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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

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 1-13397

Ingredion Incorporated

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

22-3514823

(I.R.S. Employer Identification Number)

5 Westbrook Corporate Center

WestchesterIllinois

60154

(Address of principal executive offices)

(Zip Code)

(708) 551-2600

(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

Common Stock, $.01 par value per share

INGR

New York Stock Exchange

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.

Yes No

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).

Yes No

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.

Large accelerated filer

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  No 

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 October 31, 2021

Common Stock, $.01 par value

66,535,932 shares

2

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Income

(Unaudited)

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

(in millions, except per share amounts)

    

2021

    

2020

    

2021

    

2020

Net sales

$

1,763

$

1,502

$

5,139

$

4,394

Cost of sales

1,440

1,176

4,098

3,474

Gross profit

323

326

1,041

920

Operating expenses

164

155

484

456

Other (income) expense, net

(1)

2

(29)

4

Restructuring/impairment charges and related adjustments

(12)

16

362

41

Operating income

172

153

224

419

Financing costs, net

20

22

58

59

Other, non-operating (income), net

(1)

(2)

(4)

(3)

Income before income taxes

153

133

170

363

Provision for income taxes

34

40

113

125

Net income

119

93

57

238

Less: Net income attributable to non-controlling interests

1

1

7

5

Net income attributable to Ingredion

$

118

$

92

$

50

$

233

Weighted average common shares outstanding:

Basic

67.0

67.2

67.2

67.2

Diluted

67.6

67.6

67.8

67.6

Earnings per common share of Ingredion:

Basic

$

1.76

$

1.37

$

0.74

$

3.47

Diluted

$

1.75

$

1.36

$

0.74

$

3.45

See Notes to Condensed Consolidated Financial Statements

3

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

(in millions)

    

2021

    

2020

    

2021

    

2020

 

Net income

  

$

119

  

$

93

  

$

57

$

238

Other comprehensive income:

Gains (losses) on cash flow hedges, net of income tax effect of $9, $4, $56 and $12, respectively

26

12

155

(38)

(Gains) losses on cash flow hedges reclassified to earnings, net of income tax effect of $15, $8, $45 and $14, respectively

(45)

23

(125)

42

Currency translation adjustment

248

13

226

(105)

Comprehensive income

348

141

313

137

Less: Comprehensive (loss) income attributable to non-controlling interests

(2)

3

6

5

Comprehensive income attributable to Ingredion

$

350

$

138

$

307

$

132

See Notes to Condensed Consolidated Financial Statements

4

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Balance Sheets

September 30, 

December 31, 

(in millions, except share and per share amounts)

    

2021

    

2020

 

(Unaudited)

Assets

  

  

Current assets:

Cash and cash equivalents

$

434

$

665

Short-term investments

4

Accounts receivable, net

1,128

1,011

Inventories

1,093

917

Prepaid expenses

74

54

Total current assets

2,733

2,647

Property, plant and equipment, net of accumulated depreciation of $3,225 and $3,175, respectively

2,369

2,455

Goodwill

916

902

Other intangible assets, net of accumulated amortization of $244 and $229, respectively

424

444

Operating lease assets

191

173

Deferred income tax assets

17

23

Other assets

336

214

Total assets

$

6,986

$

6,858

Liabilities and equity

Current liabilities:

Short-term borrowings

$

398

$

438

Accounts payable and accrued liabilities

1,059

1,020

Total current liabilities

1,457

1,458

Other non-current liabilities

226

227

Long-term debt

1,748

1,748

Non-current operating lease liabilities

152

136

Deferred income tax liabilities

200

217

Total liabilities

3,783

3,786

Share-based payments subject to redemption

32

30

Redeemable non-controlling interests

68

70

Ingredion stockholders’ equity:

Preferred stock — authorized 25,000,000 shares — $0.01 par value, none issued

Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at September 30, 2021 and December 31, 2020, respectively

1

1

Additional paid-in capital

1,155

1,150

Less: Treasury stock (common stock: 11,295,044 and 10,795,346 shares at September 30, 2021 and December 31, 2020, respectively) at cost

(1,072)

(1,024)

Accumulated other comprehensive loss

(877)

(1,133)

Retained earnings

3,877

3,957

Total Ingredion stockholders’ equity

3,084

2,951

Non-redeemable non-controlling interests

19

21

Total equity

3,103

2,972

Total liabilities and equity

$

6,986

$

6,858

See Notes to Condensed Consolidated Financial Statements

5

Ingredion Incorporated (“Ingredion”)

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, 2020

$

$

1

$

1,150

$

(1,024)

$

(1,133)

$

3,957

$

21

$

30

$

70

Net income attributable to Ingredion

50

Net income (loss) attributable to non-controlling interests

10

(3)

Dividends declared

(130)

(10)

Repurchases of common stock, net

(68)

Share-based compensation, net of issuance

5

20

2

Other comprehensive income (loss)

256

(2)

1

Balance, September 30, 2021

$

$

1

$

1,155

$

(1,072)

$

(877)

$

3,877

$

19

$

32

$

68

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, 2019

 

$

$

1

$

1,137

$

(1,040)

$

(1,158)

$

3,780

$

21

$

31

$

Net income attributable to Ingredion

233

Net income attributable to non-controlling interests

7

(2)

Dividends declared

(129)

(5)

Share-based compensation, net of issuance

8

13

1

Acquisition of redeemable non-controlling interests

74

Other comprehensive income (loss)

(101)

(2)

2

Balance, September 30, 2020

$

$

1

 

$

1,145

 

$

(1,027)

 

$

(1,259)

 

$

3,884

 

$

21

 

$

32

 

$

74

See Notes to Condensed Consolidated Financial Statements

6

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended

September 30, 

(in millions)

    

2021

    

2020

Cash provided by operating activities

Net income

$

57

$

238

Non-cash charges to net income:

Depreciation and amortization

155

158

Mechanical stores expense

40

39

Deferred income taxes

(25)

(1)

Charge for fair value markup of acquired inventory

3

Impairment on disposition of assets

340

Other

4

46

Changes in working capital:

Accounts receivable and prepaid expenses

(126)

36

Inventories

(226)

(10)

Accounts payable and accrued liabilities

94

54

Margin accounts

(34)

6

Other

(20)

(7)

Cash provided by operating activities

259

562

Cash used for investing activities

Capital expenditures and mechanical stores purchases, net of proceeds on disposals

(186)

(250)

Payments for acquisitions, net of cash acquired of $2 and $14, respectively

(40)

(208)

Investment in non-consolidated affiliates

(8)

(6)

Short-term investments

(4)

4

Cash used for investing activities

(238)

(460)

Cash (used for) provided by financing activities

Proceeds from borrowings

804

1,527

Payments on debt

(1,194)

(1,186)

Commercial paper borrowings, net

350

Payments for debt issuance costs

(9)

Repurchases of common stock, net

(68)

Issuances of common stock for share-based compensation, net of settlements

10

2

Dividends paid, including to non-controlling interests

  

(138)

  

(132)

Cash (used for) provided by financing activities

(236)

202

Effects of foreign exchange rate changes on cash

(16)

(15)

(Decrease) increase in cash and cash equivalents

(231)

289

Cash and cash equivalents, beginning of period

665

264

Cash and cash equivalents, end of period

$

434

$

553

See Notes to Condensed Consolidated Financial Statements

7

INGREDION INCORPORATED (“Ingredion”)

Notes to Condensed Consolidated Financial Statements

1. Interim Financial Statements

References to the “Company” are to Ingredion Incorporated (“Ingredion”) and its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The unaudited Condensed Consolidated Financial Statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 included herein were prepared by management on the same basis as the Company’s audited Consolidated Financial Statements for the year ended December 31, 2020 and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive 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 the Company’s significant accounting standards and policies, see Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Except for the matters discussed below, there have been no other material changes to the Company’s significant accounting standards and policies for the nine months ended September 30, 2021.

Significant Accounting Policies

Goodwill and Indefinite-lived intangible assets: Goodwill ($916 million and $902 million at September 30, 2021 and December 31, 2020, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The Company also had indefinite-lived intangible assets of $143 million at September 30, 2021 and December 31, 2020.

The original carrying value of goodwill and accumulated impairment charges by reportable business segment at September 30, 2021 was as follows:

North

South

Asia-

(in millions)

    

America

    

America

    

Pacific

    

EMEA

    

Total

 

Goodwill before impairment charges

$

622

$

50

$

316

$

69

$

1,057

Accumulated impairment charges

(1)

(33)

(121)

(155)

Balance at January 1, 2021

621

17

195

69

902

Acquisitions

1

3

20

24

Currency translation

(1)

(6)

(3)

(10)

Balance at September 30, 2021

$

622

$

16

$

192

$

86

$

916

The following table summarizes the balances of the Company’s indefinite-lived intangible assets at the dates presented: