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Ingredion (INGR) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Staples· May 5, 2026

Source: earnings call transcript

Executive summary

Ingredion Q1 FY26 — Argo operational challenges impact results, Texture & Healthful Solutions show resilience

Ingredion faced a challenging Q1 FY26, with overall results significantly impacted by unexpected operational issues at its Argo facility and softer industry volumes in North and Latin America. Despite these headwinds, the Texture and Healthful Solutions segment demonstrated resilience with continued volume growth, particularly in clean label and healthful offerings. The company is actively managing inflationary pressures and currency movements, while maintaining a disciplined approach to capital allocation and strategic investments in high-value areas.

Highlights

5

  • Texture and Healthful Solutions segment posted its eighth straight quarter of volume growth, up 2%.

  • Sales of pea protein isolates grew more than 50% in the quarter.

  • Clean tasting stevia-based solutions demonstrated a solid 6% growth in the quarter.

  • The company maintains a strong balance sheet and solid cash generation, providing optionality for value-accretive M&A.

  • All Other segment operating income improved by over $3 million year-on-year.

Concerns

5

  • Q1 results were weaker than anticipated due to operational challenges at the Argo facility, with an impact of $40 million (vs. expected $10M-$15M).

  • Overall net sales were down 1% and adjusted operating income was down 22% versus last year.

  • Food and Industrial Ingredients U.S./Canada net sales volumes declined 7% in Q1.

  • Adjusted diluted EPS declined by $0.63 year-over-year, including $0.71 of margin impacts and $0.14 of volume impacts.

  • The strengthening Mexican peso is presenting a meaningful transactional foreign exchange headwind for the F&II LatAm segment.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Net Sales
flat to up low single digits
high materiality
Medium
Full-year 2026 Adjusted Operating Income
flat to down low single digits
high materiality
Medium
Full-year 2026 Financing Cost
$35 million to $45 million
medium materiality
High
Full-year 2026 Reported and Adjusted Effective Tax Rate
26% to 27.5%
medium materiality
High
Full-year 2026 Adjusted EPS
$10.45 to $11.15
high materiality
Medium
Full-year 2026 Cash from Operations
$725 million to $825 million
high materiality
Medium
Full-year 2026 Capital Expenditures
$400 million to $440 million
medium materiality
High
Q2 2026 Net Sales
flat to up low single digits
medium materiality
Medium
Q2 2026 Adjusted Operating Income
down high single digits
medium materiality
Medium
Full-year 2026 Texture and Healthful Solutions Operating Income
up low single digits
medium materiality
Medium
Full-year 2026 Food & Industrial Ingredients LatAm Net Sales
flat to down low single digits
medium materiality
Medium
Full-year 2026 Food & Industrial Ingredients LatAm Operating Income
down low single digits
medium materiality
Medium
Full-year 2026 Food & Industrial Ingredients U.S./Canada Net Sales
down low single digits
medium materiality
Medium
Full-year 2026 Food & Industrial Ingredients U.S./Canada Operating Income
down low double digits
medium materiality
Medium
Full-year 2026 All Other Operating Income
improve by $5 million to $10 million from full year 2025
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Texture & Healthful Solutions
Net sales and operating income increased, driven by favorable input costs, foreign exchange, and better volumes, partially offset by strategic price and mix management. This marks the eighth consecutive quarter of sales volume growth, led by Clean Label and Texture Solutions in EMEA and Asia Pac.
Sales volume growth: 2%
up 2%up 2%—up 1%
Food & Industrial Ingredients LatAm
Net sales increased due to favorable foreign exchange, partially offset by lower volumes and weaker price/mix. Operating income decreased primarily due to Mexico transactional currency impacts and softer volumes in Mexico and the Indian region. Positive performance in Brazil and the Argentina joint venture helped offset these headwinds.
Operating margins: approximately 20%
up 1%up 1%—decreased by 9% to $115 million
Food & Industrial Ingredients U.S. Canada
Net sales and operating income were significantly impacted by operational challenges at the Argo Plant and weaker volumes and mix. The Argo issues led to $40 million in unexpected costs.
Net sales volumes declined: 7%
down 9%down 9%—$34 million
All Other
Net sales and operating income improved, driven by continued growth in protein fortification, particularly in higher-value isolate and specialty protein applications, reflecting improved mix and operating leverage.
increased approximately 3%increased approximately 3%—improved by over $3 million year-on-year

Capital programs

Cabo manufacturing facility cessation announced

Benefit:drive enterprise productivity to deliver operational efficiencies while sharpening customer mix priorities

Additionally, this morning, we announced plans to cease operations at our Cabo manufacturing facility in Northeast Brazil by end of quarter 2 as we drive enterprise productivity to deliver operational efficiencies while sharpening customer mix priorities.

Polyols network optimization (Brazil) completed

Benefit:improved customer demand and early benefits

We saw a modest recovery in Brazil, supported by improved customer demand and early benefits from our polyols network optimization completed at the end of last year.

Risks & headwinds

Operational challenges at Argo facility Q1 FY26, with corn germ unit offline for 5-6 weeks in Q2

$40 million negative impact in Q1 (vs. expected $10M-$15M)

Mitigation:Assembled multidisciplinary team, refinery operations returned to normal by quarter end, corn germ unit expected back online within Q2. Impact of thermal event excluded from adjusted results.

Softer industry volumes Q1 FY26

F&II U.S./Canada net sales volumes declined 7%; LatAm volumes slightly down.

Mitigation:Focus on solutions selling, network optimization (Cabo closure), targeted price increases.

Transactional foreign exchange headwind (Mexican peso strength) Q1 FY26 and expected to continue.

Meaningful impact on F&II LatAm operating income.

Mitigation:Leveraging pricing centers of excellence to implement targeted price increases.

Higher energy prices leading to increased input and logistics costs Remainder of FY26.

Expected to cause a 'small but manageable net negative impact' on margins.

Mitigation:Actively working to offset with in-year price increases; localized supply chain to mitigate disruptions.

Potential impact of higher energy costs on consumer demand Second half of FY26.

Not yet quantified, but a 'bigger watch out' for H2.

Mitigation:Monitoring packaging inflation and gasoline prices; leveraging pricing centers of excellence.

Rapid rise in tapioca costs in Asia Pacific Q1 FY26, expected to normalize in 1-1.5 quarters.

Caused margin compression in Q1.

Mitigation:Passing through costs, given market position.

What to watch in Q2 FY26

Argo corn germ processing unit recovery

Within Q2 FY26
Current Offline since April 10
Target Back online and operating normally

Why it matters

Critical for full operational recovery of the Argo facility and achieving full-year guidance.

Our teams are working diligently to restore our German processing capabilities, and we expect to return to normal operations in this unit within the second quarter.

Find out whether INGR delivers this. Inve re-checks your case every morning.

Q&A highlights

Will the F&II U.S./Canada business return to mid-to-high teens operating margins, and is this a 2027 target or possible by end of 2026?

Management confirmed commitment to mid-teens operating margins for F&II U.S./Canada, consistent with Investor Day targets. They expect this to be an aspiration for 2027, assuming sustained operational reliability after Argo's recovery.

“The issues at Argo are the predominant driving factor in relationship to the margin decline and the operating income decline in that business. We are encouraged by how the grind and how the refinery operations finished the quarter... for 2027, certainly, that is our aspiration.”

asked by Unknown Analyst · answered by Unknown Executive

2 min read 6 chapters

Detailed narrative

Argo Facility Operational Challenges

The Argo facility in the U.S./Canada segment faced significant operational issues in Q1, including a corn conveying failure and reliability challenges in syrup refining, leading to $40 million in unexpected costs. While these issues were largely resolved by quarter-end, an isolated thermal event in the corn germ processing unit on April 10th is expected to keep that unit offline for 5-6 weeks in Q2. The impact of this thermal event will be excluded from adjusted results.

Texture and Healthful Solutions Resilience

This segment continued its strong performance with 2% volume growth, marking its eighth consecutive quarter of expansion. Growth was driven by Clean Label and Texture Solutions in EMEA and Asia Pac, as well as strong demand for pea protein isolates (up >50%) and stevia-based solutions (up 6%). The company attributes this to increased adoption of its expanding solutions portfolio and sustained customer demand for clean label offerings.

Latin America Headwinds and Optimization

While LatAm volumes were slightly down, performance in Brazil and the Argentina joint venture helped offset headwinds from Mexico's transactional currency impacts and softer volumes. The company announced plans to cease operations at its Cabo facility in Northeast Brazil by Q2 end as part of network optimization efforts, aiming to strengthen operational efficiency and competitiveness. This follows the successful polyols network optimization completed last year.

Strategic Focus on Solutions

Ingredion is leveraging its solutions portfolio, which accounts for approximately $1 billion or 40% of Texture and Healthful Solutions revenue, to drive deeper customer engagement and improve mix. The company is increasingly using artificial intelligence to power consumer insights and predictive formulation work, accelerating the brief-to-solution cycle time for customer co-development projects.

Inflationary and FX Pressures

The company is actively monitoring and managing the direct and secondary effects of higher energy prices, particularly increased logistics costs, which they aim to offset with in-year price increases. The strengthening Mexican peso is also creating a meaningful transactional foreign exchange headwind for the LatAm segment, as most SG&A and operating costs are in pesos while the business is U.S. dollar denominated.

Capital Allocation and M&A Discipline

Ingredion maintains a strong balance sheet and cash flow, enabling disciplined capital allocation. The company continues to pursue value-accretive M&A opportunities, particularly in texture and healthful solutions, while remaining committed to its full-year share repurchase target of approximately $100 million, building on the $14 million repurchased in Q1.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.