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II

Ingredion Inc (INGR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $1.800B, down 6% YoY on lower price/mix (pass-through of lower corn costs) and the South Korea divestiture, but with positive volume; adjusted operating income rose 22% YoY to $248M as lower raw material costs and volume supported margins .
  • Adjusted diluted EPS was $2.63 vs $1.97 in Q4 2023, while reported diluted EPS was $1.43 due to $83M of impairment charges tied to facility closures in Canada and Brazil .
  • 2025 outlook initiated: reported and adjusted EPS $10.75–$11.55, net sales up low-single-digits, adjusted operating income up mid-single-digits; capex set at $400–$450M (step-up from historical), cash from operations $800–$950M, effective tax rate 26.0%–27.5% .
  • Segment highlights: US/CAN operating income +74% YoY in Q4 on catch-up pricing in multi-year contracts; Texture & Healthful Solutions (T&HS) volumes +10% in Q4 with operating income +24%; LATAM operating income modestly lower in Q4 (currency/input dynamics), but +7% for FY 2024 .

What Went Well and What Went Wrong

What Went Well

  • “We delivered record Q4 financial results driven by continued strong sales volume growth in Texture and Healthful Solutions and exceptional results in our Food and Industrial Ingredients US/CAN and LATAM segments.” – CEO Jim Zallie .
  • US/CAN: Q4 operating income rose to $82M (+74% YoY) on renewal of multi-year customer contracts that recaptured inflationary impacts and improved margin recovery .
  • T&HS: Q4 volume +10% and operating income rose to $94M (+24% YoY), aided by favorable input costs; management highlighted differentiated texture solutions and higher profitability mix .

What Went Wrong

  • Net sales declined 6% YoY in Q4, driven by price/mix (lower corn pass-through), FX, and lost volume from the South Korea sale .
  • Reported EPS fell to $1.43 due to $83M Q4 impairment charges linked to ceasing operations at Vanscoy (Canada) and Alcantara (Brazil) .
  • LATAM Q4 operating income dipped to $121M (−3% YoY) on unfavorable input costs and lower Argentina JV results versus prior-year FX impacts, partly offset by lower raw material costs .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.878 $1.870 $1.800
Revenue YoY change (%)−9% −8% −6%
Diluted EPS (GAAP) ($)$2.22 $2.83 $1.43
Adjusted Diluted EPS ($)$2.87 $3.05 $2.63
Gross Profit ($USD Millions)$446 $479 $449
Adjusted Operating Income ($USD Millions)$270 $282 $248
Adjusted Op Income YoY change (%)+8% +29% +22%
Wall St. Consensus (EPS/Revenue)N/A (S&P Global data unavailable)N/A (S&P Global data unavailable)N/A (S&P Global data unavailable)

Segment breakdown (Net Sales and Operating Income):

SegmentQ3 2024 Net Sales ($MM)Q4 2024 Net Sales ($MM)Q3 2024 Op Income ($MM)Q4 2024 Op Income ($MM)
Texture & Healthful Solutions600 581 96 94
Food & Industrial Ingredients – LATAM620 584 131 121
Food & Industrial Ingredients – U.S./Canada548 511 99 82
All Other102 124 (4) (4)

Balance sheet and cash flow KPIs:

KPI2023 YE2024 YE
Cash & Cash Equivalents ($MM)$401 $997
Total Debt ($MM)$1,740 LT + $448 ST $1,787 LT + $44 ST
Cash from Operations ($MM)$1,057 $1,436
Net Capital Expenditures ($MM)$314 (implied from context; $316 in investing table; see net capex narrative) $295
Reported Effective Tax Rate (Q4/FY)24.4% (Q4 2023) / 22.4% (FY 2023) 36.2% (Q4 2024) / 29.8% (FY 2024)
Adjusted Effective Tax Rate (Q4/FY)24.9% (Q4 2023) / 24.9% (FY 2023) 25.2% (Q4 2024) / 26.4% (FY 2024)

Notes: Net capital expenditures $295M in FY 2024; total cash from operations benefited from ~$400M favorable working capital change as corn costs decreased .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported & Adjusted EPSFY 2025N/A$10.75–$11.55 Initiated
Net SalesFY 2025N/AUp low single-digits Initiated
Reported & Adjusted Operating IncomeFY 2025N/AUp mid-single-digits Initiated
Effective Tax RateFY 2025N/A26.0%–27.5% (reported & adjusted) Initiated
Cash from OperationsFY 2025N/A$800–$950M Initiated
Capital ExpendituresFY 2025Historical $300–$350M range (context) $400–$450M Raised (step-up)
Segment Op Income – T&HSFY 2025N/AUp mid- to high-single digits Initiated
Segment Op Income – LATAMFY 2025N/AUp mid-single-digits Initiated
Segment Op Income – US/CANFY 2025N/AFlat to down low single-digits Initiated
Segment Op Income – All OtherFY 2025N/AApproach breakeven Initiated
Q1 2025 OutlookQ1 2025N/ANet sales down low single-digits; operating income up high single-digits Initiated
Dividend per shareQ4 declarationRaised to $0.80 in Aug 2024 and paid Oct 2024 $0.80 declared in Q4, payable Q1 2025 Maintained at $0.80

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Texture & Healthful Solutions volumes/mixQ2: T&HS volume +8% YoY; price/mix headwind; op income down on unfavorable mix . Q3: T&HS volume +11%; operating income +12% .Double-digit sales volume growth; operating income +24% YoY; continued solution selling and innovation focus Improving volumes; profitability recovering despite price/mix headwinds
US/CAN contract managementQ2/Q3: Catch-up pricing in multi-year contracts supported margin recovery .Significant Q4 operating income growth (+74% YoY) from contract renewals recapturing inflation Sustained margin recapture; 2025 expected to hold margins after substantial expansion
LATAM input costs/FXQ3: Brazil energy transition completed; strong Mexico drove op income margin ~19.7% .Q4 op income −3% YoY; FX/input costs mixed; JV Argentina lower vs prior year FX impact Near-term headwinds; FY 2024 +7% op income and 2025 mid-single-digit growth targeted
Cost2Compete programQ2 launch, $50M run-rate target by end of 2025; $18M run-rate achieved . Q3: structural savings complementing program .Year 1 run-rate exceeded by >30% (~$23M); network optimization and facility closures (UK, Brazil, Canada) drive 2025 savings Accelerating savings; network optimization driving efficiency
Capex and Indianapolis project—More than $100M to modernize Indianapolis, add cogeneration; completion H2 2026; capex step-up in 2025 Strategic investment for texture capacity, efficiency, sustainability
Tariffs/trade/regulatory—Guidance excludes extraordinary changes; scenario planning across US/Mexico/Canada supply chains; local manufacturing footprint mitigates risk Monitoring; mitigants in place
Cash & working capitalQ3: YTD CFO $1,000M, strong WC contribution .FY 2024 CFO $1,436M, ~$400M WC benefit from lower corn costs Exceptional 2024 cash; reversion in 2025 as WC invests

Management Commentary

  • “We delivered record Q4 financial results driven by continued strong sales volume growth in Texture and Healthful Solutions and exceptional results in our Food and Industrial Ingredients US/CAN and LATAM segments.” – Jim Zallie, CEO .
  • “Our Food and Industrial Ingredients U.S./Canada business benefited from the renewal of multi-year customer contracts that enabled us to recapture inflationary impacts and recover margins.” – Jim Zallie .
  • “Gross profit dollars and margins reached record levels of $1.8 billion with a corresponding margin of 24%… operations and procurement teams… increased efficiency and reduced costs.” – Prepared remarks (CEO) .
  • “We exceeded our year 1 run rate cost savings target of $18 million by more than 30%… we will meet or exceed our run rate target of $50 million by the end of 2025.” – Prepared remarks (CEO) .
  • “For 2025… reported and adjusted EPS are expected to be in the range of $10.75 to $11.55… capex $400M–$450M… CFO $800M–$950M… ETR 26%–27.5%.” – CFO Jim Gray .

Q&A Highlights

  • Guidance range drivers: FX weakness (BRL, COP, EUR, CNY), crop dynamics, corn costs as potential downside; upside from stronger volume growth, reformulation wins, spot pricing opportunities .
  • Indianapolis $100M+ project: aligns with organic growth strategy; cogeneration and modernization; expected IRR “at least 10 to mid-teens” and does not preclude M&A or share repurchases (≥$100M target in 2025) .
  • Volume assumptions: At total company level, low-to-mid-single digit volume growth; price/mix and FX headwinds expected to be lower vs 2024 .
  • Multi-year contracts: 2024 adjustments largely complete; 2025 margins expected stable in US/CAN after 700–800 bps expansion over last 1–2 years .
  • Tariffs/trade: Guidance excludes extraordinary changes; local manufacturing and scenario planning seen as key mitigants across US/Mexico/Canada .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at the time of analysis due to data access limits. As a result, explicit beat/miss versus consensus cannot be determined for this quarter. S&P Global consensus data was unavailable.
  • One analyst noted results “came in ahead of expectations” in 2024, but specific consensus values were not referenced on the call .

Key Takeaways for Investors

  • Mix and contracting tailwinds: US/CAN margin recovery via multi-year contract adjustments, coupled with lower input costs, supported outsized Q4 operating income; margins are expected to hold in 2025 even as net sales may decline modestly in the region .
  • T&HS momentum: Double-digit volume growth and expanding operating income in Q4 reflect differentiated solutions; management expects mid- to high-single digit operating income growth in 2025 despite price/mix headwinds .
  • LATAM stability with upside: FY 2024 operating income +7% and 2025 outlook for mid-single digit growth; watch FX/corn dynamics and mix upgrades in Brazil/Andean region .
  • Cash flow normalization: FY 2024 CFO of $1.436B benefited from ~$400M working capital tailwind; expect reversion in 2025 as working capital is reinvested and capex steps up to $400–$450M .
  • Strategic investment catalyst: >$100M Indianapolis modernization and cogeneration enhances texture capacity, reliability, and cost position; completion H2 2026, potentially a medium-term margin and sustainability lever .
  • Guidance introduces range-aware positioning: EPS $10.75–$11.55; volume-led growth offset by softer price/mix/FX; monitor spring crop, FX trends (BRL/MXN), and tariff developments for range outcome .
  • Capital returns: Dividend maintained at $0.80/share and target ≥$100M buybacks in 2025, balanced with higher organic investment focus .

Additional Data References across prior quarters (for trajectory)

  • Q3 2024: Adjusted EPS $3.05, adjusted operating income +29% YoY; strong segment profits and margin recovery .
  • Q2 2024: Adjusted EPS $2.87, adjusted operating income +8% YoY; T&HS volume +8% YoY but price/mix headwinds; early Cost2Compete savings recognized .