Ingredion Incorporated

Ladies and gentlemen, thank you for standing by, and welcome to the Ingredion Incorporated 4th Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I'll now like to hand the conference over to your speaker today, Tiffany Willis, Vice President of Investor Relations and Corporate Communications Officer. Thank you. Please go ahead, ma'am.

Thank you, Shannon, and good morning and welcome to Ingredion's fourth quarter 2020 earnings call. I'm Tiffany Willis, Vice President of Investor Relations and Corporate Communications Officer. On today's call are Jim Zally, our President and CEO, and Jim Gray, our Executive Vice President and Chief Financial Officer. We issued our results today in a press release that can be found on our website, ingredient.com, in the investor section. The slides accompanying this presentation can also be found on the website and were posted today for your convenience. As a reminder, our comments within this presentation may contain forward-looking statements. These statements are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the company's future operations and financial performance, including the impact of the COVID-19 pandemic. Actual results could differ materially from those predicted in the forward-looking statements. An ingredient assumes no obligation to update them in the future as or if circumstances change. Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in this morning's press release can be found in the company's most recently filed annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. During this call, we also refer to certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating income, and adjusted effective tax rate, which are all reconciled to U.S. GAAP measures in Note 2, non-GAAP information included in our press release and in today's presentation's appendix. And now, I'm pleased to turn the call over to Jim Vallee.

Thank you, Tiffany, and good morning, everyone. Before discussing our strong fourth quarter results, I'd like to comment on the events of last year and put in perspective what it said about the resilience of our business, the character of our people, as well as the quality and relevance of our strategy for growth. Guided by clear priorities from the start of the pandemic in support of our employees' health and safety and our customers' needs, we were able to not just ensure business continuity, but enhance business services, improve operational efficiency, drive commercial excellence, and improve the customer experience. Our business adjusted quickly to the abrupt and historic slowdown of economic activity in quarter two to ensure we were well positioned to participate in a steady second half recovery and enable us to exit the year with positive momentum. Throughout the year, our people kept rising to the challenge, persevering with a purpose and progressing an ambitious operational agenda. Finally, last year further validated the robustness of our strategy, providing us with continued strong confidence in the targeted areas we are pursuing for growth. Now turning to the fourth quarter and full year results, We were very pleased with our operational execution and financial performance. For the quarter, global net sales were up 3% compared to the year-ago period. Absent foreign exchange impacts of $26 million, net sales were up 4% versus the prior year. Quarter 4 net sales results were sequentially better than the third quarter's 5% year-over-year decline thus demonstrating demand recovery. Adjusted operating income for the quarter was up 11% year over year and up 13% absent foreign exchange impacts, driven by lower operating costs and favorable price mix in North America, as well as strong price mix and better volumes in South America. For the full year, our global net sales were down 4% compared to the year-ago period, absent foreign exchange impacts of $164 million, net sales were only down 1% versus the prior year. Adjusted operating income for the year was down 7% year-over-year and down 3% absent foreign exchange impacts. The decrease is largely attributable to lower sales volumes in North America due to COVID-19's impact on economic activity, the inclusion of Pure Circle results, and higher corporate costs due to strategic investments to drive business and digital transformations. These decreases were partially offset by strong price mix in South America. As you can see from our first quarter 2020 results, we entered the year with good momentum. At the height of the pandemic's impact, Our second quarter results were pressured, but we adjusted our operations and supply chain quickly to the new reality and pivoted to serve our customers in new and different ways. This enabled us to benefit from the recovery as COVID-19 restrictions began to ease in the third quarter. The momentum carried forward into the fourth quarter, resulting in a great quarter and a positive close to the year. Our teams executed well, and our strategy was validated. We made excellent progress against our strategic pillars and are pleased to share some great proof points with you. Specialty ingredients proved particularly resilient, growing globally and in each region, with overall specialty sales now accounting for 32% of Ingredion's total sales, up from 30% in 2019. The Pure Circle and Verdean acquisitions set us up well to capitalize on the growth in sugar reduction and plant-based foods, and we continue to diversify our specialties portfolio beyond corn, expanding capacity and capabilities in tapioca, rice, and potato-based specialty starches. We were recognized by many customers for our supply and service responsiveness to the challenges presented by the pandemic and the creative way in which we engaged and delivered commercial excellence in a virtual world. We collaborated in over 1,300 digital engagements last year. Partnering with our customers, we also made great strides against our 2025 goal to be 100% sustainably sourced for our six primary nature-based raw materials. We exceeded the $90 to $100 million cost smart target for 2020 by delivering $103 million of run rate savings. We established an office of transformation, progressed globalizing shared services, and have embarked on a new phase of reimagining and reinventing the way we work. leveraging digital tools and new organizational constructs to drive simplification and deliver increased efficiencies. All of this work was underpinned by our purpose-led culture and foundational values, which helped guide us as we navigated the health crisis and managed the impact to employees from elevated social injustices made so apparent in 2020. We continued expanding our specialty portfolio, significantly enhancing our growth prospects in plant-based and animal alternative proteins and solutions for sugar reduction. The Verdian acquisition expands our plant-based proteins capabilities, adding a broad portfolio of in-demand, sustainable, pulse-based flours and protein concentrates. At the same time, our South Sioux City facility has been recommended for food grade certification, and we are processing pea protein isolate in preparation for commercialization this year. The expected future capacity from these investments has led to the development of a growing customer project pipeline, which we expect will convert to specialty sales as we move through 2021. Our acquisition of the leading producer of stevia-based sweeteners, Pure Circle, has significantly expanded our capabilities in sugar reduction. We've moved swiftly to integrate this business, actioning over $14 million of cost synergies before the end of last year. These moves, along with the benefits inherent in leveraging Ingredion's global go-to-market network, provide exciting opportunities to drive revenue synergies commencing in the first half of this year. as we offer more complete sugar reduction systems to a broader base of customers. Moving to cost smart, we delivered significant improvements in operational efficiencies and achieved $103 million of run rate savings, well in excess of our 2020 cost smart savings target. We remain on track to reach our $170 million target cost smart savings target. And now, let me hand it off to Jim Gray, who will provide a financial review. Jim? Thank you, Jim.