10-Q 1 ingr-20220331x10q.htm 10-Q UNITED STATES
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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 March 31, 2022

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 May 4, 2022

Common Stock, $.01 par value

66,219,580 shares

INGREDION INCORPORATED

FORM 10-Q

TABLE OF CONTENTS

Page

Part I

Item 1

Financial Statements

3

Condensed Consolidated Statements of Income (Loss)

3

Condensed Consolidated Statements of Comprehensive Income (Loss)

4

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Equity and Redeemable Equity

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2

Management’s discussion and analysis of financial condition and results of operations

22

Item 3

Quantitative and qualitative disclosures about market risk

27

Item 4

Controls and procedures

27

Part II

Item 1

Legal proceedings

28

Item 1A

Risk Factors

28

Item 2

Unregistered sales of equity securities and use of proceeds

29

Item 6

Exhibits

30

Signatures

31

2

Ingredion Incorporated

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

Three Months Ended 

March 31, 

(in millions, except per share amounts)

    

2022

    

2021

Net sales

$

1,892

$

1,614

Cost of sales

1,513

1,263

Gross profit

379

351

Operating expenses

169

153

Other operating (income)

(2)

(2)

Restructuring/impairment charges

2

370

Operating income (loss)

210

(170)

Financing costs

24

19

Other non-operating income

(1)

(1)

Income (loss) before income taxes

187

(188)

Provision for income taxes

54

55

Net income (loss)

133

(243)

Less: Net income attributable to non-controlling interests

3

3

Net income (loss) attributable to Ingredion

$

130

$

(246)

Weighted average common shares outstanding:

Basic

66.9

67.3

Diluted

67.6

67.3

Earnings (loss) per common share of Ingredion:

Basic

$

1.94

$

(3.66)

Diluted

$

1.92

$

(3.66)

See Notes to Condensed Consolidated Financial Statements

3

Ingredion Incorporated

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended 

March 31, 

(in millions)

    

2022

    

2021

 

Net income (loss)

  

$

133

$

(243)

Other comprehensive income:

Gains on cash flow hedges, net of income tax effect of $46 and $7, respectively

130

22

(Gains) on cash flow hedges reclassified to earnings, net of income tax effect of $12 and $ — , respectively

(34)

(1)

Currency translation adjustment

38

(52)

Comprehensive income (loss)

267

(274)

Less: Comprehensive income attributable to non-controlling interests

2

5

Comprehensive income (loss) attributable to Ingredion

$

265

$

(279)

See Notes to Condensed Consolidated Financial Statements

4

Ingredion Incorporated

Condensed Consolidated Balance Sheets

    

March 31, 

December 31, 

(in millions, except share and per share amounts)

    

2022

    

2021

 

(Unaudited)

Assets

  

  

Current assets:

Cash and cash equivalents

$

324

$

328

Short-term investments

5

4

Accounts receivable, net

1,431

1,130

Inventories

1,306

1,172

Prepaid expenses

63

63

Total current assets

3,129

2,697

Property, plant and equipment, net of accumulated depreciation of $3,304 and $3,232, respectively

2,446

2,423

Intangible assets, net of accumulated amortization of $259 and $253, respectively

1,339

1,348

Other assets

521

531

Total assets

$

7,435

$

6,999

Liabilities and equity

Current liabilities:

Short-term borrowings

$

514

$

308

Accounts payable and accrued liabilities

1,207

1,204

Total current liabilities

1,721

1,512

Long-term debt

1,739

1,738

Other non-current liabilities

561

524

Total liabilities

4,021

3,774

Share-based payments subject to redemption

31

36

Redeemable non-controlling interests

71

71

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 March 31, 2022 and December 31, 2021

1

1

Additional paid-in capital

1,160

1,158

Less: Treasury stock (common stock: 11,464,034 and 11,154,203 shares at March 31, 2022 and December 31, 2021, respectively) at cost

(1,091)

(1,061)

Accumulated other comprehensive loss

(763)

(897)

Retained earnings

3,986

3,899

Total Ingredion stockholders’ equity

3,293

3,100

Non-redeemable non-controlling interests

19

18

Total equity

3,312

3,118

Total liabilities and equity

$

7,435

$

6,999

See Notes to Condensed Consolidated Financial Statements

5

Ingredion Incorporated

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, 2021

$

$

1

$

1,158

$

(1,061)

$

(897)

$

3,899

$

18

$

36

$

71

Net income attributable to Ingredion

130

Net income attributable to non-controlling interests

3

Dividends declared

(43)

Repurchases of common stock, net

(39)

Share-based compensation, net of issuance

2

9

(5)

Other comprehensive income (loss)

134

(2)

Balance, March 31, 2022

$

$

1

$

1,160

$

(1,091)

$

(763)

$

3,986

$

19

$

31

$

71

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 (loss) attributable to Ingredion

(246)

Net income (loss) attributable to non-controlling interests

4

(1)

Dividends declared

(44)

Repurchases of common stock, net

(14)

Share-based compensation, net of issuance

5

16

(9)

Other comprehensive (loss) income

(31)

1

1

Balance, March 31, 2021

$

$

1

 

$

1,155

 

$

(1,022)

 

$

(1,164)

 

$

3,667

 

$

26

 

$

21

 

$

70

See Notes to Condensed Consolidated Financial Statements

6

Ingredion Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended

March 31, 

(in millions)

    

2022

    

2021

Cash (used for) provided by operating activities

Net income (loss)

$

133

$

(243)

Non-cash charges to net income (loss):

Depreciation and amortization

53

52

Mechanical stores expense

13

14

Impairment charge for assets held for sale

360

Deferred income taxes

3

(4)

Other non-cash charges

15

7

Changes in working capital:

Accounts receivable and prepaid expenses

(126)

(56)

Inventories

(119)

(69)

Accounts payable and accrued liabilities

(45)

(5)

Margin accounts

28

(16)

Other

(7)

(18)

Cash (used for) provided by operating activities

(52)

22

Cash used for investing activities

Capital expenditures and mechanical stores purchases

(85)

(65)

Proceeds from disposal of manufacturing facilities and properties

5

2

Other

4

(1)

Cash used for investing activities

(76)

(64)

Cash provided by (used for) financing activities

Proceeds from borrowings

147

46

Payments on debt

(123)

(36)

Commercial paper borrowings, net

178

Repurchases of common stock, net

(39)

(14)

(Settlements) issuances of common stock for share-based compensation, net

(1)

7

Dividends paid, including to non-controlling interests

  

(43)

  

(43)

Cash provided by (used for) financing activities

119

(40)

Effects of foreign exchange rate changes on cash

5

(7)

Decrease in cash and cash equivalents

(4)

(89)

Cash and cash equivalents, beginning of period

328

665

Cash and cash equivalents, end of period

$

324

$

576

See Notes to Condensed Consolidated Financial Statements

7

Ingredion Incorporated

Notes to Condensed Consolidated Financial Statements

1. Interim Financial Statements

References to the “Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion Incorporated (“Ingredion”) individually and together with its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2021.

The unaudited Condensed Consolidated Financial Statements as of March 31, 2022 and for the quarter ended March 31, 2022 and 2021 included herein were prepared by management on the same basis as Ingredion’s audited Consolidated Financial Statements for the year ended December 31, 2021 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 (Loss), Condensed Consolidated Statements of Comprehensive Income (Loss), 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 Ingredion’s significant accounting standards and policies, see Note 1 of the Notes to the Consolidated Financial Statements included in Ingredion’s Annual Report on Form 10-K for the year ended December 31, 2021.

New Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the effect of adoption of ASU No. 2020-04 on our financial position and results of operations.

3. Acquisitions

On April 1, 2021, Ingredion acquired KaTech, a privately held company headquartered in Germany. KaTech provides advanced texture and stabilization solutions to the food and beverage industry. To complete the closing, Ingredion made a total cash payment of $40 million, net of cash acquired, which we funded from cash on hand. The acquisition added $26 million of goodwill and intangible assets, as well as $14 million of tangible assets, which we preliminarily recorded on the acquisition date based on available information and incorporating our best estimates. Beginning at the acquisition date, our Condensed Consolidated Financial Statements reflect the effects of the acquisition and KaTech’s financial results, which we report in our Europe, Middle East and Africa (“EMEA”) reportable business segment.

4. Investments

Investments consisted of the following as of:

(in millions)

March 31, 2022

December 31, 2021

Equity investments

$

19

$

16

Equity method investments

106

104

Marketable securities

5

12

Total investments

$

130

$

132

8

Amyris Joint Venture

On June 1, 2021, Ingredion entered into an agreement with Amyris, Inc. (“Amyris”) for certain exclusive commercialization rights to Amyris’s rebaudioside M by fermentation product, the exclusive licensing of the product’s manufacturing technology and a 31 percent ownership stake in a joint venture for the products (the “Amyris joint venture”). In exchange, we contributed $28 million of total consideration, which included $10 million of cash, as well as non-exclusive intellectual property licenses and other consideration valued at $18 million. The transaction resulted in an $8 million gain recorded in Other operating (income), which included $18 million related to the non-exclusive intellectual property licenses, offset by the $10 million cash payment. Beginning June 1, 2021, Ingredion accounts for the investment under the equity method.

Arcor Joint Venture

On February 12, 2021, Ingredion entered into an agreement with an affiliate of Grupo Arcor, an Argentine food company, to establish Ingrear Holding S.A. (the “Arcor joint venture”), a joint venture to operate five manufacturing facilities in Argentina to sell value-added ingredients to customers in the food, beverage, pharmaceutical and other industries in Argentina, Chile and Uruguay. On August 2, 2021, Ingredion and Grupo Arcor completed all closing conditions, pending customary antitrust review, to combine the manufacturing facilities, finalize the transaction and formally establish the Arcor joint venture, which is managed by a jointly appointed team of executives and is accounted for under the equity method.

We exchanged certain assets and liabilities with a fair value of $71 million from our Argentina, Chile and Uruguay operations for 49 percent of the outstanding shares of the Arcor joint venture valued at $64 million, as well as $7 million of other consideration, including cash, from Grupo Arcor as of August 2, 2021. The transaction also resulted in an impairment charge for the transferred assets and liabilities more fully described in Note 5.

Beginning on the dates Ingredion entered into the agreements for equity method investees, our share of income from them is included in Other operating (income). Ingredion incurred $6 million of pre-tax transaction and integration costs to acquire the Arcor and Amyris joint venture investments in 2021.

5. Restructuring and Impairment Charges

For the first quarter of 2022, Ingredion recorded $2 million of pre-tax restructuring charges. For the first quarter of 2021, we recorded a total of $370 million of pre-tax restructuring and impairment charges, consisting of $360 million of pre-tax impairment charges and $10 million of pre-tax restructuring charges.

Restructuring Charges

For the first quarter of 2022, we recorded $2 million of pre-tax net restructuring related charges, which included $1 million of costs as part of our Cost Smart Cost of sales program and $1 million of costs associated with our Cost Smart selling, general and administrative expense (“SG&A”) program.

For the first quarter of 2021, we recorded a total of $10 million pre-tax restructuring related charges. Of these charges, $5 million were related to our Cost Smart SG&A program, which were primarily for employee-related severance costs recorded in our North America and EMEA segments, professional services costs in our North America segment and other costs. We also recorded $3 million of pre-tax restructuring charges for our Cost Smart Cost of sales program, which were primarily for inventory and mechanical stores write-offs and other costs associated with the closure of our Lane Cove, Australia production facility and closures of North America facilities and product lines including our Berwick, Pennsylvania manufacturing facility and the cessation of ethanol production at our Cedar Rapids, Iowa facility.

A summary of Ingredion’s severance accrual at March 31, 2022, which we expect to fully pay in 2022, is as follows ($ in millions):

Balance in severance accrual as of December 31, 2021

    

$

3

Payments made to terminated employees

(1)

Balance in severance accrual as of March 31, 2022

 

$

2

9

Impairment Charges

At the announcement of our agreement to invest in the Arcor joint venture during the first quarter of 2021, we reclassified assets and liabilities we expected to contribute to the joint venture as held for sale in Other assets in the Condensed Consolidated Balance Sheets and we recorded an impairment charge of $360 million based on our preliminary estimates of their fair value. Of the $360 million impairment charge for the net assets contributed to the Arcor joint venture during the first quarter of 2021, $311 million was related to the write-off of the cumulative translation losses associated with the contributed net assets and $49 million was related to the write-down of the contributed net assets.

6. Derivative Instruments and Hedging Activities

Ingredion is exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, we actively manage our exposure to these market risks by entering various hedging transactions authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. We have no collateral to counterparties under collateral funding arrangements as of March 31, 2022. Derivative financial instruments used by Ingredion consist primarily of commodity-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps and treasury locks (“T-Locks”).

Commodity price hedging: Ingredion’s principal use of derivative financial instruments is to manage commodity price risk relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the next 12 to 24 months. We maintain a commodity-price risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodity-price volatility. To manage price risk related to corn purchases, primarily in North America, we use corn futures and option contracts that trade on regulated commodity exchanges to lock in corn costs associated with fixed-priced customer sales contracts. Ingredion also uses over-the-counter natural gas swaps in North America to hedge a portion of its natural gas usage. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases. Ingredion’s natural gas derivatives and the majority of its corn derivatives have been designated as cash flow hedging instruments for accounting purposes.

For certain corn derivative instruments that are not designated as cash flow hedging instruments for accounting purposes, all realized and unrealized gains and losses from these instruments are recognized in cost of sales during each accounting period. We enter these derivative instruments to further mitigate commodity and basis price risks related to anticipated purchases of corn. During the first quarter of 2022, Ingredion recognized a $2 million gain on non-designated commodity contracts compared to a $1 million loss on non-designated commodity contracts during the first quarter of 2021.

For commodity hedges designated as cash flow hedges for accounting purposes, unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of Other comprehensive loss (“OCL”) and included in the equity section of the Condensed Consolidated Balance Sheets as part of Accumulated other comprehensive loss (“AOCL”). These amounts, as well as their related tax effects, are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the period a hedge is determined to be ineffective. Ingredion assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. Gains and losses from cash flow hedging instruments reclassified from AOCL to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

Ingredion had outstanding futures and option contracts that hedged the forecasted purchase of approximately 107 million and 135 million bushels of corn as of March 31, 2022 and December 31. 2021, respectively. Ingredion also had outstanding swap contracts that hedged the forecasted purchase of approximately 31 million and 35 million mmbtus of natural gas as of March 31, 2022 and December 31, 2021, respectively.

10

Foreign currency hedging: Due to our global operations, including operations in many emerging markets, Ingredion is exposed to fluctuations in foreign currency exchange rates. As a result, Ingredion has exposure to translational foreign-exchange risk when the results of its foreign operations are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency are revalued. Ingredion’s foreign-exchange risk management strategy uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. Ingredion enters into foreign currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments for accounting purposes in order to mitigate transactional foreign-exchange risk. Gains and losses from derivative financial instruments not designated as hedging instruments for accounting purposes are marked to market in earnings during each accounting period.

Ingredion hedges certain assets using foreign currency derivatives not designated as hedging instruments for accounting purposes, which had a notional value of $466 million and $360 million as of March 31, 2022 and December 31, 2021, respectively. Ingredion also hedges certain liabilities using foreign currency derivatives not designated as hedging instruments, which had a notional value of $223 million and $205 million as of March 31, 2022 and December 31 2021, respectively.

Ingredion hedges certain assets using foreign currency derivative instruments that are designated as cash flow hedging instruments for accounting purposes, which had a notional value of $350 million and $505 million as of March 31, 2022 and December 31, 2021, respectively. Ingredion also hedges certain liability positions using foreign currency derivative instruments that are designated as cash flow hedging instruments for accounting purposes, which had a notional value of $578 million and $708 million as of March 31, 2022 and December 31, 2021, respectively.

Interest rate hedging: Ingredion assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments and by evaluating hedging opportunities. Ingredion’s risk management strategy is to monitor interest rate risk attributable to both Ingredion’s outstanding and forecasted debt obligations as well as Ingredion’s offsetting hedge positions. Derivative financial instruments that have been used by Ingredion to manage its interest rate risk consist of interest rate swaps and T-Locks.

Ingredion periodically enters into interest rate swaps to hedge its exposure to interest rate changes. The changes in fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gains or losses (the changes in fair value) of the hedged debt instruments that are attributable to changes in interest rates (the hedged risk), which are also recognized in earnings. Ingredion did not have any outstanding interest rate swaps as of March 31, 2022 or December 31, 2021.

Ingredion periodically enters into T-Locks to hedge its exposure to interest rate changes. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market fluctuations in the benchmark interest rate until the fixed interest rate is established and are accounted for as cash flow hedges. Accordingly, changes in the fair value of the T-Locks are recorded to AOCL until the consummation of the underlying debt offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. During 2020, Ingredion entered into and settled T-Locks associated with the issuance of senior notes due in 2030 and 2050. The realized loss upon settlement of the T-Locks was recorded in AOCL and is amortized into earnings over the term of the senior notes. Ingredion did not have outstanding T-Locks as of March 31, 2022 and December 31, 2021.

11

The derivative instruments designated as cash flow hedges included in AOCL as of March 31, 2022 and December 31, 2021 are reflected below:

Amount of Gains

Derivatives in Cash Flow Hedging Relationships

(Losses) included in AOCL

(in millions)

March 31, 2022

December 31, 2021

Commodity contracts, net of income tax effect of $51 and $19, respectively

$

146

$

51

Foreign currency contracts, net of income tax effect of $2 and $ -, respectively

1

-

Interest rate contracts, net of income tax effect of $1

(3)

(3)

Total

$

144

$

48

The fair value and balance sheet location of the Ingredion’s derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are reflected below:

Fair Value of Hedging Instruments as of March 31, 2022 (in millions)

Designated Hedging Instruments

Non-Designated Hedging Instruments

Balance Sheet Location

Commodity Contracts

Foreign Currency Contracts

Total

Commodity Contracts

Foreign Currency Contracts

Total

Accounts receivable, net

$

137

$

8

$

145

$

14

$

4

$

18

Other assets

35

35

3

3

Assets

172

8

180

14

7

21

Accounts payable and accrued liabilities

30

8

38

10

6

16

Non-current liabilities

1

1

7

7

Liabilities

31

8

39

10

13

23

Net Assets/(Liabilities)

$

141

$

$

141

$

4

$

(6)

$

(2)

Fair Value of Hedging Instruments as of December 31, 2021 (in millions)

Designated Hedging Instruments

Non-Designated Hedging Instruments

Balance Sheet Location

Commodity Contracts

Foreign Currency Contracts

Total

Commodity Contracts

Foreign Currency Contracts

Total

Accounts receivable, net

$

45

$

9

$

54

$

4

$

3

$

7

Other assets

7

6

13

Assets

52

15

67

4

3

7

Accounts payable and accrued liabilities

5

12

17

2

4

6

Non-current liabilities

2

6

8

1

1

Liabilities

7

18

25

2

5

7

Net Assets/(Liabilities)

$

45

$

(3)

$

42

$

2

$

(2)

$

Additional information relating to the Ingredion’s derivative instruments is presented below:

Derivatives in Cash Flow

Gains Recognized 
in AOCL on Derivatives

Gains (Losses) Reclassified
from AOCL into Income

Hedging Relationships

Three Months Ended March 31, 

Income Statement

Three Months Ended March 31, 

(in millions)

  

2022

  

2021

  

Location

  

2022

  

2021

Commodity contracts

$

171

$

27

Cost of sales

$

44

$

(1)

Foreign currency contracts

5

2

Net sales/Cost of sales

2

2

Interest rate contracts

Financing costs, net

Total

$

176

$

29

$

46

$

1

12

As of March 31, 2022, AOCL included $142 million of net gains (net of income taxes of $50 million) on commodities-related derivatives instruments, foreign currency hedges, and T-Locks designated as cash flow hedges that are expected to be reclassified into earnings during the next 12 months.

7. Fair Value Measurements

We measure certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Below is a summary of the hierarchy levels:

Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Assets and liabilities measured at fair value on a recurring basis are presented below:

As of March 31, 2022