Form 10-Q Ingredion Inc For: Jun 30
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | ||
Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class | Outstanding at August 5, 2022 | |
Common Stock, $.01 par value |
INGREDION INCORPORATED
FORM 10-Q
TABLE OF CONTENTS
2
Ingredion Incorporated
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions, except per share amounts) |
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net sales | $ | | $ | | $ | | $ | | |||||
Cost of sales | | | | | |||||||||
Gross profit | | | | | |||||||||
Operating expenses | | | | | |||||||||
Other operating (income) | ( | ( | ( | ( | |||||||||
Restructuring/impairment charges | | | | | |||||||||
Operating income | | | | | |||||||||
Financing costs | | | | | |||||||||
Other non-operating (income) | — | ( | ( | ( | |||||||||
Income before income taxes | | | | | |||||||||
Provision for income taxes | | | | | |||||||||
Net income (loss) | | | | ( | |||||||||
Less: Net income attributable to non-controlling interests | | | | | |||||||||
Net income (loss) attributable to Ingredion | $ | | $ | | $ | | $ | ( | |||||
Weighted average common shares outstanding: | |||||||||||||
Basic | | | | | |||||||||
Diluted | | | | | |||||||||
Earnings (loss) per common share of Ingredion: | |||||||||||||
Basic | $ | | $ | | $ | | $ | ( | |||||
Diluted | $ | | $ | | $ | | $ | ( | |||||
See Notes to Condensed Consolidated Financial Statements
3
Ingredion Incorporated
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| ||||
Net income (loss) |
| $ | |
| $ | |
| $ | | $ | ( | ||
Other comprehensive income: | |||||||||||||
Gains on cash flow hedges, net of income tax effect of $ | | | | | |||||||||
(Gains) on cash flow hedges reclassified to earnings, net of income tax effect of $ | ( | ( | ( | ( | |||||||||
Currency translation adjustment | ( | | ( | ( | |||||||||
Comprehensive (loss) income | ( | | | ( | |||||||||
Less: Comprehensive (loss) income attributable to non-controlling interests | ( | | ( | | |||||||||
Comprehensive (loss) income attributable to Ingredion | $ | ( | $ | | $ | | $ | ( | |||||
See Notes to Condensed Consolidated Financial Statements
4
Ingredion Incorporated
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||
(in millions, except share and per share amounts) |
| 2022 |
| 2021 |
| ||
(Unaudited) | |||||||
Assets |
|
| |||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Short-term investments | | | |||||
Accounts receivable, net | | | |||||
Inventories | | | |||||
Prepaid expenses | | | |||||
Total current assets | | | |||||
Property, plant and equipment, net of accumulated depreciation of $ | | | |||||
Intangible assets, net of accumulated amortization of $ | | | |||||
Other assets | | | |||||
Total assets | $ | | $ | | |||
Liabilities and equity | |||||||
Current liabilities: | |||||||
Short-term borrowings | $ | | $ | | |||
Accounts payable and accrued liabilities | | | |||||
Total current liabilities | | | |||||
Long-term debt | | | |||||
Other non-current liabilities | | | |||||
Total liabilities | | | |||||
Share-based payments subject to redemption | | | |||||
Redeemable non-controlling interests | | | |||||
Ingredion stockholders’ equity: | |||||||
Preferred stock — authorized | |||||||
Common stock — authorized | | | |||||
Additional paid-in capital | | | |||||
Less: Treasury stock (common stock: | ( | ( | |||||
Accumulated other comprehensive loss | ( | ( | |||||
Retained earnings | | | |||||
Total Ingredion stockholders’ equity | | | |||||
Non-redeemable non-controlling interests | | | |||||
Total equity | | | |||||
Total liabilities and equity | $ | | $ | | |||
See Notes to Condensed Consolidated Financial Statements
5
Ingredion Incorporated
Condensed Consolidated Statements of Equity and Redeemable Equity
(Unaudited)
Total Equity | ||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||
Redeemable | Share-based | Redeemable | ||||||||||||||||||||||||||
Additional | Accumulated Other | Non- | Payments | Non- | ||||||||||||||||||||||||
Preferred | Common | Paid-In | Treasury | Comprehensive | Retained | Controlling | Subject to | Controlling | ||||||||||||||||||||
(in millions) |
| Stock | Stock |
| Capital |
| Stock |
| Loss |
| Earnings |
| Interests |
| Redemption |
| Interests |
| ||||||||||
Balance, December 31, 2021 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Net income attributable to Ingredion | | |||||||||||||||||||||||||||
Net income attributable to non-controlling interests | | | ||||||||||||||||||||||||||
Dividends declared | ( | ( | ||||||||||||||||||||||||||
Repurchases of common stock, net | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | | | | |||||||||||||||||||||||||
Fair market value adjustment to non-controlling interests | ( | | ||||||||||||||||||||||||||
Non-controlling interest purchases | ( | |||||||||||||||||||||||||||
Other comprehensive (loss) | ( | ( | ( | |||||||||||||||||||||||||
Balance, June 30, 2022 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Total Equity |
| |||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||
Redeemable | Share-based | Redeemable | ||||||||||||||||||||||||||
Additional | Accumulated Other | Non- | Payments | Non- |
| |||||||||||||||||||||||
Preferred | Common | Paid-In | Treasury | Comprehensive | Retained | Controlling | Subject to | Controlling |
| |||||||||||||||||||
(in millions) |
| Stock | Stock |
| Capital |
| Stock |
| Loss |
| Earnings |
| Interests |
| Redemption |
| Interests |
| ||||||||||
Balance, December 31, 2020 |
| $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | |||||||||
Net (loss) attributable to Ingredion | ( | |||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | | ( | ||||||||||||||||||||||||||
Dividends declared | ( | ( | ||||||||||||||||||||||||||
Repurchases of common stock, net | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | | | ( | |||||||||||||||||||||||||
Other comprehensive income | | | | |||||||||||||||||||||||||
Balance, June 30, 2021 | $ | — | $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | |
| $ | |
| $ | | |||
See Notes to Condensed Consolidated Financial Statements
6
Ingredion Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended | |||||||
June 30, | |||||||
(in millions) |
| 2022 |
| 2021 | |||
Cash (used for) provided by operating activities | |||||||
Net income (loss) | $ | | $ | ( | |||
Non-cash charges to net income (loss): | |||||||
Depreciation and amortization | | | |||||
Mechanical stores expense | | | |||||
Impairment charge for assets held for sale | — | | |||||
Deferred income taxes | ( | ( | |||||
Other non-cash charges | | ( | |||||
Changes in working capital: | |||||||
Accounts receivable and prepaid expenses | ( | ( | |||||
Inventories | ( | ( | |||||
Accounts payable and accrued liabilities | | | |||||
Margin accounts | ( | ( | |||||
Other | | ( | |||||
Cash (used for) provided by operating activities | ( | | |||||
Cash used for investing activities | |||||||
Capital expenditures and mechanical stores purchases | ( | ( | |||||
Payments for acquisitions, net of cash acquired of and $ | — | ( | |||||
Proceeds from disposal of manufacturing facilities and properties | | | |||||
Other | | ( | |||||
Cash used for investing activities | ( | ( | |||||
Cash provided by (used for) financing activities | |||||||
Proceeds from borrowings | | | |||||
Payments on debt | ( | ( | |||||
Commercial paper borrowings, net | | — | |||||
Repurchases of common stock, net | ( | ( | |||||
Purchases of non-controlling interests | ( | — | |||||
(Settlements) issuances of common stock for share-based compensation, net | ( | | |||||
Dividends paid, including to non-controlling interests |
| ( |
| ( | |||
Cash provided by (used for) financing activities | | ( | |||||
Effects of foreign exchange rate changes on cash | ( | ( | |||||
Decrease in cash and cash equivalents | ( | ( | |||||
Cash and cash equivalents, beginning of period | | | |||||
Cash and cash equivalents, end of period | $ | | $ | | |||
See Notes to Condensed Consolidated Financial Statements
7
Ingredion Incorporated
Notes to Condensed Consolidated Financial Statements
1. Interim Financial Statements
References to the “Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion Incorporated (“Ingredion”) individually and together with its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2021.
The unaudited Condensed Consolidated Financial Statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 included herein were prepared by management on the same basis as Ingredion’s audited Consolidated Financial Statements for the year ended December 31, 2021 and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) that are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Statements of Income (Loss), Condensed Consolidated Statements of Comprehensive (Loss) Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows. The results for the interim period are not necessarily indicative of the results expected for the full year or any other future period.
2. Summary of Significant Accounting Standards and Policies
For detailed information about Ingredion’s significant accounting standards and policies, see Note 1 of the Notes to the Consolidated Financial Statements included in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to our significant accounting standards and policies for the three and six months ended June 30, 2022.
New Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect of adoption of ASU No. 2020-04 on our financial position and results of operations.
3. Acquisitions
PureCircle Non-Controlling Interests
During the three months ended June 30, 2022, Ingredion purchased shares from minority shareholders in PureCircle Limited (“PureCircle”) for $
Other Acquisitions
On April 1, 2021, Ingredion acquired KaTech, a privately held company headquartered in Germany. KaTech provides advanced texture and stabilization solutions to the food and beverage industry. To complete the closing, Ingredion made a total cash payment of $
8
4. Investments
Investments consisted of the following as of the dates indicated:
(in millions) |
| June 30, 2022 |
| December 31, 2021 | ||
Equity investments | $ | | $ | | ||
Equity method investments | | | ||||
Marketable securities | | | ||||
Total investments | $ | | $ | | ||
Amyris Joint Venture
On June 1, 2021, Ingredion entered into an agreement with Amyris, Inc. (“Amyris”) for certain exclusive commercialization rights to Amyris’s rebaudioside M by fermentation product, the exclusive licensing of the product’s manufacturing technology and a
Argentina Joint Venture
On February 12, 2021, Ingredion entered into an agreement with an affiliate of Grupo Arcor, an Argentine food company, to establish Ingrear Holding S.A. (the “Argentina joint venture”), a joint venture to operate
We exchanged certain assets and liabilities with a fair value of $
Beginning on the dates Ingredion entered into the agreements for equity method investees, our share of income from them is included in Other operating (income). Ingredion incurred an insignificant amount of pre-tax acquisition and integration costs during the three and six months ended June 30, 2022, and $
5. Restructuring and Impairment Charges
For the three and six months ended June 30, 2022, Ingredion recorded $
Restructuring Charges
For the three months ended June 30, 2022, we recorded $
9
For the three months ended June 30, 2021, we recorded $
For the six months ended June 30, 2021, we recorded $
A summary of Ingredion’s severance accrual at June 30, 2022, which we expect to fully pay in 2022, is as follows (in millions):
Balance in severance accrual as of December 31, 2021 |
| $ | | |
Payments made to terminated employees | ( | |||
Balance in severance accrual as of June 30, 2022 |
| $ | |
Impairment Charges
At the announcement of our agreement to invest in the Argentina joint venture during the three months ended March 31, 2021, we reclassified assets and liabilities we expected to contribute to the joint venture as held for sale in Other assets in the Condensed Consolidated Balance Sheets and recorded an impairment charge of $
6. Derivative Instruments and Hedging Activities
Ingredion is exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, we actively manage our exposure to these market risks by entering various hedging transactions authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. We have no collateral to counterparties under collateral funding arrangements as of June 30, 2022. Derivative financial instruments used by Ingredion consist primarily of commodity-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps and treasury locks (“T-Locks”).
Commodity price hedging: Ingredion’s principal use of derivative financial instruments is to manage commodity price risk relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the next to
For certain corn derivative instruments that are not designated as cash flow hedging instruments for accounting purposes, all realized and unrealized gains and losses from these instruments are recognized in cost of sales during each accounting period. We enter these derivative instruments to further mitigate commodity and basis price risks related to anticipated purchases of corn. During the three and six months ended June 30, 2022, Ingredion recognized a $
10
For commodity hedges designated as cash flow hedges for accounting purposes, unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of Other comprehensive loss (“OCL”) and included in the equity section of the Condensed Consolidated Balance Sheets as part of Accumulated other comprehensive loss (“AOCL”). These amounts, as well as their related tax effects, are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the period a hedge is determined to be ineffective. Ingredion assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. Gains and losses from cash flow hedging instruments reclassified from AOCL to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.
Ingredion had outstanding futures and option contracts that hedged the forecasted purchase of approximately
Foreign currency hedging: Due to our global operations, including operations in many emerging markets, Ingredion is exposed to fluctuations in foreign currency exchange rates. As a result, Ingredion has exposure to translational foreign-exchange risk when the results of its foreign operations are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency are revalued. Ingredion’s foreign-exchange risk management strategy uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. Ingredion enters into foreign currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments for accounting purposes in order to mitigate transactional foreign-exchange risk. Gains and losses from derivative financial instruments not designated as hedging instruments for accounting purposes are marked to market in earnings during each accounting period.
Ingredion hedges certain assets using foreign currency derivatives not designated as hedging instruments for accounting purposes, which had a notional value of $
Ingredion hedges certain assets using foreign currency derivative instruments that are designated as cash flow hedging instruments for accounting purposes, which had a notional value of $
Interest rate hedging: Ingredion assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments and by evaluating hedging opportunities. Ingredion’s risk management strategy is to monitor interest rate risk attributable to both Ingredion’s outstanding and forecasted debt obligations as well as Ingredion’s offsetting hedge positions. Derivative financial instruments that have been used by Ingredion to manage its interest rate risk consist of interest rate swaps and T-Locks.
Ingredion periodically enters into interest rate swaps to hedge its exposure to interest rate changes. The changes in fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gains or losses (the changes in fair value) of the hedged debt instruments that are attributable to changes in interest rates (the hedged risk), which are also recognized in earnings. Ingredion did not have any outstanding interest rate swaps as of June 30, 2022 or December 31, 2021.
Ingredion periodically enters into T-Locks to hedge its exposure to interest rate changes. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market
11
fluctuations in the benchmark interest rate until the fixed interest rate is established and are accounted for as cash flow hedges. Accordingly, changes in the fair value of the T-Locks are recorded to AOCL until the consummation of the underlying debt offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. During 2020, Ingredion entered into and settled T-Locks associated with the issuance of senior notes due in 2030 and 2050. The realized loss upon settlement of the T-Locks was recorded in AOCL and is amortized into earnings over the term of the senior notes. Ingredion did not have outstanding T-Locks as of June 30, 2022 and December 31, 2021.
The derivative instruments designated as cash flow hedges included in AOCL as of June 30, 2022 and December 31, 2021 are reflected below:
Amount of Gains | |||||||
Derivatives in Cash Flow Hedging Relationships | (Losses) included in AOCL | ||||||
(in millions) | June 30, 2022 | December 31, 2021 | |||||
Commodity contracts, net of income tax effect of $ | $ | | $ | | |||
Foreign currency contracts, net of income tax effect of $ | | - | |||||
Interest rate contracts, net of income tax effect of $ | ( | ( | |||||
Total | $ | | $ | | |||
The fair value and balance sheet location of the Ingredion’s derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are reflected below:
Fair Value of Hedging Instruments as of June 30, 2022 (in millions) | |||||||||||||||||||
Designated Hedging Instruments | Non-Designated Hedging Instruments | ||||||||||||||||||
Balance Sheet Location | Commodity Contracts | Foreign Currency Contracts | Total | Commodity Contracts | Foreign Currency Contracts | Total | |||||||||||||
$ | | $ | | $ | | $ | | $ | | $ | | ||||||||
| | | — | — | — | ||||||||||||||
| | | | | | ||||||||||||||
| | | | | | ||||||||||||||
| | | — | | | ||||||||||||||
| | | | | | ||||||||||||||
Net Assets/(Liabilities) | $ | | $ | ( | $ | | $ | ( | $ | | $ | | |||||||
Fair Value of Hedging Instruments as of December 31, 2021 (in millions) | |||||||||||||||||||
Designated Hedging Instruments | Non-Designated Hedging Instruments | ||||||||||||||||||
Balance Sheet Location | Commodity Contracts | Foreign Currency Contracts | Total | Commodity Contracts | Foreign Currency Contracts | Total | |||||||||||||
$ | | $ | | $ | | $ | | $ | | $ | | ||||||||
| | | — | — | — | ||||||||||||||
| | | | | | ||||||||||||||
| | | | | | ||||||||||||||
| | | — | | | ||||||||||||||
| | | | | | ||||||||||||||
Net Assets/(Liabilities) | $ | | $ | ( | $ | | $ | | $ | ( | $ | — | |||||||
12
Additional information relating to the Ingredion’s derivative instruments is presented below:
Derivatives in Cash Flow | Gains (Losses) Recognized | Gains (Losses) Reclassified | |||||||||||||
Hedging Relationships | Three Months Ended June 30, | Income Statement | Three Months Ended June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| Location |
| 2022 |
| 2021 | |||||
Commodity contracts | $ | ( | $ | | Cost of sales | $ | | $ | | ||||||
Foreign currency contracts | | ( | Net sales/Cost of sales | | ( | ||||||||||
Interest rate contracts | — | — | Financing costs, net | — | — | ||||||||||
Total | $ | | $ | | $ | | $ | | |||||||
Derivatives in Cash-Flow | Gains Recognized | Gains Reclassified | |||||||||||||
Hedging Relationships | Six Months Ended June 30, | Income Statement | Six Months Ended June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| Location |
| 2022 |
| 2021 | |||||
Commodity contracts | $ | | $ | | Cost of sales | $ | | $ | | ||||||
Foreign currency contracts | | — | Net sales/Cost of sales | | | ||||||||||
Interest rate contracts | — | — | Financing costs, net | — | — | ||||||||||
Total | $ | | $ | | $ | | $ | | |||||||
As of June 30, 2022, AOCL included $
7. Fair Value Measurements
We measure certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Below is a summary of the hierarchy levels:
| ● | Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| ● | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. |
| ● | Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
Assets and liabilities measured at fair value on a recurring basis are presented below:
As of June 30, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||
(in millions) |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
| ||||||||
Available for sale securities | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | — | $ | — | |||||||||
| | | — | | | | — | ||||||||||||||||||
| | | — | | | | — | ||||||||||||||||||
Long-term debt | | — | | — | | — | | — | |||||||||||||||||
The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable and short-term borrowings approximate fair values. Commodity futures, options and swaps contracts are recognized at fair value. Foreign currency forward contracts, swaps and options are also recognized at fair value. The fair value of Ingredion’s Long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities.
13
8. Financing Arrangements
Presented below are Ingredion’s debt carrying amounts, net of related discounts, premiums, and debt issuance costs as of June 30, 2022 and December 31, 2021:
As of | As of | ||||||
(in millions) | June 30, 2022 | December 31, 2021 | |||||
$ | | $ | | ||||
| | ||||||
| | ||||||
| | ||||||
Revolving credit agreement | — | — | |||||
Other long-term borrowings | | | |||||
Total long-term debt | | | |||||
Commercial paper | | | |||||
Other short-term borrowings | | | |||||
Total short-term borrowings | | | |||||
Total debt | $ | | $ | | |||
On July 27, 2021, Ingredion established a commercial paper program under which Ingredion may issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $
Other short-term borrowings as of June 30, 2022 and December 31, 2021, primarily include amounts outstanding under various unsecured local country operating lines of credit.
9. Commitments and Contingencies
In May 2021, the Brazilian Supreme Court (“Court”) issued its ruling related to the calculation of certain indirect taxes, which affirmed the Federal Court of Appeals (“Lower Court”) rulings that Ingredion had in previous years and affirmed that Ingredion is entitled to previously recorded tax credits. The Court ruling affirmed that Ingredion is entitled to $
10. Income Taxes
During the three months ended March 31, 2022, the U.S. Treasury published final foreign tax credit regulations that limit our ability to claim foreign tax credits from certain countries, primarily in South America. As a result, we recorded a provisional tax liability during the three months ended March 31, 2022, and will continue to assess the impact of the regulations on our Condensed Consolidated Financial Statements in future periods.
14
11. Pension and Other Postretirement Benefits
The following table sets forth the components of net periodic benefit cost of the U.S. and non-U.S. defined benefit pension plans for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| ||||||||
Service cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||
— | — | — | — | — | — | — | | ||||||||||||||||||
Net periodic benefit cost (a) | $ | ( | $ | ( | $ | | $ | $ | ( | $ | ( | $ | | $ | |||||||||||
We currently anticipate that we will make approximately $
The following table sets forth the components of net postretirement benefit cost for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Service cost | $ | — | $ | — | $ | — | $ | — | |||||
— | — | | | ||||||||||
| — | | ( | ||||||||||
Net periodic benefit cost (a) | $ | | $ | — | $ | | $ | — | |||||
| (a) | The service cost component of net periodic benefit cost is presented within either Cost of sales or Operating expenses on the Condensed Consolidated Statements of Income (Loss). The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as Other, non-operating (income) on the Condensed Consolidated Statements of Income (Loss). |
12. Equity
Treasury stock: On October 22, 2018, the Board of Directors authorized a new stock repurchase program permitting Ingredion to purchase up to
During the three and six months ended June 30, 2022, we repurchased
15
Share-based payments: The following table summarizes the components of Ingredion’s share-based compensation expense for the periods presented:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| ||||
Stock options: | |||||||||||||
Pre-tax compensation expense |
| $ | |
| $ | |
| $ | | $ | | ||
Income tax benefit |
| — |
| — |
| — |
| — | |||||
Stock option expense, net of income taxes |
| |
| |
| |
| | |||||
Restricted stock units ("RSUs"): | |||||||||||||
Pre-tax compensation expense |
| |
| |
| |
| | |||||
Income tax benefit |
| ( |
| ( |
| ( |
| ( | |||||
RSUs, net of income taxes |
| |
| |
| |
| | |||||
Performance shares and other share-based awards: | |||||||||||||
Pre-tax compensation expense |
| |
| |
| |
| | |||||
Income tax benefit |
| — |
| — |
| ( |
| — | |||||
Performance shares and other share-based compensation expense, net of income taxes |
| |
| |
| |
| | |||||
Total share-based compensation: | |||||||||||||
Pre-tax compensation expense |
| |
| |
| |
| | |||||
Income tax benefit |
| ( |
| ( |
| ( |
| ( | |||||
Total share-based compensation expense, net of income taxes |
| $ | |
| $ | |
| $ | | $ | | ||
Stock Options: Under Ingredion’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a
Ingredion granted non-qualified options to purchase
Six Months Ended June 30, | |||||||
| 2022 | 2021 | |||||
Expected life (in years) | |||||||
Risk-free interest rate | | % | | % |
| ||
Expected volatility | | % | | % | |||
Expected dividend yield | | % | | % | |||
The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and Ingredion’s historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of Ingredion’s common stock. Dividend yields are based on Ingredion’s dividend yield at the date of issuance.
16
Stock option activity for the six months ended June 30, 2022 was as follows:
| Number of Options (in thousands) |
| Weighted Average Exercise Price per Share |
| Average Remaining Contractual Term (Years) |
| Aggregate Intrinsic Value (in millions) |
| |||
Outstanding as of December 31, 2021 |
| |
| $ | | $ | | ||||
Granted |
| | | ||||||||
Exercised |
| ( | | ||||||||
Cancelled |
| ( | | ||||||||
Outstanding as of June 30, 2022 |
| | $ | |
|
| $ | | |||
Exercisable as of June 30, 2022 |
| | $ | |
|
| $ | | |||
For the six months ended June 30, 2022, cash received from the exercise of stock options was approximately $
Additional information pertaining to stock option activity is as follows for the periods presented:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(dollars in millions, except per share) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| ||||
Weighted average grant date fair value of stock options granted (per share) | $ | — | $ | — | $ | | $ | | |||||
Total intrinsic value of stock options exercised | $ | | $ | | $ | | $ | | |||||
Restricted Stock Units: Ingredion has granted restricted stock units (“RSUs”) to certain key employees. The RSUs are primarily subject to cliff vesting, generally after
The following table summarizes RSU activity in 2022:
(RSUs in thousands) |
| Number of Restricted Shares |
| Weighted Average Fair Value per Share | ||
Non-vested as of December 31, 2021 | | $ | ||||
Granted | | |||||
Vested | ( | |||||
Cancelled | ( | |||||
Non-vested as of June 30, 2022 | | $ | ||||
As of June 30, 2022, the total remaining unrecognized compensation cost related to RSUs was $
Performance Shares: Ingredion has a long-term incentive plan for senior management in the form of performance shares. The vesting of the performance shares is generally based on
For the 2022 performance shares awarded based on Ingredion’s total shareholder return, the number of shares that ultimately vest can range from
17
For the 2022 performance shares awarded based on Adjusted ROIC, the number of shares that ultimately vest can range from
For the six months ended June 30, 2022, Ingredion awarded
Accumulated Other Comprehensive Loss: The following is a summary of Accumulated other comprehensive loss for the six months ended June 30, 2022 and 2021:
(in millions) |
| Cumulative Translation Adjustment |
| Hedging Activities |
| Pension and Postretirement Adjustment |
| AOCL |
| ||||
Balance, December 31, 2021 | $ | ( | $ | | $ | ( | $ | ( | |||||
Other comprehensive (loss) gain before reclassification adjustments | ( | | — | | |||||||||
(Gain) reclassified from accumulated OCL | — | ( | — | ( | |||||||||
Tax (provision) | — | ( | — | ( | |||||||||
Net other comprehensive (loss) income | ( | | — | ( | |||||||||
Balance, June 30, 2022 | $ | ( | $ | | $ | ( | $ | ( | |||||
(in millions) |
| Cumulative Translation Adjustment |
| Hedging Activities |
| Pension and Postretirement Adjustment |
| AOCL |
| ||||
Balance, December 31, 2020 | $ | ( | $ | | $ | ( | $ | ( | |||||
Other comprehensive (loss) gain before reclassification adjustments | ( | | — | | |||||||||
(Gain) reclassified from accumulated OCL | — | ( | — | ( | |||||||||
Tax (provision) | — | ( | — | ( | |||||||||
Net other comprehensive (loss) income | ( | | — | | |||||||||
Balance, June 30, 2021 | $ | ( | $ | | $ | ( | $ | ( | |||||
18
Supplemental Information: The following Condensed Consolidated Statements of Equity and Redeemable Equity present the dividends per share for common stock for the periods indicated:
Total Equity | ||||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||
Accumulated | Redeemable | Share-based | Redeemable | |||||||||||||||||||||||||
Additional | Other | Non- | Payments | Non- | ||||||||||||||||||||||||
Preferred | Common | Paid-In | Treasury | Comprehensive | Retained | Controlling | Subject to | Controlling | ||||||||||||||||||||
(in millions) |
| Stock |
| Stock |
| Capital |
| Stock |
| Loss |
| Earnings |
| Interests |
| Redemption |
| Interests |
| |||||||||
Balance, December 31, 2021 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Net income attributable to Ingredion | | |||||||||||||||||||||||||||
Net income attributable to non-controlling interests | | |||||||||||||||||||||||||||
Dividends declared, common stock ($0.65/share) | ( | |||||||||||||||||||||||||||
Repurchases of common stock | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | | | ( | |||||||||||||||||||||||||
Other comprehensive income (loss) | | ( | ||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Net income attributable to Ingredion | | |||||||||||||||||||||||||||
Net income attributable to non-controlling interests | | | ||||||||||||||||||||||||||
Dividends declared, common stock ($0.65/share) | ( | |||||||||||||||||||||||||||
Dividends declared, non-controlling interests | ( | |||||||||||||||||||||||||||
Repurchases of common stock | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | | | | |||||||||||||||||||||||||
Fair market value adjustment to non-controlling interests | ( | | ||||||||||||||||||||||||||
Non-controlling interest purchases | ( | |||||||||||||||||||||||||||
Other comprehensive (loss) | ( | ( | ( | |||||||||||||||||||||||||
Balance, June 30, 2022 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
19
Total Equity |
| |||||||||||||||||||||||||||
Non- | ||||||||||||||||||||||||||||
Accumulated | Redeemable | Share-based | Redeemable |
| ||||||||||||||||||||||||
Additional | Other | Non- | Payments | Non- | ||||||||||||||||||||||||
Preferred | Common | Paid-In | Treasury | Comprehensive | Retained | Controlling | Subject to | Controlling |
| |||||||||||||||||||
(in millions) |
| Stock |
| Stock |
| Capital |
| Stock |
| Loss |
| Earnings |
| Interests |
| Redemption |
| Interests |
| |||||||||
Balance, December 31, 2020 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Net (loss) attributable to Ingredion | ( | |||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | | ( | ||||||||||||||||||||||||||
Dividends declared, common stock ($0.64/share) | ( | |||||||||||||||||||||||||||
Repurchases of common stock | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | | | ( | |||||||||||||||||||||||||
Other comprehensive (loss) income | ( | | | |||||||||||||||||||||||||
Balance, March 31, 2021 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Net income attributable to Ingredion | | |||||||||||||||||||||||||||
Net income attributable to non-controlling interests | | |||||||||||||||||||||||||||
Dividends declared, common stock ($0.64/share) | ( | |||||||||||||||||||||||||||
Dividends declared, non-controlling interests | ( | |||||||||||||||||||||||||||
Repurchases of common stock | ( | |||||||||||||||||||||||||||
Share-based compensation, net of issuance | ( | | | |||||||||||||||||||||||||
Other comprehensive income | | |||||||||||||||||||||||||||
Balance, June 30, 2021 | $ | — | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | | ||||||||||
Supplemental Information: The following table provides the computation of basic and diluted earnings per common share ("EPS") for the periods presented:
| Three Months Ended June 30, 2022 |
| Three Months Ended June 30, 2021 |
| |||||||||||||
(in millions, except per share amounts) |
| Net Income Available to Ingredion |
| Weighted Average Shares |
| Per Share Amount |
| Net Income Available to Ingredion |
| Weighted Average Shares |
| Per Share Amount |
| ||||
Basic EPS | $ | |
| | $ | | $ | |
| | $ | | |||||
Effect of Dilutive Securities: | |||||||||||||||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards |
| |
| | |||||||||||||
Diluted EPS | $ | |
| | $ | | $ | |
| | $ | | |||||
| Six Months Ended June 30, 2022 |
| Six Months Ended June 30, 2021 |
| |||||||||||||
(in millions, except per share amounts) |
| Net Income Available to Ingredion |
| Weighted Average Shares |
| Per Share Amount |
| Net Income Available to Ingredion |
| Weighted Average Shares |
| Per Share Amount |
| ||||
Basic EPS | $ | |
| | $ | | $ | ( |
| | $ | ( | |||||
Effect of Dilutive Securities: | |||||||||||||||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards |
| |
| — | |||||||||||||
Diluted EPS | $ | |
| | $ | | $ | ( |
| | $ | ( | |||||
20
Approximately
13. Segment Information
Ingredion is principally engaged in the production and sale of starches and sweeteners for a wide range of industries and is managed geographically on a regional basis. The nature, amount, timing and uncertainty of Ingredion’s Net sales are managed by Ingredion primarily based on our geographic segments, which we classify and report as North America, South America, Asia-Pacific and EMEA. Our North America segment includes businesses in the U.S., Mexico and Canada. Our South America segment includes businesses and our share of earnings from investments in joint ventures in Brazil, Argentina, Chile, Colombia, Ecuador, Peru and Uruguay. Our Asia-Pacific segment includes the PureCircle operating segment as well as businesses in South Korea, Thailand, China, Australia, Japan, New Zealand, Indonesia, Singapore, the Philippines, Malaysia, India and Vietnam. Our EMEA segment includes businesses in Pakistan, Germany, Poland, the United Kingdom and South Africa. Net sales by product are not presented because to do so would be impracticable.
Presented below are Ingredion’s net sales to unaffiliated customers by reportable segment for the periods indicated:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 | 2022 |
| 2021 |
| |||||
Net sales to unaffiliated customers: | |||||||||||||
North America | $ | | $ | | $ | | $ | | |||||
South America | | | | | |||||||||
Asia-Pacific | | | | | |||||||||
EMEA | | | | | |||||||||
Total net sales | $ | | $ | | $ | | $ | | |||||
Presented below are Ingredion’s operating income by reportable segment for the periods indicated:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in millions) |
| 2022 |
| 2021 | 2022 | 2021 |
| ||||||
Operating income: | |||||||||||||
North America | $ | | $ | | $ | | $ | | |||||
South America | | | | | |||||||||
Asia-Pacific | | | | | |||||||||
EMEA | | | | | |||||||||
Corporate | ( | ( | ( | ( | |||||||||
Subtotal | | | | | |||||||||
Acquisition/integration costs | — | | ( | | |||||||||
Restructuring/impairment charges | ( | ( | ( | ( | |||||||||
Impairment on assets held for sale | — | — | — | ( | |||||||||
Other matters | — | | — | | |||||||||
Total operating income | $ | | $ | | $ | | $ | | |||||
21
Presented below are Ingredion’s total assets by reportable segment as of June 30, 2022 and December 31, 2021:
As of | As of | ||||||
(in millions) | June 30, 2022 |
| December 31, 2021 | ||||
Assets: | |||||||
North America (a) | $ | | $ | | |||
South America | | | |||||
Asia-Pacific | | | |||||
EMEA | | | |||||
Total assets | $ | | $ | | |||
For purposes of presentation, North America includes Corporate assets.
14. Supplementary Financial Statement Information
Accounts Receivable, Net
Accounts receivable, net are summarized as follows:
As of | As of | ||||||
(in millions) |
| June 30, 2022 |
| December 31, 2021 | |||
Accounts receivable, net: | |||||||
Accounts receivable — trade | $ | | $ | | |||
Accounts receivable — other | | | |||||
Allowance for credit losses | ( | ( | |||||
Total accounts receivable | $ | | $ | | |||
There were no significant contract assets or significant contract liabilities associated with our customers as of June 30, 2022 or December 31, 2021. Liabilities for volume discounts and incentives were also not significant as of June 30, 2022 or December 31, 2021.
Inventories
Inventories are summarized as follows:
As of | As of |
| |||||
(in millions) |
| June 30, 2022 |
| December 31, 2021 |
| ||
Finished and in process |
| $ | |
| $ | | |
Raw materials |
| |
| | |||
Manufacturing supplies and other |
| |
| | |||
Total inventories |
| $ | |
| $ | | |
22
ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context indicates otherwise, references to “we,” “us,” “our,” the “Company” and “Ingredion” mean Ingredion Incorporated and its consolidated subsidiaries.
Overview
Ingredion is a leading global ingredients solutions provider that transforms corn, tapioca, potatoes, plant-based stevia, grains, fruits, gums and vegetables into value-added ingredients and biomaterials for the food, beverage, brewing and other industries. Our Purpose is to bring the potential of people, nature and technology together to make life better. As of June 30, 2022, we have 45 manufacturing facilities located in North America, South America, Asia-Pacific and Europe, the Middle East and Africa (“EMEA”), and we manage and operate our businesses at a regional level. We believe this approach provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate, bringing added value to our customers.
Ingredion has been navigating evolving global conditions that have varying impacts on our customers, suppliers, employees, operations and, ultimately, our profitability and cash flows. During the three months ended June 30, 2022, we continued to achieve strong price mix and higher volumes, which included increased prices for our products to manage the effects of increasing corn and freight costs. Although a portion of our revenues and costs are established with fixed-rate contracts, our ability to respond to changing customer demands, increasing inflation, fluctuating foreign exchange rates, and shifting supply chain channels were affected by a variety of factors, including the ongoing, global pandemic with new variants of the coronavirus disease 2019 (“COVID-19”) and the conflict between Russia and Ukraine.
Our results for the current period benefited from strong price mix and volume growth, which more than offset higher raw material input costs. Our net sales of $2,044 million for the second quarter of 2022 were over 16 percent higher than our net sales of $1,762 million for the second quarter of 2021 primarily due to higher volumes and stronger price mix, including the pass-through of higher corn costs. The net sales increase contributed to $23 million of higher gross profit during the current period when compared to the second quarter of 2021. Our operating income of $213 million for the second quarter of 2022 declined from operating income of $222 million for the second quarter of 2021. Excluding a one-time benefit of $15 million recorded during the second quarter of 2021 in other operating (income) related to Brazil indirect taxes, operating income increased during the current period. Net income attributable to Ingredion for the second quarter of 2022 was $142 million, or $2.12 diluted earnings per share, which was a decrease from $178 million, or $2.62 diluted earnings per share for the second quarter of 2021. Excluding the reversal of tax liabilities related to certain unremitted earnings from foreign subsidiaries during the second quarter of 2021 and the Brazil indirect taxes, our results for the current period reflected higher net income attributable to Ingredion as well as a higher diluted earnings per share.
Results of Operations
We have significant operations in four reporting segments: North America, South America, Asia-Pacific and EMEA. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ revenues and expenses. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, revenues and expenses denominated in the functional currencies of these subsidiaries are translated into U.S. dollars at the applicable average exchange rates for the period.
We acquired KaTech on April 1, 2021, and the results of the acquired business are included in our consolidated financial results beginning on the acquisition date, which inclusion affects the comparability of results between years. In addition, we entered into the Argentina joint venture on February 12, 2021, which closed on August 2, 2021, and the Amyris joint venture on June 1, 2021. Our share of results in joint ventures is classified as other operating (income) and comparability between years and between financial statement line items is affected by the timing of and consideration provided to the investments. While we identify fluctuations due to the acquisitions in our discussion below, we also address results of operations excluding the impact of our acquisitions and investments, where appropriate, to provide a more comparable and meaningful analysis.
23
For the Three Months Ended June 30, 2022
With Comparatives for the Three Months Ended June 30, 2021
Net sales. Net sales increased 16 percent to $2,044 million for the three months ended June 30, 2022, compared to $1,762 million for the three months ended June 30, 2021. The increase in net sales was primarily driven by strong price mix, including the pass-through of higher corn and input costs.
Cost of sales. Cost of sales increased by 19 percent to $1,654 million for the three months ended June 30, 2022, compared to cost of sales of $1,395 million for the three months ended June 30, 2021. The increase in cost of sales primarily reflected higher net corn costs. Our gross profit margin of 19 percent for the three months ended June 30, 2022, decreased from 21 percent for the three months ended June 30, 2021. The decrease in gross margin was primarily driven by higher corn and input costs.
Operating expenses. Operating expenses increased 7 percent to $179 million for the three months ended June 30, 2022, compared to $167 million for the three months ended June 30, 2021, primarily due to higher inflationary costs. Operating expenses as a percentage of net sales was 9 percent for both the three months ended June 30, 2022, and the three months ended June 30, 2021.
Other operating (income). Other operating (income) decreased to $(4) million for the three months ended June 30, 2022, compared to $(26) million for the three months ended June 30, 2021. During the three months ended June 30, 2021, we recorded $(15) million of Other operating (income) related to Brazil indirect tax credits and an $(8) million net gain as part of the formation of the Amyris joint venture.
Restructuring and impairment charges. Restructuring and impairment charges were $2 million for the three months ended June 30, 2022, compared to $4 million for the three months ended June 30, 2021. These charges decreased due to the wind-down of our Cost Smart restructuring program.
Financing costs. Financing costs decreased 11 percent to $17 million for the three months ended June 30, 2022, compared to $19 million for the three months ended June 30, 2021. The decrease was primarily due to higher foreign exchange losses in the prior year compared to foreign exchange losses in the current year.
Provision for income taxes. Our effective income tax rates for the three months ended June 30, 2022 increased to 26.0 percent from 11.7 percent during the three months ended June 30, 2021. The increase in the effective income tax rate was primarily driven by a discrete tax benefit of $30 million during the three months ended June 30, 2021, due to the reversal of an accrual for withholding tax on the unremitted earnings of a foreign subsidiary.
Net income attributable to non-controlling interests. Net income attributable to non-controlling interests were $3 million for both the three months ended June 30, 2022, and the three months ended June 30, 2021.
Net income attributable to Ingredion. Net income attributable to Ingredion for the three months ended June 30, 2022, was $142 million compared to a net income of $178 million for the three months ended June 30, 2021. During the three months ended June 30, 2021, we recorded several non-recurring items including: the $30 million discrete tax benefit, $15 million of income related to Brazil indirect tax credits and the $8 million net gain from the formation of the Amyris joint venture. Excluding these items, net income increased due to strong price mix, offset in part by higher corn and input costs.
Segment Results
North America
Net sales. North America’s net sales increased 20 percent to $1,284 million for the three months ended June 30, 2022, compared to $1,068 million for the three months ended June 30, 2021. The increase was primarily driven by a 19 percent improvement in price mix and a 1 percent increase in volume.
Operating income. North America’s operating income was $161 million for the three months ended June 30, 2022, compared to $149 million for the three months ended June 30, 2021. The increase was primarily due to favorable price mix and higher volumes that more than offset higher corn and input costs.
24
South America
Net sales. South America’s net sales increased 8 percent to $290 million for the three months ended June 30, 2022, from $268 million for the three months ended June 30, 2021. Excluding the effects of revenues from operations we contributed to the Argentina joint venture, net sales were 42 percent higher than in the same period last year. The increase reflected a 23 percent higher price mix across South America, a 15 percent increase in volume and a 4 percent favorable foreign exchange impact.
Operating income. South America’s operating income increased 18 percent to $39 million for the three months ended June 30, 2022, compared to $33 million for the three months ended June 30, 2021. The increase was primarily driven by favorable price mix which more than offset higher corn and input costs.
Asia-Pacific
Net sales. Asia-Pacific’s net sales increased 11 percent to $275 million for the three months ended June 30, 2022, compared to $248 million for the three months ended June 30, 2021. The increase was driven by a 15 percent higher price mix and a 4 percent increase in volume, the effects of which were partially offset by unfavorable foreign exchange impacts of 8 percent.
Operating income. Asia-Pacific’s operating income decreased 13 percent to $21 million for the three months ended June 30, 2022, compared to $24 million for the three months ended June 30, 2021. The decrease was driven by higher corn and input costs in Korea, COVID-19 disruptions in China and foreign currency headwinds.
EMEA
Net sales. EMEA’s net sales increased by 10 percent to $195 million for the three months ended June 30, 2022, compared to $178 million for the three months ended June 30, 2021. Despite unfavorable foreign exchange impacts of 14 percent, the increase was driven by a 20 percent higher price mix and a volume increase of 4 percent.
Operating income. EMEA’s operating income decreased 9 percent to $29 million for the three months ended June 30, 2022, compared to $32 million for the three months ended June 30, 2021. Favorability in Europe was more than offset by unfavorable Pakistan results and foreign exchange headwinds across the region.
For the Six Months Ended June 30, 2022
With Comparatives for the Six Months Ended June 30, 2021
Net sales. Net sales increased 17 percent to $3,936 million for the six months ended June 30, 2022, compared to $3,376 million for the six months ended June 30, 2021. The increase in net sales was driven by strong price mix, including the pass through of higher corn and input costs.
Cost of sales. Cost of sales increased by 19 percent to $3,167 million for the six months ended June 30, 2022, compared to cost of sales of $2,658 million for the six months ended June 30, 2021. The increase in cost of sales primarily reflected higher net corn costs. Our gross profit margin of 20 percent for the six months ended June 30, 2022 decreased from 21 percent for the six months ended June 30, 2021. The decrease in gross margin was primarily driven by higher corn and input costs.
Operating expenses. Operating expenses increased 9 percent to $348 million for the six months ended June 30, 2022, compared to $320 million for the six months ended June 30, 2021, primarily due to higher inflationary costs. Operating expenses as a percentage of net sales were approximately 9 percent for both the six months ended June 30, 2022, and the six months ended June 30, 2021.
Other operating (income). Other operating (income) decreased to $(6) million for the six months ended June 30, 2022, compared to $(28) million for the six months ended June 30, 2021. During the six months ended June 30, 2021, we recorded $(15) million of Other operating (income) related to Brazil indirect tax credits and an $(8) million net gain from the formation of the Amyris joint venture.
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Restructuring and impairment charges. Restructuring and impairment charges were $4 million for the six months ended June 30, 2022, compared to $374 million for the six months ended June 30, 2021. The charges we incurred for the six months ended June 30, 2021 were primarily driven by an impairment charge of $360 million for net assets from our Argentina business we contributed to the Argentina joint venture, of which $311 million was related to the write-off of the cumulative translation losses associated with the contributed net assets and $49 million was related to the write-down of the contributed net assets to fair value.
Financing costs. Financing costs increased 8 percent to $41 million for the six months ended June 30, 2022, compared to $38 million for the six months ended June 30, 2021. The increase was primarily due to higher foreign exchange losses in the current year compared to the prior year. Third party financing costs were flat due to a higher average debt balance and lower weighted average interest rate during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.
Provision for income taxes. The effective tax rate for the six months ended June 30, 2022, decreased to 27.4 percent from 464.7 percent for the six months ended June 30, 2021. The primary cause of the decrease in the effective tax rate was the $360 million impairment charge related to net assets contributed to the Argentina joint venture during the three months ended March 31, 2021, that did not have a corresponding income tax benefit. The effect of this charge was partially offset by a discrete tax benefit of $30 million during the three months ended June 30, 2021, due to the reversal of an accrual for withholding tax on the unremitted earnings of a foreign subsidiary.
Net income attributable to non-controlling interests. Net income attributable to non-controlling interests was $6 million for both the six months ended June 30, 2022, and the six months ended June 30, 2021.
Net Income attributable to Ingredion. Net income attributable to Ingredion for the six months ended June 30, 2022, was $272 million compared to a net loss of $(68) million for the six months ended June 30, 2021. The net loss in the prior year period was largely attributable to the $360 million impairment charge for the Argentina assets contributed to the Argentina joint venture that we recorded in the six months ended June 30, 2021.
Segment Results
North America
Net sales. North America’s net sales increased 22 percent to $2,458 million for the six months ended June 30, 2022, compared to $2,013 million for the six months ended June 30, 2021. The increase was primarily driven by a 20 percent improvement in price mix and a 2 percent increase in volume.
Operating income. North America’s operating income was $317 million for the six months ended June 30, 2022, compared to $283 million for the six months ended June 30, 2021. The increase was driven by favorable price mix and higher volumes that more than offset higher corn and input costs.
South America
Net sales. South America’s net sales increased by $1 million to $542 million for the six months ended June 30, 2022, from $541 million for the six months ended June 30, 2021. Excluding the effects of revenues from operations we contributed to the Argentina joint venture, net sales were 32 percent higher than in the same period last year. The increase reflected 24 percent higher price mix across South America, a 6 percent increase in volume and a 2 percent favorable foreign exchange impact.
Operating income. South America’s operating income increased 5 percent to $77 million for the six months ended June 30, 2022, compared to $73 million for the six months ended June 30, 2021. The increase was primarily driven by favorable price mix which more than offset higher corn and input costs.
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Asia-Pacific
Net sales. Asia-Pacific’s net sales increased 13 percent to $547 million for the six months ended June 30, 2022, compared to $483 million for the six months ended June 30, 2021. The increase was driven by an 11 percent higher price mix and an increase in volume of 8 percent, partially offset by unfavorable foreign exchange impacts of 6 percent.
Operating income. Asia-Pacific’s operating income decreased 12 percent to $43 million for the six months ended June 30, 2022, compared to $49 million for the six months ended June 30, 2021. The decrease was driven by higher corn and input costs in Korea, COVID-19 disruptions in China and foreign currency headwinds.
EMEA
Net sales. EMEA’s net sales increased by 15 percent to $389 million for the six months ended June 30, 2022, compared to $339 million for the six months ended June 30, 2021. Despite unfavorable foreign exchange impacts of 11 percent, the increase was driven by a 19 percent higher price mix and an increase in volume of 7 percent, partially due to the purchase of KaTech on April 1, 2021.
Operating income. EMEA’s operating income decreased 5 percent to $60 million for the six months ended June 30, 2022, compared to $63 million for the six months ended June 30, 2022. Favorability in Europe was more than offset by unfavorable Pakistan results and foreign exchange headwinds across the region.
Liquidity and Capital Resources
As of June 30, 2022, we had total available liquidity of approximately $1,484 million. Domestic liquidity of $452 million consisted of $10 million in cash and cash equivalents and $442 million of short-term borrowing availability through our $1 billion commercial paper program, under which $558 million of borrowings were outstanding as of June 30, 2022. The commercial paper program, which we initiated on July 27, 2021, is backed by $1 billion of borrowing availability under a five-year revolving credit agreement that we entered into on June 30, 2021.
We had international liquidity as of June 30, 2022 of approximately $1,032 million, consisting of $308 million of cash and cash equivalents and $4 million of short-term investments held by our operations outside the U.S., as well as $720 million of unused operating lines of credit in the various foreign countries in which we operate. As the parent company, we guarantee certain obligations of our consolidated subsidiaries, which totaled $66 million as of June 30, 2022. We believe that such consolidated subsidiaries will be able to meet their financial obligations as they become due.
As of June 30, 2022, we had total debt outstanding of approximately $2.4 billion, or $1.7 billion excluding the outstanding commercial paper and other short-term borrowings. Of our outstanding debt, $1.7 billion consists of senior notes that do not require principal repayment until 2026 through 2050. See Note 8 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our debt.
The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and commercial paper program and to raise funds in the capital markets. We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program, will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other investing and financing activities for at least the next twelve months and for the foreseeable future thereafter. Our future cash flow needs will depend on many factors, including our rate of revenue growth, the timing and extent of our expansion into new markets, the timing of introductions of and rate of success for new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions. We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions.
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Net Cash Flows
Our short-term borrowing increased $344 million, which we primarily used to invest in capital expenditures and mechanical stores purchase, pay dividends, repurchase shares of common stock and fund operating activities. Our cash used by operating activities was $4 million during the first half of 2022 as compared to cash provided by operating activities of $129 million during the first half of 2021. This decrease was primarily due to changes in working capital of $459 million through the first half of 2022, which were primarily attributable to increases in trade accounts receivable and inventory. Working capital for trade accounts receivable increased due to higher pricing and higher freight costs for products sold during the first half of 2022. Working capital for inventory increased due primarily to higher input costs from raw materials during the first half of 2022.
We used $144 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities in the first half of 2022, as compared to $117 million that we paid in the first half of 2021 for capital expenditures and mechanical stores. Capital investments for full year 2022 are anticipated to be between $290 million and $320 million.
We declare and pay cash dividends to our common stockholders of record on a quarterly basis. On May 20, 2022, our Board of Directors declared a quarterly cash dividend of $0.65 per share of common stock. This dividend was paid on July 26, 2022, to stockholders of record at the close of business on July 1, 2022. Dividends paid, including those to noncontrolling interests, were $90 million for the first half of 2022, compared to $93 million for the first half of 2021.
During the three months ended June 30, 2022, we repurchased 502 thousand outstanding shares of common stock in open market transactions at a net cost of $44 million, as compared to repurchases of 107 thousand outstanding shares of common stock at a net cost of $10 million in the three months ended June 30, 2021. For the six months ended June 30, 2022, we repurchased 957 thousand outstanding shares of common stock in open market transactions at a net cost of $83 million, as compared to repurchases of 265 thousand outstanding shares of common stock at a net cost of $24 million for the six months ended June 30, 2021.
We have not provided foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings. We do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to our critical accounting policies and estimates during the first half of 2022.
New Accounting Pronouncements
The information called for by this section is incorporated herein by reference to Note 2 of the Condensed Consolidated Financial Statements included in this report.
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FORWARD-LOOKING STATEMENTS
This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Ingredion intends these forward-looking statements to be covered by the safe harbor provisions for such statements.
Forward-looking statements include, among others, any statements regarding Ingredion’s prospects and its future operations, financial condition, earnings, net sales, tax rates, capital expenditures, cash flows, expenses or other financial items, including management’s plans or strategies and objectives for any of the foregoing, and any assumptions, expectations or beliefs underlying any of the foregoing.
These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,” “propels,” “opportunities,” “potential,” “provisional,” or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in this report are “forward-looking statements.”
These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and beyond our control. Although we believe our expectations expressed or implied in these forward-looking statements are based on reasonable assumptions, investors are cautioned that no assurance can be given that our expectations will prove correct.
Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various risks and uncertainties, including the impact of COVID-19 on the demand for our products and our financial results; changing consumption preferences relating to high fructose corn syrup and other products we make; the effects of global economic conditions and the general political, economic, business, and market conditions that affect customers and consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products, including, particularly, economic, currency and political conditions in South America and economic and political conditions in Europe, and the impact these factors may have on our sales volumes, the pricing of our products and our ability to collect our receivables from customers; future purchases of our products by major industries which we serve and from which we derive a significant portion of our sales, including, without limitation, the food, beverage, animal nutrition, and brewing industries; the uncertainty of acceptance of products developed through genetic modification and biotechnology; our ability to develop or acquire new products and services at rates or of qualities sufficient to gain market acceptance; increased competitive and/or customer pressure in the corn-refining industry and related industries, including with respect to the markets and prices for our primary products and our co-products, particularly corn oil; the availability of raw materials, including potato starch, tapioca, gum Arabic, and the specific varieties of corn upon which some of our products are based, and our ability to pass along potential increases in the cost of corn or other raw materials to customers; energy costs and availability, including energy issues in Pakistan; our ability to contain costs, achieve budgets and realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget as well as with respect to freight and shipping costs; the effects of climate change and legal, regulatory, and market measures to address climate change; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing facilities; the behavior of financial and capital markets, including with respect to foreign currency fluctuations, fluctuations in interest and exchange rates and market volatility and the associated risks of hedging against such fluctuations; effects of the conflict between Russia and Ukraine, including impacts on the availability and prices of raw materials and energy supplies and volatility in exchange and interest rates; our ability to attract, develop, motivate, and maintain good relationships with our workforce; the impact on our business of natural disasters, war, threats or acts of terrorism, the outbreak or continuation of pandemics such as COVID-19, or the occurrence of other significant events beyond our control; the impact of impairment charges on our goodwill or long-lived assets; changes in government policy, law, or regulation and costs of legal compliance, including compliance with environmental regulation; changes in our tax rates or exposure to additional income tax liability; increases in our borrowing costs that could result from increased interest rates; our ability to raise funds at reasonable rates and other factors affecting our access to sufficient funds for future growth and expansion; security breaches with respect to information technology systems, processes, and sites; volatility in the stock market and other factors that could adversely affect our stock price; risks affecting the continuation of our dividend policy; and our ability to maintain effective internal control over financial reporting.
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Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see “Risk Factors” and other information included in our Annual Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 and our subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the discussion set forth in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk at pages 41 to 43 in our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of the manner in which we address risks with respect to interest rates, raw material and energy costs and foreign currencies. There have been no material changes in the information provided with respect to those disclosures during the six months ended June 30, 2022.
ITEM 4
CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2022. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures (a) are effective in providing reasonable assurance that all information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, has been recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
There have been no changes in our internal control over financial reporting during the three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
In 2015 and 2016, Ingredion self-reported certain monitoring and recordkeeping issues relating to environmental regulatory matters involving its Indianapolis, Indiana manufacturing facility. In September 2017, following inspections and the provision by Ingredion of requested information to the U.S. Environmental Protection Agency (the “EPA"), the EPA issued Ingredion a Notice of Violation, which included additional alleged violations beyond those self-reported by Ingredion. These additional alleged violations primarily relate to the results of stack testing at the facility. The allegations in the Notice of Violation, whether from the self-reported information, the inspections or the additional requested information, are not material to us. The EPA has referred the overall matter to the U.S. Department of Justice, Environment and Natural Resources Division (the "DOJ"). The DOJ and Ingredion are engaged in discussions with respect to a resolution of this matter.
We are currently subject to claims and suits arising in the ordinary course of business, including those relating to labor matters, certain environmental proceedings and commercial claims. We also routinely receive inquiries from regulators and other government authorities relating to various aspects of our business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, we have matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within our complete control and may not be known for prolonged periods of time. We do not believe that the results of currently known legal proceedings and inquires will be material to us. There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.
ITEM 1A
RISK FACTORS
We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management. During 2022, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for 2021 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.
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ITEM 2
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities:
The following table presents information regarding our repurchase of shares of our common stock during the three months ended June 30, 2022.
Maximum Number |
| ||||||||
Total Number of | (or Approximate |
| |||||||
Total | Average | Shares Purchased as | Dollar Value) of |
| |||||
Number | Price | Part of Publicly | Shares That May Yet |
| |||||
of Shares | Paid | Announced Plans or | be Purchased Under |
| |||||
(shares in thousands) | Purchased | per Share | Programs | the Plans or Programs |
| ||||
April 1 - April 30, 2022 |
| 167,171 |
| 88.51 |
| 167,171 |
| 4,468 shares | |
May 1 - May 30, 2022 |
| 60,000 |
| 86.66 |
| 60,000 |
| 4,408 shares | |
June 1 - June 30, 2022 | 275,000 |
| 87.01 |
| 275,000 | 4,133 shares | |||
Total |
| 502,171 |
| 86.50 |
| 502,171 |
On October 22, 2018, the Board of Directors authorized a stock repurchase program permitting us to purchase up to an additional 8.0 million shares of our outstanding common stock from November 5, 2018 through December 31, 2023. As of June 30, 2022, we have 4.1 million shares available for repurchase under the stock repurchase program.
32
ITEM 6
EXHIBITS
a) Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index below:
EXHIBIT INDEX
Number | Description of Exhibit | |
31.1† | ||
31.2† | ||
32.1†† | ||
32.2†† | ||
101.INS† | XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
101.SCH† | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL† | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF† | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB† | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE† | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104† | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document, which is contained in Exhibit 101). |
_____________________________________
† | Filed with this report. | |
†† | Furnished with this report. |
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INGREDION INCORPORATED | |||
DATE: | August 9, 2022 | By | /s/ James D. Gray |
James D. Gray | |||
Executive Vice President and Chief Financial Officer | |||
DATE: | August 9, 2022 | By | /s/ Davida M. Gable |
Davida M. Gable Vice President, Global Controller and Global Shared Services | |||
34
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James P. Zallie, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Ingredion Incorporated; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: August 9, 2022 | /s/ James P. Zallie |
| James P. Zallie |
| President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, James D. Gray, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Ingredion Incorporated; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 9, 2022 | /s/ James D. Gray |
| James D. Gray |
| Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002
I, James P. Zallie, the Chief Executive Officer of Ingredion Incorporated, certify that to my knowledge (i) the report on Form 10-Q for the quarter ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ingredion Incorporated.
/s/ James P. Zallie | |
James P. Zallie | |
Chief Executive Officer | |
August 9, 2022 | |
A signed original of this written statement required by Section 906 has been provided to Ingredion Incorporated and will be retained by Ingredion Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002
I, James D. Gray, the Chief Financial Officer of Ingredion Incorporated, certify that to my knowledge (i) the report on Form 10-Q for the quarter ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ingredion Incorporated.
/s/ James D. Gray | |
James D. Gray | |
Chief Financial Officer | |
August 9, 2022 | |
A signed original of this written statement required by Section 906 has been provided to Ingredion Incorporated and will be retained by Ingredion Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.
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