Ingredion Incorporated (NYSE:INGR) Q2 2019 Earnings Conference Call Transcript

Aug 01, 2019 • 08:30 am ET

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Ingredion Incorporated (NYSE:INGR) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ingredion Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

I would now like to turn the conference over to your host, Ryan Koller. Please go ahead, sir.

Executive
Ryan Koller

Thanks everyone joining us today for Ingredion's Second Quarter 2019 Earnings Call. On today's call, you will hear from Jim Zallie, our President and CEO; and Jim Gray, our Executive Vice President and Chief Financial Officer. Our results were issued this morning in a press release that can be found on our website ingredion.com. The slides accompanying this presentation can also be found on our website and were posted a few hours ago for your convenience.

As a reminder, our comments within this presentation may contain forward-looking statements. These statements are subject to various risks and uncertainties. Actual results could differ materially from those predicted in the forward-looking statements, and Ingredion is under no obligation to update them in the future, as, or if circumstances change. Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call, or in this morning's press release, can be found in the company's most recently filed annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.

During this call, we will also refer to certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating income, adjusted effective tax rate and adjusted cash flow from operations, which are reconciled to US GAAP measures in Note 2 non-GAAP information included in our press release and in today's presentation's appendix.

Now I'm pleased to turn the call over to Jim Zallie.

Executive
James P. Zallie

Thanks, Ryan, and welcome to everyone joining us today. I would like to begin today's call with a perspective on our business performance during the second quarter. For the quarter, our global net sales were down 4% due to the impact of foreign exchange weakness. Absent the foreign exchange impacts, net sales were up 1% versus the prior year.

Our sales teams continue to take aggressive pricing actions and delivered $39 million of favorable price increases in the quarter versus the year ago period. Operating income from the quarter was down 11% year-over-year, 7 percentage points of which were due to negative foreign exchange translation impacts.

As we discussed last quarter, our North America business has faced a challenging raw material market and is lapping higher co-product values. Additionally, the unresolved US-China trade dispute continued to create crop inventory imbalances, which reduced co-product values. These factors have resulted in a higher net cost of corn. As we navigate these challenges, we remain focused on strategic initiatives to forge growth and drive value creation.

We're pleased that specialty ingredients delivered net sales growth in the quarter, led primarily by sugar reduction and specialty sweeteners. In the second half, we will begin allulose production at our manufacturing facility in San Juan del Rio, Mexico, which will complement our existing portfolio