Financial Highlights

• At June 30, 2018, total debt and cash and short-term investments were $1.66 billion and $365 million, versus $1.86 billion and $604 million, respectively, at December 31, 2017. Cash and short-term investments reductions were primarily driven by the pay down of debt and share repurchases.
• During the second quarter of 2018, net financing costs were $25 million, or $5 million higher than the year-ago period, primarily driven by foreign-exchange losses.
• For the second quarter of 2018, reported and adjusted effective tax rates were 31.4 percent and 30.5 percent, compared to reported and adjusted effective tax rates of 30.4 percent and 29.9 percent, respectively, in the year-ago period. The higher rates were driven predominantly by the devaluation of the Mexican peso impacting the U.S. dollar-denominated balances in Mexico, partially offset by a reduced valuation allowance on the net deferred tax assets of a foreign subsidiary and U.S. tax reform.
• During the quarter, the Company repurchased 1.25 million shares of common stock in the open market totaling $141 million.
• Capital expenditures were $160 million for the first half of 2018, up $16 million from the year-ago period, driven by increased investments in growing specialty ingredients.

Cost Smart Progress

• On July 12, 2018, the Company announced a $125 million savings target for its Cost Smart program, designed to improve profitability, streamline its global business, and further enable specialty growth through go-to-market and innovation. The $125 million target includes anticipated savings of $75 million in cost of sales, including freight, and $50 million in SG&A by year-end 2021 to deliver increased value to shareholders.
• Implementation planning for this program is well underway. Anticipated savings impacting all regions and functions are expected to generate cost run-rate savings of $2 million to $4 million starting in late 2018, $22 million to $34 million cumulatively in 2019, building to $125 million by year-end 2021, before inflationary effects.

Business Review

Total Ingredion

Net Sales

• Second quarter and year-to-date net sales were up compared to the year-ago period. Core and specialty volume growth as well as favorable price/mix, primarily due to foreign exchange pricing pass through in South America, were partially offset by changes in foreign currency exchange rates.

Operating income

• Second quarter reported and adjusted operating income were $193 million and $201 million, respectively.  This was an eight percent and a nine percent decrease, respectively, compared to $210 million of reported operating income and $220 million of adjusted operating income in the second quarter of 2017. The decreases were largely attributable to North America with higher production and freight costs, as well as lower U.S./Canada sweetener demand. Additionally, higher tapioca costs in Asia-Pacific impacted the quarter. These decreases were partially offset by operating income growth in South America.
• Year-to-date 2018 reported and adjusted operating income were $390 million and $401 million, respectively. These were three percent and seven percent decreases, respectively, compared to $403 million of reported operating income and $430 million of adjusted operating income year-to-date 2017. The decreases were largely attributable to North America with higher production and freight costs, as well as lower U.S./Canada sweetener demand.  Additionally, higher tapioca costs in Asia-Pacific impacted the first-half results. These decreases were partially offset by operating income growth in South America and EMEA.
• Second quarter reported operating income was lower than adjusted operating income by $8 million.  Cost Smart employee-related severance and other costs were $6 million and finance transformation initiatives were $2 million.
• Year-to-date reported operating income was lower than adjusted operating income by $11 million. Cost Smart employee-related severance and other costs were $6 million and finance transformation initiatives were $4 million. Brazil leaf extraction was $1 million.

North America

Operating income

• Second quarter operating income was $150 million, a decrease of $30 million from a year ago.  The decrease was driven by higher production and freight costs and lower U.S./Canada sweetener and industrial starch demand.
• Year-to-date operating income was $293 million, a decrease of $45 million from a year ago. The decrease was largely driven by higher production and freight costs as well as lower U.S./Canada sweetener and industrial starch demand. Commodity pricing pressures were a factor to a smaller degree.

South America

Operating income

• Second quarter and year-to-date operating incomes were $20 million and $46 million, increases of $16 million and $27 million, respectively, from a year ago. Volume growth, improved operational efficiencies, the lapping of the 2017 Argentina manufacturing optimization project and a modestly improving macroeconomic environment accounted for the increases.

Asia-Pacific

Operating income

• Second quarter and year-to-date operating incomes were $27 million and $50 million, down $3 million and $10 million, respectively, from a year ago. Foreign exchange improvement and specialty volume growth were more than offset by a lag in the pass through of higher tapioca costs.

Europe, Middle East, Africa (EMEA)

Operating income

• Second quarter operating income was $29 million, flat to a year ago. Specialty and core volume growth were offset by unfavorable foreign exchange and higher raw material costs in Pakistan.
• Year-to-date operating income was $60 million, up $3 million from a year ago. The increase was largely driven by specialty and core volume growth partially offset by higher raw material costs in Pakistan.

2018 Guidance

As previously announced, 2018 adjusted EPS is expected to be in the range of $7.50-$7.80 compared to adjusted EPS of $7.70 in 2017. This expectation excludes acquisition-related, integration and restructuring costs, as well as any potential impairment costs. The full-year guidance assumes, compared to last year: North America operating income down due to higher freight and production costs; Asia-Pacific operating income flat to down due to prolonged higher tapioca costs; South America and EMEA operating income up; an adjusted effective tax rate range of approximately 26.5-28.0 percent; and continued higher-value specialty ingredients growth. 

Excluding one-time cash receipts from tax benefits, cash from operations in 2018 is expected to be in the range of $800 million to $850 million. Capital expenditures are anticipated to be between $330 million and $360 million, with the increase expected to result from additional U.S. based investments.

Conference Call and Webcast

Ingredion will conduct a conference call today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to be hosted by Jim Zallie, president and chief executive officer, and James Gray, executive vice president and chief financial officer. The call will be webcast in real time and will include a visual presentation accessible through the Ingredion website at www.ingredion.com. The presentation will be available to download a few hours prior to the start of the call. A replay of the webcast will be available for a limited time at www.ingredion.com.

ABOUT THE COMPANY

Ingredion Incorporated (NYSE: INGR), headquartered in the suburbs of Chicago, is a leading global ingredient solutions provider serving customers in more than 120 countries.  With annual net sales of nearly $6 billion, the company turns grains, fruits, vegetables and other plant materials into value-added ingredients and biomaterial solutions for the food, beverage, paper and corrugating, brewing and other industries. With 27 Ingredion Idea Labs® innovation centers around the world and more than 11,000 employees, the Company develops ingredient solutions to meet consumers' evolving needs by making crackers crunchy, yogurt creamy, candy sweet, paper stronger, and adding fiber to nutrition bars.  For more information, visit ingredion.com .

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 other things, any statements regarding the Company's prospects or future financial condition, earnings, revenues, tax rates, capital expenditures, expenses or other financial items, any statements concerning the Company's prospects or future operations, including management's plans or strategies and objectives therefor 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 these statements, based on various factors, including the effects of global economic conditions, including, particularly, economic, currency and political conditions in South America and economic conditions in Europe, and their impact on our sales volumes and pricing of our products, our ability to collect our receivables from customers and our ability to raise funds at reasonable rates; fluctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such fluctuations; fluctuations in the markets and prices for our co-products, particularly corn oil; fluctuations in aggregate industry supply and market demand; the behavior of financial markets, including foreign currency fluctuations and fluctuations in interest and exchange rates; volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, market and weather conditions in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products; future financial performance of major industries which we serve, including, without limitation, the food, beverage, paper and corrugated, and brewing industries; energy costs and availability, freight and shipping costs, and changes in regulatory controls regarding quotas; tariffs, duties, taxes and income tax rates; particularly recently enacted United States tax reform; operating difficulties; availability of raw materials, including potato starch, tapioca, gum arabic and the specific varieties of corn upon which some of our products are based; our ability to develop or acquire new products and services at rates or of qualities sufficient to meet expectations; energy issues in Pakistan; boiler reliability; our ability to effectively integrate and operate acquired businesses; our ability to achieve budgets and to realize expected synergies; our ability to achieve expected cost savings under our Cost Smart program; our ability to complete planned maintenance and investment projects successfully and on budget; labor disputes; genetic and biotechnology issues; changing consumption preferences including those relating to high fructose corn syrup; increased competitive and/or customer pressure in the corn-refining industry; and the outbreak or continuation of serious communicable disease or hostilities including acts of terrorism. 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 December 31, 2017 and subsequent reports on Forms 10-Q and 8-K

 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, impairment and restructuring costs, and certain other special items. We use the term "adjusted" when referring to these non-GAAP amounts.  

Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, 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, provide a more complete understanding of factors and trends affecting our business. These non-GAAP 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. 
  
Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies. A reconciliation of each non-GAAP historical financial measure to the most comparable GAAP measure is provided in the tables below.