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    INGR
    Earnings call· Mar 2026(Q1 FY26)

    Ingredion Q1 FY26 earnings call INGR

    May 5, 2026 Source

    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

    15
    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

    4
    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

    Operational metrics

    23
    Adjusted Operating Income
    $212 milliondown 22% vs last year
    Q1 FY26

    Reported and adjusted operating income were $203 million and $212 million, respectively.

    Gross Profit
    declined 14%
    Q1 FY26

    Gross profit declined 14% with gross margin decreasing to 22.4%.

    Gross Margin
    22.4%decreasing
    Q1 FY26

    Gross profit declined 14% with gross margin decreasing to 22.4%, driven primarily by operational challenges at Argo, lower volumes and unfavorable mix, and transactional foreign exchange impacts.

    Net Sales
    $1.8 billiondown 1% vs prior year
    Q1 FY26

    Net sales for the first quarter were $1.8 billion, down 1% versus prior year.

    Net Sales Volume Impact
    $32 millionlower
    Q1 FY26

    The 1% decrease in net sales was driven by $32 million in lower volume.

    Net Sales Price/Mix Impact
    $22 millionlower
    Q1 FY26

    The 1% decrease in net sales was driven by $22 million in lower price mix.

    Net Sales FX Translational Impact
    $33 millionfavorable
    Q1 FY26

    The 1% decrease in net sales was partially offset by $33 million of favorable foreign exchange translational impacts.

    Adjusted Diluted EPS
    declined by $0.63year-over-year
    Q1 FY26

    Adjusted diluted earnings per share declined by $0.63 year-over-year.

    Adjusted Diluted EPS Margin Impacts
    $0.71negative
    Q1 FY26

    Adjusted diluted earnings per share declined by $0.63 year-over-year, including $0.71 of margin impacts.

    Adjusted Diluted EPS Volume Impacts
    $0.14negative
    Q1 FY26

    Adjusted diluted earnings per share declined by $0.63 year-over-year, including $0.14 of volume impacts.

    Adjusted Diluted EPS FX Benefits
    $0.07positive
    Q1 FY26

    These headwinds were partially offset by foreign exchange benefits of $0.07.

    Adjusted Diluted EPS Other Income Benefits
    $0.08positive
    Q1 FY26

    These headwinds were partially offset by other income benefits of $0.08 per share.

    Adjusted Diluted EPS Nonoperating Items
    $0.07positive
    Q1 FY26

    These headwinds were partially offset by $0.07 of nonoperating items, including $0.06 of share repurchase benefits.

    Capital Expenditures (net of disposals)
    $110 million
    Q1 FY26

    We invested $110 million of capital expenditures, net of disposals, to support reliability, capacity, and strategic priorities across the business.

    Dividends
    $52 million
    Q1 FY26

    During the quarter, we continued to return cash to shareholders through $52 million in dividends.

    Share Repurchases
    $14 million
    Q1 FY26

    and the repurchase of $14 million of shares.

    Pea Protein Isolates Sales Growth
    more than 50%
    Q1 FY26

    Sales of our pea protein isolates driven by recent new product innovations, grew more than 50% in the quarter.

    Stevia-based Solutions Sales Growth
    6%
    Q1 FY26

    And our clean tasting stevia-based solutions also demonstrated a solid 6% growth in the quarter.

    Solutions Portfolio Revenue
    $1 billion40% of segment revenue
    Q1 FY26

    As a reminder, our solutions portfolio is approximately $1 billion or 40% of this segment's revenue.

    Argo Operational Impact
    $40 millionvs expected $10M-$15M
    Q1 FY26

    the actual quarter 1 impact was much greater than anticipated, coming in at $40 million comprised of higher maintenance spend and the costs associated with elevated levels of rework.

    Mexican Peso Strength
    meaningful transactional foreign exchange headwind
    Q1 FY26

    The Mexican peso has unexpectedly maintained its strength, and this is presenting a meaningful transactional foreign exchange headwind for F&II, LatAm segment.

    Full Year Diluted Share Count
    63.5 million to 64.5 million shares
    FY26

    Our adjusted earnings per share range is based on a diluted share count of 63.5 million to 64.5 million shares.

    Share Repurchase Commitment
    $100 million
    FY26

    And is the prior commitment of $100 million roughly the right way to think about it? Or has that been updated as well? ... we plan to build on the 14 million shares we repurchased in Q1 to meet our full year targeted commitment.

    Industry KPIs

    6
    MetricValueDetails
    Gross margin22.4%%
    Brand platform growthPea protein isolates grew more than 50%; Stevia-based solutions grew 6%%
    Organic net revenue growthdown 1%%
    Adjusted EPS operating income$212 million (operating income); declined by $0.63 (EPS)USD
    Volume mix vs pricing decomposition2% volume growth, lower price/mix
    Elasticity consumer response commentaryminimal to no impact

    Capital programs

    2
    Cabo manufacturing facility cessationannounced

    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

    6
    Operational challenges at Argo facilityQ1 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 volumesQ1 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 costsRemainder 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 demandSecond 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 PacificQ1 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

    5

    Argo corn germ processing unit recovery

    Within Q2 FY26
    CurrentOffline since April 10
    TargetBack 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.

    Q&A highlights

    8

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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 impact🌐s 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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.