WESTCHESTER, ILL. — In the second quarter ended June 30, even as Ingredion, Inc. continued to deal with higher corn costs and unfavorable exchange rates, a 16% increase in net sales was received with enthusiasm from investors. On Aug. 9, shares of the Westchester-based ingredient manufacturer traded as high as $95, a 4.5% jump from the previous day’s close of $90.86.
“Our teams delivered our strongest quarter since 2017,” James P. Zallie, president and chief executive officer, said in a conference call with securities analysts to discuss second-quarter results. “Net sales growth of 16% reflected robust customer demand, which drove comparable volume growth; this, along with active price mix management, enabled us to fully offset higher input costs. As a result, our adjusted operating income was up over last year’s strong performance and was higher than our expectations.
“Regarding customer demand, I would like to note that on a comparable basis, our shipped product volumes are now ahead of pre-pandemic levels for the same quarter in 2019. This is an important milestone for us given the impact that the pandemic has had on the industry and our business over the last two years. At the same time, net sales have grown significantly and specialty ingredients have increased as a percentage of both volume and net sales, reflecting a higher value mix.
“In response to continued strong demand for clean label texturizing starches, we accelerated the commissioning of new capacity at our Indianapolis facility. In addition, our Sugar Reduction and Specialty Sweetener platform had another excellent quarter, growing net sales by more than 20%, led by a double-digit top-line increase of PureCircle’s stevia franchise.”
Net income for the quarter ended June 30 was $142 million, equal to $2.14 per share on the common stock, down 20% from second-quarter income the previous year of $178 million, or $2.65 per share.
Quarterly sales increased to $2.04 billion, up 16% from $1.76 billion the previous year.
In North America, the company’s largest business unit, second-quarter operating income was $161 million, up 8% from $149 million in the same period of 2021. Sales totaled $1.28 billion, an increase of 20% from $1.06 billion.
“North America net sales were up 20% when compared to the same period in 2021,” James Derek Gray, executive vice president and chief financial officer, said during the conference call. “The increase was driven by strong price/mix, primarily as a result of last fall’s contracting season as well as dynamic in-year pricing.”
Operating income in the South America segment was $39 million in the second quarter, up 18% from $33 million the previous year. Sales were $290 million, up 8% from $268 million a year ago.
“Also contributing to second-quarter performance, core ingredients delivered net sales growth in the mid-teens,” Mr. Zallie said. “Our volume growth resulted from strong customer demand in categories such as brewery and confectionery. In addition, enhanced contract terms have enabled us to more quickly address changing input costs in our largest markets. Higher net sales growth was led by South America and Mexico as we continued to shift our focus to fast growing categories in these territories.”
For the six months ended June 30, Ingredion net income was $272 million, a steep increase from a net loss of $68 million in the first six months of 2021.
Sales for the six-month period were $3.94 billion, up 17% from $3.38 billion.
For fiscal 2022, Ingredion offered guidance for adjusted earnings per share in the range of $6.90 to $7.45 per share.“In the first half of the year, we paid $86 million of dividends to Ingredion shareholders and repurchased $83 million of outstanding common shares,” Mr. Gray said. “Finally, we acquired additional shares of PureCircle from minority shareholders for $27 million. We expect our full year 2022 adjusted EPS to be in the range of $6.90 to $7.45. This excludes the impact of acquisition-related integration and restructuring costs as well as any potential impairment charges.”