Making Healthy
Taste Better
2023 ANNUAL REPORT
A Record Year.
A Bright Future.
“
Ingredion has
thrived for more
than a century by
continuously adapting
to changing market
conditions to pursue
growth opportunities
most effectively.”
James P. Zallie
PRESIDENT & CEO
A Message to our Shareholders:
Ingredion performed exceptionally well and
once again displayed resilience in 2023,
delivering more than 20% operating income
growth while expanding gross margins for
six consecutive quarters. We achieved strong
financial results in the face of challenging
market conditions, generating record net sales,
profitability, and cash flow while advancing
our safety and sustainability agendas and
improving service deliveries to customers.
Ingredion’s net sales reached an all-
time high of $8.2 billion, up 3% from the
prior year. We posted record operating
and adjusted operating income of $957
million, up 26%, and $969 million, up 23%,
respectively, as our teams managed the
impacts of raw material price fluctuations
and customer inventory destocking.
Reported and adjusted earnings per share
grew by 31% to $9.60 and by 26% to
$9.42, respectively. Additionally, cash from
operations exceeded $1 billion, and we
returned $295 million to shareholders.
EXECUTING OUR STRATEGY
Throughout the year, our teams focused on
executing against the four strategic pillars
of our Driving Growth Roadmap designed
to deliver shareholder value by accelerating
customer co-creation and enabling
consumer-preferred innovation to advance
specialties growth. Driven by double-
digit growth in starch-based texturizers,
specialty ingredient net sales rose by 4%
and represent 34% of 2023 consolidated net
sales. Among the standout segments were
Food Systems, driven by strong private-label
demand, as well as Pharma and Personal
Care, reflecting economically resilient, high-
value wellness offerings.
We made notable progress in commercial
excellence as our technical service teams
engaged with customers to provide the right
ingredient solutions to meet rapidly evolving
consumer demand worldwide. Customer
engagements both in person at Ingredion
Idea Labs® and through our virtual innovation
studios grew by 26% in 2023, demonstrating
the breadth and relevance of Ingredion’s
diverse portfolio of ingredients and solutions.
In addition, we enhanced our go-to-market
capabilities in line with our strategy to
become a more comprehensive solutions
provider by investing in solutions and
consultative selling. Additionally, our
investment in supply chain systems
improved forecast accuracy and on-time
delivery as we fulfilled customer orders
while carefully managing inventories. The
cumulative effect of these commercial
initiatives led to improvements across all
regions in our Net Promoter Scores.
The progress against our growth agenda was
complemented by the progress we made in
reduced our recordable and lost time
incidents to record lows, and we continued
to operate at world-class levels of safety
performance. And with approximately 66%
of our five priority crops now sustainably
sourced, we are on track to meet our 2025
commitment of 100% sustainable sourcing.
THE NEXT STAGE IN OUR EVOLUTION
Ingredion has thrived for more than a century
by continuously adapting to changing market
conditions to pursue growth opportunities
most effectively. As part of this ongoing
pursuit, we announced plans to reorganize
our business operations and redefine our
reportable business segments.
Going forward, Texture and Healthful
Solutions will have a global mandate, while
the two Food and Industrial Ingredients
segments will have a regional focus,
reflecting the unique business environments
for each of their regions. The new structure
makes our product capabilities more
transparent, better aligns our commercial
teams with customer needs, provides greater
insight for shareholders, and creates more
efficient pathways to growth.
2023’s results would not have been possible
without the commitment and support of
many stakeholders. I am grateful to our
board of directors for their guidance and
encouragement and to our employees
for their initiative, resourcefulness, and
dedication. As we enter 2024, we are
confident in our ability to achieve our
long-term growth targets and create value
for our shareholders.
Sincerely,
James P. Zallie
2023 HIGHLIGHTS
Net Sales
$8.2B
Cash from Operations
MORE THAN
$1B
Adjusted
Operating Income
Up 23%
Adjusted Earnings Per Share
Up 26%
Total Shareholder Return
15%
cost competitiveness through operational
excellence. We strengthened our global
procurement team, increased the spend
under corporate procurement management,
and invested significantly in category
management training. These investments
are providing early paybacks, delivering
meaningful year-over-year savings, reducing
risk, and improving supplier collaborations.
Our operations teams responded with
agility to softer demand, mostly during the
first part of 2023, by adjusting production
schedules. As customers rebalanced
inventories and destocking lessened in the
second half of the year, our ability to adjust
production enabled us to end the year with
balanced inventory positions.
In 2023, several third parties validated our
commitment to cultivate a purpose-driven
and people-centric growth culture. We
earned a perfect score in the Human Rights
Campaign Foundation’s Equity 100 Award,
and we were pleased to once again be
included on the Bloomberg Gender-Equality
Index and named one of the world’s most
ethical companies by Ethisphere.
We notched gains against other important
metrics as well. The safety of our employees
and contractors has always been a founda-
tional element of our culture. In 2023, we
2023
Quarterly Net Sales
($ in billions)
$2.1
$2.1
$2.0
+280
bps
+220
bps
+220
bps
$1.9
+310
bps
Q1
Q2
Q3
Q4
— Quarter-over-quarter
gross margin percentage
change (bps)
1
2023 INGREDION ANNUAL REPORT Growing a
Resilient Portfolio
By diversifying our solutions, geographies, and customer base, we are
positioning Ingredion for consistent success in a rapidly changing world.
SNACKING CENTER OF EXCELLENCE
The snacking category is an ideal fit
for Ingredion because it leverages our
broad range of solutions, from specialty
starches and plant-based proteins to
sugar reduction and sweeteners. Working
closely with our customers, the experts
at our Snacking Center of Excellence
draw on their technical proficiency and
vast experience to deliver proprietary
insights and market-ready prototypes. We
are pleased to have secured new snack
projects with large food companies, and
we have created a multimillion-dollar
pipeline with high growth potential.
SUGAR REDUCTION AND
SPECIALTY SWEETENERS
Ingredion is the global leader in natural
high-intensity sweeteners for sugar
reduction due to our acquisition of
PureCircle in 2020. PureCircle’s advanced
technology in stevia leaf breeding and
enzyme chemistry is critical for large
consumer packaged goods companies
looking to meet consumer demand for
reduced-sugar products. In 2023, we
increased our ownership of PureCircle
to 88% and continued to expand our
pipeline of projects by developing new
solutions. We also began a significant
expansion of our stevia bioconversion
facility in Kuala Lumpur, Malaysia.
Since 2020, we have added
approximately 185 new customers for
high-intensity natural sweeteners, which
has helped remove an estimated 4.7
trillion calories from consumer diets.
INGREDION HAS A
DIVERSIFIED CUSTOMER
BASE WITH
CUSTOMERS IN NEARLY
18,000
120
COUNTRIES.
Net Sales Specialty
Ingredients
32%
33% 34%
34%
2020
2021
2022
2023
50
40
30
20
10
0
2
4.7
TRILLION
ESTIMATED CALORIES
REMOVED FROM CONSUMER
DIETS GLOBALLY USING STEVIA-
BASED PRODUCTS SOLD BY
INGREDION SINCE 2020.
PHARMACEUTICAL AND PERSONAL
CARE INGREDIENTS
In 2023, Ingredion’s pharmaceutical
and personal care ingredients achieved
double-digit growth against the previous
year’s strong performance. We set the
stage for future growth by expanding our
investments in India, one of the fastest-
growing pharmaceutical markets in the
world. In 2022, we acquired Amishi Drugs
& Chemicals in Ahmedabad and secured
a majority position in Mannitab Pharma
Specialties in Malegaon. Thanks to these
strategic investments, Ingredion has an even
broader portfolio of functional excipients,
better positioning us to partner with pharma
and nutraceutical formulators to help them
meet regulatory challenges, advance drug
development, and pursue emerging trends.
CLEAN AND SIMPLE INGREDIENTS
Consumers want products that are closest
to nature — made from ingredients that are
understood, and authentic. Our comprehensive
range of clean-label solutions includes
functional native starches, multibenefit citrus
fibers, and naturally derived emulsifiers.
These ingredients enable manufacturers to
replace undesirable additives and develop
new products with shorter ingredient lists that
feature consumer-preferred labels.
Ingredion’s clean and simple platform benefited
from capacity expansion completed in 2022,
which allowed us to exceed our 2023 growth
expectations and meet customer demand in
both the U.S. and Europe. We expanded our
portfolio of functional, clean-label ingredient
solutions to include texturizers made from the
peels of citrus fruits with the U.S. launch of
FIBERTEX™ CF 502 and FIBERTEX™ CF 102. We
also introduced NOVATION® Indulge 2940, the
first non-GMO functional native corn starch and
clean-label ingredient that provides a unique
gelled texture for popular dairy and alternative
dairy products.
Revised segmentation model that matches market
opportunities with business objectives
TEXTURE &
HEALTHFUL
SOLUTIONS
FOOD &
INDUSTRIAL
INGREDIENTS
US/CAN
FOOD &
INDUSTRIAL
INGREDIENTS
LATAM
OTHER
(Includes sugar
reduction and protein
fortification)
3
2023 INGREDION ANNUAL REPORT Targeting Even
Better Execution
We are constantly looking for ways to deliver superior service to
customers, improve our productivity, and increase our margins.
COMMERCIAL EXCELLENCE
COLLABORATIONS WITH CUSTOMERS
In 2023, Ingredion took commercial
excellence to new levels, including
expanding our Pricing Centers of
Excellence in response to sharply rising
inflation. This allowed us to maintain our
ability to price and pass through higher
raw material costs. Throughout the year,
our teams around the world leveraged
regional pricing centers to continuously
assess the value that individual ingredients
bring to a recipe and price accordingly.
At the same time, Ingredion’s sales teams
secured multiyear contracts at current
market pricing with some of our larger
global customers. These contracts, which
cover sizable volumes, should support
margin expansion in 2024.
In addition, we increased the visibility of
global order tracking for customers and
improved warehousing logistics, which
reduced customer pickup times while
lowering freight costs. These initiatives
have generated higher Net Promoter
Scores and positive customer feedback.
To reduce formulation and production
costs, our customers turn to Ingredion to
leverage the functionality of our solutions
and the insights of our experts. We
engage with customers to co-create new
products through our Ingredion Idea Labs®
innovation centers and virtual creative
culinary studios.
To facilitate these efforts, we rely on ATLAS,
the largest proprietary consumer research
program in the food and beverage industry.
ATLAS contains more than 10 years of data
from over 100,000 consumer interviews
in 33 global markets, providing context to
pinpoint emerging trends in ingredients
and changes in consumer expectations. In
addition, our proprietary ATLAS product
simulator uses digital prototyping to
accelerate innovation, helping our customers
reduce R&D expenses and increase the
efficiency of new product development.
INGREDION HAS
32IDEA LABS® INNOVATION
CENTERS THAT LEVERAGE THE
TALENTS OF MORE THAN 500
FOOD TECHNOLOGISTS
AND SCIENTISTS.
4
Purpose-driven and People-centric Growth Culture
• Recognized as one of the
World’s Most Ethical Companies
by Ethisphere for the ninth time
• Included in the Bloomberg
Gender-Equality Index for the
sixth consecutive year
• Named among the “U.S. News &
World Report” 2023-2024 Best
Companies To Work For
• Recognized as one of the 2023
Top Regional Companies in the
U.S. by DiversityInc
• Earned the Equality 100 Award:
Leader in LGBTQ+ Workplace
Inclusion from the Human
Rights Campaign Foundation
• Recognized as a Top Employer in
Malaysia, South Korea, Thailand,
Singapore, China, Germany, and
the United Kingdom
• Received an Ethics and Values
in the Industry Award from
the Mexican Confederation of
Industrial Chambers for the
ninth consecutive year
• Achieved Great Place To Work
certification in Brazil, Peru,
and Colombia for the second
consecutive year
• Achieved an employee
engagement score of 79 points
across the organization, a
four-point increase over the
Microsoft Viva Glint global
engagement benchmark of 75
COST COMPETITIVENESS THROUGH
OPERATIONAL EXCELLENCE
A major challenge in 2023 was adjusting
production to changing customer demand.
During the first half of the year, customers
reduced excess inventory that they
accumulated post-pandemic to buffer supply
chain disruptions, but as the year progressed,
destocking slowed. Our supply chain
experts worked closely with the commercial
organization and operations to ensure we met
the ebbs and flows in customer demand while
maintaining sufficient, yet not excessive,
finished goods inventory.
Throughout the year, we pursued operational
excellence on several fronts. Our operations
team continued to manage production
inputs to help compensate for inflation and
absorb fixed costs, offsetting more than
$50 million of increased allocated costs by
achieving higher productivity.
Ingredion also launched a connected factory
strategy to further increase productivity. As
part of this initiative, our team in Hamburg,
Germany, is using artificial intelligence (AI)
to optimize batch cycle times, delivering up
to a 5% increase in asset utilization. Lessons
learned will guide us as we roll out AI to our
other facilities.
Sequential Quarterly Volume Improvement
(indexed against 2019 quarterly average of shipped volume* )
Supply chain
pressures peak
Q4
Q2
Q3
Q2
Q1
Q3
Ukraine
conflict
Q4
Upward trend
for volumes
Q3
Supply chain
pressures
easing
Q1
Q2
Q4
Food supply
chain inventory
destocking
Q4
Q1
Q3
Q1
Delta Variant
and start
of global
supply chain
disruptions
COVID–19
emerges
Q2
110%
105%
100%
95%
90%
85%
80%
2020
2021
2022
2023
* Shipped head product volume excludes global HFCS shipped volume, as well as impact of Argentina
JV (2021) and Cedar ethanol (2020)
5
2023 INGREDION ANNUAL REPORT Journeying Toward a
Sustainable Future
We are committed to growing responsibly, using the ESG framework
we developed as part of our 2030 All Life sustainability plan.
SAFEGUARDING OUR PLANET
It has never been more imperative that our responses to an ever-evolving world remain
thoughtful, considerate, measured, and collaborative.
• We are well on our way to meeting our goal
of having 100% of our Tier 1 crops (i.e., corn,
tapioca, potato, stevia, and pulses) sustain-
ably sourced by 2025, having reached 66%*
by the end of 2023.
• As a founding member of the Sustainable
Agriculture Initiative (SAI) Platform regen-
erative agriculture program, we are helping
to develop a regenerative framework for
the food and beverage industry.
• Our commitment to reducing Scope 1 and Scope
2 emissions progressed meaningfully last year.
— We continued our transition in Brazil to
renewable energy with the installation
of two biomass boilers and contracting
renewable electricity, reducing our
Brazilian CO2 emissions by 7% annually. In
2023, our four Brazilian plants purchased
95+% renewable electricity.
— We installed floating and land-based solar
panels in Thailand and land-based panels
in Pakistan.
• The collaborative regenerative agricultural
projects with customers are generating
incremental value across the supply chain
for Ingredion as well as for farmers and
customers. We expanded projects with
growers by 56,000 acres, putting 70,000
acres under regenerative projects.
• In partnership with the Kenyan
government and other entities, we
helped feed 50,000 school children in
2023, with the goal of serving 100,000
in 2024 and 2.4 million in 2025.
ACHIEVING RECORD
SAFETY LEVELS
Our operations team
made great strides in
driving employee and
contractor safety in 2023.
Historically, Ingredion
has operated at world-
class safety levels, but
this year, we saw a
particularly dramatic
reduction in recordable
and lost-time case rates.
INGREDION
ACHIEVED AN
EMPLOYER TOTAL
CASE INCIDENT
RATE OF
0.19
IN 2023.
*Estimate as of December 2023
6
Growth Across
the Globe
Ingredion’s ability to deliver consistent performance and steady growth reflects
the geographic diversity of our markets and the breadth of our solutions.
27%
SPECIALTIES
INGREDIENTS
62%
SPECIALTIES
INGREDIENTS
59%
SPECIALTIES
INGREDIENTS
NORTH AMERICA
$5.2B
of net sales
$718M
operating income
EUROPE, MIDDLE
EAST, AFRICA
$821M
of net sales
$156M
operating income
ASIA-PACIFIC
$1.1B
of net sales
$126M
operating income
26%
SPECIALTIES
INGREDIENTS
SOUTH AMERICA
$1.1B
of net sales
$142M
operating income
7
2023 INGREDION ANNUAL REPORT Financial Highlights
Sales
Based on 2023 Net Sales
Dollars in millions, except per share amounts;
years ended December 31
2023 % CHANGE
2022 % CHANGE
2021
Reported Income Statement Data
Net sales
Operating income
Diluted earnings per share
$8,160
3%
$7,946
15% $6,894
957
9.60
26%
31%
762
7.34
146%
324%
310
1.73
Balance Sheet and Other Data
Cash and cash equivalents
Total assets
Total debt
401
7,642
2,188
Total equity (including redeemable equity)
3,650
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
2.98
1.5
1,057
62
219
316
236
7,561
2,483
3,262
2.72
2.2
152
55
215
300
328
6,999
2,046
3,225
2.58
1.9
392
55
220
300
FOOD
BEVERAGES & BREWING
PAPERMAKING/PACKAGING,
54%
16%
PHARMA & PERSONAL CARE 20%
ANIMAL NUTRITION
10%
Adjusted Return
on Invested Capital
14.0%
13.0%
12.0%
11.0%
10.0%
9.0%
+25% OVER THE
3-YEAR PERIOD
13.3%
10.7%
11.0%
2021
2022
2023
Net
Sales
(in billions)
Operating
Income
(in millions)
Reported Diluted
Earnings Per
Share
(in dollars)
Adjusted Diluted
Earnings Per
Share1
(in dollars)
Market
Capitalization
as of 12/31/23
(in billions)
.
0
8
9 $
6
$
.
.
2
8
$
7
5
9
$
2
6
7
$
0
6
9
$
.
4
3
.
7
$
2
4
9
$
.
5
4
.
7
$
.
7
6
6
$
1
.
7
4 $
6
$
.
.
4
6
$
0
1
3
$
’21
’22
’23
’21
’22
’23
3
7
.
1
$
’21
’22
’23
’21
’22
’23
’21
’22
’23
1 See Financial Performance Metrics beginning on page 61 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
FORM 10-K
(Mark One)
❑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
X
For the fiscal year ended December 31, 2023
or
❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13397
Delaware
(State or other jurisdiction of incorporation or organization)
22-3514823
(I.R.S. Employer Identification No.)
INGREDION INCORPORATED
(Exact name of registrant as specified in its charter)
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:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
INGR
New York Stock Exchange
X
X
X
Accelerated filer ❑
Non-accelerated filer ❑
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ❑ No ❑
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
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ❑ No ❑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ❑ No ❑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ❑X
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ❑
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
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
prepared or issued its audit report Yes ❑ No ❑
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
the filing reflect the correction of an error to previously issued financial statements. ❑
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ❑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ❑ No ❑
X
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
fiscal quarter (based upon the per share closing price of $105.95 as reported on the New York Stock Exchange on June 30, 2023, and, for the purpose of
this calculation only, the assumption that all of the registrant’s directors and executive officers are affiliates) was approximately $6,990,000,000.
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of February 15, 2024 was 65,563,650.
Documents Incorporated by Reference:
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 Proxy Statement to be distributed in connection with its 2024 Annual Meeting of Stockholders, which will be filed with the Securities and
Exchange Commission within 120 days after December 31, 2023.
Smaller reporting company ❑
Emerging growth company ❑
X
1
2023 INGREDION ANNUAL REPORT INGREDION INCORPORATED FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1.
Business ......................................................................................... 4
ITEM 1A.
Risk Factors ..................................................................................... 9
ITEM 1B.
ITEM 1C.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
Unresolved Staff Comments ....................................................... 16
Cybersecurity ................................................................................ 16
Properties ....................................................................................... 17
Legal Proceedings ........................................................................ 18
Mine Safety Disclosures .............................................................. 18
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities ................ 18
[Reserved] ..................................................................................... 19
Management’s Discussion and Analysis of Financial
Condition and Results of Operations ....................................... 19
Quantitative and Qualitative Disclosures About
Market Risk .................................................................................... 25
Financial Statements and Supplementary Data ..................... 27
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................................ 53
ITEM 9A.
Controls and Procedures ............................................................. 53
ITEM 9B.
Other Information ........................................................................ 55
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections .................................................................................... 55
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
Directors, Executive Officers and Corporate Governance ..... 55
Executive Compensation ............................................................. 55
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters ...................... 55
Certain Relationships and Related Transactions,
and Director Independence......................................................... 55
ITEM 14.
Principal Accountant Fees and Services ................................... 55
PART IV
ITEM 15.
Exhibit and Financial Statement Schedules ............................ 56
ITEM 16.
Form 10-K Summary .....................................................................58
Signatures
..........................................................................................................59
2
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 Incorporated 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 our 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 geopolitical
conflicts and actions arising from them, including the impacts on
the availability and prices of raw materials and energy supplies,
supply chain interruptions, and volatility in foreign exchange and
interest rates; changing consumer consumption preferences that
may lessen demand for 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, animal nutrition, beverage and brewing
industries; the risks associated with pandemics; 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
cost of freight and logistics; our ability to contain costs, achieve
budgets and realize expected synergies, including our ability to
complete planned maintenance and investment projects on time
and on budget as well as with respect to freight and shipping costs
and hedging activities; 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, divestitures, or strategic alliances on
favorable terms as well as our ability to successfully conduct due
diligence, 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 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, 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; interruptions,
security incidents, or failures 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 below
and our subsequent reports on Form 10-Q and Form 8-K.
3
2023 INGREDION ANNUAL REPORT PART I
ITEM 1. Business
OUR COMPANY
Ingredion Incorporated (together with its consolidated subsidiaries,
the “Company,” “Ingredion,” “we,” “us,” and “our”) is a leading
global ingredients solutions provider that transforms grains, fruits,
vegetables and other plant-based materials into value-added
ingredient solutions for the food, beverage, animal nutrition,
brewing and industrial markets. Our innovative ingredient solutions
help customers stay on trend with simple ingredients and other in-
demand ingredients.
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. Currently, we
manage our operations geographically on a regional basis, with our
businesses and investments classified into the following reportable
business segments:
• North America – U.S., Mexico and Canada
• South America – Brazil, Colombia, Peru, Ecuador and Argentina
• Asia-Pacific – Thailand, China, Japan, Australia, Indonesia, India, the
Philippines, Malaysia, Singapore, New Zealand, Vietnam and previously
South Korea, in which we sold our business on February 1, 2024
• Europe, Middle East and Africa (“EMEA”) – Germany, Pakistan, the
United Kingdom, South Africa and Poland
In November 2023, we announced plans to reorganize our business
operations, which will result in a change to our reportable business
segments. Once the reorganization is complete, which we expect
will occur in 2024, we anticipate that our production assets and
commercial efforts will align with a global focus on Texture and
Healthful Solutions, a local focus on Food and Industrial Ingredients,
and other businesses. We will continue to report our results using
the existing reportable segment structure until the reorganization is
complete, the new segments are operational and discrete financial
information consistent with the new segments is being provided to
our Chief Executive Officer.
Our products are derived primarily from the processing of corn and
other starch-based materials, such as tapioca, potato and rice. 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.
GEOGRAPHIC SCOPE AND OPERATIONS
As of December 31, 2023, we utilized our global network of 47
manufacturing facilities and joint venture partnerships to support
key global product lines. 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
4
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, pea
protein, 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 produce
value-added ingredients for sale to customers in the food, beverage,
pharmaceutical and other industries in Argentina, Chile and
Uruguay (the “Argentina joint venture”). Ingredion and Grupo Arcor,
an Argentine food company, jointly appoint a team of executives to
manage the Argentina joint venture.
Our Asia-Pacific region manufactures corn-based products in China
and Thailand, tapioca- and rice-based products in Thailand, stevia
sweetener products in Malaysia and China, chemically modified
starch-based pharmaceutical excipients in India, and spray dried
and fine grade mannitol in India. On February 1, 2024, we completed
the divestiture of our business in South Korea, which manufactured
corn-based products, to an affiliate of the Sajo Group, a food
company headquartered in Seoul, South Korea. We supply products
manufactured in the Asia-Pacific region to our global network.
As of December 31, 2023, 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.
Our Asia-Pacific region includes 88 percent ownership of PureCircle
Limited (“PureCircle”), one of the leading producers and innovators
of stevia sweeteners and flavors for the food and beverage industry.
We also agreed to acquire the remaining 35 percent of shares from
our current 65 percent ownership of Mannitab Pharma Specialties
Private Limited (“Mannitab”), an Indian manufacturer of spray dried
mannitol and fine grade mannitol, by March 2026.
Our EMEA region includes six manufacturing facilities that
produce modified and specialty starches, glucose and dextrose in
Pakistan, Germany and the United Kingdom. Through our German-
headquartered subsidiary KaTech, we offer 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.
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 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. 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, we identify a portion of our
products as specialty ingredients and the remainder of our products
as core ingredients.
Starch products
Our starch products represented approximately 47 percent, 46
percent and 45 percent of our net sales for 2023, 2022 and 2021,
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 34 percent, 33
percent and 33 percent of our net sales for 2023, 2022 and 2021,
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, and beverages. These sweetener products 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.
Co-products and others
Co-products and others represented approximately 19 percent,
21 percent and 22 percent of our net sales for 2023, 2022 and
2021, respectively. We sell refined corn oil (from germ) to packers
of cooking oil and to producers of margarine, salad dressings,
shortening, mayonnaise and other foods. We also sell corn gluten
feed as animal feed and corn gluten meal 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
represented approximately 34 percent, 34 percent and 33 percent
of our net sales for 2023, 2022 and 2021, 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, which is 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.
5
2023 INGREDION ANNUAL REPORT 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 represented
approximately 66 percent, 66 percent and 67 percent of our net
sales for 2023, 2022 and 2021, respectively.
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. Our competitors include, among others, Archer-
Daniels-Midland Company (“ADM”), Cargill, Inc., Tate & Lyle PLC, and
Primient. 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
maintains 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. Smaller local corn
and tapioca processors also operate in some of our markets.
Some 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 2023:
INDUSTRIES SERVED
TOTAL
INGREDION
NORTH
AMERICA
SOUTH
AMERICA
ASIA-
PACIFIC
EMEA
Food
Beverage
Brewing
Food and Beverage
Ingredients
Animal Nutrition
Other
54%
50%
52%
66%
71%
9
7
70
10
20
12
7
69
11
20
1
16
69
13
18
6
3
75
4
21
1
—
72
6
22
Total Net Sales
100%
100%
100%
100% 100%
No customer accounted for 10 percent or more of our net sales in
2023, 2022 or 2021.
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
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, 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.
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., and we generally expect the supply of corn for these
subsidiaries to be adequate for our needs. Corn prices for our non-
U.S. subsidiaries 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 in any period may not fluctuate
in a manner that correlates to raw material costs of corn during
that period.
We use derivative hedging contracts to protect the gross margin
of our fixed (“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 based on our management’s judgment
as to the need to fix the costs of our raw materials to protect our
profitability. Outside North America and Europe, we generally
enter into 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.
RESEARCH AND DEVELOPMENT
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,
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 globally to
6
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.
Research and development (“R&D”) is supported by our marketing,
product technology, and technology support employees, 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 workforce, who are generally dedicated to
customers in a geographic region, sell our products directly to
manufacturers and distributors. In addition, we have employees
that provide 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 transport or a combination of
rail transport and trucks to deliver our products.
PATENTS AND TRADEMARKS
As of December 31, 2023, we owned more than 1,900 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 group of related
patents or any 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 of our employees contribute to our success and help us drive
financial performance.
Workforce profile
As of December 31, 2023, Ingredion employed approximately 11,600
people, of whom approximately 3,200 were located in the U.S.
and Canada. Approximately 32 percent of our U.S. and Canadian
employees are members of labor unions. Our collective bargaining
agreement at our Bedford Park, Illinois manufacturing facility, which
covers approximately 250 employees, expires in 2024.
The following table provides additional information about our
employees as of December 31, 2023:
REGION
North America
South America
Asia-Pacific
EMEA
Total Ingredion
APPROXIMATE NUMBER OF EMPLOYEES
5,200
2,250
2,650
1,500
11,600
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. 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 offices to foster connection and collaboration.
Inclusion and belonging
Our Executive Leadership Team and Board of Directors lead
our Purpose and drive inclusion and belonging throughout the
organization. Our program structure includes regional councils and
global councils, which are collectively composed of regional and
functional business leaders, human resource partners and select
Business Resource Group (“BRG”) 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 geographies and business areas, by providing
colleagues with opportunities to enhance cultural awareness, enable
collaboration, and inform our strategies for a broad consumer
marketplace.
We also participate in the Paradigm for Parity® coalition,
aspiring to achieve gender parity at manager level and above.
As of December 31, 2023, employees who self-identify as women
accounted for more than 30 percent of our Executive Leadership
Team and 40 percent of our 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
transparency in gender-data reporting, has included Ingredion in the
GEI for seven years. We use the GEI as a benchmark to measure our
performance and evaluate opportunities for improvement.
7
2023 INGREDION ANNUAL REPORT In December 2023, the Human Rights Campaign Foundation
designated Ingredion as a top scorer in its 2023-2024 Corporate
Equality Index with the Equality 100 Award: Leader in LGBTQ+
Workplace Inclusion.
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 material fines were imposed on us in 2023. 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. During 2023, we spent $36 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
$36 million for environmental facilities and programs in 2024.
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 website address is www.ingredion.com and our investor website
is www.ir.ingredionincorporated.com. We make available, free of
charge through our investor 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 investor website, and will be made available in print without
charge to any stockholder upon request in writing to our principal
executive offices at 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
Following the November 2023 announcement of our plans to
reorganize our operations, some of our executive officers were
identified for new roles beginning in 2024. Our executive officers
and their roles as of February 21, 2024 are as follows:
NAME
James P. Zallie
Valdirene Evans
Larry Fernandes
Davida M. Gable
James D. Gray
Tanya Jaeger de
Foras
AGE
62
56
59
57
57
53
POSITIONS, OFFICES AND BUSINESS EXPERIENCE
President and Chief Executive Officer since January 2018. Executive Vice President, Global Specialties and President,
Americas from January 2016 to December 2017. Director of Sylvamo Corporation, a global producer of uncoated papers.
Senior Vice President and President, Global Texture Solutions as of January 2024. Senior Vice President and President,
Asia-Pacific and Global Head of Pharma, Home and Beauty from October 2020 to December 2023. Senior Vice President and
President, Asia-Pacific from March 2018 to September 2020.
Senior Vice President and Chief Commercial and Sustainability Officer since July 2018. Senior Vice President and Chief
Commercial Officer from March 2018 to July 2018.
Vice President, Corporate Controller since joining Ingredion in October 2021. 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.
Executive Vice President and Chief Financial Officer since March 2017.
Senior Vice President, Chief Legal Officer, Corporate Secretary and Chief Compliance Officer since joining Ingredion in
November 2021. Deputy General Counsel and Chief Compliance Officer for Whirlpool Corporation, a global home appliance
manufacturer, from September 2019 to September 2021. EMEA Regional General Counsel for Whirlpool from June 2015 to
August 2019.
Michael O’Riordan
54
Senior Vice President, Texture & Healthful Solutions, EMEA and Asia-Pacific, as of January 2024. Board Chairman, Rafhan
Maize Ltd., a Company affiliate in Pakistan, since March 2023. Regional President, EMEA, from October 2020 to December
2023. Global Vice President, Marketing and Springboards, from July 2016 to September 2020.
Rob Ritchie
54
Senior Vice President, Food & Industrial Ingredients, LATAM and U.S./Canada, as of January 2024. Senior Vice President,
Food & Industrial Ingredients, Americas, from May 2023 to December 2023. Regional President, Mexico, U.S./Canada
Sweetener Solutions, Industrial Solutions and Kerr Concentrates from January 2021 to April 2023. President and General
Director, Mexico, from March 2018 to December 2020.
8
NAME
Eric Seip
Nancy Wolfe
Jeremy Xu
AGE
56
54
56
POSITIONS, OFFICES AND BUSINESS EXPERIENCE
Senior Vice President, Global Operations and Chief Supply Chain Officer since joining Ingredion in January 2021. Senior
Vice President, Global Supply Chain at ChampionX Holding Inc. (formerly Ecolab), an oil and gas equipment and services
company, from January 2020 to January 2021. Senior Vice President, Global Supply Chain at Ecolab from December 2011 to
December 2019.
Senior Vice President and Chief Human Resources Officer since joining Ingredion in January 2022. Senior Vice President,
Human Resources at Bayer Crop Science (formerly Monsanto), an agriculture, chemical and biochemical solutions company,
from June 2018 to January 2022.
Senior Vice President, Chief Innovation Officer and President, Global Healthful Solutions, as of January 2024. Senior Vice
President and Chief Innovation Officer from October 2020 to December 2023. 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
There are many factors that could adversely affect our business,
results of operations and cash flows, some of which are beyond our
control. The following is a description of some important factors that
may cause our business, results of operations, financial condition
and cash flows in future periods to differ materially from those
currently expected or desired. Factors not currently known to us
or that we currently deem to be immaterial may also materially
and adversely affect our business, results of operations, financial
condition and cash flows.
RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY
Geopolitical conflicts and actions arising from them may have
an adverse effect on the availability and prices of raw materials
and energy supplies, cause supply chain disruptions, or
contribute to volatility in foreign exchange and interest rates.
Our business may be adversely affected by new geopolitical
conflicts, including impacts from conflicts that affect shipping
through the Suez Canal, as well as the ongoing conflict between
Russia and Ukraine. Our operations in Russia and Ukraine accounted
for less than one half of one percent of our net sales in 2023, but
these locations are in regions that provide sources of raw material
and energy supplies 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 geopolitical conflicts have contributed to greater volatility in
foreign exchange and interest rates that affect our financial results.
Developments relating to geopolitical conflicts 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 practices, 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 practices
and 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
that contain sweetener products, including high fructose corn
syrup, in favor of foods that are perceived as being healthier, have
negatively affected 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 represent a significant cost to some
of our customers, including those engaged in the food and soft
drink industries, and continue to materially affect demand for our
products. Similarly, the increasing availability, use and acceptance of
weight loss medications, including the expanded use of medications
designed for weight loss in people without diabetes, may reduce
sales of food and beverage products that contain our ingredients
since the medications regulate appetite and may reduce the overall
amount of food and beverages consumed.
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 and equity markets. While currently these conditions have not
impaired our ability to access credit and equity markets to finance
our operations, we are subject to the risk of a further deterioration
in the financial markets.
These economic developments could negatively affect our
operations through reduced consumer demand for our products,
pressure to extend our customers’ payment terms, insolvency of our
customers and increased provisions for credit losses, product order
delays or cancellations, less attractive supplier finance terms and
conditions, and counterparty failures.
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
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2023 INGREDION ANNUAL REPORT cause us to produce products in excess of demand, increase our
inventory carrying costs, and incur additional charges for aged,
obsolete or spoiled inventory. 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 2023 net sales, approximately 54 percent were generated
by sales to the food industry, approximately 10 percent by sales to
the animal nutrition industry, approximately 9 percent by sales to
the beverage industry, and approximately 7 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.
Pandemics could have a material adverse effect on our
business.
Pandemics, such as the recent coronavirus pandemic, have had, and
could continue to have, negative impacts on our business, including
by 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 or
if competitors or customers independently identify or develop
new solutions that could compete with our 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. Increasing capabilities from generative artificial
intelligence may increase the ability of competitors or customers to
identify or develop new solutions that could compete with or reduce
demand for our products and services.
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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
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.
Our business in the past has been adversely affected by fluctuations
in our energy costs, which represented approximately 8 percent of
our finished product costs in 2023; and could be negatively affected
by such fluctuations in future periods. 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 in the past
and has been, and in future periods 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 ground.
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.
An inability to contain costs and working capital could
adversely affect our future profitability, cash flows, 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
and administrative costs, as well as the implementation of cost-
effective purchasing programs for raw materials, energy and related
manufacturing requirements. 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.
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 and soy futures market.
These derivative contracts typically mature within one year. At
expiration, we settle the derivative contracts at a net amount
equal to the change in the price of the commodity from the date
we entered the derivative contract, with the intention of offsetting
the change in commodity prices from the time we entered the
firm-priced supply contracts. 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 and soy 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.
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.
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 issues, product recalls, and customer
claims, including 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 the other applicable forms of insurance that we
carry. In addition, negative publicity caused by these types of
risks 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 that occur around
the globe, 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
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2023 INGREDION ANNUAL REPORT 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.
Moreover, 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 are or soon will be obligated to comply with new climate-related
reporting requirements under SEC rules, California climate-related
reporting statutes, laws of member states of the European Union
implementing the EU Corporate Sustainability Reporting Directive,
and other laws and regulations. These sustainability reporting
frameworks will require us to provide, at least annually, detailed
public disclosures about the greenhouse gas emissions and other
climate-related effects our activities produce, the climate-related
operating and financial risks we face, and the strategies we pursue
to reduce and adapt to the impacts of climate change. We expect
to incur substantial costs to prepare these disclosures. If we fail to
compile, assess and report the required operating and accounting
information in a timely manner and in accordance with mandatory
reporting standards, we could be exposed to fines and other
sanctions and sustain harm to our reputation.
We may not successfully identify and complete acquisitions,
divestitures, 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
divestitures or strategic alliances. We have completed several such
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acquisitions and strategic alliances in recent years, and divested
our business in South Korea on February 1, 2024. We may be
unable to find suitable acquisition candidates, divestiture investors,
or appropriate partners with which to form partnerships, sell
operations or assets, or form strategic alliances. Even if we identify
appropriate acquisition, divestiture or alliance candidates, we may
be unable to complete such acquisitions, divestitures or alliances on
favorable terms, on time, on budget, or at all.
The failure to consummate proposed transactions may result in the
diversion of substantial resources, including management time and
cash used for transaction-related expenses, that otherwise would
be available for developing our ongoing business. Due diligence
performed prior to an acquisition may fail to identify a material
liability or an issue that could have an adverse impact on the
Company’s reputation or reduce or delay the anticipated benefits
resulting from the acquisition. In addition, the process of integrating
an acquired business, technology, service, or product into our
existing business and operations, or of divesting certain operations
or businesses, may result in unforeseen operating difficulties and
expenditures, including with respect to the retention of strategic
talent, systems integration, and internal control effectiveness.
Integration of an acquired company or transitioning a divested
business or operations may also require significant management
resources that otherwise would be available for developing our
ongoing business. Moreover, we may not realize the anticipated
benefits of any acquisition, divestiture or strategic alliance and such
transactions may not generate anticipated financial results. Future
acquisitions or divestitures could also require us to issue equity
securities, incur debt, assume contingent liabilities, impair assets, or
amortize expenses related to intangible assets, any of which could
harm our business.
Additionally, we participate in several joint ventures, some of which
are intended to be long-term investments, in which we have limited
control over governance, financial reporting, and operations. As a
result, we face operating, financial, legal and other risks relating to
these investments, including risks related to the financial strength of
our joint venture partners or their willingness to provide adequate
funding for the joint venture, differences in objectives between us
and our partners, legal and compliance risks relating to actions or
omissions of the joint venture or our partners, and the risk that we
will be unable to resolve disputes with the joint venture partner. As
a result, these investments may contribute significantly less than we
anticipate to our earnings and cash flows.
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.
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.
Our operations are subject to political, economic and other risks.
There has been and continues to be significant political instability
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 and Argentina, may prevent the repatriation
of dividends or payments due to us from our subsidiaries in the
country. Protectionist trade measures and import and export
licensing requirements could also adversely affect our results of
operations.
Natural disasters, war, acts and threats of terrorism, 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. Any such event could result in disruptions to
operations, asset write-offs, decreased sales and a negative impact
on our cash position.
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 the recent coronavirus
pandemic 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 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
The recognition of impairment charges on goodwill or long-
lived assets could adversely impact our future financial position
and results of operations.
We have $1.3 billion of total net intangible assets as of December 31,
2023, consisting of $918 million of goodwill and $385 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 $2.9 billion of long-lived assets, or 38 percent
of our total assets, as of December 31, 2023.
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, 2024.
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, including regulations regarding
child labor, 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 disputes or 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
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2023 INGREDION ANNUAL REPORT 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.
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.
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, 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.
On October 8, 2021, the Organization for Economic Co-operation
and Development (“OECD”) members approved a framework
for reform of the international tax rule (“Inclusive Framework
Statement”). The Inclusive Framework Statement sets forth
key terms for a two-pillar solution designed to address the tax
challenges arising from the digitalization of the economy. Pillar
One focuses on nexus and profit allocation and would apply to
multinational enterprises with annual global revenue above 20
billion euros and profitability above 10 percent. Based on these
thresholds, we would currently be outside the scope of Pillar One.
The Pillar Two rules, which would apply to us, are designed to
ensure certain multinational enterprises, with consolidated revenues
of at least 750 million euros in at least two out of the last four years,
pay a global minimum effective corporate tax rate of 15 percent in
each jurisdiction in which they operate.
On February 1, 2023, the U.S. Financial Accounting Standards Board
indicated that it believes the minimum tax imposed under Pillar Two
is an alternative minimum tax. Therefore, deferred tax assets and
liabilities associated with the minimum tax will not be recognized
or adjusted for the estimate future effects of the minimum tax but
instead will be recognized in the period incurred.
Pillar Two legislation has been enacted in certain jurisdictions in
which we operate. The legislation will be effective for the financial
year beginning January 1, 2024. We have performed an assessment
of our potential exposure to Pillar Two income taxes. This assessment
is based on the most recent tax information available regarding
the financial performance of the constituent entities in our group.
Based on the assessment performed, we do not expect Pillar Two, as
currently enacted, to have a material impact on our effective tax rate.
The OECD continues to release additional guidance on Pillar Two,
and additional countries are expected to enact legislation. Although
it is difficult at this stage to determine with precision the impact
future Pillar Two proposals would have, their implementation could
adversely impact our effective tax rate.
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During 2023, the Brazilian Government published Law 14.789,
effective January 1, 2024, that eliminated the exclusion of certain tax
incentives provided by federal, state, and municipal authorities from
taxable income and modified the interest on net equity instrument.
This law will adversely impact our provision for income taxes.
RISKS RELATED TO OUR FINANCING ACTIVITIES
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, through the sale
of assets, or through the sale or divestiture of certain businesses or
operations. 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,
from the sale of assets, or from the sale or divestiture of certain
businesses or operations 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.
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 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.
RISKS RELATED TO OUR INFORMATION TECHNOLOGY
SYSTEMS
Our information technology systems, processes and sites may
suffer interruptions, security incidents, or failures which may
affect our ability to conduct our business and cause significant
damage to our reputation.
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.
The frequency, sophistication and unpredictability of cybersecurity
events globally have increased, and can be acute during times
of geopolitical tension or instability between countries or when
we make changes to our information technology systems or
implement new ones. We have been subjected in the past, and
may be subjected in the future, to incidents including phishing,
e-mails purporting to come from vendors making payment requests,
malware, and communications from look-alike corporate domains,
as well as security-related risks resulting from our use of third-party
software and services. The use of generative artificial intelligence
is increasing the sophistication and effectiveness of these types
of social engineering attacks. Future data security incidents could
compromise or lead to the loss of material confidential, proprietary
or otherwise protected information, seize, destroy or corrupt data,
or otherwise disrupt our operations or affect our customers or other
stakeholders.
Insider or employee cyber and security threats are also a significant
concern for all companies, including ours. Despite our substantial
investment in physical and technological security measures,
employee training and contractual precautions, our information
technology networks and infrastructure (or those of our third-party
vendors and other service providers) are potentially vulnerable to
unauthorized access to data, loss of access to systems or breaches
of confidential information due to criminal conduct, attacks by
hackers, employee or insider malfeasance or human error.
Although we have put in place security measures to protect
ourselves against cyber-based attacks and disaster recovery plans
for our critical systems that are designed to protect our data and
customer data and to prevent data loss and other security incidents,
these security measures cannot provide absolute security. In some
cases, it is difficult to anticipate, detect or identify indicators of
such incidents and assess the damage caused by the incidents.
In addition, a failure to promptly disclose such material incidents
as required by law may result in additional financial or regulatory
consequences.
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 incidents, or
cyber-based attacks, and if our cyber security response plans and
disaster recovery and our cyber incident response 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 damage our
reputation. Any such incidents also could subject us to government
investigations or private litigation. These factors may adversely
impact our revenues, operating results and financial condition. We
could also experience delays in reporting our financial results.
The third-party data management providers and other vendors that
we rely upon may have or develop security problems or security
vulnerabilities which may also affect our systems or data. We cannot
guarantee that a data security or privacy breach of their systems
or other form of cyber-based attack will not occur in the future. In
addition, we use external vendors to perform security assessments
on a periodic basis to review and assess our information security.
We utilize this information to audit ourselves, monitor the security
of our technology infrastructure, and assess whether and how
to prioritize the allocation of scarce resources to protect data
and systems. However, we cannot ensure that these security
assessments and audits will identify or appropriately categorize
relevant and contemporary risks or result in the protection of
our computer networks against security intrusions. Although we
require our third-party vendors contractually to maintain a level of
security that is acceptable to us and work closely with key vendors
to address potential and actual security concerns and attacks,
we cannot ensure that all confidential, proprietary, or personal
information will be protected on their systems.
Regardless of whether incidents result from an attack on us directly
or on third-party vendors upon which we rely, the costs to address
the foregoing security problems and security vulnerabilities before
or after a cybersecurity incident could be significant. Remediation
efforts may not be successful or timely 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.
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.
Our 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.
15
2023 INGREDION ANNUAL REPORT 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
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 controls related to user access over certain
information technology systems.
ITEM 1B. Unresolved Staff Comments
None.
ITEM 1C. Cybersecurity
We face numerous cybersecurity risks that include cyber-based
attacks and other security threats to our systems. We also could be
adversely affected by cybersecurity incidents affecting our suppliers
and other third-party service providers. To meet these threats, we
expend considerable resources on cybersecurity risk management,
strategy and governance.
The Board of Directors, directly and through its Audit Committee,
oversees our cybersecurity risk management. The Board of Directors
reviews material cybersecurity risks we face, approves strategic
priorities, and monitors progress made towards those priorities.
The Audit Committee is responsible under its charter for reviewing
with our management our policies and procedures with respect to
cybersecurity risks and the processes management has implemented
to monitor and mitigate those risk exposures. On a regular basis,
the Audit Committee considers management’s reports on significant
changes to our cybersecurity policies and standards, as well as risk
mitigation and remediation efforts being undertaken with respect
to cybersecurity incidents and under the program generally. The
Audit Committee regularly reports to the Board of Directors on its
activities with respect to cybersecurity matters.
In general, our incident and crisis management plans are aligned
with the National Institute of Standards and Technology (NIST)
framework for cybersecurity. These plans are intended to provide
a framework and processes that allow us to take a consistent
approach to cybersecurity before, during and after a cybersecurity
incident. Our plans are reviewed and updated periodically. In
addition, we conduct cybersecurity tabletop exercises to simulate
an actual incident and increase our team’s awareness and
preparedness. Based upon these activities, we maintain a risk
register to track identified vulnerabilities and associated mitigation
plans. We also regularly conduct security awareness training and
phishing exercises for our employees around the world to help them
identify and report suspicious activity.
16
We have implemented a number of cybersecurity risk management
processes to assess, identify and manage material risks from
cybersecurity threats. We conduct real-time monitoring of our
environment for suspicious cyber activity using a variety of security
tools and centralized logging systems. In addition, we leverage
threat intelligence monitoring to stay updated on emerging cyber
threats and vulnerabilities and, utilizing this information, conduct
regular vulnerability assessments. Furthermore, we conduct regular
penetration tests to simulate real-world attacks and identify
weaknesses.
To supplement our internal resources, we engage external
consultants to conduct independent assessments, perform
penetration testing, and provide other cybersecurity-related services
as needed. We also utilize external consultants and legal counsel
to facilitate cybersecurity tabletop simulations. In addition, we
engage external vendors to review and test key controls within our
cybersecurity program.
We regularly assess cybersecurity risks associated with our use of
suppliers and other third-party service providers. In this process, we
classify by level of risk our principal suppliers and other key service
providers and evaluate their data security controls and changes in
potential cybersecurity risk levels. In addition, our contracts with
these service providers require them to promptly report security
incidents to us and to provide us with access to relevant information
and resources to allow us to conduct related investigations.
Our cybersecurity risk management processes are integrated as
part of our overall enterprise risk management (ERM) processes.
Our Audit Committee conducts its oversight of our cybersecurity
risk management as part of its oversight of our enterprise risk
management policies and procedures. In addition, we conduct an
annual survey of over 150 Ingredion business leaders across multiple
functions and geographic locations that asks them to evaluate the
potential severity and likelihood of cybersecurity matters, among
other enterprise and information technology risks. We solicit
their views on information and data security protection against
cyber and internal threats, reliability of systems including disaster
recovery related to malware or other cyber threats, and system
implementation failures, and use the responses to modify our risk
mitigation strategies accordingly.
Subject to oversight by our Board of Directors and Audit Committee,
as described above, our Chief Digital and Information Officer is
responsible for developing and guiding our global information
technology and digital strategy, which includes overseeing
cybersecurity risk management. The Chief Digital and Information
Officer provides guidance on cybersecurity strategy initiatives and
risk mitigation activities to the Senior Director, Global Information
Security and the associated function. Our Chief Digital and
Information Officer and our Senior Director, Global Information
Security provide regular reports on security incident activity,
including containment and remediation measures as relevant,
and other cybersecurity risk management matters to the Board of
Directors and the Audit Committee.
Our Chief Digital and Information Officer has over 30 years of
experience at multinational companies, including six years of
service at our company in his current position as a digital leader
and executive, including experience managing and responding
to cybersecurity risks. He holds a bachelor’s degree in computer
science. Our Senior Director, Global Information Security has
over two decades of service at multinational companies and a
federal government agency, including over one year of service
at our company in his current position dedicated to information
technology and cybersecurity, and possesses significant experience
in protecting critical data and building cybersecurity-resilient
organizations. He holds a bachelor’s degree in telecommunications
management and a master’s degree in cybersecurity, as well as a
current Certified Information Systems Security Professional (CISSP)
certification.
To date, the risks from cybersecurity threats have not materially
affected us. Notwithstanding our investment in cybersecurity,
however, we may not be successful in preventing or mitigating a
cybersecurity incident that could have a material adverse effect on
our business, results of operations, or financial condition.
For a discussion of cybersecurity risks affecting our business, see
Item 1A - Risk Factors - Risks Related to Our Information Technology
Systems.
ITEM 2. Properties
As of December 31, 2023, we owned or leased, 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.
As of February 21, 2024, after the February 1, 2024 divestiture of
our South Korea operations, our four reportable business segments
include the following 45 manufacturing facilities:
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
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
Leased
Owned
Owned
Owned
Owned
Owned
Partially leased
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.
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
We believe our manufacturing facilities are sufficient to meet our
current production commitments, and we conduct preventive
maintenance and de-bottlenecking programs designed to improve
grind capacity and facility reliability. Furthermore, we intend to
continue capital investments to support updates, modifications,
improvements and efficient operations of our facilities for the
foreseeable future.
We have electricity or biomass 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.
17
2023 INGREDION ANNUAL REPORT 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 to us 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, we self-reported certain monitoring and
recordkeeping issues relating to environmental regulatory matters
involving our Indianapolis, Indiana manufacturing facility. In
September 2017, following inspections and our provision of
requested information to the U.S. Environmental Protection
Agency (the “EPA”), the EPA issued to us a Notice of Violation,
which included additional alleged violations beyond those we
self-reported. These additional alleged violations primarily related
to the results of stack testing at the facility. The EPA referred the
overall matter to the U.S. Department of Justice, Environment and
Natural Resources Division (the “DOJ”). In November 2023, in the
final resolution of this matter, we entered into a consent decree
to settle claims that we violated the Clean Air Act. The consent
decree required us to pay a civil penalty of $1.1 million, contribute
$0.6 million to the State of Indiana to support Brownfields
redevelopment in and around Marion County, Indiana, and
undertake projects at the Indianapolis facility to reduce and offset
unpermitted emissions of particulate matter and to comply with
lower future particulate matter limits.
In addition to the foregoing matters, 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
Issuer purchases of equity securities
The following provides information about our stock repurchase
program during the fourth quarter of 2023:
Market information
Our common stock is listed on the New York Stock Exchange under
the symbol “INGR.”
Holders
At February 15, 2024, there were 2,979 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 future 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.
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
5,000
5,000
5,000
—
—
—
—
TOTAL
NUMBER
OF SHARES
PURCHASED
AVERAGE
PRICE PAID
PER SHARE
—
—
—
—
—
—
—
—
(shares in thousands)
October 1 –
October 31, 2023
November 1 –
November 30, 2023
December 1 –
December 31, 2023
TOTAL
On September 26, 2022, the Board of Directors approved a 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, 2023, we had 5.0 million shares available for
repurchase under the stock repurchase program.
18
ITEM 6. [RESERVED]
Not applicable.
ITEM 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Unless otherwise indicated or the context otherwise requires, as used
in this “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” the terms “the Company,” “Ingredion,”
“we,” “us,” and “our” and similar terms refer to Ingredion
Incorporated and its consolidated subsidiaries. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” should be read in conjunction with the Consolidated
Financial Statements and related notes included elsewhere in this
report. This discussion contains forward-looking statements that are
subject to numerous risks and uncertainties. Actual results may differ
materially from those contained in any forward-looking statements.
See “Forward-Looking Statements” above.
OVERVIEW
We are a major supplier of high-quality food and industrial
ingredient solutions to customers around the world. As of
December 31, 2023, we had 47 manufacturing facilities located
in North America, South America, Asia-Pacific and EMEA, and
we manage and operate our businesses at a regional level. 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.
We acquired a 65 percent controlling interest in Mannitab Pharma
Specialties Private Limited (“Mannitab”), an Indian manufacturer
of spray dried mannitol and fine grade mannitol, on December 1,
2022; 100 percent of Amishi Drugs and Chemicals Private Limited
(“Amishi”), an Indian manufacturer of chemically modified starch-
based pharmaceutical excipients, on August 1, 2022; and 100
percent of KaTech, a German-headquartered provider of advanced
texture and stabilization solutions to the food and beverage
industry, 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 (income)
expense, 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.
RESULTS OF OPERATIONS
We have operations in four reportable business 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.
Our business performed well and remained resilient throughout
fiscal year 2023. Our targeted pricing actions and proactive cost
savings initiatives helped overcome inflation and raw material
volatility, leading to growth in net sales, operating income, net
income and diluted earnings per share in 2023. The increase in our
net sales and operating income was driven by price and customer
mix, partially offset by lower volumes and impacts of foreign
exchange rates. The increase in net income was driven by the above
factors in addition to a more favorable effective tax rate primarily
due to recent action by the Internal Revenue Service increasing our
ability to claim certain foreign tax credits against U.S. taxes.
For 2023, net sales increased 3 percent to $8.2 billion from $7.9
billion for 2022. Our operating income of $957 million for 2023
increased by 26 percent from operating income of $762 million
for 2022. Net income attributable to Ingredion for 2023 was $643
million, or $9.60 diluted earnings per share, which represented an
increase of 31 percent from $492 million, or $7.34 diluted earnings
per share, for 2022. The increases in net sales and operating income
were primarily due to favorable price mix, partially offset by volume
declines and foreign exchange impacts. The increase in net income
was driven by these factors in addition to a more favorable effective
tax rate.
For the Year Ended December 31, 2023 With
Comparatives for the Year Ended December 31, 2022
Net sales
Net sales increased 3 percent to $8.2 billion for 2023 compared to
$7.9 billion for 2022. The increase in net sales was driven by price
and customer mix, partially offset by lower volumes and unfavorable
foreign exchange impacts.
Cost of sales
Cost of sales decreased 1 percent to $6.4 billion for 2023 compared
to $6.5 billion for 2022. The decrease in cost of sales primarily
reflected lower volumes, partially offset by higher input costs. Our
gross profit margin increased to 21 percent in 2023 compared to 19
percent in 2022. The increase in gross profit margin was driven by
higher net sales in addition to a decrease in cost of sales.
Operating expenses
Operating expenses increased 10 percent to $789 million for 2023
compared to $715 million for 2022. The increase in operating
expenses during 2023 was primarily attributable to higher
compensation costs and spending to build long-term capabilities.
Operating expenses as a percentage of net sales was 10 percent in
2023 and 9 percent in 2022.
Other operating (income) expense
Other operating (income) expense was $8 million of income for
2023 compared to $13 million of expense for 2022. The 2023 income
was primarily attributable to income in our Argentina joint venture.
The 2022 expense was primarily attributable to charges resulting
from a U.S.-based work stoppage.
19
2023 INGREDION ANNUAL REPORT Restructuring/impairment charges
Restructuring and impairment charges increased to $11 million for
2023 from $4 million for 2022, which primarily reflected an other-
than-temporary-impairment to our equity method investments. The
2022 charges were the result of the completion of our Cost Smart
restructuring program.
Financing costs
Financing costs increased 15 percent to $114 million for 2023
compared to $99 million for 2022. The increase was primarily due to
higher interest rates in 2023 as compared to 2022.
Provision for income taxes
Our effective income tax rates for 2023 and 2022 were 22.4 percent
and 24.9 percent, respectively. The decrease in the effective tax rate
was primarily driven by the value of the Mexican peso against the
U.S. dollar, IRS Notice 2023-55, which increased our ability to claim
certain foreign tax credits against U.S. taxes, a favorable country
earnings mix primarily due to Brazil tax law developments, and a
related increase in our foreign-derived intangible income deduction.
The effects of these factors were partially offset by the impact of a
change in Brazilian law that became effective in the fourth quarter
of 2022 related to non-taxable Brazilian ICMS incentives granted
during fiscal years 2018 to 2022.
Net income attributable to non-controlling interests
Net income attributable to non-controlling interests decreased to
$8 million for 2023 from $10 million for 2022.
Net Income attributable to Ingredion
Net income attributable to Ingredion for 2023 increased to $643
million from $492 million for 2022. The increase in net income
was primarily due to price and customer mix and a more favorable
effective tax rate, which was partially offset by lower volumes.
North America
Net sales
North America’s net sales increased 5 percent to $5,188 million for
2023 from $4,934 million for 2022. The increase was primarily driven
by price mix, partially offset by volume and unfavorable foreign
exchange impacts.
Operating income
North America’s operating income increased 27 percent to $718
million for 2023 from $565 million for 2022. The increase was driven
by favorable price mix, partially offset by lower volumes and higher
fixed costs.
South America
Net sales
South America’s net sales decreased 6 percent to $1,062 million
for 2023 from $1,124 million for 2022. The decrease was primarily
driven by volume and price mix, partially offset by favorable foreign
exchange impacts.
Operating income
South America’s operating income decreased 16 percent to $142
million for 2023 from $169 million for 2022. The decrease was driven
by lower volumes and higher energy costs. On December 13, 2023,
the new Argentine government allowed the Argentine peso to
devalue from the exchange rate of approximately 366 pesos to one
20
U.S. dollar, to 800 pesos to one U.S.dollar. Because our accounting
policy is to recognize our share of income from the Argentina joint
venture one month in arrears, our 2023 results do not reflect the
impact of this devaluation.
Asia-Pacific
Net sales
Asia-Pacific’s net sales decreased 2 percent to $1,089 million for
2023 from $1,107 million for 2022. The decrease was driven by
volume and unfavorable foreign exchange impacts, partially offset
by price mix.
Operating income
Asia-Pacific’s operating income increased 35 percent to $126 million
for 2023 from $93 million for 2022. The increase was primarily
driven by lower input costs, partially offset by lower volumes.
EMEA
Net sales
EMEA’s net sales increased 5 percent to $821 million for 2023 from
$781 million for 2022. The increase was driven by favorable price
mix, partially offset by lower volumes and unfavorable foreign
exchange impacts.
Operating income
EMEA’s operating income increased 42 percent to $156 million for
2023 compared to $110 million for 2022. The increase was primarily
driven by favorable price mix, partially offset by lower volumes and
foreign exchange impacts.
For the Year Ended December 31, 2022 With
Comparatives for the Year Ended December 31, 2021
A discussion of the year-over-year comparison of results for
2022 and 2021 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, 2022.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, we had total available liquidity of $1.7
billion. Domestic liquidity of $705 million consisted of $32 million
in cash and cash equivalents and $673 million available through
our $1.0 billion commercial paper program that had $327 million of
outstanding borrowings. The commercial paper program is backed
by $1.0 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, 2023, we had international liquidity of $1.0
billion, consisting of $369 million of cash and cash equivalents and
$8 million of short-term investments held by our operations outside
the U.S., as well as $652 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, 2023, our guarantees aggregated $49 million. We
believe that those consolidated subsidiaries will be able to meet
their financial obligations as they become due.
Our revolving credit agreement, which is for an unsecured revolving
credit facility in an aggregate principal amount of $1.0 billion
outstanding at any time, 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 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 (as defined
for purposes of the revolving credit agreement) 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, 2023, we were in compliance with these financial
covenants.
Our commercial paper program allows us to issue senior unsecured
notes of short maturities up to a maximum aggregate principal
amount of $1.0 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 2023, the average
amount of commercial paper outstanding was $397 million with
a weighted average interest rate of 5.30 percent over a weighted
average maturity of 11 days. As of December 31, 2023, we had $327
million of commercial paper outstanding with a weighted average
interest rate of 5.50 percent over a weighted average maturity of
11 days. The amount of commercial paper outstanding under this
program in 2024 is expected to fluctuate.
As of December 31, 2023, we had total debt outstanding of $2.2
billion, or $1.7 billion excluding the outstanding commercial paper
and other short-term borrowings. Our outstanding debt consists
of senior notes where repayment will occur commencing in 2026
through 2050. In December 2023, we paid in full without penalty the
$200 million principal outstanding on our term loan that was due
on December 16, 2024 (“Term Loan”). The weighted average interest
rate on our total indebtedness was 4.5 percent for 2023 and 3.5
percent for 2022.
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, proceeds from divestitures, 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, changing working
capital requirements, the timing and extent of our expansion
into new markets, the timing of introductions of new products,
potential or agreed acquisitions of or investments in 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 increased to $1,057 million
in 2023 from $152 million in 2022. The increase in cash provided by
operating activities was primarily attributable to changes in working
capital and current period net income, which excluded net assets
and net liabilities we classified as held for sale for the February 1,
2024 sale of our South Korea business. Cash provided by working
capital increased to $77 million in 2023, as compared to cash used
for working capital of $664 million in 2022. This increase in cash
provided by working capital was primarily due to decreases in
inventory and trade accounts receivable, which was partially offset
by decreases in accounts payable and accrued liabilities during 2023.
Our cash used for investing activities increased to $329 million in
2023 from $320 million in 2022, primarily due to increased capital
expenditures in 2023. In 2023, we used $316 million of cash for
capital expenditures and mechanical stores purchases to update,
expand and improve our facilities, compared to $300 million we paid
in 2022 for the same purposes. Capital investment commitments for
2024 are anticipated to be approximately $340 million.
We used $569 million of cash for financing activities in 2023
compared to cash provided by financing activities of $103 million
in 2022. The difference was primarily attributable to increased
payments on debt, including the $200 million principal payment on
our unsecured Term Loan in December 2023, and a net $203 million
reduction of our commercial paper borrowings during 2023.
Also included in cash for financing activities are cash dividends
we pay to our common stockholders of record on a quarterly
basis. Dividends paid, including those to non-controlling interests,
increased 7 percent to $194 million during 2023 from $181 million
during 2022. The increase was due to an increase in our quarterly
dividend rate per share of common stock, which typically occurs
during the third quarter of each fiscal year. During 2023, we also
repurchased 1.0 million outstanding shares of our common stock in
open market transactions at a net cost of $101 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,
21
2023 INGREDION ANNUAL REPORT 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
(“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 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 shown in the
table below.
22
RETURN ON INVESTED CAPITAL RATIO
(dollars in millions)
Net income (a)
Adjusted for:
Provision for income taxes
Other non-operating expense (income)
Financing costs
Restructuring/impairment charges(i)
Acquisition/integration costs(ii)
Other matters(iii)
Income taxes (at effective rates of 24.9% and
27.0%, respectively)(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)
YEAR ENDED
DECEMBER 31,
2023
2022
$651
$502
188
4
114
11
—
1
166
(5)
99
4
1
20
(241)
(212)
728
448
1,740
(401)
(8)
575
543
1,940
(236)
(3)
1,779
2,244
55
43
48
51
3,552
3,163
$ 5,429
$5,506
$5,468
$ 5,223
11.9%
13.3%
9.6%
11.0%
(i) In 2023, we recorded $11 million of pre-tax restructuring/impairment charges
primarily related to an other-than-temporary impairment on our equity method
investments. In 2022, we recorded $4 million of pre-tax restructuring charges
primarily related to the Cost Smart programs.
(ii) In 2022, acquisition/integration costs were reduced by $4 million as they were
included in financing costs.
(iii) In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts
of a U.S.-based work stoppage. This was partially offset by $4 million of insurance
recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to
the impacts of a U.S.-based work stoppage.
(iv) The effective income tax rate was 24.9 percent for 2023 and 27.0 percent for 2022.
YEAR ENDED
DECEMBER 31, 2023
YEAR ENDED
DECEMBER 31, 2022
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR
INCOME
TAXES
EFFECTIVE
INCOME
TAX
RATE
INCOME
BEFORE
INCOME
TAXES
PROVISION
FOR
INCOME
TAXES
EFFECTIVE
INCOME
TAX
RATE
$839
$188
22.4% $668
$166
24.9%
—
11
1
—
—
—
3
—
6
15
5
4
20
—
—
—
1
5
12
4
(dollars in millions)
As reported
Add back:
Acquisition/
integration costs
Restructuring/
impairment charges
Other matters
Other tax matters
Tax item-Mexico
Adjusted non-GAAP
$851
$212
24.9% $697
$188
27.0%
Our long-term objective is to maintain an Adjusted ROIC in excess
of 10.0 percent. For 2023, we achieved an Adjusted ROIC of 13.3
percent as compared to 11.0 percent for 2022.
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 shown in the table below.
AS OF DECEMBER 31,
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
Other non-operating expense (income)
Restructuring/impairment charges(i)
Acquisition/integration costs(ii)
Other matters(iii)
Adjusted EBITDA (c)
Net Debt to Income before income tax ratio (a ÷ b)
Net Debt to Adjusted EBITDA ratio (a ÷ c)
2023
$448
1,740
(401)
(8)
1,779
839
219
114
4
12
—
1
2022
$543
1,940
(236)
(3)
2,244
668
215
99
(5)
4
1
20
$1,189
$1,002
2.1
1.5
3.4
2.2
(i)
During 2023, we recorded $11 million of pre-tax net restructuring/impairment charges
primarily related to an other-than-temporary impairment on our equity method
investments. This was increased by $1 million as it included a depreciation benefit that
was already included in depreciation and amortization line. In 2022, we recorded $4
million of pre-tax restructuring charges primarily related to the Cost Smart programs.
(ii) In 2022, acquisition/integration costs were reduced by $4 million as they were
included in financing costs.
(iii) In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts
of a U.S.-based work stoppage. This was partially offset by $4 million of insurance
recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to
the impacts of a U.S.-based work stoppage.
Our long-term objective is to target a ratio of Net Debt to Adjusted
EBITDA of 2.5 or less. As of December 31, 2023 and 2022, the ratio
was 1.5 and 2.2, 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 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 described 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 in 2022, the majority of shares of
Mannitab in 2022, and KaTech in 2021 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 additional
information.
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, 2023 were $2.4 billion and $242
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
23
2023 INGREDION ANNUAL REPORT 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,
2023 was $143 million and $918 million, respectively, compared to
$143 million and $900 million, respectively, at December 31, 2022.
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, 2023, 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. 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, 2023, 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
24
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
$12 million in 2023 and $6 million in 2022.
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, 2023 and 2022, was 5.00 percent and 5.19 percent,
respectively. The weighted average discount rate used to determine
our obligations under non-U.S. pension plans as of 2023 and 2022,
was 5.24 percent and 5.66 percent, respectively. The weighted
average discount rate used to determine our obligations under our
postretirement plans as of December 31, 2023 and 2022, was 7.37
percent and 7.30 percent, respectively.
A one percentage point decrease in the discount rates at 2023,
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
$27
27
$ 19
22
$ 9
Our investment approach and related asset allocation for the U.S.
and Canadian 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 2023,
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 5.50 percent for U.S. plans and approximately 4.66 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 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 2024 net periodic pension cost for the
U.S. and Canadian 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, 2023, the health care cost trend rate assumptions for
the next year for the U.S., Canadian and Brazilian plans were 7.80
percent, 5.04 percent and 8.94 percent, respectively.
For information related to our benefit plans, see Note 11 of the Notes
to the Consolidated Financial Statements
NEW ACCOUNTING STANDARDS
For information related to our new accounting standards, see Note 1
of the Notes to the Consolidated Financial Statements.
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
25
2023 INGREDION ANNUAL REPORT manufacturing process. Our finished products are made primarily
from corn. Primarily 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 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.
Energy costs represent approximately 8 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, 2023, we had outstanding futures and option
contracts that hedged the forecasted purchase of approximately
109 million bushels of corn, as well as outstanding swap contracts
that hedged the forecasted purchase of approximately 28 million
mmbtus of natural gas. Based on our overall commodity hedge
position at December 31, 2023, 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 $48 million, net of income tax benefit of $18 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,
2023, our Accumulated other comprehensive loss (“AOCL”) balance
included $46 million of net losses (net of income tax benefit of
$17 million) related to these derivative instruments. We anticipate
that $45 million of net losses (net of income tax benefit of $16
million) will be reclassified into earnings over the next 12 months.
We expect the net losses 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, 2023,
approximately 80 percent, or $1.7 billion principal amount, of
our total debt is fixed rate debt and 20 percent, or approximately
$450 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, 2023. A hypothetical increase of 1 percentage point
in the weighted average floating interest rate would increase our
annual interest expense by approximately $4 million and would
change the fair value of our fixed rate debt at December 31, 2023
by approximately $105 million. See Note 8 of the Notes to the
Consolidated Financial Statements for additional 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 material effect on our Consolidated Financial Statements.
We occasionally use T-Locks to hedge our exposure to interest rate
changes based on current and projected market conditions. We
did not have any T-Locks outstanding as of December 31, 2023. As
of December 31, 2023, our AOCL account included $2 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 over the next 12 months are not
anticipated to be material.
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, 2023, 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 $21 million.
At December 31, 2023, 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 $2.2 billion at December 31, 2023.
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
$250 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
26
hedging instruments for accounting purposes. As of December 31,
2023, we had foreign currency forward sales contracts with an
aggregate notional amount of $694 million and foreign currency
forward purchase contracts with an aggregate notional amount of
$182 million not designated as hedging instruments for accounting
purposes. As of December 31, 2023, we also had foreign currency
forward sales contracts with an aggregate notional amount of
$449 million and foreign currency forward purchase contracts with
an aggregate notional amount of $621 million that are classified as
cash flow hedges. The amount included in AOCL relating to these
hedges at December 31, 2023 was an insignificant amount (net of $1
million income tax expense). We expect $1 million of net losses (net
of an insignificant amount of income tax benefit) 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 exchange rates. 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:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets
of Ingredion Incorporated and subsidiaries (the Company)
as of December 31, 2023 and 2022, 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, 2023, and the related
notes (collectively, the consolidated financial statements). In our
opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as
of December 31, 2023 and 2022, and the results of its operations
and its cash flows for each of the years in the three-year period
ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission, and our
report dated February 21, 2024 expressed an unqualified opinion
on the effectiveness of the Company’s internal control over
financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits 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 audits 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. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter
arising from the current period audit of the consolidated
financial statements 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 $505 million as of
December 31, 2023. 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.
27
2023 INGREDION ANNUAL REPORT We identified the evaluation of certain 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
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, 2024
28
CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in millions, except per share amounts)
Net sales
Cost of sales
Gross profit
Operating expenses
Other operating (income) expense
Restructuring/impairment charges
Operating income
Financing costs
Other non-operating expense (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.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Net income
Other comprehensive income:
YEAR ENDED DECEMBER 31,
2023
2022
2021
$8,160
$7,946
$6,894
6,411
1,749
6,452
1,494
789
(8)
11
957
114
4
839
188
651
8
715
13
4
762
99
(5)
668
166
502
10
$643
$492
66.0
67.0
$9.74
$9.60
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
YEAR ENDED DECEMBER 31,
2023
$ 651
2022
$502
2021
$ 125
(Losses) gains on cash flow hedges, net of income tax effect of $40, $53 and $58, respectively
(111)
157
160
Losses (gains) on cash flow hedges reclassified to earnings, net of income tax effect
of $21, $69 and $55, respectively
Actuarial (losses) gains on pension and other postretirement obligations, settlements
and plan amendments, net of income tax effect of $—, $1 and $9, respectively
Losses on pension and other postretirement obligations reclassified to earnings, net
of income tax effect of $—
Currency translation adjustment
Comprehensive income
Less: Comprehensive income attributable to non-controlling interests
57
(2)
1
47
643
2
(199)
(154)
(4)
—
(105)
351
—
19
—
211
361
9
Comprehensive income attributable to Ingredion
$641
$ 351
$352
See the Notes to the Consolidated Financial Statements.
29
2023 INGREDION ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS
(dollars and shares in millions, except per share amounts)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Prepaid expenses and assets held for sale
Total current assets
Property, plant and equipment, net
Intangible assets, net
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Short-term borrowings
Accounts payable
Accrued liabilities and liabilities held for sale
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 25.0 shares — $0.01 par value, none issued
Common stock — authorized 200.0 shares — $0.01 par value, 77.8 issued at December 31, 2023 and 2022
Additional paid-in capital
Less: Treasury stock (common stock: 12.6 and 12.1 shares at December 31, 2023 and 2022, respectively) at cost
Accumulated other comprehensive loss
Retained earnings
Total Ingredion stockholders’ equity
Non-redeemable non-controlling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
See the Notes to the Consolidated Financial Statements.
30
AS OF DECEMBER 31,
2023
2022
$401
8
1,279
1,450
261
3,399
2,370
1,303
570
$7,642
$448
778
546
1,772
1,740
480
3,992
55
43
—
1
1,146
(1,207)
(1,056)
4,654
3,538
14
3,552
$7,642
$236
3
1,411
1,597
62
3,309
2,407
1,301
544
$7,561
$543
873
466
1,882
1,940
477
4,299
48
51
—
1
1,132
(1,148)
(1,048)
4,210
3,147
16
3,163
$7,561
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
TOTAL EQUITY
Balance, December 31, 2020
$—
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)
Balance, December 31, 2021
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)
Balance, December 31, 2022
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)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance, December 31, 2023
$—
See the Notes to the Consolidated Financial Statements.
$1
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
$1
$1,150
$(1,024)
$(1,133)
$3,957
—
—
—
—
8
—
—
—
—
(68)
31
—
—
—
—
—
—
236
117
—
(175)
—
—
—
1,158
(1,061)
(897)
3,899
—
—
—
—
3
(29)
—
—
—
—
—
(112)
25
—
—
—
—
—
—
—
—
—
—
(151)
492
—
(181)
—
—
—
—
—
1,132
(1,148)
(1,048)
4,210
—
—
—
—
7
7
—
—
—
—
—
(101)
42
—
—
—
—
—
—
—
—
—
(8)
643
—
(199)
—
—
—
—
—
$1,146
$(1,207)
$(1,056)
$4,654
$21
—
11
(11)
—
—
(3)
18
—
9
(5)
—
—
—
—
(6)
16
—
7
(3)
—
—
—
—
(6)
$14
$30
—
—
—
—
6
—
36
—
—
—
—
12
—
—
—
48
—
—
—
—
7
—
—
—
$55
$70
—
(3)
—
—
—
4
71
—
1
—
—
—
29
(46)
(4)
51
—
1
—
—
—
(7)
(2)
—
$43
31
2023 INGREDION ANNUAL REPORT CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Cash from 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 from 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 from financing activities
Proceeds from borrowings
Payments on debt
Commercial paper (repayments) borrowings, net
Repurchases of common stock, net
Issuances of common stock for share-based compensation, net
Purchases of non-controlling interests
Dividends paid, including to non-controlling interests
Cash (used for) provided by financing activities
Effects of foreign exchange rate changes on cash
Increase (decrease) 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.
32
YEAR ENDED DECEMBER 31,
2023
2022
2021
$651
$502
$125
219
62
—
(6)
69
77
69
(79)
10
(15)
1,057
215
55
—
(3)
57
(310)
(468)
158
(44)
(10)
152
220
55
340
(61)
8
(162)
(312)
226
(32)
(15)
392
(316)
(300)
(300)
2
—
(15)
(329)
720
(949)
(63)
(101)
20
(2)
(194)
(569)
6
165
236
7
(29)
2
(320)
825
(532)
140
(112)
9
(46)
(181)
103
(27)
(92)
328
$401
$236
18
(40)
(13)
(335)
1,300
(1,690)
250
(68)
19
—
(184)
(373)
(21)
(337)
665
$328
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE, UNLESS
OTHERWISE NOTED)
1. Description of the Business and Summary of
Significant Accounting Policies
Unless the context otherwise requires, all references herein to the
“Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion
Incorporated and its consolidated subsidiaries.
Description of the business
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.
Use of estimates
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.
Foreign currency translation
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 financing
costs in our Consolidated Statements of Income. Non-monetary
assets and liabilities are translated at historical exchange rates
with the related translation adjustments included in AOCL in our
Consolidated Balance Sheets.
Revenue recognition
Ingredion recognizes revenue under the core principle to depict our
transfer of products and solutions 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. The pricing model can be fixed or variable within
the contract. The variable pricing model is based on historical
commodity pricing and is determinable before we complete the
performance obligation. To determine the transaction price for the
contract performance obligations, we also evaluate whether the
price could be adjusted, and we may reduce the transaction price
for certain sales adjustments such as volume incentive discounts
and other discount arrangements. We estimate transaction price
adjustments 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 and liabilities held for sale 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 and liabilities held for sale
in the Consolidated Balance Sheets.
33
2023 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 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 (income) expense in the
Consolidated Statements of Income if we maintain the securities for
processing transactions that directly support operating activities;
otherwise, we record changes in fair value to Other non-operating
(income) expense 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
expense (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
expense (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 (income) expense 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 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
our obligation to make lease payments arising from the lease. Lease
assets and liabilities are recognized at the lease commencement
34
date based on the present value of future lease payments over the
lease term. The commencement date used for the calculation of
the lease obligations recorded is the latter of the lease start date or
January 1, 2019, which is when we adopted Accounting Standards
Codification (“ASC”) 842. 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. Certain leases have options to terminate or extend the life
of the lease, which we include in the lease asset and lease liability
calculation when we have sole discretion to exercise the option
and it is reasonably certain we will. We do not separate lease and
non-lease components for our leases when it is impracticable to
separate them, such as leases with variable payment arrangements.
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.
Leases with an initial term of twelve months or less are not recorded
on the Consolidated Balance Sheets.
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 machinery and
equipment. 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 charge. The impairment analysis for
long-lived assets occurs before the goodwill impairment assessment
described below.
Assets held for sale
We classify long-lived assets or disposal groups as held for sale in
the period when all of the following conditions have been met:
• We have approved and committed to a plan to sell the assets or
disposal group,
• The asset or disposal group is available for immediate sale in its
present condition,
• An active program to locate a buyer and other actions required to
complete the sale have been initiated,
• The sale of the asset or disposal group is probable and expected to
be completed within one year,
• The asset or disposal group is being actively marketed for sale at a
price that is reasonable in relation to its current fair value, and
• It is unlikely that significant changes to the plan will be made or
that the plan will be withdrawn.
When all the held for sale criteria are met, we initially measure a
long-lived asset or disposal group that is classified as held for sale
at the lower of its carrying value or the fair value less any costs
to sell, recognize any resulting losses, and cease depreciation and
amortization of the long-lived asset or assets within a disposal
group. Until the date of sale or until the asset or disposal group are
no longer classified as held for sale, we assess fair value less any
costs to sell and recognize any resulting losses at each reporting
period. Gains are not recognized until the date of the sale.
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 other
circumstances requiring assessment), which we perform as of July 1
of each year.
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 greater than its carrying amount. If not, then we determine the
fair value of the indefinite-lived intangible assets by performing
a quantitative impairment analysis that considers 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
to determine whether it is more-likely-than-not that the fair value
of a reporting unit is greater than its carrying amount. If not, 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 swaps, 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 fixed (“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 transaction is highly effective in offsetting
changes in cash flows or fair values of hedged items.
For hedging instruments designated as cash flow hedges, 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”) 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. 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.
For hedging instruments designated as fair value hedges, unrealized
gains and losses associated with marking fair value hedging
contracts to market (fair value) are recorded in earnings each
period. Unrealized gains and losses on hedged items in designated
and highly effective fair value hedges are also recorded in earnings
each period.
For hedging instruments not designated as hedging instruments for
accounting purposes, all realized and unrealized gains and losses
from these instruments are recognized in earnings during each
accounting period.
We assess the effectiveness of hedging contracts based on changes
in the contract’s fair value. The changes in the market value of our
hedging contracts have historically been, and are expected to be,
highly effective at offsetting changes in the price of hedged items.
We discontinue hedge accounting prospectively when it is unlikely
or not probable 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 and freeze the deferred gains or
losses into AOCL. Changes in the fair value of the derivative are
recognized in earnings in the same line item as the original hedged
transaction instead of AOCL. Any accumulated gains and losses that
were included in AOCL in the period we determined the hedge to be
ineffective are also released to earnings.
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
35
2023 INGREDION ANNUAL REPORT 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
expense (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 requisite service period.
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 our geographic dispersion, we believe that a loss from
a non-insured event in any one country would not have a material
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. We do not consider the potential for insurance
recoveries if we record accruals for estimated probable costs from
events or circumstances that may be insured.
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 adopted ASU 2020-04 at
the beginning of our 2023 fiscal year and this ASU did not have a
material impact on our Consolidated Financial Statements.
36
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,
except for the amendment on rollforward information, which is
effective for fiscal years beginning after December 15, 2023. We
adopted the updates to the standard at the beginning of our 2023
fiscal year and will adopt the amendment on rollforward information
during the first quarter of 2024. These updates did not have a
material impact to our Consolidated Balance Sheets. The disclosure
required by the recently adopted accounting standard is reflected
in Note 15. We are currently assessing the impact of the rollforward
information amendment on our Consolidated Financial Statements.
In August 2023, the FASB issued ASU No. 2023-05, Business
Combinations — Joint Venture Formations (Subtopic 805-60). The
amendments in this update require that a joint venture apply a
new basis of accounting upon formation. By applying a new basis
of accounting, a joint venture, upon formation, will recognize
and initially measure its assets and liabilities at fair value (with
exceptions to fair value measurement that are consistent with the
business combinations guidance). The amendments in this ASU
are effective prospectively for all joint venture formations with a
formation date on or after January 1, 2025. A joint venture that was
formed before January 1, 2025 may elect to apply the amendments
retrospectively. We plan to adopt this ASU on a prospective basis at
the beginning of our 2025 fiscal year and do not believe it will have
a material impact on our Consolidated Financial Statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment
Reporting (Topic 280). The amendments in this update improve
reportable segment disclosure requirements, primarily through
enhanced disclosures about significant segment expenses. The
amendments in this ASU are effective for annual periods beginning
after December 15, 2023, and interim periods within fiscal years
beginning after December 15, 2024, with early adoption permitted.
Entities must apply the amendments in this ASU retrospectively
to all prior periods presented in the financial statements. We are
currently assessing the impact of this ASU on our Consolidated
Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, Income
Taxes (Topic 740): Improvements to Income Tax Disclosures.
The amendments require public business entities on an annual
basis to disclose specific categories in the rate reconciliation and
provide additional information for reconciling items that meet
a quantitative threshold. Additionally, the amendment requires
information pertaining to taxes paid (net of refunds received) to
be disaggregated by federal, state, and foreign taxes with further
disaggregation for specific jurisdictions to the extent the related
amounts exceed a quantitative threshold. The amendments in this
ASU are effective for annual periods beginning after December 15,
2024, with early adoption permitted. We are currently assessing the
impact of this ASU on our Consolidated Financial Statements.
2. Acquisitions and Divestitures
Acquisition of PureCircle Non-Controlling Interests
During 2023 and 2022, Ingredion purchased shares from minority
shareholders in PureCircle Limited (“PureCircle”) for $2 million and
$46 million, respectively. These purchases increased our ownership
percentage in PureCircle to 88 percent as of December 31, 2023,
from 87 percent as of December 31, 2022, and from 75 percent as of
December 31, 2021.
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. We agreed to acquire the
remaining 35 percent of Mannitab on or before March 2026. To
reflect our controlling interest in Mannitab, we recorded $19 million
of goodwill and $9 million of definite-lived intangible assets on
our Consolidated Financial Statements when we completed the
purchase accounting in 2023. Beginning at the acquisition date,
our Consolidated Financial Statements reflect the effects of the
acquisition and Mannitab’s financial results, which we report in our
Asia-Pacific reportable business segment.
On August 1, 2022, we acquired 100 percent of 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 effects of the acquisition and Amishi’s
financial results, which we report in our Asia-Pacific reportable
business segment.
On April 1, 2021, we acquired 100 percent of 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, we 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.
Pre-tax acquisition and integration costs were insignificant in
2023, $1 million in 2022, and $5 million in 2021. The acquisitions
individually and in the aggregate would not have been material to
our results of operations for any periods presented.
South Korea Divestiture
On November 10, 2023, we entered into a definitive agreement to
sell our business in South Korea to an affiliate of the Sajo Group,
a leading food company headquartered in Seoul, South Korea, for
384.0 billion South Korean won, or approximately $294 million.
We received 330.0 billion South Korean won, or $247 million
net of certain transaction costs, when the transaction closed on
February 1, 2024, and we will receive the remaining consideration
in equal annual payments through February 2027. In the first
quarter of 2024, we expect to record a gain from the imputed fair
value of $283 million in consideration. Our business in South Korea
generated operating profits of $30 million in 2023, $14 million in
2022 and $27 million in 2021.
In connection with this divestment, we reclassified the assets and
liabilities of our South Korea business, which is in our Asia-Pacific
reportable business segment, as held for sale during the fourth
quarter of 2023 in our Consolidated Financial Statements. The
following table presents the major classes of assets and liabilities
classified as held for sale for the South Korea divestment. Assets
classified as held for sale are included in Prepaid expenses and
assets held for sale, and liabilities held for sale are included in
Accrued liabilities and liabilities held for sale on the Consolidated
Balance Sheets as of December 31, 2023.
DECEMBER 31, 2023
Accounts receivable, net
Inventories
Property, plant and equipment, net
Other assets
Assets held for sale
Short-term borrowings
Accounts payable
Accrued liabilities
Non-current liabilities
Liabilities held for sale
3. Intangible Assets
Goodwill
38
69
100
4
$211
$2
30
14
5
$51
The original carrying value of goodwill and accumulated impairment
charges at December 31, 2023 are as follows:
(in millions)
Goodwill before impairment
charges
Accumulated impairment
charges
Balance at January 1, 2023
Acquisitions
Currency translation
NORTH
AMERICA
SOUTH
AMERICA
ASIA-
PACIFIC
EMEA
TOTAL
$623
$49
$311
$72
$1,055
(1)
622
—
—
(33)
(121)
16
—
2
190
19
(5)
—
72
—
2
(155)
900
19
(1)
Balance at December 31, 2023
$622
$18
$204
$74
$918
We concluded that as of our July 1, 2023 impairment assessments,
there were no impairments to goodwill.
37
2023 INGREDION ANNUAL REPORT Other Intangible Assets
A summary of other intangible assets is as follows:
ACCUMULATED
AMORTIZATION
NET
WEIGHTED
AVERAGE
USEFUL LIFE
(YEARS)
Total other intangible assets
$684
$(299)
$385
December 31, 2023
Trademarks/tradenames
(indefinite-lived)
Patents
Customer relationships
Technology
Other
GROSS
$143
31
358
111
41
December 31, 2022
Trademarks/tradenames
(indefinite-lived)
Patents
Customer relationships
Technology
Other
GROSS
$143
32
356
102
43
$— $143
(9)
(170)
(103)
(17)
22
188
8
24
$— $143
(7)
25
(150)
206
(101)
(17)
1
26
ACCUMULATED
AMORTIZATION
NET
WEIGHTED
AVERAGE
USEFUL LIFE
(YEARS)
Total other intangible assets
$676
$(275)
$401
Amortization expense related to intangible assets was $26 million
in 2023, $26 million in 2022, and $27 million in 2021. Based on the
results of our impairment assessments, we concluded that as of
July 1, 2023, there were no impairments to our indefinite-lived other
intangible assets.
Estimated future amortization expense related to intangible assets
is as follows:
ESTIMATED FUTURE
AMORTIZATION
EXPENSE
—
12
19
9
15
17
—
12
19
9
15
17
from them is included within Other operating (income) expense
in the Consolidated Statements of Income. Of the $11 million of
Restructuring/impairment charges in the Consolidated Statements
of Income we recorded in 2023, $10 million represented other-than-
temporary-impairments on our Amyris joint venture and other joint
ventures.
Amyris Joint Venture
On June 1, 2021, we entered into an agreement with 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 (income) expense, 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 and we recognize our
share of results one quarter in arrears due to the timing of when
results are available.
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 that 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. On August 2, 2021, we completed all closing conditions,
pending customary antitrust review, 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.
$26
26
26
26
26
We exchanged certain assets and liabilities with a fair value of $71
million from our Argentina, Chile and Uruguay operations for a
value of $64 million of the Argentina joint venture, as well as
$7 million of other consideration, including cash, from Grupo Arcor
as of August 2, 2021. This resulted in our ownership of 49 percent of
the Argentine joint venture’s outstanding shares.
Years ending December 31,
2024
2025
2026
2027
2028
4. Investments
Investments as of December 31, 2023 and 2022 are as follows:
Equity investments
Equity method investments
Marketable securities
Total investments
2023
$ 27
112
4
$143
2022
$ 23
113
3
$139
Our investments classified as equity investments do not have readily
determinable fair values. Beginning on the dates we entered into
the agreements for equity method investments, our share of income
38
This transaction also resulted in 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. We incurred $4 million and
$6 million of pre-tax acquisition and integration costs to acquire the
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.
The Argentina joint venture is accounted for on the equity method
of accounting, and we recognize our share of income or expense in
Other operating (income) expense one month in arrears due to the
timing of when results are available. On December 13, 2023, the new
Argentine government allowed the Argentine peso to devalue from
the exchange rate of approximately 366 pesos to one U.S. dollar,
to 800 pesos to one U.S. dollar. Our 2023 results do not reflect the
impact of this devaluation.
5. Restructuring Charges
During 2023, we recorded $1 million of pre-tax restructuring charges
related to the divestiture of our South Korea business.
During 2022, we recorded $4 million of pre-tax restructuring
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 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.
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. A portion of our corn and soybean oil derivatives are
not designated as hedging instruments for accounting purposes.
We had outstanding futures and option contracts that hedged the
forecasted purchase of approximately 109 million and 120 million
bushels of corn as of December 31, 2023 and 2022, respectively. We
also had outstanding swap contracts that hedged the forecasted
purchase of approximately 28 million and 31 million mmbtus of
natural gas as of December 31, 2023 and 2022, 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 net assets and 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 cash flow hedging instruments as well as instruments not
designated as hedging instruments for accounting purposes in order
to mitigate transactional foreign-exchange risk.
We hedge certain assets using foreign currency derivatives not
designated as hedging instruments, which had a notional value of
$694 million and $405 million as of December 31, 2023 and 2022,
respectively. We also hedge certain liabilities using foreign currency
derivatives not designated as hedging instruments, which had a
notional value of $182 million and $239 million as of December 31,
2023 and 2022, respectively.
We hedge certain assets using foreign currency cash flow hedging
instruments, which had a notional value of $449 million and $668
million as of December 31, 2023 and 2022, respectively. We also
hedge certain liability positions using foreign currency cash flow
hedging instruments, which had a notional value of $621 million and
$840 million as of December 31, 2023 and 2022, 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 our outstanding and
forecasted debt obligations as well as our offsetting hedge positions.
Derivative financial instruments that we have used to manage our
interest rate risk consist of interest rate swaps and T-Locks.
We periodically enter into T-Locks to hedge our exposure to interest
rate changes. We have settled T-Locks associated with the issuance
of our senior notes due in 2030 and 2050. The realized loss upon
settlement of these T-Locks was recorded in AOCL and is amortized
into earnings over the term of the senior notes. We did not have
open T-Locks as of December 31, 2023 and 2022.
39
2023 INGREDION ANNUAL REPORT The derivative instruments designated as cash flow hedges included
in AOCL as of December 31, 2023 and 2022, are as follows:
Additional information relating to our derivative instruments are as
follows:
GAINS (LOSSES) INCLUDED IN
AOCL AS OF DECEMBER 31,
GAINS (LOSSES)
RECOGNIZED IN OCL ON
DERIVATIVES
GAINS (LOSSES)
RECLASSIFIED FROM
AOCL INTO INCOME
Derivatives in Cash Flow Hedging Relationships
Commodity contracts, net of income tax effect
of $17 and $3, respectively
Foreign currency contracts, net of income tax
effect of $ 1 and $—, respectively
Interest rate contracts, net of income tax
effect of $1
Total
2023
$(46)
—
(2)
$(48)
2022
$8
1
(3)
$6
Derivatives in
Cash Flow Hedging
Relationships
Commodity
contracts
Foreign currency
contracts
Interest rate
contracts
2023
2022
2021
$(161)
$202
$218
10
—
8
—
—
—
INCOME
STATEMENT
LOCATION
Cost of
sales
Net sales/
Cost of
sales
Financing
costs
2023
2022
2021
$(87)
$261
$211
10
(1)
7
—
(1)
(1)
As of December 31, 2023, AOCL included $46 million of net losses
(net of income taxes of $16 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 twelve months.
The fair value and balance sheet location of our derivative
instruments, presented gross in the Consolidated Balance Sheets,
are as follows:
FAIR VALUE OF HEDGING INSTRUMENTS AS OF DECEMBER 31, 2023
DESIGNATED HEDGING
INSTRUMENTS
NON-DESIGNATED HEDGING
INSTRUMENTS
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
COMMODITY
CONTRACTS
FOREIGN
CURRENCY
CONTRACTS TOTAL
$ 6
$ 11 $ 17
$ —
$ 5
$ 5
—
6
44
2
46
4
15
14
2
16
4
21
58
4
62
—
—
2
—
2
—
5
12
—
12
—
5
14
—
14
$(40)
$(1) $(41)
$(2)
$(7)
$(9)
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
NON-DESIGNATED HEDGING
INSTRUMENTS
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)
40
$28
$20
$48
$—
$5
$5
1
29
22
3
25
6
26
23
9
32
7
55
45
12
57
—
—
1
—
1
—
5
6
—
6
—
5
7
—
7
$ 4
$(6)
$(2)
$(1)
$(1)
$(2)
Total
$(151)
$210
$218
$(78)
$268 $209
7. Fair Value Measurements
We measure certain assets and liabilities at fair value, which
is defined as the price that would be received to sell an asset
or paid to transfer a liability (i.e., the “exit price”) in an orderly
transaction between market participants at the measurement date.
In determining fair value, we use various valuation approaches. The
hierarchy of those valuation approaches is in three levels based on
the reliability of inputs. Assets and liabilities are classified in their
entirety based on the lowest level of input that is significant to the
fair value measurement. Below is a summary of the hierarchy levels:
• Level 1 inputs consist of quoted prices (unadjusted) in active
markets for identical assets or liabilities.
• Level 2 inputs are inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly or
indirectly for substantially the full term of the financial instrument.
Level 2 inputs are based on quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, or inputs other than
quoted prices that are observable for the asset or liability or can be
derived principally from or corroborated by observable market data.
• Level 3 inputs are unobservable inputs for the asset or liability.
Unobservable inputs are used to measure fair value to the extent
that observable inputs are not available, thereby allowing for
situations in which there is little, if any, market activity for the
asset or liability at the measurement date.
Assets and liabilities measured at fair value on a recurring basis are
presented below:
AS OF DECEMBER 31, 2023
AS OF DECEMBER 31, 2022
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
Marketable
securities
Derivative
assets
Derivative
liabilities
Long-term
debt
$4
26
76
$4
26
43
—
33
$—
$—
$—
$—
$3
60
64
$3
49
51
—
—
—
11
13
—
—
—
1,591
— 1,591
1,733
— 1,733
The carrying values of cash equivalents, short-term investments,
accounts receivable, accounts payable and short-term borrowings
approximate fair values. Commodity futures, options and swap
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.
8. Financing Arrangements
We had total debt outstanding of approximately $2.2 billion and
$2.5 billion at December 31, 2023 and 2022, respectively. As of
December 31, 2023, our Short-term borrowings consisted primarily
of commercial paper borrowings and amounts outstanding under
various unsecured local country operating lines of credit. In 2023,
we paid the outstanding principal in full and without penalty under
our term loan credit agreement that was due on December 16, 2024.
In 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 $1.0 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. 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. During
2023, the average amount of commercial paper outstanding was $397
million with an average interest rate of 5.30 percent and a weighted
average maturity of 11 days. As of December 31, 2023, $327 million of
commercial paper was outstanding with an average interest rate of
5.50 percent and a weighted average maturity of 11 days. The amount
of commercial paper outstanding under this program in 2024 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, 2023 and 2022:
2023
2022
CARRYING
VALUE
FAIR
VALUE
CARRYING
VALUE
FAIR
VALUE
$596
$536
$595
$510
498
390
253
470
293
256
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
499
479
391
300
253
275
—
—
1
—
—
1
Total long-term debt
1,740
1,591
1,940
1,733
Commercial paper
Other short-term borrowings
Total short-term borrowings
327
121
448
327
121
448
390
153
543
390
153
543
Total debt
$2,188
$2,039
$2,483
$2,276
We guarantee certain obligations of our consolidated subsidiaries,
which aggregated to $49 million and $63 million at December 31,
2023 and 2022, respectively.
9. Leases
The components of lease expense are as follows:
Operating lease expense
Variable operating lease expense
Short term lease expense
Lease expense
2023
$63
26
3
$92
2022
$59
27
3
$89
2021
$58
26
4
$88
We have operating leases for certain rail cars, office spaces,
warehouses and machinery and equipment. 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, 2023:
2024
2025
2026
2027
2028
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
$63
52
45
29
14
31
234
21
213
56
$157
$208
Supplemental cash flow information arising from lease transactions
is as follows:
YEAR ENDED DECEMBER 31,
2023
2022
Cash paid for amounts included in the measurement
of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for lease
liabilities:
Operating leases
$64
$60
$72
$52
200
200
Lease term and discount rate
—
4
—
4
Weighted average remaining lease term
Weighted average discount rate
YEAR ENDED DECEMBER 31,
2023
5.3 years
4.6%
2022
5.9 years
4.4%
41
2023 INGREDION ANNUAL REPORT
10. Income Taxes
The components of income before income taxes and the provision
for income taxes for the years indicated are presented below:
2023
2022
2021
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)
$244
595
839
6
5
183
194
—
1
(7)
(6)
$111
557
668
8
2
159
169
5
(1)
(7)
(3)
Total provision for income taxes
$188
$166
$39
209
248
2
2
180
184
(57)
(2)
(2)
(61)
$123
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, 2023 and 2022, are summarized as follows:
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
Derivative contracts
Uniform capitalization
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
42
2023
2022
$32
$30
16
54
5
16
58
5
16
12
35
249
(46)
203
184
33
51
1
35
—
—
14
49
6
22
59
5
—
9
33
227
(51)
176
175
48
46
1
31
4
3
304
$101
308
$132
Of the $58 million of tax-effected net operating loss carryforwards as
of December 31, 2023, $42 million are for foreign loss carryforwards,
$14 million for state loss carryforwards, and $2 million for U.S.
federal loss carryforwards. Of the $42 million of foreign loss
carryforwards, $24 million are related to Canada, $5 million to
Australia, $4 million to Brazil, $3 million to Argentina, and $3 million
to Malaysia with carryforward periods of 20 years, indefinite,
indefinite, 5 years and 10 years, respectively. U.S. federal and state
loss carryforwards have various expiration periods beginning
in 2025.
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, 2023, we maintained valuation allowances of $46 million,
consisting of $23 million primarily related to foreign loss carryforwards,
$14 million for state loss carryforwards, $6 million for state credits
and carryforwards, $2 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%
2023
2022
2021
Tax rate difference on foreign income
Foreign currency foreign exchange
Inflation adjustments
Tax benefit of intercompany financing
U.S. international tax implications
Valuation allowance in Argentina
6.1
(1.8)
(0.5)
(0.4)
1.0
—
7.2
(0.3)
(0.6)
(0.4)
2.2
—
Favorable judgment on the treatment of
credits and interest on indirect taxes
(0.2)
(0.3)
Unremitted earnings
Impairment charge related to Argentina
joint venture
Foreign-derived intangible income (FDII)
Brazil exclusion of certain tax incentives
Other items, net
—
—
(1.5)
(1.2)
(0.1)
—
—
(1.0)
(4.0)
1.1
13.3
3.2
(4.0)
(1.6)
0.8
(0.4)
(4.8)
(12.1)
35.5
—
—
(1.3)
Provision at effective tax rate
22.4% 24.9%
49.6%
The 2023 statutory tax rates (including surcharges and local
jurisdictional taxes when applicable) were 30 percent in Mexico, 32
percent in Germany, 35 percent in Colombia, 39 percent in Pakistan,
and 26 percent in Canada, where we have significant operations.
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 2023, the IRS released Notice 2023-55, to address the
final foreign tax credit regulations issued in 2022. The notice was
effective in 2023 and provided retroactive relief to fiscal 2022. This
increased our ability to claim certain foreign tax credits against U.S.
taxes with respect to fiscal years 2022 and 2023.
Additionally, during 2023, the Brazilian Government published Law
14.596/23, which established a transfer pricing framework in Brazil
that is aligned with the Organization for Economic Co-operation and
Development (“OECD”) guidelines. The law was effective January 1,
2024, but our subsidiary in Brazil elected to early adopt the law as
of January 1, 2023, which provided a favorable country earnings mix
and related increase in our foreign-derived intangible income.
As of December 31, 2023, we had 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 or losses have been provided on distributions
of approximately $2.7 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 2023
and 2022 is as follows:
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
2023
$30
1
(1)
1
—
$31
2022
$29
5
(1)
1
(4)
$30
Of the $31 million of unrecognized tax benefits as of December 31,
2023, $20 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 unrecognized tax benefits
as of December 31, 2023.
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 2020 through 2023. In general, our
foreign subsidiaries remain subject to audit for years 2013 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, 2023. We believe it is
reasonably possible that $4 million of the unrecognized tax benefits
may be recognized within twelve months of December 31, 2023, as a
result of a statute of limitations lapse and potential settlement.
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
2023 and 2022, as well as the funded status and the amounts
recognized in our Consolidated Balance Sheets related to our
pension plans at December 31, 2023 and 2022, are as follows:
U.S. PLANS
NON-U.S. PLANS
2023
2022
2023
2022
$300
$383
$188
$254
Benefit obligation
At January 1
Service cost
Interest cost
Benefits paid
Actuarial loss (gain)
Curtailment/settlement/amendments
Foreign currency translation
3
15
(18)
5
—
—
4
9
(25)
(71)
—
—
4
10
(13)
8
(1)
4
Benefit obligation at December 31
$305
$300
$200
Fair value of plan assets
At January 1
Actual return on plan assets
Employer contributions
Benefits paid
Plan settlements
Foreign currency translation
$317
$420
$189
25
1
(18)
—
—
(79)
1
17
6
(25)
(13)
—
—
(1)
2
3
9
(13)
(49)
(2)
(14)
$188
$244
(30)
5
(13)
(2)
(15)
Fair value of plan assets at December 31
$325
$317
$200
$189
Funded status
$20
$17
$—
$1
43
2023 INGREDION ANNUAL REPORT
As of December 31, 2023, the actuarial loss for the U.S. and non-
U.S. plans was primarily driven by a decrease in the discount rate
compared to the prior year. As of December 31, 2022, the actuarial
gain for the U.S. and non-U.S. plans was primarily driven by an
increase in discount rates compared to the prior year.
Amounts recorded in the Consolidated Balance Sheets as of
December 31, 2023 and 2022 are as follows:
Non-current asset
Current liabilities
Non-current liabilities
Net asset (liability) recognized
U.S. PLANS
NON-U.S. PLANS
2022
2023
2022
$25
(1)
(7)
$17
$47
(2)
(45)
$—
$43
(1)
(41)
$1
2023
$28
(1)
(7)
$20
Components of net periodic benefit cost consist of the following for
2023, 2022 and 2021:
U.S. PLANS
NON-U.S. PLANS
2023
2022
2021
2023
2022
2021
Service cost
Interest cost
$3
15
$4
9
$4
8
Expected return on plan assets
(17)
(16)
(17)
Amortization of actuarial loss
Amortization of prior service credit
Net periodic benefit cost
1
(1)
$1
—
(1)
—
(1)
$(4)
$(6)
$4
10
(9)
1
—
$6
$3
9
(7)
1
—
$6
$4
9
(8)
2
—
$7
Total amounts recorded in other comprehensive income and net
periodic benefit cost are as follows:
Amounts recorded in AOCL, excluding tax effects that have not
yet been recognized as components of net periodic benefit cost at
December 31, 2023 and 2022, are as follows:
(pre-tax)
2023
2022
2021
2023
2022
2021
Net actuarial (gain) loss
$(3)
$25
$(1)
$— $(11)
$(11)
U.S. PLANS
NON-U.S. PLANS
Net actuarial loss
Prior service (credit) cost
Net amount recognized
Prior service cost
U.S. PLANS
NON-U.S. PLANS
Amortization of actuarial loss
2023
2022
2023
$32
(2)
$30
$36
(3)
$33
$24
—
$24
2022
$24
—
$24
Amortization of prior service credit
Foreign currency translation
Total recorded in other
comprehensive (income) loss
—
(1)
1
—
—
—
1
—
(3)
26
—
—
1
—
—
—
(1)
—
1
—
(1)
—
(2)
—
(2)
—
(11)
— (14)
(24)
Net periodic benefit cost
1
(4)
(6)
6
6
7
The amount recognized in AOCL at December 31, 2023 decreased
compared to prior year for the U.S. pension plans mainly because
the actual return on assets was more than the expected return on
assets, which was partially offset by the decrease in discount rates
used to measure our obligations under our U.S. pension. The net
amount recognized in AOCL at December 31, 2023 for the non-U.S.
pension plans as compared to December 31, 2022 was flat primarily
due to the actuarial loss amortization, which was offset by foreign
currency translation.
The accumulated benefit obligation for all defined benefit pension
plans was $485 million and $469 million at December 31, 2023 and
2022, 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 is as follows:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
U.S. PLANS
NON-U.S. PLANS
2023
$(8)
(8)
—
2022
2023
$(8)
$(51)
(8)
—
(40)
4
2022
$(45)
(35)
3
Total recorded in other
comprehensive (income) loss
and net periodic benefit cost
$(2)
$22
$(6)
$6
$(8)
$(17)
The weighted average assumptions used to determine our
obligations for the pension plans are as follows:
U.S. PLANS
NON-U.S. PLANS
2023
2022
2023
2022
Discount rate
5.00% 5.19% 5.24% 5.66%
Rate of compensation increase
Cash balance interest credit rate
3.83
4.53
3.92
4.21
3.76
—
3.83
—
The weighted average assumptions used to determine our net
periodic benefit cost for the pension plans are as follows:
U.S. PLANS
NON-U.S. PLANS
2023
2022
2021
2023
2022
2021
Discount rate
5.19% 2.91% 2.58% 5.67% 3.66% 2.84%
Expected long-term return
on plan assets
Rate of compensation
increase
Cash balance interest
crediting rate
5.50
4.10
4.10
5.05
3.50
3.37
3.92
4.18
4.26
3.83
3.77
3.54
4.21
4.11
3.76
—
—
—
44
For 2023, we assumed an expected long-term rate of return on assets
of 5.50 percent for U.S. plans and 4.66 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, 2023 and
2022, 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, 2023
NAV
LEVEL 1
LEVEL 2
TOTAL
2023
2022
2023
2022
2023
2022
2023
2022
U.S. Plans:
Equity index:
U.S.(a)
$— $— $— $— $24
$22
$24
$22
International(b)
—
—
—
—
16
14
16
14
Fixed income index:
Long bond(c)
Government
bond(d)
Other fixed income(e)
Cash & Short-term
Investments(f)
—
—
57
—
—
—
59
—
—
—
—
—
—
—
—
—
133
127
133
127
89
—
6
89
—
6
89
57
6
89
59
6
Total U.S. Plans
$57
$59
$— $— $268
$258
$325
$317
Non-U.S. Plans:
Equity index:
U.S.(a)
$— $— $— $— $10
International(b)
—
—
—
—
6
Fixed income index:
Government
bond(g)
Corporate bond(h)
Other(i)
Cash & Short-term
Investments(f)
—
—
—
—
—
—
—
—
Total Non-U.S. Plans
$— $—
—
—
—
2
$2
—
—
—
2
78
79
25
—
$9
6
99
46
22
5
$10
6
78
79
25
2
$9
6
99
46
22
7
$2
$198
$187 $200 $189
U.S. PLANS
NON-U.S. PLANS
(a) This category consists of both passively and actively managed equity index funds that
Asset Category
Equity securities
Debt securities
Cash and other
Total
2023
12%
86
2
2022
11%
87
2
2023
8%
78
14
2022
8%
77
15
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, different methods could result in
different fair value measurements at the reporting date.
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 and emerging market equities.
(c) This category consists of an actively managed fixed-income index fund that invests in
a diversified portfolio of fixed-income securities with maturities generally exceeding
10 years.
(d) This category consists of both passively and actively managed fixed-income index
funds that invest in a diversified portfolio of fixed income government debt securities
with varying maturities.
(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 may be fully redeemed with 95 days notice.
(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 government bonds with varying maturities.
(h) This category consists of actively managed fixed income index funds that track the
return of investment grade corporate bonds with varying maturities.
(i) 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 2023, we made cash contributions of $1 million to our U.S.
pension plans and $6 million to our non-U.S. pension plans. We
anticipate that in 2024 we will make cash contributions of $1 million
to our U.S. pension plans and $4 million to our non-U.S. pension
plans. Cash contributions in subsequent years will depend on a
number of factors, including the performance of plan assets.
45
2023 INGREDION ANNUAL REPORT
We expect to pay the following benefit payments to beneficiaries,
which reflect anticipated future service, as appropriate:
Amounts recorded in AOCL, excluding tax effects that have not
yet been recognized as components of net periodic benefit cost at
December 31, 2023 and 2022, are as follows:
U.S. PLANS
NON-U.S. PLANS
2024
2025
2026
2027
2028
Thereafter
$26
26
26
27
24
114
$12
12
12
13
38
73
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. The expense for defined contribution plans was $28
million in 2023, $22 million for 2022, and $22 million in 2021.
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 2023 and 2022, as well as the amounts recognized in our
Consolidated Balance Sheets at December 31, 2023 and 2022, are as
follows:
Net actuarial loss
Prior service cost
Net amount recognized
2023
2022
$4
6
$10
$1
5
$6
Components of net periodic benefit cost consisted of the following
for 2023, 2022 and 2021:
2023
2022
2021
Service cost
Interest cost
Amortization of actuarial (gain) loss
Amortization of prior service cost (credit)
Net periodic benefit cost
$1
4
(1)
1
$5
$1
3
—
—
$4
Total amounts recorded in other comprehensive income and net
periodic benefit cost for 2023, 2022 and 2021 are as follows:
Accumulated postretirement benefit obligation
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
(pre-tax)
Net actuarial loss (gain)
Prior service cost
2023
2022
Amortization of prior service (cost) credit
$58
$65
Amortization of actuarial gain (loss)
Foreign currency translation
Total recorded in other comprehensive
loss (income)
Net periodic benefit cost
2023
$1
2
(1)
1
1
4
5
2022
$(7)
—
—
—
—
(7)
4
Total recorded in other comprehensive
loss (income) and net periodic benefit cost
$9
$(3)
$(2)
We used the following weighted average assumptions to determine
our postretirement benefit obligations for 2023 and 2022:
2023
2022
$(64)
$(58)
Discount rate
7.37%
7.30%
1
4
2
1
(4)
2
64
—
1
3
—
(7)
(4)
—
58
—
$1
2
1
(2)
$2
2021
$(5)
4
2
(1)
(4)
(4)
2
As of December 31, 2023, the actuarial loss was insignificant. As of
December 31, 2022, the actuarial gain was mainly driven by higher
discount rates.
The following weighted average assumptions were used to
determine our net postretirement benefit cost:
Amounts recorded in the Consolidated Balance Sheets at
December 31, 2023 and 2022 consist of:
Discount rate
2023
2022
2021
7.30%
4.22%
3.69%
2023
$(4)
(60)
2022
$(5)
(53)
$(64)
$(58)
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.
Current liabilities
Non-current liabilities
Net liability recognized
46
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. We
used the following assumptions as of December 31, 2023:
2023 increase in per capita cost
Ultimate trend
Year ultimate trend reached
U.S.
CANADA
BRAZIL
7.80%
4.50%
2033
5.04%
4.05%
2040
8.94%
8.94%
2023
We expect to make the following benefit payments to beneficiaries
under our postretirement benefit plans, which reflect anticipated
future service, as appropriate:
Treasury stock
On September 26, 2022, the Board of Directors approved a stock
repurchase program authorizing us to purchase up to 6.0 million
shares of our outstanding common stock until 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 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.
2024
2025
2026
2027
2028
Thereafter
$4
4
4
4
4
22
During 2023, we repurchased 1.0 million outstanding shares of
common stock in open market transactions at a net cost of $101
million. During 2022, pursuant to our previous stock repurchase
program which has since been terminated, we repurchased 1.3
million shares of common stock in open market transactions at a net
cost of $112 million.
Common stock share activity for 2023, 2022 and 2021 is as follows:
Multi-employer Plan
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 risk of participating in 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. We made
regular contributions to the plan of $11 million in 2023, $10 million
in 2022, and $14 million in 2021. We cannot currently estimate the
amount of multi-employer plan contributions that will be required
in 2024 and future years, but these contributions could increase
due to healthcare cost trends. 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. The
remaining collective bargaining agreements associated with the
multi-employer plan expire during 2024 through 2027.
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,
2023 and 2022.
(Shares of common stock,
in thousands)
Balance at December 31, 2020
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
10,795
67,016
—
—
—
—
(69)
(6)
(331)
765
69
6
331
(765)
Balance at December 31, 2021
77,811
11,154
66,657
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
Issuance of restricted stock units
as compensation
Performance shares and other
share-based awards
Stock options exercised
Purchase/acquisition of
treasury stock
—
—
—
—
(95)
(43)
(182)
1,283
12,117
(108)
(51)
(386)
1,000
Balance at December 31, 2023
77,811
12,572
95
43
182
(1,283)
65,694
108
51
386
(1,000)
65,239
47
2023 INGREDION ANNUAL REPORT
Share-based payments
Share-based compensation expense for 2023, 2022 and 2021 is as
follows:
2023
2022
2021
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
$4
—
4
15
(2)
13
14
(1)
13
33
(3)
$30
$4
—
4
13
(1)
12
12
(1)
11
29
(2)
$27
$3
—
3
12
(1)
11
8
(1)
7
23
(2)
$21
We have a stock incentive plan (“SIP”) that was approved on
May 19, 2023 and which is 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 5.4 million shares were
originally authorized for awards under the SIP. As of December 31,
2023, 5.4 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 197 thousand,
281 thousand and 358 thousand shares for 2023, 2022 and 2021,
respectively. The fair value of each option grant was estimated
using the Black-Scholes option-pricing model with the following
assumptions:
Expected life (in years)
Risk-free interest rate
Expected volatility
FOR THE YEAR ENDED DECEMBER 31,
2023
5.5
2022
5.5
2021
5.5
4.0%
2.0%
0.6%
28.3%
23.8%
23.2%
Expected dividend yield
2.9%
2.9%
2.9%
48
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.
Stock option activity in 2023 is as follows:
WEIGHTED
AVERAGE
EXERCISE
PRICE PER
SHARE
NUMBER OF
OPTIONS
(in thousands)
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)
AGGREGATE
INTRINSIC
VALUE
(in millions)
2,222
$92.32
5.16
$24
197
(386)
98.69
71.76
(80)
102.66
1,953
$96.61
1,523
$97.80
4.97
4.03
$29
$22
Outstanding as of
December 31, 2022
Granted
Exercised
Cancelled
Outstanding as of
December 31, 2023
Exercisable as of
December 31, 2023
For 2023, 2022 and 2021, cash received from the exercise of stock
options was $28 million, $11 million and $21 million, respectively. As of
December 31, 2023, 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 1.6 years.
Additional information pertaining to stock option activity is as follows:
Weighted average grant date fair value
of stock options granted (per share)
Total intrinsic value of stock options
exercised
YEAR ENDED DECEMBER 31,
2023
2022
2021
$23.80
$15.04
$12.31
13
6
10
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.
RSU activity in 2023 is as follows:
(shares in thousands)
Non-vested at December 31, 2022
Granted
Vested
Cancelled
Non-vested at December 31, 2023
NUMBER OF
RESTRICTED
SHARES
WEIGHTED
AVERAGE
FAIR VALUE
PER SHARE
517
222
(154)
(33)
552
$88.04
98.15
87.91
91.30
$92.05
The total fair value of RSUs that vested in each of 2023, 2022 and
2021 was $12 million.
At December 31, 2023, the total remaining unrecognized
compensation cost related to RSUs was $20 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 for both December 31, 2023
and 2022, 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 2023 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 2023 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 93 thousand, 86 thousand and 108 thousand
performance shares in 2023, 2022 and 2021, respectively. The
weighted average fair value of the shares granted during 2023, 2022
and 2021 was $114.26, $138.85 and $100.29, respectively.
The 2020 performance share awards that vested during 2023
achieved a 77 percent payout of the granted performance shares.
As of December 31, 2023, the 2021 performance share awards are
estimated to pay out at 200 percent. Additionally, there were 34
thousand shares cancelled during 2023.
As of December 31, 2023, the unrecognized compensation cost
relating to these plans was $8 million, which will be amortized over
the remaining requisite service periods of 1.8 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 $27 million and $20 million at
December 31, 2023 and 2022, 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 is paid
in Company common stock. A director may elect 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 and no more
than ten years and 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 2023, 2022 and
2021. At December 31, 2023, there were approximately 235 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 loss for 2023,
2022 and 2021 is presented below:
CUMULATIVE
TRANSLATION
ADJUSTMENT
HEDGING
ACTIVITIES
PENSION AND
POSTRETIREMENT
ADJUSTMENT
AOCL
Balance, December 31, 2020
$(1,114)
$42
$(61)
$(1,133)
Other comprehensive (loss)
income before
reclassification adjustments
Loss (income) reclassified
from accumulated other
comprehensive loss
Tax (provision)
Net other comprehensive
income
(100)
218
28
146
311
—
211
(209)
(3)
6
48
—
(9)
19
102
(12)
236
(42)
(897)
Balance, December 31, 2021
(903)
Other comprehensive (loss)
income before
reclassification adjustments
(Income) reclassified
from accumulated other
comprehensive loss
Tax benefit
Net other comprehensive
(loss)
(105)
210
(5)
100
—
—
(268)
16
(105)
(42)
—
1
(4)
(268)
17
(151)
Balance, December 31, 2022
(1,008)
6
(46)
(1,048)
Other comprehensive income
(loss) before reclassification
adjustments
Loss reclassified from
accumulated other
comprehensive loss
Tax benefit
Net other comprehensive
income (loss)
47
—
—
47
(151)
(2)
(106)
78
19
(54)
1
—
(1)
79
19
(8)
Balance, December 31, 2023
$(961)
$(48)
$(47)
$(1,056)
49
2023 INGREDION ANNUAL REPORT Supplemental Information
The following table provides the computation of basic and diluted earnings per common share (“EPS”).
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
2023
2022
2021
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
$643
66.0
$9.74
$492
66.2
$7.43
$117
67.1
$1.74
1.0
67.0
$643
$9.60
$492
0.8
67.0
$7.34
$117
0.7
67.8
$1.73
Approximately 0.5 million, 1.4 million and 0.9 million share-based
awards of common stock were excluded for 2023, 2022 and 2021,
respectively, from the calculation of the weighted average number
of shares outstanding for diluted EPS because their effects were
anti-dilutive.
13. Segment Information
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,
Colombia, Peru, Ecuador and Argentina. Our Asia-Pacific segment
includes businesses in Thailand, China, Japan, Australia, Indonesia,
India, the Philippines, Malaysia, Singapore, New Zealand, Vietnam
and previously South Korea, in which we sold our business on
February 1, 2024, as more fully described in Note 2. Our EMEA
segment includes businesses in Germany, Pakistan, the United
Kingdom, South Africa and Poland.
In November 2023, we announced plans to reorganize our business
operations, which will result in a change to our reportable business
segments. Once the reorganization is complete, which we expect
to occur in 2024, we anticipate that our production assets and
commercial efforts will align with a global focus on Texture and
Healthful Solutions, a local focus on Food and Industrial Ingredients,
and other businesses. We will continue to report our results using
the existing reportable segment structure until the new segments
are operational and discrete financial information consistent with
the new segments is being provided to our Chief Operating Decision
Maker.
Net sales to unaffiliated customers by reportable segment are as
follows:
Net sales to unaffiliated customers:
North America
South America
Asia-Pacific
EMEA
Total net sales
2023
2022
2021
$5,188
$4,934
$4,137
1,062
1,089
821
1,124
1,107
781
1,057
997
703
$8,160
$7,946
$6,894
No customer accounted for 10 percent or more of our net sales in
2023, 2022 or 2021.
Operating income by reportable segment is as follows:
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
2023
2022
2021
$718
$565
$487
142
126
156
(173)
969
—
(11)
—
(1)
$957
169
93
110
(150)
787
(1)
(4)
—
(20)
$762
138
87
106
(133)
685
(3)
(47)
(340)
15
$310
50
Total assets by reportable segment as of December 31, 2023 and
2022 are as follows:
Long-lived assets (excluding intangible assets and deferred tax
assets) by country as of December 31, 2023 and 2022 are as follows:
2023
2022
$1,312
$1,289
294
288
235
164
162
133
338
309
273
209
144
153
126
435
$2,926
$2,938
AS OF DECEMBER 31,
2023
2022
U.S.
Mexico
Canada
Brazil
China
Thailand
Germany
Others
Total
Assets:
North America(a)
South America
Asia-Pacific
EMEA
Total assets
$4,485
$4,499
980
1,479
698
949
1,467
646
$7,642
$7,561
(a) For purposes of presentation, North America includes Corporate assets.
Depreciation and amortization, mechanical stores expense and
capital expenditures and mechanical stores purchases by reportable
segment are as follows:
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
2023
2022
2021
$146
$145
$146
19
39
15
18
37
15
18
40
16
$219
$215
$220
$47
$43
$43
6
5
4
4
4
4
6
3
3
$62
$55
$55
$183
$178
$166
42
68
23
31
72
19
38
81
15
$316
$300
$300
(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.
Net sales to unaffiliated customers by country of origin are as follows:
U.S.
Mexico
Brazil
Canada
Germany
Colombia
South Korea
Others
Total
2023
2022
2021
$3,069
$2,978
$2,509
1,571
1,444
1,170
669
548
413
332
325
720
512
342
333
356
586
459
309
260
323
1,233
1,261
1,278
$8,160
$7,946
$6,894
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 by the end of 2027.
As of December 31, 2023 and 2022, we had $32 million and $27
million, respectively, of remaining tax incentives recorded within
Other assets on the Consolidated Balance Sheets.
In May 2021, the Brazilian Supreme Court (“Court”) issued its ruling
related to the calculation of certain indirect taxes (referred as “Brazil
indirect tax matters” in these financial statements), which affirmed
the Brazil Federal Court of Appeals (“Lower Court”) rulings that we
had received in previous years and affirmed that we are entitled to
previously recorded tax credits. The Court ruling ensured that we are
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 (income) expense in the Consolidated Statements
of Income. As of December 31, 2023 and 2022, we had $5 million and
$17 million, respectively, of remaining indirect tax credits recorded
in Other assets and Prepaid expenses and assets held for sale on our
Consolidated Balance Sheets. We will use the income tax offsets to
eliminate our Brazilian federal tax payments in 2024, including the
income tax payable for the indirect taxes recovered.
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
51
2023 INGREDION ANNUAL REPORT
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.
independent of whether such supplier participates in a supply
chain finance program, and participation in any such program by a
supplier has no effect on our income or cash flows.
15. SUPPLEMENTARY INFORMATION
Accounts Receivable, Net
Accounts receivable, net as of December 31, 2023 and 2022 were as
follows:
As of December 31, 2023 and 2022, participating financial
institutions held $153 million and $175 million, respectively, of our
liabilities recorded in Accounts payable on our Consolidated Balance
Sheets. As of December 31, 2023, supply chain finance programs
existed for operations in Brazil, China, Thailand, Mexico, Colombia
and Peru.
Accounts receivable — trade
Accounts receivable — other
Allowance for credit losses
Total accounts receivable, net
2023
2022
$1,145
$1,200
154
(20)
228
(17)
Accrued Liabilities and Liabilities Held for Sale
Accrued liabilities as of December 31, 2023 and 2022 are as follows:
$1,279
$1,411
Compensation-related costs
Write-offs of accounts receivable were immaterial in 2023 and 2022.
There were no significant contract assets associated with customers
as of December 31, 2023 or 2022.
Current lease liabilities
Dividends payable
Taxes payable other than income taxes
Liabilities held for sale
Other accrued liabilities
Inventories
Inventories as of December 31, 2023 and 2022 were as follows:
Total accrued liabilities and liabilities held for sale
$546
Finished and in process
Raw materials
Manufacturing supplies
Total inventories
PP&E, net
2023
$926
434
90
2022
$962
539
96
There were no significant contract liabilities associated with
our customers as of December 31, 2023 and 2022. Liabilities for
volume discounts and incentives were also not significant as of
December 31, 2023 and 2022.
$1,450
$1,597
Other Non-Current Liabilities
Other non-current liabilities as of December 31, 2023 and 2022 were
as follows:
PP&E, net as of December 31, 2023 and 2022 were as follows:
2023
$121
56
51
46
51
221
2022
$112
48
47
45
—
214
$466
2022
$199
854
Non-current operating lease liabilities
Pension and postretirement liabilities
Deferred tax liabilities
4,680
Other
2023
$157
117
116
90
2022
$146
101
145
85
5,733
Total other non-current liabilities
$480
$477
2023
$178
853
4,767
5,798
(3,428)
(3,326)
$2,370
$2,407
We recorded capitalized interest to PP&E of $3 million in 2023, $4
million in 2022, and $4 million in 2021. We recognized depreciation
expense of $193 million in 2023, $189 million in 2022, and $194
million in 2021.
Supplemental Statements of Income Information
Research and development (“R&D”) expense was approximately
$63 million, $52 million and $43 million in 2023, 2022 and 2021,
respectively. Our R&D expense, which we record in Operating
expenses in the Consolidated Statements of Income, represents
investments in new product development and innovation.
Supply Chain Finance Programs
Supplemental Cash Flow Information
Under supply chain finance programs administered by third-party
banks, our suppliers have the opportunity to sell receivables due
from us to participating financing institutions and receive earlier
payment at a discount. Our responsibility is limited to making
payment on the terms originally negotiated with our supplier,
regardless of whether such supplier sells its receivable to a financial
institution. The payment terms we negotiate with a supplier are
The following represents additional cash flow information:
Interest paid
Income taxes paid
2023
$96
157
2022
$82
187
2021
$72
168
52
Land
Buildings
Machinery and equipment
Property, plant and equipment, at cost
Accumulated depreciation
Property, plant and equipment, net
Quarterly Financial Data (Unaudited)
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 was as follows:
1st QTR
2nd QTR
3rd QTR
4th QTR
$2,137
$2,069
$2,033
$1,921
487
191
441
163
421
158
400
131
2.89
2.46
2.39
2.00
2023
Net sales
Gross profit
Net income attributable to
Ingredion
Basic earnings per common
share of Ingredion
Diluted earnings per common
share of Ingredion
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.
2.85
2.42
2.36
1.97
2. Provide reasonable assurance that transactions are recorded
Per share dividends declared
$0.71
$0.71
$0.78
$0.78
2022
Net sales
Gross profit
Net income attributable to
Ingredion
Basic earnings per common
share of Ingredion
Diluted earnings per common
share of Ingredion
1st QTR
2nd QTR
3rd QTR
4th QTR
$1,892
$2,044
$2,023
$1,987
379
130
1.94
1.92
390
142
2.14
2.12
374
106
1.61
1.59
351
114
1.73
1.71
Per share dividends declared
$0.65
$0.65
$0.71
$0.71
ITEM 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
None.
ITEM 9A. Controls and Procedures
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, 2023.
Based on that evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that, as of December 31, 2023, 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.
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, 2023 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
our internal control over financial reporting was effective as of
December 31, 2023. 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, 2023
that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
53
2023 INGREDION ANNUAL REPORT Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Ingredion Incorporated:
Opinion on Internal Control Over Financial Reporting
We have audited Ingredion Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2023,
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 Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated balance sheets of the Company as of December 31, 2023 and 2022, 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,
2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an
unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible 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 internal control over financial reporting based on
our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. 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 audit also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
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.
/s/ KPMG LLP
Chicago, Illinois
February 21, 2024
54
ITEM 9B. Other Information
Trading Arrangements
During the quarter ended December 31, 2023, none of the
Company’s directors or officers (as defined in Rule 16a-1(f) under
the Securities Exchange Act of 1934, as amended) adopted or
terminated any contract, instruction or written plan for the
purchase or sale of Company securities intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c) under the Securities
Exchange Act of 1934, as amended, or any non-Rule 10b5-1 trading
arrangement.
ITEM 9C. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
None.
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
2024 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 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, 2023”
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 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 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 “2023 and 2022 Audit
Firm Fee Summary.”
55
2023 INGREDION ANNUAL REPORT PART IV
ITEM 15. Exhibit and Financial Statement
Schedules
Item 15(a)(1) Consolidated Financial Statements
Financial Statements (see the Index to the Consolidated Financial
Statements on page 42 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
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.
(incorporated by reference to Exhibit 3.2 to
Ingredion’s Annual Report on Form 10-K for the
year ended December 31, 2022, filed on February 21,
2023) (File No. 1-13397).
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).
3.1
3.2
4.1
4.2
4.3
56
4.4
4.5
4.6
4.7
10.1*
10.2*
10.3*
10.4*
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).
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 19,
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
(incorporated by reference to Exhibit 10.4 to
Ingredion’s Annual Report on Form 10-K for the
year ended December 31, 2022, filed on February 21,
2023) (File No. 1-13397).
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
2023 Stock Incentive Plan, as effective May 19, 2023
(the “2023 Stock Incentive Plan”) (incorporated
by reference to Exhibit 10.1 to Ingredion’s Current
Report on Form 8-K dated May 19, 2023, filed on
May 23, 2023) (File No. 1-13397)
Form of 2023 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, 2022, filed on
February 21, 2023) (File No. 1-13397).
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).
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 (incorporated by reference to Exhibit
10.9 to Ingredion’s Annual Report on Form 10-K
for the year ended December 31, 2022, filed on
February 21, 2023) (File No. 1-13397).
Form of 2024 Stock Option Award Agreement for
use in connection with awards under the 2023
Stock Incentive Plan.
Form of 2023 Stock Option Award Agreement for
use in connection with awards under the Stock
Incentive Plan (incorporated by reference to Exhibit
10.10 to Ingredion’s Annual Report on Form 10-K
for the year ended December 31, 2022, filed on
February 21, 2023) (File No. 1-13397).
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).
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 2024 Restricted Stock Units Award
Agreement for use in connection with awards under
the 2023 Stock Incentive Plan.
Form of 2023 Restricted Stock Units Award
Agreement for use in connection with awards under
the Stock Incentive Plan (incorporated by reference
to Exhibit 10.20 to Ingredion’s Annual Report on
Form 10-K for the year ended December 31, 2022,
filed on February 21, 2023) (File No. 1-13397).
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 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).
57
2023 INGREDION ANNUAL REPORT 31.1
31.2
32.1
32.2
97.1*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
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.
Policy on Recoupment of Incentive Compensation
as restated as of October 27, 2023.
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.
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 April 15, 2020,
between Ingredion and Jeremy Xu (incorporated
by reference to Exhibit 10.28 to Ingredion’s Annual
Report on Form 10-K for the year ended
December 31, 2022, filed on February 21, 2023)
(File No. 1-13397).
Letter of Agreement, dated as of November 1, 2021,
between Ingredion and Nancy Wolfe (incorporated
by reference to Exhibit 10.1 to Ingredion’s Quarterly
Report on Form 10-Q for the quarter ended March 31,
2023, filed on May 8, 2023) (File No. 1-13397).
Form of 2024 Performance Share Award Agreement
for use in connection with awards under the 2023
Stock Incentive Plan.
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 (incorporated by reference to Exhibit 10.2 to
Ingredion’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2023, filed on May 8, 2023)
(File No. 1-13397).
Summary of Non-Employee Director Compensation.
Letter of Agreement, dated as of November 23,
2020, between Ingredion and Eric Seip
(incorporated by reference to Exhibit 10.27 to
Ingredion’s Annual Report on Form 10-K for the
year ended December 31, 2022, filed on February 21,
2023) (File No. 1-13397).
Letter of Agreement, dated April 16, 2023, between
Ingredion and Jeremy Xu
Subsidiaries of the Registrant.
Consent of Independent Registered Public
Accounting Firm.
Power of Attorney.
10.23*
10.24*
10.25*
10.26*
10.27
10.28
10.29*
10.30*
10.31*
21.1
23.1
24.1
58
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, 2024
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, 2024
(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, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
/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
*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
*Patricia Verduin
Patricia Verduin
*Dwayne A. Wilson
Dwayne A. Wilson
*By:
/s/ Tanya Jaeger de Foras
Tanya Jaeger de Foras
Attorney-in-fact
Date: February 21, 2024
59
2023 INGREDION ANNUAL REPORT SHAREHOLDER CUMULATIVE TOTAL RETURN
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, 2018 to December 31,
2023, for our common stock compared to the
cumulative total return during the same period
for the S&P Composite 1500 Food Beverage &
Tobacco Index, and our peer group. The S&P
Composite 1500 Food Beverage & Tobacco
Index is a comprehensive stock market index
representing equity investments in selected
food, beverage, and tobacco companies
within the Composite 1500 Consumer Staples
sector. The index is float-adjusted market cap
weighted and only includes publicly-traded
common stocks belonging to U.S. companies,
as determined in accordance with the selection
criteria of S&P Global, the creator of the index.
As of December 31, 2023, our total shareholder return peer group consisted of the
following 19 companies:
AAK AB
Archer-Daniels-Midland Company
Associated British Foods plc
Celanese Corporation
Danone S.A.
Ecolab Inc.
General Mills, Inc.
Huntsman Corporation
Kellanova (f/k/a Kellogg Company)
Kerry Group plc
The Kraft Heinz Company
McCormick & Company, Incorporated
Mondelez International, Inc.
Novozymes A/S
Sealed Air Corporation
Sensient Technologies Corporation
Tate & Lyle plc
Tyson Foods, Inc.
Unilever PLC
* Koninklijke DSM N.V. was removed as a result of its merger with Firmenich International
SA in May 2023.
Comparison of Cumulative Five-Year Total Return
$200
$150
$100
$50
INGREDION INCORPORATED
S&P COMPOSITE 1500 FOOD
BEVERAGE & TOBACCO INDEX
2023 PEER GROUP
2022 PEER GROUP
COMPANY NAME/INDEX
Ingredion Incorporated
S&P Composite 1500 Food
Beverage & Tobacco Index
2023 Peer Group
2022 Peer Group
BASE PERIOD
DEC. 31, 2018
DEC. 31, 2019
DEC. 31, 2020
DEC. 31, 2021
DEC. 31, 2022
DEC. 31, 2023
100
100
100
100
104.70
124.69
121.04
122.22
91.56
132.36
123.93
126.02
115.69
153.31
135.95
140.10
120.86
166.14
132.90
133.94
137.88
159.77
133.73
135.71
Comparison of Cumulative Total Return among our Company, the S&P Composite 1500 Food Beverage & Tobacco Index, and our Peer Group (for the period from
December 31, 2018 to December 31, 2023. Source: Standard & Poor’s)
The graph assumes that:
• as of the market close on December 31, 2018, 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 three 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.
60
Financial Performance Metrics
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
Other non-operating (income)
Restructuring/impairment(i)
Acquisition/integration costs(ii)
Other matters(iii)
Adjusted EBITDA (c)
Net debt to Income before income tax ratio (a/b)
Net debt to adjusted EBITDA ratio (a/c)
2023
$448
1,740
(401)
(8)
2022
$543
1,940
(236)
(3)
$1,779
$2,244
839
668
219
114
4
12
—
1
215
99
(5)
4
1
20
$1,189
$1,002
2.1
1.5
3.4
2.2
(i) During 2023, we recorded $11 million of pre-tax net restructuring/impairment charges primarily related to an other-than-temporary impairment on our equity method
investments. This was increased by $1 million as it included a depreciation benefit that was already included in depreciation and amortization line. In 2022, we recorded $4 million
of pre-tax restructuring charges primarily related to the Cost Smart programs.
(ii) In 2022, acquisition/integration costs were reduced by $4 million as they were included in financing costs.
(iii) In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was partially offset by $4 million of insurance recoveries. In
2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage.
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)
Other matters(iii)
Non-GAAP adjusted operating income
THREE MONTHS ENDED DECEMBER 31,
TWELVE MONTHS ENDED DECEMBER 31,
2023
$202
—
1
—
$203
2022
$157
—
—
11
$168
2023
$ 957
—
11
1
$969
2022
$762
1
4
20
$787
(i) During the twelve months ended December 31, 2022, we recorded $1 million of pre-tax acquisition and integration charges within operating income primarily related to our
investment in the Argentina joint venture.
(ii) During the three and twelve months ended December 31, 2023, we recorded $1 million and $10 million, respectively, of pre-tax charges primarily related to an other-than-
temporary impairment on our equity method investments. During the twelve months ended December 31, 2022, we recorded $4 million of remaining pre-tax restructuring-related
charges for our Cost Smart programs.
(iii) During the twelve months ended December 31, 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was
partially offset by $4 million of insurance recoveries. During the three and twelve months ended December 31, 2022, we recorded pre-tax charges of $11 million and $20 million,
respectively, primarily related to the impacts of a U.S.-based work stoppage.
61
2023 INGREDION ANNUAL REPORT Reconciliation of GAAP Net Income attributable to Ingredion and Diluted Earnings Per Share (“EPS”) to
Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS (unaudited)
(in millions, pre-tax)
(IN MILLIONS)
DILUTED EPS
(IN MILLIONS)
DILUTED EPS
(IN MILLIONS)
DILUTED EPS
(IN MILLIONS)
DILUTED EPS
Net Income attributable to Ingredion
$131
$1.97
$114
$1.71
$643
$9.60
$492
$7.34
THREE MONTHS ENDED
DECEMBER 31, 2023
THREE MONTHS ENDED
DECEMBER 31, 2022
TWELVE MONTHS ENDED
DECEMBER 31, 2023
TWELVE MONTHS ENDED
DECEMBER 31, 2022
Add back:
Acquisition/integration costs(i)
Restructuring/impairment charges(ii)
Other matters(iii)
Tax item - Mexico(iv)
Other tax matters(v)
Non-GAAP adjusted net income attributable
to Ingredion
—
1
—
—
(1)
—
0.02
—
—
(0.02)
4
—
8
(2)
(14)
0.06
—
0.12
(0.03)
(0.21)
—
8
1
(15)
(6)
—
0.12
0.01
(0.22)
(0.09)
5
3
15
(4)
(12)
0.08
0.05
0.22
(0.06)
(0.18)
$131
$1.97
$110
$1.65
$631
$9.42
$499
$7.45
Net income, EPS and tax rates may not foot or recalculate due to rounding
(i) During the three and twelve months ended December 31, 2022, we recorded $4 million and $5 million, respectively, of pre-tax acquisition and integration charges primarily related
to our investment in the Argentina joint venture.
(ii) During the three and twelve months ended December 31, 2023, we recorded $1 million and $10 million, respectively, of pre-tax charges primarily related to an other-than-
temporary impairment on our equity method investments. During the twelve months ended December 31, 2022, we recorded $4 million of remaining pre-tax restructuring-related
charges for our Cost Smart programs.
(iii) During the twelve months ended December 31, 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was
partially offset by $4 million of insurance recoveries. During the three and twelve months ended December 31, 2022, we recorded pre-tax charges of $11 million and $20 million,
respectively, primarily related to the impacts of a U.S.-based work stoppage.
(iv) During the twelve months ended December 31, 2023, we recorded a tax benefit of $15 million. We also recorded tax benefits of $2 million and $4 million for the three and twelve
months ended December 31, 2022, respectively. These benefits were 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.
(v) This item relates to net prior year tax liabilities and contingencies, impacts from the Pakistan Super Tax, IRS Notice 2023-55, and tax results of the above non-GAAP addbacks.
These were offset by interest on previously recognized tax benefits for certain Brazilian local incentives which were previously taxable.
62
Board of Directors
as of April 3, 2024
Corporate Officers
as of April 3, 2024
DIRECTORS AND OFFICERS
SHAREHOLDER INFORMATION
David B. Fischer2
Former President and Chief Executive Officer
Greif, Inc.
Age 61; Director since 2013
Rhonda L. Jordan2
Former President, Global Health & Wellness,
and Sustainability
Kraft Foods Inc.
Age 66; Director since 2013
Gregory B. Kenny*3
Former President and Chief Executive Officer
General Cable Corporation
Age 71; Director since 2005
Charles V. Magro2
Chief Executive Officer of Corteva Agriscience
Age 54; Director since 2022
Victoria J. Reich1
Former Senior Vice President and Chief Financial Officer
Essendant Inc.
Age 66; Director since 2013
Catherine Suever1
Former Executive Vice President
Finance and Administration and Chief Financial Officer
Parker-Hannifin Corporation
Age 65; Director since 2021
Stephan B. Tanda3
President and Chief Executive Officer
AptarGroup, Inc.
Age 58; Director since 2019
Jorge A. Uribe3
Former Global Productivity and Organization
Transformation Officer
The Procter & Gamble Company
Age 67; Director since 2015
Patricia Verduin3
Former Chief Technology Officer, Global Technology
Colgate-Palmolive Company
Age 64; Director since 2023
Dwayne A. Wilson1
Former Senior Vice President
Fluor Corporation
Age 65; Director since 2010
James P. Zallie
President and Chief Executive Officer
Ingredion Incorporated
Age 62; 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 62; joined Company in 2010
Lori Arnold
Vice President, Tax
Age 58; joined Company in 2011
Valdirene Evans
Senior Vice President and President,
Global Texture Solutions
Age 56; joined Company in 2018
Larry Fernandes
Senior Vice President and
Chief Commercial and Sustainability Officer
Age 59; joined Company in 1990
James D. Gray
Executive Vice President and Chief Financial Officer
Age 57; joined Company in 2014
Tanya Jaeger de Foras
Senior Vice President, Chief Legal Officer,
Corporate Secretary and Chief Compliance Officer
Age 53; joined Company in 2021
Michael O’Riordan
Senior Vice President, Texture and Healthful Solutions,
EMEA and Asia-Pacific
Age 54; joined Company in 2010
Rob Ritchie
Senior Vice President, Food & Industrial Ingredients,
LATAM and US/Canada
Age 54; joined Company in 1996
Eric Seip
Senior Vice President, Global Operations
and Chief Supply Chain Officer
Age 56; joined Company in 2021
C. Kevin Wilson
Vice President and Corporate Treasurer
Age 62; joined Company in 2014
Nancy Wolfe
Senior Vice President and Chief Human Resources Officer
Age 55; joined Company in 2022
Jeremy Xu
Senior Vice President, Chief Innovation Officer and President,
Global Healthful Solutions
Age 56; joined Company in 2020
63
2023 INGREDION ANNUAL REPORT THIS PAGE INTENTIONALLY LEFT BLANK
64
THIS PAGE INTENTIONALLY LEFT BLANK
Corporate Headquarters
5 Westbrook Corporate Center
Westchester, IL 60154
708.551.2600
708.551.2700 fax
www.ingredion.com
Stock Exchange
The common shares of Ingredion Incorporated trade
on the New York Stock Exchange under the ticker
symbol INGR. Our Company is a member of the
Russell 1000 Index and the S&P MidCap 400 Index.
Transfer Agent, Dividend Disbursing
Agent and Registrar
Computershare 866.517.4574 or 201.680.6685
(outside the U.S. and Canada) or 888.269.5221
(hearing impaired – TTY phone)
Shareholder Assistance
Ingredion Incorporated c/o Computershare
P.O. Box 30170
College Station, TX 77842-3170
Send overnight correspondence to:
Ingredion Incorporated c/o Computershare
211 Quality Circle, Suite 210
College Station, TX 77845
Shareholder website:
www.computershare.com/investor
Shareholder online inquiries:
https://www-us.computershare.com/investor/contact
Investor and Shareholder Contact
Investor Relations Department 708.551.2592
investor.relations@ingredion.com
Company Information
Copies of the Annual Report, the Annual Report
on Form 10-K and quarterly reports on Form 10-Q
may be obtained, without charge, by writing to
Investor Relations at the corporate headquarters
address, by calling 708.551.2603, by emailing
investor.relations@ingredion.com or by visiting
our website at ir.ingredionincorporated.com.
Annual Meeting of Shareholders
The 2024 Annual Meeting of Shareholders will be
held on Wednesday, May 15, 2024, at 9:00 a.m.
Central Daylight Time. The Annual Meeting will be a
completely virtual meeting of shareholders, which may
be attended via the internet by visiting https://www.
virtualshareholdermeeting.com/INGR2024. A formal
notice of that meeting, proxy statement and proxy
voting card are being made available to stockholders
in accordance with U.S. Securities and Exchange
Commission regulations.
Independent Auditors
KPMG LLP
200 East Randolph Street
Chicago, IL 60601
312.665.1000
Board Communication
Interested parties may communicate directly with any
member of our board of directors, including the
Chairman of the Board, or the independent directors,
as a group, by writing in care of Corporate Secretary,
Ingredion Incorporated, 5 Westbrook Corporate Center,
Westchester, IL 60154.
Safe Harbor
Certain statements in this Annual Report that are neither
reported financial results nor other historical information
are forward-looking statements. Such forward-looking
statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause
actual results and Company plans and objectives to differ
materially from those expressed in the forward-looking
statements. A description of some of these risks and
uncertainties is contained in our reports on Forms 10-K,
10-Q and 8-K filed with the SEC.
Copyright © 2024 Ingredion Incorporated.
All Rights Reserved.
65
2023 INGREDION ANNUAL REPORT 2023 ANNUAL REPORT
Making Healthy Taste Better
Ingredion Incorporated
5 Westbrook Corporate Center
Westchester, IL 60154
708.551.2600
WWW.INGREDION.COM