Second quarter 2020 reported and adjusted EPS* were $0.98 and $1.12, respectively, compared with $1.56 and $1.66 in the second quarter 2019, respectivelyYear-to-date 2020 reported and adjusted EPS were $2.08 and $2.72, respectively, compared with $3.04 and $3.19 in the year-ago period, respectivelyCompletion of PureCircle acquisition on July 1 expands the Company’s on-trend and sustainable solutions in sugar reduction with stevia sweeteners and natural flavorsContinued strong progress on Cost Smart program enables Company to increase run-rate savings target by $20 million to $170 million by 2021WESTCHESTER, Ill., Aug. 04, 2020 (GLOBE NEWSWIRE) — Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to the food manufacturing industry, today reported results for the second quarter 2020. The results, reported in accordance with U.S. generally accepted accounting principles (“GAAP”) for 2020 and 2019, include items that are excluded from the non-GAAP financial measures that the Company presents.“As an essential business in the food supply chain, we quickly adapted to meet the changing needs of our customers due to fluctuations in consumer demand resulting from COVID-19 lockdowns and restrictions around the globe,” stated Jim Zallie, Ingredion’s president and chief executive officer. “During the quarter, we experienced the significant decline in away-from-home consumption that impacted global demand for ingredients, primarily in April and May. Since then, we have seen sequential improvement in June and July as the restrictions ease and consumer mobility increases.”“We remain focused on optimizing for the new reality, working virtually with customers to co-create, and taking advantage of opportunities to drive simplification and efficiencies in our business. As a result, we raised our Cost Smart savings target from $150 million to $170 million by 2021. We also strengthened our balance sheet and lowered our future financing costs through a $1 billion senior notes offering,” continued Zallie.“With the completion of our acquisition of PureCircle, a global leader in the stevia natural sweetener space, we continued to advance our long-term strategies for driving specialties growth. In addition, we commenced an $85 million expansion investment in China, one of the largest and fastest growing starch markets, to further grow our starch-based texturizer platform. We will continue to pursue M&A opportunities while remaining disciplined in our capital allocation approach.”“Despite the uncertainty that lies ahead, I am confident that with our talented and dedicated employees, the actions we are taking are the right ones to innovate for customers, deliver quality ingredients and solutions, and emerge from this pandemic better positioned for success,” concluded Zallie.*Adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate and adjusted cash flow from operations are non-GAAP financial measures. See section II of the Supplemental Financial Information entitled “Non-GAAP Information” following the Condensed Consolidated Financial Statements included in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures.Diluted Earnings Per Share (EPS)Estimated factors affecting change in reported and adjusted EPS**Totals may not foot due to roundingFinancial HighlightsAt June 30, 2020, total debt and cash and short-term investments were $2.6 billion and $1.0 billion, respectively, versus $1.8 billion and $268 million, respectively, at December 31, 2019. The increase in total debt and cash and short-term investments was primarily due to the Company’s sale of $1.0 billion of senior notes in the second quarter 2020. On July 9, 2020, the Company applied net proceeds of the new debt issuance to redeem in full $400 million of the November 2020 senior notes.Net financing costs were $19 million, or $3 million higher in the second quarter from the year-ago period. This increase resulted from foreign exchange losses compared to the gains from the same year-ago period, partially offset by lower net interest expense due to lower interest rates.Reported and adjusted effective tax rates for the quarter were both 28.7 percent, compared to reported and adjusted effective tax rates of 29.6 percent each from the year-ago period. The decrease in reported and adjusted tax rates resulted from a reduction in the Company’s U.S. global intangible low-taxed income.Year-to-date capital expenditures were $175 million, up $19 million from the year-ago period.On July 1, 2020, the Company closed its previously announced acquisition of PureCircle for a total cash payment of $222 million.Business ReviewTotal IngredionReported Operating IncomeAdjusted Operating IncomeNet Sales
Second quarter and year-to-date net sales were down from the year-ago period. The decrease was primarily driven by sales volume declines in North America and South America. Excluding foreign exchange impacts, net sales were down 9 percent and 3 percent for the quarter and year-to-date, respectively.Operating incomeReported and adjusted operating income for the quarter were $113 million and $127 million, respectively, decreases of 33 percent and 29 percent, respectively, from the year-ago period. The decreases were largely attributable to North America and South America. Excluding foreign exchange impacts, reported and adjusted operating income were down 29 percent and 25 percent, respectively, from the same period last year.Year-to-date reported and adjusted operating income were $266 million and $294 million, respectively, decreases of 19 percent and 15 percent, respectively, from the year-ago period. The decreases were largely attributable to North America. Excluding foreign exchange impacts, reported and adjusted operating income were down 15 percent and 11 percent, respectively, from the same period last year.Second quarter and year-to-date reported operating income was lower than adjusted operating income by $14 million and $28 million, respectively, due to asset closures and restructuring costs related to Cost Smart.North America
Net SalesSegment Operating IncomeOperating income
Second quarter operating income was $101 million, a decrease of $38 million from the year-ago period and year-to-date operating income was $226 million, a decrease of $38 million from the year-ago period. For both the quarter and year-to-date, the decrease was driven by significantly lower away-from-home consumption in the U.S. and Canada and the shutdown of brewery customers in Mexico.South America
Net SalesSegment Operating IncomeOperating incomeSecond quarter operating income was $13 million, a decrease of $3 million from the year-ago period. The decrease was largely attributable to unfavorable foreign currency impacts and stay-at-home orders negatively impacting sales volume, partially offset by favorable price/mix. Excluding foreign exchange impacts, segment operating income was up 6 percent.Year-to-date operating income was $39 million, an increase of $5 million from the year-ago period due to favorable price/mix, partially offset by unfavorable foreign currency impacts. Excluding foreign exchange impacts, segment operating income was up 35 percent. Results for Argentina are accounted for in U.S. dollars under hyper-inflationary accounting.Asia-Pacific
Net SalesSegment Operating IncomeOperating income
Second quarter operating income was $22 million, down $1 million from the year-ago period and year-to-date operating income was $42 million, a decrease of $1 million from the year-ago period. For both the quarter and year-to-date, the decrease was largely attributable to the impact of stay-at-home orders on sales volume, partially offset by improved tapioca margins and lower operating expenses. Excluding foreign currency impacts, segment operating income was flat for both the quarter and year-to-date.Europe, Middle East, and Africa (EMEA)
Net SalesSegment Operating IncomeOperating incomeSecond quarter operating income was $21 million, down $2 million from the year-ago period. The decrease was largely attributable to stay-at-home orders impacting production and sales in Pakistan, partially offset by strong pricing actions and strong EMEA specialty sales volume. Excluding foreign currency impacts, segment operating income was flat.Year-to-date operating income was $48 million, an increase of $1 million from a year ago. The increase was largely attributable to Pakistan pricing actions and strong EMEA specialty sales volume, partially offset by the impacts of stay-at-home orders on Pakistan production and sales volume, and negative foreign currency impacts. Excluding foreign currency impacts, segment operating income was up 9 percent.Dividends
In May 2020, the Company maintained the quarterly dividend at $0.63 per share and paid dividends of $45 million in the second quarter and $87 million year-to-date.2020 OutlookDue to continued uncertainty of COVID-19 impacts, the Company cannot reasonably estimate full-year results at this time and guidance remains withdrawn.The Company anticipates continued adverse impacts from COVID-19 on net sales across our operating segments during the second half, with recovery in sales generally correlated with easing of restrictions and increased consumer mobility. With prevailing pandemic case rates across many countries, we expect away-from-home consumption to continue to be suppressed, reducing volumes for ingredients that are formulated for food and beverages consumed away-from-home. We anticipate demand for food consumed in home to remain elevated, increasing volumes for ingredients that are part of the recipes for these meals.For the full year, we expect a reported tax rate of 29 percent to 32.7 percent and an adjusted effective tax rate range of approximately 26 percent to 27 percent, excluding PureCircle.Capital expenditures for the full year are anticipated to be between $290 million to $310 million, of which more than $100 million is being invested to drive growth.Conference Call and Webcast Details
Ingredion will conduct a conference call today at 8 a.m. CT hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real time and will include a presentation accessible through the Company’s website at www.ingredion.com. The presentation will be available to download a few hours before the start of the call. A replay of the webcast will be available for a limited time at www.ingredion.com.About the Company
Ingredion Incorporated (NYSE: INGR) headquartered in the suburbs of Chicago, is a leading global ingredient solutions provider serving customers in more than 120 countries. With 2019 annual net sales over $6 billion, the Company turns grains, fruits, vegetables and other plant-based materials into value-added ingredients solutions for the food, beverage, animal nutrition, brewing and industrial markets. With Ingredion Idea Labs® innovation centers around the world and more than 11,000 employees, the Company co-creates with customers and fulfills its purpose of bringing the potential of people, nature and technology together to make life better. Visit ingredion.com for more information and the latest Company news.Forward-Looking Statements
This news release contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company 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 the Company’s expectations regarding impacts of COVID-19, savings under the Cost Smart program, and the Company’s effective tax rates and capital expenditures for 2020 and any assumptions, expectations or beliefs underlying 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 in this release or referred to in this release 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 are 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 our forward looking statements as a result of the following risks and uncertainties, among others: changing consumption preferences and perceptions, including those relating to high fructose corn syrup; 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, including, particularly, economic, currency and political conditions in South America and economic and political conditions in Europe, and the impact these factors may have on our sales volumes, the pricing of our products, our access to credit markets and our ability to collect our receivables from customers; adverse changes in investment returns earned on our pension assets; future financial performance of major industries which we serve and from which we derive a significant portion of our sales, including the food, beverage, animal nutrition, and brewing industries; 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 meet expectations; changes in U.S. and foreign government policy, laws or regulations and costs of legal compliance; 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; the availability of raw materials, including potato starch, tapioca, gum Arabic and the specific varieties of corn upon which some of our products are based, and our ability to pass on potential increases in the cost of corn or other raw materials to customers; raw material and energy costs and availability; our ability to contain costs, achieve budgets and to realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget, and to achieve expected savings under our Cost Smart program as well as with respect to freight and shipping costs; the impact of financial and capital markets on our borrowing costs, including as a result of foreign currency fluctuations, fluctuations in interest and exchange rates and market volatility and the associated risks of hedging against such fluctuations; the potential effects of climate change; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing plants or with respect to boiler reliability; risks related to product safety and quality and compliance with environmental, health and safety, and food safety laws and regulations; economic, political and other risks inherent in operating in foreign countries with foreign currencies and shipping products between countries, including with respect to tariffs, quotas and duties; interruptions, security breaches or failures that might affect our information technology systems, processes and sites; our ability to maintain satisfactory labor relations; the impact that weather, natural disasters, war or similar acts of hostility, acts and threats of terrorism, the outbreak or continuation of pandemics such as COVID-19 and other significant events could have on our business; the potential recognition of impairment charges on goodwill or long lived assets; changes in our tax rates or exposure to additional income tax liabilities; and our ability to raise funds at reasonable rates to grow and expand our operations.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” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and in our subsequent reports on Form 10-Q and Form 8-K.CONTACTS:
Investors: Tiffany Willis, 708-551-2592
Media: Becca Hary, 708-551-2602
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