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II

Ingredion Inc (INGR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a strong operating performance: adjusted EPS $2.97 vs $2.08 prior year, while GAAP EPS declined to $3.00 from $3.23 due to lapping a 1Q24 gain on asset sale; net sales fell 4% to $1.81B on lower price/mix and FX, offset by T&HS volume growth .
  • Guidance raised: 2025 GAAP EPS to $10.93–$11.63 and adjusted EPS to $10.90–$11.60; financing costs cut to $40–$60M; share count trimmed to 65–66M; cash from operations lifted to $825–$950M .
  • Versus Street: EPS beat (actual $2.97 vs $2.41*), revenue slight miss ($1.81B vs $1.85B*); the beat was driven by margin expansion and “other income,” with volumes mixed across segments .
  • Near-term catalysts: tariff uncertainty (minimal impact expected), continued T&HS volume and margin momentum, LATAM strength (Argentina JV stabilization), and buybacks ($100M FY target) .

What Went Well and What Went Wrong

  • What Went Well

    • Texture & Healthful Solutions (T&HS) operating income up 34% on strong volumes and lower input costs; “clean label solutions” highlighted as a driver .
    • LATAM operating income up 26%, aided by stable Argentine peso and favorable mix; Mexico recorded “another record quarter” .
    • Gross margin expanded to 25.7%, up ~350 bps YoY; management emphasized contracting success and structural margin improvement across U.S./Canada F&II .

  • What Went Wrong

    • Net sales down 4% YoY on lower price/mix and FX; U.S./Canada and LATAM net sales both declined (−4% and −7%) on pass-through of lower corn costs and softer volumes in select categories .
    • GAAP EPS down 7% YoY due to lapping prior-year South Korea sale gain; reported effective tax rate rose to 25.5% from 21.0% .
    • Q2 2025 outlook conservative: net sales flat to up low single digits, operating income flat to down low single digits, given tough comp and supply chain costs tied to tariff uncertainty .

Financial Results

Consolidated P&L vs prior quarters and Street

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.87 $1.80 $1.81
GAAP Diluted EPS ($)$2.83 $1.43 $3.00
Adjusted Diluted EPS ($)$3.05 $2.63 $2.97
Gross Margin (%)25.7% (479/1,870) 24.9% (449/1,800) 25.7%
Operating Income ($USD Millions, GAAP)$268 $162 $276

Notes: Gross margin for Q3 and Q4 computed from reported gross profit/net sales in the cited filings.

Q1 2025 Segment detail

SegmentNet Sales ($MM)YoY ChangeOperating Income ($MM)YoY ChangeOp Margin (%)
Texture & Healthful Solutions602 +1% 99 +34% 16.4% (99/602)
Food & Industrial Ingredients – LATAM573 −7% 127 +26% 22.2% (127/573)
Food & Industrial Ingredients – U.S./Canada520 −4% 92 +6% 17.7% (92/520)
All Other118 −8% 0 +$4MM improvement 0.0%
Total1,813 −4% 276 +30% 15.2% (276/1,813)

KPIs and cash metrics (Q1 2025)

KPIQ1 2025
Cash from Operations ($MM)77
Net Capital Expenditures YTD ($MM)92
Total Debt ($MM)1,784
Cash & Short-term Investments ($MM)846
Reported / Adjusted Effective Tax Rate (%)25.5 / 25.4
Net Financing Costs ($MM)9
Dividends Paid ($MM)52
Share Repurchases ($MM)55

Street consensus vs actual (Q1 2025)

MetricConsensusActual
EPS ($)2.41*2.97
Revenue ($USD Billions)$1.85B*$1.81B
EPS # of Estimates5*—
Revenue # of Estimates4*—
  • Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY 2025$10.75–$11.55 $10.93–$11.63 Raised
Adjusted EPSFY 2025$10.75–$11.55 $10.90–$11.60 Raised
Cash from OperationsFY 2025$800–$950MM $825–$950MM Raised (low end)
Financing CostsFY 2025$50–$70MM $40–$60MM Lowered
Diluted SharesFY 202565.5–66.5M 65–66M Lowered
Capital ExpendituresFY 2025$400–$450MM $400–$450MM Maintained
Effective Tax Rate (GAAP/Adj.)FY 202526.0%–27.5% 26.0%–27.5% Maintained
Segment OI (T&HS)FY 2025Mid- to high-single-digit up Mid- to high-single-digit up Maintained
Segment OI (LATAM)FY 2025Up mid-single digits Up mid-single digits Maintained
Segment OI (US/CAN)FY 2025Flat to down low single digits Flat to down low single digits Maintained
Segment OI (All Other)FY 2025~Breakeven ~Breakeven Maintained
DividendQ1/Q2 2025$0.80 declared Q4’24 for Q1’25 $0.80 declared Mar 12, payable Apr 22 Maintained
Q2 OutlookQ2 2025—Net sales flat to up low-single digits; OI flat to down low-single digits New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Tariffs/macroGuidance excluded extraordinary changes (tariffs/regulatory); monitoring FX and corn; structural hedging to reduce volatility Tariff impacts expected minimal; set up “tariff response hub”; some supply chain re-routing cost headwinds; Q2–Q4 caution Elevated uncertainty, well-managed
Clean label/T&HSDouble-digit T&HS volumes; price/mix pressure from lower corn costs; sequential margin recovery through 2H’24 7% T&HS volume growth; 34% OI growth; clean label cited as driver Strengthening volumes, margin mix improving
LATAM/Argentina JV3Q/4Q benefited from lower input costs and pricing; biomass transition in Brazil completed; Mexico strong JV benefited from stable peso; segment OI +26%; mix upgrades across region Momentum sustained
US/CAN multi-year contractsMargin recovery from contract renewals; Q4 OI +74% YoY; holding 700–800 bps margin expansion into 2025 Exceeded expectations via mix and cost management; OI +6% Margin resilience holding
Hedging & co-productsExtensive hedging reduces VaR; spot pricing opportunities >80–85% hedged; potential upside in 2H’25; co-product hedges reduce earnings volatility Continued discipline
R&D/digital ITCenter-led investments planned; CapEx step-up for Indianapolis, efficiency and sustainability Maintaining corporate cost guide; reinvesting in network and technology Reinvestment consistent
All Other (Sugar Reduction/Protein)Profit drag in 2024; Vanscoy closure planned Sugar Reduction and Protein Fortification with double-digit growth; All Other near breakeven Improving trajectory

Management Commentary

  • “Our strong results demonstrate the company's continued ability to deliver sales volume and operating income growth… vast majority of our products are made locally and sold locally.” — CEO Jim Zallie .
  • “T&HS delivered a robust 34% increase in operating income… clean label solutions.” — CEO Jim Zallie .
  • “LATAM… unexpected stability of the Argentine peso, favorable market mix and lower costs… Mexico achieving another record quarter.” — CEO Jim Zallie .
  • “Gross profit dollars grew 12% with corresponding margins up 350 basis points to 25.7%… steady expansion in our gross margins over the last 3 years.” — CFO Jim Gray .
  • “The incremental outperformance of our first quarter results, combined with lower financing costs and share count, improves our new adjusted EPS range to be $10.90 to $11.60.” — CFO Jim Gray .

Q&A Highlights

  • Guidance cadence and caution: No pull-forward; cautious on supply chain costs from tariff uncertainty (e.g., Liberation Day tariffs post suspension) across Q2–Q4 .
  • Volume outlook: T&HS volumes mid-single-digit growth through 2025; Street witnessed double-digit growth in Sugar Reduction and Protein Fortification within All Other .
  • Mix resilience: Private label vs brands does not materially alter margin structure; clean label solutions carry higher ASPs and margins .
  • Capital allocation: Share repurchase target of $100M; organic growth projects with 10–mid-teens IRR; Indianapolis cogeneration and modernization through 2026 .
  • Hedging: >80–85% of corn needs hedged; potential 2H upside on lower raw costs; co-product hedges reduce volatility .
  • Pakistan affiliate: Similar in size to South Korea business; any potential sale not in guidance .

Estimates Context

  • EPS: Actual $2.97 vs Street $2.41* — bold beat (~+23%). Drivers: 60¢ margin expansion, 17¢ other income, 28¢ non-operational tailwinds (lower financing costs, tax rate), partially offset by −11¢ volume .
  • Revenue: Actual $1.81B vs Street $1.85B* — slight miss (~−1.9%), driven by lower price/mix (pass-through of lower corn), FX and South Korea sale volume impact, partly offset by volume growth .
  • Coverage: 5 EPS estimates, 4 revenue estimates*.
  • Values retrieved from S&P Global.

Key Takeaways for Investors

  • EPS quality strong and repeatable: margin expansion and disciplined hedging underpin multi-quarter resilience; watch T&HS volume mix to sustain Adjusted EPS trajectory .
  • Guidance raised despite macro uncertainty: lowered financing costs and share count support higher EPS; cash generation outlook remains robust ($825–$950M) .
  • Segment rotation favors T&HS and LATAM: clean label momentum and Argentina JV stabilization offset softer brewing/paper in select geographies .
  • Near-term watch items: tariff policy negotiations (USMCA shelter for cross-border flows), Q2 supply chain costs; management expects minimal full-year impact .
  • Capital deployment: $400–$450M CapEx focused on efficiency and growth (Indianapolis), plus $100M buybacks; dividend maintained at $0.80 .
  • Estimate revisions: Expect EPS estimates to move higher on beat and guidance raise; revenue estimates likely little changed given price/mix headwinds are structural.
  • Trading lens: Bias to accumulate on dips given raised EPS guide and margin momentum; monitor any tariff headlines and FX volatility for potential transient multiple compression.