Ingredion Incorporated

Good day and thank you for standing by. Welcome to the Ingredion first quarter 2023 earnings call. At this time, all participants 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Noah Weiss, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the first quarter 2023 earnings call. I'm Noah Weiss, 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. The press release issued today and the presentation we'll reference for the first quarter result can be found on our website, ingredient.com, in the investor section. As a reminder, our comments within the 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. Actual results could differ materially from those estimated 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 on the company's most recently filed annual report on Form 10-K and subsequent reports on Form 10-Q and 8-K. We will 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 U.S. GAAP measures in Note 2 non-GAAP information included in our press release and in today's presentation's appendix. With that, I will turn the call over to Jim Zally.

Thank you, Noah, and good morning, everyone. We started the year with exceptional performance. delivering our highest ever quarterly profit and earnings per share. Net sales grew 14% and adjusted operating profit was up 39%, driven by broad-based growth in both core and specialty ingredients. From a segment perspective, net sales were up in each region with notable increases in North America and EMEA. Entering this year, we anticipated a second consecutive year of corn and manufacturing cost inflation. Our sales teams effectively executed product and customer mix management, including price adjustments against expiring multi-year customer contracts to deliver mid double-digit price increases and successfully expanded margins for the third consecutive quarter. Now turning to our strategic pillars. Our teams continue to do an outstanding job executing against our four strategic pillars for growth. Beginning with specialties growth, we achieved a double-digit increase overall, driven by clean and simple ingredients, which were up 20%, and texturizers, which were up 13% from the same period last year. Turning to commercial excellence, we further fine-tuned our pricing centers of excellence to optimize price and customer mix, and we were able to renew expiring multi-year customer contracts to reflect current market pricing as industry fundamentals remain strong. In addition, we progressed our trade-up strategy for core ingredients. Evidence of this can be seen, for example, in our US-Canada core sweetener products, where both volumes increased and gross margins expanded for the first time in several years. Against our cost competitiveness pillar, we improved service delivery and selectively increased inventories for those specialty product lines that have been in the highest demand over the last two years. This inventory investment to strengthen supply chain resiliency also provided improved fixed cost absorption as our plants operated well throughout the winter quarter. Supply chain constraints eased significantly, reducing the need for costly premium routes. In parallel, we have invested in global digital order tracking to provide real-time transparency to customers This additional investment in logistics tracking capabilities is enhancing the customer experience. I'm also particularly proud of how our global procurement team has anticipated and responded to agri-supply risks through our global sourcing network. This has enabled us to effectively meet customers' demand despite isolated regional grain shortages. Our purpose-driven and people-centric growth culture, as always, remains a top priority for us. Just this week, we announced the appointment of a 26-year Ingredion employee and industry veteran, Rob Ritchie, to the role of Senior Vice President, Food and Industrial Ingredients Americas. Rob has joined my executive leadership team with responsibilities spanning both North and South America. In addition, in 2023, we are pleased to have been recognized by Ethisphere for the ninth time as one of the world's most ethical companies and to have been included in the Bloomberg Gender Equality Index for the sixth consecutive year. Now, turning to our specialty growth highlights. During the quarter, specialty ingredients continued their positive momentum, achieving double-digit net sales growth. Better price and customer mix favorably impacted net sales growth, which was partially offset by customer inventory rebalancing and softer overall category volumes. During the quarter, Pure Circle continued to win business with customers by co-creating natural high-intensity sweetener solutions using our Stevia portfolio to replace artificial sweeteners. The number of sugar reduction projects continue to increase, driven by customers' preference for high-intensity, natural solutions. Our clean and simple ingredient platform benefited from the ramp-up of the capacity expansion completed in 2022, which is now exceeding our commercial growth expectations, enabling us to meet customer demand in both the U.S. and Europe. Our KTEC food systems business continue to exhibit strong net sales growth in the quarter, up over 40% from last year, driven largely by wins in North Africa and Europe. This commercial integration has gone extremely well, and we are winning new contracts in both developed and emerging markets. Finally, our Shandong China expansion for starch-based texturizers is enabling solid volume growth with sales ahead of expectations. I'm pleased to say that this strategic investment is delivering preferred local supply to meet China's growing domestic demand for highly functional modified starches. Overall, when it comes to specialties, we continue to see a number of exciting opportunities to invest, to drive both organic and inorganic growth, and expand our portfolio. Before I turn it over to Jim, let me comment briefly on our continued progress against our sustainability targets. We will soon be issuing our 12th annual edition of our All Life Sustainability Report. As a quick preview, we are well on our way to meeting our goal of having 100% of our Tier 1 crops sustainably sourced by 2025. having reached 48% at the end of the quarter. Our commitment to reducing Scope 1 and 2 emissions progressed meaningfully last year with the conversion from coal to natural gas at our largest site in Bedford, Illinois. This year, we are installing renewable biomass boilers at our two largest facilities in Brazil and switching to 100% renewable electricity, thereby reducing CO2 emissions by 7% annually in Brazil. With that, let me turn it over to Jim for the financial review.