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What changed in Ingredion Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ingredion Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+347 added−337 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-21)

Top changes in Ingredion Inc's 2023 10-K

347 paragraphs added · 337 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

68 edited+9 added−14 removed19 unchanged
Biggest changeWe develop, produce and sell a variety of food and beverage ingredients, primarily starches and sweeteners, for a wide range of industries, and we manage our operations geographically on a regional basis, with our businesses and investments classified into the following segments: • North America – U.S., Mexico and Canada • South America – Brazil, Argentina, Chile, Colombia, Ecuador, Peru and Uruguay • Asia-Pacific – South Korea, Thailand, China, Australia, Japan, New Zealand, Indonesia, Singapore, the Philippines, Malaysia, India and Vietnam • Europe, Middle East and Africa (“EMEA”) – Pakistan, Germany, Poland, the United Kingdom and South Africa Our product lines include starches and sweeteners, animal feed products and edible corn oil.
Biggest changeCurrently, we manage our operations geographically on a regional basis, with our businesses and investments classified into the following reportable business segments: • North America – U.S., Mexico and Canada • South America – Brazil, Colombia, Peru, Ecuador and Argentina • Asia-Pacific – Thailand, China, Japan, Australia, Indonesia, India, the Philippines, Malaysia, Singapore, New Zealand, Vietnam and previously South Korea, in which we sold our business on February 1, 2024 • Europe, Middle East and Africa (“EMEA”) – Germany, Pakistan, the United Kingdom, South Africa and Poland In November 2023, we announced plans to reorganize our business operations, which will result in a change to our reportable business segments.
A workplace safety goal represents a part of each employee's personal performance objectives each year as we strive to achieve an injury-free work environment. Culture and Employee Engagement We conduct confidential engagement surveys of our global workforce, and executive officers and leaders throughout the organization review aggregate survey results and create action plans at global, regional, functional and managerial levels.
A workplace safety goal represents a part of each employee's personal performance objectives each year as we strive to achieve an injury-free work environment. Culture and Employee Engagement We conduct confidential engagement surveys of our global workforce. Executive officers and leaders throughout the organization review aggregate survey results and create action plans at global, regional, functional and managerial levels.
We believe our approach to production and service, which focuses on local management and production improvements of our worldwide operations, provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate. This allows us to bring added value to our customers through tailored, innovative solutions.
Our approach to production and service, which focuses on local management and production improvements of our worldwide operations, provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate. This allows us to bring added value to our customers through tailored, innovative solutions.
Corn prices for our non-U.S. subsidiaries generally fluctuate as a result of the same factors that affect U.S. corn prices. We also utilize specialty grains such as waxy and high amylose corn, as well as proprietary seed varietals in our operations.
Corn prices for our non-U.S. subsidiaries fluctuate as a result of the same factors that affect U.S. corn prices. We also utilize specialty grains such as waxy and high amylose corn, as well as proprietary seed varietals in our operations.
Activities at Bridgewater include plant science and physical, chemical and biochemical modifications to food formulations, food sensory evaluation, and development of non-food applications such as starch-based biopolymers. In addition, we have product application technology centers that direct our product development teams worldwide to create product application solutions to better serve the ingredient needs of our customers.
Activities at Bridgewater include plant science and physical, chemical and biochemical modifications to food formulations, food sensory evaluation, and development of non-food applications such as starch-based biopolymers. In addition, we have product application technology centers that direct our product development teams globally to create product application solutions to better serve the ingredient needs of our customers.
Sugar Reduction and Specialty Sweeteners : These solutions provide sweetness or functional replacement for sugar in reduced-calorie and sugar-free foods and beverages without sacrificing quality and consistency. These specialty ingredients are made from a variety of GMO and non-GMO raw material bases and include such ingredients as stevia sweeteners, polyols, dextrose and allulose, a rare sugar.
Sugar Reduction and Specialty Sweeteners : These solutions provide sweetness or functional replacement for sugar in reduced-calorie and sugar-free foods and beverages without sacrificing quality and consistency. These specialty ingredients are made from a variety of GMO and non-GMO raw material bases and include such ingredients as stevia sweeteners, polyols, dextrose and allulose, which is a rare sugar.
We invest in R&D and digital transformation solutions to support new product development and innovation, to enable greater value delivery to our customers, to reduce waste and lower our costs and to drive operational excellence. Sales and Distribution Our salaried sales personnel, who are generally dedicated to customers in a geographic region, sell our products directly to manufacturers and distributors.
We invest in R&D and digital transformation solutions to support new product development and innovation, to enable greater value delivery to our customers, to reduce waste and lower our costs, and to drive operational excellence. Sales and Distribution Our salaried sales workforce, who are generally dedicated to customers in a geographic region, sell our products directly to manufacturers and distributors.
Our operations in Mexico and Canada face competition from U.S. imports and local producers including ALMEX, a Mexican joint venture between ADM and Primient. In South America, Cargill conducts starch processing operations in Brazil and Argentina. We also face competition from Roquette Frères S.A., primarily in our EMEA, North America and Asia-Pacific regions.
Our operations in Mexico and Canada face competition from U.S. imports and local producers including ALMEX, a Mexican joint venture between ADM and Primient. In South America, Cargill maintains starch processing operations in Brazil and Argentina. We also face competition from Roquette Frères S.A., primarily in our EMEA, North America and Asia-Pacific regions.
Additionally, the Bloomberg Gender-Equality Index (“GEI”), a modified market capitalization-weighted index that aims to track the performance of public companies committed to transparency in gender-data reporting, has included Ingredion in the GEI for six years. We use the GEI as a benchmark to measure our performance and evaluate opportunities for improvement.
Additionally, the Bloomberg Gender-Equality Index (“GEI”), a modified market capitalization-weighted index that aims to track the performance of public companies committed to transparency in gender-data reporting, has included Ingredion in the GEI for seven years. We use the GEI as a benchmark to measure our performance and evaluate opportunities for improvement.
Furthermore, we employ a flexible approach for our office-based employees on how and where we work. We focus on agile ways of working that enable colleagues to work remotely when appropriate and organize our office spaces to foster connection and collaboration.
Furthermore, we employ a flexible approach for our office-based employees on how and where we work. We focus on agile ways of working that enable colleagues to work remotely when appropriate and organize our offices to foster connection and collaboration.
Many smaller local corn and tapioca processors also operate in some of our markets. Several of our products also compete with products made from raw materials other than corn. High fructose corn syrup and monohydrate dextrose compete principally with cane and beet sugar products.
Smaller local corn and tapioca processors also operate in some of our markets. Some of our products also compete with products made from raw materials other than corn. High fructose corn syrup and monohydrate dextrose compete principally with cane and beet sugar products.
The U.S. is a highly competitive market with operations by other starch processors, several of which are divisions of larger enterprises. Some of these competitors, unlike us, have vertically integrated their starch processing and other operations. Competitors include Archer-Daniels-Midland Company, Cargill, Inc., Tate & Lyle PLC, Primient and several others.
The U.S. is a highly competitive market with operations by other starch processors, several of which are divisions of larger enterprises. Some of these competitors, unlike us, have vertically integrated their starch processing and other operations. Our competitors include, among others, Archer-Daniels-Midland Company (“ADM”), Cargill, Inc., Tate & Lyle PLC, and Primient.
We leverage the diverse experience and skills of our BRGs to help inform our business strategy. Our nine BRGs, which we have implemented across our global operations, play a role in connecting employees across regions, by providing colleagues with opportunities to enhance cultural awareness, enable collaboration, and inform our strategies for a broad consumer marketplace.
We leverage the diverse experience and skills of our BRGs to help inform our business strategy. Our nine BRGs, which we have implemented across our global operations, play a role in connecting employees across geographies and business areas, by providing colleagues with opportunities to enhance cultural awareness, enable collaboration, and inform our strategies for a broad consumer marketplace.
Corn is also grown in other areas of the world, including China, Brazil, Europe, Argentina, Mexico, South Africa, Canada and Pakistan. Our subsidiaries outside the U.S. utilize both local supplies of corn and corn imported from other geographic areas, including the U.S. The supply of corn for these subsidiaries is generally expected to be adequate for our needs.
Corn is also grown in other areas of the world, including China, Brazil, Europe, Argentina, Mexico, South Africa, Canada and Pakistan. Our subsidiaries outside the U.S. utilize both local supplies of corn and corn imported from other geographic areas, including the U.S., and we generally expect the supply of corn for these subsidiaries to be adequate for our needs.
We believe that our centralized production planning, distribution and financial functions similarly give us the ability to serve global customers, leverage digital solutions, ration production capacity, identify synergies, and maximize the benefits of our global presence. Products Our portfolio of products is generally classified into the following categories: Starch Products, Sweetener Products, and Co-products and others.
Our centralized production planning, distribution and financial functions similarly give us the ability to serve global customers, leverage digital solutions, ration production capacity, identify synergies, and maximize the benefits of our global presence. Products Our portfolio of products is generally classified into the following categories: Starch Products, Sweetener Products, and Co-products and others.
Our research and development (“R&D”) is supported by our marketing, product technology, and technology support staff, as well as technical support services, to assist our customers with application development and co-creation.
Research and development (“R&D”) is supported by our marketing, product technology, and technology support employees, as well as technical support services, to assist our customers with application development and co-creation.
For those customers located considerable distances from our manufacturing facilities, we primarily use either rail or a combination of railcars and trucks to deliver our products.
For those customers located considerable distances from our manufacturing facilities, we primarily use either rail transport or a combination of rail transport and trucks to deliver our products.
We use derivative hedging contracts to protect the gross margin of our firm-priced business, primarily in North America, and we follow a policy of hedging our exposure to commodity price fluctuations with commodities futures and options contracts, primarily for certain North American corn purchases.
We use derivative hedging contracts to protect the gross margin of our fixed (“firm”) priced business, primarily in North America, and we follow a policy of hedging our exposure to commodity price fluctuations with commodities futures and options contracts, primarily for certain North American corn purchases.
Specialty industrial starches are used for biomaterial applications including biodegradable plastics, fabric softeners and detergents, hair and skin care applications, dusting powders for surgical gloves, and in the production of glass fiber and insulation. Sweetener products: Our sweetener products represented approximately 33 percent, 33 percent and 35 percent of our net sales for 2022, 2021 and 2020, respectively.
Specialty industrial starches are used for biomaterial applications, including biodegradable plastics, fabric softeners and detergents, hair and skin care applications, dusting powders for surgical gloves, and in the production of glass fiber and insulation. Sweetener products: Our sweetener products represented approximately 34 percent, 33 percent and 33 percent of our net sales for 2023, 2022 and 2021, respectively.
Dextrose has a wide range of applications in the food and confection industries, in solutions for intravenous (“IV”) and other pharmaceutical applications, and in numerous industrial applications like wallboard, biodegradable surface agents and moisture control agents. Our specialty sweeteners provide affordable and natural, reduced calorie and sugar-free solutions for our customers.
Dextrose has a wide range of applications in the food and confection industries, in solutions for intravenous (“IV”) and other pharmaceutical applications, and in numerous industrial applications like wallboard, biodegradable surface 6 Table of Con tents agents and moisture control agents. Our specialty sweeteners provide affordable and natural, reduced calorie and sugar-free solutions for our customers.
Patents and Trademarks As of December 31, 2022, we owned more than 1,800 patents and patents pending, which relate to a variety of products and processes, as well as a number of established trademarks under which we market our products. We also have the right to use other patents and trademarks pursuant to patent and trademark licenses.
Patents and Trademarks As of December 31, 2023, we owned more than 1,900 patents and patents pending, which relate to a variety of products and processes, as well as a number of established trademarks under which we market our products. We also have the right to use other patents and trademarks pursuant to patent and trademark licenses.
These sweetener products also offer functionality in addition to 5 Table of Contents sweetness, such as texture, body and viscosity; help control freezing points, crystallization and browning; add humectancy (ability to add moisture) and flavor; and act as binders. Our high maltose syrups speed the fermentation process, allowing brewers to increase capacity without adding capital.
These sweetener products offer functionality in addition to sweetness, such as texture, body and viscosity; help control freezing points, crystallization and browning; add humectancy (ability to add moisture) and flavor; and act as binders. Our high maltose syrups speed the fermentation process, allowing brewers to increase capacity without adding capital.
In addition, we have staff that provides technical support to our sales personnel on an industry basis. We generally contract with trucking companies to deliver our bulk products to customer destinations. In North America, we generally use trucks to ship to nearby customers.
In addition, we have employees that provide technical support to our sales personnel on an industry basis. We generally contract with trucking companies to deliver our bulk products to customer destinations. In North America, we generally use trucks to ship to nearby customers.
Other operations may be hedged at any given time based on management’s judgment as to the need to fix the costs of our raw materials to protect our profitability. Outside North America, we generally enter short-term commercial sales contracts and adjust our selling prices based upon the local raw material costs. See Item 7A.
Other operations may be hedged based on our management’s judgment as to the need to fix the costs of our raw materials to protect our profitability. Outside North America and Europe, we generally enter into short-term commercial sales contracts and adjust our selling prices based upon the local raw material costs. See Item 7A.
Our sweeteners are used in a wide variety of food and beverage products, such as baked goods, snack foods, canned fruits, condiments, candy and other sweets, dairy products, ice cream, jams and jellies, prepared mixes, table syrups, soft drinks, fruit-flavored drinks and many others.
Our sweeteners are used in a wide variety of food and beverage products, such as baked goods, snack foods, canned fruits, condiments, candy and other sweets, dairy products, ice cream, jams and jellies, prepared mixes, table syrups, and beverages.
The region’s operations 4 Table of Contents include twelve manufacturing facilities that produce modified, specialty and regular waxy tapioca and rice starches, dextrins, glucose, high maltose syrup, stevia sweeteners, dextrose, high fructose corn syrup, caramel color and pharmaceutical-grade polyols.
As of December 31, 2023, the region’s operations include twelve manufacturing facilities that produce modified, specialty and regular waxy tapioca and rice starches, dextrins, glucose, high maltose syrup, stevia sweeteners, dextrose, high fructose corn syrup, caramel color and pharmaceutical-grade polyols.
We also own 49 percent of Ingrear Holding S.A., which operates five manufacturing facilities in Argentina to sell value-added ingredients to customers in the food, beverage, pharmaceutical and other industries in Argentina, Chile and Uruguay (the "Argentina joint venture").
We also own 49 percent of Ingrear Holding S.A., which operates five manufacturing facilities in Argentina to produce value-added ingredients for sale to customers in the food, beverage, pharmaceutical and other industries in Argentina, Chile and Uruguay (the “Argentina joint venture”).
The following table provides additional information about our employees as of December 31, 2022: Region Approximate Number of Employees North America 5,100 South America 2,300 Asia-Pacific 2,600 EMEA 1,700 Total Ingredion 11,700 Workplace Safety The overall well-being and safety of our employees and customers is one of our top priorities.
The following table provides additional information about our employees as of December 31, 2023: Region Approximate Number of Employees North America 5,200 South America 2,250 Asia-Pacific 2,650 EMEA 1,500 Total Ingredion 11,600 Workplace Safety The overall well-being and safety of our employees and customers is one of our top priorities.
Additional Information Our Internet address is www.ingredion.com. We make available, free of charge through our Internet website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
We make available, free of charge through our investor website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
Our corporate governance guidelines, board committee charters and code of ethics are posted on our website, the address of which is www.ingredion.com, and will be made available in print without charge to any stockholder upon request in writing to Ingredion Incorporated, 5 Westbrook Corporate Center, Westchester, Illinois 60154, Attention: Corporate Secretary.
Our corporate governance guidelines, board committee charters and code of ethics are posted on our investor website, and will be made available in print without charge to any stockholder upon request in writing to our principal executive offices at Ingredion Incorporated, 5 Westbrook Corporate Center, Westchester, Illinois 60154, Attention: Corporate Secretary.
Within these categories, a portion of our products are considered specialty ingredients and we refer to the remainder of our products as core ingredients. Starch products: Our starch products represented approximately 46 percent, 45 percent and 46 percent of our net sales for each of 2022, 2021 and 2020, respectively.
Within these categories, we identify a portion of our products as specialty ingredients and the remainder of our products as core ingredients. Starch products: Our starch products represented approximately 47 percent, 46 percent and 45 percent of our net sales for 2023, 2022 and 2021, respectively.
We participate in the Paradigm for Parity® coalition, pledging our goal to achieve gender parity at manager level and above by 2030. As of December 31, 2022, employees who self-identify as women accounted for more than 25 percent of both our Executive Leadership Team and independent members of our Board of Directors.
We also participate in the Paradigm for Parity® coalition, aspiring to achieve gender parity at manager level and above. As of December 31, 2023, employees who self-identify as women accounted for more than 30 percent of our Executive Leadership Team and 40 percent of our independent members of our Board of Directors.
We utilize a network of tolling manufacturers in various regions in the production cycle of certain specialty starches. In general, these tolling manufacturers produce certain basic starches for us and we in turn complete the manufacturing process of starches through our finishing channels.
In general, these tolling manufacturers produce certain basic starches for us and we in turn complete the manufacturing process of starches through our finishing channels.
Co-products and others: Co-products and others accounted for approximately 21 percent, 22 percent and 19 percent of our net sales for 2022, 2021 and 2020, respectively. Refined corn oil (from germ) is sold to packers of cooking oil and to producers of margarine, salad dressings, shortening, mayonnaise and other foods. Corn gluten feed is sold as animal feed.
Co-products and others: Co-products and others represented approximately 19 percent, 21 percent and 22 percent of our net sales for 2023, 2022 and 2021, respectively. We sell refined corn oil (from germ) to packers of cooking oil and to producers of margarine, salad dressings, shortening, mayonnaise and other foods.
Core ingredients accounted for approximately 66 percent of our net sales for 2022, down from 67 percent in 2021 and 68 percent in 2020. 6 Table of Contents Competition The starch and sweetener industry is highly competitive. Competition within our markets is largely based on product functionality, price and quality.
Core ingredients represented approximately 66 percent, 66 percent and 67 percent of our net sales for 2023, 2022 and 2021, respectively. 7 Table of Con tents Competition The starch and sweetener industry is highly competitive. Competition within our markets is largely based on product functionality, price and quality.
Our South America region includes seven manufacturing facilities that produce regular, modified, waxy tapioca starches, high fructose and high maltose syrups and syrup solids, dextrins and maltodextrins, dextrose, specialty starches, caramel color and sorbitol.
Our North America region includes 22 manufacturing facilities that produce a wide range of starches, sweeteners, gum acacia, pea protein, and fruit and vegetable concentrates. Our South America region includes seven manufacturing facilities that produce regular, modified, waxy, tapioca starches, high fructose and high maltose syrups and syrup solids, dextrins and maltodextrins, dextrose, specialty starches, caramel color and sorbitol.
The following table shows the approximate portion of total net sales by industry for each of the industries we served in 2022: Industries Served Total Ingredion North America South America Asia Pacific EMEA Food 54 % 53 % 49 % 58 % 66 % Beverage 8 12 1 5 1 Brewing 8 8 18 3 — Food and Beverage Ingredients 70 73 68 66 67 Animal Nutrition 11 11 15 5 7 Other 19 16 17 29 26 Total Net Sales 100 % 100 % 100 % 100 % 100 % No customer accounted for 10 percent or more of our net sales in 2022, 2021 or 2020.
The following table shows the approximate portion of total net sales by industry for each of the industries we served in 2023: Industries Served Total Ingredion North America South America Asia- Pacific EMEA Food 54 % 50 % 52 % 66 % 71 % Beverage 9 12 1 6 1 Brewing 7 7 16 3 — Food and Beverage Ingredients 70 69 69 75 72 Animal Nutrition 10 11 13 4 6 Other 20 20 18 21 22 Total Net Sales 100 % 100 % 100 % 100 % 100 % No customer accounted for 10 percent or more of our net sales in 2023, 2022 or 2021.
We and many of our products are also subject to regulation by the U.S. Food and Drug Administration and other government agencies. Among other things, 9 Table of Contents applicable regulations of these agencies prescribe requirements and establish standards for product quality, purity and labeling.
We and many of our products are also subject to regulation by the U.S. Food and Drug Administration and other government agencies. Among other things, applicable regulations of these agencies prescribe requirements and establish standards for product quality, purity and labeling. Failure to comply with one or more regulatory requirements can result in a variety of sanctions, including monetary fines.
All our employees contribute to our success and help us drive financial performance. 8 Table of Contents Workforce Profile As of December 31, 2022, Ingredion employed approximately 11,700 people, of whom approximately 3,100 were located in the U.S. and Canada.
All of our employees contribute to our success and help us drive financial performance. 9 Table of Con tents Workforce Profile As of December 31, 2023, Ingredion employed approximately 11,600 people, of whom approximately 3,200 were located in the U.S. and Canada. Approximately 32 percent of our U.S. and Canadian employees are members of labor unions.
Gable has been Vice President, Corporate Controller since joining Ingredion in October 2021. Before that, she was Head of Global Accounting and External Reporting at Wayfair Inc., an e-commerce company, from August 2020 to September 2021, and Assistant Controller at AK Steel Holdings Corporation, an integrated steel manufacturer from May 2013 to July 2020. James D. Gray 56 Mr.
Head of Global Accounting and External Reporting at Wayfair Inc., an e-commerce company, from August 2020 to September 2021, and Assistant Controller at AK Steel Holdings Corporation, an integrated steel manufacturer, from May 2013 to July 2020. James D. Gray 57 Executive Vice President and Chief Financial Officer since March 2017.
Xu has been Senior Vice President and Chief Innovation Officer since joining Ingredion in October 2020. Before that, he was President, Human Nutrition and Health, at Royal DSM, a multinational corporation active in fields of health, nutrition and materials from May 2016 to September 2020.
Senior Vice President and Chief Innovation Officer from October 2020 to December 2023. President, Human Nutrition and Health, at Royal DSM, a multinational corporation active in fields of health, nutrition and materials, from May 2016 to September 2020. 12 Table of Con tents
Our EMEA region includes six manufacturing facilities that produce modified and specialty starches, glucose and dextrose in Pakistan, Germany and the United Kingdom. On April 1, 2021, we acquired KaTech, a German-based provider of advanced texture and stabilization solutions to the food and beverage industry.
Our EMEA region includes six manufacturing facilities that produce modified and specialty starches, glucose and dextrose in Pakistan, Germany and the United Kingdom. Through our German-headquartered subsidiary KaTech, we offer advanced texture and stabilization solutions to the food and beverage industry. We utilize a network of tolling manufacturers in various regions in the production cycle of certain specialty starches.
Corn gluten meal is sold as high-protein feed for chickens, pet food and aquaculture. Our other products include fruit and vegetable products, such as concentrates, purees and essences, as well as pulse proteins and hydrocolloids systems and blends. Specialty ingredients within the product portfolio : Within our three product portfolios, we consider certain of our products to be specialty ingredients.
We also sell corn gluten feed as animal feed and corn gluten meal as high-protein feed for chickens, pet food and aquaculture. Our other products include fruit and vegetable products, such as concentrates, purees and essences, as well as pulse proteins and hydrocolloids systems and blends.
We do not believe that any individual patent or trademark is material to our business. Human Capital We believe the strength of our workforce is one of the significant contributors to our success as a global company. Attracting, developing and retaining global talent with the right skills to drive our business is central to our values and long-term growth strategy.
We do not believe that any individual patent or group of related patents or any trademark is material to our business. Human Capital We believe the strength of our workforce is one of the significant contributors to our success as a global company.
During 2022, we spent approximately $22 million for environmental control and wastewater treatment equipment to be incorporated into existing facilities and in planned construction projects. We currently anticipate that we will invest approximately $27 million for environmental facilities and programs in 2023.
Those boilers, along with product dryers, are our primary source of greenhouse gas emissions. During 2023, we spent $36 million for environmental control and wastewater treatment equipment to be incorporated into existing facilities and in planned construction projects. We currently anticipate that we will invest approximately $36 million for environmental facilities and programs in 2024.
We believe these laws and regulations have not negatively affected our competitive position. Our operations are also subject to federal, state, foreign and local laws and regulations for environmental matters, including air and water quality, as well as other regulations intended to protect public health and the environment.
Our operations are also subject to federal, state, foreign and local laws and regulations for environmental matters, including air and water quality, as well as other regulations intended to protect public health and the environment. We operate industrial boilers that fire natural gas, coal, or biofuels to operate our manufacturing facilities.
Specialty ingredients accounted for approximately 34 percent of our net sales for 2022, up from 33 percent and 32 percent for 2021 and 2020, respectively. These ingredients deliver more functionality than our other products and add additional customer value.
Specialty ingredients within the product portfolio : Within our three product portfolios, we consider certain of our products to be specialty ingredients. Specialty ingredients represented approximately 34 percent, 34 percent and 33 percent of our net sales for 2023, 2022 and 2021, respectively. These ingredients deliver more functionality than our other products and add additional customer value.
Our starch-based products include both food-grade and industrial starches, as well as biomaterials. Our sweetener products include glucose syrups, high maltose syrups, high fructose corn syrup, caramel color, dextrose, polyols, maltodextrins, and glucose and syrup solids. Our products are derived primarily from the processing of corn and other starch-based materials, such as tapioca, potato and rice.
Our product lines include starches and sweeteners, animal feed products and edible corn oil. Our starch-based products include both food-grade and industrial starches, as well as biomaterials. Our sweetener products include glucose syrups, high maltose syrups, high fructose corn syrup, caramel color, dextrose, polyols, maltodextrins, and glucose and syrup solids.
Government Regulation As a manufacturer and marketer of food items and items for use in the pharmaceutical industry, our operations and the use of many of our products are subject to federal, state, foreign and local statutes and regulations, including the Federal Food, Drug and Cosmetic Act and the Occupational Safety and Health Act.
In December 2023, the Human Rights Campaign Foundation designated Ingredion as a top scorer in its 2023-2024 Corporate Equality Index with the Equality 100 Award: Leader in LGBTQ+ Workplace Inclusion. 10 Table of Con tents Government Regulation As a manufacturer and marketer of food items and items for use in the pharmaceutical industry, our operations and the use of many of our products are subject to federal, state, foreign and local statutes and regulations, including the Federal Food, Drug and Cosmetic Act and the Occupational Safety and Health Act.
Due to the competitive nature of our industry and the availability of substitute products not produced from corn, such as sugar from cane or beets, end-product prices may not necessarily fluctuate in a timely manner that correlates to raw material costs of corn.
These specialty grains have a higher cost due to their more limited supply and require longer planning cycles to mitigate the risk of supply shortages. 8 Table of Con tents Due to the competitive nature of our industry and the availability of substitute products not produced from corn, such as sugar from cane or beets, end-product prices in any period may not fluctuate in a manner that correlates to raw material costs of corn during that period.
To secure these specialty grains at the time of our anticipated needs, we contract with certain farmers to grow the specialty 7 Table of Contents corn approximately two years in advance of delivery. These specialty grains have a higher cost due to their more limited supply and require longer planning cycles to mitigate the risk of supply shortages.
To secure these specialty grains at the time of our anticipated needs, we contract with certain farmers to grow the specialty corn approximately two years in advance of delivery.
Quantitative and Qualitative Disclosures about Market Risk for additional information. Other raw materials used in our manufacturing processes include chips and slices from potato processors as the primary raw material to manufacture potato-based starches. We also use tapioca, particularly in certain of our production processes in the Asia-Pacific region.
We use chips and slices from potato processors as the primary raw material to manufacture potato-based starches. We also use tapioca, particularly in certain of our production processes in the Asia-Pacific region. In addition to corn, potatoes, and tapioca, we use pulses, gums, rice, stevia, yellow peas and sugar as raw materials, among others.
Our manufacturing process is based on a capital-intensive, two-step process that involves the wet-milling and processing of starch-based materials, primarily corn. During the front-end process, the starch-based materials are steeped in a water-based solution and separated into starch and co-products such as protein, fiber and germ used to produce corn oil.
During the front-end process, the starch-based materials are steeped in a water-based solution and separated into starch and co-products such as protein, fiber and germ used to produce corn oil. The starch is then either dried for sale or further processed to make starches, sweeteners and other ingredients that serve the particular needs of various industries.
Before that, she was Deputy General Counsel and Chief Compliance Officer from September 2019 through September 2021, as well as EMEA Regional General Counsel from June 2015 to August 2019, for Whirlpool Corporation, a global home appliance manufacturer. Jorgen Kokke 54 Mr. Jorgen Kokke has been Executive Vice President and President, Americas since October 2020.
Tanya Jaeger de Foras 53 Senior Vice President, Chief Legal Officer, Corporate Secretary and Chief Compliance Officer since joining Ingredion in November 2021. Deputy General Counsel and Chief Compliance Officer for Whirlpool Corporation, a global home appliance manufacturer, from September 2019 to September 2021. EMEA Regional General Counsel for Whirlpool from June 2015 to August 2019.
Failure to comply with one or more regulatory requirements can result in a variety of sanctions, including monetary fines. No such fines of a material nature were imposed on us in 2022. We may also be required to comply with federal, state, foreign and local laws regulating food handling and storage.
No material fines were imposed on us in 2023. We may also be required to comply with federal, state, foreign and local laws regulating food handling and storage. We believe these laws and regulations have not negatively affected our competitive position.
We completed the transaction with Grupo Arcor, an Argentine food company, on August 2, 2021, to combine facilities into the Argentina joint venture, which is managed by a jointly appointed team of executives. Our Asia-Pacific region manufactures corn-based products in South Korea, China and Thailand, tapioca- and rice-based products in Thailand, and stevia sweetener products in Malaysia and China.
Ingredion and Grupo Arcor, an Argentine food company, jointly appoint a team of executives to manage the Argentina joint venture. 5 Table of Con tents Our Asia-Pacific region manufactures corn-based products in China and Thailand, tapioca- and rice-based products in Thailand, stevia sweetener products in Malaysia and China, chemically modified starch-based pharmaceutical excipients in India, and spray dried and fine grade mannitol in India.
On December 1, 2022, we acquired a 65 percent controlling interest in Mannitab Pharma Specialties Private Limited ("Mannitab"), which is an Indian manufacturer of spray dried mannitol and fine grade mannitol, for $22 million, and we agreed to acquire the remaining shares of Mannitab over the next three years.
We also agreed to acquire the remaining 35 percent of shares from our current 65 percent ownership of Mannitab Pharma Specialties Private Limited (“Mannitab”), an Indian manufacturer of spray dried mannitol and fine grade mannitol, by March 2026.
In addition to corn, potatoes, and tapioca, we use pulses, gums, rice, stevia, yellow peas and sugar as raw materials, among others. Research and Development Our global network of approximately 500 scientists creates innovative food solutions in 32 Ingredion Idea Labs® with headquarters in Bridgewater, New Jersey.
Quantitative and Qualitative Disclosures about Market Risk for additional information. Research and Development Our global network of approximately 500 scientists creates innovative food solutions in 32 Ingredion Idea Labs® with headquarters in Bridgewater, New Jersey.
Before that, she was Senior Vice President, Human Resources at Bayer Crop Science (formerly Monsanto), an agriculture, chemical and biochemical solutions company, from June 2018 to January 2022, and Vice President and Chief of Staff at Bayer Crop Science from August 2013 through June 2018. 11 Table of Contents Name Age Positions, Offices and Business Experience Jeremy Xu 55 Mr.
Nancy Wolfe 54 Senior Vice President and Chief Human Resources Officer since joining Ingredion in January 2022. Senior Vice President, Human Resources at Bayer Crop Science (formerly Monsanto), an agriculture, chemical and biochemical solutions company, from June 2018 to January 2022. Jeremy Xu 56 Senior Vice President, Chief Innovation Officer and President, Global Healthful Solutions, as of January 2024.
Zallie has been President and Chief Executive Officer since January 1, 2018. Before that, he was Executive Vice President, Global Specialties and President, Americas from January 2016 to December 2017. He is also a director of Sylvamo Corporation, a global producer of uncoated papers. Valdirene Evans 55 Ms.
Our executive officers and their roles as of February 21, 2024 are as follows: Name Age Positions, Offices and Business Experience James P. Zallie 62 President and Chief Executive Officer since January 2018. Executive Vice President, Global Specialties and President, Americas from January 2016 to December 2017. Director of Sylvamo Corporation, a global producer of uncoated papers.
Seip was Senior Vice President, Global Supply Chain at ChampionX Holding Inc. (formerly Ecolab), from January 2020 until January 2021. Prior to that, he was Senior Vice President, Global Supply Chain at Ecolab from December 2011 through December 2019. From August 2017 through December 2018, Mr.
Eric Seip 56 Senior Vice President, Global Operations and Chief Supply Chain Officer since joining Ingredion in January 2021. Senior Vice President, Global Supply Chain at ChampionX Holding Inc. (formerly Ecolab), an oil and gas equipment and services company, from January 2020 to January 2021. Senior Vice President, Global Supply Chain at Ecolab from December 2011 to December 2019.
Fernandes has been Senior Vice President and Chief Commercial and Sustainability Officer of Ingredion since July 2018. Before that, he was Senior Vice President and Chief Commercial Officer from March 2018 to July 2018 and President and General Director, Mexico from January 2014 to February 2018. Davida M. Gable 56 Ms.
Larry Fernandes 59 Senior Vice President and Chief Commercial and Sustainability Officer since July 2018. Senior Vice President and Chief Commercial Officer from March 2018 to July 2018. Davida M. Gable 57 Vice President, Corporate Controller since joining Ingredion in October 2021.
ITEM 1. BUSINESS Our Company Ingredion is a leading global ingredients solutions provider that transforms corn, tapioca, potatoes, stevia, grains, fruits, gums and vegetables into value-added ingredients and biomaterials for the food, beverage, brewing and other industries. Our Purpose is to bring the potential of people, nature and technology together to make life better.
ITEM 1. BUSINESS Our Company Ingredion Incorporated (together with its consolidated subsidiaries, the “Company,” “Ingredion,” “we,” “us,” and “our”) is a leading global ingredients solutions provider that transforms grains, fruits, vegetables and other plant-based materials into value-added ingredient solutions for the food, beverage, animal nutrition, brewing and industrial markets.
Evans has been Senior Vice President and President, APAC and Global Head of Pharma, Home and Beauty since October 2020. Before that, she was Senior Vice President and President, Asia-Pacific from March 2018 to September 2020. 10 Table of Contents Name Age Positions, Offices and Business Experience Larry Fernandes 58 Mr.
Valdirene Evans 56 Senior Vice President and President, Global Texture Solutions as of January 2024. Senior Vice President and President, Asia-Pacific and Global Head of Pharma, Home and Beauty from October 2020 to December 2023. Senior Vice President and President, Asia-Pacific from March 2018 to September 2020.
We currently own 87 percent of PureCircle Limited ("PureCircle"), one of the leading producers and innovators of stevia sweeteners and flavors for the food and beverage industry. During 2022, we purchased $46 million of outstanding PureCircle minority shares to increase our ownership from the 75 percent controlling interest of shares we acquired on July 1, 2020.
Our Asia-Pacific region includes 88 percent ownership of PureCircle Limited (“PureCircle”), one of the leading producers and innovators of stevia sweeteners and flavors for the food and beverage industry.
The information on, or accessible through, our website is not a part of, and is not incorporated by reference into, this report. Information about our Executive Officers Set forth below, as of January 31, 2023, is information about our executive officers that indicates their positions and offices with Ingredion and other recent business experience.
The information on, or accessible through, our website is not a part of, and is not incorporated by reference into, this report. 11 Table of Con tents Information about our Executive Officers Following the November 2023 announcement of our plans to reorganize our operations, some of our executive officers were identified for new roles beginning in 2024.
Our program structure includes Regional Diversity Councils and a Global DEI Council, which are collectively composed of regional and functional business leaders, human resource partners and select Business Resource Group (“BRG”) leaders. We include specific DEI metrics as an element of personal objectives within our annual incentive plan for our CEO and other senior leaders.
Inclusion and Belonging Our Executive Leadership Team and Board of Directors lead our Purpose and drive inclusion and belonging throughout the organization. Our program structure includes regional councils and global councils, which are collectively composed of regional and functional business leaders, human resource partners and select Business Resource Group (“BRG”) leaders.
Geographic Scope and Operations We utilize our global network of 47 manufacturing facilities and joint venture partnerships to support key global product lines. We have focused our recent investments on expanding our stevia sweetener and plant-based protein product lines, including pulse-based concentrates, flours and isolates.
Geographic Scope and Operations As of December 31, 2023, we utilized our global network of 47 manufacturing facilities and joint venture partnerships to support key global product lines. Our manufacturing process is based on a capital-intensive, two-step process that involves the wet-milling and processing of starch-based materials, primarily corn.
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The starch is then either dried for sale or further processed to make starches, sweeteners and other ingredients that serve the particular needs of various industries. Our North America region includes 22 manufacturing facilities that produce a wide range of starches, sweeteners, gum acacia, peas, and fruit and vegetable concentrates.
Added
Our innovative ingredient solutions help customers stay on trend with simple ingredients and other in-demand ingredients. Our Purpose is to bring the potential of people, nature and technology together to make life better. We develop, produce and sell a variety of food and beverage ingredients, primarily starches and sweeteners, for a wide range of industries.
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We supply tapioca, rice and stevia sweetener products not only to our Asia-Pacific region, but also to the rest of our global network.
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Once the reorganization is complete, which we expect will occur in 2024, we anticipate that our production assets and commercial efforts will align with a global focus on Texture and Healthful Solutions, a local focus on Food and Industrial Ingredients, and other businesses.
Removed
Our stevia investments also include certain exclusive commercialization rights to rebaudioside M by fermentation product developed by Amyris, Inc. ("Amyris"), exclusive licensing of the product's manufacturing technology, and a 31 percent ownership stake in a joint venture for the product (the “Amyris joint venture”), which we entered with Amyris on June 1, 2021.
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We will continue to report our results using the existing reportable segment structure until the reorganization is complete, the new segments are operational and discrete financial information consistent with the new segments is being provided to our Chief Executive Officer. Our products are derived primarily from the processing of corn and other starch-based materials, such as tapioca, potato and rice.
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We are continuing to make strategic investments in Asia. On August 1, 2022, we acquired Amishi Drugs and Chemicals Private Limited ("Amishi"), which is an Indian manufacturer of chemically modified starch-based pharmaceutical excipients, for $7 million.
Added
On February 1, 2024, we completed the divestiture of our business in South Korea, which manufactured corn-based products, to an affiliate of the Sajo Group, a food company headquartered in Seoul, South Korea. We supply products manufactured in the Asia-Pacific region to our global network.
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We use chips and slices from potato processors as the primary raw material to manufacture potato-based starches. We also use tapioca, gum, rice, stevia, peas and sugar as raw materials. The supply of raw materials has been, and is anticipated to continue to be, adequate for our needs.
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Attracting, developing and retaining global talent with the right skills to drive our business is central to our values and long-term growth strategy.
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Approximately 29 percent of our U.S. and Canadian employees are members of labor unions, and three different collective bargaining agreements that expire at various dates in 2023 cover up to 430 of these employees.
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Our collective bargaining agreement at our Bedford Park, Illinois manufacturing facility, which covers approximately 250 employees, expires in 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEven if we succeed in 16 Table of Contents hiring new personnel to fill vacancies, lengthy training and orientation periods might be required before new employees are able to achieve acceptable productivity levels. Any failure by us to attract, develop, retain, motivate, and maintain good relationships with qualified individuals could adversely affect our business and results of operations.
Biggest changeFurthermore, any failure by us to manage internal succession or to effectively transfer knowledge from departing employees to others in the organization could adversely affect our business and results of operations. Even if we succeed in hiring new personnel to fill vacancies, lengthy training and orientation periods might be required before new employees are able to achieve acceptable productivity levels.
Current economic conditions may adversely impact demand for our products, reduce access to credit, affect investment returns and cause our customers and others with whom we do business to suffer financial hardship, all of which could adversely impact our business, results of operations, financial condition and cash flows.
Economic conditions may adversely impact demand for our products, reduce access to credit, affect investment returns and cause our customers and others with whom we do business to suffer financial hardship, all of which could adversely impact our business, results of operations, financial condition and cash flows.
General business and economic conditions that could affect us include barriers to trade (including as a result of tariffs, duties and border taxes, among other factors), the strength of the economies in which we operate, unemployment, inflation and fluctuations in debt markets.
General business and economic conditions that could affect us include barriers to trade (including as a result of tariffs, duties and border taxes, among other factors), the strength of the economies in which we operate, unemployment, inflation and fluctuations in debt and equity markets.
Our effective tax rates could be adversely affected by changes in the mix of earnings by jurisdiction, changes in tax laws, or tax rates changes in the valuation of deferred tax assets and liabilities and material adjustments from tax audits. The recoverability of our deferred tax assets is dependent upon our ability to generate future taxable income.
Our effective tax rates could be adversely affected by changes in the mix of earnings by jurisdiction, changes in tax laws, tax rates changes in the valuation of deferred tax assets and liabilities and material adjustments from tax audits. The recoverability of our deferred tax assets is dependent upon our ability to generate future taxable income.
Changes in consumer preferences and perceptions may lessen the demand for our products, which could reduce our sales and profitability and harm our business. Food products are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends.
Changes in consumer practices, preferences and perceptions may lessen the demand for our products, which could reduce our sales and profitability and harm our business. Food products are often affected by changes in consumer practices and tastes, national, regional and local economic conditions and demographic trends.
To minimize the effect of volatility in the cost of corn related to these firm-priced supply contracts, we enter into corn futures and options contracts, or take other hedging positions in the corn futures market. These derivative contracts typically mature within one year.
To minimize the effect of volatility in the cost of corn related to these firm-priced supply contracts, we enter into corn futures and options contracts, or take other hedging positions in the corn and soy futures market. These derivative contracts typically mature within one year.
Remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede our sales, manufacturing or other critical functions.
Remediation efforts may not be successful or timely and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede our sales, manufacturing or other critical functions.
While currently these conditions have not impaired our ability to access credit markets and finance our operations, we are subject to the risk of a further deterioration in the financial markets.
While currently these conditions have not impaired our ability to access credit and equity markets to finance our operations, we are subject to the risk of a further deterioration in the financial markets.
In addition, changing customer preferences may result in increased demands regarding packaging materials and other components in our products and their environmental impact on sustainability. Further, customers may place increasing importance on purchasing products that are sustainably grown and made, requiring us to incur additional costs for increased due diligence and reporting.
In addition, changing customer preferences may result in increased demands regarding packaging materials and other components in our products and their environmental impact on sustainability. Moreover, customers may place increasing importance on purchasing products that are sustainably grown and made, requiring us to incur additional costs for increased due diligence and reporting.
Risks to our business include impacts from labor strikes or weather-related events that affect transportation by rail, air, shipping or mobile transport. The market prices for our raw materials, supply chain freight and logistics, and energy may vary considerably depending on supply and demand, world economies, trade agreements and tariffs and other factors.
Risks to our business include impacts from labor strikes or weather-related events that affect transportation by rail, air, shipping or ground. The market prices for our raw materials, supply chain freight and logistics, and energy may vary considerably depending on supply and demand, world economies, trade agreements and tariffs and other factors.
Our operations could be adversely affected by actions taken in connection with cross-border disputes by the governments of countries in which we conduct business. 17 Table of Contents Changes in our tax rates or exposure to additional income tax liabilities could impact our profitability. We are subject to income taxes in the U.S. and in foreign jurisdictions.
Our operations could be adversely affected by actions taken in connection with cross-border disputes by the governments of countries in which we conduct business. Changes in our tax rates or exposure to additional income tax liabilities could impact our profitability. We are subject to income taxes in the U.S. and in foreign jurisdictions.
These conditions include, among others, changes in a country’s or region’s economic or political conditions, modification or termination of trade agreements or treaties promoting free trade, creation of new trade agreements or treaties, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, currency exchange rate fluctuations, burdensome taxes and tariffs, and other trade barriers.
These conditions include, among others, changes in a country’s or region’s economic or political conditions, modification or termination of trade agreements or treaties promoting free trade, creation of new trade agreements or treaties, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, including regulations regarding child labor, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, currency exchange rate fluctuations, burdensome taxes and tariffs, and other trade disputes or trade barriers.
Our cash flows from operations may not be sufficient to fund anticipated capital expenditures and, in such an event, we may not be able to obtain additional funds from financial markets or from the sale of assets at terms favorable to us.
Our cash flows from operations may not be sufficient to fund anticipated capital expenditures and, in such an event, we may not be able to obtain additional funds from financial markets, from the sale of assets, or from the sale or divestiture of certain businesses or operations at terms favorable to us.
Our ability to maintain a competitive cost structure depends on continued 14 Table of Contents containment of manufacturing, delivery and administrative costs, as well as the implementation of cost-effective purchasing programs for raw materials, energy and related manufacturing requirements.
Our ability to maintain a competitive cost structure depends on continued containment of manufacturing, delivery and administrative costs, as well as the implementation of cost-effective purchasing programs for raw materials, energy and related manufacturing requirements.
Protectionist trade measures and import and export licensing requirements could also adversely affect our results of operations. Our profitability could be negatively impacted if we fail to maintain satisfactory labor relations. We have employees domiciled in the U.S. as well as worldwide who belong to labor unions.
Protectionist trade measures and import and export licensing requirements could also adversely affect our results of operations. 17 Table of Con tents Our profitability could be negatively impacted if we fail to maintain satisfactory labor relations. We have employees domiciled in the U.S. as well as worldwide who belong to labor unions.
In addition, sanctions and macroeconomic effects of the conflict have contributed to greater volatility in foreign exchange and interest rates that affect our financial results. Developments relating to the conflict might result in a continuation of these impacts and in other impacts that could adversely affect our business or results of operations.
In addition, sanctions and macroeconomic effects of geopolitical conflicts have contributed to greater volatility in foreign exchange and interest rates that affect our financial results. Developments relating to geopolitical conflicts might result in a continuation of these impacts and in other impacts that could adversely affect our business or results of operations.
We face intensive competition in retaining and hiring individuals with the requisite expertise, both within and outside the ingredients solutions industry, including from companies that have greater resources than we do. Changes in labor markets as a result of COVID-19 and other socioeconomic and demographic changes, have increased the competition for hiring and retaining talent.
We face intensive competition in retaining and hiring individuals with the requisite expertise, both within and outside the ingredients solutions industry, including from companies that have greater resources than we do. Changes in labor markets as a result of the recent coronavirus pandemic and other socioeconomic and demographic changes have increased the competition for hiring and retaining talent.
For further strategic growth through mergers or acquisitions, we may also seek to generate additional liquidity through the sale of debt or equity securities in private or public markets or through the sale of assets.
For further strategic growth through mergers or acquisitions, we may also seek to generate additional liquidity through the sale of debt or equity securities in private or public markets, through the sale of assets, or through the sale or divestiture of certain businesses or operations.
Because we ship products worldwide, our business could be adversely affected by fluctuations in freight and logistics costs, and disruptions in supply channels between parties and locations that include our suppliers, production and storage facilities, tolling and packaging partners, distributors and customers.
Because we ship products worldwide, our business in the past and has been, and in future periods could be, adversely affected by fluctuations in freight and logistics costs, and disruptions in supply channels between parties and locations that include our suppliers, production and storage facilities, tolling and packaging partners, distributors and customers.
Additionally, we have approximately $2.9 billion of long-lived assets, or 39 percent of our total assets, as of December 31, 2022. We perform an annual impairment assessment for goodwill and our indefinite-lived intangible assets and as necessary for other long-lived assets.
Additionally, we have $2.9 billion of long-lived assets, or 38 percent of our total assets, as of December 31, 2023. We perform an annual impairment assessment for goodwill and our indefinite-lived intangible assets and as necessary for other long-lived assets.
If we are unable to generate sufficient cash flows or raise sufficient additional funds to cover our capital expenditures or to finance strategic growth opportunities, we may not be able to achieve our desired operating efficiencies and expansion plans, which may adversely impact our competitiveness and, therefore, our results of operations.
If we are unable to generate sufficient cash flows or raise sufficient additional funds to cover our capital expenditures or to finance strategic growth opportunities, we may not be able to achieve our desired operating efficiencies and expansion plans, which may adversely impact our competitiveness and, therefore, our results of operations. Increased interest rates could increase our borrowing costs.
Integration of an acquired company may also require significant management resources that otherwise would be available for ongoing development of our business. Moreover, we may not realize the anticipated benefits of any acquisition or strategic alliance and such transactions may not generate anticipated financial results.
Integration of an acquired company or transitioning a divested business or operations may also require significant management resources that otherwise would be available for developing our ongoing business. Moreover, we may not realize the anticipated benefits of any acquisition, divestiture or strategic alliance and such transactions may not generate anticipated financial results.
For example, we previously reported a material weakness in our internal control over financial reporting, which we fully remediated in fiscal 2021, related to ineffective information technology general controls ("ITGCs") related to user access over certain information technology ("IT") systems. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 19 Table of Contents
For example, we previously reported a material weakness in our internal control over financial reporting, which we fully remediated in fiscal 2021, related to ineffective information technology controls related to user access over certain information technology systems. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Extreme weather and natural disasters within or outside the United States, such as drought, wildfires, storms, changes in ocean currents and flooding, could make it more difficult and costly for us to manufacture and deliver our products to our customers, obtain raw materials from our suppliers, or perform other critical corporate functions.
Extreme weather and natural disasters that occur around the globe, such as drought, wildfires, storms, changes in ocean currents and flooding, could make it more difficult and costly for us to manufacture and deliver our products to our customers, obtain raw materials from our suppliers, or perform other critical corporate functions.
The ongoing COVID-19 pandemic has had, and could continue to have, negative impacts on our business, including causing significant volatility in the commodity and currency markets, changes in consumer demand, behavior or preference, disruptions in our supply chain and manufacturing capacity, limitations on our employees' ability to work and changes in the economic or political conditions in markets we serve which could constrain or halt shipments to customers.
Pandemics, such as the recent coronavirus pandemic, have had, and could continue to have, negative impacts on our business, including by causing significant volatility in the commodity and currency markets, changes in consumer demand, behavior or preference, disruptions in our supply chain and manufacturing capacity, limitations on our employees’ ability to work and changes in the economic or political conditions in markets we serve, which could constrain or halt shipments to customers.
If our information 18 Table of Contents technology systems are breached, damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, or cyber-based attacks, and if our disaster recovery plans do not effectively mitigate the risks on a timely basis, we may encounter significant disruptions that could interrupt our ability to manage our operations, cause loss of valuable data and actual or threatened legal actions and cause us to suffer damage to our reputation.
If our information technology systems are breached, damaged, or cease to function properly due to any number of causes, such as catastrophic events, power outages, security incidents, or cyber-based attacks, and if our cyber security response plans and disaster recovery and our cyber incident response plans do not effectively mitigate the risks on a timely basis, we may encounter significant disruptions that could interrupt our ability to manage our operations, cause loss of valuable data, and damage our reputation.
We have $1.3 billion of total net intangible assets as of December 31, 2022, consisting of $900 million of goodwill and $401 million of other net intangible assets, which constitute 12 percent and 5 percent, respectively, of our total assets as of such date.
We have $1.3 billion of total net intangible assets as of December 31, 2023, consisting of $918 million of goodwill and $385 million of other net intangible assets, which constitute 12 percent and 5 percent, respectively, of our total assets as of such date.
For instance, changes in prevailing health or dietary preferences causing consumers to avoid food products containing sweetener products, including high fructose corn syrup, in favor of foods that are perceived as being healthier, could materially reduce our sales and profitability.
For instance, changes in prevailing health or dietary preferences causing consumers to avoid food products that contain sweetener products, including high fructose corn syrup, in favor of foods that are perceived as being healthier, have negatively affected our sales and profitability.
If our operating cash flow is insufficient to fund our capital expenditures, we may either reduce our capital expenditures or utilize borrowings under our revolving credit facility, which also provides liquidity support for our commercial paper program.
We expect to fund our capital expenditures from operating cash flow to the extent we are able to do so. If our operating cash flow is insufficient to fund our capital expenditures, we may either reduce our capital expenditures or utilize borrowings under our revolving credit facility, which also provides liquidity support for our commercial paper program.
If our customers in any of these industries were to substantially decrease their purchases, our business might be materially adversely affected. The coronavirus 19 disease ("COVID 19") pandemic could have a material adverse effect on our business.
If our customers in any of these industries were to substantially decrease their purchases, our business might be materially adversely affected. Pandemics could have a material adverse effect on our business.
Our future profitability and growth depend on our ability to contain operating costs and per unit product costs and to maintain and implement effective cost control programs, while also maintaining competitive pricing and superior quality products, customer service and support.
An inability to contain costs and working capital could adversely affect our future profitability, cash flows, and growth. Our future profitability and growth depend on our ability to contain operating costs and per unit product costs and to maintain and implement effective cost control programs, while also maintaining competitive pricing and superior quality products, customer service and support.
Risks Related to Our Information Technology Systems Our information technology systems, processes and sites may suffer interruptions, security breaches, or failures which may affect our ability to conduct our business.
Risks Related to Our Information Technology Systems Our information technology systems, processes and sites may suffer interruptions, security incidents, or failures which may affect our ability to conduct our business and cause significant damage to our reputation.
Risks Related to Our Regulatory Compliance Government policies and regulations could adversely affect our operating results. Our operating results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, and other activities of the U.S. and foreign governments, agencies and similar organizations.
Our operating results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, and other activities of the U.S. and foreign governments, agencies and similar organizations.
The payment of dividends, as well as the amount of any dividends, is solely at the discretion of our Board of Directors. Future dividend payments, if any, also will be subject to our financial results and the availability of statutory surplus funds to pay dividends. These factors could result in a change to our current policy of paying dividends.
Our payment of dividends, as well as the amount of any dividends, is solely at the discretion of our Board of Directors. Future dividend payments, if any, also will be subject to our financial results and the availability of statutory surplus funds to pay dividends.
Of our 2022 net sales, approximately 54 percent were generated by sales to the food industry, 11 percent by sales to the animal nutrition industry, 8 percent by sales to the beverage industry, and 8 percent by sales to the brewing industry.
Of our 2023 net sales, approximately 54 percent were generated by sales to the food industry, approximately 10 percent by sales to the animal nutrition industry, approximately 9 percent by sales to the beverage industry, and approximately 7 percent by sales to the brewing industry.
In addition, negative publicity caused by product liability and food safety matters may damage our reputation. The occurrence of any of the matters described above could adversely affect our revenues and operating results. Global climate change and legal, regulatory, or market measures to address climate change, may negatively affect our business, operations and financial results.
The occurrence of any of the matters described above could adversely affect our revenues and operating results. Global climate change and legal, regulatory, or market measures to address climate change, may negatively affect our business, operations and financial results.
Increasing concern among consumers, public health professionals and government agencies about the potential health concerns associated with obesity and inactive lifestyles (reflected, for instance, in taxes on certain beverages designed to combat obesity, which have been imposed recently in North America) represent a significant cost to some of our customers, including those engaged in the food and soft drink industries, and could materially affect demand for our products.
Increasing concern among consumers, public health professionals and government agencies about the potential health concerns associated with obesity and inactive lifestyles represent a significant cost to some of our customers, including those engaged in the food and soft drink industries, and continue to materially affect demand for our products.
The future occurrence of a potential indicator of impairment, such as a significant adverse change in the business climate that would require a change in our assumptions or strategic decisions made in response to economic or competitive conditions, could require us to perform an assessment prior to the next required assessment date of July 1, 2023.
The future occurrence of a potential indicator of impairment, such as a significant adverse change in the business climate that would require a change in our assumptions or strategic decisions made in response to economic or competitive conditions, could require us to perform an assessment prior to the next required assessment date of July 1, 2024. 18 Table of Con tents Risks Related to Our Regulatory Compliance Government policies and regulations could adversely affect our operating results.
Breaches of our security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us, our employees, our customers or other third parties could expose us, our employees, our customers or other affected third parties to a risk of loss or misuse of this information, result in regulatory enforcement, litigation and potential liability for us, damage our brand and reputation or otherwise harm our business.
Breaches of our security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us, our employees, our customers or other third parties could expose us, our employees, our customers or other affected third parties to a risk of loss or misuse of this information.
Any failure by us to maintain effective control over financial reporting could result in loss of investor confidence and adversely impact our stock price.
These factors could result in a change to our current policy of paying dividends. 21 Table of Con tents Any failure by us to maintain effective control over financial reporting could result in loss of investor confidence and adversely impact our stock price.
There has been and continues to be significant political uncertainty in some countries in which we operate. Economic changes, terrorist activity and political unrest may result in business interruption or decreased demand for our products. Country capital controls, such as those in Pakistan, may prevent the repatriation of dividends from owned entities in the country.
There has been and continues to be significant political instability in some countries in which we operate. Economic changes, terrorist activity and political unrest may result in business interruption or decreased demand for our products.
Furthermore, co-products such as corn oil and gluten meal compete with products of the corn dry milling industry and with soybean oil, soybean meal and other products, the price of some of which may be affected by government programs such as tariffs or quotas. 13 Table of Contents Due to market volatility, we may be unable to pass potential increases in the cost of corn and other raw materials on to customers through product price increases, to purchase quantities of corn and other raw materials at prices sufficient to sustain or increase our profitability, or to supply product quantities and meet shipment delivery requirements that our customers demand.
Due to market volatility, we may be unable to pass potential increases in the cost of corn and other raw materials on to customers through product price increases, to purchase quantities of corn and other raw materials at prices sufficient to 14 Table of Con tents sustain or increase our profitability, or to supply product quantities and meet shipment delivery requirements that our customers demand.
Volatile worldwide economic conditions and market instability may make it difficult for us, our customers and our suppliers to accurately forecast future product demand trends, which could cause us to produce products in excess of demand and increase our inventory carrying costs.
Volatile worldwide economic conditions and market instability may make it difficult for us, our customers and our suppliers to accurately forecast future product demand trends, which could cause us to produce products in excess of demand, increase our inventory carrying costs, and incur additional charges for aged, obsolete or spoiled inventory. 13 Table of Con tents Alternatively, this forecasting difficulty may cause a shortage of products that could affect our ability to satisfy the demand for our products.
In addition, we are subject to risks related to such matters as product safety and quality and customer product liability claims. The liabilities that could result from these risks may not always be covered by, or could exceed the limits of, our insurance coverage related to product liability and food safety matters.
The liabilities that could result from these risks may not always be covered by, or could exceed the limits of, our insurance coverage related to product liability and the other applicable forms of insurance that we carry. In addition, negative publicity caused by these types of risks may damage our reputation.
These demands may cause us to incur additional costs or make other changes to other operations to respond to such demands, which could adversely affect our financial results. 15 Table of Contents We may not successfully identify and complete acquisitions or strategic alliances on favorable terms or achieve anticipated synergies relating to any acquisitions or alliances, and such transactions could result in unforeseen operating difficulties and expenditures and require significant management resources.
We may not successfully identify and complete acquisitions, divestitures, or strategic alliances on favorable terms or achieve anticipated synergies relating to any acquisitions or alliances, and such transactions could result in unforeseen operating difficulties and expenditures and require significant management resources.
We fund any unrealized losses or receive cash for any unrealized gains on futures contracts on a daily basis. While the corn futures contracts or hedging positions are intended to minimize the effect of volatility of corn costs on operating profits, the hedging activity can result in losses, some of which may be material.
While the corn and soy futures contracts or hedging positions are intended to minimize the effect of volatility of corn costs on operating profits, the hedging activity can result in losses, some of which may be material. In addition, our hedging activities may not be fully successful in limiting the effect of volatility in the cost of corn.
Although our operations in Russia and Ukraine accounted for less than one half of one percent of our net sales in fiscal year 2022, the region is a source of raw material and energy supply for both us and certain companies whose products we distribute.
Our operations in Russia and Ukraine accounted for less than one half of one percent of our net sales in 2023, but these locations are in regions that provide sources of raw material and energy supplies for both us and certain companies whose products we distribute.
These economic developments could have a number of other effects on our business, including reduced consumer demand for products, pressure to extend our customers’ payment terms, insolvency of our customers resulting in increased 12 Table of Contents provisions for credit losses, decreased customer demand, including order delays or cancellations and counterparty failures negatively impacting our operations.
These economic developments could negatively affect our operations through reduced consumer demand for our products, pressure to extend our customers’ payment terms, insolvency of our customers and increased provisions for credit losses, product order delays or cancellations, less attractive supplier finance terms and conditions, and counterparty failures.
Our business could be adversely affected by fluctuations in our energy costs, which represented approximately 7 percent of our finished product costs in 2022. We use energy primarily to create steam required for our production processes and to dry products. We consume natural gas, electricity, coal, fuel oil, wood and other biomass sources to generate energy.
Our business in the past has been adversely affected by fluctuations in our energy costs, which represented approximately 8 percent of our finished product costs in 2023; and could be negatively affected by such fluctuations in future periods. We use energy primarily to create steam required for our production processes and to dry products.
Future acquisitions could also require us to issue equity securities, incur debt, assume contingent liabilities, or amortize expenses related to intangible assets, any of which could harm our business. We operate a multinational business subject to the economic, political and other risks inherent in conducting operations in foreign countries and with foreign currencies.
Future acquisitions or divestitures could also require us to issue equity securities, incur debt, assume contingent liabilities, impair assets, or amortize expenses related to intangible assets, any of which could harm our business.
Our future growth could be negatively impacted if we fail to continue introducing innovative new products and services. A significant portion of our growth depends on innovation in products, processes and services. Our R&D efforts may not result in new products and services at a rate or of a quality sufficient to gain market acceptance.
Our future growth could be negatively impacted if we fail to continue introducing innovative new products and services or if competitors or customers independently identify or develop new solutions that could compete with our products and services. A significant portion of our growth depends on innovation in products, processes and services.
Natural disasters, war, acts and threats of terrorism, pandemics and other significant events could negatively impact our business. The economies of any countries in which we sell or manufacture products or purchase raw materials could be affected by natural disasters.
The economies of any countries in which we sell or manufacture products or purchase raw materials could be affected by natural disasters. Such natural disasters could include, among others, earthquakes, floods, or severe weather conditions; war, acts of war or terrorism.
Alternatively, this forecasting difficulty may cause a shortage of products that could affect our ability to satisfy the demand for our products. Our reliance on certain industries for a significant portion of our sales could have a material adverse effect on our business.
Our reliance on certain industries for a significant portion of our sales could have a material adverse effect on our business.
Additional risks that are currently unknown to us or that we currently view as immaterial may also impair our business or adversely affect our financial condition or results of operations.
Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations, financial condition and cash flows.
We rely in certain limited capacities on third-party data management providers and other vendors whose possible security problems and security vulnerabilities may have similar effects on us. Risks Related to Investment in Our Common Stock Volatility in the stock market, fluctuations in quarterly operating results and other factors could adversely affect the market price of our common stock.
Risks Related to Investment in Our Common Stock Volatility in the stock market, fluctuations in quarterly operating results and other factors could adversely affect the market price of our common stock.
The impacts of COVID-19 adversely affected our results of operations in periods since the first quarter of 2020. The recognition of impairment charges on goodwill or long-lived assets could adversely impact our future financial position and results of operations.
Any such event could result in disruptions to operations, asset write-offs, decreased sales and a negative impact on our cash position. The recognition of impairment charges on goodwill or long-lived assets could adversely impact our future financial position and results of operations.
Our business may be adversely affected by the effects of the ongoing conflict between Russia and Ukraine.
Our business may be adversely affected by new geopolitical conflicts, including impacts from conflicts that affect shipping through the Suez Canal, as well as the ongoing conflict between Russia and Ukraine.
We may not have access to the funds required for future growth and expansion. We may not have access to additional funds we need to grow and expand our operations. We expect to fund our capital expenditures from operating cash flow to the extent we are able to do so.
This law will adversely impact our provision for income taxes. Risks Related to Our Financing Activities We may not have access to the funds required for future growth and expansion. We may not have access to additional funds we need to grow and expand our operations.
Even if we identify appropriate acquisition or alliance candidates, we may be unable to complete such acquisitions or alliances on favorable terms, or at all. In addition, the process of integrating an acquired business, technology, service, or product into our existing business and operations may result in unforeseen operating difficulties and expenditures.
In addition, the process of integrating an acquired business, technology, service, or product into our existing business and operations, or of divesting certain operations or businesses, may result in unforeseen operating difficulties and expenditures, including with respect to the retention of strategic talent, systems integration, and internal control effectiveness.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. Risks Related to Our Business and Our Industry Our business may be adversely affected by impacts on the availability and prices of raw materials and energy supplies, volatility in foreign exchange and interest rates, and other effects of the conflict between Russia and Ukraine.
Risks Related to Our Business and Our Industry Geopolitical conflicts and actions arising from them may have an adverse effect on the availability and prices of raw materials and energy supplies, cause supply chain disruptions, or contribute to volatility in foreign exchange and interest rates.
We regularly review potential acquisitions of complementary businesses, technologies, services, or products, as well as potential strategic alliances. We may be unable to find suitable acquisition candidates or appropriate partners with which to form partnerships or strategic alliances.
We may be unable to find suitable acquisition candidates, divestiture investors, or appropriate partners with which to form partnerships, sell operations or assets, or form strategic alliances. Even if we identify appropriate acquisition, divestiture or alliance candidates, we may be unable to complete such acquisitions, divestitures or alliances on favorable terms, on time, on budget, or at all.
At expiration, we settle the derivative contracts at a net amount equal to the difference between the then-current price of the commodity and the derivative contract price. The fluctuations in the fair value of these hedging instruments may adversely affect our cash flow.
At expiration, we settle the derivative contracts at a net amount equal to the change in the price of the commodity from the date we entered the derivative contract, with the intention of offsetting the change in commodity prices from the time we entered the firm-priced supply contracts.
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ITEM 1A. RISK FACTORS Our business and assets are subject to varying degrees of risk and uncertainty. The following are factors that we believe could cause our actual results to differ materially from expected and historical results.
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ITEM 1A. RISK FACTORS There are many factors that could adversely affect our business, results of operations and cash flows, some of which are beyond our control.
Removed
In addition, forward-looking statements within the meaning of the federal securities laws that are contained in this annual report on Form 10-K or in our other SEC filings or public statements may be subject to the risks described below as well as other risks and uncertainties. See the cautionary notice regarding forward-looking statements in Item 7.
Added
The following is a description of some important factors that may cause our business, results of operations, financial condition and cash flows in future periods to differ materially from those currently expected or desired.
Removed
In addition, our hedging activities may not be fully successful in limiting the effect of volatility in the cost of corn. An inability to contain costs could adversely affect our future profitability and growth.
Added
Similarly, the increasing availability, use and acceptance of weight loss medications, including the expanded use of medications designed for weight loss in people without diabetes, may reduce sales of food and beverage products that contain our ingredients since the medications regulate appetite and may reduce the overall amount of food and beverages consumed.
Removed
Furthermore, any failure by us to manage internal succession or to effectively transfer knowledge from departing employees to others in the organization could adversely affect our business and results of operations.
Added
Our R&D efforts may not result in new products and services at a rate or of a quality sufficient to gain market acceptance. Increasing capabilities from generative artificial intelligence may increase the ability of competitors or customers to identify or develop new solutions that could compete with or reduce demand for our products and services.
Removed
Such natural disasters could include, among others, earthquakes, floods, or severe weather conditions; war, acts of war or terrorism; or the outbreak of an epidemic or pandemic such as COVID-19. Any such event could result in disruptions to operations, asset write-offs, decreased sales and overall reduced cash flows.
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Furthermore, co-products such as corn oil and gluten meal compete with products of the corn dry milling industry and with soybean oil, soybean meal and other products, the price of some of which may be affected by government programs such as tariffs or quotas.
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Our profitability may be affected by other factors beyond our control. Our operating income and ability to sustain or increase profitability depend to a large extent upon our ability to price finished products at a level that will cover manufacturing and raw material costs and provide an acceptable profit margin.
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We consume natural gas, electricity, coal, fuel oil, wood and other biomass sources to generate energy.
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Our ability to maintain appropriate price levels is determined by a number of factors largely beyond our control, such as aggregate industry supply and market demand, which may vary from time to time, and the economic conditions of the geographic regions in which we conduct our operations.
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The fluctuations in the fair value of these hedging instruments may adversely affect our cash flow. We fund any 15 Table of Con tents unrealized losses or receive cash for any unrealized gains on futures contracts on a daily basis.
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Pillar One and Pillar Two of the base erosion and profit shifting (“BEPS”) project undertaken by the Organisation for Economic Co-operation and Development (“OECD”) could result in significant tax law changes in jurisdictions in which we do business. An OECD-led coalition of countries is contemplating changes to long-standing international tax norms that determine each country’s right to tax cross-border transactions.
Added
In addition, we are subject to risks related to such matters as product safety and quality issues, product recalls, and customer claims, including product liability claims.
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These contemplated changes, if adopted by countries in which we do business, could increase tax uncertainty and the risk of double taxation, thereby adversely affecting our provision for income taxes. Risks Related to Our Financing Activities Increased interest rates could increase our borrowing costs.
Added
These demands may cause us to incur additional costs or make other changes to other operations to respond to such demands, which could adversely affect our financial results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur four reportable business segments include the following manufacturing facilities as of January 31, 2023: North America Cardinal, Ontario, Canada Owned London, Ontario, Canada Owned Vanscoy, Saskatchewan, Canada Owned San Juan del Rio, Queretaro, Mexico Owned Guadalajara, Jalisco, Mexico Owned Mexico City, CDMX, Mexico Owned Oxnard, California, U.S. Leased Idaho Falls, Idaho, U.S. Owned Bedford Park, Illinois, U.S.
Biggest changeAs of February 21, 2024, after the February 1, 2024 divestiture of our South Korea operations, our four reportable business segments include the following 45 manufacturing facilities: North America Cardinal, Ontario, Canada Owned London, Ontario, Canada Owned Vanscoy, Saskatchewan, Canada Owned San Juan del Rio, Queretaro, Mexico Owned Guadalajara, Jalisco, Mexico Owned Mexico City, CDMX, Mexico Owned Oxnard, California, U.S.
We have electricity co-generation facilities at our manufacturing facilities in London, Ontario, Canada; Cardinal, Ontario, Canada; Bedford Park, Illinois; Winston-Salem, North Carolina; San Juan del Rio, Queretaro and Mexico City, CDMX, Mexico; Cali, Colombia; Cornwala, Jaranwala, Pakistan; and Balsa Nova and Mogi-Guacu, Brazil. These facilities provide electricity at a lower cost than is available from third parties.
We have electricity or biomass co-generation facilities at our manufacturing facilities in London, Ontario, Canada; Cardinal, Ontario, Canada; Bedford Park, Illinois; Winston-Salem, North Carolina; San Juan del Rio, Queretaro and Mexico City, CDMX, Mexico; Cali, Colombia; Cornwala, Jaranwala, Pakistan; and Balsa Nova and Mogi-Guacu, Brazil. These facilities provide electricity at a lower cost than is available from third parties.
We generally own and operate the co-generation facilities, except for the facilities at our Mexico City and Brazil locations, which are owned by and operated pursuant to co-generation agreements with third parties. 20 Table of Contents
We generally own and operate the co-generation facilities, except for the facilities at our Mexico City and Brazil locations, which are owned by and operated pursuant to co-generation agreements with third parties. 24 Table of Con tents
ITEM 2. PROPERTIES We own or lease, directly and through our consolidated subsidiaries, 47 manufacturing facilities. In addition, we lease our corporate headquarters in Westchester, Illinois; our R&D facility in Bridgewater, New Jersey; and shared service centers in Tulsa, Oklahoma; Guadalajara, Mexico; and Kuala Lumpur, Malaysia.
ITEM 2. PROPERTIES As of December 31, 2023, we owned or leased, directly and through our consolidated subsidiaries, 47 manufacturing facilities. In addition, we lease our corporate headquarters in Westchester, Illinois; our R&D facility in Bridgewater, New Jersey; and shared service centers in Tulsa, Oklahoma; Guadalajara, Mexico; and Kuala Lumpur, Malaysia.
Owned South America Alcantara, Brazil Owned Balsa Nova, Brazil Owned Cabo, Brazil Owned Mogi-Guacu, Brazil Owned Barranquilla, Colombia Owned Cali, Colombia Owned Lima, Peru Owned Asia-Pacific Ganzhou, China Owned Shandong Province, China Owned Shanghai, China Owned Ahmedabad, Gujarat, India Owned Malegaon, Nashik, Maharashtra, India Owned Enstek, Malaysia Owned Icheon, South Korea Owned Incheon City, South Korea Owned Ban Kao Dien, Thailand Owned Kalasin, Thailand Owned Sikhiu, Thailand Owned Banglen, Thailand Leased EMEA Hamburg, Germany Owned Wesenberg, Germany Owned Cornwala, Jaranwala, Pakistan Owned Mehran, Jamshoro, Pakistan Owned Rakh Canal, Faisalabad, Pakistan Owned Goole, United Kingdom Partially leased We believe our manufacturing facilities are sufficient to meet our current production commitments.
Owned South America Alcantara, Brazil Owned Balsa Nova, Brazil Owned Cabo, Brazil Owned Mogi-Guacu, Brazil Owned Barranquilla, Colombia Owned Cali, Colombia Owned Lima, Peru Owned Asia-Pacific Ganzhou, China Owned Shandong Province, China Owned Shanghai, China Owned Ahmedabad, Gujarat, India Owned Malegaon, Nashik, Maharashtra, India Owned Enstek, Malaysia Owned Ban Kao Dien, Thailand Owned Kalasin, Thailand Owned Sikhiu, Thailand Owned Banglen, Thailand Leased EMEA Hamburg, Germany Owned Wesenberg, Germany Owned Cornwala, Jaranwala, Pakistan Owned Mehran, Jamshoro, Pakistan Owned Rakh Canal, Faisalabad, Pakistan Owned Goole, United Kingdom Partially leased We believe our manufacturing facilities are sufficient to meet our current production commitments, and we conduct preventive maintenance and de-bottlenecking programs designed to improve grind capacity and facility reliability.
Owned Mapleton, Illinois, U.S. Owned Indianapolis, Indiana, U.S. Owned Cedar Rapids, Iowa, U.S. Owned Fort Fairfield, Maine, U.S. Owned Belcamp, Maryland, U.S. Owned North Kansas City, Missouri, U.S. Owned South Sioux City, Nebraska, U.S. Owned Winston-Salem, North Carolina, U.S. Owned Salem, Oregon, U.S. Owned Charleston, South Carolina, U.S. Owned Richland, Washington, U.S. Owned Moses Lake, Washington, U.S.
Leased Idaho Falls, Idaho, U.S. Owned Bedford Park, Illinois, U.S. Owned Mapleton, Illinois, U.S. Owned Indianapolis, Indiana, U.S. Owned Cedar Rapids, Iowa, U.S. Owned Fort Fairfield, Maine, U.S. Owned Belcamp, Maryland, U.S. Owned North Kansas City, Missouri, U.S. Owned South Sioux City, Nebraska, U.S. Owned Winston-Salem, North Carolina, U.S. Owned Salem, Oregon, U.S. Owned Charleston, South Carolina, U.S.
We conduct preventive maintenance and de-bottlenecking programs designed to improve grind capacity and facility reliability. Furthermore, for the foreseeable future, we intend to continue capital investments to support the updating, modification, improvement and efficient operation of our facilities for the foreseeable future.
Furthermore, we intend to continue capital investments to support updates, modifications, improvements and efficient operations of our facilities for the foreseeable future.
Added
Owned Richland, Washington, U.S. Owned Moses Lake, Washington, U.S. Owned Plover, Wisconsin, U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn 2015 and 2016, Ingredion self-reported certain monitoring and recordkeeping issues relating to environmental regulatory matters involving its Indianapolis, Indiana manufacturing facility. In September 2017, following inspections and the provision by Ingredion of requested information to the U.S.
Biggest changeIn 2015 and 2016, we self-reported certain monitoring and recordkeeping issues relating to environmental regulatory matters involving our Indianapolis, Indiana manufacturing facility. In September 2017, following inspections and our provision of requested information to the U.S. Environmental Protection Agency (the “EPA”), the EPA issued to us a Notice of Violation, which included additional alleged violations beyond those we self-reported.
On February 8, 2023, the Illinois EPA issued a Notice of Violation with respect to the matter addressed in our report. Violations of the Illinois environmental statute could result in the imposition of civil or criminal monetary penalties. We are engaged in discussions with the Illinois EPA regarding this matter.
On February 8, 2023, the Illinois EPA issued to us a Notice of Violation with respect to the matter addressed in our report. Violations of the Illinois environmental statute could result in the imposition of civil or criminal monetary penalties. We are engaged in discussions with the Illinois EPA regarding this matter.
ITEM 3. LEGAL PROCEEDINGS In September 2022, following certain air emissions testing Ingredion performed at our Bedford Park, Illinois manufacturing facility, we reported to the Illinois Environmental Protection Agency (the "Illinois EPA") that certain emissions had exceeded applicable limits under an air emissions permit.
ITEM 3. LEGAL PROCEEDINGS In September 2022, following certain air emissions testing Ingredion performed at our Bedford Park, Illinois manufacturing facility, we reported to the Illinois Environmental Protection Agency (the “Illinois EPA”) that certain emissions had exceeded applicable limits under an air emissions permit.
We are currently subject to claims and suits arising in the ordinary course of business, including those relating to labor matters, certain environmental proceedings and commercial claims.
In addition to the foregoing matters, we are currently subject to claims and suits arising in the ordinary course of business, including those relating to labor matters, certain environmental proceedings and commercial claims.
There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 Table of Contents PART II
There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 Table of Con tents PART II
Removed
Environmental Protection Agency (the “EPA"), the EPA issued Ingredion a Notice of Violation, which included additional alleged violations beyond those self-reported by Ingredion. These additional alleged violations primarily relate to the results of stack testing at the facility.
Added
These additional alleged violations primarily related to the results of stack testing at the facility. The EPA referred the overall matter to the U.S. Department of Justice, Environment and Natural Resources Division (the “DOJ”). In November 2023, in the final resolution of this matter, we entered into a consent decree to settle claims that we violated the Clean Air Act.
Removed
The allegations in the Notice of Violation, whether from the self-reported information, the inspections or the additional requested information, are not material to us. The EPA has referred the overall matter to the U.S. Department of Justice, Environment and Natural Resources Division (the "DOJ"). The DOJ and Ingredion are engaged in discussions with respect to a resolution of this matter.
Added
The consent decree required us to pay a civil penalty of $1.1 million, contribute $0.6 million to the State of Indiana to support Brownfields redevelopment in and around Marion County, Indiana, and undertake projects at the Indianapolis facility to reduce and offset unpermitted emissions of particulate matter and to comply with lower future particulate matter limits.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities: The following provides information about our stock repurchase program: (shares in thousands) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the 2022 Stock Repurchase Program October 1 – October 31, 2022 — — — 6,000 November 1 – November 30, 2022 — — — 6,000 December 1 – December 31, 2022 — — — 6,000 Total — — — On September 26, 2022, the Board of Directors approved a new stock repurchase program authorizing us to purchase up to 6.0 million shares of our outstanding common stock until December 31, 2025.
Biggest changeIssuer Purchases of Equity Securities: The following provides information about our stock repurchase program during the fourth quarter of 2023: (shares in thousands) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the 2022 Stock Repurchase Program October 1 – October 31, 2023 — — — 5,000 November 1 – November 30, 2023 — — — 5,000 December 1 – December 31, 2023 — — — 5,000 Total — — — On September 26, 2022, the Board of Directors approved a stock repurchase program authorizing us to purchase up to 6.0 million shares of our outstanding common stock until December 31, 2025.
The amount and timing of the dividend payment, if any, is based on a number of factors, including our estimated earnings, financial position and cash flow. The payment of a dividend, as well as the amount of any dividend, is solely at the discretion of our Board of Directors.
The amount and timing of the dividend payment, if any, is based on a number of factors, including our future estimated earnings, financial position and cash flow. The payment of a dividend, as well as the amount of any dividend, is solely at the discretion of our Board of Directors.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Trading: Ingredion’s common stock is listed on the New York Stock Exchange (symbol: INGR). Holders: As of January 31, 2023, there were 3,143 holders of record of our common stock. Dividends: We have a history of paying quarterly dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information: Our common stock is listed on the New York Stock Exchange under the symbol “INGR.” Holders: At February 15, 2024, there were 2,979 holders of record of our common stock. Dividends: We have a history of paying quarterly dividends.
At December 31, 2022, we had 6.0 million shares available for repurchase under the stock repurchase program. ITEM 6. [RESERVED] Not applicable. 22 Table of Contents
At December 31, 2023, we had 5.0 million shares available for repurchase under the stock repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

45 edited+16 added−94 removed4 unchanged
Biggest changeNet income attributable to Ingredion for 2022 was $492 million, or $7.34 diluted earnings per share, which represented an increase from $117 million, or $1.73 diluted earnings per share, for 2021. The increases in operating income, net income and diluted earnings per share were primarily due to stronger price mix that more than offset higher corn and input costs.
Biggest changeOur operating income of $957 million for 2023 increased by 26 percent from operating income of $762 million for 2022. Net income attributable to Ingredion for 2023 was $643 million, or $9.60 diluted earnings per share, which represented an increase of 31 percent from $492 million, or $7.34 diluted earnings per share, for 2022.
In addition, our share of results in joint ventures are classified in our Consolidated Statements of Income in Other operating expense (income) and comparability between years and between financial statement line items is affected by the timing of and consideration provided to the investments.
In addition, our share of results in joint ventures are classified in our Consolidated Statements of Income in Other operating (income) expense, and comparability between years and between financial statement line items is affected by the timing of and consideration provided to the investments.
We believe this approach provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate, bringing added value to our customers. Our ingredients are used by customers in the food, beverage, brewing and animal feed industries, among others.
This approach provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate, bringing added value to our customers. Our ingredients are used by customers in the food, beverage, brewing and animal feed industries, among others.
Loans under the facility accrue interest at a per annum rate equal, at our option, to either a specified Secured Overnight Financing Rate ("SOFR") plus an applicable margin, or a base rate (generally determined according to the highest of the prime rate, the federal funds rate or the specified SOFR plus 1.00 percent) plus an applicable margin.
Loans under the facility accrue interest at a per annum rate equal, at our option, to either a specified Secured Overnight Financing Rate (“SOFR”) plus an applicable margin, or a base rate (generally determined according to the highest of the prime rate, the federal funds rate or the specified SOFR plus 1.00 percent) plus an applicable margin.
We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program, will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other operating, investing and financing activities for at least the next twelve months and for the foreseeable future thereafter.
We currently expect that our available cash balances, future cash flow from operations, proceeds from divestitures, access to debt markets and borrowing capacity under our revolving credit facility and commercial paper program will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other operating, investing and financing activities for at least the next twelve months and for the foreseeable future thereafter.
For the Year Ended December 31, 2021 With Comparatives for the Year Ended December 31, 2020 A discussion of the year-over-year comparison of results for 2021 and 2020 is not included in this report and can be found in Part II, Item 7.
For the Year Ended December 31, 2022 With Comparatives for the Year Ended December 31, 2021 A discussion of the year-over-year comparison of results for 2022 and 2021 is not included in this report and can be found in Part II, Item 7.
Our future cash flow needs will depend on many factors, including our rate of revenue growth, cost of raw materials, changing working capital requirements, the timing and extent of our expansion into new markets, the timing of introductions of new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions.
Our future cash flow needs will depend on many factors, including our rate of revenue growth, cost of raw materials, changing working capital requirements, the timing and extent of our expansion into new markets, the timing of introductions of new products, potential or agreed acquisitions of or investments in complementary businesses and technologies, continuing market acceptance of our new products, and general economic and market conditions.
As the parent company, we guarantee certain obligations of our consolidated subsidiaries. As of December 31, 2022, our guarantees aggregated $63 million. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.
As the parent company, we guarantee certain obligations of our consolidated subsidiaries. As of December 31, 2023, our guarantees aggregated $49 million. We believe that those consolidated subsidiaries will be able to meet their financial obligations as they become due.
We are subject to compliance, as of the end of each quarter, with a maximum leverage ratio of 3.5 to 1.0 and a minimum ratio of consolidated EBITDA to consolidated net interest expense of 3.5 to 1.0, with each financial covenant calculated for the most recently completed four-quarter period.
We are subject to compliance, as of the end of each quarter, with a maximum leverage ratio of 3.5 to 1.0 and a minimum ratio of consolidated EBITDA (as defined for purposes of the revolving credit agreement) to consolidated net interest expense of 3.5 to 1.0, with each financial covenant calculated for the most recently completed four-quarter period.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in Ingredion’s annual report on Form 10-K for the fiscal year ended December 31, 2021. Liquidity and Capital Resources As of December 31, 2022, Ingredion had total available liquidity of approximately $1,626 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in Ingredion’s annual report on Form 10-K for the fiscal year ended December 31, 2022. Liquidity and Capital Resources As of December 31, 2023, we had total available liquidity of $1.7 billion.
We have entered into a revolving credit agreement for an unsecured revolving credit facility in an aggregate principal amount of $1 billion outstanding at any time, which will mature on June 30, 2026.
Our revolving credit agreement, which is for an unsecured revolving credit facility in an aggregate principal amount of $1.0 billion outstanding at any time, will mature on June 30, 2026.
We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions. Net Cash Flows Our cash provided by operating activities decreased to $152 million in 2022 from $392 million in 2021, primarily due to changes in working capital.
We may need to raise additional capital or incur indebtedness to fund our needs for less predictable strategic initiatives, such as acquisitions. Net Cash Flows Our cash provided by operating activities increased to $1,057 million in 2023 from $152 million in 2022.
As of December 31, 2022, we had international liquidity of approximately $1,014 million, consisting of $234 million of cash and cash equivalents and $3 million of short-term investments held by our operations outside the U.S., as well as $777 million of unused operating lines of credit in foreign countries where we operate.
As of December 31, 2023, we had international liquidity of $1.0 billion, consisting of $369 million of cash and cash equivalents and $8 million of short-term investments held by our operations outside the U.S., as well as $652 million of unused operating lines of credit in foreign countries where we operate.
Net income attributable to non-controlling interests . Net income attributable to non-controlling interests increased to $10 million in 2022 from $8 million in 2021. Net Income attributable to Ingredion . Net income attributable to Ingredion for 2022 increased to $492 million from $117 million in 2021.
Net income attributable to non-controlling interests decreased to $8 million for 2023 from $10 million for 2022. Net Income attributable to Ingredion . Net income attributable to Ingredion for 2023 increased to $643 million from $492 million for 2022.
The increase was primarily due to higher outstanding debt balances, as well as higher interest rates in 2022 as compared to 2021. Provision for income taxes . Our effective income tax rates for 2022 and 2021 were 24.9 percent and 49.6 percent, respectively.
The increase was primarily due to higher interest rates in 2023 as compared to 2022. Provision for income taxes . Our effective income tax rates for 2023 and 2022 were 22.4 percent and 24.9 percent, respectively.
Management uses these non-GAAP financial measures internally for strategic decision-making, forecasting future results and evaluating current performance. Management believes that the non-GAAP financial measures provide a more consistent comparison of our operating results and trends for the periods presented.
We also have presented below the most comparable financial measures calculated using components determined in accordance with GAAP. Management uses these non-GAAP financial measures internally for strategic decision-making, forecasting future results and evaluating current performance. Management believes that the non-GAAP financial measures provide a more consistent comparison of our operating results and trends for the periods presented.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a major supplier of high-quality food and industrial ingredient solutions to customers around the world. We have 47 manufacturing facilities located in North America, South America, Asia-Pacific and EMEA and we manage and operate our businesses at a regional level.
Overview We are a major supplier of high-quality food and industrial ingredient solutions to customers around the world. As of December 31, 2023, we had 47 manufacturing facilities located in North America, South America, Asia-Pacific and EMEA, and we manage and operate our businesses at a regional level.
As of 25 Table of Contents December 31, 2022, we had $390 million of commercial paper outstanding with a weighted average interest rate of 4.75 percent over a weighted average maturity of 7 days. The amount of commercial paper outstanding under this program in 2023 is expected to fluctuate.
As of December 31, 2023, we had $327 million of 29 Table of Con tents commercial paper outstanding with a weighted average interest rate of 5.50 percent over a weighted average maturity of 11 days. The amount of commercial paper outstanding under this program in 2024 is expected to fluctuate.
As of December 31, 2022, we had total debt outstanding of approximately $2.5 billion, or approximately $1.9 billion excluding the outstanding commercial paper and other short-term borrowings. Of our outstanding debt, $1.7 billion consists of senior notes that do not require principal repayment until 2026 through 2050.
As of December 31, 2023, we had total debt outstanding of $2.2 billion, or $1.7 billion excluding the outstanding commercial paper and other short-term borrowings. Our outstanding debt consists of senior notes where repayment will occur commencing in 2026 through 2050.
As of December 31, 2022, we were in compliance with these financial covenants. On July 27, 2021, we established the commercial paper program under which we may issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1 billion outstanding at any time.
As of December 31, 2023, we were in compliance with these financial covenants. Our commercial paper program allows us to issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1.0 billion outstanding at any time. The notes may be sold from time to time on customary terms in the U.S. commercial paper market.
The weighted average interest rate on our total indebtedness was approximately 3.5 percent for 2022 and approximately 3.0 percent for 2021. The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and to raise funds in the capital markets.
The principal source of our liquidity is our internally generated cash flow, which we supplement as necessary with our ability to borrow under our credit facilities and to raise funds in the capital markets.
However, no assurance can be given that we will continue to meet our financial performance metric targets. See Item 1A. Risk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk for a discussion of factors that could affect our ability to meet those targets.
However, no assurance can be given that we will continue to meet our financial performance metric targets. See Item 1A. Risk Factors and
We acquired the majority of shares of Mannitab on December 1, 2022, fully acquired Amishi on August 1, 2022, and KaTech on April 1, 2021. The results of the acquired businesses are included in our consolidated financial results beginning on the respective acquisition dates, which affects the comparability of results between years.
The results of the acquired businesses are included in our consolidated financial results beginning on the respective acquisition dates, which affects the comparability of results between years.
The metrics Adjusted ROIC and Net Debt to Adjusted EBITDA include certain financial measures (Adjusted operating income, net of tax, and Adjusted EBITDA, respectively) that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). We also have presented below the most comparable financial measures calculated using components determined in accordance with GAAP.
We believe these metrics provide valuable information to help us run our business and are useful to investors. The metrics Adjusted ROIC and Net Debt to Adjusted EBITDA include certain financial measures (Adjusted operating income, net of tax, and Adjusted EBITDA, respectively) that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).
We used $300 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities in 2022, which was unchanged from the $300 million we paid in 2021 for the same purposes. Capital investment commitments for 2023 are anticipated to be approximately $300 million.
Our cash used for investing activities increased to $329 million in 2023 from $320 million in 2022, primarily due to increased capital expenditures in 2023. In 2023, we used $316 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities, compared to $300 million we paid in 2022 for the same purposes.
The commercial paper program, which we entered on July 27, 2021, is backed by $1 billion of borrowing availability under a five-year revolving credit agreement that we entered on June 30, 2021, as described below.
Domestic liquidity of $705 million consisted of $32 million in cash and cash equivalents and $673 million available through our $1.0 billion commercial paper program that had $327 million of outstanding borrowings. The commercial paper program is backed by $1.0 billion of borrowing availability under a five-year revolving credit agreement that we entered on June 30, 2021 as described below.
Other operating expense (income) was $13 million in 2022 compared to $(34) million in 2021. The 2022 expense was primarily attributable to charges resulting from a U.S. based work stoppage. During 2021 we recorded $15 million of income from Brazil indirect tax credits and a net gain of $8 million related to the formation of the Amyris joint venture.
Other operating (income) expense was $8 million of income for 2023 compared to $13 million of expense for 2022. The 2023 income was primarily attributable to income in our Argentina joint venture. The 2022 expense was primarily attributable to charges resulting from a U.S.-based work stoppage. Restructuring/impairment charges.
While we identify the impacts of acquisitions and investments on our results, our discussion below also addresses results of operations excluding those impacts, where appropriate, to provide a more comparable and meaningful analysis. For the Year Ended December 31, 2022 With Comparatives for the Year Ended December 31, 2021 Net sales .
While we identify the impacts of acquisitions and investments on our results, our discussion below also addresses results of operations excluding those impacts, where appropriate, to provide a more comparable and meaningful analysis. Results of Operations We have operations in four reportable business segments: North America, South America, Asia-Pacific and EMEA.
Operating expenses increased 7 percent to $715 million in 2022 compared to $668 million in 2021. The increase in operating expenses during 2022 was primarily attributable to cost impacts of higher inflation. Operating expenses as a percentage of net sales were approximately 9 percent in 2022 and 2021. Other operating expense (income) .
The increase in operating expenses during 2023 was primarily attributable to higher compensation costs and spending to build long-term capabilities. Operating expenses as a percentage of net sales was 10 percent in 2023 and 9 percent in 2022. Other operating (income) expense .
The increase was primarily driven by the favorable price mix that was partially offset by foreign exchange impacts. EMEA Net sales . EMEA’s net sales increased by 11 percent to $781 million in 2022 from $703 million in 2021.
EMEA’s net sales increased 5 percent to $821 million for 2023 from $781 million for 2022. The increase was driven by favorable price mix, partially offset by lower volumes and unfavorable foreign exchange impacts. Operating income . EMEA’s operating income increased 42 percent to $156 million for 2023 compared to $110 million for 2022.
The increase was driven by favorable price mix of 14 percent and favorable volumes of 5 percent. These impacts were partially offset by unfavorable foreign exchange impacts of 8 percent. Operating income . Asia-Pacific’s operating income increased 7 percent to $93 million in 2022 from $87 million in 2021.
The decrease was driven by volume and unfavorable foreign exchange impacts, partially offset by price mix. Operating income . Asia-Pacific’s operating income increased 35 percent to $126 million for 2023 from $93 million for 2022. The increase was primarily driven by lower input costs, partially offset by lower volumes. EMEA Net sales .
We do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Key Financial Performance Metrics We use certain key financial performance metrics to monitor our progress towards achieving our long-term strategic business objectives.
It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings. We do not anticipate the need to repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.
Cost of sales increased by 16 percent to $6,452 million in 2022 compared to cost of sales of $5,563 million in 2021. The increase in cost of sales primarily reflected higher net corn costs. Our gross profit margin of 19 percent in 2022 was unchanged from 2021. Operating expenses .
Our gross profit margin increased to 21 percent in 2023 compared to 19 percent in 2022. The increase in gross profit margin was driven by higher net sales in addition to a decrease in cost of sales. Operating expenses . Operating expenses increased 10 percent to $789 million for 2023 compared to $715 million for 2022.
North America’s net sales increased 19 percent to $4,934 million in 2022 from $4,137 million in 2021. The increase was primarily driven by a 19 percent improvement in price mix and a 1 percent increase in volume. These impacts were partially offset by an unfavorable foreign exchange impact of 1 percent. Operating income .
The increase was primarily driven by price mix, partially offset by volume and unfavorable foreign exchange impacts. Operating income . North America’s operating income increased 27 percent to $718 million for 2023 from $565 million for 2022. The increase was driven by favorable price mix, partially offset by lower volumes and higher fixed costs. South America Net sales .
North America’s operating income increased 16 percent to $565 million in 2022 from $487 million in 2021. The increase was driven by favorable price mix. South America Net sales . South America’s net sales increased 6 percent to $1,124 million in 2022 from $1,057 million in 2021.
South America’s net sales decreased 6 percent to $1,062 million for 2023 from $1,124 million for 2022. The decrease was primarily driven by volume and price mix, partially offset by favorable foreign exchange impacts. Operating income . South America’s operating income decreased 16 percent to $142 million for 2023 from $169 million for 2022.
Net sales increased 15 percent to $7,946 million for 2022 compared to $6,894 million for 2021. The increase in net sales was driven by strong price mix. This was partially offset by foreign currency impacts and lower volumes. 23 Table of Contents Cost of sales .
The increase in net sales was driven by price and customer mix, partially offset by lower volumes and unfavorable foreign exchange impacts. Cost of sales . Cost of sales decreased 1 percent to $6.4 billion for 2023 compared to $6.5 billion for 2022. The decrease in cost of sales primarily reflected lower volumes, partially offset by higher input costs.
In 2022, net sales increased over 15 percent to $7.9 billion from $6.9 billion in 2021. The increase in net sales was driven by strong price mix, partly offset by foreign currency impacts and lower volumes. Our operating income of $762 million for 2022 increased from operating income of $310 million in 2021.
The increase in our net sales and operating income was driven by price and customer mix, partially offset by lower volumes and impacts of foreign exchange rates.
We have not provided foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are 26 Table of Contents considered to be permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings.
During 2023, we also repurchased 1.0 million outstanding shares of our common stock in open market transactions at a net cost of $101 million. We have not provided foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested.
We monitor our financial leverage by regularly reviewing our ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization (“Net Debt to Adjusted EBITDA”). We believe these metrics provide valuable information to help us run our business and are useful to investors.
We assess whether we are achieving our profitability and value creation objectives by measuring our 30 Table of Con tents Adjusted Return on Invested Capital (“ROIC”). We monitor our financial leverage by regularly reviewing our ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization (“Net Debt to Adjusted EBITDA”).
During 2022, the average amount of commercial paper outstanding was $522 million with a weighted average interest rate of 1.97 percent over a weighted average maturity of 16 days.
We use and intend to continue using the note proceeds for general corporate purposes. During 2023, the average amount of commercial paper outstanding was $397 million with a weighted average interest rate of 5.30 percent over a weighted average maturity of 11 days.
These metrics relate to our ability to drive profitability, create value for stockholders and monitor our financial leverage. We assess whether we are achieving our profitability and value creation objectives by measuring our Adjusted Return on Invested Capital (“Adjusted ROIC”).
Key Financial Performance Metrics We use certain key financial performance metrics to monitor our progress towards achieving our long-term strategic business objectives. These metrics relate to our ability to drive profitability, create value for stockholders and monitor our financial leverage.
Cash used for working capital increased to $664 million for 2022, primarily due to increases in trade accounts receivable and inventory. Cash used for trade accounts receivable increased because of higher pricing and higher freight charges for products we sold, and cash used for inventory increased due primarily to higher input costs from raw materials during 2022.
Cash provided by working capital increased to $77 million in 2023, as compared to cash used for working capital of $664 million in 2022. This increase in cash provided by working capital was primarily due to decreases in inventory and trade accounts receivable, which was partially offset by decreases in accounts payable and accrued liabilities during 2023.
In addition, the completion of our Cost Smart restructuring program resulted in $4 million of pre-tax restructuring charges in 2022 as compared to $44 million in 2021. Financing costs . Financing costs increased 34 percent to $99 million in 2022 compared to $74 million in 2021.
Restructuring and impairment charges increased to $11 million for 2023 from $4 million for 2022, which primarily reflected an other-than-temporary-impairment to our equity method investments. The 2022 charges were the result of the completion of our Cost Smart restructuring program. Financing costs . Financing costs increased 15 percent to $114 million for 2023 compared to $99 million for 2022.
The increase was driven by favorable price mix of 23 percent and increased volumes of 2 percent, which were partially due to the purchase of KaTech on April 1, 2021. The effect of these factors was partially offset by unfavorable foreign exchange impacts of 14 percent. Operating income .
The increase was primarily driven by favorable price mix, partially offset by lower volumes and foreign exchange impacts.
Our cash used by investing activities decreased to $320 million in 2022 from $335 million in 2021, primarily as a result of less cash used for acquisitions in 2022. In 2022, we had cash provided by financing activities of $103 million, as compared to cash used for financing activities of $373 million in 2021.
Capital investment commitments for 2024 are anticipated to be approximately $340 million. We used $569 million of cash for financing activities in 2023 compared to cash provided by financing activities of $103 million in 2022.
Removed
Effectively managing our manufacturing costs, including costs for corn, other raw materials and utilities, is critical to the success of our business. In addition, our global operations expose us to fluctuations in foreign currency exchange rates.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless otherwise indicated or the context otherwise requires, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “the Company,” “Ingredion,” “we,” “us,” and “our” and similar terms refer to Ingredion Incorporated and its consolidated subsidiaries.
Removed
We use derivative financial instruments, when appropriate, for the purpose of managing the risks and costs associated with fluctuations in certain raw material and energy costs, foreign exchange rates and interest rates.
Added
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See “Forward-Looking Statements” above.
Removed
The capital-intensive nature of our business requires that we generate significant cash flow over time in order to reinvest selectively in our operations and grow organically, as well as to expand through strategic acquisitions and alliances. We have been navigating evolving global conditions that have varying impacts on our customers, suppliers, employees, operations and, ultimately, our profitability and cash flows.
Added
We acquired a 65 percent controlling interest in Mannitab Pharma Specialties Private Limited (“Mannitab”), an Indian manufacturer of spray dried mannitol and fine grade mannitol, on December 1, 2022; 100 percent of Amishi Drugs and Chemicals Private Limited (“Amishi”), an Indian manufacturer of chemically modified starch-based pharmaceutical excipients, on August 1, 2022; and 100 percent of KaTech, a German-headquartered provider of advanced texture and stabilization solutions to the food and beverage industry, on April 1, 2021.
Removed
During 2022, we continued to achieve strong price mix, which included increased prices for our products to manage the effects of increasing corn and freight costs.
Added
Our business performed well and remained resilient throughout fiscal year 2023. Our targeted pricing actions and proactive cost savings initiatives helped overcome inflation and raw material volatility, leading to growth in net sales, operating income, net income and diluted earnings per share in 2023.
Removed
Our ability to respond to changing customer demands, increasing inflation, fluctuating foreign exchange rates, and shifting supply channels was affected by a variety of factors, including the continuing conflict between Russia and Ukraine, the ongoing global COVID-19 pandemic with lockdowns in China and weather-related effects on crop yields in Europe.
Added
The increase in net income was driven by the above factors in addition to a more favorable effective tax rate primarily due to recent action by the Internal Revenue Service increasing our ability to claim certain foreign tax credits against U.S. taxes. For 2023, net sales increased 3 percent to $8.2 billion from $7.9 billion for 2022.
Removed
Our results for 2022 compared to 2021 were also impacted by a $340 million impairment charge related to the contribution of Ingredion Argentina's net assets to the Argentina joint venture recorded during 2021. Results of Operations We have significant operations in four reporting segments: North America, South America, Asia-Pacific and EMEA.
Added
The increases in net sales and operating income were primarily due to favorable price mix, partially offset by volume declines and foreign exchange impacts.
Removed
Restructuring/impairment charges and related adjustments. Restructuring and impairment charges decreased to $4 million in 2022 from $387 million in 2021, which primarily reflected an impairment charge of $340 million we recorded in 2021 for net assets from our Argentina business we contributed to the Argentina joint venture.
Added
The increase in net income was driven by these factors in addition to a more favorable effective tax rate. 27 Table of Con tents For the Year Ended December 31, 2023 With Comparatives for the Year Ended December 31, 2022 Net sales . Net sales increased 3 percent to $8.2 billion for 2023 compared to $7.9 billion for 2022.
Removed
The decrease was primarily attributable to the $340 million impairment charge related to net assets contributed to the Argentina joint venture during 2021, which did not have a corresponding income tax benefit. The effect of this charge was partially offset by a 2021 reversal of an accrual from unremitted earnings of a foreign subsidiary.
Added
The decrease in the effective tax rate was primarily driven by the value of the Mexican peso against the U.S. dollar, IRS Notice 2023-55, which increased our ability to claim certain foreign tax credits against U.S. taxes, a favorable country earnings mix primarily due to Brazil tax law developments, and a related increase in our foreign-derived intangible income deduction.
Removed
The increase in net income was largely attributable to the $340 million impairment charge for the Argentina assets contributed to the Argentina joint venture in the prior year. The increase was also impacted by strong price mix that more than offset higher corn and input costs. North America Net sales .
Added
The effects of these factors were partially offset by the impact of a change in Brazilian law that became effective in the fourth quarter of 2022 related to non-taxable Brazilian ICMS incentives granted during fiscal years 2018 to 2022. Net income attributable to non-controlling interests .
Removed
Excluding the effects of revenues from operations we contributed to the Argentina joint venture, net sales were 23 percent higher than in 2021. The increase reflected a 22 percent improvement in price mix and a 2 percent increase in volume. The effect of these factors was partially offset by an unfavorable foreign exchange impact of 1 percent. Operating income .
Added
The increase in net income was primarily due to price and customer mix and a more favorable effective tax rate, which was partially offset by lower volumes. North America Net sales . North America’s net sales increased 5 percent to $5,188 million for 2023 from $4,934 million for 2022.
Removed
South America’s operating income increased 22 percent to $169 million in 2022 from $138 million in 2021. The increase was driven by favorable price mix, partially offset by higher corn and input costs. 24 Table of Contents Asia-Pacific Net sales . Asia-Pacific’s net sales increased 11 percent to $1,107 million in 2022 from $997 million in 2021.
Added
The decrease was driven by lower volumes and higher energy costs. On December 13, 2023, the new Argentine government allowed the Argentine peso to devalue from the exchange rate of approximately 366 pesos to one U.S. dollar, 28 Table of Con tents to 800 pesos to one U.S.dollar.
Removed
EMEA’s operating income increased 4 percent to $110 million in 2022 compared to $106 million in 2021. Favorability in Europe was partially offset by foreign exchange impacts across the region.
Added
Because our accounting policy is to recognize our share of income from the Argentina joint venture one month in arrears, our 2023 results do not reflect the impact of this devaluation. Asia-Pacific Net sales . Asia-Pacific’s net sales decreased 2 percent to $1,089 million for 2023 from $1,107 million for 2022.
Removed
Domestic liquidity of $612 million consisted of $2 million in cash and cash equivalents and $610 million available through a $1 billion commercial paper program that had $390 million of outstanding borrowings.
Added
In December 2023, we paid in full without penalty the $200 million principal outstanding on our term loan that was due on December 16, 2024 (“Term Loan”). The weighted average interest rate on our total indebtedness was 4.5 percent for 2023 and 3.5 percent for 2022.
Removed
The notes may be sold from time to time on customary terms in the U.S. commercial paper market. We use and intend to continue using the note proceeds for general corporate purposes.
Added
The increase in cash provided by operating activities was primarily attributable to changes in working capital and current period net income, which excluded net assets and net liabilities we classified as held for sale for the February 1, 2024 sale of our South Korea business.
Removed
On December 16, 2022 we entered into a new two-year, senior, unsecured $200 million term loan, which bears interest, payable quarterly in arrears, at a variable annual rate based on an adjusted daily SOFR plus a margin of 1.10 percent per annum. The term loan will mature and all principal thereunder will be payable on December 16, 2024.
Added
The difference was primarily attributable to increased payments on debt, including the $200 million principal payment on our unsecured Term Loan in December 2023, and a net $203 million reduction of our commercial paper borrowings during 2023. Also included in cash for financing activities are cash dividends we pay to our common stockholders of record on a quarterly basis.
Removed
The term loan agreement contains customary affirmative and negative covenants that, among other matters, specify customary reporting obligations, and that, subject to exceptions, restrict the incurrence of additional indebtedness by our subsidiaries, the incurrence of liens and the consummation of certain mergers, consolidations and sales of assets.
Added
Dividends paid, including those to non-controlling interests, increased 7 percent to $194 million during 2023 from $181 million during 2022. The increase was due to an increase in our quarterly dividend rate per share of common stock, which typically occurs during the third quarter of each fiscal year.
Removed
We are subject to compliance, as of the end of each quarter, with a maximum leverage ratio of 3.5 to 1.0 and a minimum ratio of consolidated EBITDA to consolidated net interest expense of 3.5 to 1.0, with each financial covenant calculated for the most recently completed four-quarter period.
Removed
Cash provided by financing activities in 2022 was primarily provided by proceeds from borrowings, including under our new $200 million term loan, which exceeded our payments on debt.
Removed
In August 2022, we acquired Amishi for $7 million, net of cash acquired. In December 2022, we acquired a 65 percent controlling interest in Mannitab for $22 million, net of cash acquired. We declare and pay cash dividends to our common stockholders of record on a quarterly basis.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

22 edited+66 added−3 removed11 unchanged
Biggest changeWe did not have any T-Locks outstanding as of December 31, 2022. As of December 31, 2022, our AOCL account included $3 million of net losses (net of $1 million tax benefit) related to settled T-Locks. These deferred losses are being amortized to financing costs over the term of the senior notes with which they are associated.
Biggest changeWe occasionally use T-Locks to hedge our exposure to interest rate changes based on current and projected market conditions. We did not have any T-Locks outstanding as of December 31, 2023. As of December 31, 2023, our AOCL account included $2 million of net losses (net of $1 million tax benefit) related to settled T-Locks.
Some of the countries in which we operate may experience high inflation. We elect hyperinflation accounting for our affiliate in Argentina, which has high cumulative inflation, determined its functional currency to be the U.S. dollar, and measure its income statement and balance sheet in U.S. dollars using both current and historical rates of exchange.
Some of the countries in which we operate may experience high inflation. We elect hyperinflation accounting for our affiliate in Argentina, which has high cumulative inflation, determined its functional currency to be the U.S. dollar, and measure its income statement and balance sheet in U.S. dollars using both current and historical exchange rates.
In order to minimize the effect of volatility in the cost of corn related to these firm-priced supply contracts, we enter into corn futures contracts or take other hedging positions in the corn futures market. These contracts typically mature within one year.
In order to minimize the volatility in the cost of corn related to these firm-priced supply contracts, we enter into corn futures contracts or take other hedging positions in the corn futures market. These contracts typically mature within one year.
In North America, we sell a large portion of finished products at firm prices established in supply contracts typically lasting for periods of up to one year.
Primarily in North America, we sell a large portion of finished products at firm prices established in supply contracts typically lasting for periods of up to one year.
A hypothetical 10 percent decline in the value of the U.S. dollar relative to foreign currencies would have resulted in a reduction to our cumulative translation loss and a credit to OCL of approximately $200 million We primarily use derivative financial instruments such as foreign-currency forward contracts, swaps and options to manage our foreign currency transactional exchange risk.
A hypothetical 10 percent decline in the value of the U.S. dollar relative to foreign currencies would have resulted in a reduction to our cumulative translation loss and a credit to OCL of approximately $250 million We primarily use derivative financial instruments such as foreign-currency forward contracts, swaps and options to manage our foreign currency transactional exchange risk.
We assess market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential change in earnings, fair values and cash flows based on a hypothetical 1 percentage point change in interest rates at December 31, 2022.
We assess market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential change in earnings, fair values and cash flows based on a hypothetical 1 percentage point change in interest rates at December 31, 2023.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Hedging: We are exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign-currency exchange rates and interest rates.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Hedging: We are exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign-currency exchange rates and interest rates.
We expect the net gains to be offset by changes in the underlying commodities costs. Interest Rate Exposure: We are exposed to interest rate risk on our variable rate debt and price risk on our fixed rate debt.
We expect the net losses to be offset by changes in the underlying commodities costs. Interest Rate Exposure: We are exposed to interest rate risk on our variable rate debt and price risk on our fixed rate debt.
At December 31, 2022, our AOCL account included in the equity section of our Consolidated Balance Sheets includes a cumulative translation loss of approximately $1.0 billion. The aggregate net assets of our foreign subsidiaries where the local currency is the functional currency approximated $1.8 billion at December 31, 2022.
At December 31, 2023, our AOCL account included in the equity section of our Consolidated Balance Sheets includes a cumulative translation loss of approximately $1.0 billion. The aggregate net assets of our foreign subsidiaries where the local currency is the functional currency approximated $2.2 billion at December 31, 2023.
Based on our overall foreign currency transactional exposure at December 31, 2022, we estimate that a hypothetical 10 percent decline in the value of the U.S. dollar would have resulted in a transactional foreign exchange loss of approximately $4 million.
Based on our overall foreign currency transactional exposure at December 31, 2023, we estimate that a hypothetical 10 percent decline in the value of the U.S. dollar would have resulted in a transactional foreign exchange loss of approximately $21 million.
Based on our overall commodity hedge position at December 31, 2022, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would result in a charge to other comprehensive loss (“OCL”) of approximately $71 million, net of income tax benefit of $22 million.
Based on our overall commodity hedge position at December 31, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would result in a charge to other comprehensive loss (“OCL”) of approximately $48 million, net of income tax benefit of $18 million.
At December 31, 2022, we had outstanding futures and option contracts that hedged the forecasted purchase of approximately 120 million bushels of corn, as well as outstanding swap contracts that hedged the forecasted purchase of approximately 31 million mmbtus of natural gas.
At December 31, 2023, we had outstanding futures and option contracts that hedged the forecasted purchase of approximately 109 million bushels of corn, as well as outstanding swap contracts that hedged the forecasted purchase of approximately 28 million mmbtus of natural gas.
A hypothetical increase of 1 percentage point in the weighted average floating interest rate would increase our annual interest expense by approximately $7 million and would change the fair value of our fixed rate debt at December 31, 2022 by approximately $117 million.
A hypothetical increase of 1 percentage point in the weighted average floating interest rate would increase our annual interest expense by approximately $4 million and would change the fair value of our fixed rate debt at December 31, 2023 by approximately $105 million.
The effect of changes in exchange rates on its local currency denominated monetary assets and liabilities is reflected in earnings in financing costs in the Consolidated Statements of Income. 36 Table of Contents
The effect of changes in exchange rates on its local currency denominated monetary assets and liabilities is reflected in earnings in financing costs in the Consolidated Statements of Income. 39 Table of Con tents
See Note 8 of the Notes to the Consolidated Financial Statements for further information. 35 Table of Contents Since we have no current plans to repurchase our outstanding fixed rate instruments before their maturities, the impact of market interest rate fluctuations on our long-term debt is not expected to have a significant effect on our Consolidated Financial Statements.
See Note 8 of the Notes to the Consolidated Financial Statements for additional information. 38 Table of Con tents Since we have no current plans to repurchase our outstanding fixed rate instruments before their maturities, the impact of market interest rate fluctuations on our long-term debt is not expected to have a material effect on our Consolidated Financial Statements.
As of December 31, 2022, we had foreign currency forward sales contracts with an aggregate notional amount of $405 million and foreign currency forward purchase contracts with an aggregate notional amount of $239 million not designated as hedging instruments for accounting purposes.
As of December 31, 2023, we had foreign currency forward sales contracts with an aggregate notional amount of $694 million and foreign currency forward purchase contracts with an aggregate notional amount of $182 million not designated as hedging instruments for accounting purposes.
As of December 31, 2022, we also had foreign currency forward sales contracts with an aggregate notional amount of $668 million and foreign currency forward purchase contracts with an aggregate notional amount of $840 million that are classified as cash flow hedges.
As of December 31, 2023, we also had foreign currency forward sales contracts with an aggregate notional amount of $449 million and foreign currency forward purchase contracts with an aggregate notional amount of $621 million that are classified as cash flow hedges.
As of December 31, 2022, approximately 70 percent, or $1.7 billion principal amount, of our total debt is fixed rate debt and 30 percent, or approximately $750 million principal amount, of our total debt is variable rate debt subject to changes in short-term rates, which could affect our interest costs.
As of December 31, 2023, approximately 80 percent, or $1.7 billion principal amount, of our total debt is fixed rate debt and 20 percent, or approximately $450 million principal amount, of our total debt is variable rate debt subject to changes in short-term rates, which could affect our interest costs.
The amount included in AOCL relating to these hedges at December 31, 2022 was a $1 million gain (net of an insignificant amount of income tax expense). We expect $4 million of net gains (net of $2 million of income tax expense) will be reclassified to earnings over the next 12 months.
The amount included in AOCL relating to these hedges at December 31, 2023 was an insignificant amount (net of $1 million income tax expense). We expect $1 million of net losses (net of an insignificant amount of income tax benefit) will be reclassified to earnings over the next 12 months.
While the corn futures contracts or other hedging positions are intended to minimize the volatility of corn costs on operating profits, occasionally the hedging contracts can incur losses, some of which may be material. Outside North America, sales of finished products under long-term, firm-priced supply contracts are not material. Energy costs represent approximately 7 percent of our cost of sales.
While the corn futures contracts or other hedging positions are intended to minimize the volatility of corn costs on operating profits, occasionally the hedging contracts can incur losses, some of which may be material. Energy costs represent approximately 8 percent of our cost of sales.
The net losses reclassified into earnings during the next 12 months are not anticipated to be significant. Foreign Currencies: Due to our global operations, we are exposed to fluctuations in foreign currency exchange rates.
These deferred losses are being amortized to financing costs over the term of the senior notes with which they are associated. The net losses reclassified into earnings over the next 12 months are not anticipated to be material. Foreign Currencies: Due to our global operations, we are exposed to fluctuations in foreign currency exchange rates.
As of December 31, 2022, our AOCL included $8 million of net gains (net of income tax expense of $3 million) related to these derivative instruments. We anticipate that $10 million of net gains (net of income tax expense of $3 million) will be reclassified into earnings during the following 12 months.
As of December 31, 2023, our Accumulated other comprehensive loss (“AOCL”) balance included $46 million of net losses (net of income tax benefit of $17 million) related to these derivative instruments. We anticipate that $45 million of net losses (net of income tax benefit of $16 million) will be reclassified into earnings over the next 12 months.
Removed
We occasionally use interest rate swaps and T-Locks to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, or to achieve a desired proportion of fixed versus floating rate debt, based on current and projected market conditions.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk for a discussion of factors that could affect our ability to meet those targets. The objectives reflect our current aspirations in light of our present plans and existing circumstances.
Removed
The changes in fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings.
Added
We may change these objectives from time to time to address new opportunities or changing circumstances as appropriate to meet our long-term needs and those of our stockholders. A reconciliation of non-GAAP historical financial measures to the most comparable GAAP measure is below.
Removed
These amounts offset the gains or losses (the changes in fair value) of the hedged debt instruments that are attributable to changes in interest rates (the hedged risk), which are also recognized in earnings. As of December 31, 2022 and 2021, we did not have any outstanding interest rate swaps.
Added
Adjusted ROIC Adjusted ROIC is a financial performance ratio not defined under GAAP, and it should be considered in addition to, and not as a substitute for, GAAP financial measures. Ingredion defines Adjusted ROIC as Adjusted operating income, net of tax, divided by average end-of-year balances for current year and prior year Total net debt and equity.
Added
Similarly named measures may not be defined and calculated by other companies in the same manner. Ingredion believes Adjusted ROIC is meaningful to investors as it focuses on profitability and value-creating potential, taking into account the amount of capital invested.
Added
The most comparable measure calculated using components determined in accordance with GAAP is Return on Invested Capital, which Ingredion defines as Net income, divided by average end-of-year balances for current year and prior year Total net debt and equity, as shown in the table below. 31 Table of Con tents Year Ended December 31, Return on Invested Capital ratio (dollars in millions) 2023 2022 Net income (a) $ 651 $ 502 Adjusted for: Provision for income taxes 188 166 Other non-operating expense (income) 4 (5) Financing costs 114 99 Restructuring/impairment charges (i) 11 4 Acquisition/integration costs (ii) — 1 Other matters (iii) 1 20 Income taxes (at effective rates of 24.9% and 27.0%, respectively) (iv) (241) (212) Adjusted operating income, net of tax (b) 728 575 Short-term debt 448 543 Long-term debt 1,740 1,940 Less: Cash and cash equivalents (401) (236) Short-term investments (8) (3) Total net debt 1,779 2,244 Share-based payments subject to redemption 55 48 Total redeemable non-controlling interests 43 51 Total equity 3,552 3,163 Total net debt and equity $ 5,429 $ 5,506 Average current and prior year Total net debt and equity (c) $ 5,468 $ 5,223 Return on Invested Capital (a ÷ c) 11.9 % 9.6 % Adjusted Return on Invested Capital (b ÷ c) 13.3 % 11.0 % _____________________ (i) In 2023, we recorded $11 million of pre-tax restructuring/impairment charges primarily related to an other-than-temporary impairment on our equity method investments.
Added
In 2022, we recorded $4 million of pre-tax restructuring charges primarily related to the Cost Smart programs. (ii) In 2022, acquisition/integration costs were reduced by $4 million as they were included in financing costs. (iii) In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage.
Added
This was partially offset by $4 million of insurance recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage. 32 Table of Con tents (iv) The effective income tax rate was 24.9 percent for 2023 and 27.0 percent for 2022.
Added
Year Ended Year Ended December 31, 2023 December 31, 2022 (dollars in millions) Income before Income Taxes Provision for Income Taxes Effective Income Tax Rate Income before Income Taxes Provision for Income Taxes Effective Income Tax Rate As reported $ 839 $ 188 22.4 % $ 668 $ 166 24.9 % Add back: Acquisition/integration costs — — 5 — Restructuring/impairment charges 11 3 4 1 Other matters 1 — 20 5 Other tax matters — 6 — 12 Tax item-Mexico — 15 — 4 Adjusted non-GAAP $ 851 $ 212 24.9 % $ 697 $ 188 27.0 % Our long-term objective is to maintain an Adjusted ROIC in excess of 10.0 percent.
Added
For 2023, we achieved an Adjusted ROIC of 13.3 percent as compared to 11.0 percent for 2022. Net Debt to Adjusted EBITDA Net Debt to Adjusted EBITDA is a financial performance ratio that is not defined under GAAP, and should be considered in addition to, and not as a substitute for, GAAP financial measures.
Added
Ingredion defines this measure as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Adjusted EBITDA. Similarly named measures may not be defined and calculated by other companies in the same manner.
Added
Ingredion believes Total net debt to Adjusted EBITDA is meaningful to investors as it focuses on Ingredion’s leverage on a comparable Adjusted EBITDA basis and helps investors better understand the time required to pay back Ingredion’s outstanding debt.
Added
The most comparable ratio calculated using components determined in accordance with GAAP is Total net debt to Income before income taxes, calculated as Short-term and Long-term debt less Cash and cash equivalents and Short-term investments, divided by Income before income taxes, as shown in the table below. 33 Table of Con tents As of December 31, Net Debt to Adjusted EBITDA ratio (dollars in millions) 2023 2022 Short-term debt $ 448 $ 543 Long-term debt 1,740 1,940 Less: Cash and cash equivalents (401) (236) Short-term investments (8) (3) Total net debt (a) 1,779 2,244 Income before income taxes (b) 839 668 Adjusted for: Depreciation and amortization 219 215 Financing costs 114 99 Other non-operating expense (income) 4 (5) Restructuring/impairment charges (i) 12 4 Acquisition/integration costs (ii) — 1 Other matters (iii) 1 20 Adjusted EBITDA (c) $ 1,189 $ 1,002 Net Debt to Income before income tax ratio (a ÷ b) 2.1 3.4 Net Debt to Adjusted EBITDA ratio (a ÷ c) 1.5 2.2 _____________________ (i) During 2023, we recorded $11 million of pre-tax net restructuring/impairment charges primarily related to an other-than-temporary impairment on our equity method investments.
Added
This was increased by $1 million as it included a depreciation benefit that was already included in depreciation and amortization line. In 2022, we recorded $4 million of pre-tax restructuring charges primarily related to the Cost Smart programs. (ii) In 2022, acquisition/integration costs were reduced by $4 million as they were included in financing costs.
Added
(iii) In 2023, we recorded pre-tax charges of $5 million primarily related to the impacts of a U.S.-based work stoppage. This was partially offset by $4 million of insurance recoveries. In 2022, we recorded pre-tax charges of $20 million primarily related to the impacts of a U.S.-based work stoppage.
Added
Our long-term objective is to target a ratio of Net Debt to Adjusted EBITDA of 2.5 or less. As of December 31, 2023 and 2022, the ratio was 1.5 and 2.2, respectively. Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP.
Added
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Added
Actual results may differ from these estimates under different assumptions and conditions. We have identified below the most critical accounting policies upon which the financial statements are based and that involve our most complex and subjective decisions and assessments.
Added
Our senior management has discussed the development, selection and disclosure of these policies with members of the Audit Committee of our Board of Directors. These accounting policies are described in the Notes to the Consolidated Financial Statements.
Added
The discussion that follows should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this annual report on Form 10-K. 34 Table of Con tents Business Combinations Our acquisitions of Amishi in 2022, the majority of shares of Mannitab in 2022, and KaTech in 2021 were accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations .
Added
In purchase accounting, identifiable assets acquired and liabilities assumed are recognized at their estimated fair values on the date of acquisition and any remaining purchase price is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed, we make significant estimates and assumptions, particularly for long-lived tangible and intangible assets.
Added
Critical estimates used in valuing tangible and intangible assets include, but are not limited to, future expected cash flows, discount rates, market prices and asset lives. Although our estimates of fair value are based upon assumptions believed to be reasonable, actual results may differ. See Note 2 of the Notes to the Consolidated Financial Statements for additional information.
Added
Property, Plant and Equipment and Definite-Lived Intangible Assets We have substantial investments in property, plant and equipment (“PP&E”) and definite-lived intangible assets.
Added
For PP&E, we recognize the cost of depreciable assets in operations over the estimated useful life of the assets and evaluate the recoverability of these assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
Added
For definite-lived intangible assets, we recognize the cost of these amortizable assets in operations over their estimated useful life and evaluate the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
Added
The carrying values of PP&E and definite-lived intangible assets at December 31, 2023 were $2.4 billion and $242 million, respectively. In assessing the recoverability of the carrying value of PP&E and definite-lived intangible assets, we may have to make projections regarding future cash flows.
Added
In developing these projections, we make a variety of important assumptions and estimates that have a significant impact on our assessments of whether the carrying values of PP&E and definite-lived intangible assets should be adjusted to reflect impairment.
Added
Among these are assumptions and estimates about the future growth and profitability of the related asset group, anticipated future economic, regulatory and political conditions in the asset group’s market, and estimates of terminal or disposal values.
Added
To optimize our operations, we continually review whether to further consolidate our manufacturing facilities or redeploy assets for other uses when we believe we can achieve a higher return on our investment.
Added
This review may result in closing or sale of certain manufacturing facilities, which could have a significant negative impact on our results of operations in the period we decide to close or sell the facility.
Added
The future occurrence of a potential indicator of impairment, such as a significant adverse change in the business climate that would require a change in our assumptions or strategic decisions made in response to economic or competitive conditions, could require us to perform tests of recoverability in the future.
Added
Indefinite-Lived Intangible Assets and Goodwill We have certain indefinite-lived intangible assets in the form of tradenames and trademarks. Our methodology for allocating the purchase price of acquisitions is based on established valuation techniques that reflect the consideration of a number of factors, including valuations performed by third-party appraisers when appropriate.
Added
Goodwill is measured as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed. We have identified several reporting units for which cash flows are determinable and to which goodwill may be allocated.
Added
Goodwill is either assigned to a specific reporting unit or allocated between reporting units based on the relative excess fair value of each reporting unit. The carrying value of indefinite-lived intangible assets and goodwill at December 31, 2023 was $143 million and $918 million, respectively, compared to $143 million and $900 million, respectively, at December 31, 2022.
Added
We assess indefinite-lived intangible assets and goodwill for impairment as of July 1 each year (or more frequently if impairment indicators arise). We first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is impaired, which include net sales derived from these intangibles and certain market and industry conditions.
Added
After assessing the qualitative factors, if we determine that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater than its carrying amount, then we are not required to compute the fair value of the indefinite-lived intangible asset.
Added
If the qualitative assessment leads us to conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test 35 Table of Con tents in accordance with ASC subtopic 350-30, Intangibles – Goodwill and Other .
Added
Based on our assessment's results, we concluded that as of July 1, 2023, there were no impairments in our indefinite-lived intangible assets. In testing goodwill for impairment, we first assess qualitative factors in determining whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.
Added
After assessing the qualitative factors, if we determine that it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, then we do not perform an impairment test. If we conclude otherwise, then we perform the impairment test.
Added
Under this impairment test, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired, and no further testing is required.
Added
If the carrying value of the net assets exceeds the fair value of the reporting unit, then an impairment exists for the difference between the fair value and carrying value of the reporting unit. This difference may not exceed the goodwill recorded at the reporting unit.
Added
When we test goodwill for impairment, we make certain estimates and judgments, which include identifying reporting units and determining the reporting units' fair values based on both discounted cash flow analyses and an analysis of market multiples.
Added
To determine the fair value of reporting units, we use significant assumptions and estimates for discount and long-term net sales growth rates, in addition to operating and capital expenditure requirements. We consider changes in discount rates for the reporting units based on current market interest rates and specific risk factors within each geographic region.
Added
We also evaluate qualitative factors, such as legal, regulatory or competitive forces, in estimating the impact to the fair value of the reporting units, noting no significant changes that would result in any reporting unit failing the impairment test.
Added
Changes in assumptions concerning projected results or other underlying assumptions could have a significant impact on the fair value of the reporting units in the future. Based on the results of the annual assessment, we concluded that as of July 1, 2023, there were no impairments in our reporting units.
Added
Retirement Benefits We and our subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of employees in the U.S. and Canada, and certain employees in other countries. We also provide healthcare and life insurance benefits for retired employees in the U.S., Canada and Brazil.
Added
In order to measure the expense and obligations associated with these benefits, our management must make a variety of estimates and assumptions, including discount rates, expected long-term rates of return, rate of compensation increases, employee turnover rates, retirement rates, mortality rates and other factors.
Added
We review our actuarial assumptions on an annual basis as of December 31 (or more frequently if a significant event requiring remeasurement occurs) and modify our assumptions based on current rates and trends when it is appropriate to do so.
Added
The effects of modifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss (“AOCL”). We believe the assumptions utilized in recording our obligations under our plans, which are based on our experience, market conditions and input from our actuaries, are reasonable.
Added
We use third-party specialists to assist management in evaluating our assumptions and estimates, as well as to appropriately measure the costs and obligations associated with our retirement benefit plans. Had we used different estimates and assumptions for these plans, our retirement benefit obligations and related expense could vary from the actual amounts recorded and such differences could be material.
Added
Additionally, adverse changes in investment returns earned on pension assets and discount rates used to calculate pension and postretirement benefit related liabilities or changes in required funding levels may have an unfavorable impact on future expense and cash flow.
Added
Net periodic pension and postretirement benefit cost for all of our plans was $12 million in 2023 and $6 million in 2022.
Added
We determine our assumption for the discount rate used to measure year-end pension and postretirement obligations based on high-quality fixed-income investments that match the duration of the expected benefit payments, which has been benchmarked using a long-term, high-quality AA corporate bond index.
Added
We use a full yield curve approach in the estimation of the service and interest cost components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.
Added
The weighted average discount rate used to determine our obligations under U.S. pension plans as of December 31, 2023 and 2022, was 5.00 percent and 5.19 percent, respectively. The weighted average discount rate used to determine our obligations under non-U.S. pension plans as of 2023 and 2022, was 5.24 percent and 5.66 percent, respectively.
Added
The weighted average discount rate used to determine our obligations under our postretirement plans as of December 31, 2023 and 2022, was 7.37 percent and 7.30 percent, respectively. 36 Table of Con tents A one percentage point decrease in the discount rates at 2023, would have increased the accumulated benefit obligation and projected benefit obligation by the following amounts (millions): U.S.

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