Pet Food Press Releases

Ingredion reports third quarter results

Ingredion Incorporated, a leading global provider of ingredient solutions to the food and beverage manufacturing industry, reports results for the third quarter of 2021. The results, reported in accordance with U.S. generally accepted accounting principles for 2021 and 2020, include items that are excluded from the non-GAAP financial measures that the company presents.

“We delivered outstanding top-line performance of 17% net sales growth in the quarter resulting from well managed sales execution to fulfill strong customer demand. Every region achieved double-digit sales growth through a clear focus on managing price mix and partnering with customers to meet changing demand requirements as a result of global supply chain constraints. At the same time, we kept pace with higher input costs to deliver reported operating income up 12% and adjusted operating income down 9%, against previously anticipated high double-digit corn cost inflation,” said Jim Zallie, Ingredion’s president and chief executive officer.

"Once again, our specialty ingredients growth platforms achieved double-digit increases in net sales, which outpaced the remainder of our portfolio. During the quarter, we generated the largest specialty sales growth from our sugar reduction and specialty sweeteners platform, driven by customer wins from PureCircle and strong demand recovery globally. In addition, consumers’ heightened focus on nutrition and wellness is underpinning the robust demand we are seeing for our clean & simple, texture and plant-based protein solutions,” continued Zallie.

“More broadly, we continue to execute on our Driving Growth Roadmap to strategically shape our portfolio for the future. During the quarter, we completed the contribution of our Argentina business to the Arcor joint venture, reducing our exposure to currency volatility and high fructose corn syrup,” added Zallie. “Our teams are actively addressing the difficult challenges brought on by global supply chain constraints and rising inflation, to continue to serve customers, just as we have throughout the disruptions and uncertainty of the pandemic. I am incredibly proud of our employees as they engage each day to create lasting value for our stakeholders.”

*Adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate and adjusted diluted weighted average common shares outstanding 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 news release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.

Financial Highlights

  • At September 30, 2021, total debt and cash including short-term investments were $2.1 billion and $438 million, respectively, versus $2.2 billion and $665 million, respectively, at December 31, 2020.
  • Net financing costs for the third quarter were $20 million, down compared to the year-ago reported financing costs driven by the early debt extinguishment charges that were excluded from prior year adjusted net income.
  • Reported and adjusted effective tax rates for the third quarter were 22.2 percent and 21.5 percent, respectively, compared to 30.1 percent and 26.2 percent, respectively, in the year-ago period. The decrease in reported tax rate resulted primarily from U.S. foreign tax credits and other one-time adjustments. These items were partially offset by a change in value of the Mexican peso against the U.S. dollar.
  • Year-to-date net capital expenditures were $186 million, down $64 million from the year-ago period.

Net Sales

  • Third quarter and year-to-date net sales were up from the year-ago period, driven by strong price mix including the pass through of higher corn costs, and higher volumes, including PureCircle and KaTech results. Excluding foreign exchange impacts, net sales were up 17 percent and 16 percent for the quarter and year-to-date, respectively.

Operating Income

  • Third quarter reported and adjusted operating income were $172 million and $163 million, respectively, an increase of 12 percent and a decrease of 9 percent, respectively, from the same period last year. The increase in reported operating income was driven by a favorable adjustment to the net asset impairment related to the contribution of Argentina assets to the Arcor joint venture, which was partially offset by higher corn and manufacturing costs, including costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities. The decrease in adjusted operating income was driven by higher corn and manufacturing costs, including the costs associated with the ramp-up of plant-based protein operations. Excluding foreign exchange impacts, reported and adjusted operating income were up 11 percent and down 10 percent, respectively, from the same period last year.
  • Year-to-date reported and adjusted operating income were $224 million and $572 million, respectively, a decrease of 47 percent and an increase of 21 percent, respectively, from the year-ago period. The decrease in reported operating income was attributable to the net asset impairment charge related to the contribution of the Company’s Argentina assets to the Arcor joint venture and higher corn and manufacturing costs, which were partially offset by strong price mix and higher volumes. Excluding foreign exchange impacts, reported and adjusted operating income were down 49 percent and up 19 percent, respectively, from the same period last year.
  • Third quarter reported operating income was higher than adjusted operating income by $9 million driven by a favorable adjustment to the net asset impairment related to the contribution of Argentina assets to the Arcor joint venture which was partially offset by Cost Smart-related restructuring costs.
  • Year-to-date reported operating income was lower than adjusted operating income by $348 million primarily due to the net asset impairment charge related to the contribution of the Company’s Argentina assets to the Arcor joint venture.

Third quarter operating income was $120 million, a decrease of $12 million from the year-ago period, and year-to-date operating income was $403 million, an increase of $45 million from the year-ago period. For the third quarter, the decrease was driven by higher corn and manufacturing costs, including costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities. Year-to-date, the increase was driven by favorable price mix and higher volumes, which were partially offset by input cost inflation.

    • Third quarter operating income was $35 million, an increase of $6 million from the year-ago period, and year-to-date operating income was $108 million, an increase of $40 million from the year-ago period. For both the quarter and year-to-date, the increases were driven by favorable price mix partially offset by higher corn costs. Excluding foreign exchange impacts, segment operating income was up 20 percent and 62 percent for the third quarter and year-to-date, respectively. Results for Argentina are accounted for in U.S. dollars under hyperinflationary accounting.
    • Third quarter operating income was $21 million, up $3 million from the year-ago period, and year-to-date operating income was $70 million, an increase of $10 million from the year-ago period. For the third quarter, the increase was driven by higher volumes and favorable price mix, which were partially offset by higher freight and manufacturing costs. Year-to-date, the increase was driven by higher volumes and favorable foreign exchange impacts.
    • Third quarter operating income was $23 million, down $2 million from the year-ago period, and year-to-date operating income was $86 million, an increase of $13 million from a year ago. For the third quarter, the decrease was driven by higher corn and energy costs in Pakistan. Year-to-date, the increase was largely attributable to lower net corn costs and favorable price mix in Pakistan and favorable foreign exchange impacts in Europe.

    Dividends and Share Repurchases
    Ingredion continues to return cash to shareholders through cash dividends and share repurchases.

    In July 2021, a quarterly cash dividend of $0.64 per share was paid to shareholders of record on July 1, 2021, totaling $43 million bringing total year-to-date dividend payments to $138 million. In September 2021, the Company increased the quarterly dividend by $0.01 to $0.65 per share, the seventh consecutive annual increase in the dividend.

    Ingredion repurchased $44 million of outstanding shares of common stock in the third quarter. This brings Ingredion’s total year-to-date share repurchases in 2021 to $68 million.

    2021 Full Year Outlook
    The company now expects full year 2021 adjusted EPS to be in the range of $6.65-$7.00 compared to adjusted EPS of $6.23 in 2020, and up from the previously provided full year outlook of $6.45-$6.85. This expectation excludes acquisition-related integration and restructuring costs, as well as any potential impairment costs.

    Compared with last year, the 2021 full year outlook is as follows: North America operating income is expected to be up low single-digits to mid-single-digits driven by higher volumes and lower operating expenses; South America operating income, including the impact of the Arcor joint venture in Argentina, is expected to be up 20 to 25 percent driven by favorable price mix; Asia-Pacific operating income is expected to be up high single-digits driven by higher volumes; EMEA operating income is expected to be up high single-digits driven by higher volumes partially offset by higher input costs; and Corporate costs are expected to be up low single-digits driven by investments in global capabilities and centers of excellence. The Company expects full year adjusted operating income to be up high single-digits.

    Cash from operations for the full year is expected to be in the range of $450 million to $550 million, which includes an increase in expected working capital due to higher expected net sales and the impact of higher corn costs on inventory. Capital expenditures for the full year are anticipated to be between $320 million and $350 million.

    For the full year, the Company expects a reported effective tax rate of 46.0 percent to 51.0 percent and an adjusted effective tax rate of 25.5 percent to 27.0 percent.

    Conference Call and Webcast Details

    Ingredion will host a conference call on Tuesday, November 2, 2021, at 8 a.m. Central Time / 9 a.m. Eastern Time, hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real time and can be accessed at https://ir.ingredionincorporated.com/events-and-presentations. The accompanying presentation will be accessible through the Company’s website, and available to download a few hours prior to the start of the call. A replay will be available for a limited time at: https://ir.ingredionincorporated.com/financial-information/quarterly-results

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