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Ingredion Inc (INGR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient profitability despite a 2% revenue decline; adjusted operating income rose 1% YoY to $273M and adjusted EPS was flat YoY at $2.87, with reported EPS up 35% to $2.99 .
  • Texture & Healthful Solutions (T&HS) was the standout: net sales +2% and operating income +29% YoY on clean-label volume growth and procurement efficiencies; gross margin expanded to ~26% for the quarter .
  • Guidance raised: FY25 adjusted EPS to $11.10–$11.60 (from $10.90–$11.60), GAAP EPS to $11.25–$11.75; net sales now “flat” for the year, capex trimmed to $400–$425M; Q3 guide: net sales flat to low-single-digit up, operating income flat to down low-single digits .
  • Headwinds: Chicago plant mechanical fire (~$10M impact) and LATAM JV lapping a strong prior year, plus macro/tariff uncertainty (minimal direct impact YTD); management remains cautiously optimistic into H2 .
  • Potential stock reaction catalysts: raised EPS guidance, visible T&HS margin step-up, and management’s commentary that tariff impacts appear minimal Direct-to-Ingredion so far; risks remain around LATAM macro and industrial starch demand pace .

What Went Well and What Went Wrong

What Went Well

  • T&HS margin and earnings inflection: operating income +29% YoY to $111M, with “extraordinary” leverage from higher volumes, improved utilization, and integrated raw-material procurement; gross margin rose to ~26% for the quarter .
    • “Texture and Healthful Solutions delivered robust performance… Segment margin expanded by 400 basis points, driven by increased utilization and improved fixed cost absorption.”
  • Clean label, sugar reduction, protein fortification strength: double-digit growth in clean label (US) and sugar reduction globally; high double-digit growth in protein isolates (All Other net sales +10%) .
  • Operating discipline: company highlights sustained gross margin expansion, procurement savings exceeding targets, improvements in perfect-order delivery and Net Promoter Score from digital investments .

What Went Wrong

  • U.S./Canada disruption and industrial softness: operating income fell 18% YoY (to $86M), impacted by a mechanical fire at Chicago (~$10M hit) and lower industrial starch demand; management plans to rebuild inventories and recoup some impact in H2 .
  • LATAM JV and FX headwinds: segment operating income -2% YoY to $127M, pressured by the floating ARS exchange rate and JV lapping a strong Q2’24; excluding JV, cost tailwinds partially offset lower volumes .
  • Top-line pressure from price/mix: net sales -2% YoY driven by pass-through of lower raw material costs and lower volume in F&II segments; FX also a small headwind .

Financial Results

Consolidated performance vs prior periods and consensus

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.878 $1.813 $1.833
Reported Diluted EPS ($)$2.22 $3.00 $2.99
Adjusted Diluted EPS ($)$2.87 $2.97 $2.87
Gross Profit ($USD Millions)$446 $466 $477
Gross Margin (%)N/A25.7% 26.0%
Operating Income ($USD Millions)$240 $276 $271
Adjusted Operating Income ($USD Millions)$270 $273 $273
Net Income Attributable to INGR ($USD Millions)$148 $197 $196

Vs Wall Street consensus (S&P Global):

MetricQ2 2025 ConsensusQ2 2025 ActualBeat/Miss
Revenue ($USD Billions)$1.8899*$1.833 Miss ($0.057B)*
Primary EPS ($)$2.7866*$2.87 Beat $0.08*

Values retrieved from S&P Global.*

Segment breakdown (Q2 2025 vs Q2 2024)

SegmentNet Sales Q2 2024 ($MM)Net Sales Q2 2025 ($MM)Operating Income Q2 2024 ($MM)Operating Income Q2 2025 ($MM)
Texture & Healthful Solutions588 599 86 111
F&II – LATAM630 596 130 127
F&II – U.S./Canada555 523 105 86
All Other105 115 (10) (1)

Selected KPIs

KPIQ2 2025Q2 2024
Net financing costs ($MM)$12 $10
Reported / Adjusted ETR (%)23.6% / 27.2% 34.8% / 25.4%
Total Debt ($B)$1.8 $1.8 (Dec 31, 2024)
Cash + ST Investments ($MM)$868 $1,000 (Dec 31, 2024)
Cash from Operations YTD ($MM)$262 $521
Net Capex YTD ($MM)$193 $120
Dividends paid in Q2 ($MM)$52 N/A
Dividend per share (declared May 22, paid Jul 22)$0.80 N/A

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Adjusted EPSFY 2025$10.90–$11.60 $11.10–$11.60 Raised low end
GAAP EPSFY 2025$10.93–$11.63 $11.25–$11.75 Raised both ends
Net SalesFY 2025Up low single digits Flat Lowered
Adjusted Operating IncomeFY 2025Up mid-single digits Up mid-single digits Maintained
Corporate CostsFY 2025Up mid-to-high single digits Up high single digits Tightened higher
Effective Tax Rate (Adj./GAAP)FY 202526.0%–27.5% 26.0%–27.5% Maintained
Cash from OperationsFY 2025$825–$950M $825–$950M Maintained
Capital ExpendituresFY 2025$400–$450M $400–$425M Lowered
T&HS Operating IncomeFY 2025Up mid- to high-single digits Up low double digits Raised
F&II – LATAM Operating IncomeFY 2025Up mid-single digits Up low single digits Lowered
F&II – U.S./Canada Operating IncomeFY 2025Flat to down low single digits Down low single digits Lowered
All Other Operating IncomeFY 2025Approach breakeven Approach breakeven Maintained
Q3 Net SalesQ3 2025N/AFlat to up low-single digits New
Q3 Operating IncomeQ3 2025N/AFlat to down low-single digits New
DividendQ3 2025$0.80 (Q2 declared) $0.82 (declared Aug 27) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q1 2025)Current Period (Q2 2025)Trend
Tariffs/macroMinimal direct impact; monitoring evolving trade environment; cautious stance; most products made and sold locally Minimal direct impact YTD; cautious on indirect customer impacts; Q3 guide reflects strong prior-year comp and LATAM headwinds Cautious but contained direct impact
Supply chain/procurementWinterization upgrades aided Q1 U.S./Canada; hedging reduces volatility Step-change procurement in T&HS; improved perfect-order delivery and NPS via digital investments Improving execution
Product performance (clean label, sugar reduction, protein)Clean label & affordable formulations strong; double-digit sugar reduction; protein fortification growth Clean label double-digit (US), sugar reduction double-digit global, protein isolates high double-digit; All Other net sales +10% Strengthening
Regional trends (LATAM)Q1: LATAM operating income +26% on ARS stabilization and mix; brewing softness Q2: LATAM operating income -2% YoY; JV lapping strong Q2’24; macro weakness Brazil/Mexico and FX Near-term headwinds
Industrial starch demandQ1: Specialty starch & packaging soft; added Cedar Rapids investment Q2: U.S./Canada impacted by industrial softness and Chicago fire; expect H2 inventory rebuild and shipment improvement Recovering in H2
Guidance/toneRaised FY EPS in Q1; cautious on tariffs Raised FY EPS again; cautious but optimistic; Q3 flattish on tough comp Positive bias with caution

Management Commentary

  • “Texture and Healthful Solutions delivered robust performance… Segment margin expanded by 400 basis points, driven by increased utilization and improved fixed cost absorption.” — Jim Zallie
  • “We experienced minimal direct impact [from tariffs]… the vast majority of our products are manufactured locally and sold locally.” — Jim Zallie
  • “We estimate [Chicago plant] disruption has had a $10 million impact to the quarter. Operations have resumed and we expect to recover some of the impact throughout the second half.” — Jim Gray
  • “We now expect to exceed our $50 million run-rate savings target by the end of 2025.” — Jim Zallie

Q&A Highlights

  • Conservatism vs raised EPS guide: Management remains “cautiously optimistic,” citing tariff uncertainty and tough Q3 comp; upside if Argo (Chicago) runs well and T&HS momentum persists .
  • T&HS margin durability: Procurement and sourcing capabilities deliver a “step change” benefit; expect high-teens operating margin to sustain, potentially modestly lower in H2; price/mix headwinds easing as corn/tapioca costs normalize .
  • LATAM macro/JV dynamics: Brazil/Mexico volumes pressured by inflation, FX, and abnormal weather in brewing; JV performance normalizing vs unusually strong Q2’24; cautious near-term but diversified customer base helps .
  • Industrial starch outlook: Expect stronger H2 shipments as packaging customers rebalance; Cedar Rapids expansion underpins long-term positioning .
  • HFCS discussion: Management does not expect noticeable impact from cane sugar initiatives; HFCS in U.S. beverages ~4% of INGR sales; sugar reduction solutions support reformulation .

Estimates Context

  • Q2 2025: EPS beat (+$0.08 vs $2.7866*); revenue miss (–$0.057B vs $1.8899B*). Company attributes miss primarily to price/mix pass-through and U.S./Canada industrial softness, partially offset by T&HS volume growth .
  • Q1 2025: EPS beat (+$0.56 vs $2.4129*); revenue slightly below ($1.813B vs $1.8489B*), driven by lower raw-material pass-through and FX .
  • FY 2025: Consensus EPS ~$11.19* sits within raised company guide ($11.10–$11.60), implying limited required estimate changes unless LATAM/industrial trends diverge meaningfully .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • T&HS is now a clear earnings engine with structural margin uplift; procurement/digital execution is driving durability, supporting premiumization and clean-label demand .
  • Raised FY25 EPS guide (adj. $11.10–$11.60; GAAP $11.25–$11.75) and capex trim indicate confidence in cash generation and capital discipline; watch Q3 flattish OI guide on tough comp .
  • Short-term watch items: LATAM macro (Brazil/Mexico), FX volatility, and industrial starch demand trajectory; management expects H2 recovery in U.S./Canada and inventory rebuild .
  • Tariff risk currently more indirect than direct; INGR’s local-to-local model and USMCA exposure mitigate direct impacts, but customers’ cost actions could affect volume/mix near term .
  • Cash deployment remains shareholder-friendly: steady buybacks (target >$100M in 2025) and dividend growth (raised to $0.82 for Q3), supporting total return .
  • Narrative likely to move the stock: sustained T&HS margin strength, repeated EPS guide raises, and minimal direct tariff exposure are positives; macro/tariff caution and LATAM FX/mix are balancing risks .
  • Near-term trading setup: favor positive revisions if Q3 T&HS momentum offsets tough comps; monitor industrial data points (box shipments) and LATAM consumer/brewing indicators for inflection .