2022 ANNUAL REPORT
A Resilient Business with
Proven Agility for Growth
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2022 LETTER FROM OUR CEO
Dear valued shareholders,
IN 2022, Ingredion delivered outstanding
performance with top-line and adjusted
operating income both growing by 15%.
Our teams demonstrated resilience and
agility in overcoming macroeconomic
conditions and other unforeseen challenges
to successfully execute against our Driving
Growth Roadmap and create value for our
shareholders and our customers.
STRONG FINANCIAL RESULTS
Net sales for 2022 increased to nearly
$8 billion up from $6.9 billion the prior
year. Our reported and adjusted operating
income reached $762 million and $787
million, respectively, compared to $310
million and $685 million in 2021. Reported
and adjusted earnings per share grew to
$7.34 and $7.45, respectively, up from $1.73
and $6.67 last year. Also, for the full year,
we returned $288 million to Ingredion
shareholders through our dividend and
stock repurchase programs.
This strong performance was even more
noteworthy given the persistent industry-
wide market conditions. Our largest raw
material input, corn, was significantly
impacted by the Ukraine conflict and a
drought in Europe. Despite those supply
shocks, our team secured the necessary
quantities of raw material and maintained
shipments to our customers while
overcoming input cost inflation.
Also contributing to our success were
expanded hedging practices that enabled
us to mitigate profit volatility caused by
rising commodity prices and offset over
$200 million of foreign exchange impact.
We also ramped up production and
sales from our new facility in Shandong,
China despite countrywide COVID-19
restrictions, expanding our capacity for
specialty modified starches in a large,
growing market.
enhance the resiliency and efficiency of
our global supply chain, and we delivered
breakthrough product innovations in
our PureCircle franchise. In addition,
plant-based proteins more than doubled
in revenue, and despite a slower sales
ramp than we had targeted, we made
significant headway on improving product
quality, increasing production volume, and
developing our customer project pipeline.
This positions us well to capitalize on
growth opportunities within fortified
bakery and snacks, alternative dairy, sports
nutrition, and beverage categories.
EXECUTING AGAINST OUR DRIVING
GROWTH ROADMAP
Throughout the year, our teams did an
exceptional job executing against our four
strategic pillars, fueling our progress, and
laying the foundation for continued growth.
Specialty ingredients once again delivered
strong double-digit growth and ended the
year representing 34% of our total revenue.
We made substantial strides by growing our
specialties portfolio with net sales higher
across all four regions versus the prior year.
Among other highlights, we expanded our
starch-based texturizer network to further
Our progress in the areas of “Commercial
Excellence” and “Cost Competitiveness
through Operational Excellence” also
contributed significantly to our performance
and solidified the foundation for future
gains. For instance, our Pricing Centers of
Excellence enabled us to deliver $1.3 billion
in net sales growth. We also raised the level
of sustainable sourcing of our five priority
agricultural inputs to 47% from 32% in 2021.
Additionally, we are holistically assessing
how we purchase, produce, and transport
raw materials and finished products to
customers at the lowest cost and have made
investments to enhance our supply chain
2022
QUARTERLY NET SALES
$2.0B
$2.0B
$2.0B
$1.9B
OUR BOARD OF DIRECTORS Left to right: Dwayne Wilson, Catherine Suever,
Gregory Kenny, Charles Magro, James Zallie, Paul Hanrahan, Stephan Tanda, Jorge Uribe,
Rhonda Jordan, Victoria Reich, David Fischer
Q1
Q2
Q3
Q4
and drive digital transformation within our
manufacturing facilities.
In 2022, we released our 11th annual
sustainability report, Making Life Better,
and second annual DEI report, Beyond
Belonging, charting our path forward as
we advanced our purpose-driven and
people-centric growth culture. We were
honored to be included in Bloomberg’s
Gender-Equality Index for the sixth
consecutive year. Additionally, we were
among a select group of companies
to have our 2030 emissions reduction
targets validated by SBTi, which provides
us with a roadmap aligned with climate
science and reflects our ambition to make
life better for society at large.
LOOKING AHEAD
Thanks to the creativity, drive, nimbleness,
and commitment of our people, Ingredion
turned in a very strong year. Looking
to 2023, I am confident that we are
well positioned to continue to execute
against our strategic pillars for growth and
benefit further from our resilient business
model. Our priorities will be to drive mix
enrichment by growing our specialty
ingredient portfolio; continue to optimize
our grind and maximize value from the
finishing channels for core ingredients to
further mitigate profit volatility; and invest
in R&D and digital capabilities to drive
innovation and enhance customer intimacy.
I would like to thank our shareholders
for their continued trust in Ingredion.
Finally, I extend my appreciation and
gratitude to our board of directors for
their continued dedication and support.
Together, we look forward to building on
our accomplishments in the coming years.
Sincerely,
James P. Zallie
PRESIDENT & CEO
INGREDION ACHIEVED
15%YEAR-OVER-YEAR REVENUE GROWTH
DESPITE MARKET CHALLENGES
176%
GLOBAL SUPPLY CHAIN PRESSURE
INDEX GROWS SHARPLY†
Ingredion continues to digitally transform our
supply chain, better leveraging existing platforms and
introducing new tools to increase visibility
† January 2021 to 2022, Global Supply Chain Pressure Index, New York Federal Reserve Bank
14%
COMMODITY PRICES SURGE
IN WAKE OF UKRAINE WAR§
Through our global sourcing network
and hedging, we met customer orders and
reduced exposure to rising commodity costs
§ February 24 to June 8, 2022, Dow Jones Commodity Index
9%
GLOBAL INFLATION HITS 40-YEAR HIGH*
Contracting efforts in 2021 plus 2022
in-year pricing more than offset inflation
and increased gross profits by 12%
* International Monetary Fund
33%
AMERICANS RESIGN IN RECORD NUMBERS‡
By emphasizing employee engagement, well-being
and strengthening engagement and investing in our
communities, we improved retention while training
initiatives and internships widened our talent pipeline
‡ Quits Levels, U.S. Bureau of Labor Statistics
11%
DOLLAR CLIMBS AGAINST BASKET
OF WORLD CURRENCIES◊
Expanded hedging by our Pricing Centers of Excellence
buffered us against the impact of a higher U.S. dollar
◊ January to October 2022, Nominal Broad Dollar Index, Federal Reserve Bank
1
2022 INGREDION ANNUAL REPORT AGILITY FOR GROWTH
Agility For Growth
We are purpose-driven and committed to sustainable sourcing.
We help customers innovate to meet consumers’ needs with
great-tasting, functional, and healthy plant-based ingredients.
PURECIRCLE MOMENTUM CONTINUES
As a global leader in sugar reduction and
specialty sweeteners, Ingredion is well-positioned
to benefit from the growing consumer demand for food
and beverages that are lower in sugar and calories.
Throughout the year, PureCircle achieved significant
customer wins, implemented effective pricing strategies
and developed innovative solutions that strengthened
our sugar reduction and specialty sweetener portfolio.
Last year, we received approval from the European
Union for our bioconverted Reb M, and our teams are
also working to expand access to fermented sugarcane
Reb M to more countries throughout Europe. Looking
ahead, we are investing capital to expand capacity
growth for consumers around the world.
2022
NET SALES
SPECIALTY GROWTH
2
2
Ingredient Categories
Net Sales Specialty Ingredients
(in billions)
34%
SPECIALTY INGREDIENTS
66%
CORE INGREDIENTS
$2.7
$2.3
2021
2022
27%
CHINESE PER CAPITA
MODIFIED STARCH
CONSUMPTION VS. U.S.
EXPANDING OUR FOOD STARCH NETWORK
The versatility, functionality, and affordability of
texturizers makes them indispensable and critical.
Regardless of the economic cycle, texturizers are
essential in maintaining the food supply and helping
to feed growing populations. To meet the rising
demand for texturizers, we announced a multi-year
A SUSTAINABLE SOURCE OF PROTEIN
Experts agree that plant-based proteins will play a vital role in the
world’s ability to achieve food security by 2030. Pulse-based proteins
enable manufacturers to formulate non-soy-based gluten-free meat
and dairy alternatives with consumer-
preferred texture and taste. We are
proud that our Ultra Performance line
of pea protein solutions was named
the best plant-based sustainability
winner during the 2022 World Plant-
Based Awards. This better tasting, more
sustainable product line provides great
versatility in a variety of applications.
118%
YEAR-OVER-YEAR
REVENUE INCREASE IN
PLANT-BASED PROTEINS
$160 million investment through 2024 to
support the expansion of our modified and
clean-label franchise and to increase local
production. Last year, we completed one-
third of this planned capital investment.
In 2022, despite COVID-19 lockdowns,
we successfully opened a state-of-the-
art manufacturing facility in Shandong,
China, which more than doubled our starch
production capacity there. We are now the
largest producer of modified starches in
China, a significant growth market. To further
increase our starch capacity, we accelerated
the commissioning of new capacity at our
Indianapolis facility. Our expanded starch
production and our enhanced capabilities
enable us to support our European
customers, who anticipated industry
shortages for some products due to the
severe summer drought in 2022.
3
2022 INGREDION ANNUAL REPORT RESILIENT BUSINESS MODEL
Resilient Business Model
SUPPLY
CHAIN/LABOR
In a year marked by upheaval and
uncertainty, the resilience of Ingredion’s
business model—combined with the
dedication and responsiveness of our
teams and the collaboration of our
customers and partners—enabled us to
post strong results. In the face of supply
chain disruptions, rising energy and
commodity costs and a soaring dollar,
Ingredion’s exceptional performance
last year has positioned us for
continued growth in years to come.
4
ENERGY
UKRAINE
INFLATION
FX
EXTREME
WEATHER
COVID-19
RAIL
DISRUPTIONS
RISK MITIGATION
Energy and commodity prices remained elevated throughout the
year, impacted by extreme weather events and disruptions caused
by the war in Ukraine. In response, we expanded our hedging and
risk management practices, providing predictable costs during a
period of global uncertainty.
At the same time, the dollar appreciated against other major
currencies to levels not seen in decades, as the Federal Reserve
aggressively hiked interest
rates to combat inflation.
Accordingly, we took
actions throughout the
year to offset $177 million
in foreign exchange
impacts to net sales in
EMEA and Asia-Pacific.
$177M
NEGATIVE FX NET SALES IMPACTS
IN EMEA AND ASIA-PACIFIC
PRICING CENTERS OF EXCELLENCE
Our Pricing Centers of Excellence played a critical role in our
2022 results; they were instrumental in enabling us to drive
top-line growth, more than offset inflationary cost increases
and secure almost $1.3 billion in price mix increases.
Our broad ingredient portfolio serves customers across
branded and private label categories. In 2022, we successfully
managed volume by balancing demand across our customers.
ALMOST
$1.3B
IN PRICE MIX
INCREASES FOR 2022
7%
INCREASE IN
ON-TIME IN-FULL
(OTIF ) DELIVERIES
DRIVING OPERATIONAL
EXCELLENCE
Throughout the year, supply
chain challenges were intensified
by labor availability, COVID-19
restrictions and the war in
Ukraine. Using computer
simulations to model supply chain
flows, we were able to reduce our
costs and maximize returns under a variety of capacity and
service constraint scenarios. When the global corn supply
was impacted by events in Ukraine, we leveraged our global
procurement and supply chain network to address gaps
that arose in various geographies, for instance offsetting
shortages in the European Union with supplies from Asia.
5
2022 INGREDION ANNUAL REPORT Be What’s Next
We will continue to build upon our strong, proven business model that delivers growth while seeking to mitigate risk appropriately.
Our specialties framework continues to deliver significant shareholder value from a wide variety of versatile ingredients, positioning
us to create on-trend solutions for a growing range of customers.
Sustainability
At Ingredion, we believe
that environmental, social
and governance initiatives
are an expression of our
values and the foundation
of our success. Our 2030
All Life Sustainability
Plan—focusing on
Everyday Life, Planet Life,
and Connected Life—is
our roadmap forward.
8%
Reduction in global
carbon emissions due to
exiting coal usage at our
Argo, Illinois, facility vs.
2019 base year.
This year, we made significant progress toward our
environmental goals by securing approval for our
greenhouse gas emissions reduction targets by the
Science Based Targets initiative (SBTi).
6
A MOBILE APP FOR TAPIOCA
FARMERS IN THAILAND
47%
COMPLETE *
source 100% of our corn,
pulses by the end of 2025.
tapioca, potato, stevia and
We committed to sustainably
We are determined to innovate
boldly in everything we do, in
support of our partners, customers,
and communities. Recognizing
that the majority of small tapioca
farms in Thailand have only wireless
access, we launched a mobile app that provides farmers with instant
access to information on farming and harvesting techniques as well
as pricing information. Thanks to this tool, more than 1,000 farmers
have increased their yields.
*estimate as of December 2022
Growth Across the Globe
The geographic diversity of our markets—especially those with growing populations—and the range of our ingredients—from
encapsulants and emulsifiers to starches and sweeteners—provides a foundation for Ingredion’s stable performance and steady growth.
In 2022, a number of our businesses achieved record net sales, including Brazil and China, two of our most important markets. Our teams
remain intensely focused on getting our ingredients to our customers when and where they need them.
28%
SPECIALTIES
INGREDIENTS
55%
SPECIALTIES
INGREDIENTS
57%
SPECIALTIES
INGREDIENTS
NORTH AMERICA
$4.9B
of net sales
$565M
operating income
EUROPE, MIDDLE
EAST, AFRICA
$781M
of net sales
$110M
operating income
ASIA-PACIFIC
$1.1B
of net sales
$93M
operating income
24%
SPECIALTIES
INGREDIENTS
SOUTH AMERICA
$1.1B
of net sales
$169M
operating income
7
2022 INGREDION ANNUAL REPORT FINANCIAL HIGHLIGHTS
Dollars in millions, except per share amounts;
years ended December 31
2022 % CHANGE
2021 % CHANGE
2020
Sales
Based on 2022 Net Sales
$7,946
15%
$6,894
15% $5,987
762
7.34
146%
324%
310
1.73
(47)%
(66)%
582
5.15
Reported Income Statement Data
Net sales
Operating income
Diluted earnings per share
Balance Sheet and Other Data
Cash and cash equivalents
Total assets
Total debt
236
7,561
2,483
Total equity (including redeemable equity)
3,262
Annual dividends declared per
common share
Net debt to adjusted EBITDA ratio1
Cash provided by operations
Mechanical stores expense
Depreciation and amortization
Capital expenditures and mechanical
stores purchases
2.72
2.2
152
55
215
300
328
6,999
2,046
3,225
2.58
1.9
392
55
220
300
665
6,858
2,186
3,072
2.54
1.8
829
54
213
340
FOOD
BEVERAGE
BREWING
ANIMAL NUTRITION
OTHER
54%
8%
8%
11%
19%
Comparison of
Cumulative Five-Year
Total Return
$150
$100
$50
2017
2018
2019
2020
2021
2022
S&P COMPOSITE 1500 FOOD
BEVERAGE & TOBACCO INDEX
INGREDION
Net
Sales
(in billions)
Operating
Income
(in millions)
Reported Diluted
Earnings Per
Share
(in dollars)
Adjusted Diluted
Earnings Per
Share1
(in dollars)
Adjusted Return
on Invested
Capital1
(percentage)
Market
Capitalization
as of 12/31
(in billions)
.
0
8
$
.
9
6
$
.
0
6
$
2
6
7
$
5
1
.
5
$
2
8
5
$
0
1
3
$
’20
’21
’22
’20
’21
’22
’20
3
7
.
1
$
’21
4
3
.
7
$
.
7
6
6
$
.
3
2
6
$
5
4
.
7
$
%
8
0
1
.
%
7
.
0
1
%
0
.
1
1
.
4
6
$
.
4
6
$
3
.
5
$
’22
’20
’21
’22
’20
’21
’22
’20
’21
’22
1 See Financial Performance Metrics beginning on page 58 of the Annual Report for a reconciliation of these metrics, which are not calculated in accordance with Generally Accepted
Accounting Principles (GAAP), to the most comparable GAAP measures
8
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FORM 10-K
(Mark One)
(Mark One)
X(cid:84)(cid:84)
(cid:84) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
❑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
X
For the fiscal year ended December 31, 2022
or
or
(cid:84) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For the transition period from to
Commission file number 1-13397
Commission file number 1-13397
INGREDION INCORPORATED
INGREDION INCORPORATED
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
Delaware
22-3514823
(I.R.S. Employer Identification No.)
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
22-3514823
5 Westbrook Corporate Center, Westchester, Illinois 60154
(Address of principal executive offices) (Zip Code)
5 Westbrook Corporate Center, Westchester, Illinois 60154
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (708) 551-2600
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code (708) 551-2600
Common Stock, par value $0.01 per share
Title of each class
Trading Symbol(s)
Securities registered pursuant to Section 12(b) of the Act:
INGR
New York Stock Exchange
Name of each exchange on which registered
X
X
X(cid:84)(cid:84)
X(cid:84)(cid:84)
X(cid:84)(cid:84)
Accelerated filer ❑
Non-accelerated filer ❑
Securities registered pursuant to Section 12(g) of the Act: None
Title of each class Trading Symbol(s) Name of each exchange on which registered
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ❑ No ❑
New York Stock Exchange
INGR
Common Stock, par value $0.01 per share
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ❑ No ❑
X
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:84) No (cid:84)
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 ❑
X(cid:84)(cid:84)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:84) No (cid:84)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
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
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 filing requirements for the past 90 days. Yes (cid:84) No (cid:84)
such files). Yes ❑X No ❑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
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
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
such files). Yes (cid:84) No (cid:84)
company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
Large accelerated filer ❑X
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.
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
Large accelerated filer (cid:84)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3) Accelerated filer (cid:84) Non-accelerated filer (cid:84) Smaller reporting company (cid:84) Emerging growth company (cid:84)
X(cid:84)(cid:84)
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ❑
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
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:84)
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
prepared or issued its audit report Yes ❑X No ❑
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
prepared or issued its audit report Yes (cid:84) No (cid:84)
the filing reflect the correction of an error to previously issued financial statements. ❑
X(cid:84)(cid:84)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:84) No (cid:84)
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant on the last day of the most recently completed
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ❑
second fiscal quarter (based upon the per share closing price of $90.50 as reported on the New York Stock Exchange on June 30, 2021, and, for
the purpose of this calculation only, the assumption that all of the registrant’s directors and executive officers are affiliates) was approximately
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ❑ No ❑X
$6,055,000,000.
The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant on the last day of the most recently completed second
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of February 18, 2022 was 66,714,756
fiscal quarter (based upon the per share closing price of $88.16 as reported on the New York Stock Exchange on June 30, 2022, and, for the purpose of
Documents Incorporated by Reference:
this calculation only, the assumption that all of the registrant’s directors and executive officers are affiliates) was approximately $5,794,000,000.
Information required by Part III (Items 10, 11, 12, 13 and 14) of this document is incorporated by reference to certain portions of the registrant’s
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of February 15, 2023 was 65,954,699.
definitive Proxy Statement to be distributed in connection with its 2022 Annual Meeting of Stockholders, which will be filed with the Securities and
Documents Incorporated by Reference:
Exchange Commission within 120 days after December 31, 2021.
Information required by Part III (Items 10, 11, 12, 13 and 14) of this document is incorporated by reference to certain portions of the registrant’s definitive
1
Proxy Statement to be distributed in connection with its 2023 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2022.
Smaller reporting company ❑
Emerging growth company ❑
INGREDION INCORPORATED
X(cid:84)(cid:84)
2022 INGREDION ANNUAL REPORT
1
TABLE OF CONTENTS TO FORM 10-K
PART I
ITEM 1.
Business ............................................................................................... 3
ITEM 1A.
Risk Factors ......................................................................................... 8
ITEM 1B.
Unresolved Staff Comments ............................................................. 14
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 6.
ITEM 7.
Properties ............................................................................................ 14
Legal Proceedings .............................................................................. 15
Mine Safety Disclosures .................................................................... 15
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities ....................... 15
[Reserved] ........................................................................................... 16
Management’s Discussion and Analysis of Financial
Condition and Results of Operations ............................................. 16
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk ... 23
ITEM 8.
ITEM 9.
Financial Statements and Supplementary Data ........................... 25
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure............................................... 51
ITEM 9A.
Controls and Procedures .................................................................... 51
ITEM 9B.
Other Information .............................................................................. 52
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that
Prevent Inspections ........................................................................... 52
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
Directors, Executive Officers and Corporate Governance .......... 52
Executive Compensation .................................................................. 52
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters ........................... 52
Certain Relationships and Related Transactions, and
Director Independence ..................................................................... 52
ITEM 14.
Principal Accountant Fees and Services ........................................ 52
PART IV
ITEM 15.
ITEM 16.
Exhibits and Financial Statement Schedules ................................ 53
Form 10-K Summary ........................................................................... 55
Signatures
............................................................................................................... 56
2
PART I
For purposes of this report, unless the context otherwise requires, all
references herein to the “Company,” “Ingredion,” “we,” “us,” and “our”
shall mean Ingredion Incorporated and its consolidated subsidiaries.
ITEM 1. Business
OUR COMPANY
Ingredion is a leading global ingredients solutions provider that
transforms corn, tapioca, potatoes, stevia, grains, fruits, gums and
vegetables into value-added ingredients and biomaterials for the
food, beverage, brewing and other industries.
Our Purpose is to bring the potential of people, nature and
technology together to make life better. We develop, produce and
sell a variety of food and beverage ingredients, primarily starches
and sweeteners, for a wide range of industries, and we manage our
operations geographically on a regional basis, with our businesses
and investments classified into the following segments:
• North America – U.S., Mexico and Canada
• South America – Brazil, Argentina, Chile, Colombia, Ecuador, Peru
and Uruguay
• Asia-Pacific – South Korea, Thailand, China, Australia, Japan, New
Zealand, Indonesia, Singapore, the Philippines, Malaysia, India
and Vietnam
• Europe, Middle East and Africa (“EMEA”) – Pakistan, Germany,
Poland, the United Kingdom and South Africa
Our product lines include starches and sweeteners, animal feed
products and edible corn oil. Our starch-based products include
both food-grade and industrial starches, as well as biomaterials.
Our sweetener products include glucose syrups, high maltose
syrups, high fructose corn syrup, caramel color, dextrose, polyols,
maltodextrins, and glucose and syrup solids. Our products are
derived primarily from the processing of corn and other starch-
based materials, such as tapioca, potato and rice.
GEOGRAPHIC SCOPE AND OPERATIONS
We utilize our global network of 47 manufacturing facilities and
joint venture partnerships to support key global product lines.
We have focused our recent investments on expanding our stevia
sweetener and plant-based protein product lines, including pulse-
based concentrates, flours and isolates. Our manufacturing process
is based on a capital-intensive, two-step process that involves the
wet-milling and processing of starch-based materials, primarily corn.
During the front-end process, the starch-based materials are steeped
in a water-based solution and separated into starch and co-products
such as protein, fiber and germ used to produce corn oil. The starch
is then either dried for sale or further processed to make starches,
sweeteners and other ingredients that serve the particular needs of
various industries.
Our North America region includes 22 manufacturing facilities that
produce a wide range of starches, sweeteners, gum acacia, peas,
and fruit and vegetable concentrates.
Our South America region includes seven manufacturing facilities
that produce regular, modified, waxy tapioca starches, high
fructose and high maltose syrups and syrup solids, dextrins
and maltodextrins, dextrose, specialty starches, caramel color
and sorbitol. We also own 49 percent of Ingrear Holding S.A.,
which operates 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
(the “Argentina joint venture”). We completed the transaction
with Grupo Arcor, an Argentine food company, on August 2, 2021,
to combine facilities into the Argentina joint venture, which is
managed by a jointly appointed team of executives.
Our Asia-Pacific region manufactures corn-based products in South
Korea, China and Thailand, tapioca- and rice-based products in
Thailand, and stevia sweetener products in Malaysia and China.
We supply tapioca, rice and stevia sweetener products not only to
our Asia-Pacific region, but also to the rest of our global network.
The region’s operations include twelve manufacturing facilities that
produce modified, specialty and regular waxy tapioca and rice starches,
dextrins, glucose, high maltose syrup, stevia sweeteners, dextrose, high
fructose corn syrup, caramel color and pharmaceutical-grade polyols.
We currently own 87 percent of PureCircle Limited (“PureCircle”), one
of the leading producers and innovators of stevia sweeteners and
flavors for the food and beverage industry. During 2022, we purchased
$46 million of outstanding PureCircle minority shares to increase
our ownership from the 75 percent controlling interest of shares we
acquired on July 1, 2020. Our stevia investments also include certain
exclusive commercialization rights to rebaudioside M by fermentation
product developed by Amyris, Inc. (“Amyris”), exclusive licensing of
the product’s manufacturing technology, and a 31 percent ownership
stake in a joint venture for the product (the “Amyris joint venture”),
which we entered with Amyris on June 1, 2021.
We are continuing to make strategic investments in Asia. On
August 1, 2022, we acquired Amishi Drugs and Chemicals Private
Limited (“Amishi”), which is an Indian manufacturer of chemically
modified starch-based pharmaceutical excipients, for $7 million. On
December 1, 2022, we acquired a 65 percent controlling interest in
Mannitab Pharma Specialties Private Limited (“Mannitab”), which
is an Indian manufacturer of spray dried mannitol and fine grade
mannitol, for $22 million, and we agreed to acquire the remaining
shares of Mannitab over the next three years.
Our EMEA region includes six manufacturing facilities that produce
modified and specialty starches, glucose and dextrose in Pakistan,
Germany and the United Kingdom. On April 1, 2021, we acquired
KaTech, a German-based provider of advanced texture and
stabilization solutions to the food and beverage industry.
We utilize a network of tolling manufacturers in various regions in
the production cycle of certain specialty starches. In general, these
tolling manufacturers produce certain basic starches for us and we
in turn complete the manufacturing process of starches through our
finishing channels.
We believe our approach to production and service, which focuses
on local management and production improvements of our
worldwide operations, provides us with a unique understanding of
3
2022 INGREDION ANNUAL REPORT the cultures and product requirements in each of the geographic
markets in which we operate. This allows us to bring added value
to our customers through tailored, innovative solutions. We believe
that our centralized production planning, distribution and financial
functions similarly give us the ability to serve global customers,
leverage digital solutions, ration production capacity, identify
synergies, and maximize the benefits of our global presence.
PRODUCTS
Our portfolio of products is generally classified into the following
categories: Starch Products, Sweetener Products, and Co-products
and others. Within these categories, a portion of our products are
considered specialty ingredients and we refer to the remainder of
our products as core ingredients.
Starch products
Our starch products represented approximately 46 percent, 45
percent and 46 percent of our net sales for each of 2022, 2021 and
2020, respectively. Starches are an important component in a wide
range of processed foods, where they are used for adhesion, clouding,
dusting, expansion, fat replacement, freshness, gelling, glazing,
mouthfeel, stabilization and texture. Cornstarch is sold to cornstarch
packers for sale to consumers. Starches are also used in paper
production to create a smooth surface for printed communications
and to improve strength in recycled papers. Specialty paper starches
are used for enhanced drainage, fiber retention, oil and grease
resistance, improved printability and biochemical oxygen demand
control. The textile industry uses starches and specialty starches
for sizing (abrasion resistance) to provide size and finishes for
manufactured products. Industrial starches are used in the production
of construction materials, textiles, adhesives, pharmaceuticals
and cosmetics, as well as in mining and water filtration. Specialty
industrial starches are used for biomaterial applications including
biodegradable plastics, fabric softeners and detergents, hair and skin
care applications, dusting powders for surgical gloves, and in the
production of glass fiber and insulation.
Sweetener products
Our sweetener products represented approximately 33 percent, 33
percent and 35 percent of our net sales for 2022, 2021 and 2020,
respectively. Sweeteners include products such as glucose syrups,
high maltose syrup, high fructose corn syrup, dextrose, polyols,
maltodextrin, glucose syrup solids and non-GMO (genetically
modified organism) syrups. Our sweeteners are used in a wide variety
of food and beverage products, such as baked goods, snack foods,
canned fruits, condiments, candy and other sweets, dairy products,
ice cream, jams and jellies, prepared mixes, table syrups, soft drinks,
fruit-flavored drinks and many others. These sweetener products
also offer functionality in addition to sweetness, such as texture,
body and viscosity; help control freezing points, crystallization and
browning; add humectancy (ability to add moisture) and flavor; and
act as binders. Our high maltose syrups speed the fermentation
process, allowing brewers to increase capacity without adding
capital. Dextrose has a wide range of applications in the food and
confection industries, in solutions for intravenous (“IV”) and other
pharmaceutical applications, and in numerous industrial applications
like wallboard, biodegradable surface agents and moisture control
agents. Our specialty sweeteners provide affordable and natural,
reduced calorie and sugar-free solutions for our customers.
4
Co-products and others
Co-products and others accounted for approximately 21 percent,
22 percent and 19 percent of our net sales for 2022, 2021 and
2020, respectively. Refined corn oil (from germ) is sold to packers
of cooking oil and to producers of margarine, salad dressings,
shortening, mayonnaise and other foods. Corn gluten feed is sold
as animal feed. Corn gluten meal is sold as high-protein feed for
chickens, pet food and aquaculture. Our other products include fruit
and vegetable products, such as concentrates, purees and essences,
as well as pulse proteins and hydrocolloids systems and blends.
Specialty ingredients within the product portfolio
Within our three product portfolios, we consider certain of our
products to be specialty ingredients. Specialty ingredients accounted
for approximately 34 percent of our net sales for 2022, up from
33 percent and 32 percent for 2021 and 2020, respectively. These
ingredients deliver more functionality than our other products and
add additional customer value. Our specialty ingredients are aligned
with growing market and consumer trends such as health and
wellness, clean-label, simple ingredients, affordability, indulgence
and sustainability.
We drive growth for our specialty ingredients portfolio by
leveraging the following growth platforms:
Starch-based Texturizers: These ingredients support the structure
and texture behind great eating experiences. Products are made
from corn, potato, rice and tapioca, and offer a multitude of
textures, functionalities and stability during processing and shelf
life to a broad range of food products.
Clean and Simple Ingredients: These functional ingredients
address the clean label trend for finished products made with
shorter lists of food ingredients that have achieved broad
consumer acceptance. From food and beverages to pet food
and personal care, consumers are looking for clean, simple,
natural and authentic products that they can identify and trust.
The broad portfolio of clean label ingredients includes starches,
sweeteners, flours, nutrition ingredients, emulsifiers and fruit
and vegetable concentrates.
Sugar Reduction and Specialty Sweeteners: These solutions
provide sweetness or functional replacement for sugar in
reduced-calorie and sugar-free foods and beverages without
sacrificing quality and consistency. These specialty ingredients
are made from a variety of GMO and non-GMO raw material
bases and include such ingredients as stevia sweeteners, polyols,
dextrose and allulose, a rare sugar.
Food Systems: These systems deliver ingredient combinations
that simplify a customer’s production cycle. A food system can
address an array of functional challenges including mouthfeel/
texture for dairy and alternative dairy products, thickening
of sauces, stabilization in high-protein drinks, gelling for fruit
fillings, film formers for candy shells, foaming and frothing,
adding soluble fibers and nutritional ingredients, adhering
particles to breads, and emulsification of flavors.
Plant-based Proteins: These specialty pulse-based protein
ingredients bring solutions made from fava beans and peas. They
add protein, dietary fiber, micronutrients and texture to food and
beverages.
Core ingredients within the product portfolio
We refer to the remainder of our starch products, sweetener
products and co-products that do not fall into specialty ingredients,
as defined above, as core ingredients. Core ingredients accounted
for approximately 66 percent of our net sales for 2022, down from
67 percent in 2021 and 68 percent in 2020.
COMPETITION
The starch and sweetener industry is highly competitive.
Competition within our markets is largely based on product
functionality, price and quality. The U.S. is a highly competitive
market with operations by other starch processors, several of which
are divisions of larger enterprises. Some of these competitors,
unlike us, have vertically integrated their starch processing and
other operations. Competitors include Archer-Daniels-Midland
Company, Cargill, Inc., Tate & Lyle PLC, Primient and several others.
Our operations in Mexico and Canada face competition from U.S.
imports and local producers including ALMEX, a Mexican joint
venture between ADM and Primient. In South America, Cargill
conducts starch processing operations in Brazil and Argentina. We
also face competition from Roquette Frères S.A., primarily in our
EMEA, North America and Asia-Pacific regions. Many smaller local
corn and tapioca processors also operate in some of our markets.
Several of our products also compete with products made from
raw materials other than corn. High fructose corn syrup and
monohydrate dextrose compete principally with cane and beet sugar
products. Co-products such as corn oil and gluten meal compete
with products of the corn dry milling industry and with soybean oil,
soybean meal and other products. Fluctuations in prices of these
competing products may affect prices of, and profits derived from,
our products.
CUSTOMERS
We supply a broad range of customers in over 60 industries
worldwide. The following table shows the approximate portion of total
net sales by industry for each of the industries we served in 2022:
INDUSTRIES SERVED
TOTAL
INGREDION
NORTH
AMERICA
SOUTH
AMERICA
ASIA
PACIFIC
EMEA
Food
Beverage
Brewing
Food and Beverage
Ingredients
Animal Nutrition
Other
54%
53%
49%
58%
66%
8
8
70
11
19
12
8
73
11
16
1
18
68
15
17
5
3
66
5
29
1
—
67
7
26
Total Net Sales
100%
100%
100%
100% 100%
decisions; climate; domestic and foreign government policies
(including those related to the production of ethanol); livestock
feeding; shortages or surpluses of world grain supplies; and trade
agreements. We use chips and slices from potato processors as the
primary raw material to manufacture potato-based starches. We also
use tapioca, gum, rice, stevia, peas and sugar as raw materials. The
supply of raw materials has been, and is anticipated to continue to
be, adequate for our needs.
Corn is also grown in other areas of the world, including China,
Brazil, Europe, Argentina, Mexico, South Africa, Canada and
Pakistan. Our subsidiaries outside the U.S. utilize both local supplies
of corn and corn imported from other geographic areas, including
the U.S. The supply of corn for these subsidiaries is generally
expected to be adequate for our needs. Corn prices for our non-U.S.
subsidiaries generally fluctuate as a result of the same factors that
affect U.S. corn prices.
We also utilize specialty grains such as waxy and high amylose corn,
as well as proprietary seed varietals in our operations. In general,
the planning cycle for our specialty grain sourcing begins three
years in advance of the anticipated delivery of the specialty corn,
since the necessary seed must be grown in the season before we
contract to buy the grain. To secure these specialty grains at the
time of our anticipated needs, we contract with certain farmers
to grow the specialty corn approximately two years in advance of
delivery. These specialty grains have a higher cost due to their more
limited supply and require longer planning cycles to mitigate the
risk of supply shortages.
Due to the competitive nature of our industry and the availability
of substitute products not produced from corn, such as sugar from
cane or beets, end-product prices may not necessarily fluctuate in a
timely manner that correlates to raw material costs of corn.
We use derivative hedging contracts to protect the gross margin of
our firm-priced business, primarily in North America, and we follow
a policy of hedging our exposure to commodity price fluctuations
with commodities futures and options contracts, primarily for
certain North American corn purchases. Other operations may
be hedged at any given time based on management’s judgment
as to the need to fix the costs of our raw materials to protect our
profitability. Outside North America, we generally enter short-term
commercial sales contracts and adjust our selling prices based
upon the local raw material costs. See Item 7A. Quantitative and
Qualitative Disclosures about Market Risk for additional information.
Other raw materials used in our manufacturing processes include
chips and slices from potato processors as the primary raw material to
manufacture potato-based starches. We also use tapioca, particularly
in certain of our production processes in the Asia-Pacific region. In
addition to corn, potatoes, and tapioca, we use pulses, gums, rice,
stevia, yellow peas and sugar as raw materials, among others.
No customer accounted for 10 percent or more of our net sales in
2022, 2021 or 2020.
RESEARCH AND DEVELOPMENT
RAW MATERIALS
Corn (primarily yellow dent) is the primary basic raw material we
use to produce starches and sweeteners. The price of corn, which is
determined by reference to prices on the Chicago Board of Trade,
fluctuates as a result of various factors, including farmers’ planting
Our global network of approximately 500 scientists creates
innovative food solutions in 32 Ingredion Idea Labs® with
headquarters in Bridgewater, New Jersey. Activities at Bridgewater
include plant science and physical, chemical and biochemical
modifications to food formulations, food sensory evaluation,
5
2022 INGREDION ANNUAL REPORT
and development of non-food applications such as starch-based
biopolymers. In addition, we have product application technology
centers that direct our product development teams worldwide to
create product application solutions to better serve the ingredient
needs of our customers. Product development activity is focused
on developing product applications for identified customer and
market needs. Through this approach, we have developed value-
added products for use by customers in various industries. We
usually collaborate with customers to develop the desired product
application either in the customers’ facilities, our technical service
laboratories, or on a contract basis.
Our research and development (“R&D”) is supported by our
marketing, product technology, and technology support staff, as
well as technical support services, to assist our customers with
application development and co-creation. We invest in R&D
and digital transformation solutions to support new product
development and innovation, to enable greater value delivery to
our customers, to reduce waste and lower our costs and to drive
operational excellence.
SALES AND DISTRIBUTION
Our salaried sales personnel, who are generally dedicated to
customers in a geographic region, sell our products directly to
manufacturers and distributors. In addition, we have staff that
provides technical support to our sales personnel on an industry
basis. We generally contract with trucking companies to deliver
our bulk products to customer destinations. In North America,
we generally use trucks to ship to nearby customers. For those
customers located considerable distances from our manufacturing
facilities, we primarily use either rail or a combination of railcars
and trucks to deliver our products.
PATENTS AND TRADEMARKS
As of December 31, 2022, we owned more than 1,800 patents
and patents pending, which relate to a variety of products and
processes, as well as a number of established trademarks under
which we market our products. We also have the right to use other
patents and trademarks pursuant to patent and trademark licenses.
We do not believe that any individual patent or trademark is
material to our business.
HUMAN CAPITAL
We believe the strength of our workforce is one of the significant
contributors to our success as a global company. Attracting,
developing and retaining global talent with the right skills to drive
our business is central to our values and long-term growth strategy.
All our employees contribute to our success and help us drive
financial performance.
Workforce profile
As of December 31, 2022, Ingredion employed approximately 11,700
people, of whom approximately 3,100 were located in the U.S.
and Canada. Approximately 29 percent of our U.S. and Canadian
employees are members of labor unions, and three different
collective bargaining agreements that expire at various dates in
2023 cover up to 430 of these employees.
The following table provides additional information about our
employees as of December 31, 2022:
REGION
North America
South America
Asia-Pacific
EMEA
Total Ingredion
APPROXIMATE NUMBER OF EMPLOYEES
5,100
2,300
2,600
1,700
11,700
Workplace safety
The overall well-being and safety of our employees and customers
is one of our top priorities. We continue our strong focus on
maintaining an injury-free workplace and invest in training,
workplace resources and continuous improvement methodologies to
improve safety results and ensure responsible management of all our
facilities, particularly in our manufacturing plants, which continue
to represent the greatest safety and health risks. A workplace safety
goal represents a part of each employee’s personal performance
objectives each year as we strive to achieve an injury-free work
environment.
Culture and employee engagement
We conduct confidential engagement surveys of our global
workforce, and executive officers and leaders throughout the
organization review aggregate survey results and create action plans
at global, regional, functional and managerial levels. Furthermore,
we employ a flexible approach for our office-based employees on
how and where we work. We focus on agile ways of working that
enable colleagues to work remotely when appropriate and organize
our office spaces to foster connection and collaboration.
Diversity, Equity & Inclusion (“DEI”)
Our Executive Leadership Team and Board of Directors lead our DEI
commitment and drive it throughout the organization. Our recently
refreshed DEI strategy is aligned with our Purpose. Our program
structure includes Regional Diversity Councils and a Global DEI
Council, which are collectively composed of regional and functional
business leaders, human resource partners and select Business
Resource Group (“BRG”) leaders. We include specific DEI metrics as
an element of personal objectives within our annual incentive plan
for our CEO and other senior leaders.
We leverage the diverse experience and skills of our BRGs to
help inform our business strategy. Our nine BRGs, which we
have implemented across our global operations, play a role in
connecting employees across regions, by providing colleagues with
opportunities to enhance cultural awareness, enable collaboration,
and inform our strategies for a broad consumer marketplace.
We participate in the Paradigm for Parity® coalition, pledging
our goal to achieve gender parity at manager level and above by
2030. As of December 31, 2022, employees who self-identify as
women accounted for more than 25 percent of both our Executive
Leadership Team and independent members of our Board of
Directors. Additionally, the Bloomberg Gender-Equality Index
(“GEI”), a modified market capitalization-weighted index that
aims to track the performance of public companies committed to
6
transparency in gender-data reporting, has included Ingredion in
the GEI for six years. We use the GEI as a benchmark to measure our
performance and evaluate opportunities for improvement.
GOVERNMENT REGULATION
As a manufacturer and marketer of food items and items for use
in the pharmaceutical industry, our operations and the use of
many of our products are subject to federal, state, foreign and
local statutes and regulations, including the Federal Food, Drug
and Cosmetic Act and the Occupational Safety and Health Act. We
and many of our products are also subject to regulation by the U.S.
Food and Drug Administration and other government agencies.
Among other things, applicable regulations of these agencies
prescribe requirements and establish standards for product quality,
purity and labeling. Failure to comply with one or more regulatory
requirements can result in a variety of sanctions, including
monetary fines. No such fines of a material nature were imposed on
us in 2022. We may also be required to comply with federal, state,
foreign and local laws regulating food handling and storage. We
believe these laws and regulations have not negatively affected our
competitive position.
Our operations are also subject to federal, state, foreign and local
laws and regulations for environmental matters, including air and
water quality, as well as other regulations intended to protect
public health and the environment. We operate industrial boilers
that fire natural gas, coal, or biofuels to operate our manufacturing
facilities. Those boilers, along with product dryers, are our primary
source of greenhouse gas emissions. In January 2023, the European
Union (“EU”) finalized the Corporate Sustainability Reporting
Directive, which will introduce more detailed sustainability reporting
requirements for EU companies, including companies such as
Ingredion, that meet certain EU net sales thresholds.
During 2022, we spent approximately $22 million for environmental
control and wastewater treatment equipment to be incorporated
into existing facilities and in planned construction projects. We
currently anticipate that we will invest approximately $27 million for
environmental facilities and programs in 2023.
Based on current laws and regulations and their enforcement
and interpretation, we do not expect that the costs of future
environmental compliance will be a material expense, although
there can be no assurance that we will remain in compliance or
that the costs of remaining in compliance will not have a material
adverse effect on our future financial condition and results of
operations.
ADDITIONAL INFORMATION
Our Internet address is www.ingredion.com. We make available,
free of charge through our Internet website, our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended. We make these reports available as soon as reasonably
practicable after we electronically file them with or furnish them to
the Securities and Exchange Commission. Our corporate governance
guidelines, board committee charters and code of ethics are posted
on our website, the address of which is www.ingredion.com, and will
be made available in print without charge to any stockholder upon
request in writing to Ingredion Incorporated, 5 Westbrook Corporate
Center, Westchester, Illinois 60154, Attention: Corporate Secretary.
The information on, or accessible through, our website is not a part
of, and is not incorporated by reference into, this report.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Set forth below, as of January 31, 2023, is information about our
executive officers that indicates their positions and offices with
Ingredion and other recent business experience. Our Board of
Directors elects our executive officers annually to serve until the
next annual election of officers and until their respective successors
have been elected and been qualified, or until their earlier
resignation or removal by the Board of Directors.
NAME
James P. Zallie
AGE
61
Valdirene Evans
Larry Fernandes
Davida M. Gable
James D. Gray
Tanya Jaeger de
Foras
55
58
56
56
52
POSITIONS, OFFICES AND BUSINESS EXPERIENCE
Mr. Zallie has been President and Chief Executive Officer since January 1, 2018. Before that, he was Executive Vice
President, Global Specialties and President, Americas from January 2016 to December 2017. He is also a director of Sylvamo
Corporation, a global producer of uncoated papers.
Ms. Evans has been Senior Vice President and President, APAC and Global Head of Pharma, Home and Beauty since October
2020. Before that, she was Senior Vice President and President, Asia-Pacific from March 2018 to September 2020.
Mr. Fernandes has been Senior Vice President and Chief Commercial and Sustainability Officer of Ingredion since July 2018.
Before that, he was Senior Vice President and Chief Commercial Officer from March 2018 to July 2018 and President and
General Director, Mexico from January 2014 to February 2018.
Ms. Gable has been Vice President, Corporate Controller since joining Ingredion in October 2021. Before that, she was Head
of Global Accounting and External Reporting at Wayfair Inc., an e-commerce company, from August 2020 to September
2021, and Assistant Controller at AK Steel Holdings Corporation, an integrated steel manufacturer from May 2013 to July
2020.
Mr. Gray has been Executive Vice President and Chief Financial Officer since March 2017. Before that, he was Vice President,
Corporate Finance and Planning.
Ms. Jaeger de Foras has been Senior Vice President, Chief Legal Officer, Corporate Secretary and Chief Compliance Officer
since joining Ingredion in November 2021. Before that, she was Deputy General Counsel and Chief Compliance Officer from
September 2019 through September 2021, as well as EMEA Regional General Counsel from June 2015 to August 2019, for
Whirlpool Corporation, a global home appliance manufacturer.
7
2022 INGREDION ANNUAL REPORT NAME
Jorgen Kokke
Pierre Perez y
Landazuri
Eric Seip
Nancy Wolfe
Jeremy Xu
AGE
54
54
55
53
55
POSITIONS, OFFICES AND BUSINESS EXPERIENCE
Mr. Jorgen Kokke has been Executive Vice President and President, Americas since October 2020. Before, that, he was Vice
President, Global Specialties and President, North America from February 2018 until September 2020.
Mr. Perez y Landazuri has been Senior Vice President, Corporate Strategy, Specialties and President EMEA since September
2021. Before that, he was Senior Vice President Texture, Protein and Performance Specialties and President EMEA from
January 2021 to September 2021, and Senior Vice President and President, EMEA from January 2018 to January 2021.
Mr. Seip has been Senior Vice President, Global Operations and Chief Supply Chain Officer since joining Ingredion in January
2021. Before that, Mr. Seip was Senior Vice President, Global Supply Chain at ChampionX Holding Inc. (formerly Ecolab),
from January 2020 until January 2021. Prior to that, he was Senior Vice President, Global Supply Chain at Ecolab from
December 2011 through December 2019. From August 2017 through December 2018, Mr. Seip also held the role of Senior
Vice President, Supply Chain Ecolab Middle East Africa (MEA).
Ms. Wolfe has been Senior Vice President and Chief Human Resources Officer since joining Ingredion in January 2022.
Before that, she was Senior Vice President, Human Resources at Bayer Crop Science (formerly Monsanto), an agriculture,
chemical and biochemical solutions company, from June 2018 to January 2022, and Vice President and Chief of Staff at Bayer
Crop Science from August 2013 through June 2018.
Mr. Xu has been Senior Vice President and Chief Innovation Officer since joining Ingredion in October 2020. Before that, he
was President, Human Nutrition and Health, at Royal DSM, a multinational corporation active in fields of health, nutrition
and materials from May 2016 to September 2020.
ITEM 1A. Risk Factors
Our business and assets are subject to varying degrees of risk and
uncertainty. The following are factors that we believe could cause
our actual results to differ materially from expected and historical
results. Additional risks that are currently unknown to us or that
we currently view as immaterial may also impair our business or
adversely affect our financial condition or results of operations. In
addition, forward-looking statements within the meaning of the
federal securities laws that are contained in this annual report on
Form 10-K or in our other SEC filings or public statements may
be subject to the risks described below as well as other risks and
uncertainties. See the cautionary notice regarding forward-looking
statements in Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY
Our business may be adversely affected by impacts on the
availability and prices of raw materials and energy supplies,
volatility in foreign exchange and interest rates, and other
effects of the conflict between Russia and Ukraine.
Our business may be adversely affected by the effects of the
ongoing conflict between Russia and Ukraine. Although our
operations in Russia and Ukraine accounted for less than one half
of one percent of our net sales in fiscal year 2022, the region is a
source of raw material and energy supply for both us and certain
companies whose products we distribute. Economic sanctions
and export control measures imposed on Russia and designated
Russian enterprises, Belarus and certain regions of Ukraine have
resulted in increased volatility in the availability and prices of
such raw materials and energy supplies. In addition, sanctions and
macroeconomic effects of the conflict have contributed to greater
volatility in foreign exchange and interest rates that affect our
financial results. Developments relating to the conflict might result
in a continuation of these impacts and in other impacts that could
adversely affect our business or results of operations.
Changes in consumer preferences and perceptions may lessen
the demand for our products, which could reduce our sales and
profitability and harm our business.
Food products are often affected by changes in consumer tastes,
national, regional and local economic conditions and demographic
trends. For instance, changes in prevailing health or dietary
preferences causing consumers to avoid food products containing
sweetener products, including high fructose corn syrup, in favor of
foods that are perceived as being healthier, could materially reduce
our sales and profitability. Increasing concern among consumers,
public health professionals and government agencies about the
potential health concerns associated with obesity and inactive
lifestyles (reflected, for instance, in taxes on certain beverages
designed to combat obesity, which have been imposed recently
in North America) represent a significant cost to some of our
customers, including those engaged in the food and soft drink
industries, and could materially affect demand for our products.
Current economic conditions may adversely impact demand
for our products, reduce access to credit, affect investment
returns and cause our customers and others with whom we
do business to suffer financial hardship, all of which could
adversely impact our business, results of operations, financial
condition and cash flows.
General business and economic conditions that could affect us
include barriers to trade (including as a result of tariffs, duties
and border taxes, among other factors), the strength of the
economies in which we operate, unemployment, inflation and
fluctuations in debt markets. While currently these conditions
have not impaired our ability to access credit markets and
finance our operations, we are subject to the risk of a further
deterioration in the financial markets.
These economic developments could have a number of other effects
on our business, including reduced consumer demand for products,
pressure to extend our customers’ payment terms, insolvency of
our customers resulting in increased provisions for credit losses,
decreased customer demand, including order delays or cancellations
and counterparty failures negatively impacting our operations.
8
In connection with our defined benefit pension plans, adverse
changes in investment returns earned on pension assets and
discount rates used to calculate pension and related liabilities or
changes in required pension funding levels may have an unfavorable
impact on future pension expenses and cash flows.
Volatile worldwide economic conditions and market instability
may make it difficult for us, our customers and our suppliers to
accurately forecast future product demand trends, which could
cause us to produce products in excess of demand and increase our
inventory carrying costs. Alternatively, this forecasting difficulty may
cause a shortage of products that could affect our ability to satisfy
the demand for our products.
Our reliance on certain industries for a significant portion of
our sales could have a material adverse effect on our business.
Of our 2022 net sales, approximately 54 percent were generated by
sales to the food industry, 11 percent by sales to the animal nutrition
industry, 8 percent by sales to the beverage industry, and 8 percent
by sales to the brewing industry. If our customers in any of these
industries were to substantially decrease their purchases, our
business might be materially adversely affected.
The coronavirus 19 disease (“COVID-19”) pandemic could have a
material adverse effect on our business.
The ongoing COVID-19 pandemic has had, and could continue
to have, negative impacts on our business, including causing
significant volatility in the commodity and currency markets,
changes in consumer demand, behavior or preference, disruptions
in our supply chain and manufacturing capacity, limitations on
our employees’ ability to work and changes in the economic or
political conditions in markets we serve which could constrain or
halt shipments to customers. These risks individually and in the
aggregate could have a material effect on our operating results,
financial condition, cash flows and prospects.
The uncertainty of acceptance of products developed through
biotechnology could affect our profitability.
The commercial success of agricultural products developed through
biotechnology, including genetically modified corn, depends in part
on public acceptance of their development, cultivation, distribution
and consumption. Public attitudes can be influenced by claims that
genetically modified products are unsafe for consumption or that
they pose unknown risks to the environment, even if such claims are
not based on scientific studies. These public attitudes can influence
regulatory and legislative decisions about biotechnology. The sale of
our products, which may contain genetically modified corn, could be
delayed or impeded because of adverse public perception regarding
the safety of our products and the potential effects of these products
on human health, the environment and animals.
Our future growth could be negatively impacted if we fail to
continue introducing innovative new products and services.
A significant portion of our growth depends on innovation in
products, processes and services. Our R&D efforts may not result in
new products and services at a rate or of a quality sufficient to gain
market acceptance.
It may be difficult to preserve operating margins and maintain
market share in the highly competitive environment in which
we operate.
We operate in a highly competitive environment. Competition in
markets in which we compete is largely based on price, quality and
product availability. Many of our products compete with virtually
identical or similar products manufactured by other companies
in the starch and sweetener industry. In the U.S., our competitors
include divisions of larger enterprises that have greater financial
resources than we do. Some of these competitors, unlike us, have
vertically integrated their corn refining and other operations.
Many of our products also compete with products made from
raw materials other than corn, including cane and beet sugar.
Fluctuation in prices of these competing products may affect prices
of, and profits derived from, our products. In addition, government
programs supporting sugar prices indirectly impact the price of
corn sweeteners, especially high fructose corn syrup. Furthermore,
co-products such as corn oil and gluten meal compete with products
of the corn dry milling industry and with soybean oil, soybean meal
and other products, the price of some of which may be affected by
government programs such as tariffs or quotas.
Due to market volatility, we may be unable to pass potential
increases in the cost of corn and other raw materials on
to customers through product price increases, to purchase
quantities of corn and other raw materials at prices sufficient
to sustain or increase our profitability, or to supply product
quantities and meet shipment delivery requirements that our
customers demand.
The price and availability of corn and other raw materials are
subject to volatility as a result of economic and industry conditions,
including supply and demand factors such as supply chain
disruptions, crop disease and severe weather conditions that include
drought, floods, frost and ocean currents. These conditions are
difficult to anticipate, are beyond our control and could adversely
impact our profitability by affecting the prices we pay for raw
materials.
Inputs to our procurement, production processes and delivery
channels, such as raw material, energy, and freight and
logistics, may experience price fluctuations, supply chain
interruptions, and shortages that could adversely affect our
results of operations.
Our finished products are made primarily from corn. Purchased
corn and other raw material costs generally account for between
40 percent and 60 percent of our finished product costs. Some
of our products are based upon specific varieties of corn that are
produced in significantly smaller volumes than yellow dent corn.
These specialty grains cost more due to their more limited availability
and require planning cycles of up to three years to ensure we receive
an adequate supply. We also manufacture certain starch-based
products from potatoes. Our current potato starch requirements
constitute a material portion of the total available North American
supply. It is possible that, in the long term, continued growth in
demand for potato starch-based ingredients and new product
development could result in capacity constraints. Also, we utilize
9
2022 INGREDION ANNUAL REPORT tapioca in the manufacturing of starch products primarily in Thailand,
as well as pulses, gum, rice, stevia and other raw materials around
the world. A significant supply disruption or sharp increase in
prices of any of these raw materials that we are unable to recover
through pricing increases to our customers could have an adverse
impact on our growth and profitability, especially if such an event
disproportionately affects us as compared to our competitors.
and administrative costs, as well as the implementation of cost-
effective purchasing programs for raw materials, energy and related
manufacturing requirements.
If we are unable to contain our operating costs and maintain
the productivity and reliability of our production facilities, our
profitability and growth could be adversely affected.
Our business could be adversely affected by fluctuations in our
energy costs, which represented approximately 7 percent of our
finished product costs in 2022. We use energy primarily to create
steam required for our production processes and to dry products.
We consume natural gas, electricity, coal, fuel oil, wood and other
biomass sources to generate energy.
Because we ship products worldwide, our business could be
adversely affected by fluctuations in freight and logistics costs,
and disruptions in supply channels between parties and locations
that include our suppliers, production and storage facilities, tolling
and packaging partners, distributors and customers. Risks to our
business include impacts from labor strikes or weather-related
events that affect transportation by rail, air, shipping or mobile
transport.
The market prices for our raw materials, supply chain freight and
logistics, and energy may vary considerably depending on supply
and demand, world economies, trade agreements and tariffs and
other factors. We purchase these commodities and services based
on our anticipated usage and future outlook for these costs. We may
not be able to purchase these commodities and services at prices
that we can adequately pass on to customers, which could have an
adverse impact on our growth and profitability.
In North America, we sell a large portion of our finished products
derived from corn at firm prices established in supply contracts
typically lasting for a period of one year. To minimize the effect
of volatility in the cost of corn related to these firm-priced supply
contracts, we enter into corn futures and options contracts, or
take other hedging positions in the corn futures market. These
derivative contracts typically mature within one year. At expiration,
we settle the derivative contracts at a net amount equal to the
difference between the then-current price of the commodity and
the derivative contract price. The fluctuations in the fair value of
these hedging instruments may adversely affect our cash flow.
We fund any unrealized losses or receive cash for any unrealized
gains on futures contracts on a daily basis. While the corn futures
contracts or hedging positions are intended to minimize the effect
of volatility of corn costs on operating profits, the hedging activity
can result in losses, some of which may be material. In addition, our
hedging activities may not be fully successful in limiting the effect of
volatility in the cost of corn.
An inability to contain costs could adversely affect our future
profitability and growth.
Our future profitability and growth depend on our ability to contain
operating costs and per unit product costs and to maintain and
implement effective cost control programs, while also maintaining
competitive pricing and superior quality products, customer service
and support. Our ability to maintain a competitive cost structure
depends on continued containment of manufacturing, delivery
10
Operating difficulties at our manufacturing facilities and
liabilities relating to product safety and quality could adversely
affect our operating results.
Producing starches and sweeteners through corn refining is a
capital-intensive industry. We conduct preventive maintenance and
de-bottlenecking programs at our manufacturing facilities designed
to maintain and improve grind capacity and facility reliability. If
we encounter operating difficulties at a facility for an extended
period of time or start-up problems with any capital improvement
projects, we may not be able to meet a portion of our sales order
commitments and could incur significantly higher operating
expenses, both of which could adversely affect our operating
results. Furthermore, we use boilers to generate steam required
in our production processes. An event that impaired the operation
of a boiler for an extended period of time could have a significant
adverse effect on the operations of any manufacturing facility in
which such event occurred.
In addition, we are subject to risks related to such matters as
product safety and quality and customer product liability claims.
The liabilities that could result from these risks may not always be
covered by, or could exceed the limits of, our insurance coverage
related to product liability and food safety matters. In addition,
negative publicity caused by product liability and food safety
matters may damage our reputation. The occurrence of any of the
matters described above could adversely affect our revenues and
operating results.
Global climate change and legal, regulatory, or market
measures to address climate change, may negatively affect our
business, operations and financial results.
We are subject to risks associated with the long-term effects of
climate change on the global economy and on our industry in
particular. Extreme weather and natural disasters within or outside
the United States, such as drought, wildfires, storms, changes in
ocean currents and flooding, could make it more difficult and costly
for us to manufacture and deliver our products to our customers,
obtain raw materials from our suppliers, or perform other critical
corporate functions. In particular, if such climate change impacts
negatively affect agricultural productivity, we may be subject
to decreased availability or less favorable pricing from certain
commodities that are necessary for our products, such as corn,
specialty grains, rice, stevia, peas and sugar. Adverse weather
conditions and natural disasters could reduce crop size and crop
quality, which could reduce our supplies of raw materials, lower
recoveries of usable raw materials, increase the prices of our
raw materials, increase our costs of storing and transporting raw
materials, or disrupt production schedules. Our manufacturing
operations also could be adversely affected by reduced water
availability resulting from droughts.
There is a growing societal concern that carbon dioxide and other
greenhouse gases in the atmosphere may have an adverse effect
on global temperatures, weather patterns and the frequency
and severity of natural disasters. The increasing concern over
climate change could result in new domestic or international
legal requirements for us to reduce greenhouse gas emissions
and other environmental impacts of our operations, improve
our energy efficiency, or undertake sustainability measures that
exceed those we currently pursue. Furthermore, such measures
may result in the taxation of greenhouse gas emissions. Any such
regulatory requirements could cause disruptions in the manufacture
of our products and result in increased capital, procurement,
manufacturing and distribution costs. Our reputation and brand
could be harmed if we fail, or are seen as having failed, to respond
responsibly and effectively to changes in legal and regulatory
measures adopted to address climate change.
In addition, changing customer preferences may result in increased
demands regarding packaging materials and other components
in our products and their environmental impact on sustainability.
Further, customers may place increasing importance on purchasing
products that are sustainably grown and made, requiring us to incur
additional costs for increased due diligence and reporting. These
demands may cause us to incur additional costs or make other
changes to other operations to respond to such demands, which
could adversely affect our financial results.
We may not successfully identify and complete acquisitions or
strategic alliances on favorable terms or achieve anticipated
synergies relating to any acquisitions or alliances, and such
transactions could result in unforeseen operating difficulties and
expenditures and require significant management resources.
We regularly review potential acquisitions of complementary
businesses, technologies, services, or products, as well as potential
strategic alliances. We may be unable to find suitable acquisition
candidates or appropriate partners with which to form partnerships
or strategic alliances. Even if we identify appropriate acquisition or
alliance candidates, we may be unable to complete such acquisitions
or alliances on favorable terms, or at all. In addition, the process of
integrating an acquired business, technology, service, or product
into our existing business and operations may result in unforeseen
operating difficulties and expenditures. Integration of an acquired
company may also require significant management resources that
otherwise would be available for ongoing development of our
business. Moreover, we may not realize the anticipated benefits of
any acquisition or strategic alliance and such transactions may not
generate anticipated financial results. Future acquisitions could also
require us to issue equity securities, incur debt, assume contingent
liabilities, or amortize expenses related to intangible assets, any of
which could harm our business.
We operate a multinational business subject to the economic,
political and other risks inherent in conducting operations in
foreign countries and with foreign currencies.
We have operated in foreign countries and with foreign currencies
for many years, and our results are subject to foreign currency
exchange fluctuations. We primarily sell products derived from world
commodities. Historically, we have been able to adjust local prices
relatively quickly to offset the effect of local currency depreciation
versus the U.S. dollar, although we cannot guarantee our ability to
do this in the future. The anticipated strength in the U.S. dollar may
continue to involve risks, as it could take us an extended period
of time to fully recapture the impact of a loss of foreign currency
value versus the U.S. dollar. We may hedge transactions that are
denominated in a currency other than the currency of the operating
unit entering into the underlying transaction. Our hedging activities
may not be fully successful in limiting the adverse impacts of our
currency risks.
Our operations are subject to political, economic and other risks.
There has been and continues to be significant political uncertainty
in some countries in which we operate. Economic changes, terrorist
activity and political unrest may result in business interruption or
decreased demand for our products. Country capital controls, such
as those in Pakistan, may prevent the repatriation of dividends from
owned entities in the country. Protectionist trade measures and
import and export licensing requirements could also adversely affect
our results of operations.
Our profitability could be negatively impacted if we fail to
maintain satisfactory labor relations.
We have employees domiciled in the U.S. as well as worldwide who
belong to labor unions. Strikes, lockouts, or other work stoppages
or slowdowns involving our unionized employees, or attempts to
organize for collective bargaining purposes among non-unionized
employees, could have a material adverse effect on our business.
For example, from September 2022 to January 2023, we experienced
a strike involving approximately 103 employees at our production
facility in Cedar Rapids, Iowa, although this incident did not have a
material impact on our business.
The inability for us to attract, develop, retain, motivate, and
maintain good relationships with our workforce, including
key personnel, could negatively impact our business and our
profitability.
Our future success depends on our ability to attract, develop, retain,
motivate, and maintain good relationships with qualified personnel,
particularly those who have extensive expertise in the ingredients
solutions industry and who may also have long service with our
company. Such personnel are members of our senior executive
leadership and work in key areas throughout our U.S. and international
operations such as manufacturing, sales, and innovation, all of which
are critical to our future growth and profitability. We face intensive
competition in retaining and hiring individuals with the requisite
expertise, both within and outside the ingredients solutions industry,
including from companies that have greater resources than we do.
Changes in labor markets as a result of COVID-19 and other
socioeconomic and demographic changes, have increased the
competition for hiring and retaining talent. As a result of this
competition, we may be unable to continue to attract, develop,
retain, motivate, and maintain good relationships with suitably
qualified individuals at acceptable compensation levels who
have the managerial, operational, and technical knowledge and
experience to meet our needs. Furthermore, any failure by us to
11
2022 INGREDION ANNUAL REPORT manage internal succession or to effectively transfer knowledge
from departing employees to others in the organization could
adversely affect our business and results of operations. Even if we
succeed in hiring new personnel to fill vacancies, lengthy training
and orientation periods might be required before new employees
are able to achieve acceptable productivity levels. Any failure
by us to attract, develop, retain, motivate, and maintain good
relationships with qualified individuals could adversely affect our
business and results of operations.
Natural disasters, war, acts and threats of terrorism, pandemics
and other significant events could negatively impact our business.
The economies of any countries in which we sell or manufacture
products or purchase raw materials could be affected by natural
disasters. Such natural disasters could include, among others,
earthquakes, floods, or severe weather conditions; war, acts of war
or terrorism; or the outbreak of an epidemic or pandemic such as
COVID-19. Any such event could result in disruptions to operations,
asset write-offs, decreased sales and overall reduced cash flows. The
impacts of COVID-19 adversely affected our results of operations in
periods since the first quarter of 2020.
RISKS RELATED TO OUR REGULATORY COMPLIANCE
Government policies and regulations could adversely affect our
operating results.
Our operating results could be affected by changes in trade, monetary
and fiscal policies, laws and regulations, and other activities of the
U.S. and foreign governments, agencies and similar organizations.
These conditions include, among others, changes in a country’s or
region’s economic or political conditions, modification or termination
of trade agreements or treaties promoting free trade, creation
of new trade agreements or treaties, trade regulations affecting
production, pricing and marketing of products, local labor conditions
and regulations, reduced protection of intellectual property rights,
changes in the regulatory or legal environment, restrictions on
currency exchange activities, currency exchange rate fluctuations,
burdensome taxes and tariffs, and other trade barriers. International
risks and uncertainties, including changing social and economic
conditions as well as terrorism, political hostilities and war, could limit
our ability to transact business in these markets and could adversely
affect our revenues and operating results. Furthermore, the national
and global regulation or taxation of greenhouse gas emissions could
negatively affect our business, operations and financial results.
The recognition of impairment charges on goodwill or long-
lived assets could adversely impact our future financial position
and results of operations.
Our operations could be adversely affected by actions taken in
connection with cross-border disputes by the governments of
countries in which we conduct business.
We have $1.3 billion of total net intangible assets as of December 31,
2022, consisting of $900 million of goodwill and $401 million
of other net intangible assets, which constitute 12 percent
and 5 percent, respectively, of our total assets as of such date.
Additionally, we have approximately $2.9 billion of long-lived assets,
or 39 percent of our total assets, as of December 31, 2022.
We perform an annual impairment assessment for goodwill and our
indefinite-lived intangible assets and as necessary for other long-lived
assets. If the results of such assessments were to show that the fair
value of these assets were less than the carrying values, we could be
required to recognize a charge for impairment of goodwill or long-
lived assets, which could be material.
The future occurrence of a potential indicator of impairment, such
as a significant adverse change in the business climate that would
require a change in our assumptions or strategic decisions made in
response to economic or competitive conditions, could require us to
perform an assessment prior to the next required assessment date
of July 1, 2023.
Our profitability may be affected by other factors beyond
our control.
Our operating income and ability to sustain or increase profitability
depend to a large extent upon our ability to price finished products at a
level that will cover manufacturing and raw material costs and provide
an acceptable profit margin. Our ability to maintain appropriate price
levels is determined by a number of factors largely beyond our control,
such as aggregate industry supply and market demand, which may
vary from time to time, and the economic conditions of the geographic
regions in which we conduct our operations.
Changes in our tax rates or exposure to additional income tax
liabilities could impact our profitability.
We are subject to income taxes in the U.S. and in foreign
jurisdictions. Our effective tax rates could be adversely affected by
changes in the mix of earnings by jurisdiction, changes in tax laws,
or tax rates changes in the valuation of deferred tax assets and
liabilities and material adjustments from tax audits.
The recoverability of our deferred tax assets is dependent upon our
ability to generate future taxable income. In addition, we are subject
to ongoing audits in various jurisdictions and final determinations of
prior-year tax liabilities are dependent upon many factors, including
negotiations and dispute resolutions with tax or other governmental
authorities. The outcome of these final determinations could have a
material effect on our profitability and cash flows.
Pillar One and Pillar Two of the base erosion and profit shifting (“BEPS”)
project undertaken by the Organisation for Economic Co-operation
and Development (“OECD”) could result in significant tax law changes
in jurisdictions in which we do business. An OECD-led coalition of
countries is contemplating changes to long-standing international
tax norms that determine each country’s right to tax cross-border
transactions. These contemplated changes, if adopted by countries
in which we do business, could increase tax uncertainty and the risk
of double taxation, thereby adversely affecting our provision for
income taxes.
RISKS RELATED TO OUR FINANCING ACTIVITIES
Increased interest rates could increase our borrowing costs.
We continue to issue debt securities to finance capital expenditures,
working capital and acquisitions, and for other general corporate
purposes. An increase in interest rates in the general economy could
12
result in an increase in our borrowing costs for these financings, as
well as under our revolving credit facility, which bears interest at an
unhedged floating rate.
We may not have access to the funds required for future growth
and expansion.
We may not have access to additional funds we need to grow and
expand our operations. We expect to fund our capital expenditures
from operating cash flow to the extent we are able to do so. If our
operating cash flow is insufficient to fund our capital expenditures,
we may either reduce our capital expenditures or utilize borrowings
under our revolving credit facility, which also provides liquidity
support for our commercial paper program. For further strategic
growth through mergers or acquisitions, we may also seek to generate
additional liquidity through the sale of debt or equity securities in
private or public markets or through the sale of assets. Our cash flows
from operations may not be sufficient to fund anticipated capital
expenditures and, in such an event, we may not be able to obtain
additional funds from financial markets or from the sale of assets at
terms favorable to us. If we are unable to generate sufficient cash flows
or raise sufficient additional funds to cover our capital expenditures
or to finance strategic growth opportunities, we may not be able to
achieve our desired operating efficiencies and expansion plans, which
may adversely impact our competitiveness and, therefore, our results
of operations. Our working capital requirements, including margin
requirements on open positions on futures exchanges, are directly
affected by the price of corn and other agricultural commodities,
which may fluctuate significantly and change quickly.
RISKS RELATED TO OUR INFORMATION TECHNOLOGY
SYSTEMS
Our information technology systems, processes and sites may
suffer interruptions, security breaches, or failures which may
affect our ability to conduct our business.
Our operations rely on certain key information technology systems,
which are dependent on services provided by third parties and
provide critical data connectivity, information and services for
internal and external users. These interactions include, among
others, ordering and managing materials from suppliers, risk
management activities, converting raw materials to finished
products, inventory management, shipping products to customers,
processing transactions, summarizing and reporting results of
operations, human resources benefits and payroll management,
complying with regulatory, legal and tax requirements, and
other processes necessary to manage our business. Increased
information technology security and social engineering threats
and more sophisticated computer crime, including advanced
persistent threats, pose potential risks to the security of our
information technology systems, networks and services, as well as
the confidentiality, availability and integrity of our third-party and
employee data. We have put in place security measures to protect
ourselves against cyber-based attacks and disaster recovery plans
for our critical systems. If our information technology systems
are breached, damaged, or cease to function properly due to any
number of causes, such as catastrophic events, power outages,
security breaches, or cyber-based attacks, and if our disaster
recovery plans do not effectively mitigate the risks on a timely
basis, we may encounter significant disruptions that could interrupt
our ability to manage our operations, cause loss of valuable data
and actual or threatened legal actions and cause us to suffer
damage to our reputation. These factors may adversely impact our
revenues, operating results and financial condition. For example,
we reported a malware incident that occurred from October 2019
to December 2019, although this incident did not have a material
impact on our business.
The costs to address the foregoing security problems and security
vulnerabilities before or after a cyber incident could be significant.
Remediation efforts may not be successful and could result in
interruptions, delays or cessation of service and loss of existing or
potential customers that may impede our sales, manufacturing or
other critical functions. Breaches of our security measures and the
unapproved dissemination of proprietary information or sensitive or
confidential data about us, our employees, our customers or other
third parties could expose us, our employees, our customers or other
affected third parties to a risk of loss or misuse of this information,
result in regulatory enforcement, litigation and potential liability
for us, damage our brand and reputation or otherwise harm our
business. We rely in certain limited capacities on third-party data
management providers and other vendors whose possible security
problems and security vulnerabilities may have similar effects on us.
RISKS RELATED TO INVESTMENT IN OUR COMMON STOCK
Volatility in the stock market, fluctuations in quarterly
operating results and other factors could adversely affect the
market price of our common stock.
The market price for our common stock in the past has been, and
in the future may continue to be, significantly affected by factors
such as our announcement of new products or services or such
announcements by our competitors; technological innovation by
us, our competitors or other vendors; quarterly variations in our
operating results or the operating results of our competitors; general
conditions in our or our customers’ markets; and changes in earnings
estimates by analysts or reported results that vary materially from
such estimates. In addition, the stock market has experienced
significant price fluctuations that have affected the market prices of
equity securities of many companies that have been unrelated to the
operating performance of any individual company.
We may not continue to pay dividends or to pay dividends at
the same rate we have paid in our most recent fiscal quarters.
The payment of dividends, as well as the amount of any dividends,
is solely at the discretion of our Board of Directors. Future dividend
payments, if any, also will be subject to our financial results and the
availability of statutory surplus funds to pay dividends. These factors
could result in a change to our current policy of paying dividends.
Any failure by us to maintain effective control over financial
reporting could result in loss of investor confidence and
adversely impact our stock price.
If we experience material weaknesses in our internal control over
financial reporting and are unable to remediate such material
weaknesses, or are otherwise unable to maintain effective internal
13
2022 INGREDION ANNUAL REPORT SOUTH AMERICA
Alcantara, Brazil
Balsa Nova, Brazil
Cabo, Brazil
Mogi-Guacu, Brazil
Barranquilla, Colombia
Cali, Colombia
Lima, Peru
ASIA-PACIFIC
Ganzhou, China
Shandong Province, China
Shanghai, China
Ahmedabad, Gujarat, India
Malegaon, Nashik, Maharashtra, India
Enstek, Malaysia
Icheon, South Korea
Incheon City, South Korea
Ban Kao Dien, Thailand
Kalasin, Thailand
Sikhiu, Thailand
Banglen, Thailand
EMEA
Hamburg, Germany
Wesenberg, Germany
Cornwala, Jaranwala, Pakistan
Mehran, Jamshoro, Pakistan
Rakh Canal, Faisalabad, Pakistan
Goole, United Kingdom
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Partially leased
We believe our manufacturing facilities are sufficient to meet our current
production commitments. We conduct preventive maintenance
and de-bottlenecking programs designed to improve grind capacity
and facility reliability. Furthermore, for the foreseeable future, we
intend to continue capital investments to support the updating,
modification, improvement and efficient operation of our facilities for
the foreseeable future.
We have electricity co-generation facilities at our manufacturing
facilities in London, Ontario, Canada; Cardinal, Ontario, Canada;
Bedford Park, Illinois; Winston-Salem, North Carolina; San Juan del
Rio, Queretaro and Mexico City, CDMX, Mexico; Cali, Colombia;
Cornwala, Jaranwala, Pakistan; and Balsa Nova and Mogi-Guacu,
Brazil. These facilities provide electricity at a lower cost than is
available from third parties. We generally own and operate the
co-generation facilities, except for the facilities at our Mexico City
and Brazil locations, which are owned by and operated pursuant to
co-generation agreements with third parties.
control over financial reporting or our disclosure controls and
procedures, our ability to record, process and report financial
information accurately and to prepare financial statements within
required time periods, could be adversely affected, which could
subject us to litigation or investigations requiring management
resources and payment of legal and other expenses, negatively
affect investor confidence in our financial statements and adversely
impact our stock price. For example, we previously reported a
material weakness in our internal control over financial reporting,
which we fully remediated in fiscal 2021, related to ineffective
information technology general controls (“ITGCs”) related to user
access over certain information technology (“IT”) systems.
ITEM 1B. Unresolved Staff Comments
None.
ITEM 2. Properties
We own or lease, directly and through our consolidated
subsidiaries, 47 manufacturing facilities. In addition, we lease our
corporate headquarters in Westchester, Illinois; our R&D facility
in Bridgewater, New Jersey; and shared service centers in Tulsa,
Oklahoma; Guadalajara, Mexico; and Kuala Lumpur, Malaysia.
Our four reportable business segments include the following
manufacturing facilities as of January 31, 2023:
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
NORTH AMERICA
Cardinal, Ontario, Canada
London, Ontario, Canada
Vanscoy, Saskatchewan, Canada
San Juan del Rio, Queretaro, Mexico
Guadalajara, Jalisco, Mexico
Mexico City, CDMX, Mexico
Oxnard, California, U.S.
Idaho Falls, Idaho, U.S.
Bedford Park, Illinois, U.S.
Mapleton, Illinois, U.S.
Indianapolis, Indiana, U.S.
Cedar Rapids, Iowa, U.S.
Fort Fairfield, Maine, U.S.
Belcamp, Maryland, U.S.
North Kansas City, Missouri, U.S.
South Sioux City, Nebraska, U.S.
Winston-Salem, North Carolina, U.S.
Salem, Oregon, U.S.
Charleston, South Carolina, U.S.
Richland, Washington, U.S.
Moses Lake, Washington, U.S.
Plover, Wisconsin, U.S.
14
ITEM 3. Legal Proceedings
In September 2022, following certain air emissions testing Ingredion
performed at our Bedford Park, Illinois manufacturing facility,
we reported to the Illinois Environmental Protection Agency (the
“Illinois EPA”) that certain emissions had exceeded applicable limits
under an air emissions permit. On February 8, 2023, the Illinois EPA
issued a Notice of Violation with respect to the matter addressed
in our report. Violations of the Illinois environmental statute could
result in the imposition of civil or criminal monetary penalties. We
are engaged in discussions with the Illinois EPA regarding
this matter.
In 2015 and 2016, Ingredion self-reported certain monitoring
and recordkeeping issues relating to environmental regulatory
matters involving its Indianapolis, Indiana manufacturing facility.
In September 2017, following inspections and the provision by
Ingredion of requested information to the U.S. Environmental
Protection Agency (the “EPA”), the EPA issued Ingredion a Notice
of Violation, which included additional alleged violations beyond
those self-reported by Ingredion. These additional alleged violations
primarily relate to the results of stack testing at the facility. The
allegations in the Notice of Violation, whether from the self-
reported information, the inspections or the additional requested
information, are not material to us. The EPA has referred the overall
matter to the U.S. Department of Justice, Environment and Natural
Resources Division (the “DOJ”). The DOJ and Ingredion are engaged
in discussions with respect to a resolution of this matter.
We are currently subject to claims and suits arising in the ordinary
course of business, including those relating to labor matters,
certain environmental proceedings and commercial claims. We also
routinely receive inquiries from regulators and other government
authorities relating to various aspects of our business, including
with respect to compliance with laws and regulations relating to
the environment, and at any given time, we have matters at various
stages of resolution with the applicable governmental authorities.
The outcomes of these matters are not within our complete control
and may not be known for prolonged periods of time. We do not
believe that the results of currently known legal proceedings and
inquires will be material to us. There can be no assurance, however,
that such claims, suits or investigations or those arising in the
future, whether taken individually or in the aggregate, will not have
a material adverse effect on our financial condition or results of
operations.
ITEM 4. Mine Safety Disclosures
Not applicable.
PART II
ITEM 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Trading
Ingredion’s common stock is listed on the New York Stock Exchange
(symbol: INGR).
Holders
As of January 31, 2023, there were 3,143 holders of record of our
common stock.
Dividends
We have a history of paying quarterly dividends. The amount and
timing of the dividend payment, if any, is based on a number of
factors, including our estimated earnings, financial position and
cash flow. The payment of a dividend, as well as the amount of any
dividend, is solely at the discretion of our Board of Directors. Future
dividend payments will be subject to our financial results and the
availability of funds and statutory surplus to pay dividends.
Issuer purchases of equity securities
The following provides information about our stock repurchase program:
MAXIMUM
NUMBER
(OR
APPROXIMATE
DOLLAR VALUE)
OF SHARES
THAT MAY YET
BE PURCHASED
UNDER THE 2022
STOCK
REPURCHASE
PROGRAM
TOTAL
NUMBER
OF SHARES
PURCHASED
AS PART OF
PUBLICLY
ANNOUNCED
PLANS OR
PROGRAMS
6,000
6,000
6,000
—
—
—
—
TOTAL
NUMBER
OF SHARES
PURCHASED
AVERAGE
PRICE PAID
PER SHARE
—
—
—
—
—
—
—
—
(shares in thousands)
October 1 –
October 31, 2022
November 1 –
November 30, 2022
December 1 –
December 31, 2022
TOTAL
On September 26, 2022, the Board of Directors approved a new stock
repurchase program authorizing us to purchase up to 6.0 million
shares of our outstanding common stock until December 31, 2025.
At December 31, 2022, we had 6.0 million shares available for
repurchase under the stock repurchase program.
15
2022 INGREDION ANNUAL REPORT
ITEM 6. [Reserved]
Not applicable.
ITEM 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW
We are a major supplier of high-quality food and industrial
ingredient solutions to customers around the world. We have
47 manufacturing facilities located in North America, South
America, Asia-Pacific and EMEA and we manage and operate our
businesses at a regional level. We believe this approach provides
us with a unique understanding of the cultures and product
requirements in each of the geographic markets in which we
operate, bringing added value to our customers. Our ingredients are
used by customers in the food, beverage, brewing and animal feed
industries, among others.
Effectively managing our manufacturing costs, including costs for
corn, other raw materials and utilities, is critical to the success
of our business. In addition, our global operations expose us to
fluctuations in foreign currency exchange rates. We use derivative
financial instruments, when appropriate, for the purpose of
managing the risks and costs associated with fluctuations in certain
raw material and energy costs, foreign exchange rates and interest
rates. The capital-intensive nature of our business requires that
we generate significant cash flow over time in order to reinvest
selectively in our operations and grow organically, as well as to
expand through strategic acquisitions and alliances.
We have been navigating evolving global conditions that have
varying impacts on our customers, suppliers, employees, operations
and, ultimately, our profitability and cash flows. During 2022, we
continued to achieve strong price mix, which included increased
prices for our products to manage the effects of increasing corn and
freight costs. Our ability to respond to changing customer demands,
increasing inflation, fluctuating foreign exchange rates, and shifting
supply channels was affected by a variety of factors, including the
continuing conflict between Russia and Ukraine, the ongoing global
COVID-19 pandemic with lockdowns in China and weather-related
effects on crop yields in Europe.
In 2022, net sales increased over 15 percent to $7.9 billion from
$6.9 billion in 2021. The increase in net sales was driven by
strong price mix, partly offset by foreign currency impacts and
lower volumes. Our operating income of $762 million for 2022
increased from operating income of $310 million in 2021. Net
income attributable to Ingredion for 2022 was $492 million, or
$7.34 diluted earnings per share, which represented an increase
from $117 million, or $1.73 diluted earnings per share, for 2021. The
increases in operating income, net income and diluted earnings
per share were primarily due to stronger price mix that more than
offset higher corn and input costs. Our results for 2022 compared
to 2021 were also impacted by a $340 million impairment charge
related to the contribution of Ingredion Argentina’s net assets to
the Argentina joint venture recorded during 2021.
RESULTS OF OPERATIONS
We have significant operations in four reporting segments: North
America, South America, Asia-Pacific and EMEA. Fluctuations in
foreign currency exchange rates affect the U.S. dollar amounts of our
foreign subsidiaries’ revenues and expenses. For most of our foreign
subsidiaries, the local foreign currency is the functional currency.
Accordingly, revenues and expenses denominated in the functional
currencies of these subsidiaries are translated into U.S. dollars at the
applicable average exchange rates for the period.
We acquired the majority of shares of Mannitab on December 1, 2022,
fully acquired Amishi on August 1, 2022, and KaTech on April 1, 2021. The
results of the acquired businesses are included in our consolidated
financial results beginning on the respective acquisition dates, which
affects the comparability of results between years. In addition, our
share of results in joint ventures are classified in our Consolidated
Statements of Income in Other operating expense (income) and
comparability between years and between financial statement line
items is affected by the timing of and consideration provided to
the investments. While we identify the impacts of acquisitions and
investments on our results, our discussion below also addresses
results of operations excluding those impacts, where appropriate, to
provide a more comparable and meaningful analysis.
For the Year Ended December 31, 2022 with
Comparatives for the Year Ended December 31, 2021
Net sales
Net sales increased 15 percent to $7,946 million for 2022 compared
to $6,894 million for 2021. The increase in net sales was driven
by strong price mix. This was partially offset by foreign currency
impacts and lower volumes.
Cost of sales
Cost of sales increased by 16 percent to $6,452 million in 2022
compared to cost of sales of $5,563 million in 2021. The increase
in cost of sales primarily reflected higher net corn costs. Our gross
profit margin of 19 percent in 2022 was unchanged from 2021.
Operating expenses
Operating expenses increased 7 percent to $715 million in 2022
compared to $668 million in 2021. The increase in operating
expenses during 2022 was primarily attributable to cost impacts of
higher inflation. Operating expenses as a percentage of net sales
were approximately 9 percent in 2022 and 2021.
Other operating expense (income)
Other operating expense (income) was $13 million in 2022 compared
to $(34) million in 2021. The 2022 expense was primarily attributable
to charges resulting from a U.S. based work stoppage. During 2021 we
recorded $15 million of income from Brazil indirect tax credits and a net
gain of $8 million related to the formation of the Amyris joint venture.
Restructuring/impairment charges and related adjustments
Restructuring and impairment charges decreased to $4 million
in 2022 from $387 million in 2021, which primarily reflected an
impairment charge of $340 million we recorded in 2021 for net
assets from our Argentina business we contributed to the Argentina
joint venture. In addition, the completion of our Cost Smart
restructuring program resulted in $4 million of pre-tax restructuring
charges in 2022 as compared to $44 million in 2021.
16
Financing costs
Financing costs increased 34 percent to $99 million in 2022
compared to $74 million in 2021. The increase was primarily due to
higher outstanding debt balances, as well as higher interest rates in
2022 as compared to 2021.
Provision for income taxes
Our effective income tax rates for 2022 and 2021 were 24.9
percent and 49.6 percent, respectively. The decrease was primarily
attributable to the $340 million impairment charge related to net
assets contributed to the Argentina joint venture during 2021, which
did not have a corresponding income tax benefit. The effect of this
charge was partially offset by a 2021 reversal of an accrual from
unremitted earnings of a foreign subsidiary.
Net income attributable to non-controlling interests
Net income attributable to non-controlling interests increased to
$10 million in 2022 from $8 million in 2021.
Net Income attributable to Ingredion
Net income attributable to Ingredion for 2022 increased to
$492 million from $117 million in 2021. The increase in net income
was largely attributable to the $340 million impairment charge for
the Argentina assets contributed to the Argentina joint venture in
the prior year. The increase was also impacted by strong price mix
that more than offset higher corn and input costs.
North America
Net sales
North America’s net sales increased 19 percent to $4,934 million in
2022 from $4,137 million in 2021. The increase was primarily driven
by a 19 percent improvement in price mix and a 1 percent increase
in volume. These impacts were partially offset by an unfavorable
foreign exchange impact of 1 percent.
Operating income
North America’s operating income increased 16 percent to $565
million in 2022 from $487 million in 2021. The increase was driven
by favorable price mix.
South America
Net sales
South America’s net sales increased 6 percent to $1,124 million in
2022 from $1,057 million in 2021. Excluding the effects of revenues
from operations we contributed to the Argentina joint venture, net
sales were 23 percent higher than in 2021. The increase reflected
a 22 percent improvement in price mix and a 2 percent increase
in volume. The effect of these factors was partially offset by an
unfavorable foreign exchange impact of 1 percent.
Operating income
South America’s operating income increased 22 percent to $169 million
in 2022 from $138 million in 2021. The increase was driven by favorable
price mix, partially offset by higher corn and input costs.
Asia-Pacific
Net sales
Asia-Pacific’s net sales increased 11 percent to $1,107 million in 2022
from $997 million in 2021. The increase was driven by favorable
price mix of 14 percent and favorable volumes of 5 percent. These
impacts were partially offset by unfavorable foreign exchange
impacts of 8 percent.
Operating income
Asia-Pacific’s operating income increased 7 percent to $93 million in
2022 from $87 million in 2021. The increase was primarily driven by the
favorable price mix that was partially offset by foreign exchange impacts.
EMEA
Net sales
EMEA’s net sales increased by 11 percent to $781 million in 2022 from
$703 million in 2021. The increase was driven by favorable price
mix of 23 percent and increased volumes of 2 percent, which were
partially due to the purchase of KaTech on April 1, 2021. The effect of
these factors was partially offset by unfavorable foreign exchange
impacts of 14 percent.
Operating income
EMEA’s operating income increased 4 percent to $110 million in
2022 compared to $106 million in 2021. Favorability in Europe was
partially offset by foreign exchange impacts across the region.
For the Year Ended December 31, 2021 with
Comparatives for the Year Ended December 31, 2020
A discussion of the year-over-year comparison of results for 2021 and
2020 is not included in this report and can be found in Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations in Ingredion’s annual report on Form 10-K for
the fiscal year ended December 31, 2021.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2022, Ingredion had total available liquidity of
approximately $1,626 million. Domestic liquidity of $612 million
consisted of $2 million in cash and cash equivalents and $610 million
available through a $1 billion commercial paper program that had
$390 million of outstanding borrowings. The commercial paper
program, which we entered on July 27, 2021, is backed by $1 billion of
borrowing availability under a five-year revolving credit agreement
that we entered on June 30, 2021, as described below.
As of December 31, 2022, we had international liquidity of
approximately $1,014 million, consisting of $234 million of cash and
cash equivalents and $3 million of short-term investments held by
our operations outside the U.S., as well as $777 million of unused
operating lines of credit in foreign countries where we operate. As the
parent company, we guarantee certain obligations of our consolidated
subsidiaries. As of December 31, 2022, our guarantees aggregated
$63 million. We believe that those consolidated subsidiaries will be
able to meet their financial obligations as they become due.
We have entered into a revolving credit agreement for an unsecured
revolving credit facility in an aggregate principal amount of
$1 billion outstanding at any time, which will mature on June 30,
2026. Loans under the facility accrue interest at a per annum
rate equal, at our option, to either a specified Secured Overnight
Financing Rate (“SOFR”) plus an applicable margin, or a base rate
(generally determined according to the highest of the prime rate, the
federal funds rate or the specified SOFR plus 1.00 percent) plus an
applicable margin. The revolving credit agreement contains customary
17
2022 INGREDION ANNUAL REPORT affirmative and negative covenants that, among other matters, specify
customary reporting obligations, and that, subject to exceptions,
restrict the incurrence of additional indebtedness by our subsidiaries,
the incurrence of liens and the consummation of certain mergers,
consolidations and sales of assets. We are subject to compliance, as of
the end of each quarter, with a maximum leverage ratio of 3.5 to 1.0 and
a minimum ratio of consolidated EBITDA to consolidated net interest
expense of 3.5 to 1.0, with each financial covenant calculated for the
most recently completed four-quarter period. As of December 31, 2022,
we were in compliance with these financial covenants.
On July 27, 2021, we established the commercial paper program under
which we may issue senior unsecured notes of short maturities up
to a maximum aggregate principal amount of $1 billion outstanding
at any time. The notes may be sold from time to time on customary
terms in the U.S. commercial paper market. We use and intend to
continue using the note proceeds for general corporate purposes.
During 2022, the average amount of commercial paper outstanding
was $522 million with a weighted average interest rate of 1.97 percent
over a weighted average maturity of 16 days. As of December 31,
2022, we had $390 million of commercial paper outstanding with
a weighted average interest rate of 4.75 percent over a weighted
average maturity of 7 days. The amount of commercial paper
outstanding under this program in 2023 is expected to fluctuate.
On December 16, 2022 we entered into a new two-year, senior,
unsecured $200 million term loan, which bears interest, payable
quarterly in arrears, at a variable annual rate based on an adjusted
daily SOFR plus a margin of 1.10 percent per annum. The term
loan will mature and all principal thereunder will be payable on
December 16, 2024. The term loan agreement contains customary
affirmative and negative covenants that, among other matters, specify
customary reporting obligations, and that, subject to exceptions,
restrict the incurrence of additional indebtedness by our subsidiaries,
the incurrence of liens and the consummation of certain mergers,
consolidations and sales of assets. We are subject to compliance, as
of the end of each quarter, with a maximum leverage ratio of 3.5 to
1.0 and a minimum ratio of consolidated EBITDA to consolidated net
interest expense of 3.5 to 1.0, with each financial covenant calculated
for the most recently completed four-quarter period.
As of December 31, 2022, we had total debt outstanding of
approximately $2.5 billion, or approximately $1.9 billion excluding the
outstanding commercial paper and other short-term borrowings. Of
our outstanding debt, $1.7 billion consists of senior notes that do not
require principal repayment until 2026 through 2050. The weighted
average interest rate on our total indebtedness was approximately
3.5 percent for 2022 and approximately 3.0 percent for 2021.
The principal source of our liquidity is our internally generated cash
flow, which we supplement as necessary with our ability to borrow
under our credit facilities and to raise funds in the capital markets.
We currently expect that our available cash balances, future cash
flow from operations, access to debt markets and borrowing capacity
under our revolving credit facility and commercial paper program,
will provide us with sufficient liquidity to fund our anticipated capital
expenditures, dividends and other operating, investing and financing
activities for at least the next twelve months and for the foreseeable
future thereafter. Our future cash flow needs will depend on many
factors, including our rate of revenue growth, cost of raw materials,
18
changing working capital requirements, the timing and extent of
our expansion into new markets, the timing of introductions of new
products, potential acquisitions of complementary businesses and
technologies, continuing market acceptance of our new products
and general economic and market conditions. We may need to raise
additional capital or incur indebtedness to fund our needs for less
predictable strategic initiatives, such as acquisitions.
NET CASH FLOWS
Our cash provided by operating activities decreased to $152 million
in 2022 from $392 million in 2021, primarily due to changes in
working capital. Cash used for working capital increased to
$664 million for 2022, primarily due to increases in trade accounts
receivable and inventory. Cash used for trade accounts receivable
increased because of higher pricing and higher freight charges
for products we sold, and cash used for inventory increased due
primarily to higher input costs from raw materials during 2022.
Our cash used by investing activities decreased to $320 million in
2022 from $335 million in 2021, primarily as a result of less cash
used for acquisitions in 2022. In 2022, we had cash provided by
financing activities of $103 million, as compared to cash used
for financing activities of $373 million in 2021. Cash provided by
financing activities in 2022 was primarily provided by proceeds from
borrowings, including under our new $200 million term loan, which
exceeded our payments on debt.
We used $300 million of cash for capital expenditures and
mechanical stores purchases to update, expand and improve our
facilities in 2022, which was unchanged from the $300 million we
paid in 2021 for the same purposes. Capital investment commitments
for 2023 are anticipated to be approximately $300 million.
In August 2022, we acquired Amishi for $7 million, net of cash
acquired. In December 2022, we acquired a 65 percent controlling
interest in Mannitab for $22 million, net of cash acquired.
We declare and pay cash dividends to our common stockholders of
record on a quarterly basis. Dividends paid, including those to non-
controlling interests, decreased 2 percent to $181 million during 2022
compared to $184 million during 2021. The decrease was primarily
due to a reduction in shares outstanding in 2022, as a result of our
repurchase during 2022 of 1,283 thousand outstanding shares of
common stock in open market transactions at a net cost of $112 million.
We have not provided foreign withholding taxes, state income taxes
and federal and state taxes on foreign currency gains/losses on
accumulated undistributed earnings of certain foreign subsidiaries
because these earnings are considered to be permanently
reinvested. It is not practicable to determine the amount of the
unrecognized deferred tax liability related to the undistributed
earnings. We do not anticipate the need to repatriate funds to the
U.S. to satisfy domestic liquidity needs arising in the ordinary course
of business, including liquidity needs associated with our domestic
debt service requirements.
KEY FINANCIAL PERFORMANCE METRICS
We use certain key financial performance metrics to monitor
our progress towards achieving our long-term strategic business
objectives. These metrics relate to our ability to drive profitability,
create value for stockholders and monitor our financial leverage. We
assess whether we are achieving our profitability and value creation
objectives by measuring our Adjusted Return on Invested Capital
(“Adjusted ROIC”). We monitor our financial leverage by regularly
reviewing our ratio of net debt to adjusted earnings before interest,
taxes, depreciation and amortization (“Net Debt to Adjusted
EBITDA”). We believe these metrics provide valuable information to
help us run our business and are useful to investors.
The metrics Adjusted ROIC and Net Debt to Adjusted EBITDA
include certain financial measures (Adjusted operating income, net
of tax, and Adjusted EBITDA, respectively) that are not calculated
in accordance with U.S. generally accepted accounting principles
(“GAAP”). We also have presented below the most comparable
financial measures calculated using components determined in
accordance with GAAP. Management uses these non-GAAP financial
measures internally for strategic decision-making, forecasting
future results and evaluating current performance. Management
believes that the non-GAAP financial measures provide a more
consistent comparison of our operating results and trends for the
periods presented. These non-GAAP financial measures are used in
addition to and in conjunction with results presented in accordance
with GAAP and reflect an additional way of viewing aspects of our
operations that, when viewed with our GAAP results, provides a
more complete understanding of factors and trends affecting our
business. The non-GAAP financial measures should be considered
as a supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP.
In accordance with our long-term strategy, we set certain objectives
relating to these key financial performance metrics that we strive
to meet. However, no assurance can be given that we will continue
to meet our financial performance metric targets. See Item 1A.
Risk Factors and Item 7A. Quantitative and Qualitative Disclosures
About Market Risk for a discussion of factors that could affect our
ability to meet those targets. The objectives reflect our current
aspirations in light of our present plans and existing circumstances.
We may change these objectives from time to time to address new
opportunities or changing circumstances as appropriate to meet our
long-term needs and those of our stockholders.
A reconciliation of non-GAAP historical financial measures to the
most comparable GAAP measure is provided in the tables below.
Adjusted ROIC
Adjusted ROIC is a financial performance ratio not defined under
GAAP, and it should be considered in addition to, and not as a
substitute for, GAAP financial measures. Ingredion defines Adjusted
ROIC as Adjusted operating income, net of tax, divided by Average
end-of-year balances for current year and prior year Total net
debt and equity. Similarly named measures may not be defined
and calculated by other companies in the same manner. Ingredion
believes Adjusted ROIC is meaningful to investors as it focuses on
profitability and value-creating potential, taking into account the
amount of capital invested. The most comparable measure calculated
using components determined in accordance with GAAP is Return
on Invested Capital, which Ingredion defines as Net income, divided
by Average end-of-year balances for current year and prior year Total
net debt and equity, as provided in the table below.
RETURN ON INVESTED CAPITAL
(dollars in millions)
Net income (a)
Adjusted for:
Provision for income taxes
Other non-operating (income)
Financing costs
Restructuring/impairment charges(i)
Acquisition/integration costs(ii)
Impairment on disposition of assets
Other matters(iii)
YEAR ENDED
DECEMBER 31,
2022
$502
166
(5)
99
4
1
—
20
2021
$125
123
(12)
74
47
3
340
(15)
Income taxes (at effective rates of 27.0% and
25.6%, respectively)(iv)
(212)
(175)
Adjusted operating income, net of tax (b)
Short-term debt
Long-term debt
Less: Cash and cash equivalents
Short-term investments
Total net debt
Share-based payments subject to redemption
Total redeemable non-controlling interests
Total equity
Total net debt and equity
Average current and prior year
Total net debt and equity (c)
Return on Invested Capital (a ÷ c)
Adjusted Return on Invested Capital (b ÷ c)
575
543
1,940
(236)
(3)
2,244
48
51
510
308
1,738
(328)
(4)
1,714
36
71
3,163
3,118
$5,506
$4,939
$5,223
$4,766
9.6%
11.0%
2.6%
10.7%
(i) In 2022, we recorded $4 million of pre-tax restructuring charges for the Cost Smart
programs. In 2021, we recorded $47 million of pre-tax restructuring charges primarily
related to our Cost Smart programs.
(ii) 2022 acquisition/integration costs are reduced by $4 million to exclude acquisition/
integration costs already included in financing costs above.
(iii) In 2022, we recorded pre-tax charges of $20 million primarily related to the impacts
of a U.S.-based work stoppage. In 2021, we recorded $15 million of pre-tax benefits
for Brazil indirect tax matters.
(iv) The effective income tax rate was 27.0 percent for 2022 and 25.6 percent for 2021.
YEAR ENDED
DECEMBER 31, 2022
YEAR ENDED
DECEMBER 31, 2021
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR
INCOME
TAXES
EFFECTIVE
INCOME
TAX
RATE
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR
INCOME
TAXES
EFFECTIVE
INCOME
TAX
RATE
$668
$166
24.9%
$248
$123
49.6%
5
4
—
—
20
—
—
—
1
—
—
5
12
4
3
47
340
(6)
(15)
—
—
(3)
11
—
(1)
7
27
(6)
$697
$188
27.0%
$617
$158
25.6%
(dollars in millions)
As reported
Add back (deduct):
Acquisition/
integration costs
Restructuring/
impairment charges
Impairment on
disposition of assets
Fair value adjustments
on equity investments
Other matters
Other tax matters
Tax item-Mexico
Adjusted
non-GAAP
19
2022 INGREDION ANNUAL REPORT
Our long-term objective is to maintain an Adjusted ROIC in excess of
10 percent. For 2022, we achieved an Adjusted ROIC of 11.0 percent
as compared to 10.7 percent for 2021.
Net debt to adjusted EBITDA
Net Debt to Adjusted EBITDA is a financial performance ratio that
is not defined under GAAP, and should be considered in addition
to, and not as a substitute for, GAAP financial measures. Ingredion
defines this measure as Short-term and Long-term debt less Cash
and cash equivalents and Short-term investments, divided by
Adjusted EBITDA. Similarly named measures may not be defined
and calculated by other companies in the same manner. Ingredion
believes Total net debt to Adjusted EBITDA is meaningful to
investors as it focuses on Ingredion’s leverage on a comparable
Adjusted EBITDA basis and helps investors better understand the
time required to pay back Ingredion’s outstanding debt. The most
comparable ratio calculated using components determined in
accordance with GAAP is Total net debt to Income before income
taxes, calculated as Short-term and Long-term debt less Cash and
cash equivalents and Short-term investments, divided by Income
before income taxes, as provided in the table below.
AS OF DECEMBER 31,
NET DEBT TO ADJUSTED EBITDA RATIO
Short-term debt
Long-term debt
Less: Cash and cash equivalents
Short-term investments
Total net debt (a)
Income before income taxes (b)
Adjusted for:
Depreciation and amortization
Financing costs
Other non-operating (income)
Restructuring/impairment(i)
Acquisition/integration costs(ii)
Impairment from disposition of assets
Other matters(iii)
Adjusted EBITDA (c)
Net Debt to Income before income tax ratio (a ÷ b)
Net Debt to Adjusted EBITDA ratio (a ÷ c)
2022
$543
1,940
(236)
(3)
2,244
668
215
99
(5)
4
1
—
20
2021
$308
1,738
(328)
(4)
1,714
248
220
74
(12)
38
3
340
(15)
$1,002
$896
3.4
2.2
6.9
1.9
(i) Restructuring/impairment charges are reduced by $9 million in 2021 to exclude the
accelerated depreciation associated with Cost Smart programs that are included in
Depreciation and amortization above.
(ii) 2022 acquisition/integration costs are reduced by $4 million to exclude acquisition/
integration costs already included in financing costs above.
(iii) We recorded $20 million of pre-tax charges primarily related to the impacts of a U.S.-
based work stoppage in 2022 and $15 million of pre-tax benefits for Brazil indirect tax
matters in 2021.
Our long-term objective is to target a ratio of Net Debt to Adjusted
EBITDA of 2.5 or less. As of December 31, 2022 and December 31,
2021, the ratio was 2.2 and 1.9, respectively.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements have been prepared in
accordance with GAAP. The preparation of these financial statements
requires management to make estimates and assumptions that
20
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results may differ
from these estimates under different assumptions and conditions.
We have identified below the most critical accounting policies
upon which the financial statements are based and that involve
our most complex and subjective decisions and assessments. Our
senior management has discussed the development, selection and
disclosure of these policies with members of the Audit Committee
of our Board of Directors. These accounting policies are provided in
the Notes to the Consolidated Financial Statements. The discussion
that follows should be read in conjunction with the Consolidated
Financial Statements and related notes included elsewhere in this
annual report on Form 10-K.
Business combinations
Our acquisitions of Amishi and the majority of shares of Mannitab
in 2022, KaTech in 2021, and PureCircle and Verdient in 2020 were
accounted for in accordance with Accounting Standards Codification
(“ASC”) Topic 805, Business Combinations. In purchase accounting,
identifiable assets acquired and liabilities assumed are recognized
at their estimated fair values on the date of acquisition and any
remaining purchase price is recorded as goodwill. In determining
the fair values of assets acquired and liabilities assumed, we make
significant estimates and assumptions, particularly for long-lived
tangible and intangible assets. Critical estimates used in valuing
tangible and intangible assets include, but are not limited to, future
expected cash flows, discount rates, market prices and asset lives.
Although our estimates of fair value are based upon assumptions
believed to be reasonable, actual results may differ. See Note 2
of the Notes to the Consolidated Financial Statements for more
information related to our acquisitions.
Property, plant and equipment and definite-lived intangible assets
We have substantial investments in property, plant and equipment
(“PP&E”) and definite-lived intangible assets. For PP&E, we
recognize the cost of depreciable assets in operations over the
estimated useful life of the assets and evaluate the recoverability of
these assets whenever events or changes in circumstances indicate
that the carrying value of the assets may not be recoverable. For
definite-lived intangible assets, we recognize the cost of these
amortizable assets in operations over their estimated useful life and
evaluate the recoverability of the assets whenever events or changes
in circumstances indicate that the carrying value of the assets may
not be recoverable. The carrying values of PP&E and definite-lived
intangible assets at December 31, 2022 were $2.4 billion and $258
million, respectively.
In assessing the recoverability of the carrying value of PP&E and
definite-lived intangible assets, we may have to make projections
regarding future cash flows. In developing these projections, we
make a variety of important assumptions and estimates that have a
significant impact on our assessments of whether the carrying values
of PP&E and definite-lived intangible assets should be adjusted to
reflect impairment. Among these are assumptions and estimates
about the future growth and profitability of the related asset group,
anticipated future economic, regulatory and political conditions in the
asset group’s market, and estimates of terminal or disposal values.
To optimize our operations, we continually review whether to
further consolidate our manufacturing facilities or redeploy assets
for other uses when we believe we can achieve a higher return on
our investment. This review may result in closing or sale of certain
manufacturing facilities, which could have a significant negative
impact on our results of operations in the period we decide to close
or sell the facility.
The future occurrence of a potential indicator of impairment, such
as a significant adverse change in the business climate that would
require a change in our assumptions or strategic decisions made in
response to economic or competitive conditions, could require us to
perform tests of recoverability in the future.
Indefinite-lived intangible assets and goodwill
We have certain indefinite-lived intangible assets in the form of
tradenames and trademarks. Our methodology for allocating the
purchase price of acquisitions is based on established valuation
techniques that reflect the consideration of a number of factors,
including valuations performed by third-party appraisers when
appropriate. Goodwill is measured as the excess of the cost of
an acquired business over the fair value assigned to identifiable
assets acquired and liabilities assumed. We have identified several
reporting units for which cash flows are determinable and to which
goodwill may be allocated. Goodwill is either assigned to a specific
reporting unit or allocated between reporting units based on the
relative excess fair value of each reporting unit. The carrying value
of indefinite-lived intangible assets and goodwill at December 31,
2022 was $143 million and $900 million, respectively, compared to
$143 million and $914 million, respectively, at December 31, 2021.
We assess indefinite-lived intangible assets and goodwill for
impairment as of July 1 each year (or more frequently if impairment
indicators arise). We first assess qualitative factors to determine
whether it is more-likely-than-not that the fair value of an indefinite-
lived intangible asset is impaired, which include net sales derived
from these intangibles and certain market and industry conditions.
After assessing the qualitative factors, if we determine that it
is more-likely-than-not that the fair value of an indefinite-lived
intangible asset is greater than its carrying amount, then we are not
required to compute the fair value of the indefinite-lived intangible
asset. If the qualitative assessment leads us to conclude otherwise,
then we are required to determine the fair value of the indefinite-
lived intangible assets and perform a quantitative impairment test
in accordance with ASC subtopic 350-30, Intangibles–Goodwill and
Other. Based on our assessment’s results, we concluded that as
of July 1, 2022, there were no impairments in our indefinite-lived
intangible assets.
In testing goodwill for impairment, we first assess qualitative factors
in determining whether it is more-likely-than-not that the fair value
of a reporting unit is less than its carrying amount. After assessing
the qualitative factors, if we determine that it is more-likely-than-
not that the fair value of a reporting unit is greater than its carrying
amount, then we do not perform an impairment test. If we conclude
otherwise, then we perform the impairment test as described in ASC
Topic 350, Intangibles–Goodwill and Other. Under this impairment
test, the fair value of the reporting unit is compared to its carrying
value. If the fair value of the reporting unit exceeds the carrying
value of its net assets, goodwill is not considered impaired, and no
further testing is required. If the carrying value of the net assets
exceeds the fair value of the reporting unit, then an impairment
exists for the difference between the fair value and carrying value
of the reporting unit. This difference may not exceed the goodwill
recorded at the reporting unit.
When we test goodwill for impairment, we make certain estimates
and judgments, which include identifying reporting units and
determining the reporting units’ fair values based on both
discounted cash flow analyses and an analysis of market multiples.
To determine the fair value of reporting units, we use significant
assumptions and estimates for discount and long-term net sales
growth rates, in addition to operating and capital expenditure
requirements. We consider changes in discount rates for the
reporting units based on current market interest rates and specific
risk factors within each geographic region. We also evaluate
qualitative factors, such as legal, regulatory or competitive forces, in
estimating the impact to the fair value of the reporting units, noting
no significant changes that would result in any reporting unit failing
the impairment test. Changes in assumptions concerning projected
results or other underlying assumptions could have a significant
impact on the fair value of the reporting units in the future. Based
on the results of the annual assessment, we concluded that as of
July 1, 2022, there were no impairments in our reporting units.
Retirement benefits
We and our subsidiaries sponsor noncontributory defined benefit
pension plans (qualified and non-qualified) covering a substantial
portion of employees in the U.S. and Canada, and certain employees
in other countries. We also provide healthcare and life insurance
benefits for retired employees in the U.S., Canada and Brazil. In
order to measure the expense and obligations associated with these
benefits, our management must make a variety of estimates and
assumptions, including discount rates, expected long-term rates of
return, rate of compensation increases, employee turnover rates,
retirement rates, mortality rates and other factors. We review our
actuarial assumptions on an annual basis as of December 31 (or
more frequently if a significant event requiring remeasurement
occurs) and modify our assumptions based on current rates and
trends when it is appropriate to do so. The effects of modifications
are recognized immediately on the Consolidated Balance Sheets
but are generally amortized into operating earnings over future
periods, with the deferred amount recorded in accumulated
other comprehensive loss (“AOCL”). We believe the assumptions
utilized in recording our obligations under our plans, which are
based on our experience, market conditions and input from our
actuaries, are reasonable. We use third-party specialists to assist
management in evaluating our assumptions and estimates, as well
as to appropriately measure the costs and obligations associated
with our retirement benefit plans. Had we used different estimates
and assumptions for these plans, our retirement benefit obligations
and related expense could vary from the actual amounts recorded
and such differences could be material. Additionally, adverse
changes in investment returns earned on pension assets and
discount rates used to calculate pension and postretirement benefit
related liabilities or changes in required funding levels may have an
unfavorable impact on future expense and cash flow. Net periodic
pension and postretirement benefit cost for all of our plans was
$6 million in 2022 and $3 million in 2021.
21
2022 INGREDION ANNUAL REPORT We determine our assumption for the discount rate used to measure
year-end pension and postretirement obligations based on high-
quality fixed-income investments that match the duration of the
expected benefit payments, which has been benchmarked using a
long-term, high-quality AA corporate bond index. We use a full yield
curve approach in the estimation of the service and interest cost
components of benefit cost by applying the specific spot rates along
the yield curve used in the determination of the benefit obligation
to the relevant projected cash flows. The weighted average discount
rate used to determine our obligations under U.S. pension plans as
of December 31, 2022 and 2021, was 5.19 percent and 2.91 percent,
respectively. The weighted average discount rate used to determine
our obligations under non-U.S. pension plans as of 2022 and 2021,
was 5.66 percent and 3.47 percent, respectively. The weighted
average discount rate used to determine our obligations under our
postretirement plans as of December 31, 2022 and 2021, was 7.30
percent and 4.22 percent, respectively.
A one percentage point decrease in the discount rates at 2022, would
have increased the accumulated benefit obligation and projected
benefit obligation by the following amounts (millions):
U.S. PENSION PLANS
Accumulated benefit obligation
Projected benefit obligation
NON-U.S. PENSION PLANS
Accumulated benefit obligation
Projected benefit obligation
POSTRETIREMENT PLANS
Accumulated benefit obligation
$34
34
$18
19
$8
Our investment approach and related asset allocation for the U.S.
and Canada plans is a liability-driven investment approach by which
a higher proportion of investments will be in interest-rate sensitive
investments (fixed income) under an active-management approach.
The approach seeks to protect the current funded status of the plans
from market volatility with a greater asset allocation to interest-rate
sensitive assets. The greater allocation to interest-rate sensitive
assets is expected to reduce volatility in plan-funded status by more
closely matching movements in asset values to changes in liabilities.
Our current investment policy for our pension plans is to balance
risk and return through diversified portfolios of actively managed
equity index instruments, fixed income index securities and
short-term investments. Maturities for fixed income securities
are managed so that sufficient liquidity exists to meet near-term
benefit payment obligations. The asset allocation is reviewed
regularly, and portfolio investments are rebalanced to the targeted
allocation when considered appropriate or to raise sufficient
liquidity when necessary to meet near-term benefit payment
obligations. For 2022 net periodic pension cost, we assumed an
expected long-term rate of return on assets, which is based on
the fair value of plan assets, of 4.10 percent for U.S. plans and
approximately 3.06 percent for Canadian plans. In developing the
expected long-term rate of return assumption on plan assets, which
consist mainly of U.S. and Canadian debt and equity securities,
management evaluated historical rates of return achieved on
plan assets and the asset allocation of the plans, input from our
22
independent actuaries and investment consultants, and historical
trends in long-term inflation rates. Projected return estimates
made by such consultants are based upon broad equity and bond
indices. We also maintain several funded pension plans in other
international locations. The expected returns on plan assets for
these plans are determined based on each plan’s investment
approach and asset allocations. A hypothetical 25 basis point
decrease in the expected long-term rate of return assumption
would increase 2023 net periodic pension cost for the U.S. and
Canada plans by approximately $1 million each.
Healthcare cost trend rates are used in valuing our postretirement
benefit obligations and are established based on actual health care
cost trends and consultation with actuaries and benefit providers.
At December 31, 2022, the health care cost trend rate assumptions
for the next year for the U.S., Canada and Brazil plans were 6.82
percent, 4.82 percent and 8.68 percent, respectively.
See Note 11 of the Notes to the Consolidated Financial Statements
for more information related to our benefit plans.
NEW ACCOUNTING STANDARDS
For information about new accounting standards, see Note 1 of the
Notes to the Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains or may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Ingredion intends these forward-looking statements to be
covered by the safe harbor provisions for such statements.
Forward-looking statements include, among others, any
statements regarding Ingredion’s prospects, future operations, or
future financial condition, earnings, net sales, tax rates, capital
expenditures, cash flows, expenses or other financial items,
including management’s plans or strategies and objectives for
any of the foregoing and any assumptions, expectations or beliefs
underlying any of the foregoing.
These statements can sometimes be identified by the use
of forward-looking words such as “may,” “will,” “should,”
“anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,”
“expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,”
“propels,” “opportunities,” “potential,” “provisional,” or other
similar expressions or the negative thereof. All statements other
than statements of historical facts therein are “forward-looking
statements.”
These statements are based on current circumstances or
expectations, but are subject to certain inherent risks and
uncertainties, many of which are difficult to predict and beyond our
control. Although we believe our expectations reflected in these
forward-looking statements are based on reasonable assumptions,
investors are cautioned that no assurance can be given that our
expectations will prove correct.
Actual results and developments may differ materially from
the expectations expressed in or implied by these statements,
based on various risks and uncertainties, including effects of the
conflict between Russia and Ukraine, including the impacts on
the availability and prices of raw materials and energy supplies
and volatility in foreign exchange and interest rates; changing
consumption preferences relating to high fructose corn syrup
and other products we make; the effects of global economic
conditions and the general political, economic, business, and
market conditions that affect customers and consumers in the
various geographic regions and countries in which we buy our
raw materials or manufacture or sell our products, and the impact
these factors may have on our sales volumes, the pricing of our
products and our ability to collect our receivables from customers;
future purchases of our products by major industries which
we serve and from which we derive a significant portion of our
sales, including, without limitation, the food, beverage, animal
nutrition, and brewing industries; the impact of COVID-19 on our
business, the demand for our products and our financial results;
the uncertainty of acceptance of products developed through
genetic modification and biotechnology; our ability to develop
or acquire new products and services at rates or of qualities
sufficient to gain market acceptance; increased competitive and/
or customer pressure in the corn-refining industry and related
industries, including with respect to the markets and prices for
our primary products and our co-products, particularly corn
oil; price fluctuations, supply chain disruptions, and shortages
affecting inputs to our production processes and delivery channels,
including raw materials, energy costs and availability and freight
and logistics; our ability to contain costs, achieve budgets and
realize expected synergies, including with respect to our ability to
complete planned maintenance and investment projects on time
and on budget as well as with respect to freight and shipping costs;
operating difficulties at our manufacturing facilities and liabilities
relating to product safety and quality; the effects of climate
change and legal, regulatory, and market measures to address
climate change; our ability to successfully identify and complete
acquisitions or strategic alliances on favorable terms as well as our
ability to successfully integrate acquired businesses or implement
and maintain strategic alliances and achieve anticipated synergies
with respect to all of the foregoing; economic, political and other
risks inherent in conducting operations in foreign countries and in
foreign currencies; the behavior of financial and capital markets,
including with respect to foreign currency fluctuations, fluctuations
in interest and exchange rates and market volatility and the
associated risks of hedging against such fluctuations; the failure to
maintain satisfactory labor relations; our ability to attract, develop,
motivate, and maintain good relationships with our workforce;
the impact on our business of natural disasters, war, threats or
acts of terrorism, the outbreak or continuation of pandemics
such as COVID-19, or the occurrence of other significant events
beyond our control; the impact of impairment charges on our
goodwill or long-lived assets; changes in government policy, law, or
regulation and costs of legal compliance, including compliance with
environmental regulation; changes in our tax rates or exposure to
additional income tax liability; increases in our borrowing costs
that could result from increased interest rates; our ability to raise
funds at reasonable rates and other factors affecting our access to
sufficient funds for future growth and expansion; security breaches
with respect to information technology systems, processes, and
sites; volatility in the stock market and other factors that could
adversely affect our stock price; risks affecting the continuation of
our dividend policy; and our ability to maintain effective internal
control over financial reporting.
Our forward-looking statements speak only as of the date on which
they are made, and we do not undertake any obligation to update
any forward-looking statement to reflect events or circumstances
after the date of the statement as a result of new information or
future events or developments. If we do update or correct one or
more of these statements, investors and others should not conclude
that we will make additional updates or corrections. For a further
description of these and other risks, see Item 1A. Risk Factors above
and our subsequent reports on Form 10-Q and Form 8-K.
ITEM 7A. Quantitative and Qualitative
Disclosures about Market Risk
Hedging
We are 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. Our hedging transactions may
include, but are not limited to, a variety of derivative financial
instruments such as commodity-related futures, options and swap
contracts, forward currency-related contracts and options, interest
rate swap agreements and Treasury lock agreements (“T-Locks”).
We plan to continue to use derivative instruments to hedge such
price risk and, accordingly, we will be required to make cash
deposits to or be entitled to receive cash from our margin accounts
depending on the movement in the market price of the underlying
commodities. See Note 6 of the Notes to the Consolidated Financial
Statements for additional information.
Raw material, energy and other commodity exposure
Our principal use of derivative financial instruments is to manage
commodity price risk primarily in North America relating to
anticipated purchases of corn and natural gas to be used in our
manufacturing process. Our finished products are made primarily
from corn. In North America, we sell a large portion of finished
products at firm prices established in supply contracts typically
lasting for periods of up to one year. In order to minimize the effect
of volatility in the cost of corn related to these firm-priced supply
contracts, we enter into corn futures contracts or take other hedging
positions in the corn futures market. These contracts typically
mature within one year. At expiration, we settle the derivative
contracts at a net amount equal to the difference between the
then-current price of corn and the futures contract price. Although
these hedging instruments are subject to fluctuations in value,
changes in the value of the underlying exposures we are hedging
generally offset such fluctuations. While the corn futures contracts
or other hedging positions are intended to minimize the volatility of
corn costs on operating profits, occasionally the hedging contracts
can incur losses, some of which may be material. Outside North
America, sales of finished products under long-term, firm-priced
supply contracts are not material.
23
2022 INGREDION ANNUAL REPORT Energy costs represent approximately 7 percent of our cost of sales.
The primary use of energy is to create steam in the production
process and to dry product. We consume natural gas, electricity,
coal, fuel oil, wood and other biomass sources to generate energy.
The market prices for these commodities vary depending on supply
and demand, world economies and other factors. We purchase these
commodities based on our anticipated usage and the future outlook
for these costs. We cannot assure that we will be able to purchase
these commodities at prices that we can adequately pass through
to customers to sustain or increase profitability. We use derivative
financial instruments, such as over-the-counter natural gas swaps,
to hedge portions of our natural gas costs generally over the following
12 to 24 months, primarily in our North America operations.
At December 31, 2022, we had outstanding futures and option
contracts that hedged the forecasted purchase of approximately
120 million bushels of corn, as well as outstanding swap contracts
that hedged the forecasted purchase of approximately 31 million
mmbtus of natural gas. Based on our overall commodity hedge
position at December 31, 2022, a hypothetical 10 percent decline
in market prices applied to the fair value of the instruments
would result in a charge to other comprehensive loss (“OCL”) of
approximately $71 million, net of income tax benefit of $22 million.
Any change in the fair value of the contracts, real or hypothetical,
would be substantially offset by an inverse change in the value of
the underlying hedged item.
Unrealized gains and losses associated with marking our commodities-
based cash flow hedge derivative instruments to market are recorded
as a component of OCL. As of December 31, 2022, our AOCL included
$8 million of net gains (net of income tax expense of $3 million) related
to these derivative instruments. We anticipate that $10 million of net
gains (net of income tax expense of $3 million) will be reclassified into
earnings during the following 12 months. We expect the net gains to be
offset by changes in the underlying commodities costs.
Interest rate exposure
We are exposed to interest rate risk on our variable rate debt
and price risk on our fixed rate debt. As of December 31, 2022,
approximately 70 percent, or $1.7 billion principal amount, of our
total debt is fixed rate debt and 30 percent, or approximately
$750 million principal amount, of our total debt is variable rate
debt subject to changes in short-term rates, which could affect
our interest costs. We assess market risk based on changes in
interest rates utilizing a sensitivity analysis that measures the
potential change in earnings, fair values and cash flows based
on a hypothetical 1 percentage point change in interest rates at
December 31, 2022. A hypothetical increase of 1 percentage point
in the weighted average floating interest rate would increase our
annual interest expense by approximately $7 million and would
change the fair value of our fixed rate debt at December 31, 2022
by approximately $117 million. See Note 8 of the Notes to the
Consolidated Financial Statements for further information.
Since we have no current plans to repurchase our outstanding
fixed rate instruments before their maturities, the impact of market
interest rate fluctuations on our long-term debt is not expected to
have a significant effect on our Consolidated Financial Statements.
We occasionally use interest rate swaps and T-Locks to hedge
our exposure to interest rate changes, to reduce the volatility of
24
our financing costs, or to achieve a desired proportion of fixed
versus floating rate debt, based on current and projected market
conditions. 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. As of December 31, 2022 and 2021, we
did not have any outstanding interest rate swaps.
We did not have any T-Locks outstanding as of December 31, 2022.
As of December 31, 2022, our AOCL account included $3 million of
net losses (net of $1 million tax benefit) related to settled T-Locks.
These deferred losses are being amortized to financing costs over
the term of the senior notes with which they are associated. The net
losses reclassified into earnings during the next 12 months are not
anticipated to be significant.
Foreign currencies
Due to our global operations, we are exposed to fluctuations in
foreign currency exchange rates. As a result, we have exposure
to translational foreign exchange risk when our foreign operation
results are translated to U.S. dollars and to transactional foreign
exchange risk when transactions not denominated in the functional
currency of the operating unit are revalued.
We selectively use derivative instruments such as forward contracts,
currency swaps and options to manage transactional foreign
exchange risk. Based on our overall foreign currency transactional
exposure at December 31, 2022, we estimate that a hypothetical 10
percent decline in the value of the U.S. dollar would have resulted
in a transactional foreign exchange loss of approximately $4 million.
At December 31, 2022, our AOCL account included in the equity
section of our Consolidated Balance Sheets includes a cumulative
translation loss of approximately $1.0 billion. The aggregate net
assets of our foreign subsidiaries where the local currency is the
functional currency approximated $1.8 billion at December 31, 2022.
A hypothetical 10 percent decline in the value of the U.S. dollar
relative to foreign currencies would have resulted in a reduction to
our cumulative translation loss and a credit to OCL of approximately
$200 million.
We primarily use derivative financial instruments such as foreign-
currency forward contracts, swaps and options to manage our
foreign currency transactional exchange risk. We enter foreign-
currency derivative instruments that are designated as both cash
flow hedging instruments and instruments not designated as
hedging instruments for accounting purposes. As of December 31,
2022, we had foreign currency forward sales contracts with an
aggregate notional amount of $405 million and foreign currency
forward purchase contracts with an aggregate notional amount of
$239 million not designated as hedging instruments for accounting
purposes. As of December 31, 2022, we also had foreign currency
forward sales contracts with an aggregate notional amount of $668
million and foreign currency forward purchase contracts with an
aggregate notional amount of $840 million that are classified as
cash flow hedges. The amount included in AOCL relating to these
hedges at December 31, 2022 was a $1 million gain (net of an
insignificant amount of income tax expense). We expect $4 million
of net gains (net of $2 million of income tax expense) will be
reclassified to earnings over the next 12 months.
Some of the countries in which we operate may experience high
inflation. We elect hyperinflation accounting for our affiliate in
Argentina, which has high cumulative inflation, determined its
functional currency to be the U.S. dollar, and measure its income
statement and balance sheet in U.S. dollars using both current and
historical rates of exchange. The effect of changes in exchange rates
on its local currency denominated monetary assets and liabilities
is reflected in earnings in financing costs in the Consolidated
Statements of Income.
ITEM 8. Financial Statements and Supplementary
Data
Report of Independent Registered Public Accounting Firm
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
INGREDION INCORPORATED:
Opinions on the Consolidated Financial Statements and Internal
Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets
of Ingredion Incorporated and subsidiaries (the Company) as of
December 31, 2022 and 2021, the related consolidated statements
of income, comprehensive income, equity and redeemable equity,
and cash flows for each of the years in the three-year period ended
December 31, 2022, and the related notes (collectively, the consolidated
financial statements). We also have audited the Company’s internal
control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of the Company as of December 31, 2022 and 2021, and the results
of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2022, in conformity with
U.S. generally accepted accounting principles. Also in our opinion,
the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2022 based on
criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated
financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Company’s
consolidated financial statements and an opinion on the Company’s
internal control over financial reporting based on our audits. We are a
public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control
over financial reporting was maintained in all material respects.
Our audit of the consolidated financial statements included
performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error
or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial
Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current period audit of the consolidated financial statements
25
2022 INGREDION ANNUAL REPORT that was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on
the accounts or disclosures to which it relates.
Evaluation of the pension benefit obligations
As discussed in Note 11 to the consolidated financial statements, the
Company’s pension benefit obligations totaled $488 million as of
December 31, 2022. The pension benefit obligations are measured
at the actuarial present value of the benefits to which employees
are entitled based on employee service rendered and the benefits
attributed by the pension benefit formula and the employee’s
expected date of separation or retirement. The determination of
the Company’s pension benefit obligations is dependent, in part,
on certain estimates and the selection of assumptions, including
discount rates.
We identified the evaluation of the pension benefit obligations as
a critical audit matter. Subjective auditor judgment was required
to evaluate the actuarial models and methodology used by the
Company to determine the obligations and to evaluate the discount
rates used. Changes in the discount rates could have a significant
CONSOLIDATED STATEMENTS OF INCOME
impact to the measurement of the pension benefit obligations.
The following are the primary procedures we performed to address
this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the
Company’s pension benefit obligations process, including controls
related to the assessment of the actuarial models and methodology
and the development of the discount rates. For certain plans,
we involved an actuarial professional with specialized skill and
knowledge, who assisted in:
• understanding and assessing the appropriateness of the actuarial
models and methodology used by the Company to determine the
obligations;
• the evaluation of the Company’s discount rates, by assessing
changes in the discount rates from the prior year and comparing it
to the change in published indices, and by evaluating the discount
rates based on the pattern of cash flows; and
• the evaluation of the selected yield curve, the consistency of the
yield curve with the prior year, and the spot rates, to further assess
the discount rates.
/s/ KPMG LLP
We have served as the Company’s auditor since 1997.
Chicago, Illinois
February 21, 2023
(in millions, except per share amounts)
Net sales
Cost of sales
Gross profit
Operating expenses
Other operating expense (income)
Restructuring/impairment charges and related adjustments
Operating income
Financing costs
Other non-operating (income)
Income before income taxes
Provision for income taxes
Net income
Less: Net income attributable to non-controlling interests
Net income attributable to Ingredion
Weighted average common shares outstanding:
Basic
Diluted
Earnings per common share of Ingredion:
Basic
Diluted
See the Notes to the Consolidated Financial Statements.
26
YEAR ENDED DECEMBER 31,
2022
2021
2020
$7,946
$6,894
$5,987
6,452
1,494
715
13
4
762
99
(5)
668
166
502
10
$492
66.2
67.0
$7.43
7.34
5,563
1,331
668
(34)
387
310
74
(12)
248
123
125
8
$117
67.1
67.8
$1.74
1.73
4,715
1,272
628
(31)
93
582
81
(5)
506
152
354
6
$348
67.2
67.6
$5.18
5.15
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Net income
Other comprehensive income:
Gains on cash flow hedges, net of income tax effect of $53, $58 and $2,
respectively
(Gains) losses on cash flow hedges reclassified to earnings, net of income tax effect of $69, $55 and
$17, respectively
Actuarial (losses) gains on pension and other postretirement obligations, settlements and plan
amendments, net of income tax effect of $1, $9 and $1, respectively
Currency translation adjustment
Comprehensive income
Less: Comprehensive income attributable to non-controlling interests
2022
2021
2020
$502
$125
$354
157
160
(199)
(154)
(4)
(105)
351
—
19
211
361
9
3
48
(1)
(25)
379
5
Comprehensive income attributable to Ingredion
$351
$352
$374
See the Notes to the Consolidated Financial Statements.
27
2022 INGREDION ANNUAL REPORT CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Prepaid expenses
Total current assets
Property, plant and equipment, net of accumulated depreciation of $3,326 and $3,232, respectively
Intangible assets
Other assets
Total assets
Liabilities and equity
Current liabilities:
Short-term borrowings
Accounts payable
Accrued liabilities
Total current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Share-based payments subject to redemption
Redeemable non-controlling interests
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 December 31, 2022 and December 31, 2021
Additional paid-in capital
Less: Treasury stock (common stock: 12,116,920 and 11,154,203 shares at December 31, 2022 and December 31, 2021, respectively)
at cost
Accumulated other comprehensive loss
Retained earnings
Total Ingredion stockholders’ equity
Non-redeemable non-controlling interests
Total equity
Total liabilities and equity
See the Notes to the Consolidated Financial Statements.
28
AS OF DECEMBER 31,
2022
2021
$236
3
1,411
1,597
62
3,309
2,407
1,301
544
$328
4
1,130
1,172
63
2,697
2,423
1,348
531
$7,561
$6,999
$543
873
466
1,882
1,940
477
4,299
48
51
—
1
$308
774
430
1,512
1,738
524
3,774
36
71
—
1
1,132
1,158
(1,148)
(1,061)
(1,048)
4,210
3,147
16
3,163
(897)
3,899
3,100
18
3,118
$7,561
$6,999
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE EQUITY
(in millions)
PREFERRED
STOCK
COMMON
STOCK
ADDITIONAL
PAID-IN
CAPITAL
TREASURY
STOCK
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
RETAINED
EARNINGS
NON-
REDEEMABLE
NON-
CONTROLLING
INTERESTS
SHARE-
BASED
PAYMENTS
SUBJECT TO
REDEMPTION
REDEEMABLE
NON-
CONTROLLING
INTERESTS
Balance, December 31, 2019
$—
$1
$1,137
$(1,040)
$(1,158)
$3,780
$21
$31
$—
TOTAL EQUITY
Net income attributable to
Ingredion
Net income (loss) attributable
to non-controlling interests
Dividends declared
Acquisition of redeemable
non-controlling interests
Share-based compensation,
net of issuance
Other comprehensive income
(loss)
Other
348
(171)
13
16
25
Balance, December 31, 2020
—
1
1,150
(1,024)
(1,133)
3,957
Net income attributable to
Ingredion
Net income (loss) attributable
to non-controlling interests
Dividends declared
Repurchases of common
stock, net
Share-based compensation,
net of issuance
Other comprehensive income
(loss)
117
(175)
(68)
31
8
236
Balance, December 31, 2021
—
1
1,158
(1,061)
(897)
3,899
Net income attributable to
Ingredion
Net income attributable to
non-controlling interests
Dividends declared
Repurchases of common
stock, net
Share-based compensation,
net of issuance
Fair market value adjustment
to non-controlling interests
Non-controlling interest
purchases
Other comprehensive (loss)
492
(181)
(112)
3
25
(29)
(151)
Balance, December 31, 2022
$—
$1
$1,132
$(1,148)
$(1,048)
$4,210
See the Notes to the Consolidated Financial Statements.
10
(8)
(1)
(1)
21
11
(11)
(3)
18
9
(5)
(1)
30
6
36
12
(6)
$16
$48
(4)
74
70
(3)
4
71
1
29
(46)
(4)
$51
29
2022 INGREDION ANNUAL REPORT CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Cash provided by operating activities
Net income
Non-cash charges to net income:
Depreciation and amortization
Mechanical stores expense
Impairment on disposition of assets
Deferred income taxes
Other non-cash charges
Changes in working capital:
Accounts receivable and prepaid expenses
Inventories
Accounts payable and accrued liabilities
Margin accounts
Other
Cash provided by operating activities
Cash used for investing activities
Capital expenditures and mechanical stores purchases
Proceeds from disposal of manufacturing facilities and properties
Payments for acquisitions, net of cash acquired
Other
Cash used for investing activities
Cash provided by (used for) financing activities
Proceeds from borrowings
Payments on debt
Debt issuance cost
Commercial paper borrowings, net
(Repurchases) issuances of common stock, net
Purchases of non-controlling interests
Dividends paid, including to non-controlling interests
Cash provided by (used for) financing activities
Effects of foreign exchange rate changes on cash
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
See the Notes to the Consolidated Financial Statements.
30
YEAR ENDED DECEMBER 31,
2022
2021
2020
$502
$125
$354
215
55
—
(3)
57
(310)
(468)
158
(44)
(10)
152
220
55
340
(61)
8
(162)
(312)
226
(32)
(15)
392
213
54
—
(7)
105
(3)
(14)
124
43
(40)
829
(300)
(300)
(340)
7
(29)
2
(320)
825
(532)
—
140
(103)
(46)
(181)
103
(27)
(92)
328
$236
18
(40)
(13)
(335)
7
(236)
(2)
(571)
1,300
1,550
(1,690)
(1,224)
—
250
(49)
—
(184)
(373)
(21)
(337)
665
$328
(9)
—
4
—
(178)
143
—
401
264
$665
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – Description of the Business and
Summary of Significant Accounting
Policies
Description of the business
Ingredion Incorporated was founded in 1906 and became an
independent and public company as of December 31, 1997. Unless
the context otherwise requires, all references herein to the
“Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion
Incorporated and its consolidated subsidiaries. We primarily
manufacture and sell sweeteners, starches, nutrition ingredients and
biomaterial solutions derived from wet milling and processing corn
and other starch-based materials to a wide range of industries, both
domestically and internationally.
Basis of presentation
The Consolidated Financial Statements consist of the accounts of
Ingredion, including all subsidiaries. Intercompany accounts and
transactions are eliminated in consolidation.
The preparation of the accompanying Consolidated Financial
Statements in conformity with U.S. Generally Accepted Accounting
Principles (“GAAP”) requires management to make estimates
and assumptions about future events. These estimates and the
underlying assumptions affect the amounts of assets and liabilities
reported, disclosures about contingent assets and liabilities, and
reported amounts of revenues and expenses. Such estimates
and assumptions impact the value of purchase consideration,
accounts receivable, inventories, certain investments, goodwill,
intangible assets and other long-lived assets, legal contingencies,
income taxes, and pension and other postretirement benefits,
among others. These estimates and assumptions are based on
our best estimates and judgment. We evaluate our estimates
and assumptions on an ongoing basis using historical experience
and other factors, including the current economic environment,
which we believe to be reasonable under the circumstances.
We will adjust such estimates and assumptions when facts and
circumstances dictate. Corn price volatility, adverse changes in
the global economic environment, foreign currency devaluations
versus the U.S. dollar, and access to credit markets increase the
uncertainty inherent in such estimates and assumptions. As future
events and their effects cannot be determined with precision,
actual results could differ significantly from these estimates.
Changes in these estimates will be reflected in the financial
statements in future periods.
Assets and liabilities of foreign subsidiaries, other than those
whose functional currency is the U.S. dollar, are translated at
current exchange rates with the related translation adjustments
reported in equity as a component of accumulated other
comprehensive loss (“AOCL”), and income statement accounts
are translated at the average exchange rate during the period.
The U.S. dollar is the functional currency for our subsidiaries in
Mexico and Argentina, and we translate their monetary assets and
liabilities at current exchange rates with the related adjustment
included in net income and non-monetary assets and liabilities at
historical exchange rates with the related translation adjustments
included in AOCL.
Net sales
Ingredion recognizes revenue under the core principle to depict
our transfer of products to customers in amounts that reflect the
consideration we expect to receive. To achieve that core principle,
we apply the following five-step approach: (1) identify the contract
with a customer, (2) identify the performance obligations in the
contract, (3) determine the transaction price, (4) allocate the
transaction price to the performance obligations in the contract, and
(5) recognize revenue when a performance obligation is satisfied.
We identify customer purchase orders, which in some cases are
governed by a master sales agreement, as the contracts with
our customers. For each contract, we consider the transfer of
products, each of which is distinct, to be the identified performance
obligation. In determining the transaction price for the performance
obligation, we evaluate whether the price is subject to adjustment
to determine the consideration to which we expect to be entitled.
The pricing model can be fixed or variable within the contract. The
variable pricing model is based on historical commodity pricing and
is determinable prior to completing the performance obligation.
Additionally, we have certain sales adjustments for volume incentive
discounts and other discount arrangements that reduce the
transaction price. We estimate the reduction of transaction price
using the expected value method based on our analysis of historical
volume incentives or discounts over a period considered adequate
to account for current pricing and business trends. Historically,
actual volume incentives and discounts relative to those estimated
and included when determining the transaction price have not
materially differed. We accrue volume incentives and discounts in
Accrued liabilities in the Consolidated Balance Sheets when we
satisfy the performance obligation. We consider the product price
as specified in the contract, net of any discounts, as the standalone
selling price as it is an observable input that represents the price if
we sold the product to a similar customer in similar circumstances.
We do not recognize any significant financing components since
payment is due shortly after we satisfy our performance obligation.
We recognize revenue when we satisfy our performance obligation and
control is transferred to the customer, which occurs at a point in time,
either upon delivery to an agreed upon location or to the customer.
Further, in determining whether control has transferred, we consider if
there is a present right to payment and legal title, along with risks and
rewards of ownership having transferred to the customer.
Shipping and handling activities related to contracts with
customers represent fulfillment costs and are recorded in Cost of
sales in the Consolidated Statements of Income. Taxes assessed
by governmental authorities and collected from customers are
accounted for on a net basis and excluded from net sales. We
expense costs to obtain a contract when we incur the costs since
most contracts are one year or less. These costs primarily include
our internal sales force compensation. Under the terms of these
programs, the compensation is generally earned, and the costs are
recognized when we recognize the revenue.
From time to time, we may enter into long-term contracts with our
customers. Historically, such contracts do not result in significant
contract assets or liabilities. Any such arrangements are accounted
for in Other assets or Accrued liabilities in the Consolidated
Balance Sheets.
31
2022 INGREDION ANNUAL REPORT Cash and cash equivalents
Cash equivalents consist of all instruments purchased with an
original maturity of three months or less and that have virtually no
risk of loss in value.
Accounts receivable
Accounts receivable consists of trade and other receivables carried
at approximate fair value, net of an allowance for credit losses. The
allowance for credit losses is determined using our best estimate of
expected credit losses based on historical experience and current
forecasts of future economic conditions, and we adjust this estimate
over the life of the receivable as needed.
Inventories
Inventories are stated at the lower of cost or net realizable value. Costs
are predominantly determined using the weighted average method.
Long-term investments
We may hold marketable securities and equity investments, which
we include in Other assets in the Consolidated Balance Sheets.
Marketable securities are carried at fair value and we record
changes in fair value to Other operating expense (income) in the
Consolidated Statements of Income.
Equity investments in companies for which we do not have the
ability to exercise significant influence are accounted for at fair
value, with changes in fair value recorded in Other non-operating
(income) in the Consolidated Statements of Income. Equity
securities without readily determinable fair values are carried at
cost, less impairments, if any, and adjusted for observable price
changes for the identical or a similar investment of the same issuer.
We perform a qualitative impairment assessment to determine
if such investments are impaired, which considers all available
information, including declines in the financial performance of
the issuing entity, the issuing entity’s operating environment and
general market conditions. Impairments of equity securities without
readily determinable fair value are recorded in Other non-operating
(income) in the Consolidated Statements of Income.
Equity investments in companies for which we have the ability to
exercise significant influence, but not control, are accounted for
using the equity method of accounting. Our share of the earnings or
losses reported by equity method investees is recognized in Other
operating expense (income) in the Consolidated Statements of
Income. Each reporting period, we evaluate declines in the fair value
of equity method investments below carrying value to determine
if any are other-than-temporary and if so, we write down the
investment to its estimated fair value. Impairments are recognized
in Restructuring/impairment charges and related adjustments in the
Consolidated Statements of Income.
Leases
We determine if an arrangement contains a lease, as well as its
classification as an operating lease or finance lease, at the inception of
the agreement. Lease assets represent our right to use an underlying
asset for the lease term and lease liabilities represent Ingredion’s
obligation to make lease payments arising from the lease. Lease
assets and liabilities are recognized at the lease commencement
date based on the present value of future lease payments over the
lease term. As most of our leases do not provide an implicit rate,
we use an incremental borrowing rate based on the information
available at the commencement date to determine the present value
of lease payments. The lease asset value includes in our calculation
any prepaid lease payments made and any lease incentives received
from the arrangement as a reduction of the asset. Our lease terms
may include options to extend or terminate the lease, and the impact
of these options are included in the lease liability and lease asset
calculations when the exercise of the option is at our sole discretion
and it is reasonably certain that we will exercise the option. We do
not separate lease and non-lease components for its leases when it is
impracticable to separate them, such as leases with variable payment
arrangements. Leases with an initial term of twelve months or less are
not recorded on the Consolidated Balance Sheets.
We have operating leases for certain rail cars, office space,
warehouses and machinery and equipment. The commencement
date used for the calculation of the lease obligations recorded is the
latter of January 1, 2019 or the lease start date. Certain leases have
options to extend the life of the lease, which are included in the
liability calculation when the option is at our sole discretion and it is
reasonably certain that we will exercise the option. We have certain
leases that have variable payments based solely on output or usage
of the leased asset, which we do not record in our Consolidated
Balance Sheets, but expense as incurred. Lease expense is
recognized on a straight-line basis over the lease term.
Property, plant and equipment and definite-lived intangible assets
Property, plant and equipment (“PP&E”) is stated at cost less
accumulated depreciation and definite-lived intangible assets are
stated at cost less accumulated amortization. For PP&E, depreciation
is generally computed on the straight-line basis over the estimated
useful lives of depreciable assets, which range from 25 to 50 years
for buildings and from two to 25 years for all other assets. Costs
for mechanical stores represent costs for spare parts used in the
production process that are capitalized in PP&E as part of machinery
and equipment until they are utilized in the manufacturing process
and expensed as a period cost. Where permitted by law, accelerated
depreciation methods are used for tax purposes. For definite-lived
intangible assets, we recognize the cost of these amortizable assets
in operations over their estimated useful life, which range from two
to 30 years. We review the recoverability of the net book value of
PP&E and definite-lived intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying value
of an asset group may not be recoverable. If this review indicates
that the carrying values of the asset group will not be recovered,
we reduce the carrying values to fair value and recognize an
impairment loss. The impairment analysis for long-lived assets
occurs before the goodwill impairment assessment described below.
Indefinite-lived intangible assets and goodwill
We have certain indefinite-lived intangible assets in the form of
tradenames and trademarks. Our methodology for allocating the
purchase price of acquisitions is based on established valuation
techniques that reflect the consideration of a number of factors,
including valuations performed by third-party appraisers when
appropriate. Goodwill represents the excess of the cost of an acquired
entity over the fair value assigned to identifiable assets acquired and
liabilities assumed. We assess indefinite-lived intangible assets and
goodwill for impairment annually (or more frequently if impairment
indicators arise), which we perform as of July 1 of each year.
32
In testing indefinite-lived intangible assets for impairment, we first
assess qualitative factors to determine whether it is more-likely-
than-not that the fair value of an indefinite-lived intangible asset
is impaired. After assessing the qualitative factors, if we determine
that it is more-likely-than-not that the fair value of an indefinite-
lived intangible asset is greater than its carrying amount, then we
are not required to compute the fair value of the indefinite-lived
intangible asset. If the qualitative assessment leads us to conclude
otherwise, then we are required to determine the fair value of
the indefinite-lived intangible assets and perform a quantitative
impairment test. In performing the quantitative analysis, we
consider various factors, including net sales derived from these
intangibles and certain market and industry conditions.
In testing goodwill for impairment, we first assess qualitative factors
in determining whether it is more-likely-than-not that the fair value
of a reporting unit is less than its carrying amount. After assessing
the qualitative factors, if we determine that it is more-likely-than-
not that the fair value of a reporting unit is greater than its carrying
amount, then we do not perform an impairment test. If we conclude
otherwise, then we perform an impairment test that compares the fair
value of the reporting unit to its carrying value. If the fair value of the
reporting unit exceeds the carrying value of its net assets, goodwill
is not considered impaired, and no further testing is required. If the
carrying value of the net assets exceeds the fair value of the reporting
unit, then an impairment exists for the difference between the fair
value and carrying value of the reporting unit. This difference is not to
exceed the goodwill recorded at the reporting unit.
Hedging instruments
We use derivative financial instruments consisting primarily of
commodity futures, swaps and option contracts, forward currency
contracts and options, interest rate swap agreements and Treasury
lock agreements (“T-Locks”).
When we enter a derivative contract, we designate the derivative
as a hedge of variable cash flows to be paid related to certain
forecasted transactions (“a cash flow hedge”), as a hedge of the fair
value of certain firm commitments (“a fair value hedge”), or as a
non-designated hedging instrument. This process includes linking
all derivatives that are designated as cash flow or fair value hedges
to specific assets and liabilities on the Consolidated Balance Sheets,
or to specific firm commitments or forecasted transactions. For all
hedging relationships, we document the hedging relationships and
our risk-management objective and strategy for undertaking the
hedge transactions, the hedging instrument, the hedged item, the
nature of the risk being hedged, how we will assess the hedging
instrument’s effectiveness in offsetting the hedged risk, and a
description of the method to measure ineffectiveness. We also
formally assesses, both at the hedge’s inception and on an ongoing
basis, whether the derivative that is used in a hedging transactions
is highly effective in offsetting changes in cash flows or fair values of
hedged items. Unrealized gains and losses associated with marking
cash flow hedging contracts to market (fair value) are recorded as a
component of other comprehensive loss (“OCL”).
We discontinue hedge accounting prospectively when it is unlikely
that a forecasted transaction will occur or when we determine that
the designation of the derivative as a hedging instrument is no
longer appropriate, since the derivative is no longer effective in
offsetting changes in the cash flows or fair value of the originally
intended hedged transaction. When we discontinue hedge
accounting, we continue to carry the derivative on the Consolidated
Balance Sheets at its fair value, but we recognize in earnings in
the same line item affected by the originally intended hedged
transaction any accumulated gains and losses that were included in
AOCL in the period we determined the hedge to be ineffective, as
well as future gains and losses of the derivative.
Pension and other postretirement benefits
All U.S. pension and postretirement benefit plans and most non-U.S.
pension and postretirement benefit plans value the vested benefit
obligation based on the actuarial present value of the vested
benefits to which employees are currently entitled based on their
expected date of separation or retirement.
For defined benefit plans, the service cost component of net periodic
benefit cost is presented within either Cost of sales or Operating
expenses on the Consolidated Statements of Income. The interest
cost, expected return on plan assets, amortization of actuarial loss,
amortization of prior service credit and settlement loss components
of net periodic benefit cost are presented as Other non-operating
(income) on the Consolidated Statements of Income.
Actuarial gains and losses in excess of 10 percent of the greater of
the projected benefit obligation or the market-related value of plan
assets are classified in AOCL, along with the related tax impact, and
recognized as a component of net periodic benefit cost over the
average remaining service period of a plan’s active employees for active
defined benefit pension plans and over the average remaining life of a
plan’s active employees for frozen defined benefit pension plans.
Share-based compensation
We have a stock incentive plan that provides for share-based
employee compensation, including the granting of stock options,
shares of restricted stock, restricted stock units and performance
shares to certain key employees. Compensation expense is generally
recognized in the Consolidated Statements of Income on a straight-
line basis for all awards over the employee’s vesting period or over
a one-year required service period for certain retirement-eligible
employees. We estimate a forfeiture rate at the time of certain grants,
and we update the estimate throughout the vesting of certain awards
within the amount of compensation costs recognized in each period.
Earnings per common share
Basic earnings per common share (“EPS”) is computed by dividing
net income attributable to Ingredion by the weighted average
number of shares outstanding. Diluted EPS is calculated using
the treasury stock method, computed by dividing net income
attributable to Ingredion by the weighted average number of shares
outstanding, including the dilutive effect of outstanding stock
options and other instruments associated with long-term incentive
compensation plans.
Risks and uncertainties
We operate domestically and internationally, and our business and
assets in each country are subject to varying degrees of risk and
uncertainty. We insure our business and assets in each country
against insurable risks in a manner that we deem appropriate.
Because of this geographic dispersion, we believe that a loss from
a non-insured event in any one country would not have a material
33
2022 INGREDION ANNUAL REPORT On April 1, 2021, we 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. Beginning at the acquisition
date, our 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.
On November 3, 2020, we fully acquired Verdient Foods, Inc.
(“Verdient”) by purchasing the remaining 80 percent of the
outstanding shares. As a part of the acquisition, we also obtained
land and buildings Verdient leased from a third party. Verdient is a
Canada-based producer of pulse-based protein concentrates and
flours from peas, lentils and fava beans for human food applications.
To complete the closing, we made a total cash payment of CAD $33
million (USD $26 million), which we funded from cash on hand.
Before the acquisition, Ingredion owned 20 percent of Verdient’s
outstanding shares, which we had reported as an equity method
investment until we acquired the remaining shares. The acquisition
of Verdient added $15 million of goodwill and $14 million of tangible
assets assumed on the acquisition date of November 3, 2020.
Beginning on that date, the financial results of Verdient are wholly
consolidated into our North America business segment in our
Consolidated Financial Statements.
On July 1, 2020, we acquired a 75 percent controlling interest in
PureCircle, which is one of the leading producers and innovators
of stevia sweeteners for global food and beverage industries.
As described above, we own 87 percent of PureCircle as of
December 31, 2022. To complete the closing, we made a total cash
payment of $208 million, net of $14 million of cash acquired, which
we funded from cash on hand. Beginning at the acquisition date, we
wholly consolidate PureCircle’s financial statements into our Asia-
Pacific business segment in our Consolidated Financial Statements,
and net income attributable to non-controlling interests that is
deducted from our net income includes the portion of net income
attributable to the remaining portion of PureCircle owned by non-
controlling shareholders.
We incurred $1 million, $5 million and $11 million of pre-tax
acquisition and integration costs in 2022, 2021 and 2020,
respectively, associated with our acquisitions. We did not present
the pro-forma results of operations for any acquisitions since
the effect of each acquisition individually and in the aggregate
would not be material to our results of operations for any periods
presented.
adverse effect on our operations as a whole. Additionally, we believe
there is no significant concentration of risk with any single customer
or supplier whose failure or non-performance would materially
affect our results.
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, 2024. We expect the impact to be
insignificant to our Consolidated Financial Statements.
In September 2022, the FASB issued ASU No. 2022-04, Liabilities–
Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier
Finance Program Obligations. The amendments require buyers
to disclose information about supplier finance programs that is
sufficient to allow financial statement users to understand their
nature, activity during the period, changes from period to period
and potential magnitude. The amendments in this update are
effective for annual periods beginning after December 15, 2022.
We expect the impact of this update will not be material to our
Consolidated Financial Statements.
NOTE 2 – Acquisitions
PureCircle Non-Controlling Interests
During 2022, Ingredion purchased shares from minority
shareholders in PureCircle Limited (“PureCircle”) for $46 million.
These purchases increased our ownership percentage in PureCircle
from 75 percent as of December 31, 2021, to approximately
87 percent as of December 31, 2022.
Other Acquisitions
On December 1, 2022, we acquired a 65 percent controlling interest
in Mannitab Pharma Specialties Private Limited (“Mannitab”),
which is an Indian manufacturer of spray dried mannitol and
fine grade mannitol, for $22 million. As the purchase accounting
is not yet complete, we preliminarily recognized $22 million in
Other assets. We will finalize the purchase accounting in 2023 and
agreed to acquire the remaining outstanding shares of Mannitab
over the next three years. Beginning at the acquisition date, our
Consolidated Financial Statements reflect the preliminary effects of
the acquisition and Mannitab’s financial results, which we report on
a one-month lag in our Asia-Pacific reportable business segment.
On August 1, 2022, we acquired Amishi Drugs and Chemicals Private
Limited (“Amishi”) for $7 million, which added $3 million of goodwill
and intangible assets to our Consolidated Financial Statements.
Amishi is an Indian manufacturer of chemically modified starch-
based pharmaceutical excipients. Beginning at the acquisition date,
our Consolidated Financial Statements reflect the preliminary effects
of the acquisition and Amishi’s financial results, which we report in
our Asia-Pacific reportable business segment.
34
NOTE 3 – Intangible Assets
Goodwill
The original carrying value of goodwill and accumulated impairment
charges by reportable business segment at December 31, 2022, was
as follows:
NORTH
AMERICA
SOUTH
AMERICA
ASIA-
PACIFIC
EMEA
TOTAL
(in millions)
YEAR
2023
2024
2025
2026
2027
AMORTIZATION
EXPENSE
$26
26
25
25
25
(in millions)
Goodwill before impairment
charges
Accumulated impairment
charges
Balance at January 1, 2021
Acquisitions
Currency translation
$624
$48
$323
$74
$1,069
NOTE 4 – Investments
Investments consisted of the following as of December 31, 2022 and 2021:
(1)
623
—
(1)
(33)
15
—
1
(121)
202
1
(13)
—
74
4
(6)
$72
(155)
914
5
(19)
$900
(in millions)
Equity investments
Equity method investments
Marketable securities
Total investments
2022
$23
113
3
$139
2021
$16
104
12
$132
Balance at December 31, 2022
$622
$16
$190
Based on the results of our impairment assessments, we concluded
that as of July 1, 2022, there were no impairments to goodwill.
Amyris Joint Venture
Other Intangible Assets
The following tables summarize our other intangible assets as of
December 31, 2022 and 2021:
2022
ACCUMULATED
AMORTIZATION
NET
WEIGHTED
AVERAGE
USEFUL LIFE
(YEARS)
(in millions)
Trademarks/tradenames
(indefinite-lived)
Patents
Customer relationships
Technology
Other
GROSS
$143
32
356
102
43
Total other intangible assets
$676
$(275)
$401
2021
ACCUMULATED
AMORTIZATION
NET
WEIGHTED
AVERAGE
USEFUL LIFE
(YEARS)
$— $143
(7)
25
(150)
206
(101)
(17)
1
26
$— $143
(4)
(134)
(101)
(14)
29
231
2
29
—
12
19
9
15
17
—
12
19
9
15
17
(in millions)
Trademarks/tradenames
(indefinite-lived)
Patents
Customer relationships
Technology
Other
GROSS
$143
33
365
103
43
Total other intangible assets
$687
$(253)
$434
Amortization expense related to intangible assets was $26 million,
$27 million and $30 million for 2022, 2021 and 2020, respectively. Based
on the results of our impairment assessments, we concluded that as of
July 1, 2022, there were no impairments to our indefinite-lived other
intangible assets. Based on acquisitions completed through 2022,
intangible asset amortization expense for the next five years is
shown below:
On June 1, 2021, we entered into an agreement with Amyris, Inc.
(“Amyris”) for certain exclusive commercialization rights to Amyris’
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 expense (income), which included $18 million
related to the non-exclusive intellectual property licenses, offset
by the $10 million cash payment. Beginning June 1, 2021, we began
accounting for the investment under the equity method.
Argentina Joint Venture
On February 12, 2021, we entered into an agreement with an affiliate
of Grupo Arcor, an Argentine food company, to establish Ingrear
Holding S.A. (the “Argentina 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,
we completed all closing conditions to combine the manufacturing
facilities, finalize the transaction and formally establish the
Argentina 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 Argentina 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 we entered into the agreements for equity
method investees, our share of income from them is included in
Other operating expense (income). We incurred $4 million and $6
million of pre-tax acquisition and integration costs to acquire the
35
2022 INGREDION ANNUAL REPORT Argentina and Amyris joint venture investments in 2022 and 2021,
respectively. The 2022 charges were recorded within Financing costs
on the Consolidated Statements of Income.
A summary of our severance accrual at December 31, 2022, is as
follows ($ in millions):
NOTE 5 – Restructuring and Impairment Charges
Payments made to terminated employees
Balance in severance accrual as of December 31, 2021
Balance in severance accrual as of December 31, 2022
$3
(3)
$—
We recorded net pre-tax restructuring and impairment charges of
$4 million, $387 million and $93 million in 2022, 2021 and 2020,
respectively.
Restructuring Charges
During 2022, we recorded $4 million of pre-tax restructuring related
charges, which included $3 million of costs associated with our
Cost Smart selling, general and administrative expense (“SG&A”)
program and $1 million of costs as part of our Cost Smart Cost of
sales program.
During 2021, we recorded a total of $47 million of pre-tax
restructuring related charges. We recorded pre-tax net restructuring
charges of $27 million as part of our Cost Smart Cost of sales
program, which primarily consisted of accelerated depreciation
and other costs recorded in our North America segment. We also
recorded $17 million of employee-related and other costs associated
with our Cost Smart SG&A program, consisting of professional
services and employee-related severance costs primarily in our
North America and EMEA segments.
During 2020, we recorded a total of $48 million of pre-tax
restructuring charges. We recorded pre-tax restructuring charges of
$25 million for 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 $23 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.
The Cost Smart Cost of sales and Cost Smart SG&A programs began
in 2018. During 2018 and 2019, we recorded a total of $78 million
of pre-tax restructuring charges for our Cost Smart Cost of sales
program and a total of $39 million for our Cost Smart SG&A program.
Impairment Charges
During 2021, we recorded a $340 million impairment charge
for assets and liabilities we contributed to the Argentina joint
venture, which consisted of $311 million related to the write-off of
the cumulative translation losses associated with the contributed
net assets and $29 million related to the final write-down of the
contributed net assets to fair value.
During 2020, we recorded a $35 million impairment charge for our
indefinite-lived intangible asset associated with the TIC Gums tradename
due to our decision to change our marketing strategy related to the
brand. Additionally, we recorded a $10 million other-than-temporary
impairment of our equity method investment in Verdient when we
agreed to acquire the remaining 80 percent interest in Verdient.
36
NOTE 6 – Derivative Instruments and Hedging
Activities
We are 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 use derivative financial
instruments that consist of commodity-related futures, options and
swap contracts, foreign currency-related forward contracts, interest
rate swaps and treasury locks (“T-Locks”).
Commodity price hedging
Our principal use of derivative financial instruments is to manage
commodity price risk relating to anticipated purchases of corn and
natural gas that we intend to use 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.
We use soybean oil and soybean meal futures contracts in North
America that trade on regulated commodity exchanges to hedge
sales of our co-products. We also use over-the-counter natural gas
swaps primarily in North America to hedge a portion of our 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, as well as co-product sales. Our natural
gas, soybean meal and the majority of our corn and soybean oil
derivatives have been designated as cash flow hedging instruments.
For certain corn derivative instruments that are not designated
as 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 price risk
related to anticipated purchases of corn. During 2022, 2021 and
2020, we recognized a $1 million gain, a $1 million loss and a $1
million gain, respectively, on non-designated commodity contracts.
For commodity hedges designated as cash flow hedges, unrealized
gains and losses associated with marking the commodity hedging
contracts to market (fair value) are recorded as a component of
OCL and included in the equity section of the Consolidated Balance
Sheets as part of 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. We assess 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 Consolidated Statements of Cash Flows.
We had outstanding futures and option contracts that hedged the
forecasted purchase of approximately 120 million and 135 million
bushels of corn as of December 31, 2022 and 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 December 31, 2022 and 2021, respectively.
Foreign currency hedging
Due to our global operations, including operations in many
emerging markets, we are exposed to fluctuations in foreign
currency exchange rates. As a result, we have exposure to
translational foreign-exchange risk when the results of our foreign
operations are translated to U.S. dollars and to transactional
foreign-exchange risk when transactions not denominated in
the functional currency are revalued. Our foreign-exchange risk
management strategy uses derivative financial instruments such as
foreign currency forward contracts, swaps and options to manage
our transactional foreign exchange risk. We enter 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 period.
We hedge certain assets using foreign currency derivatives not
designated as hedging instruments, which had a notional value of
$405 million and $360 million as of December 31, 2022 and 2021,
respectively. We also hedge certain liabilities using foreign currency
derivatives not designated as hedging instruments, which had a
notional value of $239 million and $205 million as of December 31,
2022 and 2021, respectively.
We hedge certain assets using foreign currency cash flow hedging
instruments, which had a notional value of $668 million and $505
million as of December 31, 2022 and 2021, respectively. We also
hedge certain liability positions using foreign currency cash flow
hedging instruments, which had a notional value of $840 million
and $708 million as of December 31, 2022 and 2021, respectively.
Interest rate hedging
We assess our 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. Our risk management
strategy is to monitor interest rate risk attributable to both
our outstanding and forecasted debt obligations as well as our
offsetting hedge positions. Derivative financial instruments that we
have used to manage its interest rate risk consist of interest rate
swaps and T-Locks.
We periodically enter into interest rate swaps to hedge our
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 December 31,
2022 or December 31, 2021.
We periodically enter into T-Locks to hedge our 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, we 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. We did not have
outstanding T-Locks as of December 31, 2022 and December 31, 2021.
The derivative instruments designated as cash flow hedges included
in AOCL as of December 31, 2022 and 2021, are reflected below:
GAINS (LOSSES) INCLUDED IN
AOCL AS OF DECEMBER 31,
Derivatives in Cash Flow Hedging Relationships
(in millions)
Commodity contracts, net of income tax effect
of $3 and $19, respectively
Foreign currency contracts, net of income tax
effect of $—
Interest rate contracts, net of income tax effect
of $1
Total
2022
$8
1
(3)
$6
2021
$51
—
(3)
$48
The fair value and balance sheet location of our derivative
instruments, presented gross in the Consolidated Balance Sheets,
are reflected below:
Balance Sheet
Location
Accounts
receivable, net
Other assets
Assets
Accounts payable
and accrued
liabilities
Non-current
liabilities
Liabilities
Net Assets/
(Liabilities)
FAIR VALUE OF HEDGING INSTRUMENTS AS OF DECEMBER 31, 2022
DESIGNATED HEDGING
INSTRUMENTS (IN MILLIONS)
NON-DESIGNATED HEDGING
INSTRUMENTS (IN MILLIONS)
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
$28
$20 $48
$—
1
29
22
3
25
$4
6
26
23
9
32
7
55
45
12
57
—
—
1
—
1
$5
—
5
6
—
6
$5
—
5
7
—
7
$(6)
$(2)
$(1)
$(1)
$(2)
37
2022 INGREDION ANNUAL REPORT FAIR VALUE OF HEDGING INSTRUMENTS AS OF DECEMBER 31, 2021
DESIGNATED HEDGING
INSTRUMENTS (IN MILLIONS)
NON-DESIGNATED HEDGING
INSTRUMENTS (IN MILLIONS)
Balance Sheet
Location
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
Accounts
receivable, net
Other assets
Assets
Accounts
payable and
accrued
liabilities
Non-current
liabilities
Liabilities
Net Assets/
(Liabilities)
$45
$9
$54
7
52
5
2
7
6
15
12
6
18
13
67
17
8
25
$45
$(3)
$42
$4
—
4
2
—
2
$2
$3
$7
0
3
4
1
5
0
7
6
1
7
$(2)
$—
Additional information relating to Ingredion’s derivative instruments
is presented below:
GAINS (LOSSES)
RECOGNIZED IN OCL ON
DERIVATIVES
GAINS (LOSSES)
RECLASSIFIED FROM
AOCL INTO INCOME
Derivatives in
Cash Flow Hedging
Relationships
(in millions)
2022
2021
2020
Commodity
contracts
$202
$218
$17
Foreign currency
contracts
Interest rate
contracts
Total
8
—
—
—
$210
$218
(7)
(5)
$5
INCOME
STATEMENT
LOCATION
Cost of
sales
Net
sales/
Cost of
sales
Financing
costs
2022
2021
2020
$261
$211
$(62)
7
—
(1)
(1)
(2)
(1)
$268
$209
$(65)
Derivatives in
Fair Value
Hedging
Relationships
(in millions)
INCOME
STATEMENT
LOCATION OF
DERIVATIVES
DESIGNATED
AS HEDGING
INSTRUMENTS
Interest rate
contracts
Financing
costs
GAINS (LOSSES)
RECOGNIZED IN
INCOME
2022 2021
2020
$— $— $(1)
INCOME
STATEMENT
LOCATION
OF HEDGED
ITEMS
Financing
costs
GAINS (LOSSES)
RECOGNIZED IN
INCOME
2022 2021
2020
$— $—
$1
As of December 31, 2022, AOCL included $14 million of net gains
(net of income taxes of $5 million) on commodities-related
derivative instruments, T-Locks and foreign currency hedges
designated as cash flow hedges that are expected to be reclassified
into earnings during the next 12 months.
NOTE 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
38
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 DECEMBER 31, 2022
AS OF DECEMBER 31, 2021
(in millions)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
$3
60
64
$3
49
51
Marketable
Securities
Derivative
assets
Derivative
liabilities
Long-term
debt
$—
$—
$12
$12
$—
$—
11
13
—
—
74
32
49
22
25
10
—
—
—
1,733
— 1,733
— 1,957
— 1,957
The carrying values of cash equivalents, short-term investments,
accounts receivable, accounts payable and short-term borrowings
approximate fair values. Commodity futures, options and swaps
contracts are recognized at fair value. Foreign currency forward
contracts, swaps and options are also recognized at fair value. The
fair value of our Long-term debt is estimated based on quotations
of major securities dealers who are market makers in the securities.
See Note 11 for information on the fair value of pension plan assets.
NOTE 8 – Financing Arrangements
We had total debt outstanding of approximately $2.5 billion and
$2.0 billion at December 31, 2022 and 2021, respectively. Short-term
borrowings at December 31, 2022, consisted primarily of commercial
paper borrowings and amounts outstanding under various
unsecured local country operating lines of credit.
On December 16, 2022, we entered into a new two-year, senior,
unsecured $200 million term loan, which bears interest, payable
quarterly in arrears, at a variable annual rate based on an adjusted
daily Secured Overnight Financing Rate (“SOFR”) plus a margin of
1.10 percent per annum. The term loan will mature and all principal
thereunder will be payable on December 16, 2024. The term loan
agreement contains customary affirmative and negative covenants
that, among other matters, specify customary reporting obligations,
and that, subject to exceptions, restrict the incurrence of additional
indebtedness by our subsidiaries, the incurrence of liens and the
consummation of certain mergers, consolidations and sales of
assets. We are subject to compliance, as of the end of each quarter,
with a maximum leverage ratio of 3.5 to 1.0 and a minimum ratio of
consolidated EBITDA to consolidated net interest expense of 3.5 to
1.0, with each financial covenant calculated for the most recently
completed four-quarter period. We were in compliance with all of
our debt covenants as of December 31, 2022.
On November 30, 2022, we amended our existing revolving credit
agreement. The amendment changed the applicable interest
rate calculation under our revolving credit facility to either a
specified SOFR plus an applicable margin, or a base rate (generally
determined according to the highest of the prime rate, the
federal funds rate or the specified SOFR plus 1.00 percent) plus
an applicable margin. The revolving credit agreement previously
referenced London Interbank Offering Rate (“LIBOR”) instead of
SOFR for applicable interest calculations under the facility. As of
December 31, 2022 and December 31, 2021, borrowings of $— and
$—, respectively, were outstanding under the $1 billion facility.
On July 27, 2021, we established a commercial paper program under
which we may issue senior unsecured notes of short maturities up to a
maximum aggregate principal amount of $1 billion outstanding at any
time. The notes may be sold from time to time on customary terms in
the U.S. commercial paper market. We use the note proceeds for general
corporate purposes. From the inception of the program until December
31, 2021, the average amount of commercial paper outstanding was
$670 million with an average interest rate of 0.27 percent and a weighted
average maturity of 48 days. As of December 31, 2021, $250 million of
commercial paper was outstanding with an average interest rate of 0.35
percent and a weighted average maturity of 48 days. During 2022, the
average amount of commercial paper outstanding was $522 million with
an average interest rate of 1.97 percent and a weighted average maturity
of 16 days. As of December 31, 2022, $390 million of commercial paper
was outstanding with an average interest rate of 4.75 percent and a
weighted average maturity of 7 days. The amount of commercial paper
outstanding under this program in 2023 is expected to fluctuate.
Presented below are our debt carrying amounts, net of related
discounts, premiums and debt issuance costs and fair values as of
December 31, 2022 and 2021:
We guarantee certain obligations of our consolidated subsidiaries,
which aggregated $63 million and $61 million at December 31, 2022
and 2021, respectively.
NOTE 9 – Leases
The components of lease expense for the indicated periods were as
follows:
(in millions)
Operating lease cost
Variable operating lease cost
Short term lease cost
Lease expense
2022
$59
27
3
$89
2021
$58
26
4
$88
2020
$58
29
4
$91
We currently have no finance leases. The following is a reconciliation
of future undiscounted cash flows to the operating lease liabilities
and the related operating lease assets as presented within Other
non-current liabilities and Other assets, respectively, on our
Consolidated Balance Sheets as of December 31, 2022 ($ in millions):
2023
2024
2025
2026
2027
Thereafter
Total future lease payments
Less imputed interest
Present value of future lease payments
Less current lease liabilities
Non-current operating lease liabilities
Operating lease assets
$54
44
34
28
17
37
214
20
194
48
$146
$187
Additional information related to our operating leases is listed below.
2022
2021
Other Information
YEAR ENDED DECEMBER 31,
CARRYING
VALUE
FAIR
VALUE
CARRYING
VALUE
FAIR
VALUE
($ in millions)
2022
2021
$595
$510
$595
$619
Cash paid for amounts included in the measurement
of lease liabilities:
(in millions)
2.900% senior notes due
June 1, 2030
3.200% senior notes due
October 1, 2026
3.900% senior notes due
June 1, 2050
6.625% senior notes due
April 15, 2037
Term loan credit agreement due
December 16, 2024
Revolving credit agreement
Other long-term borrowings
498
470
390
293
253
256
200
200
—
4
—
4
498
390
253
—
—
2
531
455
350
—
—
2
Total long-term debt
1,940
1,733
1,738
1,957
Commercial paper
Other short-term borrowings
Total short-term borrowings
390
153
543
390
153
543
250
58
308
250
58
308
Total debt
$2,483
$2,276
$2,046
$2,265
Operating cash flows from operating leases
$60
$58
Right-of-use assets obtained in exchange for
lease liabilities:
Operating leases
$52
$77
AS OF
DECEMBER 31, 2022
AS OF
DECEMBER 31, 2021
Weighted average remaining lease term:
Operating leases
5.9 years
6.5 years
Weighted average discount rate:
Operating leases
4.4%
4.0%
39
2022 INGREDION ANNUAL REPORT NOTE 10 – Income Taxes
The components of income before income taxes and the provision
for income taxes for the years indicated are shown below:
(in millions)
2022
2021
2020
Income before income taxes:
U.S.
Foreign
Total income before income taxes
Provision for income taxes:
Current tax expense:
U.S. federal
State and local
Foreign
Total current tax expense
Deferred tax expense (benefit):
U.S. federal
State and local
Foreign
Total deferred tax (benefit)
$111
557
668
8
2
159
169
5
(1)
(7)
(3)
Total provision for income taxes
$166
$39
209
248
2
2
180
184
(57)
(2)
(2)
(61)
$123
$(15)
521
506
1
2
156
159
(18)
(1)
12
(7)
$152
Deferred income taxes are provided for the tax effects of temporary
differences between the financial reporting basis and tax basis
of assets and liabilities. Significant temporary differences as of
December 31, 2022 and 2021, are summarized as follows:
(in millions)
Deferred tax assets attributable to:
Employee benefit accruals
Pensions and postretirement plans
Lease liabilities
Bad debt
Inventory reserve
Net operating loss carryforwards
Tax credit carryforwards
Other
Total deferred tax assets
Valuation allowances
Net deferred tax assets
Deferred tax liabilities attributable to:
Property, plant and equipment
Identified intangibles
Right-of-use lease assets
Foreign withholding and state taxes on unremitted
earnings
Goodwill
Brazilian indirect tax credits
Derivative contracts
Total deferred tax liabilities
Net deferred tax liabilities
40
2022
2021
$30
$28
14
49
6
22
59
5
42
227
(51)
176
175
48
46
1
31
4
3
308
$132
14
49
14
13
64
18
36
236
(67)
169
175
47
46
1
27
5
19
320
$151
Of the $59 million of tax-effected net operating loss carryforwards as
of December 31, 2022, $4 million and $15 million are for U.S. federal
and state loss carryforwards, respectively, and $40 million are for
foreign loss carryforwards. U.S. federal and state loss carryforwards
have various expiration periods starting in 2025. Of the $40 million
of foreign loss carryforwards, $19 million are related to Canada,
$7 million to Argentina and $7 million to Australia with carryforward
periods of 20 years, 5 years and indefinitely, respectively.
A valuation allowance is established when it is more likely than not
that all or a portion of a deferred tax asset will not be realized. Prior
to establishing a valuation allowance, we consider historical taxable
income, scheduled reversal of deferred tax liabilities, tax planning
strategies, tax carryovers and projected future taxable income.
As of December 31, 2022, we maintained valuation allowances of
$51 million, consisting of $26 million primarily related to foreign loss
carryforwards, $15 million for state loss carryforwards, $5 million
for state credits and carryforwards, $4 million for U.S. federal loss
carryforwards and $1 million for certain foreign tax credits, all of
which we have determined will more likely than not expire prior to
realization.
Net operating loss carryforwards disclosed in the financial
statements differ from the as-filed tax returns due to an
unrecognized tax benefit. Foreign net operating loss carryforwards
and valuation allowances would increase $10 million, absent the
unrecognized tax benefit.
A reconciliation of the U.S. federal statutory tax rate to our effective
tax rate follows:
Provision for tax at U.S. statutory rate
21.0% 21.0%
21.0%
2022
2021
2020
Tax rate difference on foreign income
Foreign currency FX
Inflation adjustments
Tax benefit of intercompany financing
U.S. international tax implications
Valuation allowance in Argentina
Favorable judgment on the treatment of
credits and interest on indirect taxes
Unremitted earnings
Impairment charge related to Argentina
joint venture
Foreign-derived intangible income (FDII)
Brazil exclusion of certain tax incentives
7.2
(0.3)
(0.6)
(0.4)
2.2
—
13.3
3.2
(4.0)
(1.6)
0.8
(0.4)
(0.3)
(4.8)
—
—
(1.0)
(4.0)
(12.1)
35.5
—
—
9.1
1.2
(0.8)
(0.8)
0.6
(0.6)
(0.6)
—
—
—
—
Other items, net
1.1
(1.3)
0.9
Provision at effective tax rate
24.9% 49.6%
30.0%
We have significant operations in Mexico, Pakistan and Colombia,
where the 2022 statutory tax rates are 30 percent, 33 percent
(excluding a 4 percent surcharge) and 35 percent, respectively.
In addition, our subsidiary in Brazil has a statutory tax rate of 34
percent before the application of local incentives that vary each year.
During 2022, the U.S. Treasury published final foreign tax credit
regulations that limit our ability to claim foreign tax credits from
certain countries, primarily in South America, and we recorded the
resulting tax liability to our Consolidated Balance Sheets.
During 2022, Ingredion Brazil recorded a tax benefit related to the
exclusion of certain tax incentives provided by the local government
from taxable income for fiscal years 2018 through 2022. This resulted
in a tax benefit of $27 million, or 4.0 percentage points on the
effective tax rate. This transaction is more fully discussed in Note 14
Commitments and Contingencies.
As of December 31, 2022, we have a $1 million accrual for
foreign withholding on certain unremitted earnings from foreign
subsidiaries. No foreign withholding taxes, federal and state taxes or
foreign currency gains/losses have been provided on distributions
of approximately $2.4 billion of unremitted earnings of our
foreign subsidiaries, as such amounts are considered permanently
reinvested. It is not practicable to estimate the additional income
taxes, including applicable foreign withholding taxes that would be
due upon the repatriation of these earnings.
A reconciliation of the beginning and ending amounts of
unrecognized tax benefits, excluding interest and penalties, for 2022
and 2021 is as follows:
(in millions)
Balance at January 1
Additions for tax positions related to prior years
Reductions for tax positions related to prior years
Additions based on tax positions related to the current year
Reductions related to a lapse in the statute of limitations
Balance at December 31
2022
$29
5
(1)
1
(4)
$30
2021
$46
2
(9)
2
(12)
$29
Of the $30 million of unrecognized tax benefits as of December 31,
2022, $19 million represents the amount that, if recognized, could
affect the effective tax rate in future periods. The remaining $11
million includes $10 million of net operating loss carryforwards that
would have otherwise had a valuation allowance and $1 million of
U.S. federal benefits.
We account for interest and penalties related to income tax matters
within the provision for income taxes. We have accrued $5 million
of interest expense and penalties related to the unrecognized tax
benefits as of December 31, 2022.
We are subject to U.S. federal income tax as well as income tax
in multiple states and non-U.S. jurisdictions. The U.S. federal tax
returns are subject to audit for the years 2019 through 2022. In
general, our foreign subsidiaries remain subject to audit for years
2010 and later.
It is reasonably possible that the total amount of unrecognized tax
benefits including interest and penalties will increase or decrease
within twelve months of December 31, 2022. We believe it is
reasonably possible that none of the unrecognized tax benefits may
be recognized within twelve months of December 31, 2022, as a
result of a lapse of the statute of limitations. We have classified none
of the unrecognized tax benefits as current because they are not
expected to be resolved within the next twelve months.
NOTE 11 – Pension and Other Postretirement
Benefits
We sponsor noncontributory defined benefit pension plans (qualified
and non-qualified) covering a substantial portion of our employees
in the U.S. and Canada and certain employees in other foreign
countries. Plans for most salaried employees provide pay-related
benefits based on years of service. Plans for hourly employees
generally provide benefits based on flat dollar amounts and years
of service. Our general funding policy is to make contributions to
the plans that comply with minimum funding requirements and
are within the limits of deductibility under current tax regulations.
Certain foreign countries allow income tax deductions without
regard to contribution levels and our policy in those countries is to
make contributions required by the terms of the applicable plan.
Included in our pension obligation are nonqualified supplemental
retirement plans for certain key employees. Benefits provided
under these plans are unfunded and we make direct payments to
plan participants. We also provide healthcare and/or life insurance
benefits for retired employees in the U.S., Canada and Brazil.
Healthcare benefits for retirees outside the U.S., Canada and Brazil
are generally covered through local government plans.
Pension Plans
Pension obligation and funded status
The changes in pension benefit obligations and plan assets during
2022 and 2021, as well as the funded status and the amounts
recognized in our Consolidated Balance Sheets related to our
pension plans at December 31, 2022 and 2021, were as follows:
(in millions)
Benefit obligation
At January 1
Service cost
Interest cost
Benefits paid
Actuarial (gain) loss
Curtailment/settlement/amendments
Foreign currency translation
U.S. PLANS
NON-U.S. PLANS
2022
2021
2022
2021
$383
$409
$254
$275
4
9
(25)
(71)
—
—
4
8
(24)
(14)
—
—
3
9
(13)
(49)
(2)
(14)
4
9
(13)
(15)
(1)
(5)
Benefit obligation at December 31
$300
$383
$188
$254
Fair value of plan assets
At January 1
Actual return on plan assets
Employer contributions
Benefits paid
Plan settlements
Foreign currency translation
$420
(79)
1
(25)
—
—
$439
$244
$249
4
1
(24)
—
—
(30)
5
(13)
(2)
(15)
Fair value of plan assets at December 31
$317
$420
$189
Funded status
$17
$37
$1
3
7
(13)
(1)
(1)
$244
$(10)
41
2022 INGREDION ANNUAL REPORT
As of December 31, 2022, the decrease in the benefit obligation
for U.S. and non-U.S. plans was primarily driven by actuarial gains,
which mainly resulted from an increase in discount rates compared
to the prior year. As of December 31, 2021, the decrease in the
benefit obligation for U.S. and non-U.S. plans was primarily driven by
actuarial gains, which mainly resulted from an increase in discount
rates due to an increase in bond yields compared to the prior year.
Amounts recorded in the Consolidated Balance Sheets as of
December 31, 2022 and 2021 were as follows:
(in millions)
Non-current asset
Current liabilities
Non-current liabilities
Net asset (liability) recognized
U.S. PLANS
NON-U.S. PLANS
2022
$25
(1)
(7)
$17
2021
2022
$47
(1)
(9)
$37
$43
(1)
(41)
$1
2021
$44
(1)
(53)
$(10)
Amounts recorded in AOCL, excluding tax effects that have not
yet been recognized as components of net periodic benefit cost at
December 31, 2022 and 2021, were as follows:
(in millions)
Net actuarial loss
Transition obligation
Prior service (credit) cost
Net amount recognized
2022
$36
—
(3)
$33
2021
2022
$11
—
(4)
$7
$24
—
—
$24
2021
$38
—
—
$38
The amount recognized in AOCL at December 31, 2022 increased
compared to prior year for the U.S. pension plans mainly due to the
actual return on assets being less than the expected return on assets,
which was partially offset by the increase in discount rates used to
measure our obligations under our U.S. pension. The decrease in the
net amount recognized in AOCL at December 31, 2022 for the non-
U.S. pension plans as compared to December 31, 2021 was primarily
due to higher discount rates used to measure our obligations.
The accumulated benefit obligation for all defined benefit pension
plans was $469 million and $619 million at December 31, 2022 and
2021, respectively. Information for pension plans with a projected
benefit obligation in excess of plan assets and an accumulated
benefit obligation in excess of plan assets was as follows:
Components of net periodic benefit cost consist of the following for
2022, 2021 and 2020:
(in millions)
Service cost
Interest cost
U.S. PLANS
NON-U.S. PLANS
2022
2021
2020
2022
2021
2020
$4
9
$4
8
$5
11
$3
9
(7)
1
—
$6
$4
9
(8)
2
—
$7
$4
10
(8)
2
—
$8
Expected return on plan assets
(16)
(17)
(21)
Amortization of actuarial loss
Amortization of prior service credit
—
(1)
—
(1)
—
(1)
Net periodic benefit cost
$(4)
$(6)
$(6)
$1
—
(2)
—
—
(1)
8
Total amounts recorded in other comprehensive income and net
periodic benefit cost were as follows:
(in millions, pre-tax)
2022
2021
2020
2022
2021
2020
U.S. PLANS
NON-U.S. PLANS
Net actuarial (gain) loss
$25
$(1)
$(3)
$(11)
$(11)
Prior service cost
Amortization of actuarial loss
Foreign currency translation
Total recorded in other
comprehensive income
—
—
1
—
26
—
—
1
—
—
—
—
1
—
—
(1)
—
(2)
—
(2)
—
(11)
(2)
(14)
(24)
Net periodic benefit cost
(4)
(6)
(6)
6
7
Total recorded in other
comprehensive income and
net periodic benefit cost
$22
$(6)
$(8)
$(8)
$(17)
$7
The following weighted average assumptions were used to
determine our obligations for the pension plans for the given years:
Discount rate
Rate of compensation increase
Cash balance interest credit rate
U.S. PLANS
NON-U.S. PLANS
2022
2021
2022
2021
5.19% 2.91% 5.66% 3.47%
3.92
4.21
4.18
4.11
3.83
—
3.67
—
The following weighted average assumptions were used to
determine our net periodic benefit cost for the pension plans for the
given years:
U.S. PLANS
NON-U.S. PLANS
Amortization of prior service credit
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2022
$(8)
(8)
—
U.S. PLANS
NON-U.S. PLANS
2021
2022
$(10)
$(45)
2021
$(57)
U.S. PLANS
NON-U.S. PLANS
2022
2021
2020
2022
2021
2020
(9)
—
(35)
3
(48)
Discount rate
2.91% 2.58% 3.34% 3.66% 2.84% 3.55%
3
Expected long-term return
on plan assets
4.10
4.10
5.30
3.50
3.37
3.81
Rate of compensation
increase
Cash balance interest
crediting rate
4.18
4.26
4.21
3.77
3.54
3.68
4.11
3.76
4.16
—
—
—
42
For 2022, we assumed an expected long-term rate of return
on assets of 4.10 percent for U.S. plans and 3.06 percent for
Canadian plans. In developing the expected long-term rate of
return assumption on plan assets, which consist mainly of U.S. and
Canadian debt and equity securities, we evaluated historical rates of
return achieved on plan assets and the asset allocation of the plans,
input from our independent actuaries and investment consultants,
and historical trends in long-term inflation rates. Projected return
estimates are based upon broad equity and bond indices.
The discount rate reflects a rate of return on high-quality fixed
income investments that match the duration of the expected benefit
payments. We typically use returns on long-term, high-quality
corporate AA bonds as a benchmark in establishing this assumption,
and we elect to use a full yield curve approach to estimate these
components of benefit cost by applying the specific spot rates along
the yield curve used to determine the benefit obligation to the
relevant projected cash flows.
Plan assets
Our investment policy for our pension plans is to balance risk and
return through diversified portfolios of fixed income securities,
equity instruments and short-term investments. Maturities for fixed
income securities are managed such that sufficient liquidity exists to
meet near-term benefit payment obligations. For U.S. pension plans,
the weighted average target range allocation of assets was 9 to 19
percent in equities and 81 to 91 percent in fixed income inclusive
of other short-term investments. The asset allocation is reviewed
regularly, and portfolio investments are rebalanced to the targeted
allocation when considered appropriate.
Our weighted average asset allocations as of December 31, 2022 and
2021, for U.S. and non-U.S. pension plan assets are as follows:
The fair values of our plan assets by asset category are as follows:
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2022
NAV
LEVEL 1
LEVEL 2
TOTAL
2022
2021
2022
2021
2022
2021
2022
2021
(in millions)
U.S. Plans:
Equity index:
U.S.(a)
$— $— $— $— $22
$37
$22
International(b)
—
—
—
—
14
22
14
$37
22
Fixed income index:
Long bond(c)
Long government
bond(d)
Other fixed
income(e)
Cash & Short-term
Investments(f)
—
—
—
—
59
69
—
—
—
—
—
—
—
—
—
—
127
179
127
179
89
109
89
109
—
6
—
4
59
69
6
4
Total U.S. Plans
$59
$69
$— $— $258
$351
$317 $420
Non-U.S. Plans:
Equity index:
U.S.(a)
$— $— $— $—
International(b)
—
—
—
—
$9
6
$26
17
$9
6
$26
17
Fixed income index:
Short bond(g)
Intermediate
bond(h)
Long bond(i)
Other(j)
Cash & Short-term
Investments(f)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
$2
—
—
—
—
8
25
34
25
34
51
69
22
45
93
21
51
69
22
45
93
21
5
—
7
8
$8
$187
$236
$189 $244
U.S. PLANS
NON-U.S. PLANS
Total Non-U.S. Plans
$— $—
Asset Category
Equity securities
Debt securities
Cash and other
Total
2022
11%
87
2
2021
14%
85
1
2022
8%
77
15
2021
18%
57
25
100% 100% 100% 100%
With the exception of cash, which is considered Level 1 in the
fair value hierarchy, all significant pension plan assets are held
in collective trusts by our U.S. and non-U.S. plans. The fair value
of shares of collective trusts are based upon the net asset value
(“NAV”) of the fund reported by the fund managers based on quoted
market prices of the underlying securities as of the balance sheet
date and are considered to be Level 2 fair value measurements.
Investments measured at NAV, as a practical expedient for fair value,
are excluded from the fair value hierarchy. This may produce a fair
value measurement that may not be indicative of net realizable
value or reflective of future fair values. Furthermore, while we
believe our valuation methods are appropriate and consistent
with those of other market participants, the use of different
methodologies could result in different fair value measurements at
the reporting date.
(a) This category consists of both passively and actively managed equity index funds that
track the return of large capitalization U.S. equities.
(b) This category consists of both passively and actively managed equity index funds that
track an index of returns on international developed market equities.
(c) This category consists of an actively managed fixed income index fund that invests in
a diversified portfolio of fixed-income corporate securities with maturities generally
exceeding 10 years.
(d) This category consists of an actively managed fixed income index fund that invests
in a diversified portfolio of fixed-income U.S. treasury securities with maturities
generally exceeding 10 years.
(e) This category consists of an actively managed common collective fund that invests
in government bonds, collateralized mortgage obligations, investment grade
private credit and real estate debt. This fund is priced monthly at the aggregated
market value of the underlying investments and can be fully redeemed with 95 days
notification.
(f) This category represents cash, cash equivalents, or highly liquid short-term
investments.
(g) This category consists of both passively and actively managed fixed income index
funds that track the return of short-duration government and investment grade
corporate bonds.
(h) This category consists of both passively and actively managed fixed income index
funds that track the return of intermediate duration government and investment
grade corporate bonds.
(i) This category consists of both passively and actively managed fixed income
index funds that track the return of government bonds and investment grade
corporate bonds.
(j) This category mainly consists of investment products provided by insurance companies
that offer returns that are subject to a minimum guarantee and mutual funds.
During 2022, we made cash contributions of $1 million and
$5 million to our U.S. and non-U.S. pension plans, respectively.
43
2022 INGREDION ANNUAL REPORT
Ingredion anticipates that in 2023 we will make cash contributions
of $1 million and $3 million to our U.S. and non-U.S. pension plans,
respectively. Cash contributions in subsequent years will depend on
a number of factors, including the performance of plan assets.
The following benefit payments to beneficiaries, which reflect
anticipated future service, as appropriate, are expected to be made
in the following years:
(in millions)
U.S. PLANS
NON-U.S. PLANS
2023
2024
2025
2026
2027
Years 2028–2032
26
25
25
25
26
115
14
13
13
13
14
78
We also maintain defined contribution plans. We make matching
contributions to these plans that are subject to certain vesting
requirements and are based on a percentage of employee
contributions. Amounts charged to expense for defined contribution
plans totaled $22 million for each of 2022, 2021 and 2020.
Postretirement Benefit Plans
Our postretirement benefit plans currently are not funded. The
information presented below includes plans in the U.S., Brazil and
Canada. The changes in the benefit obligations of the plans during
2022 and 2021, as well as the amounts recognized in our Consolidated
Balance Sheets at December 31, 2022 and 2021, are as follows:
Amounts recorded in the Consolidated Balance Sheets at
December 31, 2022 and 2021 consist of:
(in millions)
Current liabilities
Non-current liabilities
Net liability recognized
2022
$(5)
(53)
2021
$(4)
(61)
$(58)
$(65)
Amounts recorded in AOCL, excluding tax effects that have not
yet been recognized as components of net periodic benefit cost at
December 31, 2022 and 2021 were as follows:
(in millions)
Net actuarial loss
Prior service cost
Net amount recognized
2022
2021
$1
5
$6
$8
5
$13
Components of net periodic benefit cost consisted of the following
for 2022, 2021 and 2020:
(in millions)
Service cost
Interest cost
Amortization of actuarial loss
Amortization of prior service credit
Net periodic benefit cost
2022
2021
2020
$1
3
—
—
$4
$1
2
1
(2)
$2
(in millions)
Accumulated postretirement benefit obligation
2022
2021
Total amounts recorded in other comprehensive income and net
periodic benefit cost for 2022, 2021 and 2020 was as follows:
At January 1
Service cost
Interest cost
Amendments
Actuarial (gain) loss
Benefits paid
Foreign currency translation
At December 31
Fair value of plan assets
Funded status
$65
$68
(in millions, pre-tax)
1
3
—
(7)
(4)
—
58
—
1
2
4
(5)
(4)
(1)
65
—
$(58)
$(65)
Net actuarial loss (gain)
Prior service cost
Amortization of prior service credit
Amortization of actuarial loss
Foreign currency translation
Total recorded in other comprehensive income
Net periodic benefit cost
2022
$(7)
—
—
—
—
(7)
4
2021
$(5)
4
2
(1)
(4)
(4)
2
Total recorded in other comprehensive income
and net periodic benefit cost
$(3)
$(2)
$—
3
1
(2)
$2
2020
$4
—
2
(1)
—
5
2
$7
As of December 31, 2022, the decrease in the postretirement
benefit obligation was mainly driven by higher discount rates. As
of December 31, 2021, the decrease in the postretirement benefit
obligation was mainly driven by higher actuarial gains, partially
offset by a $4 million amendment and favorable foreign currency
translation related to Ingredion’s Canada and Brazil postretirement
plans. The North Kansas City retiree medical group shifted from
a multi-employer plan to the Ingredion Post Retirement Medical
Health and Life Plan at the end of 2021, causing an increase to the
postretirement obligation of $4 million in 2021.
The following weighted average assumptions were used to determine
our obligations under the postretirement plans for 2022 and 2021:
Discount rate
2022
2021
7.30%
4.22%
The following weighted average assumptions were used to
determine our net postretirement benefit cost:
Discount rate
2022
2021
2020
4.22%
3.69%
4.42%
44
The discount rate reflects a rate of return on high-quality fixed-
income investments that match the duration of expected benefit
payments. We typically use returns on long-term, high-quality
corporate AA bonds as a benchmark in establishing this assumption.
The healthcare cost trend rates used in valuing our postretirement
benefit obligations are established based upon actual healthcare
trends and consultation with actuaries and benefit providers. The
following assumptions were used as of December 31, 2022:
2022 increase in per capita cost
Ultimate trend
Year ultimate trend reached
U.S.
CANADA
BRAZIL
6.82%
4.50%
2032
4.82%
4.05%
2040
8.68%
8.68%
2022
The following benefit payments to beneficiaries, which reflect
anticipated future service, as appropriate, are expected to be made
under Ingredion’s postretirement benefit plans:
(in millions)
2023
2024
2025
2026
2027
Years 2028–2032
Multi-employer Plan
$5
4
4
4
4
21
Ingredion participates in and contributes to one multi-employer
benefit plan under the terms of collective bargaining agreements
that cover certain union-represented employees and retirees in the
U.S. The plan covers medical and dental benefits for active hourly
employees and retirees represented by the United Steelworkers
Union for certain U.S. locations. The risks of participating in this
multi-employer plan are different from single-employer plans. This
plan receives contributions from two or more unrelated employers
pursuant to one or more collective bargaining agreements, and
the assets contributed by one employer may be used to fund the
benefits of all employees covered within the plan.
We are required to make contributions to this multi-employer
plan as determined by the terms and conditions of the collective
bargaining agreements and plan terms, but we do not provide more
than five percent of the total contributions to the plan. For 2022,
2021 and 2020, we made regular contributions of $10 million,
$14 million and $14 million, respectively, to the plan. We cannot
currently estimate the amount of multi-employer plan contributions
that will be required in 2023 and future years, but these contributions
could increase due to healthcare cost trends. As described above,
the North Kansas City retiree medical group shifted from a multi-
employer plan to the U.S. postretirement benefit plan at the end of
2021. The remaining collective bargaining agreements associated
with the multi-employer plan expire during 2023 through 2025.
NOTE 12 – Equity
Preferred stock
We have authorized 25 million shares of $0.01 par value preferred
stock, none of which were issued or outstanding at December 31,
2022 and 2021.
Treasury stock
On September 26, 2022, the Board of Directors terminated
the stock repurchase program it had previously authorized on
October 22, 2018, which permitted us to purchase up to 8 million
of our outstanding shares of common stock from November 5,
2018 through December 31, 2023. As of the date of termination, the
2018 repurchase program had approximately 3.8 million shares of
common stock remaining for repurchase.
On September 26, 2022, the Board of Directors contemporaneously
approved a new stock repurchase program to authorize us to
purchase up to 6 million shares of our outstanding common
stock from September 26, 2022 through December 31, 2025. We
may repurchase shares from time to time in the open market,
in privately negotiated transactions, or otherwise, at prices we
deem appropriate. We are not obligated to repurchase any shares
under the authorization, and the new repurchase program may be
suspended, discontinued or modified at any time, for any reason
and without notice. The parameters of our stock repurchase program
are not established solely with reference to the dilutive impact of
shares issued under our stock incentive plan. However, we expect
that, over time, share repurchases will offset the dilutive impact of
shares issued under the stock incentive plan.
During 2022, we repurchased 1,283 thousand shares of common
stock in open market transactions at a net cost of $112 million.
During 2021, we repurchased 765 thousand shares of common stock
in open market transactions at a net cost of $68 million.
Set forth below is a reconciliation of common stock share activity for
2022, 2021 and 2020:
(Shares of common stock,
in thousands)
Balance at December 31, 2019
Issuance of restricted stock units
as compensation
Performance shares and other
share-based awards
Stock options exercised
Purchase/acquisition of treasury
stock
ISSUED
77,811
HELD IN
TREASURY
OUTSTANDING
10,993
66,818
—
—
—
—
(69)
(5)
(124)
—
69
5
124
—
Balance at December 31, 2020
77,811
10,795
67,016
Issuance of restricted stock units
as compensation
Performance shares and other
share-based awards
Stock options exercised
Purchase/acquisition of treasury
stock
—
—
—
—
Balance at December 31, 2021
77,811
Issuance of restricted stock units
as compensation
Performance shares and other
share-based awards
Stock options exercised
Purchase/acquisition of treasury
stock
—
—
—
—
Balance at December 31, 2022
77,811
(69)
(6)
(331)
765
11,154
(95)
(43)
(182)
1,283
12,117
69
6
331
(765)
66,657
95
43
182
(1,283)
65,694
45
2022 INGREDION ANNUAL REPORT Share-based payments
The following table summarizes the components of our share-based
compensation expense for 2022, 2021 and 2020:
(in millions)
Stock options:
Pre-tax compensation expense
Income tax benefit
Stock option expense, net of income taxes
Restricted stock units (“RSUs”):
Pre-tax compensation expense
Income tax benefit
RSUs, net of income taxes
Performance shares and other share-based
awards:
Pre-tax compensation expense
Income tax benefit
Performance shares and other share-based
compensation expense, net of income taxes
Total share-based compensation:
Pre-tax compensation expense
Income tax benefit
Total share-based compensation expense, net
of income taxes
2022
2021
2020
$4
—
4
13
(1)
12
12
(1)
11
29
(2)
$27
$3
—
3
12
(1)
11
8
(1)
7
23
(2)
$21
$4
—
4
12
(1)
11
7
(1)
6
23
(2)
$21
We have a stock incentive plan (“SIP”) administered by the People,
Culture and Compensation Committee (“Compensation Committee”)
of our Board of Directors that provides for the granting of stock
options, restricted stock, restricted stock units and other share-based
awards to certain key employees. A maximum of 8 million shares
were originally authorized for awards under the SIP. On May 19,
2021, our stockholders approved an increase in the number of shares
then available under the SIP by 2.5 million shares. As of December 31,
2022, 3.1 million shares were available for future grants under the
SIP. Shares covered by awards that expire, terminate or lapse will
again be available for the grant of awards under the SIP.
Stock options
Under the SIP, stock options are granted at exercise prices that
equal the market value of the underlying common stock on the date
of grant. The options have a 10-year term and are exercisable upon
vesting, which occurs over a three-year period at the anniversary
dates of the date of grant.
We granted non-qualified options to purchase 281 thousand,
358 thousand and 336 thousand shares for 2022, 2021 and 2020,
respectively. The fair value of each option grant was estimated using
the Black-Scholes option-pricing model with the following assumptions:
The expected life of options represents the weighted average
period that we expect options granted to be outstanding giving
consideration to vesting schedules and our historical exercise
patterns. The risk-free interest rate is based on the U.S. Treasury
yield curve in effect at the grant date for the period corresponding
to the expected life of the options. Expected volatility is based on
historical volatilities of our common stock, and dividend yields are
based on our dividend yield at the date of issuance.
A summary of stock option transactions in 2022 is as follows:
WEIGHTED
AVERAGE
EXERCISE
PRICE PER
SHARE
NUMBER OF
OPTIONS
(in thousands)
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)
AGGREGATE
INTRINSIC
VALUE
(in millions)
2,154
$90.39
5.26
$26
281
(182)
(31)
88.66
61.90
103.55
2,222
$92.32
1,651
$93.79
5.16
4.03
$24
$18
Outstanding as of
December 31, 2021
Granted
Exercised
Cancelled
Outstanding as of
December 31, 2022
Exercisable as of
December 31, 2022
For 2022, 2021 and 2020, cash received from the exercise of stock
options was $11 million, $21 million and $6 million, respectively. As of
December 31, 2022, the unrecognized compensation cost related to
non-vested stock options totaled $3 million, which is expected to be
amortized over the weighted-average period of approximately 1.7 years.
Additional information pertaining to stock option activity is as follows:
YEAR ENDED DECEMBER 31,
(dollars in millions, except per share)
2022
2021
2020
Weighted average grant date fair value of
stock options granted (per share)
Total intrinsic value of stock options
exercised
$15.04
$12.31
$11.48
6
10
5
Restricted stock units
We have granted restricted stock units (“RSUs”) to certain key
employees. The RSUs are primarily subject to cliff vesting, generally
after three years, provided the employee remains in our service.
The fair value of the RSUs is determined based upon the number of
shares granted and the quoted market price of our common stock at
the grant date.
The following table summarizes RSU activity in 2022:
FOR THE YEAR ENDED DECEMBER 31,
(shares in thousands)
2022
5.5
2021
5.5
2.0%
0.6%
2020
5.5
1.4%
Non-vested at December 31, 2021
Granted
Vested
23.8%
23.2%
19.8%
Cancelled
2.9%
2.9%
2.9%
Non-vested at December 31, 2022
Expected life (in years)
Risk-free interest rate
Expected volatility
Expected dividend yield
46
NUMBER OF
RESTRICTED
SHARES
WEIGHTED
AVERAGE
FAIR VALUE
PER SHARE
486
213
(132)
(50)
517
$88.34
88.80
90.74
87.14
$88.04
The total fair value of RSUs that vested in 2022, 2021 and 2020 was
$12 million, $12 million and $17 million, respectively.
At December 31, 2022, the total remaining unrecognized compensation
cost related to RSUs was $17 million, which will be amortized on a
weighted-average basis over approximately 1.7 years. Recognized
compensation cost related to unvested RSUs is included in Share-
based payments subject to redemption in the Consolidated Balance
Sheets and totaled $28 million and $25 million at December 31, 2022
and 2021, respectively.
Performance shares
We have a long-term incentive plan for senior management in the
form of performance shares. The vesting of the performance shares
is generally based on two performance metrics. Fifty percent of the
performance shares awarded vest based on our total shareholder
return as compared to the total shareholder return of our peer group
and the remaining fifty percent vest based on the calculation of our
three-year average Adjusted Return on Invested Capital (“ROIC”)
against an established ROIC target. The 2021 performance shares
were granted in two tranches. Vesting for the first tranche was split
evenly between our total shareholder return and Adjusted ROIC
against the applicable target. The second tranche of performance
share awards vest 100 percent based on the calculation of Adjusted
ROIC against the applicable target.
For the 2022 performance shares awarded based on our total
shareholder return, the number of shares that ultimately vest can
range from zero to 200 percent of the grant depending on our total
shareholder return as compared to the total shareholder return
of our peer group. The share award vesting will be calculated at
the end of the three-year period and is subject to approval by
management and the Compensation Committee of the Board of
Directors. Compensation expense is based on the fair value of the
performance shares at the grant date, established using a Monte
Carlo simulation model. The total compensation expense for these
awards is amortized over a three-year graded vesting schedule.
For the 2022 performance shares awarded based on Adjusted ROIC,
the number of shares that ultimately vest can range from zero to 200
percent of the grant depending on our Adjusted ROIC performance
against the target. The share award vesting will be calculated at
the end of the three-year period and is subject to approval by
management and the Compensation Committee. Compensation
expense is based on the market price of our common stock on the
grant date and the final number of shares that ultimately vest. We
estimate the potential share vesting at least annually to adjust the
compensation expense for these awards over the vesting period to
reflect our estimated Adjusted ROIC performance against the target.
The total compensation expense for these awards is amortized over
a three-year graded vesting schedule.
We awarded 86 thousand, 108 thousand and 81 thousand
performance shares in 2022, 2021 and 2020, respectively. The
weighted average fair value of the shares granted during 2022, 2021
and 2020 was $138.85, $100.29 and $94.48, respectively.
The 2019 performance share awards that vested during 2022
achieved a zero percent payout of the granted performance shares.
As of December 31, 2022, the 2020 performance share awards are
estimated to pay out at 75 percent. Additionally, there were two
thousand shares cancelled during 2022.
As of December 31, 2022, the unrecognized compensation cost
relating to these plans was $8 million, which will be amortized over
the remaining requisite service periods of 1.7 years. Recognized
compensation cost related to these unvested awards is included in
Share-based payments subject to redemption in the Consolidated
Balance Sheets and totaled $20 million and $11 million at
December 31, 2022 and 2021, respectively.
Other share-based awards under the SIP
Under the compensation agreement with the Board of Directors,
$150,000 of a non-employee director’s annual retainer and 50
percent of the additional retainers paid to the lead director and the
chairs of committees of the Board of Directors are awarded in shares
of common stock or, if a director elects to defer all or a portion of
the director’s common stock or cash compensation, in shares of
restricted stock units. These restricted units may not be transferred
until a date not less than six months after the director’s termination
of service from the Board of Directors, at which time the restricted
units will be settled by delivering shares of common stock with
fractional shares to be paid in cash. The compensation expense
relating to this plan included in the Consolidated Statements
of Income was approximately $2 million in each of 2022, 2021,
and 2020. At December 31, 2022, there were approximately 230
thousand restricted stock units outstanding under this plan at a
carrying value of approximately $15 million.
Accumulated other comprehensive loss
A summary of accumulated other comprehensive income (loss) for
2022, 2021 and 2020, is presented below:
(in millions)
CUMULATIVE
TRANSLATION
ADJUSTMENT
HEDGING
ACTIVITIES
PENSION AND
POSTRETIREMENT
ADJUSTMENT
AOCL
Balance, December 31, 2019
$(1,089)
$(9)
$(60)
$(1,158)
Other comprehensive (loss)
income before reclassification
adjustments
Loss reclassified from
accumulated other
comprehensive loss
Tax (provision) benefit
Net other comprehensive
(loss) income
Balance, December 31, 2020
Other comprehensive (loss)
income before reclassification
adjustments
Loss (gain) reclassified
from accumulated other
comprehensive loss
Tax (provision)
Net other comprehensive
income
Other comprehensive (loss)
gain before reclassification
adjustments
(Gain) loss reclassified
from accumulated other
comprehensive loss
Tax benefit
Net other comprehensive
income
Balance, December 31, 2021
(903)
(25)
5
(2)
(22)
—
—
(25)
(1,114)
65
(19)
51
42
—
1
(1)
65
(18)
25
(61)
(1,133)
(100)
218
28
146
(209)
(3)
6
48
—
(9)
19
102
(12)
236
(42)
(897)
(105)
210
(5)
100
(268)
16
(42)
$6
—
1
(268)
17
(4)
(151)
$(46)
$(1,048)
47
311
—
211
—
—
(105)
Balance, December 31, 2022
$(1,008)
2022 INGREDION ANNUAL REPORT Supplemental information
The following table provides the computation of basic and diluted earnings per common share (“EPS”) for the periods presented.
(in millions)
Basic EPS
Effect of Dilutive Securities:
Incremental shares from assumed
exercise of dilutive stock options and
vesting of dilutive RSUs and other
awards
Diluted EPS
2022
2021
2020
NET INCOME
AVAILABLE TO
INGREDION
WEIGHTED
AVERAGE
SHARES
PER
SHARE
AMOUNT
NET INCOME
AVAILABLE TO
INGREDION
WEIGHTED
AVERAGE
SHARES
PER
SHARE
AMOUNT
NET INCOME
AVAILABLE TO
INGREDION
WEIGHTED
AVERAGE
SHARES
PER
SHARE
AMOUNT
$492
66.2
$7.43
$117
67.1
$1.74
$348
67.2
$5.18
0.8
67.0
$492
$7.34
$117
0.7
67.8
$1.73
$348
0.4
67.6
$5.15
Approximately 1.4 million, 0.9 million and 1.7 million share-based
awards of common stock were excluded for 2022, 2021 and 2020,
respectively, from the calculation of the weighted average number
of shares outstanding for diluted EPS because their effects were
anti-dilutive.
NOTE 13 – Information by Segment and
Geographic Region
We are principally engaged in the production and sale of starches
and sweeteners for a wide range of industries and we are managed
geographically on a regional basis. The nature, amount, timing and
uncertainty of our Net sales are managed by us primarily based on
our geographic segments, which we classify and report as North
America, South America, Asia-Pacific and EMEA. Our North America
segment includes businesses in the U.S., Mexico and Canada. Our
South America segment includes businesses and our share of
earnings from investments in joint ventures in Brazil, Argentina,
Chile, Colombia, Ecuador, Peru and Uruguay. Our Asia-Pacific segment
includes businesses in South Korea, Thailand, China, Australia, Japan,
New Zealand, Indonesia, Singapore, the Philippines, Malaysia, India
and Vietnam. Our EMEA segment includes businesses in Pakistan,
Germany, Poland, the United Kingdom and South Africa. Net sales by
product are not presented because to do so would be impracticable.
Presented below is our operating income by reportable segment for
the years indicated:
(in millions)
Operating income:
North America
South America
Asia-Pacific
EMEA
Corporate
Subtotal
Acquisition/integration costs
Restructuring/impairment charges
Impairment on disposition of assets
Other matters
Total operating income
2022
2021
2020
$565
$487
$487
169
93
110
138
87
106
112
80
102
(150)
(133)
(122)
787
(1)
(4)
—
(20)
$762
685
(3)
(47)
(340)
15
$310
659
(11)
(93)
—
27
$582
Presented below are our total assets by reportable segment as of
December 31, 2022 and 2021:
Presented below are Ingredion’s net sales to unaffiliated customers
by reportable segment for the years indicated:
(in millions)
Assets:
North America(a)
South America
Asia-Pacific
EMEA
Total assets
(a) For purposes of presentation, North America includes Corporate assets.
AS OF DECEMBER 31,
2022
2021
$4,499
$4,203
949
1,467
646
799
1,403
594
$7,561
$6,999
(in millions)
2022
2021
2020
Net sales to unaffiliated customers:
North America
South America
Asia-Pacific
EMEA
Total net sales
$4,934
$4,137
$3,662
1,124
1,107
781
1,057
997
703
919
813
593
$7,946
$6,894
$5,987
48
Presented below are our depreciation and amortization, mechanical
stores expense and capital expenditures and mechanical stores
purchases by reportable segment:
The following table presents long-lived assets (excluding intangible
assets and deferred income taxes) by country as of December 31,
2022 and 2021:
(in millions)
2022
2021
2020
Depreciation and amortization:
North America(a)
South America
Asia-Pacific
EMEA
Total
Mechanical stores expense(b):
North America(a)
South America
Asia-Pacific
EMEA
Total
Capital expenditures and mechanical stores
purchases:
North America(a)
South America
Asia-Pacific
EMEA
Total
$145
$146
$147
18
37
15
18
40
16
19
32
15
$215
$220
$213
$43
$43
$39
4
4
4
6
3
3
7
4
4
$55
$55
$54
$178
$166
$243
31
72
19
38
81
15
39
46
12
$300
$300
$340
(a) North America includes Corporate activities.
(b) Represents costs for spare parts used in the production process that are recorded
in PP&E as part of machinery and equipment until they are utilized in the
manufacturing process and expensed as a period cost.
The following table presents net sales to unaffiliated customers by
country of origin for the years indicated:
(in millions)
U.S.
Mexico
Brazil
Canada
Korea
Others
Total
NET SALES
2022
2021
2020
$2,978
$2,509
$2,284
1,444
1,170
720
512
356
586
459
323
1,936
1,847
984
447
393
268
1,611
$7,946
$6,894
$5,987
(in millions)
U.S.
Mexico
Canada
Brazil
Thailand
China
Germany
Others
Total
LONG-LIVED ASSETS
2022
2021
$1,289
$1,317
309
273
209
153
144
126
435
320
272
189
156
128
135
423
$2,938
$2,940
NOTE 14 – Commitments and Contingencies
In October 2022, the Brazilian Superior Court of Justice issued
a motion of clarification that certain tax incentives provided by
local governments can be excluded from taxable income. In the
fourth quarter of 2022, we filed an action for a right to recover
previously taxable, local government tax incentives granted
during fiscal years 2018 to 2022. As our recovery is probable, we
recorded a $27 million income tax benefit, which we expect to
recover within five years.
In 2020, our Brazilian subsidiary received a favorable decision from
the Federal Court of Appeals (“Lower Court”) in Sao Paulo, Brazil,
related to certain indirect taxes collected in prior years (referred
as “Brazil indirect tax matters” in these financial statements). The
Lower Court clarified the calculation of our benefit, allowing us
to claim gross treatment within the indirect tax claim calculation
and a larger indirect tax claim against the government. As a result
of the decision, we recorded a $35 million pre-tax benefit in the
Consolidated Income Statements in Other operating expense
(income) in 2020 related to the open period of 2005 to 2014.
In May 2021, the Brazilian Supreme Court (“Court”) issued its
ruling related to the calculation of certain indirect taxes, which
affirmed the Lower Court rulings that we had received in previous
years and affirmed that we are entitled to the previously recorded
tax credits. The Court ruling ensures that we will be entitled to
$15 million of additional credits from the period of 2015 to 2018
that was previously unrecorded pending a final Court ruling. We
recorded the $15 million of additional credits in 2021 within Other
operating expense (income) in the Consolidated Statements of
Income. As of December 31, 2022 and December 31, 2021, we had
$17 million and $41 million, respectively, of remaining indirect
tax credits recorded in Other assets and Prepaid expenses on our
Consolidated Balance Sheets. These credits resulted in $— and
$5 million of a deferred tax liability as of December 31, 2022
and December 31, 2021, respectively. We will use the income
tax offsets to eliminate our Brazilian federal tax payments in
2023 and future years, including the income tax payable for the
indirect taxes recovered.
49
2022 INGREDION ANNUAL REPORT
We are currently subject to claims and suits arising in the ordinary
course of business, including labor matters, certain environmental
proceedings and other commercial claims. We also routinely
receive inquiries from regulators and other government authorities
relating to various aspects of our business, including with respect to
compliance with laws and regulations relating to the environment,
and at any given time, we have matters at various stages of
resolution with the applicable governmental authorities. The
outcomes of these matters are not within our complete control and
may not be known for prolonged periods of time. We do not believe
that the results of currently known legal proceedings and inquires
will be material to us. There can be no assurance, however, that such
proceedings, matters, claims, suits or investigations or those arising
in the future, whether taken individually or in the aggregate, will not
have a material adverse effect on our financial condition or results of
operations.
We recorded capitalized interest to PP&E of $4 million, $4 million
and $7 million for 2022, 2021 and 2020, respectively. We recognized
depreciation expense of $189 million, $194 million and $183 million
in 2022, 2021 and 2020, respectively.
Accrued Liabilities
Accrued liabilities as of December 31, 2022 and 2021, consist of:
(in millions)
Compensation-related costs
Current lease liabilities
Dividends payable
Taxes payable other than income taxes
Other accrued liabilities
Total accrued liabilities
2022
$112
48
47
45
214
$466
2021
$105
47
44
44
190
$430
NOTE 15 – Supplementary Information
Accounts Receivable, Net
Accounts receivable, net as of December 31, 2022 and 2021, consist of:
There were no significant contract liabilities associated with our
customers as of December 31, 2022 and 2021. Liabilities for volume
discounts and incentives were also not significant as of December 31,
2022 and 2021.
(in millions)
Accounts receivable—trade
Accounts receivable—other
Allowance for credit losses
Total accounts receivable
2022
$1,200
228
(17)
2021
$950
193
(13)
Other Non-Current Liabilities
Other non-current liabilities as of December 31, 2022 and 2021,
consist of:
$1,411
$1,130
(in millions)
Write-offs of accounts receivable were immaterial in 2022 and 2021.
There were no significant contract assets associated with customers
as of December 31, 2022 or 2021.
Deferred tax liabilities
Non-current operating lease liabilities
Pension and postretirement liabilities
Other
2022
$145
146
101
85
2021
$165
154
123
82
Inventories
Inventories as of December 31, 2022 and 2021, consist of:
Supplemental Income Statements Information
Total other non-current liabilities
$477
$524
Research and Development (“R&D”) expense was approximately
$52 million in fiscal year 2022 and $43 million in fiscal years 2021
and 2020. Our R&D expense represents investments in new product
development and innovation. R&D expense is recorded within
Operating expenses in the Consolidated Statements of Income.
Supplemental Cash Flow Information
The following represents additional cash flow information for 2022,
2021 and 2020:
(in millions)
Interest paid
Income taxes paid
2022
$82
187
2021
$72
168
2020
$78
120
(in millions)
Finished and in process
Raw materials
Manufacturing supplies
Total inventories
PP&E
PP&E as of December 31, 2022 and 2021, consists of:
(in millions)
Land
Buildings
Machinery and equipment
Property, plant and equipment, at cost
Accumulated depreciation
Property, plant and equipment, net
50
2022
$962
539
96
2021
$688
380
104
$1,597
$1,172
2022
$199
854
4,680
5,733
2021
$206
812
4,637
5,655
(3,326)
(3,232)
$2,407
$2,423
Quarterly Financial Data (Unaudited)
ITEM 9A. Controls and Procedures
Earnings per share for each quarter and the year are calculated
individually and may not sum to the total for the respective year.
Summarized quarterly financial data is as follows:
(in millions, except per share
amounts)
1st QTR(b)
2nd QTR(c)
3rd QTR(d)
4th QTR(e)
2022
Net sales
Gross profit
Net income attributable to
Ingredion
Basic earnings per common
share of Ingredion
Diluted earnings per
common share of Ingredion
Per share dividends declared
$1,892
$2,044
$2,023
$1,987
379
130
1.94
390
142
2.14
374
106
1.61
351
114
1.73
1.92
$0.65
2.12
$0.65
1.59
$0.71
1.71
$0.71
(in millions, except per share
amounts)
1st QTR(f)
2nd QTR(g)
3rd QTR(h)
4th QTR(i)
2021
Net sales
Gross profit
Net income attributable to
Ingredion
Basic earnings per common
share of Ingredion
Diluted earnings per common
share of Ingredion
Per share dividends declared
$1,614
$1,762
$1,763
$1,755
351
(246)
367
178
323
290
118
67
(3.66)
2.65
1.76
1.00
(3.66)
$0.64
2.62
1.75
0.99
$0.64
$0.65
$0.65
(a) All items in the footnotes below are presented after-tax unless otherwise noted.
(b) In the first quarter of 2022, Ingredion recorded $2 million in net restructuring costs,
$1 million in acquisition/integration costs and $1 million benefit for tax matters.
(c) In the second quarter of 2022, Ingredion recorded $1 million in net restructuring
costs and $1 million benefit for tax matters.
(d) In the third quarter of 2022, Ingredion recorded $7 million in charges for other
matters and $2 million in charges for tax matters.
(e) In the fourth quarter of 2022, Ingredion recorded $16 million in benefit for tax
matters, $8 million in charges for other matters and $4 million in net acquisition/
integration costs.
(f) In the first quarter of 2021, Ingredion recorded $360 million in held for sale
impairment charges related to the Argentina joint venture with no income tax
benefit, $8 million in net restructuring costs, $3 million in charges for tax matters and
$1 million in acquisition/integration costs.
(g) In the second quarter of 2021, Ingredion recorded $32 million in benefit for tax
matters, $10 million in other matters income, $4 million in acquisition/integration
costs, $3 million in equity method acquisition benefits and $2 million in net
restructuring costs.
(h) In the third quarter of 2021, Ingredion recorded a $20 million favorable adjustment
to the impairment charges related to the Argentina joint venture with no income tax
expense, $7 million in net restructuring costs, $4 million in acquisition/integration costs
and $4 million in charges for tax matters.
(i) In the fourth quarter of 2021, Ingredion recorded $19 million in net restructuring and
impairment costs, $12 million in benefits for other matters, $5 million in benefits for
fair value adjustments to equity investments, $4 million in charges for tax matters
and $1 million in net acquisition/integration costs.
ITEM 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure
None.
Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and our
Chief Financial Officer, performed an evaluation of the effectiveness
of our disclosure controls and procedures as of December 31, 2022.
Based on that evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that, as of December 31, 2022, our
disclosure controls and procedures (a) are effective in providing
reasonable assurance that all information required to be disclosed
in the reports that we file or submit under the Securities Exchange
Act of 1934, as amended, has been recorded, processed, summarized
and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms and (b) are designed
to ensure that information required to be disclosed in the reports
we file or submit under the Securities Exchange Act of 1934, as
amended, is accumulated and communicated to our management,
including our principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over
Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. This system of internal
control is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our Consolidated
Financial Statements for external purposes in accordance with GAAP.
Internal control over financial reporting includes those policies and
processes that:
1. Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
our assets.
2. Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in
accordance with generally accepted accounting principles accepted
in the U.S., and that our receipts and expenditures are being made
only with proper authorizations of our management and directors.
3. Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management, under the supervision and with the participation
of our Chief Executive Officer and our Chief Financial Officer and
the oversight of the Board of Directors, conducted an evaluation
of the effectiveness of our internal control over financial reporting
as of December 31, 2022 based upon the framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework (2013).
The scope of the assessment included all of the subsidiaries of
Ingredion. Based on the evaluation, management concluded that
51
2022 INGREDION ANNUAL REPORT our internal control over financial reporting was effective as of
December 31, 2022. The effectiveness of our internal control over
financial reporting has been audited by KPMG LLP, an independent
registered public accounting firm, as stated in their report included
in the Consolidated Financial Statements filed with this report.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial
reporting that occurred during the quarter ended December 31, 2022
that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Under guidelines established by the U.S. Securities and Exchange
Commission, companies are allowed to exclude acquisitions from
their first assessment of internal control over financial reporting
following the date of the acquisition. Management’s evaluation of
internal control over financial reporting excluded the internal controls
of Amishi and Mannitab. Total assets and total net sales recorded
since the respective acquisition dates were each less than 1 percent
of Ingredion’s net sales and total assets, included in our Consolidated
Financial Statements as of and for the year ended December 31, 2022.
ITEM 9B. Other Information
None.
ITEM 9C. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
Not applicable.
PART III
ITEM 10. Directors, Executive Officers and
Corporate Governance
Information required by this Item 10 is incorporated herein by
reference to Ingredion’s definitive proxy statement for Ingredion’s
2023 Annual Meeting of Stockholders (the “Proxy Statement”),
including the information in the Proxy Statement appearing
under the headings “Proposal 1. Election of Directors,” “The Board
and Committees,” and “Delinquent Section 16(a) Reports.” The
information regarding executive officers required by Item 401 of
Regulation S-K is included in Part 1 of this report under the heading
“Information about our Executive Officers.”
Ingredion has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and controller. The
code of ethics is posted on Ingredion’s Internet website, which is
found at www.ingredion.com. Ingredion intends to disclose on its
website, within any period that may be required under SEC rules,
any amendments to, or waivers under, a provision of its code of
ethics that applies to Ingredion’s principal executive officer, principal
financial officer or controller that relates to any element of the code
of ethics definition enumerated in Item 406(b) of Regulation S-K.
ITEM 11. Executive Compensation
Information required by this Item 11 is incorporated herein by reference
to the Proxy Statement, including the information in the Proxy
Statement appearing under the headings “Executive Compensation,”
“Compensation Committee Report,” “Director Compensation” and
“Compensation Committee Interlocks and Insider Participation.”
ITEM 12. Security Ownership of Certain
Beneficial Owners and Management and Related
Stockholder Matters
Information required by this Item 12 is incorporated herein by
reference to the Proxy Statement, including the information
in the Proxy Statement appearing under the headings “Equity
Compensation Plan Information as of December 31, 2022” and
“Security Ownership of Certain Beneficial Owners and Management.”
ITEM 13. Certain Relationships and Related
Transactions and Director Independence
Information required by this Item 13 is incorporated herein by
reference to the Proxy Statement, including the information in the
Proxy Statement appearing under the headings “Review and Approval
of Transactions with Related Persons,” “Certain Relationships and
Related Transactions” and “Independence of Board Members.”
ITEM 14. Principal Accountant Fees and Services
Information required by this Item 14 is incorporated herein by
reference to the Proxy Statement, including the information in the
Proxy Statement appearing under the heading “2022 and 2021 Audit
Firm Fee Summary.”
52
PART IV
ITEM 15. Exhibits and Financial Statement
Schedules
Item 15(a)(1) Consolidated Financial Statements
Financial Statements (see the Index to the Consolidated Financial
Statements on page 26 of this report).
Item 15(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted because the
information either is not required or is otherwise included in the
Consolidated Financial Statements and notes thereto.
Item 15(a)(3) Exhibits
The following list of exhibits includes both exhibits submitted with
this Form 10-K as filed with the SEC and those incorporated by
reference from other filings.
Exhibit No.
Description
3.1
3.2
4.1
4.2
4.3
4.4
Amended and Restated Certificate of Incorporation
of Ingredion Incorporated (“Ingredion”), as
amended (incorporated by reference to Exhibit 3.1
to Ingredion’s Annual Report on Form 10-K for the
year ended December 31, 2019, filed on February 19,
2020) (File No. 1-13397).
Amended and Restated By-Laws of Ingredion.
Description of Ingredion’s Securities Registered
Pursuant to Section 12 of the Securities Exchange
Act of 1934 (incorporated by reference to Exhibit 4.1
to Ingredion’s Annual Report on Form 10-K for the
year ended December 31, 2019, filed on February 19,
2020) (File No. 1-13397).
Indenture dated as of August 18, 1999, between
Ingredion and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to
Ingredion’s Registration Statement on Form S-3,
filed on September 19, 2019) (File No. 333-233854).
Fourth Supplemental Indenture dated as of April 10,
2007, between Corn Products International, Inc.
and The Bank of New York Trust Company, N.A., as
Trustee (incorporated by reference to Exhibit 4.4 to
Ingredion’s Current Report on Form 8 K dated April 10,
2007, filed on April 10, 2007) (File No. 1-13397).
Seventh Supplemental Indenture, dated as of
September 17, 2010, between Corn Products
International, Inc. and The Bank of New York
Mellon Trust Company, N.A. (as successor trustee
to The Bank of New York), as Trustee (incorporated
by reference to Exhibit 4.3 to Ingredion’s Current
Report on Form 8-K dated September 14, 2010, filed
on September 20, 2010) (File No. 1-13397).
4.5
4.6
4.7
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
Ninth Supplemental Indenture, dated as of
September 22, 2016, between Ingredion and The
Bank of New York Mellon Trust Company, N.A. (as
successor trustee to The Bank of New York), as
Trustee (incorporated by reference to Exhibit 4.1
to Ingredion’s Current Report on Form 8-K dated
September 22, 2016, filed on September 22, 2016)
(File No. 1-13397).
Tenth Supplemental Indenture, dated as of May 13,
2020, between Ingredion and The Bank of New York
Mellon Trust Company, N.A. (as successor trustee
to The Bank of New York), as Trustee (incorporated
by reference to Exhibit 4.1 to Ingredion’s Quarterly
Report on Form 10-Q for the quarter ended June 30,
2020, filed on August 5, 2020) (File No. 1-13397).
Eleventh Supplemental Indenture, dated as of
May 13, 2020, between Ingredion and The Bank
of New York Mellon Trust Company, N.A. (as
successor trustee to The Bank of New York), as
Trustee (incorporated by reference to Exhibit 4.2
to Ingredion’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2020, filed on August 5,
2020) (File No. 1-13397).
Stock Incentive Plan as amended and restated
as of May 19, 2021 (the “Stock Incentive Plan”)
(incorporated by reference to Exhibit 10.1 to
Ingredion’s Current Report on Form 8-K dated May 20,
2021, filed on May 20, 2021) (File No. 1-13397).
Form of Indemnification Agreement entered into by
each of the members of Ingredion’s Board of Directors
and Ingredion’s executive officers (incorporated
by reference to Exhibit 10.14 to Ingredion’s Annual
Report on Form 10-K for the year ended December 31,
1997, filed on March 31, 1998) (File No. 1-13397).
Supplemental Executive Retirement Plan as
effective July 18, 2012 (incorporated by reference
to Exhibit 10.7 to Ingredion’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2012, filed on November 2, 2012) (File No. 1-13397).
Annual Incentive Plan as effective January 1, 2022
Form of 2023 Performance Share Award Agreement
for use in connection with awards under the Stock
Incentive Plan.
Form of 2022 Performance Share Award Agreement
for use in connection with awards under the Stock
Incentive Plan (incorporated by reference to Exhibit
10.5 to Ingredion’s Annual Report on Form 10-K
for the year ended December 31, 2021, filed on
February 22, 2022) (File No. 1-13397).
53
2022 INGREDION ANNUAL REPORT Form of March 2021 Performance Share Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.2 to Ingredion’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2021,
filed on May 7, 2021) (File No. 1-13397).
Form of February 2021 Performance Share Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.5 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2020,
filed on February 24, 2021) (File No. 1-13397).
Form of Amendment to 2022, March 2021,
and February 2021 Performance Share Award
Agreements, dated as of February 15, 2023 for
use in connection with awards under the Stock
Incentive Plan.
10.16*
10.17*
10.18*
Form of 2023 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan.
10.19*
Form of 2022 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to Exhibit
10.7 to Ingredion’s Annual Report on Form 10-K
for the year ended December 31, 2021, filed on
February 22, 2022) (File No. 1-13397).
Form of 2021 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.6 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2020,
filed on February 24, 2021) (File No. 1-13397).
Form of 2020 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.2 to Ingredion’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2020,
filed on May 6, 2020) (File No. 1-13397).
Form of 2019 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.12 to Ingredion’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2019,
filed on May 3, 2019) (File No. 1-13397).
Form of 2018 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.2 to Ingredion’s Current Report on
Form 8-K for the year ended December 31, 2017,
filed on February 12, 2018) (File No. 1-13397).
10.20*
10.21*
10.22*
10.23*
10.24*
Form of 2017 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.3 to Ingredion’s Current Report on Form 8-K
dated February 7, 2017, Filed on February 14, 2017)
(File No. 1-13397).
Form of 2016 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.13 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2015,
filed on February 19, 2016) (File No. 1-13397).
Form of 2015 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to
Exhibit 10.2 to Ingredion’s Current Report on
Form 8-K dated February 3, 2015, filed on February 9,
2015) (File No. 1-13397).
Form of 2014 Stock Option Award Agreement
for use in connection with awards under the Stock
Incentive Plan (incorporated by reference to Exhibit 10.2
to Ingredion’s Current Report on Form 8-K dated
February 3, 2014, filed on February 7, 2014) (File No.
1-13397).
Form of 2023 Restricted Stock Units Award
Agreement for use in connection with awards under
the Stock Incentive Plan.
Form of 2022 Restricted Stock Units Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.8 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2021,
filed on February 22, 2022) (File No. 1-13397).
Form of March 2021 Restricted Stock Units Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.3 to Ingredion’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2021,
filed on May 7, 2021) (File No. 1-13397).
Form of February 2021 Restricted Stock Units Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.7 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2020,
filed on February 24, 2021) (File No. 1,13397).
Form of Executive Severance Agreement entered
into by certain executive officers of Ingredion
(incorporated by reference to Exhibit 10.17 to
Ingredion’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018, filed on August 3,
2018) (File No. 1-13397).
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
54
10.25*
10.26*
10.27*
10.28*
10.29
10.30
10.31
Form of Executive Severance Agreement entered
into by certain executive officers of Ingredion
(incorporated by reference to Exhibit 10.18 to
Ingredion’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018, filed on August 3,
2018) (File No. 1-13397).
Letter of Agreement, dated as of June 30, 2020,
between Ingredion and Jorgen Kokke (incorporated
by reference to Exhibit 10.1 to Ingredion’s Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2020, filed on November 6, 2020)
(File No, 1-13397).
32.1
32.2
Letter of Agreement, dated as of November 23,
2020, between Ingredion and Eric Seip.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Letter of Agreement, dated as of April 15, 2020,
between Ingredion and Jeremy Xu.
Revolving Credit Agreement, dated as of June 30,
2021, by and among Ingredion Incorporated, as
Borrower, the Subsidiary Borrowers from time-to-
time party thereto, the Lenders from time to time
party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated July 1, 2021, filed on July 1, 2021)
(File No. 1-13397).
Amendment No. 1 to Revolving Credit Agreement,
dated as of November 30, 2022, by and among
Ingredion Incorporated, as Borrower, the Subsidiary
Borrowers from time-to-time party thereto, the
Lenders from time-to-time party thereto and JP
Morgan Chase Bank, N.A., as Administrative Agent.
Credit Agreement, dated as of December 16, 2022,
between Ingredion Incorporated, as Borrower,
and PNC Bank, National Association, as Lender
(incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K dated
December 16, 2022, filed on December 16, 2022)
(File No. 1-13397).
10.32*
Summary of Non-Employee Director Compensation.
21.1
23.1
24.1
31.1
31.2
Subsidiaries of the Registrant.
Consent of Independent Registered Public
Accounting Firm.
Power of Attorney.
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to
Rule 13a-14(b) or Rule 15d-14(b) under the Securities
Exchange Act of 1934 and Section 1350 of Chapter 63
of Title 18 of the United States Code, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Certification of Chief Financial Officer pursuant to
Rule 13a-14(b) or Rule 15d-14(b) under the Securities
Exchange Act of 1934 and Section 1350 of Chapter 63
of Title 18 of the United States Code, as adopted
pursuant to Section 906 of the Sarbanes Oxley
Act of 2002.
XBRL Instance Document (the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL
document).
Inline XBRL Taxonomy Extension Schema
Document.
Inline XBRL Taxonomy Extension Calculation
Linkbase Document.
Inline XBRL Taxonomy Extension Definition
Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase
Document.
Inline XBRL Taxonomy Extension Presentation
Linkbase Document.
Cover Page Interactive Data File (the cover page
XBRL tags are embedded within the Inline XBRL
document, which is contained in Exhibit 101).
*
Management contract or compensatory plan or arrangement required to
be filed as an exhibit to this form pursuant to Item 15(b) of this report.
ITEM 16. Form 10-K Summary
None.
55
2022 INGREDION ANNUAL REPORT Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 21, 2023
INGREDION INCORPORATED
By:
/s/ James P. Zallie
James P. Zallie
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant, in the capacities indicated and on the dates indicated.
Signature
Title
Date
President, Chief Executive Officer and Director
February 21, 2023
(Principal executive officer)
Chief Financial Officer
(Principal financial officer)
Controller
(Principal accounting officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
/s/ James P. Zallie
James P. Zallie
/s/ James D. Gray
James D. Gray
/s/ Davida M. Gable
Davida M. Gable
*David B. Fischer
David B. Fischer
*Paul Hanrahan
Paul Hanrahan
*Rhonda L. Jordan
Rhonda L. Jordan
*Gregory B. Kenny
Gregory B. Kenny
*Charles Magro
Charles Magro
*Victoria J. Reich
Victoria J. Reich
*Catherine A. Suever
Catherine A. Suever
*Stephan B. Tanda
Stephan B. Tanda
* Jorge A. Uribe
Jorge A. Uribe
*Dwayne A. Wilson
Dwayne A. Wilson
*By: /s/ Tanya Jaeger de Foras
Tanya Jaeger de Foras
Attorney-in-fact
Date: February 21, 2023
56
SHAREHOLDER CUMULATIVE TOTAL RETURN
SHAREHOLDER INFORMATION
The performance graph below shows the
cumulative total return to shareholders
(stock price appreciation or depreciation
plus reinvested dividends) during the 5-year
period from December 31, 2017 to December
31, 2022, for our common stock compared to
the cumulative total return during the same
period for the Russell 1000 Index, the S&P
Composite 1500 Food Beverage & Tobacco
Index, and our peer group. The Russell 1000
Index is a comprehensive stock market
index representing equity investments in the
1,000 largest U.S. companies ranked by total
market capitalization. The Russell 1000 Index
only includes publicly traded common stocks
belonging to U.S. companies, as determined in
accordance with the selection criteria published
by FTSE Russell, the creator of the index.
As of December 31, 2022, our total shareholder return peer group consisted of the
following 20 companies:
AAK AB (publ.)
Archer-Daniels-Midland Company
Associated British Foods plc
Celanese Corporation
Danone S.A.
Ecolab Inc.
General Mills, Inc.
Huntsman Corporation
Kellogg Company
Kerry Group plc
Koninklijke DSM N.V.
McCormick & Company, Incorporated
Mondelez International, Inc.
Novozymes A/S
Sealed Air Corporation
Sensient Technologies Corporation
Tate & Lyle plc
The Kraft Heinz Company
Tyson Foods, Inc.
Unilever PLC
W.R. Grace & Co. was removed due to its acquisition by Standard Industries in
September 2021.
Comparison of Cumulative Five Year Total Return
$200
$150
$100
$50
INGREDION INCORPORATED
RUSSELL 1000 INDEX
S&P COMPOSITE 1500 FOOD
BEVERAGE & TOBACCO INDEX
2022 PEER GROUP
2021 PEER GROUP
COMPANY NAME/INDEX
Ingredion Incorporated
Russell 1000 Index
S&P Composite 1500 Food
Beverage & Tobacco Index
2022 Peer Group
2021 Peer Group
BASE PERIOD
DEC. 31, 2017
100
100
100
DEC. 31, 2018
66.90
95.22
85.48
DEC. 31, 2019
70.04
125.14
106.59
DEC. 31, 2020
61.25
151.37
113.14
DEC. 31, 2021
77.40
191.42
131.06
DEC. 31, 2022
80.86
154.80
142.03
100
100
88.08
88.12
107.65
107.61
111.00
110.79
123.40
123.09
117.98
117.68
Comparison of Cumulative Total Return among our Company, the Russell 1000 Index, the S&P Composite 1500 Food Beverage & Tobacco Index, and our Peer Group
(For the period from December 31, 2017 to December 31, 2022. Source: Standard & Poor’s)
The graph assumes that:
• as of the market close on December 31, 2017, you made one-time $100 investments in our common stock and in market capital base-weighted amounts which
were apportioned among all the companies whose equity securities constitute each of the other four named indices, and
• all dividends were automatically reinvested in additional shares of the same class of equity securities constituting such investments at the frequency with which
dividends were paid on such securities during the applicable time frame.
57
2022 INGREDION ANNUAL REPORT
Financial Performance Metrics
Reconciliation of Diluted Earnings Per Share (“EPS”) to Non-GAAP Adjusted Diluted EPS
Net Income Attributable to Ingredion
Add back (deduct):
Acquisition/integration costs, net of income tax(i)
Restructuring/impairment charges, net of income tax(ii)
Impairment on disposition of assets(iii)
Other matters, net of income tax(iv)
Fair value adjustments to equity investments, net of income tax expense(v)
Tax (benefit) provision–Mexico(vi)
Other tax matters(vii)
Non-GAAP adjusted net income
YEAR ENDED
DECEMBER 31, 2022
YEAR ENDED
DECEMBER 31, 2021
YEAR ENDED
DECEMBER 31, 2020
$7.34
0.08
0.05
—
0.22
—
(0.06)
(0.18)
$7.45
$1.73
0.10
0.53
5.01
(0.32)
(0.07)
0.09
(0.40)
$6.67
$5.15
0.13
1.11
—
(0.24)
—
0.04
0.04
$6.23
(i) During 2022 and 2021, we recorded acquisition and integration charges for our acquisitions of the PureCircle, KaTech and Verdient Foods businesses, as well as our investments
with the Amyris and Argentina joint ventures. The 2020 period primarily includes costs related to the acquisition and integration of business acquired from PureCircle Limited.
(ii) During 2022, we recorded $4 million of remaining pre-tax restructuring-related charges for the Cost Smart programs. During 2021, we recorded $47 million of net pre-tax
restructuring-related charges primarily for our Cost Smart programs. During 2020, we recorded $93 million of pre-tax restructuring and impairment charges, which included
$48 million of pre-tax restructuring charges for our Cost Smart programs and a $35 million impairment charge in the fourth quarter of 2020 for a TIC Gum intangible asset.
(iii) During 2021, we recorded a $340 million net asset impairment charge related to the contribution of our Argentina operations to the Argentina joint venture, which primarily
consisted of $311 million for cumulative translation losses related to the contributed net assets.
(iv) During 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage. In 2021, we recorded $15 million of pre-tax benefits for
Brazil indirect tax matters. In 2020, we recorded $35 million of pre-tax benefits for Brazil indirect tax matters, partially offset by other adjusted costs totaling $13 million.
(v) During 2021, we recorded a net pre-tax fair value adjustment of $6 million to our equity investments.
(vi) We recorded a tax benefit of $4 million for 2022, and tax provisions of $6 million and $3 million for 2021 and 2020, respectively, as a result of the movement of the Mexican peso
against the U.S. dollar and its impact on the remeasurement of our Mexico financial statements during the periods.
(vii) In 2022, we recognized an income tax benefit of $20 million for certain Brazilian state grants we received between 2018 and 2021, which were previously taxable. Other
adjustments relate to the impacts of prior year tax liabilities and contingencies, the reversal of tax liabilities related to certain unremitted earnings from foreign subsidiaries, tax
adjustments for an intercompany reorganization, and tax effects of the above non-GAAP addbacks.
Return on Invested Capital
(DOLLARS IN MILLIONS)
Net income (a)
Adjusted for:
Provision for income taxes
Other, non-operating (income)
Financing costs
Restructuring/impairment charges(i)
Acquisition/integration costs(ii)
Impairment on disposition of assets
Other matters(iii)
Income taxes(iv)
Adjusted operating income, net of tax (b)
Short term debt
Long term debt
Less: Cash and cash equivalents
Short-term investments
Total net debt
Share-based payments subject to redemption
Total redeemable non-controlling interests
Total equity
Total net debt and equity
Average current and prior year Total net debt and equity (c)
Return on Invested Capital (a/c)
Adjusted Return on Invested Capital (b/c)
58
DECEMBER 31,
2022
DECEMBER 31,
2021
DECEMBER 31,
2020
$502
166
(5)
99
4
1
—
20
(212)
575
543
1,940
(236)
(3)
2,244
48
51
3,163
$5,506
$5,223
9.6%
11.0%
$125
123
(12)
74
47
3
340
(15)
(175)
510
308
1,738
(328)
(4)
1,714
36
71
3,118
$4,939
$4,766
2.6%
10.7%
$354
152
(5)
81
93
11
—
(27)
(177)
482
438
1,748
(665)
—
1,521
30
70
2,972
$4,593
$4,473
7.9%
10.8%
(i) During 2022, we recorded $4 million of remaining pre-tax restructuring-related charges for the Cost Smart programs. In 2021, we recorded $47 million of pre-tax restructuring
charges primarily related to our Cost Smart programs. During 2020, we recorded $93 million of pre-tax restructuring and impairment charges, which included $48 million of
pre-tax restructuring charges as part of our Cost Smart programs and a $35 million impairment charge in the fourth quarter of 2020 for a TIC Gum intangible asset.
(ii) 2022 acquisition/integration costs are reduced by $4 million to exclude acquisition/integration costs already included within financing costs above.
(iii) During 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage. In 2021, we recorded $15 million of pre-tax benefits for
Brazil indirect tax matters. In 2020, we recorded $35 million of pre-tax benefits for Brazil indirect tax matters, partially offset by other adjusted costs totaling $8 million.
(iv) The effective income tax rate for 2022, 2021, and 2020 was 27.0 percent, 25.6 percent and 26.9 percent, respectively. For purposes of this calculation we exclude the provision
for income taxes from the calculation and subsequently add back income taxes for adjusted operating income using the adjusted effective income tax rate. The adjusted effective
income tax rate is calculated by removing the tax impact for the identified adjusted items below.
(DOLLARS IN MILLIONS)
As reported
Add back (deduct):
Acquisition/integration costs
Restructuring/impairment charges
Impairment on disposition of assets
Fair value adjustments to equity investments
Other matters
Tax item–Mexico
Other tax matters
Adjusted non-GAAP
Net Debt to Adjusted EBITDA ratio
(DOLLARS IN MILLIONS)
Short-term debt
Long-term debt
Less: Cash and cash equivalents
Short-term investments
Total net debt (a)
Income before income taxes (b)
Adjusted for:
Depreciation and amortization
Financing costs, net
Other non-operating (income)
Restructuring/impairment(i)
Acquisition/integration costs(ii)
Impairment on disposition of assets
Other matters(iii)
Adjusted EBITDA (c)
Net debt to Income before income tax ratio (a/b)
Net debt to adjusted EBITDA ratio (a/c)
YEAR ENDED DECEMBER 31, 2022
YEAR ENDED DECEMBER 31, 2021
YEAR ENDED DECEMBER 31, 2020
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR INCOME
TAXES
EFFECTIVE
INCOME TAX
RATE
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR INCOME
TAXES
EFFECTIVE
INCOME TAX
RATE
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR INCOME
TAXES
EFFECTIVE
INCOME TAX
RATE
$668
$166
24.9%
$248
$123
49.6% $506
$152
30.0%
5
4
—
—
20
—
—
—
1
—
—
5
4
12
3
47
340
(6)
(15)
—
—
(3)
11
—
(1)
7
(6)
27
11
93
—
—
(22)
—
—
2
18
—
—
(8)
(3)
(3)
$697
$188
27.0%
$617
$158
25.6%
$588
$158
26.9%
2022
$543
1,940
(236)
(3)
2021
$308
1,738
(328)
(4)
2020
$438
1,748
(665)
—
$2,244
$1,714
$1,521
668
248
506
215
99
(5)
4
1
—
20
$1,002
3.4
2.2
220
74
(12)
38
3
340
(15)
$896
6.9
1.9
213
81
(5)
85
11
—
(22)
$869
3.0
1.8
(i) 2021 Restructuring/impairment charges are reduced by $9 million to exclude the accelerated depreciation primarily related to the exit of coal burning from the Argo facility. 2020
Restructuring/impairment charges are reduced by $8 million to exclude the accelerated depreciation primarily related to the Berwick facility closure, as well as the cessation
of ethanol production at the Cedar Rapids facility. The accelerated depreciation is included in Depreciation and amortization above, and to include in restructuring/impairment
charge would include the charge twice.
(ii) 2022 acquisition/integration costs are reduced by $4 million to exclude acquisition/integration costs already included in the financing costs above.
(iii) During 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage. In 2021, we recorded $15 million of pre-tax benefits for
Brazil indirect tax matters. In 2020, we recorded $35 million of pre-tax benefits for Brazil indirect tax matters, partially offset by other adjusted costs totaling $13 million.
59
2022 INGREDION ANNUAL REPORT
Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income (Unaudited)
(in millions, pre-tax)
Operating income
Add back:
Acquisition/integration costs(i)
Restructuring/impairment charges(ii)
Impairment on disposition of assets(iii)
Other matters(iv)
Non-GAAP adjusted operating income
YEAR ENDED DECEMBER 31,
2022
$762
1
4
—
20
$787
2021
$ 310
3
47
340
(15)
$685
2020
$582
11
93
—
(27)
$659
(i) During 2022 and 2021, we recorded acquisition and integration charges for our acquisitions of the PureCircle, KaTech and Verdient Foods businesses, as well as our investments
with the Amyris and Argentina joint ventures. The 2020 period primarily includes costs related to the acquisition and integration of business acquired from PureCircle Limited.
(ii) During 2022, we recorded $4 million of remaining pre-tax restructuring-related charges for the Cost Smart programs. During 2021, we recorded $47 million of net pre-tax
restructuring-related charges primarily for our Cost Smart programs. During 2020, we recorded $93 million of pre-tax restructuring and impairment charges, which included $48
million of pre-tax restructuring charges for our Cost Smart programs and a $35 million impairment charge for a TIC Gum intangible asset.
(iii) During 2021, we recorded a $340 million net asset impairment charge related to the contribution of our Argentina operations to the Argentina joint venture.
(iv) During 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage. In 2021, we recorded $15 million of pre-tax benefits for
Brazil indirect tax matters. In 2020, we recorded $35 million of pre-tax benefits for Brazil indirect tax matters, partially offset by other non-recurring charges totaling $8 million.
60
Board of Directors
as of April 5, 2023
Corporate Officers
as of April 5, 2023
SHAREHOLDER INFORMATION
DIRECTORS AND OFFICERS
David B. Fischer2
Former President and Chief Executive Officer
Greif, Inc.
Age 60; Director since 2013
Paul Hanrahan1
Former Chief Executive Officer and Director
Hygo Energy Transitions Ltd.
Age 65; Director since 2006
Rhonda L. Jordan2
Former President, Global Health & Wellness,
and Sustainability
Kraft Foods Inc.
Age 65; Director since 2013
Gregory B. Kenny*3
Former President and Chief Executive Officer
General Cable Corporation
Age 70; Director since 2005
Charles V. Magro2
Chief Executive Officer of Corteva Agriscience
Age 53; Director since 2022
Victoria J. Reich1
Former Senior Vice President and Chief Financial Officer
Essendant Inc.
Age 65; Director since 2013
Catherine Suever1
Former Executive Vice President
Finance and Administration and Chief Financial Officer
Parker-Hannifin Corporation
Age 64; Director since 2021
Stephan B. Tanda3
President and Chief Executive Officer
AptarGroup, Inc.
Age 57; Director since 2019
Jorge A. Uribe3
Former Global Productivity and Organization
Transformation Officer
The Procter & Gamble Company
Age 66; Director since 2015
Dwayne A. Wilson1
Former Senior Vice President
Fluor Corporation
Age 64; Director since 2010
James P. Zallie
President and Chief Executive Officer
Ingredion Incorporated
Age 61; Director since 2017
* Chairman of the Board
Committees of the Board
1 Audit Committee, Ms. Reich is Chairman.
2 People, Culture and Compensation Committee, Ms. Jordan is Chairman.
3 Corporate Governance and Nominating Committee, Mr. Kenny is Chairman.
James P. Zallie
President and Chief Executive Officer
Age 61; joined Company in 2010
Lori Arnold
Vice President, Tax
Age 57; joined Company in 2011
Valdirene Evans
Senior Vice President and President, APAC
and Global Head of Pharma, Home and Beauty
Age 55; joined Company in 2018
Larry Fernandes
Senior Vice President and
Chief Commercial and Sustainability Officer
Age 58; joined Company in 1990
James D. Gray
Executive Vice President and Chief Financial Officer
Age 56; joined Company in 2014
Tanya Jaeger de Foras
Senior Vice President, Chief Legal Officer,
Corporate Secretary and Chief Compliance Officer
Age 52; joined Company in 2021
Jorgen Kokke
Executive Vice President and President, Americas
Age 54; joined Company in 2010
Pierre Perez y Landazuri
Senior Vice President, Corporate Strategy,
Specialties and President, EMEA
Age 54; joined Company in 2016
Eric Seip
Senior Vice President, Global Operations
and Chief Supply Chain Officer
Age 55; joined Company in 2021
C. Kevin Wilson
Vice President and Corporate Treasurer
Age 61; joined Company in 2014
Nancy Wolfe
Senior Vice President and Chief Human Resources Officer
Age 54; joined Company in 2022
Jeremy Xu
Senior Vice President and Chief Innovation Officer
Age 55; joined Company in 2020
61
2022 INGREDION ANNUAL REPORT THIS PAGE INTENTIONALLY LEFT BLANK
62
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63
2022 INGREDION ANNUAL REPORT THIS PAGE INTENTIONALLY LEFT BLANK
64
2022 LETTER FROM OUR CEO
2022 LETTER FROM OUR CEO
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Dear valued shareholders,
Dear valued shareholders,
IN 2022, Ingredion delivered outstanding
IN 2022, Ingredion delivered outstanding
performance with top-line and adjusted
performance with top-line and adjusted
operating income both growing by 15%.
operating income both growing by 15%.
Our teams demonstrated resilience and
Our teams demonstrated resilience and
agility in overcoming macroeconomic
agility in overcoming macroeconomic
conditions and other unforeseen challenges
conditions and other unforeseen challenges
to successfully execute against our Driving
to successfully execute against our Driving
Growth Roadmap and create value for our
Growth Roadmap and create value for our
shareholders and our customers.
shareholders and our customers.
STRONG FINANCIAL RESULTS
STRONG FINANCIAL RESULTS
Net sales for 2022 increased to nearly
Net sales for 2022 increased to nearly
$8 billion up from $6.9 billion the prior
$8 billion up from $6.9 billion the prior
year. Our reported and adjusted operating
year. Our reported and adjusted operating
income reached $762 million and $787
income reached $762 million and $787
million, respectively, compared to $310
million, respectively, compared to $310
million and $685 million in 2021. Reported
million and $685 million in 2021. Reported
and adjusted earnings per share grew to
and adjusted earnings per share grew to
$7.34 and $7.45, respectively, up from $1.73
$7.34 and $7.45, respectively, up from $1.73
and $6.67 last year. Also, for the full year,
and $6.67 last year. Also, for the full year,
we returned $288 million to Ingredion
we returned $288 million to Ingredion
shareholders through our dividend and
shareholders through our dividend and
stock repurchase programs.
stock repurchase programs.
This strong performance was even more
This strong performance was even more
noteworthy given the persistent industry-
noteworthy given the persistent industry-
wide market conditions. Our largest raw
wide market conditions. Our largest raw
material input, corn, was significantly
material input, corn, was significantly
impacted by the Ukraine conflict and a
impacted by the Ukraine conflict and a
drought in Europe. Despite those supply
drought in Europe. Despite those supply
shocks, our team secured the necessary
shocks, our team secured the necessary
quantities of raw material and maintained
quantities of raw material and maintained
shipments to our customers while
shipments to our customers while
overcoming input cost inflation.
overcoming input cost inflation.
Also contributing to our success were
Also contributing to our success were
expanded hedging practices that enabled
expanded hedging practices that enabled
us to mitigate profit volatility caused by
us to mitigate profit volatility caused by
rising commodity prices and offset over
rising commodity prices and offset over
$200 million of foreign exchange impact.
$200 million of foreign exchange impact.
We also ramped up production and
We also ramped up production and
sales from our new facility in Shandong,
sales from our new facility in Shandong,
China despite countrywide COVID-19
China despite countrywide COVID-19
restrictions, expanding our capacity for
restrictions, expanding our capacity for
specialty modified starches in a large,
specialty modified starches in a large,
growing market.
growing market.
enhance the resiliency and efficiency of
enhance the resiliency and efficiency of
our global supply chain, and we delivered
our global supply chain, and we delivered
breakthrough product innovations in
breakthrough product innovations in
our PureCircle franchise. In addition,
our PureCircle franchise. In addition,
plant-based proteins more than doubled
plant-based proteins more than doubled
in revenue, and despite a slower sales
in revenue, and despite a slower sales
ramp than we had targeted, we made
ramp than we had targeted, we made
significant headway on improving product
significant headway on improving product
quality, increasing production volume, and
quality, increasing production volume, and
developing our customer project pipeline.
developing our customer project pipeline.
This positions us well to capitalize on
This positions us well to capitalize on
growth opportunities within fortified
growth opportunities within fortified
bakery and snacks, alternative dairy, sports
bakery and snacks, alternative dairy, sports
nutrition, and beverage categories.
nutrition, and beverage categories.
EXECUTING AGAINST OUR DRIVING
EXECUTING AGAINST OUR DRIVING
GROWTH ROADMAP
GROWTH ROADMAP
Throughout the year, our teams did an
Throughout the year, our teams did an
exceptional job executing against our four
exceptional job executing against our four
strategic pillars, fueling our progress, and
strategic pillars, fueling our progress, and
laying the foundation for continued growth.
laying the foundation for continued growth.
Specialty ingredients once again delivered
Specialty ingredients once again delivered
strong double-digit growth and ended the
strong double-digit growth and ended the
year representing 34% of our total revenue.
year representing 34% of our total revenue.
We made substantial strides by growing our
We made substantial strides by growing our
specialties portfolio with net sales higher
specialties portfolio with net sales higher
across all four regions versus the prior year.
across all four regions versus the prior year.
Among other highlights, we expanded our
Among other highlights, we expanded our
starch-based texturizer network to further
starch-based texturizer network to further
Our progress in the areas of “Commercial
Our progress in the areas of “Commercial
Excellence” and “Cost Competitiveness
Excellence” and “Cost Competitiveness
through Operational Excellence” also
through Operational Excellence” also
contributed significantly to our performance
contributed significantly to our performance
and solidified the foundation for future
and solidified the foundation for future
gains. For instance, our pricing centers of
gains. For instance, our Pricing Centers of
excellence enabled us to deliver $1.3 billion
Excellence enabled us to deliver $1.3 billion
in net sales growth. We also raised the level
in net sales growth. We also raised the level
of sustainable sourcing of our five priority
of sustainable sourcing of our five priority
agricultural inputs to 47% from 32% in 2021.
agricultural inputs to 47% from 32% in 2021.
Additionally, we are holistically assessing
Additionally, we are holistically assessing
how we purchase, produce, and transport
how we purchase, produce, and transport
raw materials and finished products to
raw materials and finished products to
customers at the lowest cost and have made
customers at the lowest cost and have made
investments to enhance our supply chain
investments to enhance our supply chain
2022
2022
QUARTERLY NET SALES
QUARTERLY NET SALES
$2.0B
$2.0B
$2.0B
$2.0B
$2.0B
$2.0B
$1.9B
$1.9B
OUR BOARD OF DIRECTORS Left to right: Dwayne Wilson, Catherine Suever,
OUR BOARD OF DIRECTORS Left to right: Dwayne Wilson, Catherine Suever,
Gregory Kenny, Charles Magro, James Zallie, Paul Hanrahan, Stephan Tanda, Jorge Uribe,
Gregory Kenny, Charles Magro, James Zallie, Paul Hanrahan, Stephan Tanda, Jorge Uribe,
Rhonda Jordan, Victoria Reich, David Fischer
Rhonda Jordan, Victoria Reich, David Fischer
Q1
Q1
Q2
Q2
Q3
Q3
Q4
Q4
Corporate Headquarters
Corporate Headquarters
5 Westbrook Corporate Center
5 Westbrook Corporate Center
Westchester, IL 60154
Westchester, IL 60154
708.551.2600
708.551.2600
708.551.2700 fax
708.551.2700 fax
www.ingredion.com
www.ingredion.com
Stock Exchange
Stock Exchange
The common shares of Ingredion Incorporated trade
The common shares of Ingredion Incorporated trade
on the New York Stock Exchange under the ticker
on the New York Stock Exchange under the ticker
symbol INGR. Our Company is a member of the
symbol INGR. Our Company is a member of the
Russell 1000 Index and the S&P MidCap 400 Index.
Russell 1000 Index and the S&P MidCap 400 Index.
Transfer Agent, Dividend Disbursing
Transfer Agent, Dividend Disbursing
Agent And Registrar
Agent And Registrar
Computershare 866.517.4574 or 201.680.6685
Computershare 866.517.4574 or
201.680.6685
(outside the U.S. and Canada) or 888.269.5221
(outside the U.S. and Canada) or 888.269.5221
(hearing impaired – TTY phone)
(hearing impaired – TTY phone)
Shareholder Assistance
Shareholder Assistance
Ingredion Incorporated c/o Computershare
Ingredion Incorporated c/o Computershare
P.O. Box 30170
P.O. Box 30170
College Station, TX 77842-3170
College Station, TX 77842-3170
Send overnight correspondence to:
Send overnight correspondence to:
Ingredion Incorporated c/o Computershare
Ingredion Incorporated c/o Computershare
211 Quality Circle, Suite 210
211 Quality Circle, Suite 210
College Station, TX 77845
College Station, TX 77845
Shareholder website:
Shareholder website:
www.computershare.com/investor
www.computershare.com/investor
Shareholder online inquiries:
Shareholder online inquiries:
https://www-us.computershare.com/investor/contact
https://www-us.computershare.com/investor/contact
Investor And Shareholder Contact
Investor And Shareholder Contact
Investor Relations Department 708.551.2592
Investor Relations Department 708.551.2592
investor.relations@ingredion.com
investor.relations@ingredion.com
Company Information
Company Information
Copies of the Annual Report, the Annual Report on
Copies of the Annual Report, the Annual Report
Form 10-K and quarterly reports on Form 10-Q may
on Form 10-K and quarterly reports on Form 10-Q
be obtained, without charge, by writing to Investor
may be obtained, without charge, by writing to
Relations at the corporate headquarters address, by
Investor Relations at the corporate headquarters
calling 708.551.2603, by emailing
address, by calling 708.551.2603, by emailing
investor.relations@ingredion.com or by visiting our
investor.relations@ingredion.com or by visiting
website at ir.ingredionincorporated.com.
our website at ir.ingredionincorporated.com.
Annual Meeting Of Shareholders
Annual Meeting Of Shareholders
The 2023 Annual Meeting of Shareholders will be held
The 2023 Annual Meeting of Shareholders will be held
on Friday, May 19, 2023, at 9:00 a.m. Central Daylight
on Friday, May 19, 2023, at 9:00 a.m. Central Daylight
Time. The Annual Meeting will be held in person at
Time. The Annual Meeting will be held in person at
the Conference Center (L004), which is located on the
the Conference Center (L004), which is located on the
ground floor between Towers 2 and 5 of the Westbrook
ground floor between Towers 2 and 5 of the Westbrook
Corporate Center, Westchester, Illinois 60154. A formal
Corporate Center, Westchester, Illinois 60154. A formal
notice of that meeting, proxy statement and proxy
notice of that meeting, proxy statement and proxy
voting card are being made available to shareholders
voting card are being made available to shareholders
in accordance with U.S. Securities and Exchange
in accordance with U.S. Securities and Exchange
Commission (“SEC”) regulations.
Commission (“SEC”) regulations.
Independent Auditors
Independent Auditors
KPMG LLP
KPMG LLP
200 East Randolph Street
200 East Randolph Street
Chicago, IL 60601
Chicago, IL 60601
312.665.1000
312.665.1000
Board Communication
Board Communication
Interested parties may communicate directly with any
Interested parties may communicate directly with any
member of our Board of Directors, including the
member of our Board of Directors, including the
Chairman of the Board, or the independent directors,
Chairman of the Board, or the independent directors,
as a group, by writing in care of Corporate Secretary,
as a group, by writing in care of Corporate Secretary,
Ingredion Incorporated, 5 Westbrook Corporate Center,
Ingredion Incorporated, 5 Westbrook Corporate Center,
Westchester, IL 60154.
Westchester, IL 60154.
Safe Harbor
Safe Harbor
Certain statements in this Annual Report that are neither
Certain statements in this Annual Report that are neither
reported financial results nor other historical information
reported financial results nor other historical information
are forward-looking statements. Such forward-looking
are forward-looking statements. Such forward-looking
statements are not guarantees of future performance and
statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause
are subject to risks and uncertainties that could cause
actual results and Company plans and objectives to differ
actual results and Company plans and objectives to differ
materially from those expressed in the forward-looking
materially from those expressed in the forward-looking
statements. A description of some of these risks and
statements. A description of some of these risks and
uncertainties is contained in our reports on Forms 10-K,
uncertainties is contained in our reports on Forms 10-K,
10-Q and 8-K filed with the SEC.
10-Q and 8-K filed with the SEC.
Copyright © 2023 Ingredion Incorporated.
Copyright © 2023 Ingredion Incorporated.
All Rights Reserved.
All Rights Reserved.
2022 ANNUAL REPORT
A Resilient Business with
Proven Agility for Growth
Ingredion Incorporated
5 Westbrook Corporate Center
Westchester, Il 60154
708.551.2600
WWW.INGREDION.COM