of sales or Operating expenses on the Condensed Consolidated Statements of Income. The interest cost, expected return on plan assets and amortization of prior service costs are presented within Other non-operating expense on the Condensed Consolidated Statements of Income.
Treasury Stock: On September 26, 2022, the Board of Directors approved a stock repurchase program authorizing us to purchase up to 6.0 million shares of our outstanding common stock until December 31, 2025. We may repurchase shares from time to time in the open market, in privately negotiated transactions, or otherwise, at prices we deem appropriate. We are not obligated to repurchase any shares under the authorization, and the repurchase program may be suspended, discontinued, or modified at any time, for any reason and without notice. The parameters of our stock repurchase program are not established solely with reference to the dilutive impact of shares issued under our stock incentive plan. However, we expect that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan.
During the second quarter and year-to-date 2024, we repurchased 572 thousand and 577 thousand outstanding shares of common stock in open market transactions at a net cost of $65 million and $66 million. During the second quarter and year-to-date 2023, we did not
14
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Share-based Payments: Share-based compensation expense for the periods presented is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| Stock options: | ||||||||||||||||||||||||||
| Pre-tax compensation expense | $ | $ | $ | $ | ||||||||||||||||||||||
| Income tax benefit | ||||||||||||||||||||||||||
| Stock option expense, net of income taxes | ||||||||||||||||||||||||||
| Restricted stock units (“RSUs”): | ||||||||||||||||||||||||||
| Pre-tax compensation expense | ||||||||||||||||||||||||||
| Income tax benefit | ( | ( | ||||||||||||||||||||||||
| RSUs, net of income taxes | ||||||||||||||||||||||||||
| Performance shares and other share-based awards: | ||||||||||||||||||||||||||
| Pre-tax compensation expense | ||||||||||||||||||||||||||
| Income tax benefit | ||||||||||||||||||||||||||
| Performance shares and other share-based compensation expense, net of income taxes | ||||||||||||||||||||||||||
| Total share-based compensation: | ||||||||||||||||||||||||||
| Pre-tax compensation expense | ||||||||||||||||||||||||||
| Income tax benefit | ( | ( | ||||||||||||||||||||||||
| Total share-based compensation expense, net of income taxes | $ | $ | $ | $ | ||||||||||||||||||||||
Stock Options: Under our stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a ten-year term and are exercisable upon vesting, which occurs over a three-year period at the anniversary dates of the date of grant. We generally recognize compensation expense on a straight-line basis for all awards over the employee’s vesting period. We estimate a forfeiture rate at the time of grant and update the estimate throughout the vesting period of the stock options within the amount of compensation costs recognized in each period.
We granted non-qualified options to purchase 178 thousand shares and 197 thousand shares for year-to-date 2024 and 2023. We estimated the fair value of each option grant by using the Black-Scholes option-pricing model with the following assumptions:
| Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Expected life (in years) | ||||||||||||||
| Risk-free interest rate | ||||||||||||||
| Expected volatility | ||||||||||||||
| Expected dividend yield | ||||||||||||||
The expected life of options represents the weighted average period that we expect options granted to be outstanding giving consideration to vesting schedules and our historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of our common stock, and dividend yields are based on our dividend yield at the date of issuance.
15
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Stock option activity for year-to-date 2024 is as follows:
| Number of Options (in thousands) | Weighted Average Exercise Price per Share | Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||||||||||||
| Outstanding as of December 31, 2023 | $ | $ | ||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Cancelled | ( | |||||||||||||||||||||||||
| Outstanding as of June 30, 2024 | $ | $ | ||||||||||||||||||||||||
| Exercisable as of June 30, 2024 | $ | $ | ||||||||||||||||||||||||
For year-to-date 2024, cash received from the exercise of stock options was approximately $24 million. As of June 30, 2024, the unrecognized compensation cost related to non-vested stock options totaled $3 million, which we expect to amortize over the weighted-average period of approximately 1.5 years.
Additional information pertaining to stock option activity is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Weighted average grant date fair value of stock options granted (per share) | $ | $ | $ | $ | |||||||||||||||||||
| Total intrinsic value of stock options exercised | |||||||||||||||||||||||
Restricted Stock Units: We have granted restricted stock units (“RSUs”) to certain key employees. The RSUs are primarily subject to cliff vesting, generally after three years , provided the employee remains in our service. The fair value of the RSUs is determined based upon the number of shares granted and the quoted market price of our common stock at the grant date.
The following table summarizes RSU activity in 2024:
| Number of Restricted Shares (in thousands) | Weighted Average Fair Value per Share | |||||||||||||
| Non-vested as of December 31, 2023 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ( | |||||||||||||
| Cancelled | ( | |||||||||||||
| Non-vested as of June 30, 2024 | $ | |||||||||||||
As of June 30, 2024, the total remaining unrecognized compensation cost related to RSUs was $26 million, which will be amortized on a weighted-average basis over approximately 1.9 years.
Performance Shares: We have a long-term incentive plan for senior management in the form of performance shares. The vesting of the performance shares is generally based on two performance metrics. Fifty percent of the performance shares awarded vest based on our total shareholder return as compared to the total shareholder return of our peer group, and the remaining fifty percent vest based on the calculation of our three-year average Adjusted Return on Invested Capital (“Adjusted ROIC”) against an established ROIC target.
16
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
For the 2024 performance shares awarded based on our total shareholder return, the number of shares that ultimately vest can range from zero to 200 percent of the grant depending on our total shareholder return as compared to the total shareholder return of our peer group. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the People, Culture, and Compensation Committee (“Compensation Committee”) of the Board of Directors. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. We amortize the total compensation expense for these awards over a three-year graded vesting schedule.
For the 2024 performance shares awarded based on Adjusted ROIC, the number of shares that ultimately vest can range from zero to 200 percent of the grant depending on our Adjusted ROIC performance against the target. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee. We base compensation expense on the market price of our common stock on the grant date and the final number of shares that ultimately vest. We estimate the potential share vesting at least annually to adjust the compensation expense for these awards over the vesting period to reflect our estimated Adjusted ROIC performance against the target. We amortize the total compensation expense for these awards over a three-year graded vesting schedule.
For year-to-date 2024, we awarded 86 thousand performance shares at a weighted average fair value of $127.97 per share. As of June 30, 2024, the unrecognized compensation cost related to these awards was $14 million, which we will amortize over the remaining service period of 2.2 years. The 2021 performance share awards that vested in February 2024 achieved a 200 percent payout of the granted performance shares. As of June 30, 2024, we estimated the 2022 performance share awards will pay out at 200 percent. For year-to-date 2024, 12 thousand shares were cancelled.
Accumulated Other Comprehensive Loss: The following is a summary of accumulated other comprehensive loss for year-to-date 2024 and 2023:
| Cumulative Translation Adjustment | Hedging Activities | Pension and Other Post-employment Benefits | AOCL | |||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive (loss) income before reclassification adjustments | ( | ( | ( | |||||||||||||||||||||||
| Loss reclassified from AOCL | ||||||||||||||||||||||||||
| Tax benefit | ||||||||||||||||||||||||||
| Net other comprehensive (loss) income | ( | ( | ( | |||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Cumulative Translation Adjustment | Hedging Activities | Pension and Other Post-employment Benefits | AOCL | |||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Other comprehensive income (loss) before reclassification adjustments | ( | ( | ( | |||||||||||||||||||||||
| Loss reclassified from AOCL | ||||||||||||||||||||||||||
| Tax benefit | ||||||||||||||||||||||||||
| Net other comprehensive income (loss) | ( | ( | ( | |||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
17
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Supplemental Information: The following Condensed Consolidated Statements of Equity and Redeemable Equity provide the dividends per share for common stock for the periods indicated:
| Total Equity | Share-based Payments Subject to Redemption | Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non- Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, common stock ($ | — | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, net | — | — | — | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, common stock ($ | — | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared, non-controlling interests | — | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, net | — | — | — | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair market value adjustment to non-controlling interests | — | — | ( | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of non-controlling interests | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
18
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
| Total Equity | Share-based Payments Subject to Redemption | Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non- Redeemable Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, common stock ($ | — | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Ingredion | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, common stock ($ | — | — | — | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared, non-controlling interests | — | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of issuance | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair market value adjustment to non-controlling interests | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | — | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
19
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Supplemental Information : The following tables provide the computation of basic and diluted earnings per common share (“EPS”) for the periods presented:
| Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Net Income Available to Ingredion | Weighted Average Shares | Per Share Amount | Net Income Available to Ingredion | Weighted Average Shares | Per Share Amount | |||||||||||||||||||||||||||||||||
| Basic EPS | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||||
| Incremental shares from assumed exercise of dilutive stock options, vesting of dilutive RSUs and other awards | ||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Net Income Available to Ingredion | Weighted Average Shares | Per Share Amount | Net Income Available to Ingredion | Weighted Average Shares | Per Share Amount | |||||||||||||||||||||||||||||||||
| Basic EPS | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||||
| Incremental shares from assumed exercise of dilutive stock options, vesting of dilutive RSUs and other awards | ||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
For the second quarter and year-to-date 2024, approximately 0.5 0.6 million and 0.5 million share-based awards of common stock were excluded from the calculation of the weighted average number of shares outstanding for diluted EPS because their effects were anti-dilutive.
We are principally engaged in the production and sale of starches and sweeteners for a wide range of industries. Our T&HS segment has a global focus and primarily manufactures texturizing food ingredients. Our F&II - LATAM segment has a local focus and primarily manufactures food, ingredient, and industrial products, which we process from raw materials that we primarily source within South America and Mexico. Our F&II - U.S./Canada segment has a local focus and primarily manufactures food, ingredient, and industrial products, which we process from raw materials sourced within the U.S. and Canada. All Other consists of the businesses of multiple operating segments that are not individually or collectively classified as reportable segments. Revenues 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. Net sales by product are not presented because such presentation is not practicable.
20
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
The following tables are our net sales to affiliated and unaffiliated customers by reportable segment and All Other for the periods presented:
| Three Months Ended | T&HS | F&II - LATAM | F&II - U.S./Canada | All Other | Consolidated Totals | |||||||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Net sales including intersegment sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Less: Intersegment sales | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| June 30, 2023 | ||||||||||||||||||||||||||||||||
| Net sales including intersegment sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Less: Intersegment sales | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Six Months Ended | T&HS | F&II - LATAM | F&II - U.S./Canada | All Other | Consolidated Totals | |||||||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Net sales including intersegment sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Less: Intersegment sales | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| June 30, 2023 | ||||||||||||||||||||||||||||||||
| Net sales including intersegment sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Less: Intersegment sales | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table provides our operating income (loss) by reportable segment and All Other for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||
| Texture & Healthful Solutions | $ | $ | $ | $ | ||||||||||||||||||||||
| Food & Industrial Ingredients - LATAM | ||||||||||||||||||||||||||
| Food & Industrial Ingredients - U.S./Canada | ||||||||||||||||||||||||||
| All Other | ( | ( | ( | |||||||||||||||||||||||
| Corporate | ( | ( | ( | ( | ||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||
| Restructuring and resegmentation costs | ( | ( | ||||||||||||||||||||||||
| Other matters | ( | ( | ( | |||||||||||||||||||||||
| Impairment charge | ( | ( | ||||||||||||||||||||||||
| Total operating income | $ | $ | $ | $ | ||||||||||||||||||||||
21
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
The Chief Operating Decision Maker evaluates performance, makes strategic decisions, and allocates resources based on Property, plant and equipment, net for internal and external reporting purposes. Presented below is Property, plant and equipment, net by reportable segment and All Other as of June 30, 2024 and December 31, 2023:
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||
| Property, plant and equipment, net: | ||||||||||||||
| Texture & Healthful Solutions | $ | $ | ||||||||||||
| Food & Industrial Ingredients - LATAM | $ | $ | ||||||||||||
| Food & Industrial Ingredients - U.S./Canada | $ | $ | ||||||||||||
All Other (a) | $ | $ | ||||||||||||
| Total Property, plant and equipment, net | $ | $ | ||||||||||||
_____________________
(a)For purposes of presentation, All Other includes Corporate assets.
We filed an action in Brazil to recover previously taxable local government tax incentives. As we believe recovery is probable, we recorded a $27 million income tax benefit in 2022. As of June 30, 2024 and December 31, 2023, $29 million and $32 million of remaining tax incentives were recorded in Other non-current assets in the Condensed Consolidated Balance Sheets.
Accounts Receivable, Net
Accounts receivable, net as of June 30, 2024 and December 31, 2023 were as follows:
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||
| Accounts receivable - trade | $ | $ | ||||||||||||
| Accounts receivable - other | $ | |||||||||||||
| Allowance for credit losses | ( | $ | ( | |||||||||||
| Total accounts receivable, net | $ | $ | ||||||||||||
There were no significant contract assets or contract liabilities associated with our customers as of June 30, 2024 or December 31, 2023. Liabilities for volume discounts and incentives were also not significant as of June 30, 2024 or December 31, 2023.
Inventories
Inventories as of June 30, 2024 and December 31, 2023 were as follows:
| As of June 30, 2024 | As of December 31, 2023 | |||||||||||||
| Finished and in process | $ | $ | ||||||||||||
| Raw materials | ||||||||||||||
| Manufacturing supplies | ||||||||||||||
| Total inventories | $ | $ | ||||||||||||
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Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
(dollars in millions, except per share data, unless otherwise noted)
Supply Chain Finance Programs
Under supply chain finance programs administered by third-party banks, our suppliers have the opportunity to sell receivables due from us to participating financing institutions and receive earlier payment at a discount. Our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether such supplier sells its receivable to a financial institution. The payment terms we negotiate with a supplier are independent of whether such supplier participates in a supply chain finance program, and participation in any such program by a supplier has no effect on our income or cash flows.
As of June 30, 2024 and December 31, 2023, participating financial institutions held $115 million and $153 million of our liabilities recorded in on our Condensed Consolidated Balance Sheets. As of June 30, 2024, supply chain finance programs existed for operations in Brazil, Mexico, certain PureCircle entities, Colombia, Peru, Thailand and China.
The rollforward of our outstanding obligations confirmed as valid under our supply chain finance programs as of June 30, 2024 was as follows:
| As of June 30, 2024 | |||||
| Outstanding at the beginning of the year | $ | ||||
| Invoices added during the year | |||||
| Invoices paid during the year | ( | ||||
| Cumulative translation adjustment | ( | ||||
Outstanding as of June 30, 2024 | $ | ||||
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless otherwise indicated or the context otherwise requires, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “Ingredion,” “we,” “us,” and “our” and similar terms refer to Ingredion Incorporated and its consolidated subsidiaries. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and related notes included elsewhere in this report and with the audited Consolidated Financial Statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See “Forward-Looking Statements” at the end of this discussion.
Overview
We are a leading global ingredients solutions provider that transforms grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets. Our innovative ingredient solutions help customers stay on trend with simple ingredients and other in-demand ingredients.
During the second quarter of 2024, net sales, operating income, net income and diluted earnings per share decreased when compared to the same quarter last year. Excluding the impact from the sale of our business in South Korea, the decrease in our net sales was driven by both raw material deflation and price mix impacts, partially offset by volume increases. Cost of sales decreased primarily due to lower raw material and input costs, partially offset by price mix, and these factors led to increased gross profit and higher gross margins. Operating income decreased during the second quarter primarily due to an other-than-temporary impairment charge and restructuring activities. Net income and diluted earnings per share decreased primarily due to lower financing costs and a higher effective tax rate for the second quarter of 2024 compared to the second quarter of 2023.
Results of Operations
The following discusses our results for our three reportable segments consisting of Texture & Healthful Solutions (“T&HS”), Food & Industrial Ingredients (“F&II”) - Latin America (“LATAM”), and F&II - U.S./Canada. In addition, we discuss the results of All Other. 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.
Second Quarter of 2024
With Comparatives to Second Quarter of 2023
Net sales. Net sales decreased 9 percent to $1,878 million for the second quarter of 2024 compared to $2,069 million for the second quarter of 2023. The decrease was due primarily from price mix from lower raw material costs and lost sales volume from the sale of South Korea, partly offset by volume increases.
Cost of sales. Cost of sales decreased 12 percent to $1,432 million for the second quarter of 2024 compared to cost of sales of $1,628 million for the second quarter of 2023. The decrease was due primarily to lower raw material and input costs. Our gross profit margin of 24 percent for the second quarter of 2024 increased from 21 percent for the second quarter of 2023.
Operating expenses. Operating expenses increased 2 percent to $191 million for the second quarter of 2024 compared to $188 million for the second quarter of 2023. The increase was primarily due to general cost inflation. Operating expenses as a percentage of net sales were 10 percent and 9 percent for the second quarter of 2024 and 2023.
Other operating (income) expense. Other operating (income) was $(8) million for the second quarter of 2024 compared to other operating expense of $2 million for the second quarter of 2023. The change was primarily due to income from our Argentina joint venture.
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Restructuring and impairment charges. Restructuring and impairment charges were $23 million for the second quarter of 2024 compared to an insignificant amount for the second quarter of 2023. During the second quarter of 2024, we recorded an $18 million other-than-temporary-impairment on an equity method investment in addition to costs incurred related to restructuring activities and the resegmentation of the business.
Financing costs. Financing costs decreased 67 percent to $10 million for the second quarter of 2024 compared to $30 million for the second quarter of 2023. The decrease was primarily due to lower average outstanding debt balances for the second quarter of 2024 compared to the second quarter of 2023, as well as foreign exchange impacts.
Provision for income taxes. Our effective income tax rates for the second quarter of 2024 and second quarter of 2023 were 34.8 percent and 25.1 percent. The increase was primarily due to depreciation of the Mexican peso against the U.S. dollar during the second quarter of 2024 compared to an appreciation during the second quarter of 2023 and the impairment of an equity method investment during the second quarter of 2024.
Net income attributable to Ingredion. Net income attributable to Ingredion for the second quarter of 2024 decreased to $148 million from $163 million for the second quarter of 2023. The decrease was primarily due to lower volumes, higher restructuring costs and a less favorable effective tax rate, partially offset by lower input costs and reduced financing costs.
Segment Results
Texture & Healthful Solutions
Net sales. T&HS net sales decreased 5 percent to $588 million for the second quarter of 2024 from $618 million for the second quarter of 2023. The decrease was primarily due to unfavorable price mix of 12 percent and unfavorable foreign exchange of 1 percent, partially offset by an increase of 8 percent in volume.
Operating income. T&HS operating income decreased 18 percent to $86 million for the second quarter of 2024 from $105 million for the second quarter of 2023. The decrease was primarily due unfavorable price mix, partially offset by recovering volumes and lower input costs.
Food & Industrial Ingredients - LATAM
Net sales. F&II - LATAM net sales decreased 5 percent to $630 million for the second quarter of 2024 from $666 million for the second quarter of 2023. The decrease was primarily due to unfavorable price mix of 10 percent, partially offset by an increase of 4 percent in volume and favorable foreign exchange impacts of 1 percent.
Operating income. F&II - LATAM operating income increased 29 percent to $130 million for the second quarter of 2024 from $101 million for the second quarter of 2023. The increase was primarily due to lower input costs and improved volume, partially offset by price mix.
Food & Industrial Ingredients - U.S./Canada
Net sales. F&II - U.S./Canada net sales decreased 8 percent to $555 million for the second quarter of 2024 from $604 million for the second quarter of 2023. The decrease was due to unfavorable price mix of 10 percent, partially offset by an increase of 2 percent in volume.
Operating income. F&II - U.S./Canada operating income increased 31 percent to $105 million for the second quarter of 2024 from $80 million for the second quarter of 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.
All Other
Net sales. All Other net sales decreased 42 percent to $105 million for the second quarter of 2024 from $181 million for the second quarter of 2023. Excluding the sale of the South Korea business, net sales increased 2 percent.
Operating (loss) income. All Other operating (loss) income was $(10) million for the second quarter of 2024 compared to $3 million for the second quarter of 2023. The decrease was primarily due to the sale of the South Korea business.
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Year-to-Date 2024
With Comparatives to Year-to-Date 2023
Net sales. Net sales decreased 11 percent to $3,760 million for year-to-date 2024 compared to $4,206 million for year-to-date 2023. The decrease was primarily due to price mix from lower raw material costs and lost sales volume from the sale of South Korea, partially offset by volume increases.
Cost of sales. Cost of sales decreased 12 percent to $2,897 million for year-to-date 2024 compared to cost of sales of $3,278 million for year-to-date 2023. The decrease was primarily due to lower raw material and input costs. Our gross profit margin of 23 percent for year-to-date 2024 increased from 22 percent for year-to-date 2023.
Operating expenses. Operating expenses increased 1 percent to $380 million for year-to-date 2024 compared to $375 million for year-to-date 2023. The increase was primarily due to general cost inflation. Operating expenses as a percentage of net sales were 10 percent for year-to-date 2024 and 9 percent for year-to-date 2023.
Other operating expense. Other operating expense was $4 million for year-to-date 2024 compared to $11 million for year-to-date 2023. The decrease was primarily due to charges related to a U.S.-based work stoppage for year-to-date 2023 that were not incurred for year-to-date 2024.
Restructuring and impairment charges. Restructuring and impairment charges were $26 million for year-to-date 2024 compared to none for year-to-date 2023. During the second quarter of 2024, we recorded an $18 million other-than-temporary-impairment on an equity method investment in addition to costs incurred related to restructuring activities and the resegmentation of the business.
Financing costs. Financing costs decreased 53 percent to $29 million for year-to-date 2024 compared to $62 million for year-to-date 2023. The decrease was primarily due to lower average outstanding debt balances during the year-to-date 2024 compared to year-to-date 2023, as well as foreign exchange impacts.
Net gain on sale of business. Net gain on sale of business was $82 million for year-to-date 2024 to reflect the sale of the South Korea business, which was completed on February 1, 2024. There was no such gain recorded year-to-date 2023.
Provision for income taxes. Our effective income tax rate for year-to-date 2024 increased to 27.3 percent from 25.1 percent for year-to-date 2023. The increase was primarily due to depreciation of the Mexican peso against the U.S. dollar for year-to-date 2024 compared to an appreciation for year-to-date 2023 and the impairment of an equity method investment during the second quarter of 2024. These impacts were partially offset by favorable tax treatment on the sale of the South Korea business during the first quarter of 2024.
Net income attributable to Ingredion. Net income attributable to Ingredion for year-to-date 2024 increased to $364 million from $354 million for year-to-date 2023. The increase was primarily due to the gain on the sale of our South Korea business and reduced financing costs.
Segment Results
T&HS
Net sales. T&HS net sales decreased 8 percent to $1,185 million for year-to-date 2024 from $1,283 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix of 10 percent and unfavorable foreign exchange of 2 percent, partially offset by increased volume of 4 percent.
Operating income. T&HS operating income decreased 31 percent to $160 million for year-to-date 2024 from $232 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix and higher input costs, partially offset by improved volume.
F&II - LATAM
Net sales. F&II - LATAM net sales decreased 7 percent to $1,246 million for year-to-date 2024 from $1,333 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix of 9 percent, partially offset by foreign exchange impacts of 2 percent.
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Operating income. F&II - LATAM operating income increased 4 percent to $231 million for year-to-date 2024 from $223 million for year-to-date 2023. The increase was primarily due to lower input costs and improved volume, partially offset by price mix.
F&II - U.S./Canada
Net sales. F&II - U.S./Canada net sales decreased 10 percent to $1,096 million for year-to-date 2024 from $1,212 million for year-to-date 2023. The decrease was primarily due to unfavorable price mix of 9 percent and unfavorable volumes of 1 percent.
Operating income. F&II - U.S./Canada operating income increased 12 percent to $192 million for year-to-date 2024 from $172 million for year-to-date 2023. The increase was primarily due to lower raw material and input costs, partially offset by price mix.
All Other
Net sales. All Other net sales decreased 38 percent to $233 million for year-to-date 2024 from $378 million for year-to-date 2023. Excluding the sale of the South Korea business, net sales were down 4 percent.
Operating (loss). All Other operating (loss) increased 180 percent to $(14) million for year-to-date 2024 compared to $(5) million for year-to-date 2023. The increase was primarily due to the sale of the South Korea business.
Liquidity and Capital Resources
As of June 30, 2024, we had total available liquidity of $2.1 billion. Domestic liquidity of $1.1 billion consisted of $84 million in cash and cash equivalents and $1.0 billion available through our commercial paper program. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement.
As of June 30, 2024, we had international liquidity of $1.0 billion, consisting of $421 million of cash and cash equivalents and $5 million of short-term investments held by our operations outside the U.S., as well as $608 million of unused operating lines of credit in foreign countries where we operate. As the parent company, we guarantee certain obligations of our consolidated subsidiaries. These guarantees totaled $39 million as of June 30, 2024. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.
As of June 30, 2024, we had total debt outstanding of approximately $1.9 billion, or approximately $1.7 billion excluding other short-term borrowings. Of our outstanding debt, $1.7 billion consists of senior notes that do not require principal repayment until 2026 through 2050. The weighted average interest rate on our total indebtedness was approximately 4.2 percent for year-to-date 2024 and approximately 4.3 percent for year-to-date 2023.
The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and commercial paper program and to raise funds in the capital markets. We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other operating, investing and financing activities for at least the next twelve months and for the foreseeable future thereafter. Our future cash flow needs will depend on many factors, including our rate of revenue growth, cost of raw materials, changing working capital requirements, the timing and extent of our expansion into new markets, the timing of introductions of new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions. We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions.
Net Cash Flows
Our cash provided by operating activities was $521 million for year-to-date 2024 compared to cash provided by operating activities of $279 million for year-to-date 2023. The increase was primarily due to changes in working capital. Cash provided by changes in working capital increased by $280 million for year-to-date 2024 compared to year-to-date 2023 primarily due to decreases in inventory and increases in accounts payable and accrued liabilities, partially offset by an increase in trade accounts receivable and prepaid expenses.
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We used $120 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities during year-to-date 2024, compared to $154 million that we paid during year-to-date 2023 for the same purposes. Capital investment commitments for the remainder of 2024 are anticipated to be approximately $340 million.
We used $526 million of cash for financing activities during year-to-date 2024 compared to cash used for financing activities of $97 million for year-to-date 2023. The difference was primarily attributable to a net $327 million reduction of our commercial paper borrowings during year-to-date 2024 from zero net borrowings of commercial paper during year-to-date 2023.
We declare and pay cash dividends to our common stockholders of record on a quarterly basis. Dividends paid, including those to non-controlling interests, was $104 million during year-to-date 2024 compared to $95 million during year-to-date 2023. The increase in dividend payments was due to an increase in our quarterly dividend to $0.78 per share during year-to-date 2024 from $0.71 per share during year-to-date 2023.
During the second quarter and year-to-date 2024, we repurchased 572 thousand and 577 thousand outstanding shares of common stock in open market transactions at a net cost of $65 million and $66 million. During the second quarter and year-to-date 2023, we did not repurchase any shares of common stock. During the second quarter of 2024, we purchased shares in PureCircle from minority shareholders for $40 million, which increased our ownership to 98 percent as of June 30, 2024.
We have not provided foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings. We do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no changes to our critical accounting policies and estimates during year-to-date 2024.
New Accounting Pronouncements
The information called for by this section is incorporated herein by reference to Note 1 to the Condensed Consolidated Financial Statements included in this report.
Forward-Looking Statements
This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Ingredion Incorporated intends these forward-looking statements to be covered by the safe harbor provisions for such statements.
Forward-looking statements include, among others, any statements regarding our prospects, future operations, or future financial condition, earnings, net sales, tax rates, capital expenditures, 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.
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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 in our subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the discussion set forth in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the manner in which we address risks with respect to interest rates, raw material and energy costs and foreign currencies. There have been no material changes in the information provided with respect to those risks during year-to-date 2024.
ITEM 4. CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2024. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of June 30, 2024, our disclosure controls and procedures (a) are effective in providing reasonable assurance that all information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, has been recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as
29
amended, is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
There have been no changes in our internal control over financial reporting during the second quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of this report, there have been no material developments in the environmental proceedings related to our Bedford Park, Illinois manufacturing facility discussed in Part I, Item 3. Legal Proceedings in our Annual Report for the year ended December 31, 2023.
In addition to the foregoing matter, we are currently subject to claims and suits arising in the ordinary course of business, including those relating to labor matters, certain environmental proceedings, and commercial claims. We also routinely receive inquiries from regulators and other government authorities relating to various aspects of our business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, we have matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within our complete control and may not be known for prolonged periods of time. We do not believe that the results of currently known legal proceedings and inquires will be material to us. There can be no assurance, however, that such claims, suits, or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of common stock:
The following table presents information regarding our repurchase of shares of our common stock during the second quarter of 2024:
| (shares in thousands) | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the Plans or Programs at End of Period | ||||||||||||||||||||||
| April 1 – April 30, 2024 | 117 | 111.16 | 117 | 4,878 | ||||||||||||||||||||||
| May 1 – May 31, 2024 | 85 | 115.92 | 85 | 4,793 | ||||||||||||||||||||||
| June 1 – June 30, 2024 | 370 | 114.67 | 370 | 4,423 | ||||||||||||||||||||||
| Total | 572 | 113.88 | 572 | |||||||||||||||||||||||
On September 26, 2022, the Board of Directors approved a stock repurchase program permitting us to purchase up to 6.0 million shares of our outstanding common stock until December 31, 2025. As of June 30, 2024, we had 4.4 million shares available for repurchase under the stock repurchase program.
ITEM 5. OTHER INFORMATION
Trading Arrangements
During the second quarter of 2024, none of Ingredion’s directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) adopted terminated
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ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a) Exhibits
We hereby file or furnish the exhibits listed below:
| Exhibit No. | Description | ||||
| 31.1† | |||||
| 31.2† | |||||
| 32.1†† | |||||
| 32.2†† | |||||
| 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). | ||||
_____________________
† | Filed with this report. | ||||
†† | Furnished with this report. | ||||
32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INGREDION INCORPORATED | ||||||||
Date: August 8, 2024 | By: | /s/ James D. Gray | ||||||
| James D. Gray | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
Date: August 8, 2024 | By: | /s/ Davida M. Gable | ||||||
| Davida M. Gable | ||||||||
| Vice President, Corporate Controller, Finance and Environmental, Social and Governance | ||||||||
33
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James P. Zallie, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Ingredion Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2024 | /s/ James P. Zallie | ||||
| James P. Zallie | |||||
| President and Chief Executive Officer | |||||
1
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, James D. Gray, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Ingredion Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2024 | /s/ James D. Gray | ||||
| James D. Gray | |||||
| Executive Vice President and Chief Financial Officer | |||||
1
EXHIBIT 32.1
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002
I, James P. Zallie, the Chief Executive Officer of Ingredion Incorporated, certify that to my knowledge (i) the report on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ingredion Incorporated.
| James P. Zallie | |||||
| Chief Executive Officer | |||||
August 8, 2024 | |||||
A signed original of this written statement required by Section 906 has been provided to Ingredion Incorporated and will be retained by Ingredion Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002
I, James D. Gray, the Chief Financial Officer of Ingredion Incorporated, certify that to my knowledge (i) the report on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ingredion Incorporated.
| /s/ James D. Gray | |||||
| James D. Gray | |||||
| Chief Financial Officer | |||||
August 8, 2024 | |||||
A signed original of this written statement required by Section 906 has been provided to Ingredion Incorporated and will be retained by Ingredion Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.