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)
|
2Q19 |
2Q20 |
YTD19 |
YTD20 |
Reported EPS |
$1.56 |
$0.98 |
$3.04 |
$2.08 |
Impairment/Restructuring Costs |
$0.10 |
$0.12 |
$0.15 |
$0.28 |
Acquisition/Integration Costs |
- |
$0.03 |
$0.01 |
$0.03 |
Discrete Tax Item |
- |
- |
$(0.01) |
$0.32 |
Adjusted EPS** |
$1.66 |
$1.12 |
$3.19 |
$2.72 |
Estimated factors affecting change in reported and
adjusted EPS
|
2Q20 |
YTD20 |
Margin |
(0.09) |
0.02 |
Volume |
(0.35) |
(0.38) |
Foreign exchange |
(0.08) |
(0.13) |
Other income |
(0.03) |
(0.04) |
Total operating items |
(0.55) |
(0.53) |
Other non-operating income |
0.01 |
0.03 |
Financing costs |
(0.03) |
0.01 |
Shares outstanding |
- |
(0.01) |
Tax rate |
0.03 |
0.03 |
Total non-operating items |
0.01 |
0.06 |
Total items affecting EPS** |
(0.54) |
(0.47) |
**Totals may not foot due to rounding
Financial Highlights
- At 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 Review
Total Ingredion
$ in millions |
2019Net Sales |
FX Impact |
Volume |
Price/mix |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
1,550 |
-59 |
-183 |
41 |
1,349 |
-13% |
-9% |
Year-to-Date |
3,086 |
-100 |
-178 |
84 |
2,892 |
-6% |
-3% |
Reported Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
Acquisition/Integration |
Restructuring /Impairment |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
168 |
-7 |
-44 |
-2 |
-2 |
113 |
-33% |
-29% |
Year-to-Date |
329 |
-12 |
-38 |
-1 |
-12 |
266 |
-19% |
-15% |
Adjusted Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
178 |
-7 |
-44 |
127 |
-29% |
-25% |
Year-to-Date |
344 |
-12 |
-38 |
294 |
-15% |
-11% |
Net 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 income
- Reported 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 AmericaNet Sales
$ in millions |
2019Net Sales |
FX Impact |
Volume |
Price/mix |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
977 |
-4 |
-142 |
17 |
848 |
-13% |
-13% |
Year-to-Date |
1,928 |
-5 |
-150 |
38 |
1,811 |
-6% |
-6% |
Segment Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
139 |
-1 |
-37 |
101 |
-27% |
-27% |
Year-to-Date |
264 |
-1 |
-37 |
226 |
-14% |
-14% |
Operating 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 Sales
$ in millions |
2019 Net Sales |
FX Impact |
Volume |
Price/mix |
2020 Net Sales |
% change |
% changeexcl. FX |
Second quarter |
226 |
-41 |
-26 |
23 |
182 |
-19% |
-1% |
Year-to-Date |
454 |
-66 |
-13 |
44 |
419 |
-8% |
7% |
Segment Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
2020 Net Sales |
% change |
% changeexcl. FX |
Second quarter |
16 |
-4 |
1 |
13 |
-19% |
6% |
Year-to-Date |
34 |
-7 |
12 |
39 |
15% |
35% |
Operating income
- Second 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 Sales
$ in millions |
2019 Net Sales |
FX Impact |
Volume |
Price/mix |
2020 Net Sales |
% change |
% changeexcl. FX |
Second quarter |
203 |
-6 |
-8 |
-2 |
187 |
-8% |
-5% |
Year-to-Date |
406 |
-12 |
-13 |
-5 |
376 |
-7% |
-4% |
Segment Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
23 |
-1 |
- |
22 |
-4% |
- |
Year-to-Date |
43 |
-1 |
- |
42 |
-2% |
- |
Operating 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 Sales
$ in millions |
2019Net Sales |
FX Impact |
Volume |
Price/mix |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
144 |
-9 |
-7 |
4 |
132 |
-8% |
-2% |
Year-to-Date |
298 |
-18 |
-2 |
8 |
286 |
-4% |
2% |
Segment Operating Income
$ in millions |
2019Net Sales |
FX Impact |
Business Drivers |
2020Net Sales |
% change |
% changeexcl. FX |
Second quarter |
23 |
-1 |
-1 |
21 |
-9% |
- |
Year-to-Date |
47 |
-3 |
4 |
48 |
2% |
9% |
Operating income
- Second 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 Outlook
Due 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
DetailsIngredion 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 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 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 StatementsThis 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, 708-551-2592Media: Becca Hary,
708-551-2602
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
Condensed
Consolidated Statements of Income |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions, except per share amounts) |
|
|
Three Months Ended June 30, |
|
Change % |
|
|
Six Months Ended June 30, |
|
Change % |
|
|
|
|
2020 |
2019 |
|
|
|
|
2020 |
2019 |
|
|
|
Net sales |
|
|
$ |
1,349 |
$ |
1,550 |
|
(13%) |
|
|
$ |
2,892 |
$ |
3,086 |
|
(6%) |
|
Cost of
sales |
|
|
1,078 |
1,221 |
|
|
|
|
2,298 |
2,441 |
|
|
|
Gross
profit |
|
|
271 |
329 |
|
(18%) |
|
|
594 |
645 |
|
(8%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
147 |
154 |
|
(5%) |
|
|
301 |
304 |
|
(1%) |
|
Other
income, net |
|
|
- |
(2) |
|
|
|
|
2 |
(1) |
|
|
|
Restructuring/impairment charges |
|
|
11 |
9 |
|
|
|
|
25 |
13 |
|
|
|
Operating
income |
|
|
113 |
168 |
|
(33%) |
|
|
266 |
329 |
|
(19%) |
|
Financing
costs, net |
|
|
19 |
16 |
|
|
|
|
37 |
38 |
|
|
|
Other,
non-operating income, net |
|
|
- |
- |
|
|
|
|
(1) |
- |
|
|
|
Income
before income taxes |
|
|
94 |
152 |
|
(38%) |
|
|
230 |
291 |
|
(21%) |
|
Provision
for income taxes |
|
|
27 |
45 |
|
|
|
|
85 |
82 |
|
|
|
Net
income |
|
|
67 |
107 |
|
(37%) |
|
|
145 |
209 |
|
(31%) |
|
Less: Net
income attributable to non-controlling interests |
|
|
1 |
2 |
|
|
|
|
4 |
4 |
|
|
|
Net income
attributable to Ingredion |
|
|
$ |
66 |
$ |
105 |
|
(37%) |
|
|
$ |
141 |
$ |
205 |
|
(31%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share attributable to Ingredion |
|
|
|
|
|
|
|
|
|
|
|
|
|
common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
67.2 |
66.9 |
|
|
|
|
67.2 |
66.9 |
|
|
|
Diluted |
|
|
67.6 |
67.4 |
|
|
|
|
67.7 |
67.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share of Ingredion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.98 |
$ |
1.57 |
|
(38%) |
|
|
$ |
2.10 |
$ |
3.06 |
|
(31%) |
|
Diluted |
|
|
$ |
0.98 |
$ |
1.56 |
|
(37%) |
|
|
$ |
2.08 |
$ |
3.04 |
|
(31%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
Condensed
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions, except share and per share amounts) |
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,047 |
|
|
$ |
264 |
|
|
|
|
|
Short-term
investments |
|
1 |
|
|
|
4 |
|
|
|
|
|
Accounts
receivable – net |
|
861 |
|
|
|
977 |
|
|
|
|
|
Inventories |
|
859 |
|
|
|
861 |
|
|
|
|
|
Prepaid
expenses |
|
52 |
|
|
|
54 |
|
|
|
|
Total current assets |
|
2,820 |
|
|
|
2,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment – net |
|
2,231 |
|
|
|
2,306 |
|
|
|
|
|
Goodwill |
|
791 |
|
|
|
801 |
|
|
|
|
|
Other
intangible assets – net |
|
421 |
|
|
|
437 |
|
|
|
|
|
Operating
lease assets |
|
149 |
|
|
|
151 |
|
|
|
|
|
Deferred
income tax assets |
|
17 |
|
|
|
13 |
|
|
|
|
|
Other
assets |
|
182 |
|
|
|
172 |
|
|
|
Total assets |
$ |
6,611 |
|
|
$ |
6,040 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Short-term
borrowings |
$ |
470 |
|
|
$ |
82 |
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
812 |
|
|
|
885 |
|
|
|
|
Total current liabilities |
|
1,282 |
|
|
|
967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
liabilities |
|
209 |
|
|
|
220 |
|
|
|
|
|
Long-term
debt |
|
2,140 |
|
|
|
1,766 |
|
|
|
|
|
Non-current
operating lease liabilities |
|
115 |
|
|
|
120 |
|
|
|
|
|
Deferred
income tax liabilities |
|
172 |
|
|
|
195 |
|
|
|
|
|
Share-based
payments subject to redemption |
|
27 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2020 and December 31, 2019 |
|
1 |
|
|
|
1 |
|
|
|
|
|
Additional
paid-in capital |
|
1,143 |
|
|
|
1,137 |
|
|
|
|
|
Less:
Treasury stock (common stock; 10,825,142 and 10,993,388 shares
at |
|
|
|
|
|
|
|
June 30, 2020 and December 31, 2019, respectively) at cost |
|
(1,027 |
) |
|
|
(1,040 |
) |
|
|
|
|
Accumulated
other comprehensive loss |
|
(1,307 |
) |
|
|
(1,158 |
) |
|
|
|
|
Retained earnings |
|
3,836 |
|
|
|
3,780 |
|
|
|
|
Total Ingredion stockholders' equity |
|
2,646 |
|
|
|
2,720 |
|
|
|
|
Non-controlling interests |
|
20 |
|
|
|
21 |
|
|
|
|
Total equity |
|
2,666 |
|
|
|
2,741 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
6,611 |
|
|
$ |
6,040 |
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
Condensed
Consolidated Statements of Cash Flows |
|
(Unaudited) |
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
(in millions) |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
145 |
|
|
$ |
209 |
|
|
|
|
Adjustments
to reconcile net income to |
|
|
|
|
|
|
|
net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
106 |
|
|
|
103 |
|
|
|
|
Mechanical stores expense |
|
|
26 |
|
|
|
28 |
|
|
|
|
Deferred income taxes |
|
|
(2 |
) |
|
|
10 |
|
|
|
|
Margin accounts |
|
|
(18 |
) |
|
|
15 |
|
|
|
|
Changes in other trade working capital |
|
|
12 |
|
|
|
(136 |
) |
|
|
|
Other |
|
|
25 |
|
|
|
24 |
|
|
|
|
Cash provided by operating activities |
|
|
294 |
|
|
|
253 |
|
|
|
|
|
|
|
|
|
|
|
Cash used for investing activities: |
|
|
|
|
|
|
|
Capital
expenditures and mechanical stores purchases, net proceeds on
disposals |
|
|
(175 |
) |
|
|
(156 |
) |
|
|
|
Payments for
acquisitions, net of cash acquired |
|
|
- |
|
|
|
(42 |
) |
|
|
|
Investment
in a non-consolidated affiliate |
|
|
(6 |
) |
|
|
(10 |
) |
|
|
|
Short-term
investments |
|
|
3 |
|
|
|
3 |
|
|
|
|
Cash used for investing activities |
|
|
(178 |
) |
|
|
(205 |
) |
|
|
|
|
|
|
|
|
|
|
Cash provided by (used for) financing
activities: |
|
|
|
|
|
|
|
Proceeds
from borrowings (payments on), net |
|
|
777 |
|
|
|
(51 |
) |
|
|
|
Debt
issuance costs |
|
|
(9 |
) |
|
|
- |
|
|
|
|
Repurchases
of common stock, net |
|
|
- |
|
|
|
63 |
|
|
|
|
Issuances of
common stock for share-based compensation, net of settlements |
|
|
2 |
|
|
|
- |
|
|
|
|
Dividends
paid, including to non-controlling interests |
|
|
(87 |
) |
|
|
(87 |
) |
|
|
|
Cash provided by (used for) financing activities |
|
|
683 |
|
|
|
(75 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash |
|
|
(16 |
) |
|
|
(3 |
) |
|
|
|
Increase
(decrease) in cash and cash equivalents |
|
|
783 |
|
|
|
(30 |
) |
|
|
|
Cash and
cash equivalents, beginning of period |
|
|
264 |
|
|
|
327 |
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
1,047 |
|
|
$ |
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion Incorporated ("Ingredion") |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Financial Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I. Geographic
Information of Net Sales and Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions, expect for percentages) |
|
Three Months Ended June 30, |
|
|
|
Change |
|
Six Months Ended June 30, |
|
Change |
Change |
|
|
|
2020 |
|
|
|
2019 |
|
|
Change |
|
Excl. FX |
|
|
2020 |
|
|
|
2019 |
|
|
% |
Excl. FX |
Net
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
848 |
|
|
$ |
977 |
|
|
(13 |
%) |
|
(13 |
%) |
|
$ |
1,811 |
|
|
$ |
1,928 |
|
|
(6 |
%) |
(6 |
%) |
South America |
|
|
182 |
|
|
|
226 |
|
|
(19 |
%) |
|
(1 |
%) |
|
|
419 |
|
|
|
454 |
|
|
(8 |
%) |
7 |
% |
Asia-Pacific |
|
|
187 |
|
|
|
203 |
|
|
(8 |
%) |
|
(5 |
%) |
|
|
376 |
|
|
|
406 |
|
|
(7 |
%) |
(4 |
%) |
EMEA |
|
|
132 |
|
|
|
144 |
|
|
(8 |
%) |
|
(2 |
%) |
|
|
286 |
|
|
|
298 |
|
|
(4 |
%) |
2 |
% |
Total Net
Sales |
|
$ |
1,349 |
|
|
$ |
1,550 |
|
|
(13 |
%) |
|
(9 |
%) |
|
$ |
2,892 |
|
|
$ |
3,086 |
|
|
(6 |
%) |
(3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
101 |
|
|
$ |
139 |
|
|
(27 |
%) |
|
(27 |
%) |
|
$ |
226 |
|
|
$ |
264 |
|
|
(14 |
%) |
(14 |
%) |
South America |
|
|
13 |
|
|
|
16 |
|
|
(19 |
%) |
|
6 |
% |
|
|
39 |
|
|
|
34 |
|
|
15 |
% |
35 |
% |
Asia-Pacific |
|
|
22 |
|
|
|
23 |
|
|
(4 |
%) |
|
0 |
% |
|
|
42 |
|
|
|
43 |
|
|
(2 |
%) |
0 |
% |
EMEA |
|
|
21 |
|
|
|
23 |
|
|
(9 |
%) |
|
0 |
% |
|
|
48 |
|
|
|
47 |
|
|
2 |
% |
9 |
% |
Corporate |
|
|
(30 |
) |
|
|
(23 |
) |
|
(30 |
%) |
|
(30 |
%) |
|
|
(61 |
) |
|
|
(44 |
) |
|
(39 |
%) |
39 |
% |
Sub-total |
|
|
127 |
|
|
|
178 |
|
|
(29 |
%) |
|
(25 |
%) |
|
|
294 |
|
|
|
344 |
|
|
(15 |
%) |
(11 |
%) |
Restructuring/impairment charges |
|
|
(11 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
(25 |
) |
|
|
(13 |
) |
|
|
|
Acquisition/integration costs |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
(2 |
) |
|
|
|
Total Operating Income |
|
$ |
113 |
|
|
$ |
168 |
|
|
(33 |
%) |
|
(29 |
%) |
|
$ |
266 |
|
|
$ |
329 |
|
|
(19 |
%) |
(15 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
II. Non-GAAP Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, restructuring and
impairment cost, Mexico discrete tax provision, 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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
Reconciliation of GAAP Net Income attributable to Ingredion
and Diluted Earnings Per Share ("EPS") to |
|
Non-GAAP
Adjusted Net Income attributable to Ingredion and Adjusted Diluted
EPS |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Three Months
Ended |
|
Six Months
Ended |
|
Six Months
Ended |
|
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
|
(in millions) |
Diluted EPS |
|
(in millions) |
Diluted EPS |
|
(in millions) |
EPS |
|
(in millions) |
EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Ingredion |
$ |
66 |
$ |
0.98 |
|
$ |
105 |
$ |
1.56 |
|
$ |
141 |
$ |
2.08 |
|
$ |
205 |
|
$ |
3.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition/integration costs, net of income tax benefit of $1
million for the three and six months ended June 30, 2020, and $1
million for the three and six months ended June 30, 2019 (i) |
|
2 |
|
0.03 |
|
|
- |
|
- |
|
|
2 |
|
0.03 |
|
|
1 |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring/impairment charges, net of income tax benefit of $3
million and $6 million for the three and six months ended June 30,
2020, respectively, and $2 million and $3 million for the three and
six months ended June 30, 2019, respectively (ii) |
|
8 |
|
0.12 |
|
|
7 |
|
0.10 |
|
|
19 |
|
0.28 |
|
|
10 |
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete tax
item - Mexico (iii) |
|
- |
|
- |
|
|
- |
|
- |
|
|
22 |
|
0.32 |
|
|
(1 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted net income attributable to Ingredion |
$ |
76 |
$ |
1.12 |
|
$ |
112 |
$ |
1.66 |
|
$ |
184 |
$ |
2.72 |
|
$ |
215 |
|
$ |
3.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, EPS and
tax rates may not foot or recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) The 2020 period
primarily includes costs related to the acquisition and integration
of the business acquired from PureCircle Limited. The 2019 period
primarily includes costs related to the acquisition and integration
of the business acquired from Western Polymer, LLC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) During the second
quarter of 2020, the Company recorded $11 million of pre-tax
restructuring/impairment charges, consisting of $6 million of
restructuring related expenses primarily in APAC and North America
as part of its Cost Smart cost of sales program and $5 million of
employee-related and other costs, including professional services,
associated with its Cost Smart SG&A program. During the six
months ended June 30, 2020, the Company recorded $25 million of
pre-tax restructuring/impairment charges, consisting of $15 million
of restructuring related expenses primarily in APAC and North
America as part of its Cost Smart cost of sales program and $10
million of employee-related and other costs, including professional
services, associated with its Cost Smart SG&A program. During
the three and six months ended June 30, 2019, the Company recorded
$9 million and $13 million of pre-tax restructuring charges,
respectively. During the second quarter of 2019, the Company
recorded $6 million of other costs, including professional
services, and employee-related severance in the North America and
South America segments as part of its Cost Smart SG&A program
and finance transformation initiative and $3 million of other
costs, including professional services, related to its Cost Smart
cost of sales program. During the six months ended June 30, 2019,
the $13 million of restructuring charges consisted of $9 million of
costs associated with its Cost Smart SG&A program and Finance
Transformation initiative and $4 million of costs associated with
its Cost Smart cost of sales program. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iii) The discrete tax
item represents the impact of the Company’s use of the U.S. dollar
as the functional currency for its subsidiaries in Mexico. Mexico’s
effective tax rate is strongly influenced by the remeasurement of
the Mexican peso financial statements into U.S. dollars. A $22
million discrete tax provision was recorded for the six months
ended June 30, 2020 as a result of the movement of the Mexican peso
against the U.S. dollar during the period, compared to a $1 million
discrete tax benefit recorded for the six months ended June 30,
2019. |
|
|
|
|
|
II. Non-GAAP Information (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
Reconciliation of GAAP Operating Income to Non-GAAP
Adjusted Operating Income |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
|
|
|
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
|
|
(in
millions, pre-tax) |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
$ |
113 |
$ |
168 |
|
$ |
266 |
$ |
329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition/integration costs (i) |
|
3 |
|
1 |
|
|
3 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring/impairment charges (ii) |
|
11 |
|
9 |
|
|
25 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted operating income |
$ |
127 |
$ |
178 |
|
$ |
294 |
$ |
344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
|
|
Reconciliation of GAAP Effective Income Tax Rate to
Non-GAAP Adjusted Effective Income Tax Rate |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
|
Six Months Ended June 30, 2020 |
|
|
|
|
Income before |
|
Provision for |
|
Effective
Income |
|
Income before |
|
Provision for |
|
Effective
Income |
|
(in millions) |
|
Income Taxes (a) |
Income Taxes (b) |
Tax Rate (b / a) |
|
Income Taxes (a) |
Income Taxes (b) |
Tax Rate (b / a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
$ |
94 |
|
$ |
27 |
|
28.7 |
% |
|
$ |
230 |
|
$ |
85 |
|
|
37.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition/integration costs (i) |
|
|
3 |
|
|
1 |
|
|
|
|
3 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring/impairment charges (ii) |
|
|
11 |
|
|
3 |
|
|
|
|
25 |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete tax
item - Mexico (iii) |
|
|
- |
|
|
- |
|
|
|
|
- |
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Non-GAAP |
|
$ |
108 |
|
$ |
31 |
|
28.7 |
% |
|
$ |
258 |
|
$ |
70 |
|
|
27.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 |
|
Six Months Ended June 30, 2019 |
|
|
|
|
Income before |
|
Provision for |
|
Effective
Income |
|
Income before |
|
Provision for |
|
Effective
Income |
|
(in millions) |
|
Income Taxes (a) |
Income Taxes (b) |
Tax Rate (b / a) |
|
Income Taxes (a) |
Income Taxes (b) |
Tax Rate (b / a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported |
|
$ |
152 |
|
$ |
45 |
|
29.6 |
% |
|
$ |
291 |
|
$ |
82 |
|
|
28.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition/integration costs (i) |
|
|
1 |
|
|
1 |
|
|
|
|
2 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring/impairment charges (ii) |
|
|
9 |
|
|
2 |
|
|
|
|
13 |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete tax
item - Mexico (iii) |
|
|
- |
|
|
- |
|
|
|
|
- |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Non-GAAP |
|
$ |
162 |
|
$ |
48 |
|
29.6 |
% |
|
$ |
306 |
|
$ |
87 |
|
|
28.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For notes (i) through
(iii) see notes (i) through (iii) 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) |
|
|
|
|
|
|
|
|
|
|
|
Ingredion
Incorporated ("Ingredion") |
Reconciliation of Reported U.S. GAAP Effective Tax Rate
("GAAP ETR") |
to
Anticipated Adjusted Effective Tax Rate ("Adjusted
ETR") |
(Unaudited) |
|
|
|
|
|
|
Anticipated
Effective Tax Rate Range |
|
|
for Full
Year 2020 |
|
|
Low End |
|
High End |
|
GAAP ETR |
|
29.0 |
% |
|
32.7 |
% |
|
|
|
|
Add: |
|
|
|
|
|
|
|
Acquisition/integration costs (i) |
|
0.1 |
% |
|
0.1 |
% |
|
|
|
|
Restructuring/impairment charges (ii) |
|
1.1 |
% |
|
1.1 |
% |
|
|
|
|
Discrete tax
item - Mexico (iii) |
|
-3.0 |
% |
|
-5.6 |
% |
|
|
|
|
Other tax
matters (iv) |
|
0.5 |
% |
|
0.5 |
% |
|
|
|
|
Impact of
adjustment on Effective Tax Rate (v) |
|
-1.7 |
% |
|
-1.8 |
% |
|
|
|
|
Adjusted ETR |
|
26.0 |
% |
|
27.0 |
% |
|
|
|
|
|
|
|
|
Above is a reconciliation of our anticipated full year 2020 GAAP
ETR to our anticipated full year 2020 adjusted ETR, excluding the
impact of the July 1, 2020 acquisition of PureCircle Limited. 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 ETR
guidance. For these reasons, we are more confident in our ability
to predict adjusted ETR than we are in our ability to predict GAAP
ETR. |
|
|
|
|
(i) Reflects costs related to the acquisition and integration of
business acquired from PureCircle Limited. |
|
|
|
|
(ii) Reflects current estimates for 2020 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. |
|
|
|
|
(iii) Estimated impact of the change in the value of the Mexican
peso against the U.S. dollar. Because the Company uses the U.S.
dollar as the functional currency for its subsidiaries in Mexico,
its effective tax rate is strongly influenced by the remeasurement
of the Mexican peso financial statements into U.S. dollars. The
change in the Mexican peso produced substantial taxable translation
gains or losses on net-U.S.-dollar-monetary assets held in Mexico
for which there are no corresponding gain in pre-tax income. |
|
|
|
|
(iv) This relates to other tax settlements and the reversal of
interest and penalties for tax reserves. |
|
|
|
|
(v) Indirect impact of tax rate after items (i) through (iv). |
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