UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-13397

Ingredion Incorporated

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

22-3514823

(I.R.S. Employer Identification Number)

5 Westbrook Corporate Center

Westchester, Illinois

60154

(Address of principal executive offices)

(Zip Code)

(708) 551-2600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	INGR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Class		Outstanding at ~~October 31, 2021~~May 4, 2022
Common Stock, $.01 par value		~~66,535,932~~66,219,580 shares

Table of Contents

Ingredion Incorporated ~~(“Ingredion”)~~

Condensed Consolidated Statements of Income (Loss)

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions, except per share amounts)	2021		2020		2021		2020		2022		2021
Net sales	$	1,763	$	1,502	$	5,139	$	4,394	$	1,892	$	1,614
Cost of sales		1,440		1,176		4,098		3,474		1,513		1,263
Gross profit		323		326		1,041		920		379		351

Operating expenses		164		155		484		456		169		153
Other (income) expense, net		(1)		2		(29)		4
Restructuring/impairment charges and related adjustments		(12)		16		362		41
Other operating (income)										(2)		(2)
Restructuring/impairment charges										2		370

Operating income		172		153		224		419
Operating income (loss)										210		(170)

Financing costs, net		20		22		58		59
Other, non-operating (income), net		(1)		(2)		(4)		(3)
Financing costs										24		19
Other non-operating income										(1)		(1)

Income before income taxes		153		133		170		363
Income (loss) before income taxes										187		(188)
Provision for income taxes		34		40		113		125		54		55
Net income		119		93		57		238
Net income (loss)										133		(243)
Less: Net income attributable to non-controlling interests		1		1		7		5		3		3
Net income attributable to Ingredion	$	118	$	92	$	50	$	233
Net income (loss) attributable to Ingredion									$	130	$	(246)

Weighted average common shares outstanding:
Basic		67.0		67.2		67.2		67.2		66.9		67.3
Diluted		67.6		67.6		67.8		67.6		67.6		67.3

Earnings per common share of Ingredion:
Earnings (loss) per common share of Ingredion:
Basic	$	1.76	$	1.37	$	0.74	$	3.47	$	1.94	$	(3.66)
Diluted	$	1.75	$	1.36	$	0.74	$	3.45	$	1.92	$	(3.66)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Ingredion Incorporated ~~(“Ingredion”)~~

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2021		2020		2021		2020		2022		2021
Net income	$	119	$	93	$	57	$	238
Net income (loss)									$	133	$	(243)
Other comprehensive income:
Gains (losses) on cash flow hedges, net of income tax effect of $9, $4, $56 and $12, respectively		26		12		155		(38)
(Gains) losses on cash flow hedges reclassified to earnings, net of income tax effect of $15, $8, $45 and $14, respectively		(45)		23		(125)		42
Gains on cash flow hedges, net of income tax effect of $46 and $7, respectively										130		22
(Gains) on cash flow hedges reclassified to earnings, net of income tax effect of $12 and $ — , respectively										(34)		(1)
Currency translation adjustment		248		13		226		(105)		38		(52)
Comprehensive income		348		141		313		137
Less: Comprehensive (loss) income attributable to non-controlling interests		(2)		3		6		5
Comprehensive income attributable to Ingredion	$	350	$	138	$	307	$	132
Comprehensive income (loss)										267		(274)
Less: Comprehensive income attributable to non-controlling interests										2		5
Comprehensive income (loss) attributable to Ingredion									$	265	$	(279)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Ingredion Incorporated ~~(“Ingredion”)~~

Condensed Consolidated Balance Sheets


	September 30,		December 31,		March 31,		December 31,
(in millions, except share and per share amounts)	2021		2020		2022		2021
	(Unaudited)				(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	434	$	665	$	324	$	328
Short-term investments		4		—		5		4
Accounts receivable, net		1,128		1,011		1,431		1,130
Inventories		1,093		917		1,306		1,172
Prepaid expenses		74		54		63		63
Total current assets		2,733		2,647		3,129		2,697

Property, plant and equipment, net of accumulated depreciation of $3,225 and $3,175, respectively		2,369		2,455
Goodwill		916		902
Other intangible assets, net of accumulated amortization of $244 and $229, respectively		424		444
Operating lease assets		191		173
Deferred income tax assets		17		23
Property, plant and equipment, net of accumulated depreciation of $3,304 and $3,232, respectively						2,446		2,423
Intangible assets, net of accumulated amortization of $259 and $253, respectively						1,339		1,348
Other assets		336		214		521		531
Total assets	$	6,986	$	6,858	$	7,435	$	6,999

Liabilities and equity
Current liabilities:
Short-term borrowings	$	398	$	438	$	514	$	308
Accounts payable and accrued liabilities		1,059		1,020		1,207		1,204
Total current liabilities		1,457		1,458		1,721		1,512

Long-term debt						1,739		1,738
Other non-current liabilities		226		227		561		524
Long-term debt		1,748		1,748
Non-current operating lease liabilities		152		136
Deferred income tax liabilities		200		217
Total liabilities		3,783		3,786		4,021		3,774

Share-based payments subject to redemption		32		30		31		36
Redeemable non-controlling interests		68		70		71		71

Ingredion stockholders’ equity:
Preferred stock — authorized 25,000,000 shares — $0.01 par value, NaN issued		—		—		—		—
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at September 30, 2021 and December 31, 2020, respectively		1		1
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at March 31, 2022 and December 31, 2021						1		1
Additional paid-in capital		1,155		1,150		1,160		1,158
Less: Treasury stock (common stock: 11,295,044 and 10,795,346 shares at September 30, 2021 and December 31, 2020, respectively) at cost		(1,072)		(1,024)
Less: Treasury stock (common stock: 11,464,034 and 11,154,203 shares at March 31, 2022 and December 31, 2021, respectively) at cost						(1,091)		(1,061)
Accumulated other comprehensive loss		(877)		(1,133)		(763)		(897)
Retained earnings		3,877		3,957		3,986		3,899
Total Ingredion stockholders’ equity		3,084		2,951		3,293		3,100
Non-redeemable non-controlling interests		19		21		19		18
Total equity		3,103		2,972		3,312		3,118
Total liabilities and equity	$	6,986	$	6,858	$	7,435	$	6,999

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Ingredion Incorporated ~~(“Ingredion”)~~

Condensed Consolidated Statements of Equity and Redeemable Equity

(Unaudited)


	Total Equity																		Total Equity
													Non-																		Non-
													Redeemable		Share-based		Redeemable														Redeemable		Share-based		Redeemable
					Additional				Accumulated Other				Non-		Payments		Non-						Additional				Accumulated Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling		Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests		Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Balance, December 31, 2021																			$	—	$	1	$	1,158	$	(1,061)	$	(897)	$	3,899	$	18	$	36	$	71
Net income attributable to Ingredion												50																		130
Net income (loss) attributable to non-controlling interests														10				(3)
Net income attributable to non-controlling interests																																3
Dividends declared												(130)		(10)																(43)
Repurchases of common stock, net								(68)																		(39)
Share-based compensation, net of issuance						5		20								2								2		9								(5)
Other comprehensive income (loss)										256				(2)				1										134				(2)
Balance, September 30, 2021	$	—	$	1	$	1,155	$	(1,072)	$	(877)	$	3,877	$	19	$	32	$	68
Balance, March 31, 2022																			$	—	$	1	$	1,160	$	(1,091)	$	(763)	$	3,986	$	19	$	31	$	71


	Total Equity																		Total Equity
													Non-																		Non-
													Redeemable		Share-based		Redeemable														Redeemable		Share-based		Redeemable
					Additional				Accumulated Other				Non-		Payments		Non-						Additional				Accumulated Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling		Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests		Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2019	$	—	$	1	$	1,137	$	(1,040)	$	(1,158)	$	3,780	$	21	$	31	$	—
Net income attributable to Ingredion												233
Net income attributable to non-controlling interests														7				(2)
Balance, December 31, 2020																			$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion																														(246)
Net income (loss) attributable to non-controlling interests																																4				(1)
Dividends declared												(129)		(5)																(44)
Repurchases of common stock, net																										(14)
Share-based compensation, net of issuance						8		13								1								5		16								(9)
Acquisition of redeemable non-controlling interests																		74
Other comprehensive income (loss)										(101)				(2)				2
Balance, September 30, 2020	$	—	$	1	$	1,145	$	(1,027)	$	(1,259)	$	3,884	$	21	$	32	$	74
Other comprehensive (loss) income																												(31)				1				1
Balance, March 31, 2021																			$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70

See Notes to Condensed Consolidated Financial Statements

Table of Contents

��

Ingredion Incorporated ~~(“Ingredion”)~~

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended				Three Months Ended
	September 30,				March 31,
(in millions)	2021		2020		2022		2021
Cash provided by operating activities
Net income	$	57	$	238
Non-cash charges to net income:
Cash (used for) provided by operating activities
Net income (loss)					$	133	$	(243)
Non-cash charges to net income (loss):
Depreciation and amortization		155		158		53		52
Mechanical stores expense		40		39		13		14
Impairment charge for assets held for sale						—		360
Deferred income taxes		(25)		(1)		3		(4)
Charge for fair value markup of acquired inventory		—		3
Impairment on disposition of assets		340		—
Other		4		46
Other non-cash charges						15		7
Changes in working capital:
Accounts receivable and prepaid expenses		(126)		36		(126)		(56)
Inventories		(226)		(10)		(119)		(69)
Accounts payable and accrued liabilities		94		54		(45)		(5)
Margin accounts		(34)		6		28		(16)
Other		(20)		(7)		(7)		(18)
Cash provided by operating activities		259		562
Cash (used for) provided by operating activities						(52)		22

Cash used for investing activities
Capital expenditures and mechanical stores purchases, net of proceeds on disposals		(186)		(250)
Payments for acquisitions, net of cash acquired of $2 and $14, respectively		(40)		(208)
Investment in non-consolidated affiliates		(8)		(6)
Short-term investments		(4)		4
Capital expenditures and mechanical stores purchases						(85)		(65)
Proceeds from disposal of manufacturing facilities and properties						5		2
Other						4		(1)
Cash used for investing activities		(238)		(460)		(76)		(64)

Cash (used for) provided by financing activities
Cash provided by (used for) financing activities
Proceeds from borrowings		804		1,527		147		46
Payments on debt		(1,194)		(1,186)		(123)		(36)
Commercial paper borrowings, net		350		—		178		—
Payments for debt issuance costs		—		(9)
Repurchases of common stock, net		(68)		—		(39)		(14)
Issuances of common stock for share-based compensation, net of settlements		10		2
(Settlements) issuances of common stock for share-based compensation, net						(1)		7
Dividends paid, including to non-controlling interests		(138)		(132)		(43)		(43)
Cash (used for) provided by financing activities		(236)		202
Cash provided by (used for) financing activities						119		(40)

Effects of foreign exchange rate changes on cash		(16)		(15)		5		(7)

(Decrease) increase in cash and cash equivalents		(231)		289
Decrease in cash and cash equivalents						(4)		(89)

Cash and cash equivalents, beginning of period		665		264		328		665

Cash and cash equivalents, end of period	$	434	$	553	$	324	$	576

See Notes to Condensed Consolidated Financial Statements

Table of Contents

~~INGREDION INCORPORATED (“Ingredion”)~~

Ingredion Incorporated

Notes to Condensed Consolidated Financial Statements

1. Interim Financial Statements

References to the ~~“Company” are to~~“Company,” “Ingredion,” “we,” “us,” and “our” shall mean Ingredion Incorporated (“Ingredion”) individually and together with its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in ~~the Company’s~~Ingredion’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The unaudited Condensed Consolidated Financial Statements as of ~~September 30, 2021~~March 31, 2022 and for the ~~three~~quarter ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~ included herein were prepared by management on the same basis as ~~the Company’s~~Ingredion’s audited Consolidated Financial Statements for the year ended December 31, ~~2020~~2021 and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Statements of Income (Loss), Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows. The results for the interim period are not necessarily indicative of the results expected for the full year or any other future period.

2. Summary of Significant Accounting Standards and Policies

For detailed information about ~~the Company’s~~Ingredion’s significant accounting standards and policies, see Note 21 of the Notes to the Consolidated Financial Statements included in ~~the Company’s~~Ingredion’s Annual Report on Form 10-K for the year ended December 31, ~~2020. Except for the matters discussed below, there have been no other material changes to the Company’s significant accounting standards and policies for the nine months ended September 30,~~ 2021.

~~Significant~~New Accounting ~~Policies~~Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)~~Goodwill and Indefinite-lived intangible assets:~~ ~~Goodwill ($916 million and $902 million at September 30, 2021 and~~No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, ~~2020, respectively) represents~~2022. We are currently evaluating the ~~excess~~effect of ~~the cost~~adoption of ~~an acquired entity over the fair value assigned to identifiable assets acquired~~ASU No. 2020-04 on our financial position and ~~liabilities assumed. The Company also had indefinite-lived intangible assets of $143 million at September 30, 2021 and December 31, 2020.~~

~~The original carrying value of goodwill and accumulated impairment charges by reportable business segment at September 30, 2021 was as follows:~~

North

South

Asia-

(in millions)

America

America

Pacific

EMEA

Total

Goodwill before impairment charges

$
622

$
50

$
316

$
69

$
1,057

Accumulated impairment charges

(1)

(33)

(121)

—

(155)

Balance at January 1, 2021

621

17

195

69

902

Acquisitions

1

—

3

20

24

Currency translation

—

(1)

(6)

(3)

(10)

Balance at September 30, 2021

$
622

$
16

$
192

$
86

$
916

~~The following table summarizes the balances of the Company’s indefinite-lived intangible assets at the dates presented:~~

(in millions)

As of September 30, 2021

As of December 31, 2020

Trademarks/tradenames (indefinite-lived)

$
143

$
143

~~The Company assesses goodwill and indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise). Based on the~~ results of ~~the Company’s assessment as of July 1, 2021, there were 0 impairments in its~~ ~~goodwill~~ ~~or indefinite-lived intangible assets.~~operations.

~~Table of Contents~~

3.Acquisitions ~~and Equity Method Investments~~

~~Acquisitions~~

On April 1, 2021, ~~the Company~~Ingredion acquired KaTech, a ~~privately-held~~privately held company headquartered in Germany. KaTech provides advanced texture and stabilization solutions to the food and beverage industry. To complete the closing, ~~the Company~~Ingredion made a total cash payment of $40 million, net of ~~$2 million of~~ cash acquired, which itwe funded from cash on hand. The ~~results~~acquisition added $26 million of ~~KaTech are reported~~goodwill and intangible assets, as well as $14 million of tangible assets, which we preliminarily recorded on ~~a one-month lag within~~ the ~~Company’s~~acquisition date based on available information and incorporating our best estimates. Beginning at the acquisition date, our Condensed Consolidated Financial Statements ~~during~~reflect the ~~integration process~~effects of the ~~companies.~~acquisition and KaTech’s ~~operational~~financial results, ~~are recorded~~which we report in ~~the Company’s~~our Europe, Middle East and Africa (“EMEA”) reportable business segment.

On November 3, 2020, the Company acquired the remaining 80% of the outstanding shares of Verdient Foods, Inc. (“Verdient”), as well as the leased land and buildings not owned by Verdient. To complete the closing, the Company made a total cash payment of CAD $33 million (USD $26 million), which it funded from cash on hand. The Company had previously entered into an equity method investment with Verdient by acquiring 20% of its outstanding shares. Verdient is a Canada-based producer of pulse-based protein concentrates and flours from peas, lentils, and fava beans for human food applications. The results of the acquired operation are included in the Company’s consolidated results from the acquisition date within the North America reportable business segment.

The acquisitions of KaTech and Verdient added a total of $36 million of goodwill and $35 million of tangible assets as of their respective acquisition dates. The purchase accounting for the assets acquired and liabilities assumed for KaTech and Verdient is preliminarily recorded based on available information and incorporating management’s best estimates.

On July 1, 2020, the Company completed its acquisition of a controlling interest in PureCircle Limited (“PureCircle”). PureCircle is one of the leading producers and innovators of plant-based stevia sweeteners for the global food and beverage industries. To complete the closing, the Company made a total cash payment of $208 million, net of $14 million of cash acquired, which it funded from cash on hand. After the closing, the Company owns 75% of PureCircle, with the remaining 25% owned by former PureCircle shareholders. PureCircle is consolidated by Ingredion for financial reporting purposes, with a corresponding redeemable non-controlling interest of $74 million recorded for the portion not owned by the Company at the time of acquisition. The results of PureCircle are reported on a one-month lag within the Company’s Condensed Consolidated Financial Statements during the integration process of the companies. The results of the acquired operations are included in the Company’s consolidated results from the acquisition date within the Asia-Pacific reportable business segment.

A preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. The assets acquired and liabilities assumed in the transaction for each acquisition were generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisitions were expensed as incurred.

~~The purchase accounting for the assets acquired and liabilities assumed for PureCircle was completed during the three months ended September 30, 2021.~~

Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill results from synergies and other operational benefits expected to be derived from the acquisition. The goodwill related to PureCircle is not tax-deductible due to the structure of the acquisition.

~~Table of Contents~~

~~The following table summarizes the purchase price allocations for the PureCircle acquisition as of September 30, 2021:~~

(in millions)

PureCircle

Working capital (excluding cash)

$
68

Property, plant and equipment

91

Other, net

(33)

Identifiable intangible assets

68

Goodwill

88

Total fair value, net of cash

282

Less: Non-redeemable non-controlling interests

74

Total purchase price, net of cash

$
208

The identifiable intangible assets for the acquisition of a controlling interest in PureCircle include customer relationships, tradenames, and proprietary technology. The fair values of these intangible assets were determined to be Level 3 under the fair value hierarchy. Level 3 inputs are unobservable inputs for an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for an asset or liability at the measurement date. For more information on the fair value hierarchy, see Note 6 of the Notes to the Condensed Consolidated Financial Statements.4. Investments

~~The~~Investments consisted of the following ~~table presents the fair values, valuation techniques, and estimated remaining useful life at the acquisition date for these Level 3 measurements (dollars in millions):~~

Estimated

Intangible Asset

Fair Value

Valuation Technique

Useful Life

Proprietary technology

$
32

Relief-from-royalty method

12 years

Trade names

18

Relief-from-royalty method

15 years

Customer relationships

18

Multi-period excess earnings method

12 years

~~The fair values of proprietary technology, trade names, and customer relationships were determined through the valuation techniques described above using various judgmental assumptions such~~ as discount rates, royalty rates, and customer attrition rates, as applicable. The fair values of property, plant and equipment associated with the acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach.of:

Pro-forma results of operation for any of the foregoing acquisitions have not been presented as the effect of each acquisition individually and in the aggregate with other acquisitions would not be material to the Company’s results of operations for any periods presented.



(in millions)	March 31, 2022		December 31, 2021
Equity investments	$	19	$	16
Equity method investments		106		104
Marketable securities		5		12
Total investments	$	130	$	132

~~The Company incurred an insignificant amount and $5 million~~8

Table of pre-tax acquisition and integration costs for the three and nine months ended September 30, 2021, respectively. The Company incurred $5 million and $8 million of pre-tax acquisition and integration costs for the three and nine months ended September 30, 2020, respectively.Contents

~~Equity Method Investments~~Amyris Joint Venture

On June 1, 2021, ~~the Company and certain of its subsidiaries~~Ingredion entered into an agreement with Amyris, Inc. (“Amyris”) for certain exclusive commercialization rights to ~~Amyris’~~Amyris’s rebaudioside M by fermentation ~~(“Reb M by fermentation”) product;~~product, the exclusive licensing of ~~Amyris’ Reb M by fermentation~~the product’s manufacturing ~~technology;~~technology and a ~~31%~~31 percent ownership stake in a ~~Reb M by fermentation~~ joint ~~venture.~~venture for the products (the “Amyris joint venture”). In exchange, ~~for its ownership interest in the Amyris joint venture, Ingredion~~we contributed $28 million of total consideration, ~~including~~which included $10 million of cash, ~~and~~as well as non-exclusive intellectual property licenses and other consideration valued at $18 million. The transaction resulted in ~~$8 million of Other (income) expense, net recorded in the Condensed Consolidated Statements of Income during the nine months ended September 30, 2021. The~~an $8 million gain ~~includes~~recorded in Other operating (income), which included $18 million ~~of other income~~ related to the non-exclusive intellectual property licenses, ~~and other consideration contributed by Ingredion for the Company’s stake in the Amyris joint venture,~~ offset by athe $10 million cash ~~payment made by a subsidiary of~~payment. Beginning June 1, 2021, Ingredion ~~to Amyris~~accounts for the ~~exclusive right to~~investment under the ~~Reb M by fermentation manufacturing technology license from Amyris.~~ equity method.

Arcor Joint Venture

~~Table of Contents~~

On February 12, 2021, ~~the Company signed~~Ingredion entered into an agreement with an affiliate of Grupo Arcor, an Argentine food company, to establish Ingrear Holding S.A. (the “Arcor joint venture”), a joint venture to ~~combine and~~ operate 5 manufacturing facilities in Argentina to sell value-added ingredients to customers in the food, beverage, pharmaceutical and other industries in Argentina, Chile and Uruguay. On August 2, 2021, ~~the Company~~Ingredion and Grupo Arcor completed all closing conditions, pending customary antitrust review, to combine the manufacturing facilities, finalize the transaction and formally establish the Arcor joint ~~venture. The Arcor joint~~ venture, which is managed by a jointly appointed team of ~~executives.~~executives and is accounted for under the equity method.

~~The Company obtained an equity method investment in the Arcor joint venture as a result of the transaction. In exchange for transferring~~We exchanged certain assets and liabilities with a fair value of $71 million from ~~its~~our Argentina, Chile and Uruguay operations for ~~a total fair value of $71 million, the Company received~~ 49 percent of the outstanding shares of the Arcor joint venture valued at $64 million, ~~and~~as well as $7 million of other consideration, including cash, from Grupo Arcor as of August 2, 2021. The transaction also resulted in an impairment charge for the transferred assets and liabilities more fully described in Note ~~5 of the Notes to the Condensed Consolidated Financial Statements.~~5.

~~The Company~~Beginning on the dates Ingredion entered into the agreements for equity method investees, our share of income from them is included in Other operating (income). Ingredion incurred $3$6 million of pre-tax ~~direct~~ transaction and integration costs to acquire the Arcor ~~joint venture investment during the three months ended September 30, 2021,~~ and ~~$4 million of pre-tax gains, consisting of the $8 million gain related to the~~ Amyris joint venture ~~partially offset by $4 million of direct transaction costs to acquire the Arcor joint venture and Amyris~~ investments ~~during the nine months ended September 30,~~in 2021.

4. ~~Revenue Recognition~~

~~The Company applies the provisions of ASC 606-10,~~ ~~Revenue from Contracts with Customers~~. The Company recognizes revenue under the core principle to depict the transfer of products to customers in an amount reflecting the consideration the Company expects to receive. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company identifies customer purchase orders, which in some cases are governed by a master sales agreement, as the contracts with its customers. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the performance obligation, the Company evaluates whether the price is subject to adjustment to determine the consideration to which the Company expects to be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and is determinable prior to completion of the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other discount arrangements that reduce the transaction price. The reduction of the transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. Volume incentives and discounts are accrued at the satisfaction of the performance obligation and accounted for in Accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. These amounts were not significant as of September 30, 2021 or December 31, 2020. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied; therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.

Revenue is recognized when the Company’s performance obligation is satisfied and control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer.

Shipping and handling activities related to contracts with customers represent fulfillment costs and are recorded in Cost of sales. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. The Company applies a practical expedient to expense costs to obtain a contract as incurred as most contracts are one year or less. These costs primarily include the Company’s internal sales force compensation. Under the terms of these programs, such costs are generally earned and recognized at the time the revenue is recognized.

~~Table of Contents~~

From time to time, the Company may enter into long-term contracts with its customers. Historically, the contracts entered into by the Company do not result in significant contract assets or liabilities. Any such arrangements are accounted for in Other assets or Accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. There were no significant contract assets or liabilities as of September 30, 2021 or December 31, 2020.

The Company is principally engaged in the production and sale of starches and sweeteners for a wide range of industries, and is managed geographically on a regional basis. The Company’s operations are classified into 4 reportable business segments: North America, South America, Asia-Pacific and EMEA. The nature, amount, timing and uncertainty of the Company’s Net sales are managed by the Company primarily based on its geographic segments. Each region’s product sales are unique to each region and have unique risks.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2021

2020

2021

2020

Net sales to unaffiliated customers:

North America

$
1,083

$
928

$
3,096

$
2,739

South America

260

224

801

643

Asia-Pacific

245

207

728

583

EMEA

175

143

514

429

Total net sales

$
1,763

$
1,502

$
5,139

$
4,394

5. Restructuring and Impairment Charges

For the ~~three and nine months ended September 30, 2021, the Company~~first quarter of 2022, Ingredion recorded ~~$12~~$2 million of ~~net~~ pre-tax restructuring ~~and impairment income and $362~~charges. For the first quarter of 2021, we recorded a total of $370 million of pre-tax restructuring and impairment charges, ~~respectively. During the three months ended September 30, 2021, the Company recorded a $20~~consisting of $360 million ~~adjustment to its estimated final impairment~~ of the net assets contributed to the Arcor joint venture as described in Note 3 of the Notes to the Condensed Consolidated Financial Statements and below, based upon the final transaction terms, working capital, and foreign exchange impacts. This adjustment was partially offset by pre-tax ~~restructuring charges of $8 million primarily related to the Company’s Cost Smart program. For the nine months ended September 30, 2021, the Company recorded total~~ impairment charges ~~of $340 million related to the net assets contributed to the Arcor joint venture,~~ and ~~pre-tax restructuring charges of $22 million primarily related to the Company’s Cost Smart program.~~

~~For the three months and nine months ended September 30, 2020, the Company recorded $16 million and $41~~$10 million of pre-tax restructuring and impairment charges, respectively. For the three months ended September 30, 2020, these charges included pre-tax restructuring charges of $6 million primarily related to the Company’s Cost Smart program and an other-than-temporary impairment of $10 million on its equity method investment in Verdient Foods Inc. For the nine months ended September 30, 2020, the Company recorded pre-tax restructuring charges of $31 million primarily related to its Cost Smart program and an other-than-temporary impairment of $10 million on its equity method investment in Verdient Foods Inc.charges.

~~Impairment~~Restructuring Charges

~~On February 12, 2021,~~For the ~~Company signed an agreement~~first quarter of 2022, we recorded $2 million of pre-tax net restructuring related charges, which included $1 million of costs as part of our Cost Smart Cost of sales program and $1 million of costs associated with ~~an affiliate of Grupo Arcor, an Argentine food company, to establish Ingrear Holding S.A., a joint venture to combine~~our Cost Smart selling, general and operate 5 manufacturing facilities in Argentina to sell value-added ingredients to customers in the food, beverage, pharmaceutical and other industries in Argentina, Chile and Uruguay. On August 2, 2021, the Company and Grupo Arcor completed all closing conditions to finalize the transaction and formally establish the Arcor joint venture. The Arcor joint venture is managed by a jointly appointed team of executives.administrative expense (“SG&A”) program.

AtFor the ~~announcement~~first quarter of 2021, we recorded a total of $10 million pre-tax restructuring related charges. Of these charges, $5 million were related to our Cost Smart SG&A program, which were primarily for employee-related severance costs recorded in our North America and EMEA segments, professional services costs in our North America segment and other costs. We also recorded $3 million of pre-tax restructuring charges for our Cost Smart Cost of sales program, which were primarily for inventory and mechanical stores write-offs and other costs associated with the ~~agreement, during~~closure of our Lane Cove, Australia production facility and closures of North America facilities and product lines including our Berwick, Pennsylvania manufacturing facility and the ~~three months ended~~cessation of ethanol production at our Cedar Rapids, Iowa facility.

A summary of Ingredion’s severance accrual at March 31, ~~2021, the Company recorded the assets and liabilities expected~~2022, which we expect to ~~be contributed~~fully pay in 2022, is as held for sale. The Company recorded an impairment of $360 million based upon the estimated fair value of the assets and liabilities classified as held for sale. Upon completion of the transaction, the Company disposed of the assets and liabilities from its Argentina, Chile and Uruguay operations, that were previously accounted for as held for sale, and transferred them to the Arcor joint venturefollows ($ in exchange for an equity share in the venture. The Company has accounted for its share of the venture as an equity method investment, as discussed in Note 3 of the Notes to the Condensed Consolidated Financial Statements. Upon disposal, the Company valued the assetsmillions):


Balance in severance accrual as of December 31, 2021	$	3
Payments made to terminated employees		(1)
Balance in severance accrual as of March 31, 2022	$	2

129

Table of Contents

Impairment Charges

At the announcement of our agreement to invest in the Arcor joint venture during the first quarter of 2021, we reclassified assets and liabilities ~~transferred at~~we expected to contribute to the joint venture as held for sale in Other assets in the Condensed Consolidated Balance Sheets and we recorded an impairment charge of $360 million based on our preliminary estimates of their fair value. ~~This resulted in a $20~~Of the $360 million ~~favorable adjustment~~impairment charge for the net assets contributed to the ~~estimated impairment charge. The favorable adjustment was recorded~~Arcor joint venture during the ~~three months ended September 30, 2021. The total net impairment charge was $340 million for the nine months ended September 30,~~first quarter of 2021, ~~of which~~ $311 million was related to the write-off of the cumulative translation losses associated with the contributed net assets and ~~$29~~$49 million was related to the write-down ~~to fair value~~ of the contributed net assets to fair value. The Company recorded the impairment within Restructuring/impairment charges and related adjustments in the Condensed Consolidated Statements of Income during the nine months ended September 30, 2021.assets.

~~Restructuring Charges~~

For the three months ended September 30, 2021, the Company recorded $8 million of pre-tax restructuring related charges, consisting of $4 million of employee-related and other costs, including professional services, associated with its Cost Smart selling, general, and administrative expense (“SG&A”) program and $3 million of restructuring related charges primarily in North America as a part of its Cost Smart Cost of sales program. The Company also recorded $1 million of restructuring charges related to disposition of the assets contributed to the Arcor joint venture transaction described above.

For the nine months ended September 30, 2021, the Company recorded $22 million of pre-tax restructuring related charges, consisting of $13 million of employee-related and other costs, including professional services, associated with its Cost Smart SG&A program and $11 million of restructuring related charges as part of its Cost Smart Cost of sales program, primarily in North America. The Cost Smart Cost of sales program charges were partly offset by a $5 million gain on the sale of the Stockton, California land and building during the period. The Company also recorded $3 million of restructuring charges related to disposition of the assets contributed to the Arcor joint venture transaction described above.

For the three and nine months ended September 30, 2020, the Company recorded a total of $6 million and $31 million of pre-tax restructuring related charges, respectively. For the three and nine months ended September 30, 2020, the Company recorded $2 million and $17 million of pre-tax restructuring charges for its Cost Smart Cost of sales program, respectively. During the three months ended September 30, 2020, the Company recorded $1 million of other restructuring costs related to the closure of the Lane Cove, Australia manufacturing facility and $1 million of other costs related to the closure of the Stockton, California manufacturing facility. During the nine months ended September 30, 2020, the Company recorded $10 million of restructuring charges related to the closure of the Lane Cove, Australia manufacturing facility, $6 million related to the closure of the Stockton, California manufacturing facility and $1 million of other restructuring costs. The Lane Cove, Australia facility restructuring costs consisted of $6 million of asset write-offs, $3 million of other costs, and $1 million of accelerated depreciation. The Stockton, California facility restructuring costs consisted of $4 million of accelerated depreciation, $1 million of employee-related severance, and $1 million of other costs.

Additionally, the Company recorded pre-tax restructuring charges of $4 million and $14 million during the three and nine months ended September 30, 2020, respectively, for its Cost Smart SG&A program. During the three months ended September 30, 2020, the Company recorded $4 million of pre-tax restructuring charges, consisting primarily of other costs, including professional services, in North America. During the nine months ended September 30, 2020, the Company recorded pre-tax restructuring costs of $14 million primarily in North America, consisting of $12 million of other costs, including professional services, and $2 million of employee-related severance.

~~A summary of the Company’s employee-related severance accrual as of September 30, 2021 is as follows (in millions):~~

Balance in severance accrual as of December 31, 2020

$
12

Joint venture related

1

Cost Smart Cost of sales and SG&A

1

Payments made to terminated employees

(10)

Balance in severance accrual as of September 30, 2021

$
4

~~The entire $4 million severance accrual as of September 30, 2021 is expected to be paid in the next 12 months.~~

During the year ended December 31, 2020, the Company identified property, plant and equipment assets within the Stockton, California and Lane Cove, Australia locations that met the held for sale criteria totaling $8 million. During the nine months ended September 30, 2021, the Company sold the Stockton, California land and building for $11 million,

~~Table of Contents~~

resulting in a gain of $5 million. The remaining assets held for sale totaled $2 million as of September 30, 2021. The assets held for sale are reported within Other assets on the Condensed Consolidated Balance Sheets.

6. ~~Financial~~Derivative Instruments ~~Derivatives~~ and Hedging Activities

~~The Company~~Ingredion is exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, ~~the Company~~we actively ~~manages its~~manage our exposure to these market risks by entering ~~into~~ various hedging transactions authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. We have no collateral to counterparties under collateral funding arrangements as of March 31, 2022. Derivative financial instruments used by ~~the Company~~Ingredion consist primarily of commodity-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps and treasury locks (“T-Locks”).

Commodity price hedging: ~~The Company’s~~Ingredion’s principal use of derivative financial instruments is to manage commodity price risk relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the next 12 to 24 months. ~~The Company maintains~~We maintain a commodity-price risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodity-price volatility. To manage price risk related to corn purchases, primarily in North America, ~~the Company uses~~we use corn futures and option contracts that trade on regulated commodity exchanges to ~~lock-in~~lock in corn costs associated with fixed-priced customer sales contracts. ~~The Company~~Ingredion also uses over-the-counter natural gas swaps in North America to hedge a portion of its natural gas usage. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases. ~~The Company’s~~Ingredion’s natural gas derivatives and the majority of its corn derivatives have been designated as cash flow hedging ~~instruments.~~instruments for accounting purposes.

~~The Company enters into~~For certain corn derivative instruments that are not designated as cash flow hedging instruments ~~as defined by ASC 815,~~ ~~Derivatives and Hedging~~~~. Therefore, the~~for accounting purposes, all realized and unrealized gains and losses from these instruments are recognized in ~~Cost~~cost of sales ~~in the Condensed Consolidated Statements of Income~~ during each accounting period. ~~These~~We enter these derivative instruments ~~also~~to further mitigate commodity and basis price ~~risk~~risks related to anticipated purchases of corn. During the first quarter of 2022, Ingredion recognized a $2 million gain on non-designated commodity contracts compared to a $1 million loss on non-designated commodity contracts during the first quarter of 2021.

For commodity hedges designated as cash flow hedges for accounting purposes, unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of ~~other~~Other comprehensive loss (“~~OCL”~~OCL��) and included in the equity section of the Condensed Consolidated Balance Sheets as part of Accumulated other comprehensive loss (“AOCL”). These amounts, as well as their related tax effects, are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the ~~month~~period a hedge is determined to be ineffective. ~~The Company~~Ingredion assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. Gains and losses from cash flow hedging instruments reclassified from AOCL to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

~~As of September 30, 2021, the Company~~Ingredion had outstanding futures and option contracts that hedged the forecasted purchase of approximately 79107 million and 135 million bushels of corn as of March 31, 2022 and December 31. 2021, respectively. Ingredion also had outstanding swap contracts that hedged the forecasted purchase of approximately 3231 million ~~mmbtu’s~~and 35 million mmbtus of natural ~~gas.~~gas as of March 31, 2022 and December 31, 2021, respectively.

Table of Contents

Foreign currency hedging: Due to ~~the Company’s~~our global operations, including operations in many emerging markets, ~~the Company~~Ingredion is exposed to fluctuations in foreign currency exchange rates. As a result, ~~the Company~~Ingredion has exposure to translational foreign-exchange risk when the results of its foreign operations are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency are revalued. ~~The Company’s~~Ingredion’s foreign-exchange risk management strategy uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. ~~The Company~~Ingredion enters into foreign currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments ~~as defined by ASC 815,~~ ~~Derivatives and Hedging~~,for accounting purposes in order to mitigate transactional foreign-exchange risk. Gains and losses from derivative financial instruments not designated as hedging instruments for accounting purposes are marked to market in earnings during each accounting period.

~~The Company~~Ingredion hedges certain assets using foreign currency derivatives not designated as hedging instruments for accounting purposes, which had a notional value of ~~$385~~$466 million and ~~$410~~$360 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~

~~Table of Contents~~

2021, respectively. ~~The Company~~Ingredion also hedges certain liabilities using foreign currency derivatives not designated as hedging instruments, which had a notional value of ~~$225~~$223 million and ~~$224~~$205 million as of ~~September 30, 2021~~March 31, 2022 and December 31 ~~2020,~~2021, respectively.

~~The Company~~Ingredion hedges certain assets using foreign currency derivative instruments that are designated as cash flow hedging instruments for accounting purposes, which had a notional value of ~~$543~~$350 million and ~~$401~~$505 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. ~~The Company~~Ingredion also hedges certain liability positions using foreign currency derivative instruments that are designated as cash flow hedging instruments for accounting purposes, which had a notional value of ~~$761~~$578 million and ~~$542~~$708 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Interest rate hedging: ~~The Company~~Ingredion assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments and by evaluating hedging opportunities. ~~The Company’s~~Ingredion’s risk management strategy is to monitor interest rate risk attributable to both ~~the Company’s~~Ingredion’s outstanding and forecasted debt obligations as well as ~~the Company’s~~Ingredion’s offsetting hedge positions. Derivative financial instruments that have been used by ~~the Company~~Ingredion to manage its interest rate risk consist of interest rate swaps and T-Locks.

~~The Company~~Ingredion periodically enters into interest rate swaps to hedge its exposure to interest rate changes. 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. 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 September 30, 2021 and December 31, 2020, the Company~~Ingredion did not have any outstanding interest rate ~~swaps. During the year ended~~swaps as of March 31, 2022 or December 31, 2020, the Company had an outstanding interest rate swap agreement that converted the interest rates on $200 million of its $400 million 4.625% senior notes due November 1, 2020, to variable rates. The Company redeemed these notes in July 2020 and settled the outstanding interest rate swap in the second quarter of 2020.2021.

~~The Company~~Ingredion periodically enters into T-Locks to hedge its exposure to interest rate changes. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market fluctuations in the benchmark interest rate until the fixed interest rate is established and are accounted for as cash flow hedges. Accordingly, changes in the fair value of the T-Locks are recorded to AOCL until the consummation of the underlying debt offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. During 2020, Ingredion entered into and settled T-Locks associated with the issuance of senior notes due in 2030 and 2050. The ~~Company~~realized loss upon settlement of the T-Locks was recorded in AOCL and is amortized into earnings over the term of the senior notes. Ingredion did not have outstanding ~~T-locks~~T-Locks as of ~~September 30, 2021 or~~March 31, 2022 and December 31, ~~2020.~~2021.

Table of Contents

The derivative instruments designated as cash flow hedges included in AOCL as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are reflected below:



	Amount of Gains				Amount of Gains
Derivatives in Cash Flow Hedging Relationships	(Losses) included in AOCL				(Losses) included in AOCL
(in millions)	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Commodity contracts, net of income tax effect of $27 and $16, respectively	$	77	$	47
Foreign currency contracts, net of income tax effect of $ —		(1)		(1)
Commodity contracts, net of income tax effect of $51 and $19, respectively					$	146	$	51
Foreign currency contracts, net of income tax effect of $2 and $ -, respectively						1		-
Interest rate contracts, net of income tax effect of $1		(4)		(4)		(3)		(3)
Total	$	72	$	42	$	144	$	48

The fair value and balance sheet location of the Ingredion’s derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are reflected below:


	Fair Value of Hedging Instruments as of March 31, 2022 (in millions)
	Designated Hedging Instruments						Non-Designated Hedging Instruments
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	137	$	8	$	145	$	14	$	4	$	18
Other assets		35		—		35		—		3		3
Assets		172		8		180		14		7		21
Accounts payable and accrued liabilities		30		8		38		10		6		16
Non-current liabilities		1		—		1		—		7		7
Liabilities		31		8		39		10		13		23
Net Assets/(Liabilities)	$	141	$	—	$	141	$	4	$	(6)	$	(2)


	Fair Value of Hedging Instruments as of December 31, 2021 (in millions)
	Designated Hedging Instruments						Non-Designated Hedging Instruments
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	45	$	9	$	54	$	4	$	3	$	7
Other assets		7		6		13		—		—		—
Assets		52		15		67		4		3		7
Accounts payable and accrued liabilities		5		12		17		2		4		6
Non-current liabilities		2		6		8		—		1		1
Liabilities		7		18		25		2		5		7
Net Assets/(Liabilities)	$	45	$	(3)	$	42	$	2	$	(2)	$	—

Additional information relating to the Ingredion’s derivative instruments is presented below:


Derivatives in Cash Flow	Gains Recognized in AOCL on Derivatives					Gains (Losses) Reclassified from AOCL into Income
Hedging Relationships	Three Months Ended March 31,				Income Statement	Three Months Ended March 31,
(in millions)	2022		2021		Location	2022		2021
Commodity contracts	$	171	$	27	Cost of sales	$	44	$	(1)
Foreign currency contracts		5		2	Net sales/Cost of sales		2		2
Interest rate contracts		—		—	Financing costs, net		—		—
Total	$	176	$	29		$	46	$	1

Table of Contents

As of March 31, 2022, AOCL included $142 million of net gains (net of income taxes of $50 million) on commodities-related derivatives instruments, foreign currency hedges, and T-Locks designated as cash flow hedges that are expected to be reclassified into earnings during the next 12 months.

7. Fair Value Measurements

We measure certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Below is a summary of the hierarchy levels:

●

Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities.

●

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data.

●

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Assets and liabilities measured at fair value on a recurring basis are presented below:


	As of March 31, 2022								As of December 31, 2021
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available for sale securities	$	5	$	5	$	—	$	—	$	12	$	12	$	—	$	—
Derivative assets		201		134		67		—		74		49		25		—
Derivative liabilities		62		59		3		—		32		22		10		—
Long-term debt		1,763		—		1,763		—		1,957		—		1,957		—

The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable and short-term borrowings approximate fair values. Commodity futures, options and swaps contracts are recognized at fair value. Foreign currency forward contracts, swaps and options are also recognized at fair value. The fair value of Ingredion’s Long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities.

8. Financing Arrangements

Presented below are Ingredion’s debt carrying amounts, net of related discounts, premiums, and debt issuance costs as of March 31, 2022 and December 31, 2021:


	As of		As of
(in millions)	March 31, 2022		December 31, 2021
2.900% senior notes due June 1, 2030	$	595	$	595
3.200% senior notes due October 1, 2026		498		498
3.900% senior notes due June 1, 2050		390		390
6.625% senior notes due April 15, 2037		253		253
Revolving credit agreement		—		—
Other long-term borrowings		3		2
Total long-term debt		1,739		1,738
Commercial paper		428		250
Other short-term borrowings		86		58
Total short-term borrowings		514		308
Total debt	$	2,253	$	2,046

Table of Contents

On July 27, 2021 Ingredion established a commercial paper program under which Ingredion may issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1 billion outstanding at any time. The notes may be sold from time to time on customary terms in the U.S. commercial paper market. Ingredion intends to use the note proceeds for general corporate purposes. During 2022, the average amount of commercial paper outstanding was $353 million with an average interest rate of 0.38 percent and a weighted average maturity of 27 days. As of March 31, 2022, $428 million of commercial paper was outstanding with an average interest rate of 0.99 percent and a weighted average maturity of 14 days. As of December 31, 2021, $250 million of commercial paper was outstanding with an average interest rate of 0.35 percent and a weighted average maturity of 40 days. The amount of commercial paper outstanding under this program in 2022 is expected to fluctuate.

Other short-term borrowings as of March 31, 2022 and December 31, 2021, primarily include amounts outstanding under various unsecured local country operating lines of credit.

9. Commitments and Contingencies

In May 2021, the Brazilian Supreme Court (“Court”) issued its ruling related to the calculation of certain indirect taxes, which affirmed the Federal Court of Appeals (“Lower Court”) rulings that Ingredion had received in previous years and affirmed that Ingredion is entitled to previously recorded tax credits. The Court ruling ensured that Ingredion is entitled to $15 million of additional credits from the period of 2015 to 2018 that were previously unrecorded pending a final Court ruling. In the second quarter of 2021, Ingredion recorded the $15 million of additional credits within Other operating (income) in the Condensed Consolidated Statements of Income (Loss). As of March 31, 2022, Ingredion has $41 million of remaining indirect tax credits recorded in Other assets and Prepaid expenses on the Condensed Consolidated Balance Sheets that result in deferred income taxes of $3 million. We will use the income tax offsets to eliminate our Brazilian federal tax payments in 2022 and future years, including the income tax payable for the indirect taxes recovered.

10. Income Taxes

In the first quarter of 2022, the U.S. Treasury published final foreign tax credit regulations that limit our ability to claim foreign tax credits from certain countries, primarily in South America. As a result, Ingredion recorded a provisional tax liability and will continue to assess the impact of the regulations on our Condensed Consolidated Financial Statements.

11. Pension and Other Postretirement Benefits

The following table sets forth the components of net periodic benefit cost of the U.S. and non-U.S. defined benefit pension plans for the periods presented:


	Three Months Ended March 31,
	U.S. Plans				Non-U.S. Plans
(in millions)	2022		2021		2022		2021
Service cost	$	1	$	1	$	1	$	1
Interest cost		2		2		2		3
Expected return on plan assets		(4)		(5)		(2)		(2)
Amortization of actuarial loss		—		—		—		1
Net periodic benefit cost (a)	$	(1)	$	(2)	$	1	$	3

Ingredion currently anticipates that we will make approximately $4 million in cash contributions to our pension plans in 2022, consisting of contributions of $3 million to our non-U.S. pension plans and $1 million to our U.S. pension plans. For the first quarter of 2022, we made cash contributions of approximately $1 million to the non-U.S. plans and an insignificant amount to the U.S. plans.

Table of Contents

The following table sets forth the components of net postretirement benefit cost for the periods presented:


	Three Months Ended March 31,
(in millions)	2022		2021
Service cost	$	—	$	—
Interest cost		1		1
Amortization of prior service credit		—		(1)
Net periodic benefit cost (a)	$	1	$	—

(a)

The service cost component of net periodic benefit cost is presented within either Cost of sales or Operating expenses on the Condensed Consolidated Statements of Income (Loss). The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as Other, non-operating income on the Condensed Consolidated Statements of Income (Loss).

12. Equity

Treasury stock: On October 22, 2018, the Board of Directors authorized a new stock repurchase program permitting Ingredion to purchase up to 8 million of its outstanding shares of common stock from November 5, 2018 through December 31, 2023. The parameters of Ingredion’s stock repurchase program are not established solely with reference to the dilutive impact of shares issued under Ingredion’s stock incentive plan. However, Ingredion expects that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan.

During the first quarter of 2022, Ingredion repurchased 455 thousand outstanding shares of common stock in open market transactions at a net cost of $39 million. During the first quarter of 2021, Ingredion repurchased 158 thousand outstanding shares of common stock in open market transactions at a net cost of $14 million.

Share-based payments:The following table summarizes the components of Ingredion’s share-based compensation expense for the periods presented:


	Three Months Ended
	March 31,
(in millions)	2022		2021
Stock options:
Pre-tax compensation expense	$	1	$	1
Income tax benefit		—		—
Stock option expense, net of income taxes		1		1

Restricted stock units ("RSUs"):
Pre-tax compensation expense		3		3
Income tax benefit		—		—
RSUs, net of income taxes		3		3

Performance shares and other share-based awards:
Pre-tax compensation expense		3		1
Income tax benefit		(1)		—
Performance shares and other share-based compensation expense, net of income taxes		2		1

Total share-based compensation:
Pre-tax compensation expense		7		5
Income tax benefit		(1)		—
Total share-based compensation expense, net of income taxes	$	6	$	5

Stock Options: Under Ingredion’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a 10-year term and are exercisable upon vesting, which occurs over a three-year period at the anniversary dates of the date of grant. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement-eligible executive level employees. Ingredion estimates

Table of Contents

a forfeiture rate at the time of grant and updates the estimate throughout the vesting period of the stock options within the amount of compensation costs recognized in each period.

Ingredion granted non-qualified options to purchase 281 thousand shares and 358 thousand shares for the first quarter of 2022 and 2021, respectively. The fair value of each option grant for the periods presented was estimated using the Black-Scholes option-pricing model with the following assumptions:


	Three Months Ended March 31,
	2022		2021
Expected life (in years)	5.5		5.5
Risk-free interest rate	2.0	%	0.6	%
Expected volatility	23.8	%	23.2	%
Expected dividend yield	2.9	%	2.9	%

The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and Ingredion’s historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of Ingredion’s common stock. Dividend yields are based on Ingredion’s dividend yield at the date of issuance.

Stock option activity for the first quarter of 2022 was as follows:


	Number of Options (in thousands)	Weighted Average Exercise Price per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2021	2,154	$	90.39	5.26	$	26
Granted	281		88.66
Exercised	(36)		57.65
Cancelled	(13)		117.27
Outstanding as of March 31, 2022	2,386	$	90.54	5.69	$	12
Exercisable as of March 31, 2022	1,805	$	91.34	4.56	$	12

For the first quarter of 2022, cash received from the exercise of stock options was approximately $2 million. As of March 31, 2022, the unrecognized compensation cost related to non-vested stock options totaled $6 million, which is expected to be amortized over the weighted-average period of approximately 2.0 years.

Additional information pertaining to stock option activity is as follows for the periods presented:


	March 31,
(dollars in millions, except per share)	2022		2021
Weighted average grant date fair value of stock options granted (per share)	$	15.04	$	12.31
Total intrinsic value of stock options exercised	$	1	$	5

Restricted Stock Units: Ingredion has granted restricted stock units (“RSUs”) to certain key employees. The RSUs are primarily subject to cliff vesting, generally after three years, provided the employee remains in the service of Ingredion. The fair value of the RSUs is determined based upon the number of shares granted and the quoted market price of Ingredion’s common stock at the date of the grant.

Table of Contents

The following table summarizes RSU activity in 2022:


(RSUs in thousands)	Number of Restricted Shares	Weighted Average Fair Value per Share
Non-vested as of December 31, 2021	486	$	88.34
Granted	193		88.91
Vested	(122)		91.40
Cancelled	(14)		88.07
Non-vested as of March 31, 2022	543	$	87.86

As of March 31, 2022, the total remaining unrecognized compensation cost related to RSUs was $30 million, which will be amortized on a weighted-average basis over approximately 1.9 years.

Performance Shares: Ingredion has a long-term incentive plan for senior management in the form of performance shares. The vesting of the performance shares is generally based on 2 performance metrics. NaN percent of the performance shares awarded vest based on Ingredion’s total shareholder return as compared to the total shareholder return of its peer group and the remaining 50 percent vest based on the calculation of Ingredion’s three-year average Adjusted Return on Invested Capital (“Adjusted ROIC”) against an established ROIC target.

For the 2022 performance shares awarded based on Ingredion’s total shareholder return, the number of shares that ultimately vest can range from 0 to 200 percent of the grant depending on Ingredion’s total shareholder return as compared to the total shareholder return of its peer group. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee of the Board of Directors. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

For the 2022 performance shares awarded based on Adjusted ROIC, the number of shares that ultimately vest can range from 0 to 200 percent of the grant depending on Ingredion’s Adjusted ROIC performance against the target. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee. Compensation expense is based on the market price of our common stock on the date of the grant and the final number of shares that ultimately vest. Ingredion will estimate the potential share vesting at least annually to adjust the compensation expense for these awards over the vesting period to reflect Ingredion’s estimated Adjusted ROIC performance against the target. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

For the first quarter of 2022, Ingredion awarded 86 thousand performance shares at a weighted average fair value of $138.85 per share. As of March 31, 2022, the unrecognized compensation cost related to these awards was $16 million, which will be amortized over the remaining requisite service period of 2.4 years. The 2019 performance share awards, whose three-year performance period has ended, achieved a 0 percent payout of granted performance shares. There were 0 performance shares cancelled during 2022.

Accumulated Other Comprehensive Loss: The following is a summary of Accumulated other comprehensive loss for the first quarter of 2022 and 2021:


(in millions)	Cumulative Translation Adjustment		Hedging Activities		Pension and Postretirement Adjustment		AOCL
Balance, December 31, 2021	$	(903)	$	48	$	(42)	$	(897)
Other comprehensive gain before reclassification adjustments		38		176		—		214
(Gain) reclassified from accumulated OCL		—		(46)		—		(46)
Tax (provision)		—		(34)		—		(34)
Net other comprehensive income		38		96		—		134
Balance, March 31, 2022	$	(865)	$	144	$	(42)	$	(763)

Table of Contents

~~The fair value and balance sheet location of the Company’s derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are reflected below:~~

Fair Value of Hedging Instruments as of September 30, 2021

Designated Hedging Instruments (in millions)

Non-Designated Hedging Instruments (in millions)

Balance Sheet Location

Commodity Contracts

Foreign Currency Contracts

Total

Commodity Contracts

Foreign Currency Contracts

Total

Accounts receivable, net

$
71

$
10

$
81

$
3

$
7

$
10

Other assets

15

7

22

—

3

3

Assets

86

17

103

3

10

13

Accounts payable and accrued liabilities

6

22

28

1

—

1

Non-current liabilities

3

5

8

—

—

—

Liabilities

9

27

36

1

—

1

Net (Liabilities)/Assets

$
77

$
(10)

$
67

$
2

$
10

$
12

Fair Value of Hedging Instruments as of December 31, 2020

Designated Hedging Instruments (in millions)

Non-Designated Hedging Instruments (in millions)

Balance Sheet Location

Commodity Contracts

Foreign Currency Contracts

Total

Commodity Contracts

Foreign Currency Contracts

Total

Accounts receivable, net

$
50

$
7

$
57

$
3

$
4

$
7

Other assets

4

—

4

—

1

1

Assets

54

7

61

3

5

8

Accounts payable and accrued liabilities

4

12

16

1

8

9

Non-current liabilities

2

—

2

—

2

2

Liabilities

6

12

18

1

10

11

Net (Liabilities)/Assets

$
48

$
(5)

$
43

$
2

$
(5)

$
(3)

~~Additional information relating to the Company’s derivative instruments is presented below:~~

Derivatives in Cash Flow

Gains (Losses) Recognized
in AOCL on Derivatives

Income

Gains (Losses) Reclassified
from AOCL into Income

Hedging Relationships

Three Months Ended September 30,

Statement

Three Months Ended September 30,

(in millions)

2021

2020

Location

2021

2020

Commodity contracts

$
36

$
21

Cost of sales

$
62

$
(30)

Foreign currency contracts

(1)

(5)

Net sales/Cost of sales

(2)

(1)

Interest rate contracts

—

—

Financing costs, net

—

—

Total

$
35

$
16

$
60

$
(31)

Derivatives in Cash-Flow

Gains (Losses) Recognized
in AOCL on Derivatives

Income

Gains (Losses) Reclassified
from AOCL into Income

Hedging Relationships

Nine Months Ended September 30,

Statement

Nine Months Ended September 30,

(in millions)

2021

2020

Location

2021

2020

Commodity contracts

$
212

$
(36)

Cost of sales

$
171

$
(54)

Foreign currency contracts

(1)

(9)

Net sales/Cost of sales

(1)

(1)

Interest rate contracts

—

(5)

Financing costs, net

—

(1)

Total

$
211

$
(50)

$
170

$
(56)

~~Table of Contents~~

Derivatives in Fair Value Hedging
Income Statement Location of

Gains (Losses) Recognized in Income

Income Statement

Gains (Losses) Recognized in Income

Relationships
Derivatives Designated as

Three Months Ended September 30,

Location

Three Months Ended September 30,

(in millions)
Hedging Instruments

2021

2020

of Hedged Items

2021

2020

Interest rate contracts
Financing costs, net

$
—

$
—

Financing costs, net

$
—

$
—

Derivatives in Fair Value
Income Statement Location of

Gains (Losses) Recognized in Income

Income Statement

Gains (Losses) Recognized in Income

Hedging Relationships
Derivatives Designated as

Nine Months Ended September 30,

Location

Nine Months Ended September 30,

(in millions)
Hedging Instruments

2021

2020

of Hedged Items

2021

2020

Interest rate contracts
Financing costs, net

$
—

$
(1)

Financing costs, net

$
—

$
1


(in millions)	Cumulative Translation Adjustment		Hedging Activities		Pension and Postretirement Adjustment		Accumulated Other Comprehensive Loss
Balance, December 31, 2020	$	(1,114)	$	42	$	(61)	$	(1,133)
Other comprehensive (loss) before reclassification adjustments		(52)		29		—		(23)
(Gain) reclassified from accumulated OCL		—		(1)		—		(1)
Tax (provision)		—		(7)		—		(7)
Net other comprehensive (loss) income		(52)		21		—		(31)
Balance, March 31, 2021	$	(1,166)	$	63	$	(61)	$	(1,164)

As of September 30, 2021, AOCL included $60 million of net gains (net of income taxes of $22 million) on commodities-related derivatives instruments, foreign currency hedges, and T-Locks designated as cash flow hedges that are expected to be reclassified into earnings during the next 12 months.

~~Fair Value Measurements:~~ ~~Presented below are the fair values of the Company’s financial instruments and derivatives as of the dates presented:~~

As of September 30, 2021

As of December 31, 2020

(in millions)

Total

Level 1 (a)

Level 2 (b)

Level 3 (c)

Total

Level 1 (a)

Level 2 (b)

Level 3 (c)

Available for sale securities

$
12

$
12

$
—

$
—

$
11

$
11

$
—

$
—

Derivative assets

116

28

88

—

69

53

16

—

Derivative liabilities

37

7

30

—

29

3

26

—

Long-term debt

1,925

—

1,925

—

1,751

—

1,751

—

~~(a)~~

~~Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities.~~

~~(b)~~

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data.

~~(c)~~

The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable and short-term borrowings approximate fair values. Commodity futures, options, and swap contracts are recognized at fair value. Foreign currency forward contracts, swaps and options are also recognized at fair value. The fair value of the Company’s Long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities. As of September 30, 2021, the carrying value and fair value of the Company’s Long-term debt was approximately $1.7 billion and $1.9 billion, respectively.

~~Table of Contents~~

7. ~~Debt~~

~~Presented below are the Company’s debt carrying amounts, net of related discounts, premiums, and debt issuance costs as of September 30, 2021 and December 31, 2020:~~

As of

As of

(in millions)

September 30, 2021

December 31, 2020

2.900% senior notes due June 1, 2030

$
594

$
594

3.200% senior notes due October 1, 2026

498

497

3.900% senior notes due June 1, 2050

390

390

6.625% senior notes due April 15, 2037

253

253

Revolving credit agreement

—

—

Other long-term borrowings

13

14

Total long-term debt

1,748

1,748

Term loan credit agreement due April 12, 2021

—

380

Commercial paper

350

—

Other short-term borrowings

48

58

Total short-term borrowings

398

438

Total debt

$
2,146

$
2,186

On March 16, 2021, the Company amended and restated its term loan credit agreement (the “Amended Term Loan Credit Agreement”). As of September 30, 2021, the Company repaid in full the $380 million of borrowings outstanding under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement restated the previous agreement by extending the maturity date of the borrowings under the previous agreement until March 15, 2022. No new borrowings under the Amended Term Loan Credit Agreement were incurred in connection with the amendment and restatement. Borrowings under the Amended Term Loan Credit Agreement bore interest at a variable annual rate based on a London Interbank Offering Rate (“LIBOR”) or a base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Amended Term Loan Credit Agreement ~~reduced the applicable interest rate margin for loans accruing interest based on LIBOR from 0.80 percent to 0.75 percent.~~ The Company was required to pay a fee on the unused availability under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement contained customary representations, warranties, covenants and events of default, including covenants restricting the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and certain fundamental changes involving the Company and its subsidiaries, subject to certain exceptions in each case. The Company also had to maintain a specified maximum consolidated leverage ratio and a specified minimum consolidated interest coverage ratio.

On June 30, 2021, the Company entered into a new revolving credit agreement (the “Revolving Credit Agreement”) to replace the previous revolving credit agreement, which was terminated. The Revolving Credit Agreement provides for a five-year unsecured revolving credit facility in an aggregate principal amount of $1 billion outstanding at any time. The facility will mature on June 30, 2026. Loans under the facility will accrue interest at a per annum rate equal, at the Company’s option, to either a LIBOR rate 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 LIBOR rate plus 1.00%) plus an applicable margin. The Revolving Credit 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 the Company’s subsidiaries, the incurrence of liens and the consummation of certain mergers, consolidations and sales of assets. The Company is 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, as each such financial covenant is calculated for the most recently completed four-quarter period. As of September 30, 2021, the Company was in compliance with these covenants.

On July 27, 2021, the Company established a commercial paper program under which the Company may issue senior unsecured notes of short maturities up to a maximum aggregate principal amount of $1 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 Company intends to use the note proceeds for general corporate purposes. During the three months ended September 30, 2021, the average amount of commercial paper outstanding during the period was $401 million. As of September 30, 2021, $350 million of commercial paper was outstanding. The commercial paper outstanding has a weighted average interest rate of

~~Table of Contents~~

~~0.28% over a weighted average maturity of 76 days. The amount of commercial paper outstanding under this program in 2021 is expected to fluctuate.~~

~~Other short-term borrowings as of September 30, 2021 and December 31, 2020, primarily include amounts outstanding under various unsecured local country operating lines of credit.~~

8. ~~Leases~~

The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in operating lease assets, and current and non-current operating lease liabilities in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease asset value includes in its calculation any prepaid lease payments made and any lease incentives received from the arrangement as a reduction of the asset. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options is included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and non-lease components for its leases when it is impracticable to separate the two, such as for leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has operating leases for certain rail cars, office space, warehouses, and machinery and equipment. The commencement date used for the calculation of the lease obligations recorded is the latter of the commencement date of the new standard (January 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. The Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. The Company currently has 0 finance leases.

~~Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows for the periods presented:~~

Three Months Ended

Nine Months Ended

Lease Cost

September 30,

September 30,

(in millions)

2021

2020

2021

2020

Operating lease cost

$
14

$
14

$
43

$
40

Variable operating lease cost

6

8

21

23

Short term lease cost

1

1

3

3

Lease cost

$
21

$
23

$
67

$
66

~~Table of Contents~~

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities and the related operating lease assets as presented on the Condensed Consolidated Balance Sheet as of September 30, 2021.

Operating Leases

As of

(in millions)

September 30, 2021

2021 (Excluding the nine months ended September 30, 2021)

$
14

2022

51

2023

41

2024

30

2025

21

Thereafter

67

Total future lease payments

224

Less imputed interest

25

Present value of future lease payments

199

Less current lease liabilities

47

Non-current operating lease liabilities

$
152

Operating lease assets

$
191

~~Additional information related to the Company’s operating leases is listed below.~~

Three Months Ended

Nine Months Ended

Other Information

September 30,

September 30,

($ in millions)

2021

2020

2021

2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
14

$
14

$
43

$
40

Right-of-use assets obtained in exchange for lease liabilities:

Operating leases

$
18

$
24

$
57

$
45

As of

As of

September 30, 2021

December 31, 2020

Weighted average remaining lease term:

Operating leases

6.7 years

5.5 years

Weighted average discount rate:

Operating leases

4.2
%

4.9
%

~~9. Taxes~~

The Company’s effective tax rate for the three months ended September 30, 2021 decreased to 22.2 percent from 30.1 percent for the three months ended September 30, 2020. The decrease in the effective income tax rate was driven by the utilization of U.S. foreign tax credits for which a benefit had not been previously recognized compared to a valuation allowance recorded for the three months ended September 30, 2020. The remaining decrease in the effective tax rate was driven by a $20 million impairment adjustment on the net assets contributed to the Arcor joint venture, as described in Note 5 of the Notes to the Condensed Consolidated Financial Statements, with 0 corresponding income tax expense recorded with respect to the impairment, a change in mix of earnings, including the consolidation of PureCircle, and certain other items in the prior year. These items were partially offset by a decrease in the value of the Mexican peso against the U.S. dollar during the three months ended September 30, 2021, as compared to an increase during the three months ended September 30, 2020 and a valuation allowance on net operating losses compared to the utilization of net operating losses for which a benefit had not been previously recognized for the three months ended September 30, 2020.

The effective tax rate for the nine months ended September 30, 2021 was 66.5 percent compared to 34.4 percent for the nine months ended September 30, 2020. The primary cause of the increase in the effective tax rate was a $340 million impairment charge related to the net assets contributed to the Arcor joint venture. There was 0 corresponding income tax benefit recorded with respect to the impairment. This item was partially offset by a tax benefit of $30 million due to the reversal of an accrual for withholding tax on the unremitted earnings of a foreign subsidiary. The remaining change in the effective income tax rate was primarily driven by a decrease in the value of the Mexican peso against the U.S. dollar. The decrease in the value of the Mexican peso against the U.S. dollar produced taxable translation gains on

~~Table of Contents~~

net-U.S.-dollar-monetary assets held in Mexico for which there was 0 corresponding gain in pre-tax income. Consequently, the Company recorded a tax expense of $16 million in the nine months ended September 30, 2020, as compared to $4 million in the nine months ended September 30, 2021.

In January 2019, the Company’s Brazilian subsidiary received a favorable decision from the Federal Court of Appeals in Sao Paulo, Brazil, related to certain indirect taxes collected in prior years. The Company finalized its calculation of the amount of the credits and interest due from the favorable decision, concluding that the Company could be entitled to approximately $66 million of credits spanning a period from 2005 to 2018. The Department of Federal Revenue of Brazil, however, issued an Internal Ruling in which it charged that the Company is entitled to only $22 million of the calculated indirect tax credits and interest for the period from 2005 to 2014. The Brazil National Treasury filed a motion for clarification with the Brazilian Supreme Court, asking the Court, among other things, to modify the lower court’s decision to approve the Internal Ruling, which could impact the decision in favor of the Company. During the year ended December 31, 2020, the Company received another favorable court judgment that clarified the calculation of the Company’s benefit, allowing the Company to claim gross treatment within the indirect tax claim calculation and a larger indirect tax claim against the government. As a result of the decision, the Company recorded an additional $35 million pre-tax benefit in the Consolidated Income Statement in Other income for the year ended December 31, 2020, related to the open period of 2005 to 2014. In May 2021, the Brazilian Supreme Court issued its ruling related to the calculation of certain indirect taxes, which affirmed the lower court rulings that the Company had received in previous years and affirmed that the Company is entitled to the previously recorded tax credits. The Supreme Court ruling ensures that the Company will be entitled to $15 million of additional credits from the period of 2015 to 2018 that was previously unrecorded pending a final court ruling. The Company recorded the $15 million of additional credits during the three months ended June 30, 2021 within Other Income (expense), net in the Condensed Consolidated Income Sheet. As of September 30, 2021, the Company has $51 million of remaining tax credits recorded in Other assets and Prepaid expenses on the Condensed Consolidated Balance Sheets that result in deferred income taxes of $17 million. The Company will use the tax offsets to eliminate its Brazilian federal tax payments in 2021 and future years, including the income tax payable with respect to the indirect taxes recovered.

~~10.~~ ~~Net Periodic Pension and Postretirement Benefit Costs~~

~~The following table sets forth the components of net periodic benefit cost of the U.S. and non-U.S. defined benefit pension plans for the periods presented:~~

Three Months Ended September 30,

Nine Months Ended September 30,

U.S. Plans

Non-U.S. Plans

U.S. Plans

Non-U.S. Plans

(in millions)

2021

2020

2021

2020

2021

2020

2021

2020

Service cost

$
1

$
2

$
1

$
1

$
3

$
4

$
3

$
3

Interest cost

2

2

2

2

6

8

7

8

Expected return on plan assets

(4)

(5)

(2)

(2)

(13)

(16)

(6)

(6)

Amortization of actuarial loss

(1)

—

1

1

(1)

—

2

2

Net periodic benefit cost (a)

$
(2)

$
(1)

$
2

$
2

$
(5)

$
(4)

$
6

$
7

The Company currently anticipates that it will make approximately $4 million in cash contributions to its pension plans in 2021, consisting of contributions of $3 million to its non-U.S. pension plans and $1 million to its U.S. pension plans. For the nine months ended September 30, 2021,~~cash contributions of approximately $2 million were made to the non-U.S. plans and $1 million to the U.S. plans.~~

~~Table of Contents~~

~~The following table sets forth the components of net postretirement benefit cost for the periods presented:~~

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

2021

2020

2021

2020

Service cost

$
—

$
—

$
—

$
—

Interest cost

1

—

2

2

Amortization of prior service credit

—

—

(1)

(1)

Net periodic benefit cost (a)

$
1

$
—

$
1

$
1

~~(a)~~

The service cost component of net periodic benefit cost is presented within either Cost of sales or Operating expenses on the Condensed Consolidated Statements of Income. The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as Other, non-operating income on the Condensed Consolidated Statements of Income.

~~11.~~ ~~Inventories~~

~~Inventories are summarized as follows:~~

As of

As of

(in millions)

September 30, 2021

December 31, 2020

Finished and in process

$
627

$
584

Raw materials

361

236

Manufacturing supplies and other

105

97

Total inventories

$
1,093

$
917

~~12. Equity~~

~~Treasury stock~~: On October 22, 2018, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to 8 million of its outstanding shares of common stock from November 5, 2018 through December 31, 2023. The parameters of the Company’s stock repurchase program are not established solely with reference to the dilutive impact of shares issued under the Company’s stock incentive plan. However, the Company expects that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan.

During the three and nine months ended September 30, 2021, the Company repurchased 500 thousand and 765 thousand outstanding shares of common stock in open market transactions at a net cost of $44 million and $68 million, respectively. During the three and nine months ended September 30, 2020, the Company did 0t repurchase shares of common stock.

~~Table of Contents~~

~~Share-based payments:~~~~The following table summarizes the components of the Company’s share-based compensation expense for the periods presented:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2021

2020

2021

2020

Stock options:

Pre-tax compensation expense

$
1

$
1

$
3

$
3

Income tax benefit

—

—

—

—

Stock option expense, net of income taxes

1

1

3

3

Restricted stock units ("RSUs"):

Pre-tax compensation expense

2

3

8

9

Income tax benefit

—

—

(1)

(1)

RSUs, net of income taxes

2

3

7

8

Performance shares and other share-based awards:

Pre-tax compensation expense

1

2

4

6

Income tax benefit

—

(1)

—

(1)

Performance shares and other share-based compensation expense, net of income taxes

1

1

4

5

Total share-based compensation:

Pre-tax compensation expense

4

6

15

18

Income tax benefit

—

(1)

(1)

(2)

Total share-based compensation expense, net of income taxes

$
4

$
5

$
14

$
16

~~Stock Options:~~ Under the Company’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a 10-year term and are exercisable upon vesting, which occurs over a three-year period at the anniversary dates of the date of grant. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement-eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate throughout the vesting period of the stock options within the amount of compensation costs recognized in each period.

The Company granted non-qualified options to purchase 358 thousand shares and 336 thousand shares for the nine months ended September 30, 2021 and 2020, respectively. The fair value of each option grant for the periods presented was estimated using the Black-Scholes option-pricing model with the following assumptions at the date of grant:

Nine Months Ended September 30,

2021

2020

Expected life (in years)

5.5

5.5

Risk-free interest rate

0.6
%

1.4
%

Expected volatility

23.2
%

19.8
%

Expected dividend yield

2.9
%

2.9
%

The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of the Company’s common stock. Dividend yield is based on current dividend payments at the date of grant.

~~Table of Contents~~

~~Stock option activity for the nine months ended September 30, 2021 was as follows:~~

Number of Options (in thousands)

Weighted Average Exercise Price per Share

Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value (in millions)

Outstanding as of December 31, 2020

2,238

$
86.55

5.15

$
14

Granted

358

87.12

Exercised

(200)

58.10

Cancelled

(102)

90.72

Outstanding as of September 30, 2021

2,294

$
89.15

5.36

$
18

Exercisable as of September 30, 2021

1,725

$
89.50

4.19

$
17

For the nine months ended September 30, 2021, cash received from the exercise of stock options was approximately $12 million. As of September 30, 2021, the unrecognized compensation cost related to non-vested stock options totaled $3 million, which is expected to be amortized over the weighted-average period of approximately 1.7 years.

~~Additional information pertaining to stock option activity is as follows for the periods presented:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

(dollars in millions, except per share)

2021

2020

2021

2020

Weighted average grant date fair value of stock options granted (per share)

$
—

$
—

$
12.31

$
11.48

Total intrinsic value of stock options exercised

$
—

$
—

$
6

$
4

~~Restricted Stock Units:~~ The Company has granted restricted stock units (“RSUs”) to certain key employees. The RSUs are primarily subject to cliff vesting, generally after three years, provided the employee remains in the service of the Company. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement-eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate throughout the vesting period of the RSUs within the amount of compensation costs recognized in each period. The fair value of the RSUs is determined based upon the number of shares granted and the market price of the Company’s common stock on the date of the grant.

~~The following table summarizes RSU activity for the nine months ended September 30, 2021:~~

(RSUs in thousands)

Number of Restricted Shares

Weighted Average Fair Value per Share

Non-vested as of December 31, 2020

418

$
96.45

Granted

228

87.42

Vested

(90)

124.16

Cancelled

(69)

89.87

Non-vested as of September 30, 2021

487

$
88.07

~~As of September 30, 2021, the total remaining unrecognized compensation cost related to RSUs was $21 million, which will be amortized over a weighted average period of approximately 1.9 years.~~

~~Performance Shares:~~ ~~The Company has a long-term incentive plan for senior management in the form of performance shares~~. Historically these performance shares vested based solely on the Company’s total shareholder return as compared to the total shareholder return of its peer group over the three-year vesting period. Beginning with the 2019 performance share grants, the vesting of the performance shares is based on 2 performance metrics. NaN ~~percent~~ ~~of the performance shares awarded will vest based on the Company’s total shareholder return as compared to the total shareholder return of its peer group, and the remaining 50~~ ~~percent~~ ~~will vest based on the calculation of the Company’s three-year~~ ~~average~~ Adjusted Return on Invested Capital (“Adjusted ROIC”) against an established Adjusted ROIC target. The 2021 performance shares were granted in 2 tranches. Vesting for the first tranche was split evenly between the Company’s total shareholder return and Adjusted ROIC against the applicable target. The second tranche of performance share awards will vest 100% based on the calculation of Adjusted ROIC against the applicable target.

~~Table of Contents~~

For the 2021 performance shares awarded based on the Company’s total shareholder return, the number of shares that ultimately vest can range from 0 to 200% of the grant depending on the Company’s total shareholder return as compared to the total shareholder return of its peer group. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the People, Culture, and Compensation Committee of the Board of Directors. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

For the 2021 performance shares awarded based on Adjusted ROIC, the number of shares that ultimately vest can range from 0 to 200% of the grant depending on the Company’s Adjusted ROIC performance against the target. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the People, Culture, and Compensation Committee. Compensation expense is based on the market price of the Company’s common stock on the date of the grant and the final number of shares that ultimately vest. The Company will estimate the potential share vesting at least annually to adjust the compensation expense for these awards over the vesting period to reflect the Company’s estimated Adjusted ROIC performance against the target. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

~~For the nine months ended September 30, 2021, the Company awarded 108 thousand performance shares at a weighted average fair value of $100.29 per share.~~

~~As of September 30, 2021, the unrecognized compensation cost related to these awards was $7 million, which will be amortized over the remaining requisite service period of 2.1 years.~~

The 2018 performance share awards vested during the nine months ended September 30, 2021, achieving a 0 percent payout of the granted performance shares. Additionally, there were 26 thousand performance share cancellations during the nine months ended September 30, 2021.

~~Accumulated Other Comprehensive Loss:~~ ~~The following is a summary of net changes in Accumulated other comprehensive loss by component and net of tax for the nine months ended September 30, 2021 and 2020:~~

(in millions)

Cumulative Translation Adjustment

Hedging Activities

Pension and Postretirement Adjustment

Accumulated Other Comprehensive Loss

Balance, December 31, 2020

$
(1,114)

$
42

$
(61)

$
(1,133)

Other comprehensive (loss) gain before reclassification adjustments

(85)

211

—

126

Loss (gain) reclassified from accumulated OCL

311

(170)

—

141

Tax (provision)

—

(11)

—

(11)

Net other comprehensive income

226

30

—

256

Balance, September 30, 2021

$
(888)

$
72

$
(61)

$
(877)

(in millions)

Cumulative Translation Adjustment

Hedging Activities

Pension and Postretirement Adjustment

Accumulated Other Comprehensive Loss

Balance, December 31, 2019

$
(1,089)

$
(9)

$
(60)

$
(1,158)

Other comprehensive (loss) before reclassification adjustments

(105)

(50)

—

(155)

Loss reclassified from accumulated OCL

—

56

—

56

Tax (provision)

—

(2)

—

(2)

Net other comprehensive (loss) income

(105)

4

—

(101)

Balance, September 30, 2020

$
(1,194)

$
(5)

$
(60)

$
(1,259)

~~Table of Contents~~

Supplemental Information: The following Condensed Consolidated Statements of Equity and Redeemable Equity ~~provide~~present the dividends per share for common stock for the periods ~~presented:~~indicated:


	Total Equity																		Total Equity
													Non-																		Non-
									Accumulated				Redeemable		Share-based		Redeemable										Accumulated				Redeemable		Share-based		Redeemable
					Additional				Other				Non-		Payments		Non-						Additional				Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling		Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests		Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income attributable to non-controlling interests														4				(1)
Dividends declared, common stock ($0.64/share)												(44)
Repurchases of common stock								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive loss										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70
Net income attributable to Ingredion												178
Net income attributable to non-controlling interests														3
Dividends declared, common stock ($0.64/share)												(43)
Dividends declared, non-controlling interests														(7)
Repurchases of common stock								(10)
Share-based compensation, net of issuance						(1)		3								7
Other comprehensive income										58
Balance, June 30, 2021	$	—	$	1	$	1,154	$	(1,029)	$	(1,106)	$	3,802	$	22	$	28	$	70
Balance, December 31, 2021																			$	—	$	1	$	1,158	$	(1,061)	$	(897)	$	3,899	$	18	$	36	$	71
Net income attributable to Ingredion												118																		130
Net income attributable to non-controlling interests														3				(2)														3
Dividends declared, common stock ($0.65/share)												(43)																		(43)
Dividends declared, non-controlling interests														(3)
Repurchases of common stock								(44)																		(39)
Share-based compensation, net of issuance						1		1								4								2		9								(5)
Other comprehensive income (loss)										229				(3)														134				(2)
Balance, September 30, 2021	$	—	$	1	$	1,155	$	(1,072)	$	(877)	$	3,877	$	19	$	32	$	68
Balance, March 31, 2022																			$	—	$	1	$	1,160	$	(1,091)	$	(763)	$	3,986	$	19	$	31	$	71


	Total Equity
													Non-
									Accumulated				Redeemable		Share-based		Redeemable
					Additional				Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income attributable to non-controlling interests														4				(1)
Dividends declared, common stock ($0.64/share)												(44)
Repurchases of common stock								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive (loss) income										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70

2618

Table of Contents

Total Equity

Non-

Accumulated

Redeemable
Share-based

Redeemable

Additional

Other

Non-

Payments

Non-

Preferred

Common

Paid-In

Treasury

Comprehensive

Retained

Controlling

Subject to

Controlling

(in millions)

Stock

Stock

Capital

Stock

Loss

Earnings

Interests

Redemption

Interests

Balance, December 31, 2019

$
—

$
1

$
1,137

$
(1,040)

$
(1,158)

$
3,780

$
21

$
31

$
—

Net income attributable to Ingredion

75

Net income attributable to non-controlling interests

3

Dividends declared, common stock ($0.63/share)

(42)

Share-based compensation, net of issuance

5

12

(8)

Other comprehensive loss

(164)

(3)

Balance, March 31, 2020

$
—

$
1

$
1,142

$
(1,028)

$
(1,322)

$
3,813

$
21

$
23

$
—

Net income attributable to Ingredion

66

Net income attributable to non-controlling interests

1

Dividends declared, common stock ($0.63/share)

(43)

Dividends declared, non-controlling interests

(3)

Share-based compensation, net of issuance

1

1

4

Other comprehensive income (loss)

15

1

Balance, June 30, 2020

$
—

$
1

$
1,143

$
(1,027)

$
(1,307)

$
3,836

$
20

$
27

$
—

Net income attributable to Ingredion

92

Net income attributable to non-controlling interests

3

(2)

Dividends declared, common stock ($0.64/share)

(44)

Dividends declared, non-controlling interests

(2)

Acquisition of redeemable non-controlling interests

74

Share-based compensation, net of issuance

2

5

Other comprehensive income (loss)

48

2

Balance, September 30, 2020

$
—

$
1

$
1,145

$
(1,027)

$
(1,259)

$
3,884

$
21

$
32

$
74

Supplemental Information: The following table provides the computation of basic and diluted earnings per common share ("EPS") for the periods presented:

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

(in millions, except per share amounts)

Net Income Available to Ingredion

Weighted Average Shares

Per Share Amount

Net Income Available to Ingredion

Weighted Average Shares

Per Share Amount

Basic EPS

$
118

67.0

$
1.76

$
92

67.2

$
1.37

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards

0.6

0.4

Diluted EPS

$
118

67.6

$
1.75

$
92

67.6

$
1.36

~~Table of Contents~~


	Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020					Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
(in millions, except per share amounts)	Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount
Basic EPS	$	50	67.2	$	0.74	$	233	67.2	$	3.47	$	130	66.9	$	1.94	$	(246)	67.3	$	(3.66)

Effect of Dilutive Securities:
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards			0.6					0.4					0.7					—
Diluted EPS	$	50	67.8	$	0.74	$	233	67.6	$	3.45	$	130	67.6	$	1.92	$	(246)	67.3	$	(3.66)

~~For the three and nine months ended September 30, 2021, approximately 1.6~~Approximately 1.3 million and ~~1.5~~2.1 million share-based awards of common stock ~~respectively,~~ were excluded from the calculation of diluted EPS as the impact of their inclusion would have been ~~anti-dilutive. For~~anti-dilutive for the ~~three~~first quarter of 2022 and nine months ended September 30, 2020, approximately 1.7 million and 1.4 million share-based awards of common stock, respectively, were excluded from the calculation of diluted EPS as the impact of their inclusion would have been anti-dilutive.2021, respectively.

13. Segment Information

~~The Company~~Ingredion is principally engaged in the production and sale of starches and sweeteners for a wide range of industries and is managed geographically on a regional basis. The ~~Company’s operations~~nature, amount, timing and uncertainty of Ingredion’s Net sales are ~~classified into 4 reportable business segments:~~managed by Ingredion primarily based on our geographic segments, which we classify and report as North America, South America, Asia-Pacific and EMEA. ~~Its~~Our North America segment includes businesses in the U.S., Mexico and Canada. ~~The Company’s~~Our South America segment includes businesses and our share of earnings from investments in joint ventures in Brazil, Argentina, Chile, Colombia, Ecuador, ~~and the Southern Cone of South America, which includes Argentina,~~ Peru ~~Chile,~~ and Uruguay. ~~Its~~Our Asia-Pacific segment includes the PureCircle operating segment as well as businesses in South Korea, Thailand, China, Australia, Japan, New Zealand, Indonesia, Singapore, the Philippines, ~~India,~~ Malaysia, ~~New Zealand,~~India and Vietnam. ~~The Company’s~~Our EMEA segment includes businesses in Pakistan, Germany, Poland, the United Kingdom and South ~~Africa, and Kenya. The Company has aggregated the PureCircle operating segment into the Asia-Pacific reportable segment.~~Africa. Net sales by product are not presented because to do so would be impracticable.

Presented below are Ingredion’s net sales to unaffiliated customers by reportable segment for the periods indicated:


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net sales to unaffiliated customers:
North America	$	1,174	$	945
South America		252		273
Asia-Pacific		272		235
EMEA		194		161
Total net sales	$	1,892	$	1,614

2819

Table of Contents

Presented below are Ingredion’s operating income by reportable segment for the periods indicated:


	Three Months Ended
	March 31,
(in millions)	2022		2021
Operating income:
North America	$	156	$	134
South America		38		40
Asia-Pacific		22		25
EMEA		31		31
Corporate		(34)		(29)
Subtotal		213		201
Acquisition/integration costs		(1)		(1)
Restructuring/impairment charges		(2)		(10)
Impairment on assets held for sale		—		(360)
Total operating income	$	210	$	(170)

Presented below are Ingredion’s total assets by reportable segment as of March 31, 2022, and December 31, 2021:


	As of		As of
(in millions)	March 31, 2022		December 31, 2021
Assets:
North America (a)	$	4,523	$	4,203
South America		907		799
Asia-Pacific		1,401		1,403
EMEA		604		594
Total assets	$	7,435	$	6,999

(a)

For purposes of presentation, North America includes Corporate assets.

14. Supplementary Financial Statement Information

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2021

2020

2021

2020

Operating income:

North America

$
120

$
132

$
403

$
358

South America

35

29

108

68

Asia-Pacific

21

18

70

60

EMEA

23

25

86

73

Corporate

(36)

(25)

(95)

(86)

Subtotal

163

179

572

473

Acquisition/integration costs

—

(5)

(5)

(8)

Equity method acquisition charges

(3)

—

4

—

Restructuring/impairment charges

(8)

(16)

(22)

(41)

Impairment on disposition of assets

20

—

(340)

—

Other matters

—

—

15

—

Charge for fair value markup of acquired inventory

—

(3)

—

(3)

North America storm damage

—

(2)

—

(2)

Total operating income

$
172

$
153

$
224

$
419

Accounts Receivable, Net

As of

As of

(in millions)

September 30, 2021

December 31, 2020

Assets:

North America (a)

$
4,204

$
4,231

South America

852

818

Asia-Pacific

1,333

1,255

EMEA

597

554

Total assets

$
6,986

$
6,858

Accounts receivable, net are summarized as follows:


	As of		As of
(in millions)	March 31, 2022		December 31, 2021
Accounts receivable, net:
Accounts receivable — trade	$	1,122	$	950
Accounts receivable — other		324		193
Allowance for credit losses		(15)		(13)
Total accounts receivable	$	1,431	$	1,130

There were no significant contract assets or significant contract liabilities associated with our customers as of March 31, 2022 or December 31, 2021. Liabilities for volume discounts and incentives were also not significant as of March 31, 2022 or December 31, 2021.

Table of Contents

~~For purposes of presentation, North America includes Corporate assets.~~Inventories

Inventories are summarized as follows:


	As of		As of
(in millions)	March 31, 2022		December 31, 2021
Finished and in process	$	762	$	688
Raw materials		428		380
Manufacturing supplies and other		116		104
Total inventories	$	1,306	$	1,172

2921

Table of Contents

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context indicates otherwise, references to “we,” “us,” “our,” the “Company” and “Ingredion” mean Ingredion Incorporated and its consolidated subsidiaries.

Overview

~~We are~~Ingredion is a ~~major supplier~~leading global ingredients solutions provider that transforms corn, tapioca, potatoes, plant-based 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 ~~high-quality food~~people, nature and ~~industrial ingredient solutions~~technology together to ~~customers around the world.~~make life better. As of ~~September 30, 2021,~~March 31, 2022, we have 45 manufacturing facilities located in North America, South America, Asia-Pacific and Europe, the Middle East and Africa (“EMEA”), and we manage and operate our businesses at a regional level. 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 nutrition industries, among others.~~

~~Our strategic growth roadmap is based~~Ingredion has been navigating evolving global conditions that have varying impacts on ~~five growth platforms~~our customers, suppliers, employees, operations and, ~~is designed~~ultimately, our profitability and cash flows. We recognized higher than expected demand and strong price mix for the quarter, which included increased prices for our products to ~~deliver shareholder value~~manage the effects of volatile supply chains and increasing corn and freight costs. Although a significant portion of our revenues and costs are established with fixed-rate contracts, we proactively made decisions to respond to changing customer demands, increasing inflation, fluctuating foreign exchange rates, and shifting supply chain channels that have been affected by ~~accelerating customer co-creation and enabling consumer-preferred innovation. Our first platform is starch-based texturizers,~~a variety of factors including the second platform is clean and simple ingredients, the third platform is plant-based proteins, the fourth platform is sugar reduction and specialty sweeteners, and finally, our fifth platform is value-added food systems.

For the three months ended September 30, 2021, Operating income, Net income, and Diluted earnings per share increased from the comparable 2020 period. The increases for this period were primarily due to the volume recovery in 2021. During the comparable 2020 period, there were reductions in volume driven by government mandated shutdowns associatedongoing, global pandemic with new variants of the coronavirus disease 2019 (“COVID-19”) ~~pandemic, particularly in the Americas.~~

~~COVID-19:~~ Our operations in recent periods have been adversely affected by impacts of the COVID-19 pandemic. Our global operations expose us to risks associated with public health crises such as COVID-19. Foreign governmental organizations and governmental organizations at the national, state and local levels in the United States have taken various actions to combat the spread of COVID-19, including imposing stay-at-home orders and closing “non-essential” businesses and their operations. As a manufacturer of food ingredients, our operations are considered “essential” under most current COVID-19 government regulations, and our facilities are operating globally. While certain governmental organizations have begun to lift some of the pandemic control measures, COVID-19 continues to spread and may result in the imposition of more restrictions in the future. We did not experience any material supply chain interruptions during the three months ended September 30, 2021, and were able to continue to operate and ship products from our global network of manufacturing facilities. We place top priority on our employees’ health and safety and continue to follow the advice and the ~~guidelines of applicable public health authorities for physical distancing~~conflict between Russia and to make available personal protective equipment and sanitization supplies. We continue to monitor COVID-19 infection rates as well as the pace and effectiveness of vaccination rollouts, as the net sales volume is generally correlated with increased consumer activity and availability of food and beverages consumed away from home.Ukraine.

~~Impairment Charges:~~ ~~On February 12,~~Our 2022 first quarter net sales of $1,892 million were over 17 percent higher than the 2021 ~~we signed~~first quarter net sales of $1,614 million, primarily due to strong price mix, including the pass-through of higher corn costs. The net income attributable to Ingredion for the 2022 first quarter of $130 million, or $1.92 diluted earnings per share, improved from the net loss attributable to Ingredion for the 2021 first quarter of $246 million, or $3.66 loss per share. Excluding an agreement with Grupo Arcor, an Argentine food company, to establish Ingrear Holding S.A. (the “Arcor joint venture”), a joint venture to combine and operate 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. On August 2, 2021, we and Grupo Arcor completed all closing conditions to finalize the transaction and formally establish the Arcor joint venture. The Arcor joint venture is managed by a jointly appointed team of executives.

~~At the announcement of the agreement, during the three months ended March 31, 2021, we recorded the assets and liabilities expected to be contributed as held for sale. We recorded an~~ impairment charge of $360 million ~~based upon the estimated fair value of the assets and liabilities classified as held for sale. Upon completion of the transaction,~~ we disposed of the assets and liabilities from its Argentina, Chile and Uruguay operations, that were previously accounted for as held for sale, and transferred them to the Arcor joint venture in exchange for an equity shareincurred in the ~~venture. We have accounted for~~first quarter of 2021, our share of the venture as an equity method investment, as discussed in Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report. Upon disposal, we valued the assets and liabilities transferred at fair value. This resulted in a $20 million favorable adjustment to the estimated impairment charge. The favorable adjustment was recorded during the three months ended September 30, 2021. The total net impairment charge was

~~Table of Contents~~

~~$340 million~~results for the ~~nine months ended September 30, 2021,~~first quarter of ~~which $311 million was related~~2022 reflected higher net income attributable to the write-off of the cumulative translation losses associated with the contributed net assets and $29 million was related to the write-down to fair value of the contributed net assets to fair value. We recorded the impairment within Restructuring/impairment charges and related adjustments in the Condensed Consolidated Statements of Income during the nine months ended September 30, 2021.

~~Restructuring Charges:~~ In July 2018, we announced a $125 million savings target for our Cost Smart program, designed to improve profitability, further streamline our global business, and deliver increased value to stockholders. We set Cost Smart savings targets to include an anticipated $75 million in Cost of sales savings, including freight, and $50 million in anticipated SG&A savings by year-end 2021. Since the program’s inception, we have periodically updated our savings targets and we now expect to deliver $170 million in total savings by year-end 2021.

Our Cost Smart program and other initiatives have resulted in restructuring charges. For the three and nine months ended September 30, 2021, we recorded $7 million and $19 million, respectively, of pre-tax restructuring charges related to these programs. For the three months ended September 30, 2021, we recorded $4 million of pre-tax restructuring charges, consisting of employee-related and other costs, including professional services, associated with our Cost Smart SG&A program and $3 million of restructuring charges primarily in North America for our Cost Smart Cost of sales program. During the nine months ended September 30, 2021, we recorded $13 million of employee-related and other costs, including professional services, associated with our Cost Smart SG&A program and $11 million of restructuring charges as part of our Cost Smart Cost of sales program, primarily in North America. The Cost Smart Cost of sales charges were partly offset by a $5 million gain on the sale of the Stockton, California land and building during the period.

~~Liquidity and Capital Resources:~~ Our cash provided by operating activities decreased to $259 million for the nine months ended September 30, 2021, from $562 million for the prior year, primarily due to changes in our working capital. Our cash used for investing activities decreased to $238 million for the nine months ended September 30, 2021, from $460 million for the prior year, primarily due to our purchase of PureCircle Limited (“PureCircle”) in the prior yearIngredion as well as a ~~change in~~higher diluted earnings per share. Our results for the ~~timing of capital expenditures~~current quarter benefited from increased prices as well as volume growth, which more than offset higher raw material and ~~mechanical stores purchases. Our cash used for financing activities was $236 million during the nine months ended September 30, 2021,~~inflationary input costs when compared to ~~cash provided by financing activities~~the first quarter of $202 million in the prior year. This decrease was mainly driven by lower net borrowings during the current period, as we issued and sold $1.0 billion of senior notes during the nine months ended September 30, 2020.2021.

~~Table of Contents~~

Results of Operations

We have significant operations in four reporting segments: North America, South America, Asia-Pacific and EMEA. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ revenues and expenses. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, revenues and expenses denominated in the functional currencies of these subsidiaries are translated into U.S. dollars at the applicable average exchange rates for the period. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ revenues and expenses. The impact of foreign currency translation to the reporting currency, where significant, is provided below.

We acquired ~~a controlling interest in~~ KaTech on April 1, 2021, ~~Verdient on November 3, 2020,~~ and ~~PureCircle on July 1, 2020. The~~the results of the acquired ~~businesses~~business are included in our consolidated financial results ~~from~~beginning on the ~~respective~~ acquisition ~~dates.~~date, which inclusion affects the comparability of results between years. In addition, we entered into the Arcor joint venture on February 12, 2021, and the Amyris joint venture on June 1, 2021. Our share of results in joint ventures is classified as other operating (income) and comparability between years and between financial statement line items is affected by the timing of and consideration provided to the investments. While we identify ~~the effects of~~fluctuations due to the acquisitions, our discussion below also addresses results of operations excluding the impact of the acquisitions and ~~the results of the acquired businesses,~~investments, where appropriate, to provide a more comparable and meaningful analysis.

Table of Contents

For the ~~Three Months Ended September 30, 2021~~First Quarter of 2022

With Comparatives for the ~~Three Months Ended September 30, 2020~~

Three Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales

$
1,763

$
1,502

$
261

17
%
Cost of sales

1,440

1,176

(264)

(22)
%
Gross profit

323

326

(3)

(1)
%

Operating expenses

164

155

(9)

(6)
%
Other (income) expense, net

(1)

2

3

150
%
Restructuring/impairment charges and related adjustments

(12)

16

28

175
%

Operating income

172

153

19

12
%

Financing costs, net

20

22

2

9
%
Other, non-operating (income), net

(1)

(2)

(1)

(50)
%

Income before income taxes

153

133

20

15
%
Provision for income taxes

34

40

6

15
%
Net income

119

93

26

28
%
Less: Net income attributable to non-controlling interests

1

1

—

—
%
Net income attributable to Ingredion

$
118

$
92

$
26

28
%

~~Net income attributable to Ingredion.~~ Net income attributable to Ingredion for the three months ended September 30, 2021, increased by 28 percent to $118 million from $92 million for the three months ended September 30, 2020. The increase in net income was driven by an adjustment to the net asset impairment related to the contributionFirst Quarter of Argentina assets to the Arcor joint venture, which was partially offset by higher corn and manufacturing costs, including costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities.2021

Net ~~sales.~~sales. Net sales increased ~~$261 million or~~ 17 percent to $1,892 million for the ~~three months ended September 30, 2021 as~~first quarter of 2022, compared to $1,614 million for the ~~three months ended September 30, 2020.~~first quarter of 2021. The increase in net sales was primarily driven by strong price mix including the pass-through of higher corn ~~costs, and higher volumes, including PureCircle and KaTech results.~~costs.

Cost of ~~sales.~~sales. Cost of sales increased by 20 percent to $1,513 million for the ~~three months ended September 30, 2021 increased by $264 million or 22 percent as~~first quarter of 2022, compared to cost of sales of $1,263 million for the ~~three months ended September 30, 2020.~~first quarter of 2021. The increase in cost of sales primarily reflected higher net corn costs. Our gross profit margin of 20 percent for the first quarter of 2022 decreased ~~by 4 percent,~~ from 22 percent for the ~~three months ended September 30, 2020 to 18 percent for the three months ended September 30,~~first quarter of 2021. The decrease in gross ~~profit~~ margin was primarily driven by higher corn and ~~manufacturing costs, including the costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities.~~freight costs.

~~Table of Contents~~

Operating ~~expenses.~~expenses. Operating expenses increased 610 percent to ~~$164~~$169 million for the ~~three months ended September 30, 2021 as~~first quarter of 2022, compared to ~~$155~~$153 million for the ~~three months ended September 30, 2020.~~first quarter of 2021, primarily due to higher inflationary costs. Operating expenses as a percentage of ~~Net~~net sales were approximately 9 percent for the ~~three months ended September 30, 2021 and~~first quarter of 2022, compared to 10 percent for the ~~three months ended September 30, 2020.~~same quarter in 2021, primarily due to higher net sales in the first quarter of 2022.

Other operating (income). Other operating (income) was $(2) million for the first quarter of 2022, which was flat compared to the first quarter 2021.

Restructuring and impairment charges. Restructuring and impairment charges were $2 million for the first quarter of 2022, compared to $370 million for the first quarter of 2021. The ~~decrease~~charges we incurred in ~~this ratio was~~the first quarter of 2021 were primarily driven by ~~the increase in Net sales~~an impairment charge of $360 million for ~~the current period, which was partly offset by an increase in Operating expenses resulting~~net assets from our ~~acquisition~~Argentina business we contributed to the Arcor joint venture, of ~~PureCircle~~which $311 million was related to the write-off of the cumulative translation losses associated with the contributed net assets and ~~KaTech.~~$49 million was related to the write-down of the contributed net assets to fair value.

Financing costs ~~net.~~. Financing costs ~~decreased by $2~~increased 26 percent to $24 million ~~or 9 percent~~ for the ~~three months ended September 30, 2021. This decrease was driven primarily by lower Argentina hyperinflation costs during the three months ended September 30, 2021~~first quarter of 2022, compared to $19 million for the ~~year-ago period.~~first quarter of 2021. The increase was primarily due to foreign exchange losses in the current year compared to foreign exchange gains in the prior year.

Provision for income taxes. Our effective income tax ~~rate~~rates for the ~~three months ended September 30,~~first quarter of 2022 and 2021 ~~was 22.2~~were 28.9 percent ~~compared to 30.1~~and (29.3) percent, ~~for the three months ended September 30, 2020.~~respectively. The ~~decrease~~change in the effective ~~income~~ tax rate was primarily driven by the ~~utilization~~$360 million impairment related to net assets contributed to the Arcor joint venture during the first quarter of ~~U.S. foreign~~2021 that did not have a corresponding income tax ~~credits for which a benefit had not been previously recognized compared to a valuation allowance recorded for the three months ended September 30, 2020.~~benefit. The remaining ~~decrease~~change in the effective tax rate was driven by new U.S. tax regulations published in the first quarter of 2022 that limit our ability to claim foreign tax credits from certain countries, primarily in South America, the effect of which was partially offset by favorable foreign currency impacts.

Net income attributable to non-controlling interests. Net income attributable to non-controlling interests was $3 million for the first quarter of 2022, which was unchanged from $3 million for the first quarter of 2021.

Net Income attributable to Ingredion. Net income attributable to Ingredion for the first quarter of 2022 was $130 million compared to a ~~$20~~net loss of $(246) million for the three first quarter of 2021. The net loss in the prior year period was largely attributable to the $360 million impairment ~~adjustment on~~charge for the ~~net~~Argentina assets contributed to the Arcor joint venture ~~as described in Note 5 of the Notes to the Condensed Consolidated Financial Statements included in this report, with no corresponding income tax expense~~that we recorded ~~with respect to the impairment, a change in mix of earnings, including the consolidation of PureCircle, and certain other items~~ in the ~~prior year. These items were partially offset by a decrease~~first quarter of 2021. Net income in the ~~value~~first quarter of ~~the Mexican peso against the U.S. dollar during the three months ended September 30, 2021, as compared to an increase during the three months ended September 30, 2020,~~2022 reflected strong price mix, offset in part by increased raw material and ~~a valuation allowance on net operating losses compared to the utilization of net operating losses for which a benefit had not been previously recognized for the three months ended September 30, 2020.~~freight costs.

Segment Results

North America

Net ~~sales.~~sales ~~Net~~. North America’s net sales increased 1724 percent to $1,174 million for the ~~three months ended September 30, 2021, as~~first quarter of 2022, compared to $945 million for the ~~three months ended September 30, 2020,~~first quarter of 2021. The increase was primarily driven by a 1320 percent ~~increase in price mix, a 3 percent increase in volume, and a favorable foreign exchange impact of 1 percent.~~

~~Operating income.~~ Operating income decreased by $12 million for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020. The decrease was driven by higher corn and input costs, including costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities.

~~South America~~

~~Net sales.~~ Net sales increased 16 percent for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, primarily due to a 31 percent increase in favorable price mix, which was partially offset by a 15 percent decrease in volume.

~~Operating income.~~ Operating income increased $6 million for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, primarily due to favorable price mix, which was partially offset by higher corn costs.

~~Table of Contents~~

~~Asia-Pacific~~

~~Net sales.~~ ~~Net sales increased 18 percent for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020, primarily due to a 9 percent increase~~improvement in price mix and a 94 percent increase in volume.

~~Operating income.~~ Operating income increased by $3 million for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020. The increase was driven by higher volumes and favorable price mix, which were partially offset by higher freight and manufacturing costs.

~~EMEA~~

~~Net sales.~~ Net sales increased by 22 percent for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020. Eight percent of the increase was due to the inclusion of KaTech results in the 2021 period. In addition, we experienced an 8 percent increase in volume, a 4 percent increase due to price mix, and a favorable foreign exchange impact of 2 percent.

~~Operating income.~~ Operating income decreased by $2 million for the three months ended September 30, 2021, as compared to the three months ended September 30, 2020. The decrease was driven by higher corn and energy costs in Pakistan.

3423

Table of Contents

~~For the Nine Months Ended September 30, 2021~~Operating income

~~With Comparatives for the Nine Months Ended September 30, 2020~~

Nine Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales

$
5,139

$
4,394

$
745

17
%
Cost of sales

4,098

3,474

(624)

(18)
%
Gross profit

1,041

920

121

13
%

Operating expenses

484

456

(28)

(6)
%
Other (income) expense, net

(29)

4

33

825
%
Restructuring/impairment charges and related adjustments

362

41

(321)

(783)
%

Operating income

224

419

(195)

(47)
%

Financing costs, net

58

59

1

2
%
Other, non-operating (income), net

(4)

(3)

1

33
%

Income before income taxes

170

363

(193)

(53)
%
Provision for income taxes

113

125

12

10
%
Net income

57

238

(181)

(76)
%
Less: Net income attributable to non-controlling interests

7

5

(2)

(40)
%
Net income attributable to Ingredion

$
50

$
233

$
(183)

(79)
%

~~Net~~. North America’s operating income ~~attributable to Ingredion.~~ ~~Net income attributable to Ingredion for the nine months ended September 30, 2021, decreased by 79 percent to $50 million from $233~~was $156 million for the ~~nine months ended September 30, 2020.~~first quarter of 2022, compared to $134 million for the first quarter of 2021. The ~~decrease in net income~~increase was ~~attributable~~primarily due to the impairment charge related to the contribution of the Company’s Argentina assets to the Arcor joint venture as described in Note 5 of the Notes to the Condensed Consolidated Financial Statements included in this report and higher corn and manufacturing costs, which were partially offset by strong price mix ~~and higher volumes.~~

~~Net sales.~~ Net sales increased $745 million or 17 percent for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase was driven by strong price mix reflecting the pass-through of higher corn costs, and higher volumes, including PureCircle and KaTech results.

~~Cost of sales.~~ Cost of sales for the nine months ended September 30, 2021 increased by $624 million or 18 percent, as compared to the nine months ended September 30, 2020. Our gross profit margin decreased by 1 percent to 20 percent for the nine months ended September 30, 2021, as compared to 21 percent for the nine months ended September 30, 2020. The decrease in gross profit margin was driven by higher corn and manufacturing costs, including the costs associated with the ramp-up of plant-based protein operations in our South Sioux City and Vanscoy facilities.

~~Operating expenses.~~ Operating expenses increased 6 percent to $484 million for the nine months ended September 30, 2021 as compared to $456 million for the nine months ended September 30, 2020. Operating expenses, as a percentage of net sales, decreased to 9 percent for the nine months ended September 30, 2021 from 10 percent for the nine months ended September 30, 2020. The decrease in this ratio was driven by the increase in net sales for the current period, which was partiallythat more than offset ~~by an increase in Operating expenses resulting from our acquisition of PureCircle and KaTech.~~

~~Financing costs, net.~~ Financing costs for the nine months ended September 30, 2021 decreased to $58 million from $59 million for the nine months ended September 30, 2020. The decrease in financing costs was driven primarily by lower Argentina hyperinflationinflationary input costs.

~~Provision for income taxes.~~ ~~Our effective tax rate for the nine months ended September 30, 2021 was 66.5 percent compared to 34.4 percent for the nine months ended September 30, 2020.~~ ~~The primary cause of the increase in the~~

~~Table of Contents~~

effective tax rate was a $340 million impairment charge related to the net assets contributed to the Arcor joint venture. There was no corresponding income tax benefit recorded with respect to the impairment. This item was partially offset by a tax benefit of $30 million due to the reversal of an accrual for withholding tax on the unremitted earnings of a foreign subsidiary. The remaining change in the effective income tax rate was primarily driven by a decrease in the value of the Mexican peso against the U.S. dollar. The decrease in the value of the Mexican peso against the U.S. dollar produced taxable translation gains on net-U.S.-dollar-monetary assets held in Mexico for which there was no corresponding gain in pre-tax income. Consequently, the Company recorded a tax expense of $16 million in the nine months ended September 30, 2020, as compared to $4 million in the nine months ended September 30, 2021.

~~Segment Results~~

~~North America~~

Nine Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales to unaffiliated customers

$
3,096

$
2,739

$
357

13
%
Operating income

403

358

45

13
%

~~Net sales.~~ Our increase in net sales of 13 percent for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was driven by an 8 percent increase in price mix, a 4 percent increase in volume, and a favorable foreign exchange impact of 1 percent.

~~Operating income.~~ Operating income increased by $45 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase was driven by favorable price mix and higher volumes, which were partially offset by manufacturing cost inflation.

South America

Nine Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales to unaffiliated customers

$
801

$
643

$
158

25
%
Operating income

108

68

40

59
%

Net ~~sales.~~sales ~~Net~~. South America’s net sales ~~increased~~decreased 8 percent to $252 million for the first quarter of 2022 from $273 million for the first quarter of 2021. Excluding the effects of revenues from operations we contributed to the Arcor joint venture, net sales were 22 percent higher than in the same quarter last year. The increase reflects 25 percent ~~for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, primarily due to a 27 percent increase in favorable~~higher price ~~mix. This was partially~~mix across South America, offset by a 23 percent ~~unfavorable foreign exchange impact.~~decrease in volume.

Operating ~~income.~~income ~~Operating~~. South America’s operating income ~~increased~~decreased 5 percent to $38 million for the first quarter of 2022, compared to $40 million for the ~~nine months ended September 30, 2021, as compared~~first quarter of 2021. The decrease was primarily due to impact of the contribution of our operations to the ~~nine months ended September 30, 2020. The increase was driven by favorable price mix and~~Arcor joint venture, partially offset by ~~higher corn costs.~~strong price mix.

Asia-Pacific

Nine Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales to unaffiliated customers

$
728

$
583

$
145

25
%
Operating income

70

60

10

17
%

Net ~~sales.~~sales ~~Net~~. Asia-Pacific’s net sales increased 2516 percent to $272 million for the ~~nine months ended September 30, 2021, as~~first quarter of 2022, compared to $235 million for the ~~nine months ended September 30, 2020. Nine percent~~first quarter of ~~the~~2021. The increase was ~~due to the inclusion~~driven by favorable volumes of ~~PureCircle results in the 2021 period. In addition, our results reflected a 10~~14 percent ~~increase in volume, a 4~~and favorable price mix of 7 percent, ~~favorable~~partially offset by unfavorable foreign exchange ~~impact, and a 2 percent increase from price mix.~~impacts of 5 percent.

Operating ~~income.~~income ~~Operating~~. Asia-Pacific’s operating income ~~increased by $10~~decreased 12 percent to $22 million for the ~~nine months ended September 30, 2021, as~~first quarter of 2022, compared to $25 million for the ~~nine months ended September 30, 2020.~~first quarter of 2021. The ~~increase~~decrease was driven by higher ~~volumes and favorable foreign exchange impacts.~~corn costs primarily in Korea, which more than offset higher price mix in the period.

~~Table of Contents~~

EMEA

Nine Months Ended September 30,

Favorable (Unfavorable)

Favorable (Unfavorable)

(in millions)

2021

2020

Variance

Percentage

Net sales to unaffiliated customers

$
514

$
429

$
85

20
%
Operating income

86

73

13

18
%

Net ~~sales.~~sales ~~Net~~. EMEA’s net sales increased by 20 percent to $194 million for the ~~nine months ended September 30, 2021, as~~first quarter of 2022, compared to $161 million for the first quarter of 2021. Despite unfavorable foreign exchange impacts of 8 percent, the increase was driven by a favorable price mix of 17 percent and favorable volumes of 11 percent, partially due to the purchase of KaTech on April 1, 2021.

Operating income. EMEA’s operating income remained flat at $31 million for the first quarter of 2022 compared to the ~~nine months ended September 30, 2020. Four percent~~first quarter of the increase was due to the inclusion of KaTech results in the 2021 period. In addition, we experienced a 7 percent increase in volume, a 6 percent favorable foreign exchange impact, and a 3 percent increase due to price mix.

~~Operating income.~~ Operating income increased $13 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase was largely attributable to lower net corn costs and favorable2021. Favorable price mix in Europe was offset by higher input costs in Pakistan and ~~favorable~~unfavorable foreign exchange ~~impacts in Europe.~~impacts.

Liquidity and Capital Resources

~~Cash provided by operating activities for the nine months ended September 30, 2021 was $259~~As of March 31, 2022, Ingredion had total available liquidity of approximately $1,630 million. Domestic liquidity of $589 million ~~as compared to $562~~consisted of $17 million ~~for the nine months ended September 30, 2020. The decrease~~ in ~~operating~~ cash ~~flow was primarily driven by our changes in working capital. Cash used for investing activities for the nine months ended September 30, 2021 was $238~~and cash equivalents and $572 million ~~as compared to $460 million for the nine months ended September 30, 2020. The change was driven by $40~~available through a $1 billion commercial paper program that had $428 million of net cash used for the acquisition of KaTech during the nine months ended September 30, 2021, compared to $208 million of net cash used for the acquisition of PureCircle during the nine months ended September 30, 2020, as well as by the timing of capital expenditures and mechanical stores purchases,outstanding borrowings. The commercial paper program, which ~~totaled $186 million for the nine months ended September 30, 2021, compared to $250 million for the nine months ended September 30, 2020.~~

~~As of September 30, 2021, our total debt consists of the following:~~

(in millions)



2.900% senior notes due June 1, 2030

$
594

3.200% senior notes due October 1, 2026

498

3.900% senior notes due June 1, 2050

390

6.625% senior notes due April 15, 2037

253

Revolving credit agreement

—

Other long-term borrowings

13

Total long-term debt

1,748

Commercial paper

350

Other short-term borrowings

48

Total short-term borrowings

398

Total debt

$
2,146

~~On March 16, 2021,~~ we amended and restated our term loan credit agreement (the “Amended Term Loan Credit Agreement”). As of September 30, 2021, we repaid in full the $380 million of borrowings outstanding under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement restated the previous agreement by extending the maturity date of the borrowings under the previous agreement until March 15, 2022. No new borrowings under the Amended Term Loan Credit Agreement were incurred in connection with the amendment and restatement. Borrowings under the Amended Term Loan Credit Agreement bore interest at a variable annual rate basedinitiated on a London Interbank Offering Rate (“LIBOR”) or a base rate, at our election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Amended Term Loan Credit Agreement ~~reduced the applicable interest rate margin for loans accruing interest based on LIBOR from 0.80 percent to 0.75 percent.~~ We were required to pay a fee on the unused availability under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement contained customary representations, warranties, covenants and events of default, including covenants restricting the incurrence of liens, the incurrence of indebtedness by our subsidiaries and certain fundamental changes involving us and our subsidiaries, subject to certain exceptions in each case. We also had to maintain a specified maximum consolidated leverage ratio and a specified minimum consolidated interest coverage ratio.

~~Table of Contents~~

During the nine months ended September 30, 2021, we entered into a revolving credit agreement (the “Revolving Credit Agreement”) to replace our previous revolving credit agreement, which was terminated. The Revolving Credit Agreement provides for a five-year unsecured revolving credit facility in an aggregate principal amount of $1 billion outstanding at any time. The facility will mature on June 30, 2026. Loans under the facility will accrue interest at a per annum rate equal, at our option, to either a LIBOR rate 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 LIBOR rate plus 1.00%) plus an applicable margin. The Revolving Credit 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. 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, as each such financial covenant is calculated for the most recently completed four-quarter period. As of September 30, 2021, we were in compliance with these covenants.

On July 27, 2021, we established a 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. The notes may be sold from time to time on customary terms in the U.S. commercial paper market. We intend to use the note proceeds for general corporate purposes. During the three months ended September 30, 2021, the average amount of commercial paper outstanding during the period was $401 million. As of September 30, 2021, $350 million of commercial paper was outstanding. The commercial paper outstanding has a weighted average interest rate of 0.28% over a weighted average maturity of 76 days. The amount of commercial paper outstanding under this program in 2021 is ~~expected to fluctuate.~~

~~As of September 30, 2021, in addition to approximately~~backed by $1 billion of borrowing availability under ~~each of our~~a five-year revolving credit ~~facility~~agreement that we entered on June 30, 2021.

We had international liquidity as of March 31, 2022 of approximately $1,041 million, consisting of $307 million of cash and cash equivalents and $5 million of short-term investments held by our ~~commercial paper program, we have approximately $799~~operations outside the U.S., as well as $729 million of unused operating lines of credit in the various foreign countries in which we operate. As the parent company, we guarantee certain obligations of our consolidated subsidiaries. As of March 31, 2022, such guarantees aggregated $91 million. We believe that such consolidated subsidiaries will be able to meet their financial obligations as they become due.

As of March 31, 2022, we had total debt outstanding of approximately $2.3 billion, or $1.7 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. See Note 8 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information about our debt. The weighted average interest rate on our total indebtedness was approximately 3.1 percent for the ~~nine months ended September 30, 2021,~~first quarter of 2022, compared to 3.4 percent for the ~~nine~~first quarter of 2021.

Table of Contents

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. 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 investing and financing activities for at least the next twelve months ~~ended September 30, 2020.~~and for the foreseeable future thereafter. Our future cash flow needs will depend on many factors, including our rate of revenue growth, the timing and extent of our expansion into new markets, the timing of introductions of and rate of success for new products, potential acquisitions of complementary businesses and technologies, continuing market acceptance of our new products and general economic and market conditions. 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 short-term borrowing increased $206 million, which we primarily used to invest in capital expenditures and mechanical stores purchase, pay dividends, and fund operating activities. Our cash used by operating activities of $52 million in the first quarter of 2022 was primarily due to changes in working capital of $262 million. Working capital for trade accounts receivable increased due to higher pricing and higher freight costs for products sold during the quarter.

We used $85 million of cash for capital expenditures and mechanical stores purchases to update, expand and improve our facilities in the first quarter of 2022, as compared to $65 million that we paid in the first quarter of 2021 for capital expenditures and mechanical stores. Capital investment commitments for 2022 are anticipated to be between $300 million and $335 million.

We declare and pay cash dividends to our common stockholders of record on a quarterly basis. Dividends paid, including those to noncontrolling interests, were $43 million in the first quarter of 2022, and the first quarter of 2021. On ~~September 22, 2021,~~March 16, 2022, our Board of Directors declared a quarterly cash dividend of $0.65 per share of common stock. This dividend was paid on ~~October 25, 2021,~~April 26, 2022, to stockholders of record at the close of business on ~~October 4, 2021. Additionally, during~~April 1, 2022.

During the ~~three and nine months ended September 30, 2021,~~first quarter of 2022, we repurchased ~~500 thousand and 765~~455 thousand outstanding shares of common stock ~~respectively,~~ in open market transactions at a net cost of ~~$44~~$39 million, ~~and $67~~as compared to repurchases of 158 thousand outstanding shares of common stock at a net cost of $14 million ~~respectively.~~in the first quarter of 2021.

We have not provided foreign withholding taxes, state income taxes and federal and state taxes oron foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested. 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. ~~Approximately $419 million of the total $434 million of cash and cash equivalents on September 30, 2021 was held by our operations outside of the U.S.~~

We expect that available cash balances and borrowings expected to be available under the revolving credit facility and commercial paper program, together with cash generated from operations and our access to debt markets, will be sufficient to meet our operating and other cash needs for at least the next twelve months.

~~Hedging and Financial 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. In the normal course of business, we actively manage our exposure to these market risks by entering into various hedging transactions, authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. Our hedging transactions may include, but are not limited to, a variety of derivative financial instruments such as commodity-related futures, options and swap contracts, forward currency-related contracts and options, interest rate swap agreements, and Treasury lock agreements (“T-Locks”). See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information.

~~Table of Contents~~

~~Commodity Price Risk:~~ Our principal use of derivative financial instruments is to manage commodity price risk in North America relating to anticipated purchases of corn and natural gas to be used in our manufacturing process. We periodically enter into futures, options and swap contracts for a portion of our anticipated corn and natural gas usage, generally over the following 12 to 24 months, in order to hedge price risk associated with fluctuations in market prices. Unrealized gains and losses associated with marking our commodities-based cash flow hedge derivative instruments to market are recorded as a component of other comprehensive loss (“OCL”). As of September 30, 2021, our Accumulated other comprehensive loss account (“AOCL”) included $77 million of net gains (net of income tax expense of $27 million) related to these derivative instruments. It is anticipated that $64 million of net gains (net of income tax expense of $23 million) will be reclassified into earnings during the next 12 months. We expect the net gains to be offset by changes in the underlying commodities costs.

~~Foreign-Currency Exchange Risk:~~ Due to our global operations, including operations in many emerging markets, we are exposed to fluctuations in foreign-currency exchange rates. As a result, we have exposure to translational foreign-exchange risk when our foreign operations’ results are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency of the operating unit are revalued into U.S. dollars. We primarily use derivative financial instruments such as foreign-currency forward contracts, swaps and options to manage our foreign currency transactional exchange risk. We enter into foreign-currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments as defined by Accounting Standards Codification 815, ~~Derivatives and Hedging~~. As of September 30, 2021, we had foreign currency derivatives not designated as hedging instruments hedging certain asset and liability positions with aggregate notional amounts of $385 million and $225 million, respectively.

As of September 30, 2021, we had foreign currency derivatives designated as cash flow hedging instruments hedging certain asset and liability positions with aggregate notional amounts of $543 million and $761 million, respectively. The amount included in AOCI relating to these hedges at September 30, 2021, included $1 million of net losses (net an insignificant amount of taxes). It is anticipated that $4 million of net losses (net of income tax benefit of $1 million) will be reclassified into earnings during the next 12 months.

~~Interest Rate Risk:~~ 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. We did not have outstanding T-Locks as of September 30, 2021.

As of September 30, 2021, AOCL included $4 million of net losses (net of an income tax benefit of $1 million) related to previously settled T-Locks. Once T-Locks are settled, deferred losses are amortized to financing costs over the terms of the senior notes with which they are associated. It is anticipated that an insignificant amount of net losses (net of an insignificant amount of taxes) will be reclassified into earnings during the next 12 months.

We did not have any interest rate swap agreements as of September 30, 2021 or September 30, 2020. During the three months ended June 30, 2020, we settled an interest rate swap that effectively converted the interest rates on $200 million of our $400 million of 4.625% senior notes due November 1, 2020, to variable rates. These senior notes were redeemed in July 2020. The swap agreement called for us to receive interest at the fixed coupon rate of the notes and to pay interest at a variable rate based on the six-month U.S. dollar LIBOR plus a spread.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no other changes to our critical accounting policies and estimates during the ~~nine months ended September 30, 2021.~~first quarter of 2022.

New Accounting Pronouncements

The information called for by this section is incorporated herein by reference to Note 2 of the Condensed Consolidated Financial Statements.

3925

Table of Contents

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. ~~The Company~~Ingredion intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

Forward-looking statements include, among others, any statements regarding ~~the Company’s~~Ingredion’s prospects, future ~~prospects~~operations, or future financial condition, earnings, ~~revenues,~~net sales, tax rates, capital expenditures, cash flows, expenses or other financial items, ~~any statements concerning the Company’s prospects or future operations,~~ including management’s plans or strategies and objectives ~~therefor,~~for any of the foregoing, and any assumptions, expectations or beliefs underlying any of the foregoing.

These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,” “propels,” “opportunities,” “potential,” “provisional,” or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in or incorporated by reference into this report are “forward-looking statements.”

These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and beyond our control. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, investors are cautioned that no assurance can be given that our expectations will prove correct.

Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various ~~factors,~~risks and uncertainties, including the impact of COVID-19 on the demand for our products and our financial results; changing consumption preferences relating to high fructose corn syrup and other products we make; the effects of global economic conditions and the general political, economic, business, and market conditions that affect customers and consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products, including, particularly, economic, currency and political conditions in South America and economic and political conditions in Europe, and the impact these factors may have on our sales ~~volume,~~volumes, the pricing of our products and our ability to collect our receivables from customers; future ~~financial performance~~purchases of our products by major industries which we serve and from which we derive a significant portion of our sales, including, without limitation, the food, beverage, animal nutrition, and brewing industries; the uncertainty of acceptance of products developed through genetic modification and biotechnology; our ability to develop or acquire new products and services at rates or of qualities sufficient to gain market acceptance; increased competitive and/or customer pressure in the corn-refining industry and related industries, including with respect to the markets and prices for our primary products and our co-products, particularly corn oil; the availability of raw materials, including potato starch, tapioca, gum Arabic, and the specific varieties of corn upon which some of our products are based, and our ability to pass along potential increases in the cost of corn or other raw materials to customers; energy costs and availability, including energy issues in Pakistan; our ability to contain costs, achieve budgets and realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget ~~and realize expected savings under our Cost Smart program~~ as well as with respect to freight and shipping costs; the ~~behavior~~effects of ~~financial~~climate change and ~~capital markets, including with respect to foreign currency fluctuations, fluctuations in interest and exchange rates~~legal, regulatory, and market ~~volatility and the associated risks of hedging against such fluctuations;~~measures to address climate change; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing facilities; the ~~impact~~behavior of ~~impairment charges on our goodwill or long-lived assets; changes~~financial and capital markets, including with respect to foreign currency fluctuations, fluctuations in ~~our tax~~interest and exchange rates ~~or exposure to additional income tax liability;~~and market volatility and the associated risks of hedging against such fluctuations; our ability to attract, develop, motivate, and maintain ~~satisfactory labor relations;~~good relationships with our workforce; the impact on our business of natural disasters, war, ~~or similar acts of hostility,~~ threats or acts of terrorism, the outbreak or continuation of pandemics such as COVID-19, or the occurrence of other significant events beyond our control; the impact of impairment charges on our goodwill or long-lived assets; changes in government policy, law, or regulation and costs of legal compliance, including compliance with environmental ~~regulation; potential effects of climate change; security breaches with respect~~regulation changes in our tax rates or exposure to ~~information technology systems, processes, and sites;~~additional income tax liability; increases in our borrowing costs that could result from increased interest rates; our ability to raise funds at reasonable rates and other factors affecting our access to sufficient funds for future growth and expansion; security breaches with respect to information technology systems, processes, and sites; volatility in the stock market and other factors that could adversely affect our stock price; risks affecting the continuation of our dividend policy; and our ability to maintain effective internal control over financial reporting.

4026

Table of Contents

Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see “Risk Factors” and other information included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and in our subsequent reports on ~~Forms~~Form 10-Q and ~~8-K.~~Form 8-K filed with the Securities and Exchange Commission.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the discussion set forth in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk at pages 5541 to 5643 in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a discussion of the manner in which we address risks with respect to interest rates, raw material and energy costs and foreign currencies. There have been no material changes in the information provided with respect to those disclosures during the ~~nine months ended September 30, 2021. For additional information, also see “Management’s Discussion and Analysis~~first quarter of ~~Financial Condition and Results of Operations – Hedging and Financial Risk” in this report.~~2022.

ITEM 4

CONTROLS AND PROCEDURES

~~Evaluation of Disclosure Controls and Procedures~~

Our management, including our Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2021.~~ March 31, 2022. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of ~~September 30, 2021,~~March 31, 2022, our disclosure controls and procedures (a) are effective in providing reasonable assurance that all information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, has been recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

~~Changes in Internal Control Over Financial Reporting~~

~~During the three months ended September 30, 2021, the material weakness~~There have been no changes in our internal control over financial reporting ~~described in our Annual Report on Form 10-K for~~during the year ended December 31, 2020 related to ineffective information technology general controls (“ITGCs”) related to user access over certain information technology (“IT”) systems has been fully remediated, as the impacted controls have been designed and implemented effectively. The remedial actions taken by management included: enhanced control training for ITGC owners, as well as design and implementation of improved documentation of the user access review that more clearly communicates the control objective and management’s documentation requirements.

~~We acquired Verdient in the fourth~~first quarter of 2020, as well as KaTech in the second quarter of 2021, and are currently in the process of evaluating and integrating the acquired operations, processes and internal controls. See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information regarding the acquisitions.

~~Other than as described above, there were no changes to our internal control over financial reporting that occurred during the three months ended September 30, 2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4127

Table of Contents

PART II OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

In 2015 and 2016, ~~the Company~~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 ~~the Company~~Ingredion of requested information to the U.S. Environmental Protection Agency (the “EPA"), the EPA issued ~~the Company~~Ingredion a Notice of Violation, which included additional alleged violations beyond those self-reported by ~~the Company.~~Ingredion. These additional alleged violations primarily relate to the results of stack testing at the facility. 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 ~~the Company~~Ingredion are engaged in discussions with respect to a resolution of this matter.

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. We also routinely receive inquiries from regulators and other government authorities relating to various aspects of our business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, we have matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within our complete control and may not be known for prolonged periods of time. We do not believe that the results of currently known legal proceedings and inquires will be material to us. 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 1A

RISK FACTORS

We caution readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those currently expected by management. We described the principal risk factors that could impact our results in our 2021 form 10-K. During the first quarter of 2022, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for 2021, except as described below.

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.

Our business may be adversely affected by the effects of the ongoing conflict between Russia and Ukraine. Although our operations in Russia and Ukraine accounted for less than one half of one percent of our net sales in fiscal year 2021, the region is a source of raw material and energy supply for both us and certain companies whose products we distribute. Economic sanctions and export control measures imposed on Russia and designated Russian enterprises, certain regions of Ukraine and Belarus have resulted in increased volatility in the availability and prices of such raw materials and energy supplies. 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. We continue to evaluate impacts of the conflict on our customers, suppliers, employees and operations.

Table of Contents

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities:

The following table presents information regarding our repurchase of shares of our common stock during the ~~three months ended September 30, 2021.~~first quarter of 2022.

Maximum Number

(or Approximate

Dollar Value) of

Total Number of

Dollar Value) of

Total Number of

Shares That May Yet

Total

Average

Shares Purchased as

Shares That May Yet

Total

Average

Shares Purchased as

be Purchased Under

Number

Price

Part of Publicly

be Purchased Under

Number

Price

Part of Publicly

the Plans or Programs

of Shares

Paid

Announced Plans or

the Plans or Programs

of Shares

Paid

Announced Plans or

at End of Period

(shares in thousands)

Purchased

per Share

Programs

at End of Period

Purchased

per Share

Programs

(in thousands)

July 1 – July 31, 2021

—

5,590 shares

August 1 – August 31, 2021

500,000

87.18

500,000

5,090 shares

September 1 – September 30, 2021

—

5,090 shares

January 1 - January 31, 2022

—

5,090 shares

February 1 - February 28, 2022

227,980

87.29

227,980

4,862 shares

March 1 - March 31, 2022

226,783

85.70

226,783

4,635 shares

Total

500,000

87.18

500,000

454,763

86.50

454,763

On October 22, 2018, the Board of Directors authorized a stock repurchase program permitting us to purchase up to an additional 8.0 million shares of our outstanding common stock from November 5, 2018 through December 31, 2023. As of ~~September 30, 2021,~~March 31, 2022, we have ~~5.1~~4.6 million shares available for repurchase under the stock repurchase program.

4229

Table of Contents

ITEM 6

EXHIBITS

a) Exhibits

Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index ~~below.~~below:

EXHIBIT INDEX


Number		Description of Exhibit

10.1*†		Annual Incentive Plan, as amended and restated as of January 1, 2022.

31.1†		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2†		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1††		Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2††		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101.INS†		XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH†		Inline XBRL Taxonomy Extension Schema Document.
101.CAL†		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF†		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB†		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE†		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104†		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document, which is contained in Exhibit 101).

HIDDEN_ROW
†		Filed with this report.
††		Furnished with this report.
*		Management contract or compensatory plan or arrangement to be filed as an exhibit to this form pursuant to Item 6 of this report.

4330

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		INGREDION INCORPORATED


DATE:	~~November 5, 2021~~May 6, 2022	By	/s/ James D. Gray
		James D. Gray
		Executive Vice President and Chief Financial Officer

DATE:	May 6, 2022	By	/s/ Davida M. Gable
		Davida M. Gable
		Vice President, Global Controller and Global Shared Services

4431

		Page
Part I

Item 1	Financial Statements	3
	Condensed Consolidated Statements of Income (Loss)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Equity and Redeemable Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s discussion and analysis of financial condition and results of operations	3022
Item 3	Quantitative and qualitative disclosures about market risk	4127
Item 4	Controls and procedures	4127

Part II

Item 1	Legal proceedings	28
42Item 1A	Risk Factors	28
Item 2	Unregistered sales of equity securities and use of proceeds	4229
Item 6	Exhibits	4330
Signatures		4431


	North		South		Asia-
(in millions)	America		America		Pacific		EMEA		Total
Goodwill before impairment charges	$	622	$	50	$	316	$	69	$	1,057
Accumulated impairment charges		(1)		(33)		(121)		—		(155)
Balance at January 1, 2021		621		17		195		69		902
Acquisitions		1		—		3		20		24
Currency translation		—		(1)		(6)		(3)		(10)
Balance at September 30, 2021	$	622	$	16	$	192	$	86	$	916


(in millions)	As of September 30, 2021		As of December 31, 2020
Trademarks/tradenames (indefinite-lived)	$	143	$	143


(in millions)		PureCircle
Working capital (excluding cash)	$	68
Property, plant and equipment		91
Other, net		(33)
Identifiable intangible assets		68
Goodwill		88
Total fair value, net of cash		282
Less: Non-redeemable non-controlling interests		74
Total purchase price, net of cash	$	208


				Estimated
Intangible Asset	Fair Value		Valuation Technique	Useful Life
Proprietary technology	$	32	Relief-from-royalty method	12 years
Trade names		18	Relief-from-royalty method	15 years
Customer relationships		18	Multi-period excess earnings method	12 years


Balance in severance accrual as of December 31, 2020	$	12
Joint venture related		1
Cost Smart Cost of sales and SG&A		1
Payments made to terminated employees		(10)
Balance in severance accrual as of September 30, 2021	$	4


	Fair Value of Hedging Instruments as of September 30, 2021
	Designated Hedging Instruments (in millions)						Non-Designated Hedging Instruments (in millions)
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	71	$	10	$	81	$	3	$	7	$	10
Other assets		15		7		22		—		3		3
Assets		86		17		103		3		10		13
Accounts payable and accrued liabilities		6		22		28		1		—		1
Non-current liabilities		3		5		8		—		—		—
Liabilities		9		27		36		1		—		1
Net (Liabilities)/Assets	$	77	$	(10)	$	67	$	2	$	10	$	12


Derivatives in Cash Flow	Gains (Losses) Recognized in AOCL on Derivatives				Income	Gains (Losses) Reclassified from AOCL into Income
Hedging Relationships	Three Months Ended September 30,				Statement	Three Months Ended September 30,
(in millions)	2021		2020		Location	2021		2020
Commodity contracts	$	36	$	21	Cost of sales	$	62	$	(30)
Foreign currency contracts		(1)		(5)	Net sales/Cost of sales		(2)		(1)
Interest rate contracts		—		—	Financing costs, net		—		—
Total	$	35	$	16		$	60	$	(31)


Derivatives in Cash-Flow	Gains (Losses) Recognized in AOCL on Derivatives				Income	Gains (Losses) Reclassified from AOCL into Income
Hedging Relationships	Nine Months Ended September 30,				Statement	Nine Months Ended September 30,
(in millions)	2021		2020		Location	2021		2020
Commodity contracts	$	212	$	(36)	Cost of sales	$	171	$	(54)
Foreign currency contracts		(1)		(9)	Net sales/Cost of sales		(1)		(1)
Interest rate contracts		—		(5)	Financing costs, net		—		(1)
Total	$	211	$	(50)		$	170	$	(56)


	Three Months Ended				Nine Months Ended
Lease Cost	September 30,				September 30,
(in millions)	2021		2020		2021		2020
Operating lease cost	$	14	$	14	$	43	$	40
Variable operating lease cost		6		8		21		23
Short term lease cost		1		1		3		3
Lease cost	$	21	$	23	$	67	$	66


Operating Leases		As of
(in millions)		September 30, 2021
2021 (Excluding the nine months ended September 30, 2021)	$	14
2022		51
2023		41
2024		30
2025		21
Thereafter		67
Total future lease payments		224
Less imputed interest		25
Present value of future lease payments		199
Less current lease liabilities		47
Non-current operating lease liabilities	$	152
Operating lease assets	$	191


	Three Months Ended				Nine Months Ended
Other Information	September 30,				September 30,
($ in millions)	2021		2020		2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14	$	14	$	43		$	40
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	18	$	24	$	57		$	45
					As of			As of
					September 30, 2021			December 31, 2020
Weighted average remaining lease term:
Operating leases						6.7 years			5.5 years
Weighted average discount rate:
Operating leases						4.2	%		4.9	%


	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020
(in millions, except per share amounts)	Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount
Basic EPS	$	118	67.0	$	1.76	$	92	67.2	$	1.37

Effect of Dilutive Securities:
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards			0.6					0.4
Diluted EPS	$	118	67.6	$	1.75	$	92	67.6	$	1.36


	Three Months Ended September 30,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales	$	1,763	$	1,502	$	261	17	%
Cost of sales		1,440		1,176		(264)	(22)	%
Gross profit		323		326		(3)	(1)	%

Operating expenses		164		155		(9)	(6)	%
Other (income) expense, net		(1)		2		3	150	%
Restructuring/impairment charges and related adjustments		(12)		16		28	175	%

Operating income		172		153		19	12	%

Financing costs, net		20		22		2	9	%
Other, non-operating (income), net		(1)		(2)		(1)	(50)	%

Income before income taxes		153		133		20	15	%
Provision for income taxes		34		40		6	15	%
Net income		119		93		26	28	%
Less: Net income attributable to non-controlling interests		1		1		—	—	%
Net income attributable to Ingredion	$	118	$	92	$	26	28	%