Ingredion Incorporated Reports First Quarter 2019 Results
Ingredion Incorporated (NYSE: INGR), a leading global provider of
ingredient solutions to diversified industries, today reported
results for the first quarter 2019. The results, reported in
accordance with U.S. generally accepted accounting principles
(“GAAP”) for 2019 and 2018, include items that are excluded from
the non-GAAP financial measures that the Company presents.
“During the first quarter, our performance was challenged by
continued unfavorable foreign exchange impacts, difficult raw
material market conditions in North America, and continued
macroeconomic weakness in South America. We are navigating this
environment by taking aggressive pricing actions to pass through
foreign exchange impacts and accelerating our $125 million Cost
Smart savings program,” said Jim Zallie, Ingredion’s president and
chief executive officer.
“We are strengthening our higher-value, starch-based texturizer
portfolio by expanding capacity for future specialty growth with
the acquisition of the Western Polymer business. Also during
the quarter, we continued to advance our specialties growth
strategy with the previously announced $200 million of investments
in clean and simple ingredients, plant-based proteins and sugar
reduction capabilities. We remain steadfast in leveraging these
capabilities to deliver value through customer co-creation.”
“Given the challenging macroeconomic and market conditions, we
have lowered the top end of our expected adjusted EPS guidance to
be in the range of $6.80 to $7.20,” 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)
|
1Q18 |
1Q19 |
Reported EPS |
$1.90 |
$1.48 |
Acquisition/Integration Costs |
— |
$0.01 |
Impairment/Restructuring Costs |
$0.04 |
$0.05 |
Adjusted EPS** |
$1.94 |
$1.54 |
**Totals may not foot due to rounding
Estimated factors affecting change in
reported and adjusted EPS
|
1Q19 |
Margin |
(0.14) |
Volume |
— |
Foreign exchange |
(0.19) |
Other income |
(0.03) |
Total operating items |
(0.36) |
|
|
Other non-operating income |
(0.01) |
Financing costs |
(0.06) |
Shares outstanding |
0.13 |
Tax rate |
(0.10) |
Non-controlling interest |
— |
Total non-operating items |
(0.04) |
Total items affecting EPS |
(0.40) |
Financial Highlights
- At March 31, 2019, total debt and cash and short-term
investments were $2.1 billion and $259 million, versus $2.1 billion
and $334 million, respectively, at December 31, 2018. Cash and
short-term investments decreases were primarily driven by lower net
income and timing of changes in working capital.
- Net financing costs were $22 million or $6 million higher in
the first quarter than the year-ago period, primarily driven by
higher net debt and interest rates.
- Reported and adjusted effective tax rates for the quarter were
26.6 percent and 26.4 percent, compared to reported and adjusted
effective tax rates of 21.4 percent and 21.1 percent, respectively,
in the year-ago period. The increase in reported and adjusted
rates was primarily driven by a reduced excess tax benefit related
to share-based payment awards.
- First quarter capital expenditures were $80 million, down $15
million from the year-ago period driven by higher investments in
the year-ago period to expand capacity for plant-based proteins and
sugar reduction.
- The $125 million Cost Smart program continues to identify
additional ways to organize people and processes to achieve
structural savings. The Company expects to exceed its stated 2019
year-end cumulative run-rate savings target of $24 million to $34
million, building to $125 million by year-end 2021, before
inflationary effects.
Business Review
Total Ingredion
$ in millions |
2018 Net sales |
FX Impact |
Volume |
Price/mix |
2019 Net sales |
% change |
First quarter |
1,469 |
-95 |
-27 |
73 |
1,420 |
-3 |
% |
Net Sales
- First quarter net sales were down compared to the year-ago
period. The decrease in net sales was driven by unfavorable foreign
currency impacts and lower core volumes, partially offset by
favorable price/mix primarily due to pass-throughs for higher raw
material costs and foreign exchange impacts.
Operating income
- Reported and adjusted operating income for the quarter were
$161 million and $166 million, decreases of 18 percent and 17
percent, respectively, from the same period last year. The
decreases were largely attributable to foreign-exchange impacts and
higher raw material and production costs, partially offset by
improved price/mix.
- First quarter reported operating income was lower than adjusted
operating income by $5 million primarily attributable to
restructuring charges related to Cost Smart initiatives of $4
million. The remaining $1 million is related to the acquisition and
integration of the Western Polymer business.
North America
$ in millions |
2018 Net sales |
FX Impact |
Volume |
Price/mix |
2019 Net sales |
% change |
First quarter |
874 |
-5 |
-14 |
5 |
860 |
-2 |
% |
Operating income
- First quarter operating income was $125 million, a decrease of
$18 million from a year ago. The decrease was driven by higher
inventory and production costs, higher net corn costs, and a modest
impact from the extreme weather in the U.S. and Canada.
South America
$ in millions |
2018 Net sales |
FX Impact |
Volume |
Price/mix |
2019 Net sales |
% change |
First quarter |
249 |
-63 |
-14 |
46 |
218 |
-12 |
% |
Operating income
- First quarter operating income was $18 million, a decrease of
$8 million from a year ago. Foreign exchange impacts and lower
volumes in Argentina and Brazil more than offset pricing
actions.
Asia-Pacific
$ in millions |
2018 Net sales |
FX Impact |
Volume |
Price/mix |
2019 Net sales |
% change |
First quarter |
194 |
-7 |
-4 |
11 |
194 |
— |
Operating income
- First quarter operating income was $20 million, down $3 million
from a year ago. Specialty volume growth and improved price/mix
were more than offset by higher regional corn costs and foreign
exchange impacts.
Europe, Middle East, and Africa (EMEA)
$ in millions |
2018 Net sales |
FX Impact |
Volume |
Price/mix |
2019 Net sales |
% change |
First quarter |
152 |
-21 |
6 |
11 |
148 |
-3 |
% |
Operating income
- First quarter operating income was $24 million, down $7 million
from a year ago. Unfavorable foreign exchange impacts and higher
raw material costs across the region more than offset specialty and
core volume growth and improved price/mix.
Share Repurchases
- On November 5, 2018, the Company entered into a Variable Timing
Accelerated Share Repurchase (“ASR”) program with JPMorgan
(“JPM”). Under the ASR program, the Company paid an initial
price of $455 million on November 5, 2018, and acquired 4.0 million
shares of its common stock having an approximate value of $423
million on that date. On February 5, 2019, the Company and
JPM settled the difference between the initial price and average
daily volume weighted average price (“VWAP”) less the agreed upon
discount during the term of the agreement. The final VWAP was
$98.04 per share, which was less than originally paid. The
Company settled the difference in cash, resulting in JPM returning
$63 million of the upfront payment to the Company on February 6,
2019 and lowering the total cost of repurchasing the 4.0 million
shares of common stock to $392 million.
2019 Outlook
The Company expects 2019 adjusted EPS to be in the range of
$6.80-$7.20 compared to adjusted EPS of $6.92 in 2018. This
expectation excludes acquisition-related, integration and
restructuring costs, as well as any potential impairment costs.
Compared with last year, the 2019 full-year outlook assumes: North
America operating income is flat to down assuming current market
values for corn and corn by-products, which have been negatively
impacted by crop inventory imbalances arising from a U.S. and China
trade dispute; South America operating income is flat due to
persistent macroeconomic challenges; Asia-Pacific and EMEA
operating incomes are expected to be flat to modestly up; an
adjusted effective tax rate range of approximately 26.5-27.5
percent; and continued higher-value specialty ingredients
growth. The Company expects operating income to be higher in
the second half of 2019 relative to 2018, given the anticipated
layout of corn costs in North America and anticipated impacts of
foreign-exchange.
Cash from operations in 2019 is expected to be in the range of
$630 million to $680 million. Capital expenditures are anticipated
to be between $330 million to $360 million.
Conference Call and Webcast
DetailsIngredion will conduct a conference call
today at 9 a.m. ET (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 visual presentation accessible through the
Ingredion website at www.ingredion.com. The presentation will be
available to download a few hours prior to the start of the call. A
replay of the webcast will be available for a limited time at
www.ingredion.com.
Upcoming CommunicationsJames Gray, executive
vice president and chief financial officer, will participate in the
14th Annual Farm to Market conference on Thursday, May 16 at 8:50
a.m. ET in New York City. The webcast will be available on
the Company’s website, www.ingredion.com, in the “Company and
Investors” section, under “Investors/Presentations &
Presentations/Webcasts.”
ABOUT THE COMPANYIngredion Incorporated (NYSE:
INGR), headquartered in the suburbs of Chicago, is a leading global
ingredient solutions provider serving customers in more than 120
countries. With annual net sales of nearly $6 billion, the company
turns grains, fruits, vegetables and other plant materials into
value-added ingredients and biomaterial solutions for the food,
beverage, paper and corrugating, brewing and other industries. With
Ingredion Idea Labs® innovation centres around the world and more
than 11,000 employees, the Company develops ingredient solutions to
meet consumers' evolving needs by making crackers crunchy, yogurt
creamy, candy sweet, paper stronger, and adding fiber to nutrition
bars. For more information, visit ingredion.com.
CONTACTS: Investors: Heather Kos,
708-551-2592 Media: Becca Hary, 708-551-2602
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 other things, any
statements regarding the Company's prospects or future financial
condition, earnings, revenues, tax rates, capital expenditures,
cash flows, expenses or other financial items, any statements
concerning the Company's prospects or future operations, including
management's plans or strategies and objectives therefor 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 these
statements, based on various factors, including the effects of
global economic conditions, including, particularly, economic,
currency and political conditions in South America and economic and
political conditions in Europe, and their impact on our sales
volumes and pricing of our products; our ability to collect our
receivables from customers and our ability to raise funds at
reasonable rates; fluctuations in worldwide markets for corn and
other commodities, and the associated risks of hedging against such
fluctuations; fluctuations in the markets and prices for our
co-products, particularly corn oil; fluctuations in aggregate
industry supply and market demand; the behavior of financial
markets, including foreign currency fluctuations and fluctuations
in interest and exchange rates; volatility and turmoil in the
capital markets; the commercial and consumer credit environment;
general political, economic, business, market and weather
conditions in the various geographic regions and countries in which
we buy our raw materials or manufacture or sell our products;
future financial performance of major industries which we serve,
including, without limitation, the food, beverage, paper and
corrugated, and brewing industries; energy costs and availability;
freight and shipping costs; and changes in regulatory controls
regarding quotas; tariffs, duties, taxes and income tax rates,
particularly United States tax reform enacted in 2017; operating
difficulties; availability of raw materials, including potato
starch, tapioca, gum Arabic and the specific varieties of corn upon
which some of our products are based; our ability to develop or
acquire new products and services at rates or of qualities
sufficient to meet expectations; energy issues in Pakistan; boiler
reliability; our ability to effectively integrate and operate
acquired businesses; our ability to achieve budgets and to realize
expected synergies; our ability to achieve expected savings under
our Cost Smart program; our ability to complete planned maintenance
and investment projects successfully and on budget; labor disputes;
genetic and biotechnology issues; changing consumption preferences
including those relating to high fructose corn syrup; increased
competitive and/or customer pressure in the corn-refining industry;
and the outbreak or continuation of serious communicable disease or
hostilities including acts of terrorism. 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, 2018 and
subsequent reports on Forms 10-Q and 8-K.
Ingredion Incorporated ("Ingredion") |
Condensed Consolidated Statements of Income |
(Unaudited) |
|
|
|
|
(in millions, except per share
amounts) |
|
Three Months Ended March 31, |
|
Change % |
|
|
2019 |
|
2018 |
|
|
Net sales before shipping and handling costs |
|
$ |
1,536 |
$ |
1,581 |
|
|
(3 |
%) |
Less: shipping and handling
costs |
|
|
116 |
|
112 |
|
|
(4 |
%) |
Net sales |
|
|
1,420 |
|
1,469 |
|
|
(3 |
%) |
Cost of sales |
|
|
1,104 |
|
1,115 |
|
|
|
Gross profit |
|
|
316 |
|
354 |
|
|
(11 |
%) |
|
|
|
|
|
Operating expenses |
|
|
150 |
|
156 |
|
|
(4 |
%) |
Other expense (income), net |
|
|
1 |
|
(2 |
) |
|
|
Restructuring/impairment charges |
|
|
4 |
|
3 |
|
|
|
Operating income |
|
|
161 |
|
197 |
|
|
(18 |
%) |
Financing costs, net |
|
|
22 |
|
16 |
|
|
|
Other, non-operating
income |
|
|
- |
|
(1 |
) |
|
|
Income before income
taxes |
|
|
139 |
|
182 |
|
|
(24 |
%) |
Provision for income
taxes |
|
|
37 |
|
39 |
|
|
|
Net income |
|
|
102 |
|
143 |
|
|
(29 |
%) |
Less: Net income attributable to non-controlling interests |
|
|
2 |
|
3 |
|
|
|
Net income attributable to
Ingredion |
|
$ |
100 |
$ |
140 |
|
|
(29 |
%) |
|
|
|
|
|
|
|
|
|
|
Earnings per common share
attributable to Ingredion |
|
|
|
|
|
common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
Basic |
|
|
66.8 |
|
72.3 |
|
|
|
Diluted |
|
|
67.4 |
|
73.6 |
|
|
|
|
|
|
|
|
Earnings per common share of
Ingredion: |
|
|
|
|
|
Basic |
|
$ |
1.50 |
$ |
1.94 |
|
|
(23 |
%) |
Diluted |
|
$ |
1.48 |
$ |
1.90 |
|
|
(22 |
%) |
Ingredion Incorporated ("Ingredion") |
|
Condensed Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
(in millions, except share and per share amounts) |
March 31, 2019 |
|
December 31, 2018 |
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
255 |
|
|
$ |
327 |
|
|
|
Short-term investments |
|
4 |
|
|
|
7 |
|
|
|
Accounts receivable – net |
|
1,013 |
|
|
|
951 |
|
|
|
Inventories |
|
862 |
|
|
|
824 |
|
|
|
Prepaid expenses |
|
36 |
|
|
|
29 |
|
|
|
|
Total current assets |
|
2,170 |
|
|
|
2,138 |
|
|
|
|
|
|
|
|
Property, plant and equipment
– net |
|
2,208 |
|
|
|
2,198 |
|
|
|
Goodwill |
|
815 |
|
|
|
791 |
|
|
|
Other intangible assets –
net |
|
453 |
|
|
|
460 |
|
|
|
Operating lease assets |
|
146 |
|
|
|
- |
|
|
|
Deferred income tax
assets |
|
11 |
|
|
|
10 |
|
|
|
Other assets |
|
129 |
|
|
|
131 |
|
|
|
Total assets |
$ |
5,932 |
|
|
$ |
5,728 |
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
Current
liabilities |
|
|
|
Short-term
borrowings |
$ |
153 |
|
|
$ |
169 |
|
|
|
Accounts payable and accrued
liabilities |
|
748 |
|
|
|
777 |
|
|
|
|
Total current liabilities |
|
901 |
|
|
|
946 |
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
203 |
|
|
|
217 |
|
|
|
Long-term debt |
|
1,957 |
|
|
|
1,931 |
|
|
|
Non-current operating lease
liabilities |
|
113 |
|
|
|
- |
|
|
|
Deferred income tax
liabilities |
|
193 |
|
|
|
189 |
|
|
|
Share-based payments subject
to redemption |
|
21 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Ingredion
stockholders' equity: |
|
|
|
|
|
Preferred stock – authorized
25,000,000 shares – $0.01 par value, none issued |
|
- |
|
|
|
- |
|
|
|
Common stock – authorized
200,000,000 shares – $0.01 par value, 77,810,875 |
|
|
|
|
|
shares issued at March 31, 2019 and December 31, 2018 |
|
1 |
|
|
|
1 |
|
|
|
Additional paid-in
capital |
|
1,137 |
|
|
|
1,096 |
|
|
|
Less: Treasury stock (common stock; 11,131,668 and 11,284,681
shares at |
|
|
|
|
|
March 31, 2019 and December 31, 2018, respectively) at cost |
|
(1,050 |
) |
|
|
(1,091 |
) |
|
|
Accumulated other
comprehensive loss |
|
(1,160 |
) |
|
|
(1,154 |
) |
|
|
|
|
Retained earnings |
|
3,594 |
|
|
|
3,536 |
|
|
|
Total Ingredion
stockholders' equity |
|
2,522 |
|
|
|
2,388 |
|
|
|
Non-controlling
interests |
|
22 |
|
|
|
20 |
|
|
|
|
Total equity |
|
2,544 |
|
|
|
2,408 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
5,932 |
|
|
$ |
5,728 |
|
|
Ingredion Incorporated ("Ingredion") |
|
Condensed Consolidated Statements of Cash
Flows |
|
(Unaudited) |
|
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
(in millions) |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Cash
provided by operating activities: |
|
|
|
|
Net income |
|
$ |
102 |
|
|
$ |
143 |
|
|
|
Adjustments to reconcile net
income to |
|
|
|
|
|
|
net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
51 |
|
|
|
54 |
|
|
|
Mechanical stores expense |
|
|
13 |
|
|
|
15 |
|
|
|
Deferred income taxes |
|
|
5 |
|
|
|
8 |
|
|
|
Margin accounts |
|
|
1 |
|
|
|
16 |
|
|
|
Changes in other trade working capital |
|
|
(171 |
) |
|
|
(134 |
) |
|
|
Other |
|
|
17 |
|
|
|
48 |
|
|
|
|
Cash provided by operating activities |
|
|
18 |
|
|
|
150 |
|
|
|
|
|
|
Cash used
for investing activities: |
|
|
|
|
Capital expenditures and mechanical stores purchases, net of
proceeds on disposals |
|
|
(80 |
) |
|
|
(95 |
) |
|
|
Payments for acquisitions, net
of cash acquired of $4 and $-, respectively |
|
|
(41 |
) |
|
|
- |
|
|
|
Short-term investments |
|
|
3 |
|
|
|
3 |
|
|
|
Other |
|
|
- |
|
|
|
6 |
|
|
|
|
Cash used for investing activities |
|
|
(118 |
) |
|
|
(86 |
) |
|
|
|
|
|
|
|
Cash
provided by (used for) financing activities: |
|
|
|
|
|
|
Proceeds from (payments on) borrowings, net |
|
|
8 |
|
|
|
(212 |
) |
|
|
Repurchases of common stock, net |
|
|
63 |
|
|
|
- |
|
|
|
Issuances of common stock for share-based compensation, net of
settlements |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
Dividends paid, including to non-controlling interests |
|
|
(42 |
) |
|
|
(46 |
) |
|
|
|
Cash provided by (used for) financing activities |
|
|
28 |
|
|
|
(261 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect
of foreign exchange rate changes on cash |
|
|
- |
|
|
|
3 |
|
|
|
Decrease in cash and cash
equivalents |
|
|
(72 |
) |
|
|
(194 |
) |
|
|
Cash and cash equivalents,
beginning of period |
|
|
327 |
|
|
|
595 |
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
255 |
|
|
$ |
401 |
|
|
Ingredion Incorporated ("Ingredion") |
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Supplemental Financial Information |
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(Unaudited) |
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I. Geographic
Information of Net Sales and Operating Income |
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(in millions) |
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Three Months Ended March 31, |
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Change |
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2019 |
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2018 |
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% |
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Net Sales |
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North America |
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$ |
860 |
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$ |
874 |
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(2 |
%) |
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South America |
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218 |
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249 |
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(12 |
%) |
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Asia Pacific |
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194 |
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194 |
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0 |
% |
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EMEA |
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148 |
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152 |
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(3 |
%) |
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Total Net Sales |
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$ |
1,420 |
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$ |
1,469 |
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(3 |
%) |
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Operating Income |
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North America |
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$ |
125 |
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$ |
143 |
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(13 |
%) |
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South America |
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18 |
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26 |
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(31 |
%) |
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Asia Pacific |
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20 |
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23 |
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(13 |
%) |
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EMEA |
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24 |
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31 |
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(23 |
%) |
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Corporate |
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(21 |
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(23 |
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9 |
% |
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Sub-total |
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166 |
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200 |
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(17 |
%) |
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Acquisition/integration
costs |
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(1 |
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- |
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Restructuring/impairment
charges |
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(4 |
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(3 |
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Total Operating
Income |
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$ |
161 |
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$ |
197 |
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(18 |
%) |
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II. Non-GAAP
Information |
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To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles (“GAAP”),
we use non-GAAP historical financial measures, which exclude
certain GAAP items such as acquisition and integration costs,
impairment and restructuring costs, and certain other special
items. We generally use the term “adjusted” when referring to these
non-GAAP amounts. Management uses non-GAAP financial measures
internally for strategic decision making, forecasting future
results and evaluating current performance. By disclosing non-GAAP
financial measures, management intends to provide investors with a
more meaningful, consistent comparison of our operating results and
trends for the periods presented. These non-GAAP financial measures
are used in addition to and in conjunction with results presented
in accordance with GAAP and reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP results,
provide a more complete understanding of factors and trends
affecting our business. These non-GAAP measures should be
considered as a supplement to, and not as a substitute for, or
superior to, the corresponding measures calculated in accordance
with GAAP. Non-GAAP financial measures are not prepared in
accordance with GAAP; therefore, the information is not necessarily
comparable to other companies. A reconciliation of each non-GAAP
historical financial measure to the most comparable GAAP measure is
provided in the tables below. |
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Ingredion Incorporated ("Ingredion") |
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Reconciliation of GAAP Net Income attributable to Ingredion
and Diluted Earnings Per Share ("EPS")
to |
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Non-GAAP Adjusted Net Income attributable to Ingredion and
Adjusted Diluted EPS |
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(Unaudited) |
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Three Months Ended |
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Three Months Ended |
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March 31, 2019 |
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March 31, 2018 |
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(in millions) |
EPS |
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(in millions) |
EPS |
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Net income attributable to
Ingredion |
$ |
100 |
$ |
1.48 |
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$ |
140 |
$ |
1.90 |
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Add back: |
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Acquisition/integration costs,
net of income tax benefit of $- million for the three months ended
March 31, 2019 and 2018 (i) |
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1 |
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0.01 |
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- |
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- |
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Restructuring/impairment charges, net of income tax benefit of $1
million and $- million for the three months ended March 31, 2019
and 2018 (ii) |
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3 |
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0.05 |
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3 |
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0.04 |
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Non-GAAP adjusted net income
attributable to Ingredion |
$ |
104 |
$ |
1.54 |
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$ |
143 |
$ |
1.94 |
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Net income, EPS and tax rates may not foot or recalculate due to
rounding. |
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Notes |
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(i) The 2019 period includes costs related to the acquisition and
integration of the business acquired from Western Polymer,
LLC. |
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(ii) During the first quarter in 2019, the Company recorded $4
million of pre-tax restructuring charges, comprised of $3 million
of employee-related severance and other costs as part of the Cost
Smart SG&A program and $1 million in restructuring expenses as
part of the Cost Smart cost of sales program in relation to the
cessation of wet-milling at the Stockton, California plant. During
the first quarter in 2018, the Company recorded $3 million of
pre-tax restructuring charges consisting of $2 million of other
costs associated with the Company's North America Finance
Transformation initiative and $1 million of other costs related to
the abandonment of certain assets related to our leaf extraction
process in Brazil. |
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II. Non-GAAP Information (continued) |
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Ingredion Incorporated ("Ingredion") |
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Reconciliation of GAAP Operating Income to Non-GAAP
Adjusted Operating Income |
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(Unaudited) |
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Three Months Ended |
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March 31, |
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(in millions, pre-tax) |
2019 |
2018 |
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Operating income |
$ |
161 |
$ |
197 |
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Add back: |
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Acquisition/integration costs
(i) |
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1 |
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- |
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Restructuring/impairment
charges (ii) |
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4 |
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3 |
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Non-GAAP adjusted operating
income |
$ |
166 |
$ |
200 |
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For notes (i) through (ii) see notes (i) through (ii) included in
the Reconciliation of GAAP Net Income attributable to Ingredion and
Diluted EPS to Non-GAAP Adjusted Net Income attributable to
Ingredion and Adjusted Diluted EPS. |
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II. Non-GAAP
Information (continued) |
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Ingredion Incorporated ("Ingredion") |
Reconciliation of GAAP Effective Income Tax Rate to
Non-GAAP Adjusted Effective Income Tax Rate |
(Unaudited) |
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Three Months Ended March 31, 2019 |
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Income before |
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Provision for |
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Effective Income |
(in
millions) |
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Income Taxes (a) |
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Income Taxes (b) |
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Tax Rate (b / a) |
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As Reported |
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$ |
139 |
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$ |
37 |
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26.6 |
% |
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Add back: |
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Acquisition/integration costs
(i) |
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1 |
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- |
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Restructuring/impairment
charges (ii) |
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4 |
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1 |
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Adjusted Non-GAAP |
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$ |
144 |
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$ |
38 |
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26.4 |
% |
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Three Months Ended March 31, 2018 |
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Income before |
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Provision for |
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Effective Income |
(in
millions) |
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Income Taxes (a) |
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Income Taxes (b) |
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Tax Rate (b / a) |
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As Reported |
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$ |
182 |
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$ |
39 |
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21.4 |
% |
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Add back: |
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Restructuring/impairment
charges (ii) |
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3 |
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- |
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Adjusted Non-GAAP |
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$ |
185 |
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$ |
39 |
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21.1 |
% |
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For notes (i) through (ii) see notes (i) through (ii) included in
the Reconciliation of GAAP Net Income attributable to Ingredion and
Diluted EPS to Non-GAAP Adjusted Net Income attributable to
Ingredion and Adjusted Diluted EPS. |
II. Non-GAAP
Information (continued) |
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Ingredion Incorporated ("Ingredion") |
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Reconciliation of Anticipated GAAP Diluted Earnings per
Share ("GAAP EPS") |
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to Anticipated Adjusted Diluted Earnings per Share
("Adjusted EPS") |
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(Unaudited) |
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Anticipated EPS Range |
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for Full Year 2019 |
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Low End |
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High End |
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GAAP EPS |
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$ |
6.44 |
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$ |
6.91 |
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Add: |
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Acquisition/integration costs
(iii) |
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0.03 |
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0.02 |
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Restructuring/impairment
charges (iv) |
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0.33 |
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0.27 |
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Adjusted EPS |
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$ |
6.80 |
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$ |
7.20 |
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Above is a reconciliation of our anticipated full year 2019 diluted
EPS to our anticipated full year 2019 adjusted diluted EPS. The
amounts above may not reflect certain future charges, costs and/or
gains that are inherently difficult to predict and estimate due to
their unknown timing, effect and/or significance. These
amounts include, but are not limited to, acquisition and
integration costs, impairment and restructuring costs, and certain
other special items. We generally exclude these items from
our adjusted EPS guidance. For these reasons, we are more confident
in our ability to predict adjusted EPS than we are in our ability
to predict GAAP EPS. |
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(iii) Reflects expected costs related to the acquisition and
integration of the business acquired from Western Polymer, LLC. and
acquisitions to be determined. |
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(iv) Primarily reflects current estimates for 2019 restructuring
charges related to the Cost Smart Cost of Sales & SG&A
programs. As specific projects within these programs are approved,
the estimates will be reviewed and may be subject to revision. |
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