Ingredion Incorporated

Thank you for standing by and welcome to the first quarter 2022 Ingredion, Inc. Earnings Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Jason Payne, Vice President of Corporate Finance and Interim Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Ingredion's first quarter 2022 earnings call. I'm Jason Pan, Vice President of Corporate Finance and Interim Vice President of Investor Relations. On today's call are Jim Zally, our President and CEO, and Jim Gray, our Executive Vice President and CFO. We issued our results today in a press release that can be found on our website, Ingredion.com, in the Investors 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 and 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 estimated in the forward-looking statements. and Ingredion 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 reconciled to US GAAP measures in Note 2, Non-GAAP Information, included in our press release and in today's presentation's appendix. Now, I'm pleased to turn the call over to Jim Zally.

Thank you, Jason, and good morning, everyone. We had a strong start to 2022 delivering outstanding top line performance of 17% net sales growth for the quarter. Our results were driven by excellent sales execution that led to $278 million of incremental sales enabling us to more than offset inflationary impacts and our supply chain responded to higher than expected customer demand. As a result, full-year adjusted operating income grew six percent versus the prior year and it's worth noting that this was the strongest first quarter result in operating income in our company's history turning to our top-line performance across all four regions we grew comparable net sales for the first quarter by high double digits our operating teams actively managed the terms of our customer contracts, which enabled them to address higher corn and input costs and deliver both core sales growth and a stronger specialty mix. Recognizing the contribution last August of our Argentina business to the R-Core JV, on a comparable basis, our Brazil and Andean quarter one net sales combined were up 23% versus prior year. Turning to slide seven, you can see just how critical our pricing centers of excellence were in delivering strong price mix gains across each region. In the quarter, we delivered greater than $280 million of price mix improvements to successfully offset the significant increases in raw material and input costs that we experienced. Combined with favorable product mix and organic volume growth, we were also able to grow operating income by 6%. Now moving on to the strategic pillars. We continue to make great progress against each of the four pillars that shape our strategy. To start, global specialties once again led our top-line growth up 20% in the quarter. Specialties growth was robust across all growth platforms, with texturizing ingredients and sugar reduction leading net sales dollar growth. Plant-based protein sales were up more than 250% in the quarter, and I'll speak more to our progress with plant-based protein in a moment. Moving to commercial excellence, our sales teams around the world coordinated closely with our customers and our supply chain to most effectively navigate product delivery challenges. We also operated with a dynamic approach to pricing to reflect timely changes in our freight and input costs, enabled by more flexible contract terms. These strong commercial efforts enabled us to largely offset inflationary impacts, continue to improve our product mix, and organically grow volumes on a comparable basis. We also drove cost competitiveness through operational excellence as our teams worked hard to increase production while managing continued disruptions in global supply chains. We expanded our commodity risk coverage and continue to develop our approach toward commodity risk management to further reduce the impact of raw material cost volatility in the current environment. All of this progress continues to be underpinned by our fourth strategic pillar, accelerating a purpose and values-driven growth culture. We are pleased to announce the Nancy Wolf Joint Ingredient as our Chief Human Resources Officer. Nancy brings more than 20 years of executive HR experience, most recently joining us from Bayer Corporation, where she served in business partnering roles to both the innovation and commercial teams. Nancy is already driving a people-centric HR agenda, and we are looking forward to her leadership contributions. Turning our focus to sustainability, we have been recognized by the Science-Based Targets Initiative as committed for our emissions reductions targets by 2030 that we put forward in our sustainability plan. Additionally, we continue to engage with customers and growers to advance regenerative agriculture and sustainable sourcing for our Tier 1 priority crops. Now, let me spend a moment to update you on plant-based proteins. We grew net sales by greater than 250% in the quarter. Our customer pipeline remains robust and diversified across different categories, and it continues to grow. We are overcoming the manufacturing challenges typically associated with new plant startups and are pleased to report that production accelerated last quarter at South Sioux City with overall output of pea protein isolate doubling over the last three months. Both production and sales are improving, and results for the quarter were ahead of prior estimates. Despite the strong start to 2022, there were, of course, new challenges that surfaced early in the quarter, which we will need to continue to monitor and manage throughout the year. With sales in over 120 countries, it is important to point out that less than one half of 1% of our global sales were into Ukraine and Russia. Like everyone else, we are saddened by the toll the conflict is taking on Ukraine's citizens and the resultant humanitarian crisis that continues to unfold. We have a small number of employees in the Ukraine and have provided support for them and their families during this terrible time. To help those impacted by the crisis, we are supporting the World Central Kitchen, which is operating in Poland, by serving refugees. And in addition, our employees in Europe are contributing to the United Nations Refugee Agency, and the company is matching those contributions. Inflation, already a significant factor coming into the year, was exacerbated by the Ukraine conflict. Agricultural and energy supply flows across Europe have been impacted, leading to higher prices. In limited circumstances, supply disruptions have impacted availability of key product lines. And to meet customers' changing needs, we have either moved product or reallocated available supply to keep our customers operating. Lastly, while we all hoped we would be moving beyond the pandemic after two challenging years, difficulties remain, particularly in China. However, our team at our Shanghai specialty starch facility has been operating throughout the lockdown since the beginning of April, and we continue to ship ingredients critical to the local food supply chain, albeit at a slower pace. In addition, our commissioning team for a modified starch expansion in Shandong province continues to progress the mechanical completion of this strategic investment. At this point, we cannot predict the countrywide scope and duration of the pandemic's resurgence in China. Therefore, with reduced consumer mobility and food service spending, we are likely to see an impact on sales volume in the second quarter. And now, let me hand it over to Jim Gray for the financial overview.