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Ingredion (INGR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Aug 4, 2026

Source: earnings call transcript

Executive summary

Ingredion Q2 FY26 — Strong Texture & Healthful Solutions Performance Amidst Operational Challenges

Ingredion navigated a mixed quarter with robust performance in its Texture and Healthful Solutions segment, driven by strong volume growth and strategic initiatives. While operational challenges at the Argo facility and macroeconomic headwinds in Mexico impacted overall profitability, the company made significant progress in resolving production issues and is advancing its portfolio transformation through the pending acquisition of Tate & Lyle. Management remains confident in its long-term strategy and ability to manage inflationary pressures.

Highlights

5

  • Net sales increased 1% to $1.85 billion.

  • Texture and Healthful Solutions (TNHS) net sales volume grew 7%, marking the ninth consecutive quarter of growth.

  • TNHS delivered its second highest quarterly operating income ever, up 5%.

  • Argo facility operating at normal production rates by end of June after sequential improvements.

  • Protein fortification net sales grew over 40%.

Concerns

5

  • Adjusted operating income decreased 5% to $258 million due to Argo manufacturing issues and macroeconomic pressures in Mexico.

  • Food and Industrial Ingredients U.S./Canada net sales declined 7% and operating income was $58 million, impacted by Argo production challenges and softer demand.

  • Food and Industrial Ingredients LatAm operating income decreased 7% due to transactional currency impacts in Mexico and challenging demand.

  • Tapioca costs increased over 40% since the start of the year, leading to near-term margin pressure.

  • Full-year adjusted operating income expected to be down mid-single digits, reflecting the sale of the Pakistan business.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Adjusted Earnings Per Share
$10.30 to $10.90
high materiality
High
Full-year 2026 Net Sales
flat to up low single digits
high materiality
High
Full-year 2026 Adjusted Operating Income
down mid-single digits
high materiality
High
Full-year 2026 Cash from Operations
$700 million to $800 million
medium materiality
High
Full-year 2026 Capital Expenditures
$450 million to $490 million
medium materiality
High
Full-year 2026 Diluted Shares Outstanding
$63 million to $64 million
low materiality
High
Q3 2026 Net Sales
up low single digits
medium materiality
High
Q3 2026 Adjusted Operating Income
down mid-single digits
medium materiality
High
Texture & Healthful Solutions FY26 Net Sales
up mid-single digits
medium materiality
High
Texture & Healthful Solutions FY26 Operating Income
up mid- to high single digits
medium materiality
High
Food & Industrial Ingredients LatAm FY26 Net Sales
up low single digits
medium materiality
High
Food & Industrial Ingredients LatAm FY26 Operating Income
down low single digits
medium materiality
High
Food & Industrial Ingredients U.S./Canada FY26 Net Sales
down low single digits
medium materiality
High
Food & Industrial Ingredients U.S./Canada FY26 Operating Income
down 20% to 25%
medium materiality
High
All Other FY26 Net Sales
down 20% to 25%
low materiality
High
All Other FY26 Operating Loss
approximately $15 million
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Texture and Healthful Solutions
Driven by volume growth and FX favorability, partially offset by lower price/mix and higher tapioca costs. Achieved second highest quarterly operating income ever.
Sales volume growth: 7%Foreign exchange favorability: 1%
—5%—up 5%
Food and Industrial Ingredients LatAm
Driven by favorable foreign exchange, partially offset by lower volumes and weaker price mix. Decrease in operating income due to transactional currency impacts in Mexico and challenging demand.
—3%—decreased 7% to $118 million
Food and Industrial Ingredients U.S./Canada
Impacted by production challenges at Argo facility and softer volumes and price mix.
—declined 7%—$58 million
All Other
Driven by strong net sales growth in protein fortification, particularly from higher-value isolates and specialty protein applications. Reflects improved mix and operating leverage.
Net sales growth in protein fortification: >40%
—increased 8%—improved by $7 million year-over-year

Product announcements

ProductTypeDetails
ask Ingredionlaunch
Benicarosupdate
Plant-based alternatives for PFAS-containing grease-resistant barriersupdate
Bio-based adhesive solutions for corrugated packagingupdate

Deals & partnerships

Tate & Lyle Acquisition of entire issued and to be issued share capital. all-cash offer

Establishes Ingredion as a more comprehensive global leader in ingredient solutions. Subject to regulatory approval in 11 jurisdictions.

SandStar Strategic partnership to strengthen pharma business in India.

Part of Texture and Healthful Solutions diversified portfolio.

Benicaros Acquisition of a clinically supported immune health prebiotic.

Aligns with consumer trends in digestive health, immune support, and clean label formulation.

null Sale of majority stake in Pakistan business.

Completed at the end of Q2.

null Closure of Cabo, Brazil Plant.

Announced last quarter.

Capital programs

Argo Facility Reliability Investments underway

Benefit:improve reliability, redundancies built in to prevent any kind of impact should one of those tanks not perform as they should

The investment of some targeted additional capital directed specifically towards reliability at Argo gives confidence in the guidance. Investments are in targeted locations throughout the plant to improve reliability, alongside changes in maintenance, training, leadership, and operating procedures.

Risks & headwinds

Argo Facility Operational Challenges Q2 FY26, Q3 FY26

Q2-Q4 last year: $40 million cumulative; Q1 FY26: $40 million; Q2 FY26: $20 million to $25 million (estimated); Q3 FY26: $10 million to $15 million (estimated)

Mitigation:Systematic addressing of issues (grind, refinery, thermal event), targeted capital investments for reliability, improvements in maintenance, training, leadership, and operating procedures. Expects normalized run rates for balance of year.

Macroeconomic Pressures in Mexico Q2 FY26

Food and Industrial Ingredients LatAm operating income decreased 7%

Mitigation:Underlying long-term market trends remain intact.

Increased Tapioca Costs Q2 FY26 (near-term margin pressures)

up more than 40% since the start of the year

Mitigation:Actively passing through price increases (takes 1 to 1.5 quarters to realize). Views impact as temporary, not structural.

Transactional Currency Impacts (Mexican Peso) Q2 FY26, Q3 FY26

negatively impacts operating income

Mitigation:Mexico business is U.S. dollar denominated, but most SG&A/operating costs are in pesos; peso strengthening increases dollar costs.

Geopolitical/Middle East Conflict Inflationary Pressures FY26

in the range of a few million dollars

Mitigation:Managed by a "Middle East response team"; impact is manageable and offset by pricing increases.

Potential 301 Tariffs August (mid-August)

null

Mitigation:Company has managed through similar situations multiple times, has network capabilities to move product, and expects to pass through additional costs to customers.

Softer Production and Demand (F&I U.S./Canada) Q2 FY26

volumes remain below prior year levels, net sales declined 7%

Mitigation:Partially offset by strong performance in other segments (TNHS). Expects improvement as macroeconomic conditions normalize.

What to watch in Q3 FY26

Argo Facility Reliability and Profitability

Q3 FY26 and balance of year
Current operating at normal production rates across all major operating units by end of June
Target Sustained reliability and restoration of profitability

Why it matters

Argo's operational issues significantly impacted Q1 and Q2 results; sustained recovery is crucial for F&I U.S./Canada segment performance and overall profitability.

Our focus remains on sustaining reliability and restoring profitability.

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

Q&A highlights

Inquired about potential volume/mix headwinds in the second half guidance for U.S./Canada, specifically concerning Argo's recovery.

Management clarified that underlying full-year expectations are unchanged, with better performance in TNHS offsetting softer F&I U.S./Canada. Argo's production rates and yields are improving, and the plant finished June at normal rates. Some corporate cost benefits in Q2 will unwind, and the Argentine peso decline will negatively impact Q3.

“The business is performing in line with expectations and we continue to see solid execution across TNHS, which is very encouraging.”

asked by Kristen Owen · answered by Jason Payant

2 min read 5 chapters

Detailed narrative

Tate & Lyle Acquisition Progress

Shareholders approved the deal, an important milestone. The transaction is now subject to ordinary regulatory approval in 11 jurisdictions, including the U.S. and the EU. The combination is expected to add $2.7 billion in highly complementary revenue, deliver $130 million of expected run-rate synergies by 2030, and be greater than 15% adjusted EPS accretive in the first full calendar year post-acquisition, with a clear path to achieving less than 2.5x net leverage within 18 months of closing.

Texture and Healthful Solutions Momentum

This segment continues its strong performance, driven by broad-based growth in solutions offerings and clean label ingredients. Customer innovation activity is robust, focusing on health and wellness, protein and fiber fortification, and clean label. These trends align with Ingredion's growth strategy and reinforce confidence in sustainable long-term volume and margin growth.

Argo Facility Recovery

Significant progress has been made at the Argo facility, with the grind now operating reliably and at expected run rates. Downstream refinery issues and the thermal event on April 10th have been addressed, and oil processing is back to historical run rates. Targeted capital investments and improvements in maintenance, training, leadership, and operating procedures are expected to sustain reliability and restore profitability.

Innovation and Portfolio Transformation

Ingredion launched "ask Ingredion," an AI-powered formulation platform, and strengthened its healthful solutions portfolio through the acquisition of Benicaros, an immune health prebiotic. The company is also advancing in higher-value industrial applications like sustainable food packaging (replacing PFAS) and bio-based adhesives for corrugated packaging. Portfolio optimization includes the sale of the Pakistan business and closure of the Cabo, Brazil plant.

Inflationary Pressures and Mitigation

The company is experiencing increased tapioca costs, up more than 40% since the start of the year, due to weather-related impacts. These costs are being actively passed through, typically with a 1 to 1.5 quarter lag. A "Middle East response team" has been assembled to manage inflationary pressures from geopolitical events, with the net impact estimated to be manageable and largely offset by pricing actions. The company is also monitoring potential implications of 301 tariffs.

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