Ingredion Inc (INGR) Q1 2025 Earnings Call Highlights: Strong Operating Income Growth Amid ...

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Wed, May 7, 2025, 1:10 AM 4 min read

Net Sales: $1.8 billion, down 4% versus prior year.
Gross Profit: Increased 12%, with margins up 350 basis points to 25.7%.
Adjusted Operating Income: $273 million, up 26% year-over-year.
Texture and Healthful Solutions Operating Income: Up 34%, with a margin of 16.4%, up 400 basis points.
Food and Industrial Ingredients LATAM Operating Income: $127 million, up 26% year-over-year.
Food and Industrial Ingredients US, Canada Operating Income: $92 million, up 6%, with a margin of 17.7%.
Cash Flow from Operations: $77 million.
Capital Expenditures: $92 million net of disposals.
Share Repurchase: $55 million of outstanding common shares repurchased.
Dividends Paid: $52 million.
Adjusted EPS Guidance for 2025: $10.90 to $11.60.
Cash from Operations Guidance for 2025: $825 million to $950 million.

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Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Ingredion Inc (NYSE:INGR) achieved significant double-digit adjusted EPS and operating income growth in the first quarter of 2025.
The Texture and Healthful Solutions segment delivered a robust 34% increase in operating income, driven by strong sales volume across all geographies.
The Food and Industrial Ingredients LATAM segment experienced double-digit operating income growth, supported by the stability of the Argentine peso and favorable market mix.
The Food and Industrial Ingredients US, Canada segment exceeded expectations with a 26% year-over-year increase in operating income.
Ingredion Inc (NYSE:INGR) was recognized on Fortune's World's Most Admired Companies list and Ethisphere's list of the world's most ethical companies, highlighting its commitment to excellence and ethics.

Negative Points

Net sales for the first quarter were down 4% compared to the prior year, impacted by lower price mix and foreign exchange effects.
The Food and Industrial Ingredients LATAM segment saw a 2% decline in net sales volumes due to soft volumes in brewing.
Ingredion Inc (NYSE:INGR) faces potential challenges from tariffs, although they are expected to have minimal impact for the balance of the year.
The company is cautious about macroeconomic uncertainties, including potential supply chain disruptions and trade dislocations.
Ingredion Inc (NYSE:INGR) anticipates potential incremental costs related to trade dislocations and supply chain adjustments.

Q & A Highlights

Q: Can you provide more details on the updated guidance for Q2 and which segments are expected to drive strength or show weakness? A: (James Gray, CFO) The Q2 guidance is against a record year last year, particularly in our Food and Industrial Ingredients US-Canada segment, which had an extraordinary performance due to a cold weather impact in Q1 2024. LATAM is expected to be seasonally weaker, while Texture and Healthful Solutions should align with full-year guidance, showing solid volume performance.

Q: How do you view the impact of recent corn planting reports on your unhedged net corn costs? A: (James Gray, CFO) We hedge about 80-85% of our corn needs, so any upside might be seen in Q4. The hedging strategy helps us manage volatility and maintain predictable pricing for customers.

Q: Why isn't the stronger-than-expected Q1 fully reflected in the full-year guidance? A: (James Gray, CFO) We are cautiously considering potential supply chain disruptions and incremental costs related to trade dislocations. The uncertainty around tariffs, especially those with a 90-day suspension, adds costs to supply chains, which we are factoring into our guidance.

Q: How are you thinking about volumes for the rest of the year amid consumer uncertainty? A: (James Gray, CFO) We expect mid-single-digit sales volume growth for Texture and Healthful Solutions throughout the year. We are monitoring economic indicators like unemployment and food inflation, which could impact consumer behavior and our volume outlook.

Q: Can you elaborate on the performance in LATAM and the impact of portfolio shifts on operating income? A: (James Gray, CFO) The LATAM segment saw positive operating income growth, partly due to a more stable Argentine peso and inflation. We are optimizing our product mix to move volumes into higher-value uses, which supports margin improvement.

Q: What is the status of the Pakistan affiliate, and how does it compare to the South Korea business? A: (James Gray, CFO) The Pakistan business is similar in size to the South Korea business. We are early in the process of evaluating options, and our current outlook does not assume any impact from a potential sale.

Q: How does the sales mix look in the event of consumer uncertainty and potential trade downs? A: (James Zallie, CEO) Our ingredients are used in both private label and multinational products, so trade downs do not significantly impact our product mix or margins. Our clean label solutions, which have higher margins, continue to perform well.

Q: What are the potential drivers for the upper and lower ends of your full-year guidance? A: (James Zallie, CEO) Upside drivers include a resolution to tariff uncertainties, stronger volumes, and a robust corn crop. Downside risks involve ongoing tariff impacts, supply chain disruptions, and a potential shallow US recession.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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