- Third quarter 2020 reported and adjusted EPS* were
$1.36 and$1.77 , respectively, compared with$1.47 and$1.86 in the third quarter 2019, respectively - Year-to-date 2020 reported and adjusted EPS were
$3.45 and$4.50 , respectively, compared with$4.51 and$5.06 in the year-ago period, respectively - The Company expects to increase its investment in
Verdient Foods Inc. by acquiring 100% ownership, further bolstering its plant-based proteins portfolio
“We are pleased with our operational execution and financial performance for the third quarter. We experienced sequential improvement over second quarter 2020 in customer volume demand across all four of our regions, driven by increased consumer activity in response to easing of COVID-19 restrictions,” said
“As we continue to navigate the different economic environments around the world, we remain focused on the resilience of our workforce, the responsibility to the communities in which we operate and ensuring business continuity for our customers. Our teams displayed great agility and creativity to advance our go-to-market strategy with customers, and I am incredibly proud of them. As part of new ways of working, we are leveraging new forms of digital collaboration to connect, innovate and co-create with our customers. Around the world, we are moving our
“Today, we announced another strategic step to advance our Driving Growth Roadmap with the pending acquisition of
“We are well positioned to effectively manage through the uncertainties due to the pandemic and successfully support our customers and their changing needs. We remain confident in the relevance of our strategy to grow our business and deliver value for shareholders,” concluded Zallie.
*Adjusted diluted earnings per share (“adjusted EPS”), adjusted operating income, adjusted effective income tax rate and adjusted cash flow from operations are non-GAAP financial measures. See section II of the Supplemental Financial Information entitled “Non-GAAP Information” following the Condensed Consolidated Financial Statements included in this press release for a reconciliation of these non-GAAP financial measures to the most directly comparable
Diluted Earnings Per Share (EPS)
3Q19 | 3Q20 | YTD19 | YTD20 | |||
Reported EPS | $1.47 | $1.36 | $4.51 | $3.45 | ||
Impairment/Restructuring Costs | ||||||
Acquisition/Integration Costs | - | |||||
Tax Items | ||||||
Other Adjusted Items | - | - | ||||
Adjusted EPS** | $1.86 | $1.77 | $5.06 | $4.50 |
Estimated factors affecting change in reported and adjusted EPS
3Q20 | YTD20 | |
Margin | (0.07) | (0.05) |
Volume | (0.02) | (0.41) |
Foreign exchange | (0.07) | (0.20) |
Other income | 0.01 | (0.03) |
Total operating items | (0.15) | (0.69) |
Other non-operating income | 0.02 | 0.05 |
Financing costs | 0.09 | 0.09 |
Non-Controlling interests | 0.02 | 0.02 |
Shares outstanding | (0.01) | (0.02) |
Tax rate | (0.06) | (0.02) |
Total non-operating items | 0.06 | 0.12 |
Total items affecting EPS** | (0.09) | (0.56) |
**Totals may not foot due to rounding
Financial Highlights
- At
September 30, 2020 , total debt and cash and short-term investments were$2.2 billion and$553 million , respectively, versus$1.8 billion and$268 million , respectively, atDecember 31, 2019 . The increase in total debt and cash and short-term investments was primarily due to the Company's sale of$1.0 billion of senior notes in the second quarter 2020, partially offset by the redemption of$400 million ofNovember 2020 senior notes in July. - Net financing costs were
$22 million , which includes$5 million for interest payments associated with the early retirement of the senior notes in July. Net financing costs were$2 million lower in the third quarter from the year-ago period. The decrease resulted from lower net interest expense due to lower interest rates. - Reported and adjusted effective tax rates for the quarter were 30.1 percent and 26.2 percent, respectively, compared to 27.1 percent and 23.2 percent, respectively, in the year-ago period. The increase in reported and adjusted tax rates resulted primarily from US foreign tax credits, country earnings mix, and other one-time adjustments.
- Year-to-date capital expenditures were
$250 million , up$19 million from the year-ago period.
Business Review
Total Ingredion
$ in millions | 2019 | FX Impact | Volume | Pricemix | PureCircle | 2020 | % change | % change excl. FX |
Third quarter | 1,574 | -38 | -36 | -6 | 8 | 1,502 | -5% | -2% |
Year-to-Date | 4,660 | -138 | -214 | 78 | 8 | 4,394 | -6% | -3% |
Reported Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | PureCircle | Acquisition / Integration | Restructuring / Impairment | Other | 2020 | % change | % change excl. FX |
Third quarter | 165 | -6 | -3 | -5 | -5 | 12 | -5 | 153 | -7% | -4% |
Year-to-Date | 494 | -18 | -41 | -5 | -6 | - | -5 | 419 | -15% | -11% |
Adjusted Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | PureCircle | 2020 | % change | % change excl. FX |
Third quarter | 193 | -6 | -3 | -5 | 179 | -7% | -4% |
Year-to-Date | 537 | -18 | -41 | -5 | 473 | -12% | -8% |
- Third quarter net sales were down from the year-ago period. The decrease was driven by foreign exchange impacts in
South America and sales volume declines inNorth America . Excluding foreign exchange impacts, net sales were down 2 percent for the quarter. - Year-to-date net sales were down from the year-ago period. The decrease in year-to-date net sales was driven by sales volume declines in
North America andSouth America and foreign exchange impacts inSouth America which were partially offset by favorable pricing. Excluding foreign exchange impacts, net sales were down 3 percent year-to-date.
Operating income
- Reported and adjusted operating income for the quarter were
$153 million and$179 million , respectively, both of which decreased by 7 percent, from the year-ago period. The decreases were largely attributable to lower sales volumes inNorth America and the inclusion of PureCircle results. Excluding foreign exchange impacts, reported and adjusted operating income were both down 4 percent from the same period last year. - Year-to-date reported and adjusted operating income were
$419 million and$473 million , respectively, decreases of 15 percent and 12 percent, respectively, from the year-ago period. The decreases were largely attributable to lower sales volumes inNorth America and higher corporate costs due to continued investments to drive business and digital transformation. Excluding foreign exchange impacts, reported and adjusted operating income were down 11 percent and 8 percent, respectively, from the same period last year. - Third quarter and year-to-date reported operating income were lower than adjusted operating income by
$26 million and$54 million , respectively, due to asset closures and restructuring costs related to Cost Smart, acquisition and integration costs, and the impact of the August storm damage inIowa .
$ in millions | 2019 | FX Impact | Volume | Price mix | 2020 | % change | % change excl. FX |
Third quarter | 984 | -1 | -31 | -24 | 928 | -6% | -6% |
Year-to-Date | 2,912 | -6 | -181 | 14 | 2,739 | -6% | -6% |
Segment Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | 2020 | % change | % change excl. FX |
Third quarter | 145 | - | -13 | 132 | -9% | -9% |
Year-to-Date | 409 | -1 | -50 | 358 | -12% | -12% |
Operating income
- Third quarter operating income was
$132 million , a decrease of$13 million from the year-ago period. The decrease was driven by lower volumes, as COVID-19 continued to impact away-from-home consumption across the region, and unfavorable mix in theU.S. andCanada . - Year-to-date operating income was
$358 million , a decrease of$51 million from the year-ago period. The decrease was driven by significantly lower away-from-home consumption across the region and the shutdown of brewery customers inMexico in the second quarter.
$ in millions | 2019 | FX Impact | Volume | Price mix | 2020 | % change | % change excl. FX | ||
Third quarter | 245 | -38 | -7 | 24 | 224 | -9 | % | 7 | % |
Year-to-Date | 699 | -104 | -20 | 68 | 643 | -8 | % | 7 | % |
Segment Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | 2020 | % change | % change excl. FX | ||
Third quarter | 27 | -6 | 8 | 29 | 7 | % | 30 | % |
Year-to-Date | 61 | -13 | 20 | 68 | 11 | % | 33 | % |
Operating income
- Third quarter operating income was
$29 million , an increase of$2 million from the year-ago period. The increase was driven by strong price mix which was partially offset by unfavorable foreign currency impacts. Excluding foreign exchange impacts, segment operating income was up 30 percent. - Year-to-date operating income was
$68 million , an increase of$7 million from the year-ago period due to strong price mix which was partially offset by unfavorable foreign currency impacts and lower sales volumes. Excluding foreign exchange impacts, segment operating income was up 33 percent. Results forArgentina are accounted for inU.S. dollars under hyper-inflationary accounting.
$ in millions | 2019 | FX Impact | Volume | Price mix | PureCircle | 2020 | % change | % change excl. FX |
Third quarter | 205 | - | 1 | -7 | 8 | 207 | 1% | 1% |
Year-to-Date | 611 | -12 | -12 | -12 | 8 | 583 | -5% | -3% |
Segment Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | PureCircle | 2020 | % change | % change excl. FX |
Third quarter | 22 | - | 1 | -5 | 18 | -18% | -18% |
Year-to-Date | 65 | -1 | 1 | -5 | 60 | -8% | -6% |
Operating income
- Third quarter operating income was
$18 million , down$4 million from the year-ago period driven by$5 million of operating loss from PureCircle. Excluding PureCircle, third quarter operating income was$23 million , up$1 million from the year-ago period driven by lower input costs and operating expenses. - Year-to-date operating income was
$60 million , a decrease of$5 million from the year-ago period. PureCircle results reduced year-to-date operating income by$5 million . Excluding PureCircle results, year-to-date operating income was flat to the same period in the prior year as lower input costs and favorable operating expenses offset lower sales volumes in the first half due to the impact of stay-at-home orders. Excluding foreign currency impacts, segment operating income was down 6%.
$ in millions | 2019 | FX Impact | Volume | Price mix | 2020 | % change | % change excl. FX |
Third quarter | 140 | - | 1 | 2 | 143 | 2% | 2% |
Year-to-Date | 438 | -18 | -1 | 10 | 429 | -2% | 2% |
Segment Operating Income
$ in millions | 2019 | FX Impact | Business Drivers | 2020 | % change | % change excl. FX |
Third quarter | 24 | - | 1 | 25 | 4% | 4% |
Year-to-Date | 71 | -3 | 5 | 73 | 3% | 8% |
Operating income
- Third quarter operating income was
$25 million , up$1 million from the year-ago period. The increase was largely attributable to favorable price mix inPakistan and lower operating expenses inEurope . - Year-to-date operating income was
$73 million , an increase of$2 million from a year ago. The increase was largely attributable toPakistan pricing actions, solid EMEA specialty sales volume, and lower operating expenses inEurope , partially offset by the impacts of stay-at-home orders onPakistan production and sales volume in the first half and negative foreign currency impacts. Excluding foreign currency impacts, segment operating income was up 8 percent.
Dividends
In
2020 Outlook
Due to continued uncertainty of COVID-19 impacts, the Company cannot reasonably estimate full-year results at this time and guidance remains withdrawn.
The Company anticipates continued impacts from COVID-19 on net sales volume across our operating segments in the fourth quarter, with recovery in net sales generally correlated with increased consumer activity. With pandemic case rates rising and falling across many geographies, we expect away-from-home consumption to continue to fluctuate, suppressing volume demand for ingredients that are formulated in food and beverages consumed away-from-home. We anticipate modestly higher demand for food consumed in home, increasing volumes for ingredients that are part of the recipes for these meals.
For the full year, we expect a reported tax rate of 32 percent to 36 percent and an adjusted effective tax rate in the range of approximately 27 percent to 28 percent.
Capital expenditures are anticipated to be between
Conference Call and Webcast Details
Ingredion will conduct a conference call on
About the Company
Forward-Looking Statements
This news release 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. The Company 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 the Company's expectations regarding impacts of COVID-19, and the Company's effective tax rates and capital expenditures for 2020 and any assumptions, expectations or beliefs underlying 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 in this release or referred to in this release 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 are 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 our forward looking statements as a result of the following risks and uncertainties, among others: changing consumption preferences and perceptions, including those relating to high fructose corn syrup; 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, including, particularly, economic, currency and political conditions in
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 "Risk Factors" included in our Annual Report on Form 10-K for the year ended
CONTACTS:
Investors:
Media:
Condensed Consolidated Statements of Income | |||||||||||||||
(Unaudited) | |||||||||||||||
(in millions, except per share amounts) | Three Months Ended | Change % | Nine Months Ended | Change % | |||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net sales | $ | 1,502 | $ | 1,574 | (5%) | $ | 4,394 | $ | 4,660 | (6%) | |||||
Cost of sales | 1,176 | 1,230 | 3,474 | 3,671 | |||||||||||
Gross profit | 326 | 344 | (5%) | 920 | 989 | (7%) | |||||||||
Operating expenses | 155 | 153 | 1% | 456 | 457 | 0% | |||||||||
Other expense (income), net | 2 | (2) | 4 | (3) | |||||||||||
Restructuring/impairment charges | 16 | 28 | 41 | 41 | |||||||||||
Operating income | 153 | 165 | (7%) | 419 | 494 | (15%) | |||||||||
Financing costs, net | 22 | 24 | 59 | 62 | |||||||||||
Other, non-operating (income) expense, net | (2) | 1 | (3) | 1 | |||||||||||
Income before income taxes | 133 | 140 | (5%) | 363 | 431 | (16%) | |||||||||
Provision for income taxes | 40 | 38 | 125 | 120 | |||||||||||
Net income | 93 | 102 | (9%) | 238 | 311 | (23%) | |||||||||
Less: Net income attributable to non-controlling interests | 1 | 3 | 5 | 7 | |||||||||||
Net income attributable to Ingredion | $ | 92 | $ | 99 | (7%) | $ | 233 | $ | 304 | (23%) | |||||
Earnings per common share attributable to Ingredion | |||||||||||||||
common shareholders: | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 67.2 | 66.9 | 67.2 | 66.9 | |||||||||||
Diluted | 67.6 | 67.4 | 67.6 | 67.4 | |||||||||||
Earnings per common share of Ingredion: | |||||||||||||||
Basic | (7%) | (24%) | |||||||||||||
Diluted | (7%) | (24%) | |||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
(in millions, except share and per share amounts) | |||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 553 | $ | 264 | |||||||
Short-term investments | - | 4 | |||||||||
Accounts receivable – net | 913 | 977 | |||||||||
Inventories | 908 | 861 | |||||||||
Prepaid expenses | 56 | 54 | |||||||||
Total current assets | 2,430 | 2,160 | |||||||||
Property, plant and equipment – net | 2,354 | 2,306 | |||||||||
841 | 801 | ||||||||||
Other intangible assets – net | 479 | 437 | |||||||||
Operating lease assets | 161 | 151 | |||||||||
Deferred income tax assets | 23 | 13 | |||||||||
Other assets | 176 | 172 | |||||||||
Total assets | $ | 6,464 | $ | 6,040 | |||||||
Liabilities and equity | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings | 62 | $ | 82 | ||||||||
Accounts payable and accrued liabilities | 893 | 885 | |||||||||
Total current liabilities | 955 | 967 | |||||||||
Non-current liabilities | 211 | 220 | |||||||||
Long-term debt | 2,115 | 1,766 | |||||||||
Non-current operating lease liabilities | 123 | 120 | |||||||||
Deferred income tax liabilities | 189 | 195 | |||||||||
Share-based payments subject to redemption | 32 | 31 | |||||||||
Redeemable non-controlling interests | 74 | - | |||||||||
Equity | |||||||||||
Ingredion stockholders' equity: | |||||||||||
Preferred stock – authorized 25,000,000 shares – | - | - | |||||||||
Common stock – authorized 200,000,000 shares – | |||||||||||
shares issued at | 1 | 1 | |||||||||
Additional paid-in capital | 1,145 | 1,137 | |||||||||
Less: | |||||||||||
(1,027 | ) | (1,040 | ) | ||||||||
Accumulated other comprehensive loss | (1,259 | ) | (1,158 | ) | |||||||
Retained earnings | 3,884 | 3,780 | |||||||||
Total Ingredion stockholders' equity | 2,744 | 2,720 | |||||||||
Non-redeemable non-controlling interests | 21 | 21 | |||||||||
Total equity | 2,765 | 2,741 | |||||||||
Total liabilities and equity | $ | 6,464 | $ | 6,040 | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||
(Unaudited) | |||||||||||
For the Nine Months Ended | |||||||||||
(in millions) | 2020 | 2019 | |||||||||
Cash provided by operating activities: | |||||||||||
Net income | $ | 238 | $ | 311 | |||||||
Adjustments to reconcile net income to | |||||||||||
net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 158 | 158 | |||||||||
Mechanical stores expense | 39 | 42 | |||||||||
Deferred income taxes | (1 | ) | 2 | ||||||||
Charge for fair value mark-up of acquired inventory | 3 | - | |||||||||
Margin accounts | 6 | (4 | ) | ||||||||
Changes in other trade working capital | 80 | (51 | ) | ||||||||
Other | 39 | 32 | |||||||||
Cash provided by operating activities | 562 | 490 | |||||||||
Cash used for investing activities: | |||||||||||
Capital expenditures and mechanical stores purchases, net proceeds on disposals | (250 | ) | (231 | ) | |||||||
Payments for acquisitions, net of cash acquired | (208 | ) | (42 | ) | |||||||
Investment in a non-consolidated affiliate | (6 | ) | (10 | ) | |||||||
Short-term investments | 4 | 4 | |||||||||
Other | - | 1 | |||||||||
Cash used for investing activities | (460 | ) | (278 | ) | |||||||
Cash provided by (used for) financing activities: | |||||||||||
Proceeds from borrowings (payments on), net | 341 | (19 | ) | ||||||||
Debt issuance costs | (9 | ) | - | ||||||||
Repurchases of common stock, net | - | 63 | |||||||||
Issuances of common stock for share-based compensation, net of settlements | 2 | 1 | |||||||||
Dividends paid, including to non-controlling interests | (132 | ) | (131 | ) | |||||||
Cash provided by (used for) financing activities | 202 | (86 | ) | ||||||||
Effect of foreign exchange rate changes on cash | (15 | ) | (10 | ) | |||||||
Increase in cash and cash equivalents | 289 | 116 | |||||||||
Cash and cash equivalents, beginning of period | 264 | 327 | |||||||||
Cash and cash equivalents, end of period | $ | 553 | $ | 443 | |||||||
Supplemental Financial Information | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
I. Geographic Information of | |||||||||||||||||||||||||||
(in millions, expect for percentages) | Three Months Ended | Change | Nine Months Ended | Change | Change | ||||||||||||||||||||||
2020 | 2019 | Change | Excl. FX | 2020 | 2019 | % | Excl. FX | ||||||||||||||||||||
$ | 928 | $ | 984 | (6 | %) | (6 | %) | $ | 2,739 | $ | 2,912 | (6 | %) | (6 | %) | ||||||||||||
224 | 245 | (9 | %) | 7 | % | 643 | 699 | (8 | %) | 7 | % | ||||||||||||||||
207 | 205 | 1 | % | 1 | % | 583 | 611 | (5 | %) | (3 | %) | ||||||||||||||||
EMEA | 143 | 140 | 2 | % | 2 | % | 429 | 438 | (2 | %) | 2 | % | |||||||||||||||
Total | $ | 1,502 | $ | 1,574 | (5 | %) | (2 | %) | $ | 4,394 | $ | 4,660 | (6 | %) | (3 | %) | |||||||||||
Operating Income | |||||||||||||||||||||||||||
$ | 132 | $ | 145 | (9 | %) | (9 | %) | $ | 358 | $ | 409 | (12 | %) | (12 | %) | ||||||||||||
29 | 27 | 7 | % | 30 | % | 68 | 61 | 11 | % | 33 | % | ||||||||||||||||
18 | 22 | (18 | %) | (18 | %) | 60 | 65 | (8 | %) | (6 | %) | ||||||||||||||||
EMEA | 25 | 24 | 4 | % | 4 | % | 73 | 71 | 3 | % | 8 | % | |||||||||||||||
Corporate | (25 | ) | (25 | ) | 0 | % | 0 | % | (86 | ) | (69 | ) | (25 | %) | (25 | %) | |||||||||||
Sub-total | 179 | 193 | (7 | %) | (4 | %) | 473 | 537 | (12 | %) | (8 | %) | |||||||||||||||
Restructuring/impairment charges | (16 | ) | (28 | ) | (41 | ) | (41 | ) | |||||||||||||||||||
Acquisition/integration costs | (5 | ) | - | (8 | ) | (2 | ) | ||||||||||||||||||||
Charge for fair value markup of acquired inventory | (3 | ) | - | (3 | ) | ||||||||||||||||||||||
(2 | ) | - | (2 | ) | - | ||||||||||||||||||||||
Total Operating Income | $ | 153 | $ | 165 | (7 | %) | (4 | %) | $ | 419 | $ | 494 | (15 | %) | (11 | %) | |||||||||||
II. Non-GAAP Information | ||||||||||||||||||||||
To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), we use non-GAAP historical financial measures, which exclude certain GAAP items such as acquisition and integration costs, restructuring and impairment cost, | ||||||||||||||||||||||
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) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||||||||
(in millions) | Diluted EPS | (in millions) | Diluted EPS | (in millions) | Diluted EPS | (in millions) | Diluted EPS | |||||||||||||||
Net income attributable to Ingredion | $ | 92 | $ | 1.36 | $ | 99 | $ | 1.47 | $ | 233 | $ | 3.45 | $ | 304 | $ | 4.51 | ||||||
Add back: | ||||||||||||||||||||||
Acquisition/integration costs, net of income tax benefit of | 4 | 0.06 | - | - | 6 | 0.10 | 1 | 0.02 | ||||||||||||||
Restructuring/impairment charges, net of income tax benefit of | 15 | 0.22 | 22 | 0.32 | 34 | 0.51 | 32 | 0.47 | ||||||||||||||
Charge for fair value markup of acquired inventory, net of income tax benefit of $ - for the three and nine months ending | 3 | 0.04 | - | - | 3 | 0.04 | ||||||||||||||||
Charge for early extinguishment of debt, net of income tax benefit of | 4 | 0.06 | - | - | 4 | 0.06 | - | - | ||||||||||||||
2 | 0.03 | - | - | 2 | 0.03 | - | - | |||||||||||||||
Tax (benefit) provision - | (6 | ) | (0.08 | ) | 3 | 0.04 | 16 | 0.24 | 2 | 0.03 | ||||||||||||
Other tax matters (vii) | 6 | 0.09 | 2 | 0.03 | 6 | 0.09 | 2 | 0.03 | ||||||||||||||
Non-GAAP adjusted net income attributable to Ingredion | $ | 120 | $ | 1.77 | $ | 126 | $ | 1.86 | $ | 304 | $ | 4.50 | $ | 341 | $ | 5.06 | ||||||
Net income, EPS and tax rates may not foot or recalculate due to rounding. | ||||||||||||||||||||||
Notes | ||||||||||||||||||||||
(i) The 2020 period primarily includes costs related to the acquisition and integration of the business acquired from PureCircle Limited. The 2019 period primarily includes costs related to the acquisition and integration of the business acquired from | ||||||||||||||||||||||
(ii) During the three months ended | ||||||||||||||||||||||
(iii) The three and nine months ended | ||||||||||||||||||||||
(iv) During the three and nine months ended | ||||||||||||||||||||||
(v) During the three and nine months ended | ||||||||||||||||||||||
(vi) The tax item represents the impact of the Company’s use of the | ||||||||||||||||||||||
(vii) This relates to other tax settlements, tax adjustments for an intercompany reorganization, and tax results of the above non-GAAP addbacks. | ||||||||||||||||||||||
II. Non-GAAP Information (continued) | ||||||||||||||||||||||
Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
(in millions, pre-tax) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
Operating income | $ | 153 | $ | 165 | $ | 419 | $ | 494 | ||||||||||||||
Add back: | ||||||||||||||||||||||
Acquisition/integration costs (i) | 5 | - | 8 | 2 | ||||||||||||||||||
Restructuring/impairment charges (ii) | 16 | 28 | 41 | 41 | ||||||||||||||||||
Charge for fair value markup of acquired inventory (iii) | 3 | - | 3 | 0 | ||||||||||||||||||
2 | - | 2 | - | |||||||||||||||||||
Non-GAAP adjusted operating income | $ | 179 | $ | 193 | $ | 473 | $ | 537 | ||||||||||||||
For each tickmark above, see footnotes included in the Reconciliation of GAAP Net Income attributable to Ingredion and Diluted EPS to Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS. | ||||||||||||||||||||||
II. Non-GAAP Information (continued) | |||||||||||||||||||||
Reconciliation of GAAP Effective Income Tax Rate to Non-GAAP Adjusted Effective Income Tax Rate | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
Income before | Provision for | Effective Income | Income before | Provision for | Effective Income | ||||||||||||||||
(in millions) | Income Taxes (a) | Income Taxes (b) | Tax Rate (b / a) | Income Taxes (a) | Income Taxes (b) | Tax Rate (b / a) | |||||||||||||||
As Reported | $ | 133 | $ | 40 | 30.1 | % | $ | 363 | $ | 125 | 34.4 | % | |||||||||
Add back: | |||||||||||||||||||||
Acquisition/integration costs (i) | 5 | 1 | 8 | 2 | |||||||||||||||||
Restructuring/impairment charges (ii) | 16 | 1 | 41 | 7 | |||||||||||||||||
Charge for fair value markup of acquired inventory (iii) | 3 | - | 3 | - | |||||||||||||||||
Charge for early extinguishment of debt (iv) | 5 | 1 | 5 | 1 | |||||||||||||||||
2 | - | 2 | - | ||||||||||||||||||
Tax item - | - | 6 | - | (16 | ) | ||||||||||||||||
Other tax matters (vii) | - | (6 | ) | - | (6 | ) | |||||||||||||||
Adjusted Non-GAAP | $ | 164 | $ | 43 | 26.2 | % | $ | 422 | $ | 113 | 26.8 | % | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
Income before | Provision for | Effective Income | Income before | Provision for | Effective Income | ||||||||||||||||
(in millions) | Income Taxes (a) | Income Taxes (b) | Tax Rate (b / a) | Income Taxes (a) | Income Taxes (b) | Tax Rate (b / a) | |||||||||||||||
As Reported | $ | 140 | $ | 38 | 27.1 | % | $ | 431 | $ | 120 | 27.8 | % | |||||||||
Add back: | |||||||||||||||||||||
Acquisition/integration costs (i) | - | - | 2 | 1 | |||||||||||||||||
Restructuring/impairment charges (ii) | 28 | 6 | 41 | 9 | |||||||||||||||||
Tax item - | - | (3 | ) | - | (2 | ) | |||||||||||||||
Other tax matters (vii) | - | (2 | ) | - | (2 | ) | |||||||||||||||
Adjusted Non-GAAP | $ | 168 | $ | 39 | 23.2 | % | $ | 474 | $ | 126 | 26.6 | % | |||||||||
For each tickmark above, see footnotes included in the Reconciliation of GAAP Net Income attributable to Ingredion and Diluted EPS to Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS. | |||||||||||||||||||||
II. Non-GAAP Information (continued) | ||||||||||
Reconciliation of Reported | ||||||||||
to Anticipated Adjusted Effective Tax Rate ("Adjusted ETR") | ||||||||||
(Unaudited) | ||||||||||
for Full Year 2020 | ||||||||||
Low End | High End | |||||||||
GAAP ETR | 32.0 | % | 36.0 | % | ||||||
Add: | ||||||||||
Acquisition/integration costs (i) | 0.4 | % | 0.4 | % | ||||||
Restructuring/impairment charges (ii) | 1.5 | % | 1.6 | % | ||||||
Charge for fair value markup of acquired inventory (iii) | 0.0 | % | 0.0 | % | ||||||
Charge for early extinguishment of debt (iv) | 0.2 | % | 0.2 | % | ||||||
0.1 | % | 0.2 | % | |||||||
Tax item - | -2.3 | % | -5.0 | % | ||||||
Other tax matters (vii) | -1.0 | % | -1.0 | % | ||||||
Impact of adjustment on Effective Tax Rate (viii) | -3.9 | % | -4.4 | % | ||||||
Adjusted ETR | 27.0 | % | 28.0 | % | ||||||
Above is a reconciliation of our anticipated full year 2020 GAAP ETR to our anticipated full year 2020 adjusted ETR. The amounts above may not reflect certain future charges, costs and/or gains that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance. These amounts include, but are not limited to, acquisition and integration costs, impairment and restructuring costs, and certain other special items. We generally exclude these items from our adjusted ETR guidance. For these reasons, we are more confident in our ability to predict adjusted ETR than we are in our ability to predict GAAP ETR. | ||||||||||
For items (i) through (vii), see footnotes included in the Reconciliation of GAAP Net Income attributable to Ingredion and Diluted EPS to Non-GAAP Adjusted Net Income attributable to Ingredion and Adjusted Diluted EPS. | ||||||||||
(viii) Indirect impact of tax rate after items (i) through (vii). | ||||||||||
© OMX, source