Ingredion Incorporated

Good day, and thank you for standing by. Welcome to the first quarter 2024 Ingredient Incorporated 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'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Noah Weiss, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Ingridown's first quarter 2024 earnings call. I'm Noah Weiss, Vice President of Investor Relations. Joining me on today's call are Jim Zally, our President and CEO, and Jim Gray, our Executive Vice President and CFO. The press release we issued today, as well as the presentation we will reference, our first quarter results can be found on our website ingredient.com in the investor section 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 actual results could differ materially from those estimated in the forward-looking statements and ingredient assumes no obligation to update them as 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 Forms 10-Q and 8-K. During this call, we also referred 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 appendix. With that, I will turn the call over to Jim Zelen.

Thank you, Noah, and good morning, everyone. Ingredion's first quarter results exceeded our expectations against a strong comparison with last year's record first quarter performance. As anticipated, our net sales volumes in the quarter improved sequentially despite the impacts of extreme cold weather on shipments in the U.S. and taking into account the sale of our South Korea business. As you can see on slide five, while the consolidated net sales and operating income were lower year over year, the operating income for quarter one, 2024, was still the second highest in the company's history and continue the upward trend from prior years. Inclusive of the current period, we have delivered 5% net sales growth over the last five years, compounded annual growth rate, and an adjusted operating income compounded annual growth rate of 7% over the same period. Furthermore, while we delivered adjusted operating profit for the first quarter of 2024 at the top end of our guided range, The current market environment would have been conducive to delivering even better profitability had it not been for the impact of extreme cold weather on our U.S. shipments, which we estimate was at least $10 million. Now, let me update you on progress against our three strategic pillars, starting with our business growth pillar. During the quarter, we completed the reorganization of our business, which resulted in new reportable segments, which we are sharing for the first time today. For texture and healthful solutions, we feel increasingly confident regarding volume momentum as we saw strong demand from distributors in the quarter, and volumes overall in April were up nicely year over year. Also noteworthy, project-related customer engagement in the U.S. are up 60% in quarter one, which we view as a positive leading indicator of future growth for our texture and healthful solutions segment. We have completed the commissioning of the capacity expansion for our higher value Stevia product lines at our Pure Circle facility in Kuala Lumpur to support our sugar reduction franchise growth. Lastly, in terms of a positive indicator of overall economic growth, we have seen a strong demand recovery for industrial starch from papermaking and packaging customers in North America. Turning to our second pillar, cost competitiveness through operational excellence. In February, we closed on the sale of our South Korea business. The proceeds from this divestiture will be used to support our capital allocation priorities. During the quarter, we also launched a multi-year cost savings program, which we are calling Cost to Compete. We are already advancing toward our target to deliver $50 million of savings by the end of 2025, and I'll highlight this program more in a few minutes. Some of the notable Cost to Compete initiatives include a project we have undertaken to unlock capacity across our manufacturing footprint by applying machine learning and AI. In addition, we are continuing to optimize our supply chain, distribution, and warehouse network in pursuit of service excellence, efficiencies, and savings. Lastly, we continue to be encouraged by the results achieved by our centralized procurement team, which has recorded some big wins on freight cost savings through globally-led procurement strategies combined with strong local execution. Regarding our purpose-driven and people-centric growth culture, I'm proud to report that we were recognized for the 10th time by Ethisphere as one of its 2024 world's most ethical companies. This award reflects the deep commitment of our teams around the world who lead with integrity and prioritize ethics across our organization. Regarding sustainability-related achievements, I would like to commend our team for lowering greenhouse gas emissions by 22% compared to 2019 levels and for increasing the share of purchased electricity from renewable sources to 25%, which is a big jump from only 5% two years ago. This has been done through a combination of investments in solar and biomass energy. In fact, for Brazil specifically, following the completion of our recent conversion to biomass boilers, at our two largest facilities, 96% of all of our energy needs in Brazil now come from renewable sources. I would now like to comment a bit more on volume trends in the quarter. As we have shown in previous quarters, this is a volume index based upon our 2019 quarterly shipment averages, excluding high fructose corn syrup and adjusting for material changes in our portfolio. This graph illustrates the heightened volume demand during 2021 and 2022 in reaction to globally constrained supply chains. In the middle of 2023, we experienced a notable drop in orders as customers destocked inventories, primarily impacting our texture product line. This year, we anticipate a gradual improvement in volumes and have already seen a significant pickup in distributor demand and solid volume growth in April. It is worth noting that for the quarter on the slide being shown, we are also projecting where volume was expected to land if not for the impact of extreme cold weather on our U.S. shipments. Ingredion has a legacy of transforming and evolving its business in response to changing market dynamics. Our ability to strategically adapt has ensured long-term prosperity for the company and is one of the many reasons We are approaching a rare milestone to be listed now for 122 years on the New York Stock Exchange. Ingredion's previous region structure was instrumental in maintaining local accountability to deliver results. That culture of accountability will continue as we shift to a more customer and market-focused segment in pursuit of growth, which will be further enabled by our maturing global operating model. Our reorganization and financial resegmentation would not have been possible five years ago without the global operating model currently in place. As we look forward, we believe the more compelling natural geographic alignment of the new segments will create operational and market synergies. As we execute our strategy to drive growth and deliver on our winning aspiration to be recognized as the go-to provider for texture and healthful solutions that make healthy taste better, I'm pleased to announce that Dr. Michael Leonard will join Ingredion as Senior Vice President, Chief Innovation Officer, and Head of Protein Fortification, effective May 13th, 2024. Mike brings broad industry leadership experience in both developed and emerging markets with both CPG and Ingredient multinationals, as well as high-growth startup companies, which will be a tremendous asset to Ingredion and our customers. As we mentioned recently at Cagney, we are committed to driving continuous cost efficiencies as a means to maintain consistent profitable growth. Cost to compete will deliver $50 million of run rate savings by 2025. We are pursuing savings in two areas. 25 million will come from SG&A, which will show up in our reported operating expenses. and another $25 million will come from cost of goods sold savings, which will positively impact our gross margin. We see a significant opportunity to continue to leverage our shared services infrastructure that we have built over the past five years. To lead that effort, we are also pleased to announce that Vanessa Bourdeaux joined Ingredion as Vice President, Global Shared Services. In her role, she will continue to drive continuous improvement and change with a strong focus on global process standardization, risk reduction, and internal controls management. Now, I will hand it over to Jim Gray for the financial review. Jim?