Ingredion(INGR) - 2025 Q2 - Quarterly Report

Part I Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Ingredion Incorporated for the three and six months ended June 30, 2025, and 2024, including income, comprehensive income, balance sheets, equity changes, and cash flows, with accompanying notes Condensed Consolidated Statements of Income Q2 2025 net sales decreased to $1,833 million, while net income attributable to Ingredion increased to $196 million, with year-to-date net income growing to $393 million from higher operating income Consolidated Income Statement Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,833 | $1,878 | $3,646 | $3,760 | | Gross Profit | $477 | $446 | $943 | $863 | | Operating Income | $271 | $240 | $547 | $453 | | Net Income Attributable to Ingredion | $196 | $148 | $393 | $364 | | Diluted EPS | $2.99 | $2.22 | $5.99 | $5.46 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $7,781 million, primarily due to higher accounts receivable, while total liabilities slightly decreased and stockholders' equity grew to $4,197 million Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,517 | $3,355 | | Total Assets | $7,781 | $7,444 | | Total Current Liabilities | $1,264 | $1,281 | | Total Liabilities | $3,505 | $3,554 | | Total Ingredion Stockholders' Equity | $4,197 | $3,804 | Condensed Consolidated Statements of Cash Flows Cash provided by operating activities for the six months ended June 30, 2025, decreased to $262 million due to working capital changes, with $215 million used for investing and $204 million for financing activities Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $262 | $521 | | Cash (used for) provided by investing activities | $(215) | $125 | | Cash used for financing activities | $(204) | $(526) | | (Decrease) increase in cash and cash equivalents | $(136) | $104 | Notes to the Condensed Consolidated Financial Statements The notes detail accounting policies, divestitures, investments, and segment performance, highlighting the South Korea business sale, a new joint venture with Agrana, and ongoing share repurchases - On February 1, 2024, the company completed the sale of its South Korea business for approximately $294 million, recognizing a pre-tax net gain of $82 million[25] - In June 2025, the company entered into a joint venture with Agrana Stärke GmbH, acquiring a 49% equity interest for $19 million to develop starch production in Romania[26] - Year-to-date 2025, the company repurchased 409,000 shares of common stock for $55 million. As of June 30, 2025, 2.9 million shares remained available for repurchase under the current program[47] Segment Net Sales to Unaffiliated Customers - YTD 2025 vs 2024 (in millions) | Segment | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | T&HS | $1,201 | $1,185 | | F&II - LATAM | $1,169 | $1,246 | | F&II - U.S./Canada | $1,043 | $1,096 | | All Other | $233 | $233 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and YTD 2025 financial results, noting increased net income driven by higher operating income as input costs declined faster than net sales, covering segment performance, liquidity, and cash flow activities - Year-to-date 2025 net income attributable to Ingredion increased to $393 million from $364 million in 2024, primarily due to a 21% increase in operating income, driven by corn and input costs declining faster than net sales[81] - The company maintains a strong liquidity position with $3.7 billion available as of June 30, 2025, comprising cash, short-term investments, and borrowing capacity[117] - Capital investment commitments for the full year 2025 are anticipated to be between $400 million and $425 million[123] Results of Operations - Second Quarter 2025 Q2 2025 net sales decreased 2% to $1,833 million, while gross profit margin improved to 26% as cost of sales fell 5%, leading to a 32% increase in net income attributable to Ingredion, reaching $196 million Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,833 | $1,878 | -2% | | Cost of Sales | $1,356 | $1,432 | -5% | | Operating Income | $271 | $240 | +13% | | Net Income Attributable to Ingredion | $196 | $148 | +32% | - The effective tax rate decreased to 23.6% in Q2 2025 from 34.8% in Q2 2024, primarily due to the changing value of the Mexican peso and the tax impact of a 2024 impairment charge[92] Segment Results - Second Quarter 2025 In Q2 2025, T&HS adjusted operating income increased 29%, F&II - LATAM decreased 2%, F&II - U.S./Canada fell 18%, and the All Other segment significantly reduced its operating loss Q2 2025 Adjusted Operating Income by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Texture & Healthful Solutions | $111 | $86 | +29% | | Food & Industrial Ingredients - LATAM | $127 | $130 | -2% | | Food & Industrial Ingredients - U.S./Canada | $86 | $105 | -18% | | All Other | $(1) | $(10) | +90% | Results of Operations - Year-to-Date 2025 For YTD 2025, net sales decreased 3% to $3,646 million, but a 7% drop in cost of sales improved gross profit margin to 26% and increasing operating income by 21% to $547 million, with net income attributable to Ingredion rising to $393 million - Excluding the impact of the South Korea business sale in 2024, net sales decreased 2% year-over-year[102] - Gross profit margin increased to 26% for YTD 2025 from 23% in YTD 2024, as raw material and input costs decreased faster than sales[103] - Financing costs decreased 28% to $21 million due to lower average debt balances[107] Liquidity and Cash As of June 30, 2025, Ingredion had $3.7 billion in liquidity and $1.8 billion in debt, with cash from operations decreasing to $262 million due to working capital changes and cash used for capital expenditures, financing, dividends, and share repurchases Liquidity Position as of June 30, 2025 (in billions) | Component | Amount | | :--- | :--- | | Total Available Liquidity | $3.7 | | Total Debt Outstanding | $1.8 | - Cash from operating activities decreased to $262 million YTD 2025 from $521 million YTD 2024, primarily due to a $250 million change in working capital from increased trade accounts receivables[122] - The quarterly dividend was increased to $0.80 per share in 2025 from $0.78 per share in 2024[125] Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's market risk exposures, including interest rates, raw material and energy costs, and foreign currencies, during the first six months of 2025 compared to the information provided in the 2024 Annual Report on Form 10-K - There have been no material changes in the information provided with respect to market risks during year-to-date 2025[137] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2025, the company's disclosure controls and procedures are effective[138] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[139] Part II Other Information Legal Proceedings The company reports no material developments in environmental proceedings related to its Bedford Park, Illinois facility and does not anticipate material adverse effects from other ordinary course claims - There have been no material developments in the environmental proceedings related to the Bedford Park, Illinois manufacturing facility as of the date of this report[140] Unregistered Sales of Equity Securities and Use of Proceeds No common stock shares were repurchased during Q2 2025, with 2.9 million shares remaining available under the existing repurchase program authorized through December 31, 2025 - No shares of common stock were repurchased during the second quarter of 2025[142] - As of June 30, 2025, 2.9 million shares were available for repurchase under the stock repurchase program authorized until December 31, 2025[142] Other Information On May 7, 2025, CEO James P. Zallie and SVP Larry Fernandes entered into Rule 10b5-1 plans for common stock sales, commencing August 6, 2025 - CEO James P. Zallie entered into a Rule 10b5-1 plan to sell up to 195,155 shares of common stock, commencing August 6, 2025[143] - SVP Larry Fernandes entered into a Rule 10b5-1 plan to sell up to 13,161 shares of common stock, commencing August 6, 2025[144] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and various XBRL data files - The exhibits filed with the report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, as well as XBRL data files[145]