Company Overview - Ingredion (INGR) is rated with a Buy rating due to its successful strategy in manufacturing products with higher added value and functionalities [1] - The company’s products command higher selling prices and profit margins, indicating a strong market position [1] Analyst Background - Daniel Mellado, an economist with a Master's Degree in Statistics, has experience in analyzing agricultural commodities and managing trading and data analysis teams [1] - His expertise includes developing strategies for algorithmic trading and providing analysis and valuation for sectors such as commodities, banking, technology, and pharmaceuticals [1] Investment Strategy - The approach to generating buy and sell recommendations is based on financial statements, regulations, and macroeconomic variables [1]

Financial Performance - Net sales for the first quarter of 2025 decreased by 4% to $1,813 million compared to $1,882 million in the same quarter of 2024, primarily due to lower raw material costs and foreign exchange impacts [77]. - Operating income increased by 30% in the first quarter of 2025, driven by volume growth and lower raw material costs [73]. - Gross profit margin improved to 26% in the first quarter of 2025 from 22% in the first quarter of 2024, reflecting an 8% decrease in cost of sales to $1,347 million [78]. - Net income attributable to Ingredion decreased to $197 million in the first quarter of 2025 from $216 million in the same quarter of 2024, largely due to a prior year gain from the sale of the South Korea business [84]. Segment Performance - Texture & Healthful Solutions segment net sales increased to $602 million in the first quarter of 2025, up from $597 million in the same quarter of 2024, with operating income rising 34% to $99 million [85][86]. - Food & Industrial Ingredients - LATAM segment net sales decreased by 7% to $573 million, while operating income increased by 26% to $127 million [87][88]. - Food & Industrial Ingredients - U.S./Canada segment net sales decreased by 4% to $520 million, but operating income increased by 6% to $92 million [89][90]. Liquidity and Cash Flow - Total available liquidity as of March 31, 2025, was $3.8 billion, with $1.5 billion in domestic liquidity and $2.3 billion in international liquidity [93][94]. - Cash provided by operating activities was $77 million for the first quarter of 2025, down from $209 million in the same quarter of 2024, primarily due to a $223 million change in working capital [97]. - Capital investment commitments for the remainder of 2025 are anticipated to be between $400 million and $450 million [98]. Risks and Challenges - The company faces various risks including changes in consumer preferences and geopolitical conflicts that may impact raw material availability and pricing [108]. - There is increased competitive pressure in the corn-refining industry, affecting market prices for primary products and co-products, particularly corn oil [109]. - Operating difficulties at manufacturing facilities and liabilities related to product safety and quality are ongoing concerns [109]. - The company is exposed to risks from climate change and regulatory measures aimed at addressing it [109]. - The company must manage costs effectively to achieve budgets and realize expected synergies from maintenance and investment projects [109]. - The ability to maintain satisfactory labor relations and attract a skilled workforce is critical for the company's operations [109]. - The company is subject to legal and regulatory proceedings that may impact its business operations [109]. - Changes in government policy and tax rates could affect the company's financial performance and growth prospects [109]. Market Risk Disclosures - There have been no material changes in the company's market risk disclosures regarding interest rates, raw material costs, and foreign currencies during Q1 2025 [111].

Core Insights - Ingredion Incorporated reported strong performance in Q1 2025, driven by sales growth across global regions, particularly in clean label solutions, with a 34% increase in operating income for the texture and health solutions segment [1][4][10] - The company has raised its full-year earnings expectations due to the excellent performance in the first quarter, emphasizing its commitment to becoming the preferred choice for customers [1][21] - Despite a 4% decline in net sales compared to Q1 2024, the company achieved a 30% increase in reported operating income and a 26% increase in adjusted operating income [4][10][36] Financial Performance - Reported diluted EPS for Q1 2025 was $3.00, down from $3.23 in Q1 2024, while adjusted diluted EPS increased to $2.97 from $2.08 [2][4] - Total net sales for Q1 2025 were $1.813 billion, a decrease of 4% from $1.882 billion in Q1 2024, primarily due to changes in pricing mix and foreign exchange impacts [6][32] - Operating income for Q1 2025 was $276 million, reflecting a 30% increase from $213 million in Q1 2024, with adjusted operating income also showing a significant increase [10][37] Segment Performance - The texture and health solutions segment reported operating income of $99 million, a 34% increase year-over-year, driven by lower raw material costs and increased sales volume [13][37] - The Latin America food and industrial ingredients segment achieved operating income of $127 million, a 26% increase, benefiting from favorable market conditions and cost reductions [15][37] - The U.S./Canada food and industrial ingredients segment saw a slight increase in operating income to $92 million, up 6% year-over-year, attributed to improved product mix and cost management [17][37] Outlook - The company expects full-year 2025 reported EPS to range between $10.93 and $11.63, with adjusted EPS projected between $10.90 and $11.60, reflecting anticipated sales growth despite potential pricing and foreign exchange challenges [21][23] - For 2025, net sales are expected to achieve low single-digit growth, with operating income projected to grow close to 20% due to last year's impairment charge base effect [21][22] - The company anticipates a moderate increase in costs for the year, with capital expenditures expected to be between $400 million and $450 million [22][23]

Financial Data and Key Metrics Changes - In Q1 2025, net sales were $1.8 billion, down 4% year-over-year, while gross profit dollars increased by 12%, with margins up 350 basis points to 25.7% [17][18] - Adjusted operating income rose by 26% year-over-year to $273 million, driven by lower raw material costs and greater sales volume [17][18] - Adjusted EPS increased by $0.89 per share, primarily due to an operating margin increase of $0.60 and other income of $0.17 [22] Business Line Data and Key Metrics Changes - The Texture and Healthful Solutions segment saw net sales up 1% and operating income up 34%, with a margin of 16.4%, reflecting lower input costs and greater volumes [20] - Food and Industrial Ingredients LATAM experienced a 7% decline in net sales, but operating income improved by 26% to $127 million due to lower raw material costs [20] - In the U.S./Canada segment, net sales were down 4%, but operating income increased by 6% to $92 million, driven by lower raw material costs [21] Market Data and Key Metrics Changes - Organic growth was driven by a 3% increase in net sales volume, with Texture and Healthful Solutions growing by 7% across all geographies [8] - LATAM's net sales volumes decreased by 2%, primarily due to soft volumes in brewing, while the U.S./Canada segment saw strong volumes in brewing offset by weaker specialty starch sales [9][10] Company Strategy and Development Direction - The company is focusing on three strategic pillars: business growth, cost competitiveness, and a people-centric culture, with significant investments in expanding specialty industrial starch capacity [12][13][14] - The commitment to sustainability is highlighted by recognitions from Fortune and Ethisphere, reflecting the company's ethical practices and environmental efforts [14][16] - The company is actively monitoring the evolving trade environment and has set up a tariff response hub to navigate complexities [28] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about 2025, citing customer collaborations driving volume growth and a diversified ingredient portfolio [29][30] - Key economic indicators such as low unemployment and moderating food inflation are viewed as positive signs for future performance [30] - The company anticipates minimal impact from current tariffs, with a strong local production and sales model [27][30] Other Important Information - The company repurchased $55 million of outstanding common shares and paid out $52 million in dividends in the first quarter [23] - Full-year cash from operations is expected to be between $825 million and $950 million, reflecting updates to working capital investments [25] Q&A Session Summary Question: Can you provide insights on the updated guidance for Q2? - Management indicated that Q2 guidance is against a record year and expects solid performance in Texture and Healthful Solutions, while LATAM may see seasonal weakness [32][34] Question: What are the implications of recent corn planting data on costs? - Management noted that while some corn costs are unhedged, they have hedged 80-85% of their needs, which helps stabilize pricing [36][37] Question: How does the company view volumes amid consumer uncertainty? - Management remains optimistic about volume growth, particularly in Texture and Healthful Solutions, driven by affordable formulation trends [44][46] Question: What is the outlook for the LATAM segment? - The LATAM segment is expected to perform well, with positive operating income growth despite some volume declines in beverages [64][66] Question: How does the company plan to handle potential trade downs in consumer behavior? - Management stated that their product mix is resilient, with growth in private label products and clean label solutions, which are in demand regardless of economic conditions [58][60]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net sales of $1.8 billion, a decrease of 4% compared to the prior year, while gross profit dollars increased by 12%, leading to a gross margin of 25.7%, up 350 basis points [16][19][20] - Adjusted operating income rose by 26% year over year to $273 million, driven by lower raw material costs and increased sales volume [16][19] - Adjusted earnings per share (EPS) for the quarter increased by $0.89, primarily due to an operating margin increase and lower financing costs [22][26] Business Line Data and Key Metrics Changes - The Texture and Healthful Solutions segment saw net sales increase by 1% and operating income grow by 34%, with a margin of 16.4%, up 400 basis points from the previous year [19][20] - Food and Industrial Ingredients LATAM reported a 7% decrease in net sales, but operating income improved by 26% to $127 million, benefiting from lower raw material costs [19][20] - In the U.S./Canada segment, net sales decreased by 4%, while operating income increased by 6% to $92 million, driven by lower raw material costs [19][20] Market Data and Key Metrics Changes - The company achieved a 3% organic growth in net sales volume, with a 7% increase in the Texture and Healthful Solutions segment [7][19] - The LATAM segment experienced a 2% decline in net sales volumes, primarily due to soft demand in brewing, although there was recovery in confectionery and bakery markets [8][19] - The U.S./Canada segment's strong volumes in brewing were offset by weaker sales of specialty starches for papermaking and packaging [8][19] Company Strategy and Development Direction - The company is focused on three strategic pillars: business growth, cost competitiveness, and a people-centric performance culture [10][12][13] - A $50 million investment was announced for the Cedar Rapids facility to expand specialty industrial starch capacity and support innovation in sustainable food packaging [11] - The company is committed to reducing earnings volatility through expanded hedging practices and operational excellence [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the remainder of 2025, highlighting customer collaborations driving volume growth and the importance of monitoring economic indicators such as unemployment and food inflation [29][30] - The company does not anticipate significant financial impacts from current tariffs, as most products are produced and sold locally [27][30] - Management is actively monitoring the evolving trade environment and has set up a tariff response hub to navigate complexities [28][30] Other Important Information - The company received several recognitions, including being named one of Fortune's World's Most Admired Companies and one of Ethisphere's World's Most Ethical Companies [13][14] - Cash generated from operations was $77 million, with capital expenditures of $92 million planned for organic growth initiatives [22][23] Q&A Session Summary Question: Can you provide insights on the updated guidance for Q2 and segment performance? - Management indicated that Q2 guidance is against a strong prior year, with expectations for the U.S./Canada segment to remain strong despite seasonal weakness in LATAM [34][35] Question: How do you view the impact of recent prospective plantings on corn costs? - Management noted that while some corn costs are unhedged, they have hedged 80-85% of their needs, which helps stabilize pricing [38] Question: What are the expectations for volumes in the context of consumer uncertainty? - Management remains optimistic about mid-single-digit sales volume growth, driven by trends towards affordable formulations [46][49] Question: How does the sales mix look in light of potential consumer trade downs? - Management stated that the ingredients supplied to private label customers are not significantly impacted by trade downs, and clean label solutions are performing well [56][60] Question: Can you elaborate on the performance in LATAM and any portfolio shifts? - Management highlighted improved performance in LATAM due to a stable Argentine peso and strategic shifts in product mix to higher-margin uses [65][66] Question: What is the size of the Pakistan affiliate business and potential sale implications? - Management indicated that the Pakistan business is similar in size to the South Korea business, but details on potential sale proceeds are not yet available [68][70]

Financial Performance - Q1 2025 net sales were $1.813 billion, a decrease of 4% compared to $1.882 billion in Q1 2024[15, 29] - Q1 2025 adjusted operating income increased by 26% to $273 million, compared to $216 million in Q1 2024[17, 29] - Q1 2025 adjusted diluted EPS was $2.97, an increase of $0.89 per share compared to $2.08 in Q1 2024[29] - The gross profit margin for Q1 2025 was 25.7%, a 350 bps increase from 22.2% in Q1 2024[29] Segment Performance - Texture & Healthful Solutions net sales increased by 1% to $602 million in Q1 2025, with a 7% volume increase[19, 34] - Food & Industrial Ingredients—LATAM net sales decreased by 7% to $573 million in Q1 2025[34] - Food & Industrial Ingredients—US/CAN net sales decreased by 4% to $520 million in Q1 2025[36] Outlook - The company expects full-year 2025 net sales to be up low single-digits[43] - The company projects full-year 2025 adjusted EPS to be in the range of $10.90 to $11.60[43] - The company anticipates cash from operations to be between $825 million and $950 million for full-year 2025[43]

Core Viewpoint - Ingredion reported quarterly earnings of $2.97 per share, exceeding the Zacks Consensus Estimate of $2.44 per share, and up from $2.08 per share a year ago, indicating strong performance despite revenue challenges [1][2]. Financial Performance - The company achieved an earnings surprise of 21.72% for the quarter, having surpassed consensus EPS estimates in all of the last four quarters [2]. - Revenues for the quarter were $1.81 billion, which fell short of the Zacks Consensus Estimate by 1.63% and decreased from $1.88 billion year-over-year [3]. Stock Performance and Outlook - Ingredion shares have declined approximately 2.9% year-to-date, compared to a 3.9% decline in the S&P 500 [4]. - The company's earnings outlook is uncertain, with current consensus EPS estimates at $2.82 for the next quarter and $11.07 for the current fiscal year, alongside projected revenues of $1.9 billion and $7.51 billion respectively [8]. Industry Context - The Food - Miscellaneous industry, to which Ingredion belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable industry outlook [9]. - The performance of Ingredion's stock may be influenced by the overall industry outlook, as top-ranked industries tend to outperform lower-ranked ones significantly [9].

Financial Performance - First quarter 2025 reported and adjusted operating income increased by 30% and 26% year-over-year, respectively[3]. - First quarter 2025 reported EPS was $3.00, down from $3.23 in Q1 2024, while adjusted EPS rose to $2.97 from $2.08[4]. - Full-year 2025 reported EPS guidance improved to a range of $10.93 to $11.63, with adjusted EPS expected between $10.90 and $11.60[17]. - Net income attributable to Ingredion decreased by 9% to $197 million in Q1 2025, down from $216 million in Q1 2024[33]. - Earnings per share (EPS) for Q1 2025 were $3.05 (basic) and $3.00 (diluted), representing a decline of 7% from $3.29 and $3.23 in Q1 2024[33]. - Non-GAAP adjusted net income for Q1 2025 was $195 million, resulting in an adjusted diluted EPS of $2.97, while in Q1 2024, it was $139 million with an adjusted diluted EPS of $2.08[48]. - The effective income tax rate for Q1 2025 was reported at 25.5%, while the adjusted non-GAAP effective income tax rate was 25.4%[53]. - For the full-year 2025, Ingredion expects GAAP EPS to range from $10.93 to $11.63, with adjusted EPS guidance between $10.90 and $11.60[55]. - The expected effective income tax rate for the full-year 2025 is projected to be between 26.0% and 27.5%[57]. Sales and Revenue - First quarter net sales decreased by 4% to $1,813 million, impacted by lower raw material costs and the sale of the South Korea business[6][8]. - Net sales for Q1 2025 were $1,813 million, a decrease of 4% compared to $1,882 million in Q1 2024[33]. - The Texture & Healthful Solutions segment reported a 1% increase in net sales to $602 million, while the Food & Industrial Ingredients - LATAM segment saw a 7% decline to $573 million[39]. Operating Income - Operating income for the Texture & Healthful Solutions segment increased by 34% to $99 million, driven by lower input costs and increased volumes[10]. - Food & Industrial Ingredients - LATAM segment reported operating income of $127 million, a 26% increase, benefiting from the stability of the Argentine peso[12]. - Food & Industrial Ingredients - U.S./Canada segment operating income rose to $92 million, a 6% increase, aided by lower raw material costs[14]. - Total operating income increased by 30% to $276 million in Q1 2025, driven by improved performance across several segments[39]. - Operating income rose by 30% to $276 million in Q1 2025, compared to $213 million in Q1 2024[33]. - Operating income for Q1 2025 was $276 million, up from $213 million in Q1 2024, with non-GAAP adjusted operating income at $273 million compared to $216 million in the prior year[50]. Cash Flow and Debt - Total debt as of March 31, 2025, was $1,784 million, with cash and short-term investments totaling $846 million[5]. - Cash from operations for full-year 2025 is projected to be in the range of $825 million to $950 million[21]. - Operating cash flow for Q1 2025 was $77 million, a significant drop from $209 million in Q1 2024[37]. - Cash and cash equivalents decreased to $837 million at the end of Q1 2025 from $997 million at the end of 2024[35]. Capital Expenditures - Full-year 2025 capital expenditures are expected to be approximately $400 to $450 million[21]. Impairments and Restructuring - Restructuring and resegmentation costs for Q1 2025 were $1 million, compared to $3 million in Q1 2024[51]. - Ingredion recorded $6 million in impairment charges in Q1 2025, primarily related to certain equity investments[51]. - The company reported a pre-tax benefit of $10 million in Q1 2025, mainly from insurance recoveries and favorable judgments related to indirect taxes in Brazil[51]. - Ingredion experienced a net gain of $82 million on the sale of a business in South Korea during Q1 2024[51].

Core Insights - Ingredion Incorporated reported strong first-quarter results for 2025, demonstrating growth in sales volume and operating income despite tariff uncertainties [2][19] - The company has improved its full-year earnings forecast based on the successful first-quarter performance, focusing on sustainable growth and disciplined cost management [2][20] Financial Performance - First-quarter 2025 reported diluted EPS was $3.00, down from $3.23 in Q1 2024, while adjusted diluted EPS increased to $2.97 from $2.08 [3][4] - Reported operating income for Q1 2025 was $276 million, a 30% increase compared to $213 million in Q1 2024, with adjusted operating income rising 26% to $273 million [10][41] - Net sales for Q1 2025 decreased by 4% to $1.813 billion, primarily due to lower raw material costs and the impact of the sale of the South Korea business [9][34] Segment Performance - The Texture & Healthful Solutions segment saw a 34% increase in operating income, driven by strong sales volume, particularly in clean label solutions [2][13] - Food & Industrial Ingredients—LATAM reported operating income of $127 million, a 26% increase, benefiting from the stability of the Argentine peso and lower raw material costs [15][21] - Food & Industrial Ingredients—U.S./Canada segment operating income increased by 6% to $92 million, supported by efficient cost management and favorable product mix [16][21] Guidance and Outlook - The company expects full-year 2025 reported EPS to range from $10.93 to $11.63 and adjusted EPS from $10.90 to $11.60, reflecting anticipated growth in net sales and operating income [19][20] - Full-year net sales are projected to increase by low single-digits, with operating income expected to rise in the high teens [20][22] - Segment-specific expectations include mid-single-digit growth for Texture & Healthful Solutions and flat to low single-digit declines for Food & Industrial Ingredients—U.S./Canada [21][22] Capital Management - In Q1 2025, the company paid $52 million in dividends and repurchased $55 million in common stock [18] - Total debt at the end of Q1 2025 was $1.784 billion, with cash and short-term investments totaling $846 million [12][36]

Core Insights - Ingredion Incorporated will release its first quarter 2025 financial results on May 6, 2025, before market opens [1] - A conference call will be hosted by the CEO and CFO on the same day to discuss the financial performance [2] Company Overview - Ingredion is a leading global ingredient solutions provider, serving customers in over 120 countries [3] - The company reported annual net sales of approximately $7.4 billion in 2024, focusing on turning plant-based materials into value-added ingredient solutions [3] - Ingredion operates innovation centers globally and employs more than 11,000 people, emphasizing collaboration with customers [3]