Ingredion Incorporated · NYSE:INGR
Ingredion — Q4 2023 Earnings Presentation
33 slides from Ingredion's earnings presentation, Feb 6, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings Call
Fourth Quarter and Full Year 2023 Earnings Call Jim Zallie President and CEO James Gray Executive Vice President and CFO
Slide 2: Non-GAAP Financial Measures and Forward-Looking Statements
Non-GAAP Financial Measures This presentation provides information about adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate, and other financial measures (collectively, the “non-GAAP financial measures”) which are not measurements of f
Slide 3: CEO Perspective
Jim Zallie President and CEO Fourth Quarter and Full Year 2023 Earnings Call CEO Perspective 3
Slide 4: Strong operating performance driven by pricing actions and cost savings
Strong operating performance driven by pricing actions and proactive cost savings initiatives FY Net Sales FY Adjusted Op Income +3% +23% Absent FX impacts Absent FX impacts +4% +25% Q4 Q4 -3% -4% +21% +19% 4 *See appendix for a reconciliation of these non-GAAP financial measures to the comparable G
Slide 5: Strong execution across our four strategic pillars
Strong execution across our four strategic pillars Specialties Growth Commercial Excellence Cost Competitiveness through Operational Excellence • FY global specialties net sales • Idea Lab customer • Procurement category strategies grew greater than 4% vs. prior engagements +26% for FY 2023 and savi
Slide 6: Continued gross margin strength due to price and customer mix
Continued gross margin strength due to price and customer mix, as well as cost savings initiatives Gross margin +260 bps 21.2% 21.4% 19.3% 18.8% 6th consecutive quarter-over-quarter gross margin expansion FY 2020 FY 2021 FY 2022 FY 2023 6
Slide 7: Record year of earnings despite challenging market environment
Record year of earnings despite challenging market environment Excellent collaboration across functions and businesses to achieve strategic goals FY Net Sales FY Adj. FY Adj. EPS FY Cash from Shareholder Operating Income Operations Return* $8.2B $969M $9.42 +$1B 15% +3% +23% +26% 6X 7 *Shareholder R
Slide 8: Financial Update
James Gray Executive Vice President and CFO Fourth Quarter and Full Year 2023 Earnings Call Financial Update 8
Slide 9: Q4 highlights: Income statement
Q4 highlights: Income statement $ in millions, unless noted Q4 2022 Q4 2023 Change Net Sales $1,987 $1,921 -3% Gross Profit $351 $400 +14% Gross Profit Margin 17.7% 20.8% 310 bps Reported Operating Income $157 $202 +29% Reported Diluted EPS $1.71 $1.97 $0.26/share Adjusted Operating Income* $168 $20
Slide 10: Q4: Net sales bridge
Q4: Net sales bridge $ in millions -3% $1,987 $19 $63 $1,921 $(148) Q4 2022 FX Volume Price/Mix Q4 2023 10 Totals may not foot due to rounding
Slide 11: Quarterly volume trends
Quarterly volume trends Indexed Against 2019 Quarterly Average of Shipped Volume* 125% 120% 115% Ukraine Supply chain conflict pressures 110% peak Upward trend for Q4 Q2 volumes 105% Q3 Q1 Q3 Q2 Q4 100% Q4 Q1 Q3 Q1 Q3 Q4 95% Q1 Supply chain Q2 COVID–19 pressures easing 90% emerges Delta Variant and
Slide 12: Q4: Net sales variance by region
Q4: Net sales variance by region Foreign Net Sales Volume Price Mix Exchange Change North America 0% -10% 8% -2% South America 9% 1% -18% -8% Asia-Pacific 1% -4% 0% -3% EMEA -5% -12% 12% -5% Ingredion 1% -7% 3% -3% 12 Totals may not foot due to rounding
Slide 13: Q4: EPS bridge
Q4: EPS bridge Amounts are dollars/share Margin $ 0.94 Volume (0.76) 2022 Reported Diluted EPS $ 1.71 Foreign Exchange Rates 0.03 Restructuring/Impairment Costs 0.00 Other Income 0.20 Acquisition/Integration Costs 0.06 Changes from Operations $ 0.41 Tax and other matters (0.12) 2022 Adjusted Diluted
Slide 14: Full-year highlights: Income statement
Full-year highlights: Income statement $ in millions, unless noted FY 2022 FY 2023 Change Net Sales $7,946 $8,160 +3% Gross Profit $1,494 $1,749 +17% Gross Profit Margin 18.8% 21.4% 260 bps Reported Operating Income $762 $957 +26% Reported Diluted EPS $7.34 $9.60 $2.26/share Adjusted Operating Incom
Slide 15: Full year: Net sales bridge
Full year: Net sales bridge $ in millions +3% $7,946 $943 $8,160 $(81) $(648) FY 2022 FX Volume Price/Mix FY 2023 15 Totals may not foot due to rounding
Slide 16: Full year: Net sales variance by region
Full year: Net sales variance by region Foreign Net Sales Volume Price Mix Exchange Change North America -1% -8% 14% 5% South America 2% -6% -2% -6% Asia-Pacific -2% -7% 7% -2% EMEA -9% -10% 24% 5% Ingredion -1% -8% 12% 3% 16 Totals may not foot due to rounding
Slide 17: Full year: EPS bridge
Full year: EPS bridge Amounts are dollars/share Margin $ 3.78 Volume (1.65) 2022 Reported Diluted EPS $ 7.34 Foreign Exchange Rates (0.16) Restructuring/Impairment Costs 0.05 Other Income 0.02 Acquisition/Integration Costs 0.08 Changes from Operations $ 1.99 Tax and other matters (0.02) 2022 Adjuste
Slide 18: Full year cash from operations and capital allocation
Full year cash from operations and capital allocation $ millions Net Income $651 Depreciation and amortization $219 Working capital $67 Other $120 Cash from operations $1,057 Capital allocation Capital expenditures, net $(314) To Shareholders Dividend payments to INGR Shareholders $(194) Repurchases
Slide 19: Full year 2024 outlook
Full year 2024 outlook Net Sales Flat to up low single-digits 2024 Full Adjusted Operating Income* Up mid-single-digits year Financing costs $95 – $115 million Adjusted effective tax rate* 25.5% – 26.5% Reported EPS $10.20 to $11.15 Adjusted EPS* $9.15 to $9.85 Diluted weighted avg. shares outstandi
Slide 20: Q1 2024 expected to be lower than prior year
Q1 2024 expected to be lower than prior year including Argentina devaluation impact Adj. operating income* $296 -25% to -35% $213 $201 $167 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 Est. 20 *See appendix for a reconciliation of these non-GAAP financial measures to the comparable GAAP financial measure
Slide 21: Record year in 2023 and continued growth momentum into 2024
Record year in 2023 and continued growth momentum into 2024 • Delivered record year in 2023 • Strong profit growth and year-over-year gross margin expansion • Record cash from operations at over $1B dollars • Customer destocking has largely run its course • Business remains resilient and our teams a
Slide 22: Reorganizing business operations to match market growth opportunities
Reorganizing business operations to match market growth opportunities Texture & Healthful Food & Industrial Food & Industrial Other Solutions Ingredients US/Can Ingredients LATAM 22
Slide 23: Questions & Answers
23 Questions & Answers DRIVINGROWTH Customer Co-Creation and Consumer Preferred Innovation ORSEO STARCH-BASED CLEAN AND SIMPLE PLANT-BASED SUGAR REDUCTION FOOD SYSTEMS TEXTURIZERS INGREDIENTS PROTEINS AND SPECIALTY SWEETENERS = ¢ oO 9 o 2. ° s Supply Chain and Operational Excellence — Sustainable an
Slide 24: Upcoming investor activities
Upcoming investor activities CAGNY 2024 Boca Raton | February 21, 2024 JP Morgan Consumer Ingredients Day London | March 12, 2024 BNP Paribas Exane 12th Consumer Ingredients Conference London | March 13, 2024 London non-deal roadshow London | March 14, 2024 24
Slide 25: Appendix
Appendix NN Ingredion Be what's next.
Slide 26: Non-GAAP Information
Non-GAAP Information To supplement the consolidated financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we use non-GAAP historical financial measures, which exclude certain GAAP items such as acquisition and integration costs, restructuring and impai
Slide 27: Reconciliation of GAAP net income and diluted EPS to non-GAAP
Reconciliation of GAAP net income and diluted earnings per share (EPS) to non-GAAP adjusted net income and adjusted diluted EPS
Slide 28: Reconciliation of GAAP net income and diluted EPS (continued)
Reconciliation of GAAP net income and diluted earnings per share (EPS) to non-GAAP adjusted net income and adjusted diluted EPS (continued)
Slide 29: Reconciliation of GAAP operating income to non-GAAP adjusted operating income
Reconciliation of GAAP operating income to non-GAAP adjusted operating income Totals may not foot due to rounding
Slide 30: Reconciliation of GAAP effective income tax rate to non-GAAP
Reconciliation of GAAP effective income tax rate to non-GAAP adjusted effective income tax rate Totals may not foot due to rounding
Slide 31: Reconciliation of effective income tax rate, cont'd
Reconciliation of GAAP effective income tax rate to non-GAAP adjusted effective income tax rate, cont’d
Slide 32: Reconciliation of anticipated GAAP diluted EPS to non-GAAP
Reconciliation of anticipated GAAP diluted earnings per share to anticipated non-GAAP adjusted diluted earnings per share
Slide 33: Reconciliation of anticipated GAAP effective tax rate to non-GAAP
Reconciliation of anticipated reported GAAP effective tax rate to anticipated non-GAAP adjusted effective income tax rate