Core Points - Ingredion Incorporated's Board of Directors has waived the mandatory retirement policy for CEO James P. Zallie, allowing him to continue in his role beyond April 2026 when he turns 65 [1][2] - The Board expressed full confidence in Zallie's leadership, particularly in driving the company's innovation-driven growth strategy [2] - Ingredion reported annual net sales of approximately $7.4 billion for 2024, serving customers in over 120 countries with a focus on ingredient solutions for various markets [3] Company Overview - Ingredion is headquartered in Westchester, Illinois, and operates globally, providing ingredient solutions for food, beverage, animal nutrition, brewing, and industrial markets [3] - The company employs more than 11,000 people and has innovation centers known as Ingredion Idea Labs® around the world [3] - Ingredion's mission is to combine the potential of people, nature, and technology to enhance quality of life [3]

Core Insights - Ingredion Incorporated reported a decline in both net sales and adjusted earnings per share (EPS) for Q3 2025 compared to Q3 2024, with reported EPS at $2.61 and adjusted EPS at $2.75, down from $2.83 and $3.05 respectively [2][4][22] Financial Performance - Net sales for Q3 2025 were $1.816 billion, a decrease of 3% from $1.870 billion in Q3 2024, primarily due to changes in pricing mix and reduced sales volume in the Food & Industrial Ingredients segments [6][40] - Reported operating income for Q3 2025 was $249 million, down 7% from $268 million in Q3 2024, while adjusted operating income was $254 million, a 10% decrease from $282 million [9][40] - The company expects full-year 2025 reported EPS to be in the range of $11.11 to $11.31, and adjusted EPS to be between $11.10 and $11.30 [4][22] Segment Performance - The Texture & Healthful Solutions segment saw a slight increase in net sales to $605 million, up 1% from $600 million in Q3 2024, driven by strong growth in clean label ingredient solutions [10][40] - The Food & Industrial Ingredients segment in Latin America reported net sales of $585 million, a decline of 6% from $620 million in Q3 2024, attributed to weak demand in the brewing industry and overall consumer demand [13][40] - The U.S./Canada Food & Industrial Ingredients segment experienced a 7% decrease in net sales to $507 million, down from $548 million in Q3 2024, primarily due to production challenges following a fire at a major manufacturing facility [15][40] Strategic Outlook - The company plans to continue investing in organic growth opportunities and acquisitions to enhance its Texture & Healthful Solutions portfolio [4][21] - Ingredion aims to return capital to shareholders through dividends and share repurchases, having paid $54 million in dividends in Q3 2025 [21][23] - The company anticipates low to mid-single-digit growth in both reported and adjusted operating income for the full year 2025 [22][24]

Core Insights - Yacktman Asset Management sold 135,400 shares of Ingredion, valued at approximately $17.45 million, reducing its stake in the company [2][3] Company Overview - Ingredion is a leading global ingredient solutions provider with a diversified product portfolio and broad geographic reach [5] - The company generates revenue by processing corn and other starch-based materials into ingredients for various applications, including food, beverage, brewing, and industrial uses [8] Financial Performance - Ingredion reported a total revenue of $7.32 billion and a net income of $676 million for the trailing twelve months (TTM) [4] - The company has a dividend yield of 2.98% and has increased its dividend payments by 5% annually over the last decade [10] Stock Performance - As of November 3, 2025, Ingredion's stock price was $114.13, reflecting a 14.85% decline over the past year, underperforming the S&P 500 by 32 percentage points [3] - The stock trades at 10 times earnings, indicating low market expectations [11] Investment Position - Following the sale, Ingredion now represents 2.42% of Yacktman Asset Management's assets under management (AUM), down from 2.9% [3][9] - Despite the reduction, Ingredion remains the 13th-largest holding in Yacktman's portfolio [9]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $1.8 billion, down 3% year-over-year, with gross profit dollars decreasing by 5% and gross margin slightly lower at 25.1% [18][19] - Reported and adjusted operating income were $249 million and $254 million respectively, with a decrease in operating margin impacting earnings per share [18][23] - Year-to-date net sales were approximately $5.5 billion, down 3% versus the prior year, while gross profit dollars grew by 4% and gross margin increased to 25.6% [24][25] Business Line Data and Key Metrics Changes - Texture and Healthful Solutions segment saw net sales up 1% with operating income up 9%, achieving a 17.4% operating income margin [20] - Food and Industrial Ingredients LATAM reported a net sales decrease of 6%, with operating income at $116 million and a margin of 19.8% [21] - Food and Industrial Ingredients U.S./Canada experienced a 7% decline in net sales, with operating income down 18% to $81 million due to production challenges at the Argo plant [22] Market Data and Key Metrics Changes - The U.S. market for sweeteners saw a notable drop in demand in July and August, recovering in September, while LATAM faced challenges due to inflation and interest rates impacting consumer spending [41][42] - The brewing industry in LATAM experienced a significant decline, attributed to cooler weather and strategic customer mix adjustments [6][11] Company Strategy and Development Direction - The company is focused on driving profitable growth in the Texture and Healthful Solutions segment, emphasizing clean label ingredients and solutions [12][13] - Innovation remains a key pillar, with a focus on integrated solutions and cost-effective ingredient alternatives to help customers maintain quality while reducing costs [14][15] - Operational excellence initiatives are aimed at maximizing asset utilization and achieving significant cost savings, with a target of over $55 million in run rate savings by 2025 [16][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified business portfolio despite recent challenges, anticipating operating income growth for the full year [5][28] - The outlook for 2025 includes expectations for flat to low single-digit net sales, with adjusted operating income projected to increase in the low to mid-single digits [27][29] - The company is closely monitoring macroeconomic conditions, particularly in LATAM, where inflation and interest rates are affecting consumer behavior [41][102] Other Important Information - The company has repurchased $134 million of outstanding shares, exceeding its target, and has increased the share repurchase target for 2025 to $200 million [32][108] - A new share repurchase program has been authorized for up to 8 million shares over the next three years, reflecting confidence in future growth [32][108] Q&A Session Summary Question: Demand environment and stabilization signs - Management noted that inflation and high interest rates in LATAM are impacting consumer spending, with a forecasted GDP growth of only 0.5% in Mexico and 2% in Brazil [41][42] Question: Texture and Healthful Solutions segment outlook - The segment is benefiting from a diverse customer base and strong demand for clean label solutions, with expectations for continued growth [46][48] Question: Volume impact from macro weakening and specific events - Approximately 40% of the revenue decline in LATAM was due to soft brewing volumes, while 12 million of the 18 million decline in U.S./Canada was attributed to the Argo plant issues [60][61] Question: Price-cost dynamics into 2026 - Management anticipates inflationary pressures on input costs will prolong customer commitments, with a cautious outlook for contracting in 2026 [64][65] Question: Impact of proposed taxation in Mexico - The proposed sweetness tax is expected to have an initial impact on consumer behavior, but historical trends suggest consumers may adjust over time [75][78]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $1.8 billion, down 3% year-over-year, with gross profit dollars decreasing by 5% and gross margins slightly lower at 25.1% [16][18] - Reported and adjusted operating income were $249 million and $254 million, respectively [16] - Year-to-date cash from operations was $539 million, with capital expenditures net of disposals at $298 million [21][22] Business Line Data and Key Metrics Changes - Texture and Healthful Solutions net sales increased by 1%, driven by a 4% sales volume growth [16][17] - Food and Industrial Ingredients LATAM reported a net sales decrease of 6%, primarily due to weaker brewing demand and macroeconomic conditions [17][18] - Food and Industrial Ingredients U.S./Canada net sales declined by 7%, with a 5% decline in sales volume attributed to production challenges at the Argo plant [17][18] Market Data and Key Metrics Changes - LATAM market showed signs of weakening demand due to higher inflation and interest rates impacting consumer spending [9][10] - In the U.S., demand for sweeteners decreased in July and August but recovered in September [27][28] Company Strategy and Development Direction - The company is focused on driving profitable growth, particularly in Texture and Healthful Solutions, with an emphasis on clean-label ingredients [11][12] - Innovation remains a key pillar, with ongoing development of cost-effective ingredient solutions to help customers maintain quality while reducing costs [12][13] - Operational excellence initiatives are expected to yield significant savings, with a target of over $55 million in run-rate savings by the end of 2025 [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified business portfolio despite recent challenges, anticipating operating income growth for the full year [4][5] - The outlook for 2025 includes expectations for net sales to be flat to down low single digits, with adjusted operating income expected to increase low to mid-single digits [22][23] Other Important Information - The company has authorized a new share repurchase program of up to eight million shares over the next three years, reflecting confidence in future growth [25][60] - The effective tax rate for 2025 is projected to be between 25.5% and 26.5% [23] Q&A Session Summary Question: Demand environment and stabilization signs - Management noted that inflation and high interest rates in LATAM are impacting consumer spending, with GDP growth forecasts for Mexico and Brazil being low [27][28] Question: Texture and Healthful Solutions segment outlook - The outlook change is driven by a diverse customer base and strong demand in food service and private label sectors [29][30] Question: Volume impacts from macro weakening and company-specific events - Approximately 12 million of the decline in U.S. Canada F&I was attributed to Argo plant issues, with the remainder related to market weakness [31][34] Question: Fourth-quarter contracting season and price-cost dynamics - Management anticipates that contracting will be influenced by inflationary pressures and higher input costs, with a cautious outlook for 2026 [37][38] Question: LATAM market and taxation impacts - The proposed sweetness tax in Mexico is expected to impact consumer behavior, but management believes the company is well-positioned to adapt [41][44] Question: Share repurchase strategy - The company plans to exceed $200 million in share repurchases in 2025, with a healthy cash balance supporting this strategy [60][61]

Financial Performance - Q3 2025 - Net sales decreased by 3% from $1.87 billion in Q3 2024 to $1.816 billion in Q3 2025[16, 34] - Adjusted operating income decreased by 10% from $282 million in Q3 2024 to $254 million in Q3 2025[17, 34] - Adjusted diluted EPS decreased from $3.05 in Q3 2024 to $2.75 in Q3 2025, a decrease of $0.30 per share[34] Financial Performance - Year-to-Date (YTD) 2025 - Net sales decreased by 3% from $5.63 billion in YTD 2024 to $5.462 billion in YTD 2025[15, 45] - Adjusted operating income increased by 4% from $768 million in YTD 2024 to $800 million in YTD 2025[17, 45] - Adjusted diluted EPS increased from $8.02 in YTD 2024 to $8.60 in YTD 2025, an increase of $0.58 per share[45] Segment Performance - Q3 2025 - Texture & Healthful Solutions net sales increased by 1%[37, 39] - Food & Industrial Ingredients—LATAM net sales decreased by 6%[37, 41] - Food & Industrial Ingredients—U.S./CAN net sales decreased by 7%[37, 43] Full Year 2025 Outlook - Net sales are expected to be flat to down low single-digits[49] - Adjusted EPS is expected to be between $11.10 and $11.30[49] - Cash from operations is expected to be between $800 million and $900 million[49]

Core Viewpoint - Ingredion reported quarterly earnings of $2.75 per share, exceeding the Zacks Consensus Estimate of $2.73 per share, but down from $3.05 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was +0.73%, and the company had previously delivered a surprise of +3.24% with earnings of $2.87 per share against an expectation of $2.78 [2] - Revenues for the quarter were $1.82 billion, missing the Zacks Consensus Estimate by 2.31%, and down from $1.87 billion year-over-year [3] - Over the last four quarters, the company has consistently surpassed consensus EPS estimates but has not beaten revenue estimates [3] Stock Performance and Outlook - Ingredion shares have declined approximately 17% since the beginning of the year, contrasting with a 16.5% gain in the S&P 500 [4] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $2.53 for the upcoming quarter and $11.10 for the current fiscal year [5][8] - The Zacks Rank for Ingredion is currently 5 (Strong Sell), indicating expected underperformance in the near future [7] Industry Context - The Food - Miscellaneous industry, to which Ingredion belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Comparatively, TreeHouse Foods, another company in the same industry, is expected to report a year-over-year earnings decline of 28.4% in its upcoming results [10]

Financial Performance - Third quarter 2025 reported and adjusted operating income decreased by 7% and 10% compared to the third quarter 2024[5] - Third quarter 2025 reported diluted EPS was $2.61, down from $2.83 in the same quarter last year, while adjusted diluted EPS was $2.75, down from $3.05[6] - Third quarter net sales decreased by 3% year-over-year to $1.816 billion, driven by lower volume from F&II segments and price mix[8] - Food & Industrial Ingredients–U.S./Canada segment operating income decreased by 18% to $81 million, primarily due to production challenges and lower consumer demand[17] - Net income attributable to Ingredion for the three months ended September 30, 2025, was $171 million, a decrease of 9% from $188 million in 2024[38] - Earnings per share (EPS) for the three months ended September 30, 2025, were $2.66, down 8% from $2.88 in the same period of 2024[38] - Total operating income for the nine months ended September 30, 2025, was $796 million, an increase of 10% from $721 million in the same period of 2024[53] Sales and Segment Performance - Texture & Healthful Solutions segment achieved 4% sales volume growth, with double-digit increases in clean label ingredient solutions in U.S./Canada and Asia-Pacific[4] - Ingredion's net sales for the three months ended September 30, 2025, were $1.816 billion, a decrease of 3% compared to $1.870 billion in the same period of 2024[38] - Texture & Healthful Solutions segment reported net sales of $605 million in Q3 2025, a 1% increase from $600 million in Q3 2024[43] - LATAM Food & Industrial Ingredients segment saw a 6% decline in net sales to $585 million in Q3 2025 from $620 million in Q3 2024[43] - U.S./Canada Food & Industrial Ingredients segment reported net sales of $507 million, down 7% from $548 million in Q3 2024[43] Guidance and Projections - Full-year 2025 reported EPS guidance adjusted to a range of $11.11 to $11.31, with adjusted EPS expected between $11.10 and $11.30[21] - Full-year 2025 net sales are expected to be flat to down low single-digits, reflecting volume growth in Texture & Healthful Solutions offset by lower price mix[22] - The expected GAAP EPS for full-year 2025 is projected to range from $11.11 to $11.31[57] - The expected adjusted EPS for full-year 2025 is projected to range from $11.10 to $11.30[57] - The expected GAAP effective income tax rate for full-year 2025 is projected to range from 25.5% to 26.5%[59] - The expected adjusted effective income tax rate for full-year 2025 is projected to range from 26.0% to 27.0%[59] Cash Flow and Capital Expenditures - Cash from operations for full-year 2025 is projected to be between $800 million and $900 million, with capital expenditures expected around $400 to $425 million[26] - Cash provided by operating activities for the nine months ended September 30, 2025, was $539 million, a decrease from $1 billion in 2024[41] - Capital expenditures for the nine months ended September 30, 2025, were $298 million, compared to $170 million in 2024[41] - Cash and cash equivalents at the end of the period on September 30, 2025, were $915 million, down from $997 million at the beginning of the period[41] Debt and Assets - Total debt as of September 30, 2025, was $1.8 billion, with cash and short-term investments totaling $921 million[20] - Total assets as of September 30, 2025, were $7.833 billion, an increase from $7.444 billion as of December 31, 2024[40] - Ingredion's total liabilities as of September 30, 2025, were $3.509 billion, a slight decrease from $3.554 billion as of December 31, 2024[40] Other Financial Metrics - For the three months ended September 30, 2025, the income before income taxes was $241 million, with an effective tax rate of 28.6%[55] - The adjusted non-GAAP income before income taxes for the same period was $246 million, reflecting an effective tax rate of 26.4%[55] - For the nine months ended September 30, 2025, the income before income taxes was $767 million, with an effective tax rate of 25.8%[55] - The adjusted non-GAAP income before income taxes for the nine months ended September 30, 2025, was $771 million, with an effective tax rate of 26.3%[55] Dividends - The company paid $54 million in dividends during the third quarter and declared a quarterly dividend of $0.82 per share, marking the 11th consecutive annual increase[21] Restructuring and Impairment - Restructuring and resegmentation costs are expected to contribute $0.09 to the adjusted EPS for full-year 2025[57] - Impairment charges are expected to contribute $0.06 to the adjusted EPS for full-year 2025[57]

Core Insights - Ingredion Incorporated reported its third quarter results for 2025, highlighting a mixed performance across its business segments, with a notable decline in earnings per share compared to the previous year [1][6]. Financial Performance - The company reported diluted earnings per share (EPS) of $2.61 for Q3 2025, down from $2.83 in Q3 2024, reflecting a decrease of 8% [4][6]. - Adjusted diluted EPS also fell to $2.75 from $3.05, marking a 10% decline year-over-year [4][6]. - Reported operating income decreased by 7% to $249 million, while adjusted operating income fell by 10% to $254 million compared to the same quarter last year [10][46]. Segment Performance - The Texture & Healthful Solutions segment achieved 4% sales volume growth, driven by double-digit increases in clean label ingredient solutions in the U.S./Canada and Asia-Pacific [2][3]. - The Food & Industrial Ingredients—U.S./Canada segment saw an 18% decline in operating income, primarily due to production challenges at a major facility and reduced consumer demand [3][17]. - The Food & Industrial Ingredients—LATAM segment's operating income decreased by 11%, impacted by lower brewing industry demand and a challenging economic environment [3][15]. Sales and Revenue - Total net sales for Q3 2025 were $1.816 billion, a 3% decrease from $1.870 billion in Q3 2024, driven by lower volumes across the F&II segments [7][45]. - Year-to-date net sales also declined by 3%, totaling $5.462 billion compared to $5.630 billion in the previous year [7][45]. Strategic Outlook - The company plans to continue investing in organic growth opportunities and mergers and acquisitions to strengthen its Texture & Healthful Solutions portfolio [3][21]. - Full-year 2025 guidance for reported EPS is projected to be in the range of $11.11 to $11.31, with adjusted EPS expected between $11.10 and $11.30 [21][23]. Shareholder Returns - In Q3 2025, Ingredion paid $54 million in dividends and declared a quarterly dividend of $0.82 per share, marking the 11th consecutive annual increase [20][21]. - The company repurchased $134 million in common stock year-to-date through September 30, 2025 [20].

Core Insights - Global equity markets experienced broad positive returns in Q3 2025, driven by resilient corporate earnings, enthusiasm for AI, and the U.S. Federal Reserve's first interest rate cut of the year [3][21] - Emerging markets, particularly China, led the gains, supported by a U.S. trade truce and strength in the tech sector [3][4] - The Polaris Global Equity Composite gained 5.04% (net of fees) for the quarter, underperforming the MSCI World Index, which returned 7.36% [5][6] Market Performance - Developed markets saw weaker currencies benefiting export-oriented indices, with Japan's TOPIX Index up 11.0% and the U.K.'s FTSE All-Share Index up 6.9% [4] - The U.S. market, represented by the S&P 500 Index, gained over 8%, primarily due to tech and communication stocks [4] - France and Germany underperformed due to geopolitical and fiscal concerns, with tepid growth projections under new U.S. trade policy [4] Sector Analysis - The healthcare sector was the best performer, with notable gains from pharmaceutical stocks, while financials, consumer discretionary, and IT also contributed positively [5][6] - Health insurers faced challenges, with UnitedHealth Group and CVS Health posting over 10% returns, while Elevance Health's shares dropped sharply due to profit guidance cuts [7] - In IT, Samsung Electronics excelled with strong performance in HBM technology and a significant deal with Tesla for AI chip manufacturing [11] Company Highlights - United Therapeutics Corp. was a top contributor to portfolio performance, driven by positive clinical trial results for its drug Tyvaso, potentially adding $4-5 billion in peak sales [6] - AbbVie, Inc. expects high single-digit revenue growth through 2029, with flagship drugs projected to exceed $31 billion in sales by 2027 [6] - The Carlyle Group Inc. outperformed in the financial sector, up over 20% due to strong fee-based credit and secondaries business [8] Investment Strategy - The current economic environment is characterized by a "two-speed" economy, with a concentrated AI-driven boom amidst subdued growth in other sectors [21][22] - Financials are seen as attractive due to stable net interest margins and loan growth, while defensives like consumer staples and healthcare are expected to perform well [22] - Opportunities in economically-sensitive sectors are being explored, with a focus on industrials benefiting from AI integration and supply chain modernization [22][23]