Ingredion Incorporated Q4 FY2025 earnings call

• Despite unforeseen challenges, delivered record full year operating income and earnings per share growth. - Texture and Healthful Solutions had seventh straight quarter of volume growth (4%), clean label ingredients key driver. - Food and Industrial Ingredients LatAm delivered record operating income and margins. - Food and Industrial Ingredients U.S./Canada faced operational issues at Argo facility. - Progress against key growth investments and strategic initiatives, including starch modernization project at Indianapolis facility and expansion of blending center of expertise in Belcamp, Maryland. - Cost2Compete run rate savings of $59 million exceeded target, transitioning to enterprise productivity. - Resilience to volatile trade and tariff environment with over 80% production locally made and sold.

Texture and Healthful Solutions: Net sales up 1% for full year 2025, operating income up 16%, operating income margin 16.9% (up over 200 basis points). Fourth quarter net sales up 2%, driven by 4% sales volume growth and foreign exchange favorability, partially offset by price/mix. Food and Industrial Ingredients LatAm: Net sales down 4% for full year 2025, but operating income increased to $493 million, op income margin 21.1%. Fourth quarter net sales up 1%, largely driven by favorable foreign exchange, partially offset by weaker volumes. Food and Industrial Ingredients U.S./Canada: Full year net sales down 7%, operating income $315 million, down 16%, driven by production challenges at Argo plant and lower beverage and food volume demand. Fourth quarter net sales declined 9%, sales volume fell 7% primarily due to Argo's operational challenges and soft beverage sweetener volumes.

• Full year 2026 net sales expected up low single digits to mid-single digits, reported and adjusted operating income up low single digits. - 2026 financing cost estimate $40 million to $50 million, effective tax rate 25.5% to 27%, adjusted EPS $11 to $11.80. - Cash from operations $820 million to $940 million, CapEx $400 million to $440 million. - Texture and Healthful Solutions: Net sales up low single digits to mid-single digits, operating income growth up low single digits to mid-single digits. - Food and Industrial Ingredients LatAm: Net sales up low single digits to mid-single digits, operating profit flat to up low single digits. - Food and Industrial Ingredients U.S./Canada: Net sales generally flat year-over-year, operating income flat, anticipating continued Argo challenges through first quarter. - All other businesses: Combined net sales up high single digits, operating income improve $5 million to $10 million. - First quarter 2026: Net sales down low single digits, operating income down mid-double digits.

• Operational difficulties at Argo facility in Food and Industrial Ingredients U.S./Canada segment. - Softness in beverage sweetener volumes. - Regional, economic and political volatility in Food and Industrial Ingredients LatAm segment. - Volatile trade and tariff environment. - Impact of sugar tax on sweetened beverages in Mexico. - Potential impact of GLP-1 trends on consumer behavior and company's protein fortification business.

Q: Kicking off with the outlook, help understand Argo facility impact in fourth quarter and 2026 playout.

A: Q4 Argo impact ~$16 million, 2025 total impact ~$40 million. 2026 Argo costs mostly in Q1, expect to get back onetime impacts in back half.

Q: On Texture & Healthful Solutions, unpack onetime items and price/mix headwinds in 2026.

A: Q4 op income down year-over-year due to 2024 onetime op expense benefits. Expect price/mix to move positive in 2026 driven by solutions growth and texture elevation.

Q: On LatAm business, break out volume movements and mix management.

A: Q4 LatAm net sales up 1%, sales volume down 3% due to brewing adjunct decline, food and beverage volume growth. Mexico food volumes up 3%, beverage volumes up 1%.

Q: On THS solutions business, quantification of mix and margin differential.

A: Solutions business over $1 billion, gross margins 5% higher than segment average, ~40% of segment revenue.

Q: On Texture & Healthful Solutions contracting pricing for 2026.

A: U.S. contracting pricing slightly down, anticipate covering raw material changes, but manufacturing cost inflation may hold gross margins flat.

Q: On cash from operations, repurchases, and M&A preferences for 2026.

A: Cash from operations strong, established at least $100 million share repurchase target, remain flexible for strategic M&A.

Q: On LatAm, impact of currency and tax changes.

A: Dollar functional in Mexico, strong peso increases operating expense. Watch peso/dollar value, World Cup year expected to benefit volumes.

Q: On U.S./CAN business returning to op income margin, and long-term algo.

A: U.S./CAN business can achieve 17% to 18% op income margin, long-term strategy intact but may reset to 2025 space results, return to mid-single digit and high single digit op income growth in future years.

Q: On broader industrial starch demand trends and Indianapolis starch modernization.

A: Industrial starch business done well, $50 million investment in Cedar Rapids, Indy starch modernization completed, cogen unit commissioning in third quarter.