WESTCHESTER, Ill., Aug 2 (Bernama-GLOBE NEWSWIRE) -- Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to diversified industries, today reported results for the second quarter 2019. The results, reported in accordance with U.S. generally accepted accounting principles (“GAAP”) for 2019 and 2018, include items that are excluded from the non-GAAP financial measures that the Company presents.
 
“During the second quarter, we experienced foreign exchange impacts and rapidly changing raw material markets. Our teams have taken aggressive pricing actions to mitigate foreign exchange impacts. We experienced an increase in the net cost of corn in North America due to continued crop inventory imbalances arising from the U.S./China trade dispute. We are closely monitoring raw material markets and selectively capitalizing on opportunities to partially offset the higher cost of corn,” said Jim Zallie, Ingredion’s president and chief executive officer.
 
“As a result of the actions we took to accelerate our Cost Smart savings program, we now expect to deliver $30 million to $40 million of 2019 year-end cumulative run-rate savings, an increase from the $24 million to $34 million of savings previously anticipated.”
 
“Our specialty growth platforms delivered increased net sales in the quarter led primarily by sugar reduction and specialty sweeteners. We are nearing startup of Allulose production at our manufacturing facility in San Juan del Rio, Mexico, which will complement our existing portfolio of specialty sweeteners. In addition, we progressed our plant-based proteins growth strategy and are actively filling our customer pipeline with anticipated sales in the second half of the year. We have also expanded our relationship with Verdient Foods to increase the capacity to produce food-grade, higher-value specialty pulse-based flours and concentrates.”
 
“We expect modest growth in the second half of the year. However, due to the recent increase in corn costs, our expectation for net corn costs in the second half in North America is higher. Our adjusted EPS guidance for 2019 is now in the range of $6.60-$6.90,” added Zallie.
 
*Adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate and adjusted cash flow from operations are non-GAAP financial measures. See section II of the Supplemental Financial Information entitled “Non-GAAP Information” following the Condensed Consolidated Financial Statements included in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures.
 
 


 
Financial Highlights

 
Business Review

Total Ingredion 


 
Net Sales

 
North America



Operating income

 
 Europe, Middle East, and Africa (EMEA)
 


Operating income

Updated 2019 Outlook
 
The Company expects 2019 adjusted EPS to be in the range of $6.60-$6.90 compared to adjusted EPS of $6.92 in 2018. This expectation excludes acquisition-related, integration and restructuring costs, as well as any potential impairment costs. Compared with last year, the 2019 full-year outlook is as follows: North America operating income is expected to be down assuming current market conditions for corn and co-products, which have been negatively impacted by unprecedented weather and late crop plantings in the U.S. and continued crop inventory imbalances arising from the U.S./China trade dispute; South America operating income is expected to be flat reflecting macroeconomic challenges; Asia-Pacific operating income is expected to be down driven by foreign exchange rates, increased input costs and anticipated slower customer demand due to the regional impact of trade disputes; EMEA operating income is expected to be down due to foreign exchange, higher raw material cost and uncertainty around Brexit; adjusted effective tax rate is expected to be in the range of approximately 26.5-28.0 percent; and higher-value specialty ingredients are expected to deliver continued growth. The Company expects operating income to be up modestly in the second half of 2019 relative to 2018. Cash from operations is expected to be in the range of $610 million to $660 million. Capital expenditures are anticipated to be between $330 million and $360 million.
 
Conference Call and Webcast Details
Ingredion will conduct a conference call today at 7:30 a.m. Central Time hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real time and will include a presentation accessible through the Company’s website at www.ingredion.com. The presentation will be available to download a few hours prior to the start of the call. A replay of the webcast will be available for a limited time at www.ingredion.com.
 
ABOUT THE COMPANY
Ingredion Incorporated (NYSE: INGR), headquartered in the suburbs of Chicago, is a leading global ingredient solutions provider serving customers in more than 120 countries. With annual net sales of nearly $6 billion, the company turns grains, fruits, vegetables and other plant materials into value-added ingredients and biomaterial solutions for the food, beverage, paper and corrugating, brewing and other industries. With Ingredion Idea Labs^® innovation centers around the world and more than 11,000 employees, the Company develops ingredient solutions to meet consumers' evolving needs by making crackers crunchy, yogurt creamy, candy sweet, paper stronger, and adding fiber to nutrition bars. For more information, visit ingredion.com.
 
Forward-Looking Statements
This news release 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. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements.
 
Forward-looking statements include, among other things, any statements regarding the Company's future financial condition, earnings, revenues, tax rates, capital expenditures, cash flows, expenses or other financial items, including the Company’s expectations for 2019 adjusted EPS, operating income, adjusted effective tax rate, cash from operations and capital expenditures, any statements concerning the Company's prospects or future operations, including management's plans or strategies and objectives therefor, and any assumptions, expectations or beliefs underlying 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 release or referred to in this release 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 are beyond our control. Although we believe our expectations reflected 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 factors, including changing consumption preferences including those relating to high fructose corn syrup; the effects of global economic conditions, including, particularly, economic, currency and political conditions in South America and economic and political conditions in Europe, and their impact on our sales volumes and pricing of our products; our ability to collect our receivables from customers and our ability to raise funds at reasonable rates; future financial performance of major industries which we serve, including, without limitation, the food, beverage, paper and corrugated, and brewing industries; fluctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such fluctuations; genetic and biotechnology issues; our ability to develop or acquire new products and services at rates or of qualities sufficient to meet expectations; availability of raw materials, including corn, including the impact of recent excess precipitation in the U.S. corn-planting season, potato starch, tapioca, gum Arabic and also the specific varieties of corn upon which some of our products are based; fluctuations in the markets and prices for our co-products, particularly corn oil; fluctuations in aggregate industry supply and market demand; the behavior of financial markets, including foreign currency fluctuations and fluctuations in interest and exchange rates; volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, market and weather conditions in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products; energy costs and availability; freight and shipping costs; and changes in regulatory controls regarding quotas; tariffs, duties, taxes and income tax rates, particularly United States tax reform enacted in 2017; operating difficulties; energy issues in Pakistan; boiler reliability; our ability to effectively integrate and operate acquired businesses; our ability to achieve budgets and to realize expected synergies; our ability to achieve expected savings under our Cost Smart program; our ability to complete planned maintenance and investment projects successfully and on budget; labor disputes; ; increased competitive and/or customer pressure in the corn-refining industry; and the outbreak or continuation of serious communicable disease or hostilities, including acts of terrorism. 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, 2018 and subsequent reports on Forms 10-Q and 8-K.
 
CONTACTS:
Investors: Ryan Koller, 708-551-2592
Media: Becca Hary, 708-551-2602
 





 

Ingredion Incorporated ("Ingredion")
Supplemental Financial Information
(Unaudited)
 
I.  Geographic Information of Net Sales and Operating Income
 


II.  Non-GAAP Information

To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), we use non-GAAP historical financial measures, which exclude certain GAAP items such as acquisition and integration costs, impairment and restructuring costs, and certain other special items. We generally use the term “adjusted” when referring to these non-GAAP amounts.  

Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of our operating results and trends for the periods presented. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. 
  
Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies. A reconciliation of each non-GAAP historical financial measure to the most comparable GAAP measure is provided in the tables below.
 


Notes
 
(i) The 2019 period includes costs related to the acquisition and integration of the business acquired from Western Polymer, LLC.
 
(ii) During the three and six months ended June 30, 2019, the Company recorded $9 million and $13 million of pre-tax restructuring charges, respectively.  During the second quarter of 2019, the Company recorded $6 million of other costs, including professional services, and employee-related severance in the North America and South America  segments as part of its Cost Smart SG&A program and finance transformation initiative and $3 million of other costs, including professional services, related to its Cost Smart cost of sales program.  During the six months ended June 30, 2019, the $13 million of restructuring charges consisted of $9 million of costs associated with its Cost Smart SG&A program and Finance Transformation initiative and $4 million of costs associated with its Cost Smart cost of sales program.
 
During the three and six months ended June 30, 2018, the Company recorded an $8 million and $11 million pre-tax restructuring charge, respectively.  During the second quarter of 2018, the Company recorded $6 million of employee-related severance and other costs associated with its Cost Smart program and $2 million of costs associated with the Company's finance transformation initiative, and $1 million of other costs related to the abandonment of certain assets related to its leaf extraction process in Brazil.
 
(iii) The Company had been pursuing relief from double taxation under the U.S. and Canadian tax treaty for the years 2004 through 2013.  During the fourth quarter of 2016, the Company recorded a net reserve of $24 million, including interest thereon, recorded as a $70 million liability and a $46 million benefit.  During the third quarter of 2017, an agreement was reached between the two countries for the specific issues being contested.  As a result of that final settlement, during the second quarter of 2018, the Company received a $34 million refund from the CRA and recorded $2 million of interest penalty through tax expense.
 
II. Non-GAAP Information (continued)



II. Non-GAAP Information (continued)
 
II. Non-GAAP Information (continued)
 

 
Above is a reconciliation of our anticipated full year 2019 diluted EPS to our anticipated full year 2019 adjusted diluted EPS. The amounts above may not reflect certain future charges, costs and/or gains that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance.  These amounts include, but are not limited to, acquisition and integration costs, impairment and restructuring costs, and certain other special items.  We generally exclude these items from our adjusted EPS guidance. For these reasons, we are more confident in our ability to predict adjusted EPS than we are in our ability to predict GAAP EPS.

(iii) Reflects expected costs related to the acquisition and integration of the business acquired from Western Polymer, LLC. and acquisitions to be determined

(iv) Primarily reflects current estimates for 2019 restructuring charges related to the Cost Smart Cost of Sales & SG&A programs. As specific projects within these programs are approved, the estimates will be reviewed and may be subject to revision.
 
Source: Ingredion Incorporated
 
--BERNAMA