Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to the food and beverage industry, reported its first quarter 2024 financial results, which exceeded expectations and prompted the company to raise its full-year guidance.

Financials

For the first quarter of 2024, Ingredion reported net sales of $1.882 billion, down 12% from the prior year period. Despite the decline in net sales, the company's gross profit margin remained resilient at 22%, only slightly lower than the 23% recorded in the first quarter of 2023. Operating income for the quarter was $213 million, while net income attributable to Ingredion was $216 million.

On a full-year basis, Ingredion reported annual net sales of approximately $8.16 billion and net income of $643 million in 2023. The company also generated robust operating cash flow of $1.057 billion and free cash flow of $741 million last year.

Segment Performance

In the first quarter of 2024, Ingredion's Texture & Healthful Solutions (T&HS) segment reported net sales of $597 million, down 10% year-over-year. Operating income for the T&HS segment was $74 million, a 42% decrease compared to the prior year period. The decline was primarily driven by unfavorable price mix and the carryforward of higher cost inventory.

Ingredion's Food & Industrial Ingredients - LATAM (F&II-LATAM) segment reported net sales of $616 million in the first quarter, down 8% year-over-year. Operating income for the F&II-LATAM segment was $101 million, a 17% decrease compared to the prior year period. The decline was primarily due to the impact of the Argentine peso devaluation on the company's joint venture in the country.

The Food & Industrial Ingredients - U.S./Canada (F&II-U.S./Canada) segment reported net sales of $541 million, down 11% year-over-year. Operating income for the F&II-U.S./Canada segment was $87 million, a 5% decrease compared to the prior year period. The decline was primarily driven by downtime due to the impacts of cold weather, partially offset by stronger industrial demand.

Ingredion's All Other segment, which includes the company's businesses in Pakistan, PureCircle, Sugar Reduction, Protein Fortification, and the recently divested South Korea operation, reported net sales of $128 million, down 35% year-over-year. Operating loss for the All Other segment was $4 million, an improvement of 50% compared to the prior year period.

Outlook

Looking ahead, Ingredion provided updated guidance for the full-year 2024. Excluding the impact of the South Korea divestiture, the company expects full-year net sales to be flat to up low single digits, reflecting improved volume demand offset by a decline in price/mix as the company passes through lower raw material costs. Adjusted operating income is expected to be up mid-single digits, with year-over-year growth in the second through fourth quarters.

The company also revised its financing cost outlook to a range of $85 million to $105 million and its reported effective tax rate to 24.5% to 25.5%, with an adjusted effective tax rate of 26.5% to 27.5%. Ingredion now expects its full-year reported earnings per share to be in the range of $10.35 to $11.00, which includes an $82 million gain from the sale of its South Korea business. Adjusted earnings per share are expected to be in the range of $9.20 to $9.85.

Conclusion

Ingredion's strong first quarter performance, coupled with its updated guidance, demonstrates the company's ability to navigate a challenging market environment. The company's strategic initiatives, including the recent reorganization into three reportable segments and the Cost2Compete cost savings program, position Ingredion well to continue delivering value to its shareholders.