# Ingredion Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [Ingredion Inc](/companies/ingr.md) (CIK 1046257)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 13:53 ET
- Period: 2024-03-31
- Accession: 0001046257-24-000018
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1046257/000104625724000018/ingr-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1046257/000104625724000018/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.88bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.47bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $417.0m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $213.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $58.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $216.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $3.23 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $3.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 66,800,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $209.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $65.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $51.0m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-03-31 | $438.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $3.13bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $7.32bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $1.28bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $3.49bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $1.74bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $141.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $3.72bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 21,852 characters.

*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. In November 2023, we announced a strategic reorganization of our business. Under the new structure, effective January 1, 2024, we have three reportable business segments that we operate and manage as strategic business units: Texture & Healthful Solutions (“T&HS”), Food & Industrial Ingredients (“F&II”) - Latin America (“LATAM”), and F&II - U.S./Canada. In All Other, we include the business in Pakistan, PureCircle, Sugar Reduction, Protein Fortification, and the South Korea business until its sale on February 1, 2024.

During the quarter ended March 31, 2024, net sales, operating income, net income and diluted earnings per share decreased when compared to the same quarter last year. The decrease in our net sales was driven by price mix and lower volumes, which were partly offset by favorable impacts of foreign exchange rates. Cost of sales decreased primarily due lower input costs and lower volume. These factors led to lower gross profit and lower operating income compared to the first quarter of 2023.

### Results of Operations

The following discusses our results for our three reportable segments effective January 1, 2024, consisting of: T&HS, F&II - 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.

Our consolidated financial statements include the results of our business in South Korea prior to the date the sale of the business was completed on February 1, 2024.

### For the Three Months Ended March 31, 2024

### Compared to Three Months Ended March 31, 2023

**Net sales**. Net sales decreased 12 percent to $1,882 million for the first quarter of 2024 compared to $2,137 million for the first quarter of 2023. The decrease in net sales was driven by unfavorable price mix, the divestiture of our South Korea business, and lower volumes.

**Cost of sales**. Cost of sales decreased 11 percent to $1,465 million during the first quarter of 2024 compared to cost of sales of $1,650 million during the first quarter of 2023. The decrease in cost of sales was due primarily to lower volumes, partially offset by carryover of higher cost inventory. Our gross profit margin of 22 percent during the first quarter of 2024 decreased from 23 percent for the first quarter of 2023.

**Operating expenses**. Operating expenses increased 1 percent to $189 million during the first quarter of 2024 compared to $187 million during the first quarter of 2023. The increase in operating expenses was primarily attributable to increased compensation cost. Operating expenses as a percentage of net sales were 10 percent and 9 percent for the first quarter of 2024 and 2023.

**Other operating expense**. Other operating expense was $12 million during the first quarter of 2024 compared to $9 million during the first quarter of 2023. The change was primarily due to a loss from the December 2023 devaluation of the Argentine peso, which was reflected in our share of earnings from the joint venture in Argentina that we recognize one month in arrears.

**Restructuring and impairment charges.** Restructuring and impairment charges increased $3 million during the first quarter of 2024 compared to an insignificant amount during the first quarter of 2023, reflecting costs incurred during the first quarter of 2024 in connection with changes to our operating segments.

**Financing costs**. Financing costs decreased 41 percent to $19 million during the first quarter of 2024 compared to $32 million during the first quarter of 2023. The decrease in financing costs was primarily due to lower average outstanding debt balances during the first quarter of 2024 compared to the first quarter of 2023.

**Net gain on sale of business.** Net gain on sale of business was $82 million during the first quarter of 2024 to reflect the sale of our South Korea business, which was completed on February 1, 2024. There was no such gain recorded in the first quarter of 2023.

**Provision for income taxes**. Our effective income tax rates for the first quarter of 2024 and 2023 were 21.0 percent and 25.1 percent. The decrease in the effective tax rate was primarily driven by favorable tax treatment on the sale of our South Korea business during the first quarter of 2024.

**Net income attributable to Ingredion**. Net income attributable to Ingredion for the first quarter of 2024 increased to $216 million from $191 million for the first quarter of 2023. The increase in net income was primarily due to the gain on the sale of our South Korea business and reduced financing costs.

### Segment Results

#### Texture & Healthful Solutions

**Net sales**. T&HS net sales decreased 10 percent to $597 million during the first quarter of 2024 from $665 million during the first quarter of 2023. The decrease was primarily driven by an unfavorable price mix of 9 percent and foreign exchange impacts of 1 percent.

**Operating income**. T&HS operating income decreased 42 percent to $74 million during the first quarter of 2024 from $127 million during the first quarter of 2023. The decrease was primarily driven by unfavorable price mix and the carry-forward of higher cost inventory.

#### Food & Industrial Ingredients - LATAM

**Net sales**. F&II- LATAM net sales decreased 8 percent to $616 million in the first quarter of 2024 from $667 million in the first quarter of 2023. The decrease was primarily driven by an unfavorable price mix of 9 percent, and a reduction in volume of 2 percent, which were partially offset by favorable foreign exchange impacts of 3 percent.

**Operating income**. F&II - LATAM operating income decreased 17 percent to $101 million in the first quarter of 2024 from $122 million in the first quarter of 2023. The decrease was primarily driven by the decrease of Argentine peso, on December 13, 2023, the new Argentine government allowed the Argentine peso to devalue from the exchange rate of approximately 366 pesos to one U.S. dollar to 800 pesos to one U.S. dollar. Because our accounting policy is to recognize our share of income from the Argentina joint venture one month in arrears, our 2024 results reflect the impact of this devaluation. The balance of the change was driven primarily by unfavorable volume.

#### Food & Industrial Ingredients - U.S./Canada

**Net sales**. F&II - U.S./Canada net sales decreased 11 percent to $541 million in the first quarter of 2024 from $608 million in the first quarter of 2023. The decrease was driven by unfavorable price mix of 7 percent and a reduction in volume of 4 percent.

**Operating income**. F&II - U.S./Canada operating income decreased 5 percent to $87 million during the first quarter of 2024 from $92 million during the first quarter of 2023. The decrease was primarily driven by downtime due to the impacts of cold weather, partly offset by stronger industrial demand.

#### All Other

**Net sales**. All Other net sales decreased 35 percent to $128 million in the first quarter of 2024 from $197 million in the first quarter of 2023. The decrease was primarily driven by lower volumes of 25 percent from the sale of our South Korea business, unfavorable price mix of 6 percent and foreign exchange impacts of 4 percent.

**Operating income (loss)**. All Other operating (loss) decreased 50 percent to $(4) million in the first quarter of 2024 compared to $(8) million in the first quarter of 2023.

### Liquidity and Capital Resources

As of March 31, 2024, we had total available liquidity of $2.0 billion. Domestic liquidity of $996 million consisted of $12 million in cash and cash equivalents and $984 million available through a $1.0 billion commercial paper program that had $16 million of outstanding borrowings. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement.

As of March 31, 2024, we had international liquidity of $1.0 billion, consisting of $578 million of unused operating lines of credit, $426 million of cash and cash equivalents, and $7 million of short-term investments. As the parent company, we guarantee certain obligations of our consolidated subsidiaries. These guarantees totaled $41 million as of March 31, 2024. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.

As of March 31, 2024, we had total debt outstanding of $1.9 billion, or $1.7 billion excluding the outstanding commercial paper and other short-term borrowings. Our outstanding debt 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 4.1 percent and 4.3 percent for the first quarter of 2024 and 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 raise funds in the capital markets. During the first quarter of 2024, we supplemented liquidity from these sources with $247 million of proceeds from our divestiture of our South Korea business. 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 $209 million during the first quarter of 2024 compared to cash used for operating activities of $51 million during the first quarter of 2023. The increase was primarily due to changes in working capital and current period net income. Cash provided by changes in working capital increased $285 million during the first quarter of 2024 compared to the first quarter of 2023 primarily due to decreases in inventory and trade accounts receivable.

Our cash provided by investing activities was $181 million during the first quarter of 2024 compared to cash used for investing activities of $81 million during the first quarter of 2023. The increase was primarily due to our receipt of $247 million of proceeds from the sale of our South Korea business completed on February 1, 2024. We used $65 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities during the first quarter of 2024, compared to $76 million that we paid during the first quarter of 2023 for the same purposes. Capital investment commitments for 2024 are anticipated to be approximately $340 million.

Our cash used for financing activities was $347 million during the first quarter of 2024 compared to cash provided by financing activities of $113 million during the first quarter of 2023. The decrease was primarily attributable to a net $312 million reduction of our commercial paper borrowings during the first quarter of 2024, as compared to $107 million net borrowings of commercial paper during the first quarter of 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 $51 million during the first quarter of 2024 compared to $47 million during the first quarter of 2023. The increase in dividend payments was due to an increase in our quarterly dividend rate to $0.78 per share of common stock during the first quarter of 2024 from $0.71 per share during the first quarter of 2023. On December 12, 2023, our Board of Directors declared a quarterly cash dividend of $0.78 per share of common stock, which was paid on January 23, 2024 to stockholders of record at the close of business on January 2, 2024.

During the first quarter of 2024, we repurchased 5 thousand outstanding shares of common stock in open market transactions at a net cost of $1 million. During the first quarter of 2023, there were zero shares of common stock repurchased.

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 the first quarter of 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.

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.

## Market risk

As filed, 448 characters.

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 the first quarter of 2024.

## Controls and procedures

As filed, 1,372 characters.

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 March 31, 2024. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, 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 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.

Except in connection with changes to our reportable segments effective January 1, 2024, there have been no changes in our internal control over financial reporting during the first quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001046257-24-000018. Last ingested by Listed: Nov 3, 2026, 14:45 ET. No prices; not investment advice.