Ingredion Inc (NYSE: INGR) This fall 2025 Earnings Name dated Feb. 03, 2026
Company Members:
Noah Weiss
James Zallie
Jim Grey
Analysts:
Kristen Owen — Analyst
James Cannon — Analyst
Benjamin Theurer — Analyst
Heather Jones — Analyst
Benjamin Mayhew — Analyst
Pooran Sharma — Analyst
Presentation:
operator
Good day and thanks for standing by. Welcome to the fourth quarter 2025 Ingridion Integrated earnings Convention Name. At the moment all individuals are in a pay attention solely mode. After the speaker’s presentation there will probably be a query and reply session. To ask a query throughout this session you will want to press star 11 in your phone. You’ll then hear an automatic message advising your hand is raised to withdraw your query. Please press star 11 once more. Please be suggested that right this moment’s convention is being recorded. I might now like handy the convention over to your speaker right this moment, Noah Smart.
Please go forward sir.
Noah Weiss
Good morning and welcome to Ingredion’s fourth quarter and full yr 2025 earnings name. I’m Noah Weiss, Vice President of Investor Relations. Becoming a member of me on right this moment’s name are Jim Zali, our President and CEO, and Jim Grey, our Govt Vice President and cfo. The press launch we issued right this moment in addition to the presentation we are going to reference for our fourth quarter and full yr outcomes might be discovered on our web site ingredion.com within the buyers part. As a reminder, our feedback inside the presentation might include ahead trying statements. These statements are topic to varied dangers and uncertainties and embrace expectations and assumptions concerning the Firm’s future operations and monetary efficiency.
Precise outcomes might differ materially from these estimated within the ahead trying statements and ingredion assumes no obligation to replace them sooner or later as or if circumstances change. Extra info regarding components that might trigger precise outcomes to vary materially from these mentioned throughout right this moment’s convention name or on this morning’s press launch might be discovered within the Firm’s most just lately filed Annual report on Type 10K and subsequent studies on Types 10Q and 8K. Throughout this name we may also consult with sure non GAAP monetary measures together with adjusted earnings per share, adjusted working earnings and adjusted efficient tax price, that are reconciled to 2 US GAAP measures.
In word 2 non GAAP info included in our press launch and in right this moment’s presentation appendix. With that, I’ll flip the decision over to Jim Zali.
Jim Grey
Thanks Noah and good morning everybody. Regardless of unexpected challenges all year long, we’re happy to share that we delivered file full yr working earnings and earnings per share development pushed by continued power in texture and healthful options and strong outcomes from our Meals and Industrial Components LATAM enterprise. Though the biggest facility in our Meals and Industrial Components US Canada section confronted operational difficulties, we’ve taken steps on the ARGO facility to systematically tackle the problems. Whereas we anticipate a gradual restoration, the actions we’re taking ought to result in steadily enhancing efficiency all through 2026. Turning to the following slide.
Let’s begin with a abstract of our internet gross sales quantity development for the fourth quarter. Texture and Healthful Options posted its seventh straight quarter of quantity development up 4%. Led by Clear Label Components and Options. Clear Label ingredient volumes skilled important development in each the fourth quarter and all year long throughout Asia Pacific and US Canada. Clear Label stays one of many meals trade’s quickest rising areas, emphasizing its crucial position in assembly shoppers desire for genuine components and easy meals labels. Ingredion continues to be a frontrunner within the clear label texturizing area because of the breadth and power of its portfolio which is supported by proprietary know-how, patents, shopper insights and years of formulating experience.
Moreover, our options promoting strategy continues to ship strong development outpacing the section’s total internet gross sales efficiency. This complete means of partaking prospects is driving higher intimacy at a time when meals firms are pursuing extra reinvention and reformulation. These increased margin gross sales are additionally anticipated to be margin accretive to the section over time. In our Meals and Industrial Components LATAM section we began to see brewing adjunct quantity demand get well from our long run contracted prospects. Nevertheless, the area continued to face challenges within the confectionery and paper and corrugating sectors the place demand stays smooth. Partially offsetting this softness, meals ingredient gross sales skilled modest development.
Lastly, our Meals and industrial components US Canada section noticed a 7% lower in internet gross sales quantity in the latest quarter, primarily pushed by ongoing manufacturing challenges at Argo which restricted our means to provide stock accessible on the market. Along with this operational subject, our enterprise and the trade confronted total softness in beverage sweetener volumes, additional contributing to decrease gross sales. As we transfer to section updates, I need to spotlight progress in opposition to key development investments and strategic initiatives beginning with texture and healthful options. Our concentrate on the client has by no means been stronger, delivering gross sales quantity development of 4% and OI development of 16% versus prior yr.
As well as, strategic capital development and value financial savings investments had been accomplished at our flagship Indianapolis facility. Our starch modernization challenge accomplished in quarter 4 will scale back our modified starch manufacturing prices by extra environment friendly product flows and debottlenecking which is able to drive the discharge of recent capability. As well as, we accomplished the growth of our Mixing middle of experience in Belkamp, Maryland which will increase personalized options income potential by $30 million a yr. The vary of options succesful to be produced from this facility help clear label plant primarily based protein and fiber fortification, sugar discount and inexpensive formulating. Turning now to our Meals and Industrial Components Latam section, in opposition to a backdrop of regional financial and political volatility all year long, our group managed to ship file working earnings and margins of higher than 21% for the yr, up 140 foundation factors.
Mexico particularly demonstrated resilience to offset difficult unexpected financial situations, delivering one other file yr of working earnings. In pursuit of extra worthwhile development, Mexico repurposed a portion of its grind to strategically diversify its buyer and product combine in the direction of increased margin components that serve meals and confectionery prospects. We efficiently accomplished a posh community optimization transfer in Brazil. For long run value competitiveness, we closed our Alcantara facility and efficiently expanded polyol manufacturing at Moji Guassu, our largest facility in Brazil. This funding was supported by long run buyer quantity commitments. Now turning to our Meals and Industrial components US Canada section, operational points at our Argo facility stubbornly endured all through the fourth quarter.
Regardless of being inspired by a powerful September, we skilled intermittent grind shutdowns which resulted in increased upkeep prices, decrease yields and glued value absorption which decreased each our saleable completed product stock and our co product valorization. Moreover, trade quantity demand for sweeteners was down all through the second half. The 2025 full yr working earnings influence of Argos operational challenges was roughly $40 million. With the vast majority of the primary quarter nonetheless forward of us, our group stays targeted on executing an achievable restoration plan. Regardless of the unexpected challenges and headwinds described Meals and industrial components U.S. canada delivered higher than 15.5% working earnings margins for the yr.
Let me now replace you on progress in opposition to our three strategic pillars. Let me begin with driving worthwhile development. By persevering with to prioritize options and clear label choices, we’ve considerably enhanced the outcomes of our texture and healthful section. As talked about beforehand, gross sales in each ingredient options and clear label classes have outpaced the general section’s internet gross sales development in the course of the second half of 2025 and we’ve a powerful pipeline and development momentum in each areas going ahead. Moreover, we’re excited to report that our protein fortification enterprise delivered a file yr with internet gross sales development exceeding 40%.
As you already know, we’ve been working diligently to optimize this enterprise for a number of years. In 2025 we doubled manufacturing and had been in a position to improve the common promoting value by new product innovation. We see this enterprise representing a viable long run development alternative for us supported by sturdy and clear shopper pull. our second strategic pillar, innovation, we’ve developed a brand new household of ingredient options that assist prospects readily substitute components which were impacted by shortages and quickly rising uncooked materials prices. For instance, our suite of options to exchange cocoa and product reformulations have seen regular gross sales will increase all through 2025.
Moreover, we’re advancing our proprietary sugar discount style modulation platform in collaboration with Oubli by a strategic industrial partnership. Our candy proteins and stevia blends enhance the standard of pure sweetness whereas providing a value aggressive clear style resolution. Concerning innovation, Texture elevation represents the following degree in worth supply that we’re providing to pick prospects. This co creation strategy combines proprietary shopper insights, sensory science and fast formulation experience to assist prospects predict total liking and ship shopper most popular textures sooner and with increased success charges. Our 2025 buyer engagements proved very efficient and are resulting in buyer successes within the market.
We’re extraordinarily excited by this chance and what it represents to develop personalized resolution gross sales with the potential additionally to generate new service revenues. Lastly, I’d wish to touch upon our Operational Excellence pillar. In 2025 we delivered $59 million of value to compete run price financial savings exceeding Our beforehand said $50 million financial savings goal. This achievement displays our means to optimize throughout manufacturing our manufacturing community in addition to ship procurement and SG&A financial savings leveraging our scale. Constructing off the success of value to compete, we’re transitioning our Operational Excellence strategic pillar towards long run enterprise productiveness.
We sit up for updating you on our enterprise productiveness progress sooner or later. It is usually value highlighting that regardless of the unstable commerce and tariff atmosphere in 2025, Ingredion was minimally straight impacted. This was because of the truth that greater than 80% of our manufacturing is domestically made and domestically offered. Turning to the following slide, our outcomes this yr show how ingredion’s diversified portfolio continues to drive stronger and extra constant profitability whereas navigating unstable market situations. We delivered file gross revenue and expanded margins to over 25%, a transparent testomony to our agility and operational self-discipline.
This efficiency additionally displays the flexibility to leverage the power of our international community, adapt shortly to shifting demand and our concentrate on increased worth options. As we proceed to optimize our combine and execute in opposition to our technique, we’re constructing a basis for sustained long run development. Total, 2025 stands out as a yr the place disciplined actions and portfolio steadiness enabled us to carry out effectively in a difficult atmosphere. Earlier than I flip the decision over to Jim to debate our monetary outcomes, I do need to take a second to touch upon our CFO transition. Final week we introduced that Jim Grey will probably be retiring on March 31, 2026 and we’ve begun a complete search to determine his successor.
The board, the Govt Management group and I are extremely grateful for Jim’s management. Throughout his greater than 9 years as a CFO of ingredion. He’s been a useful associate to me and has made important contributions to our success. I want Jim all the most effective in retirement. And with that, I’ll flip the decision over to Jim Grey for the Monetary Evaluation.
Jim Grey
Jim thanks, Jim and good morning everybody. Shifting to our earnings assertion, internet gross sales for the fourth quarter had been $1.8 billion, down 2% versus prior yr gross revenue {dollars} decreased by 4% with gross margin barely decrease at 24.5% as value of products offered was impacted by increased manufacturing expense in U.S. canada. Meals and components reported and adjusted working earnings had been 220 and $228 million respectively. Turning to our This fall internet gross sales bridge, the two% lower was pushed by $40 million in decrease quantity, $39 million in cheaper price combine offset partially by $36 million of favorable overseas change.
Shifting to the following slide, we spotlight internet gross sales Drivers for the fourth quarter. Textual content Well being Options internet gross sales had been up 2% pushed by gross sales quantity development of 4% and overseas change favorability of two%, partially offset by value combine attributable to move by of declining tapioca enter prices and higher quantity mixture of decrease worth Tapioca primarily based sweeteners offered domestically in Thailand. Meals and industrial components Latam reported internet gross sales up 1%, largely pushed by favorable overseas change partially offset by weaker volumes. Meals and industrial components U.S. canada internet gross sales declined 9%. Gross sales quantity fell by 7%, primarily pushed by much less accessible stock on the market as our ARGO facility confronted working challenges and we met buyer demand by sourcing from different vegetation.
Turning to our earnings bridge on the highest half you’ll be able to see the reconciliation from reported to adjusted earnings per share. Operationally we noticed a lower of $0.23 per share for the quarter pushed by a lower in working margin of minus $0.22 and quantity of minus $0.10, partially offset by overseas change acquire of plus $0.08 per share. Shifting to the change in non operational objects, we had a rise of $0.13 per share. Shares excellent had a good influence of $0.08 per share and a decrease tax price equal was $0.06 per share favorable. Shifting to our full yr earnings assertion, internet gross sales for the total yr had been $7.2 billion, down 3% versus prior yr.
Gross revenue {dollars} elevated by 2% with gross margin rising to 25.3%. Reported and adjusted working earnings had been $1,016,000,000 and $1,028,000,000 respectively. Turning to our full yr internet gross sales bridge, the three% lower was pushed by 144 million in cheaper price combine, 75 million in decrease quantity offset partially by 8 million of favorable overseas change Shifting to the following slide, we spotlight internet gross sales drivers for the total yr Texture and Healthful Options internet gross sales had been up 1% pushed by 4% gross sales quantity development and overseas change favorability of two% partially offset by value combine Meals and industrial components.
Latam reported internet gross sales down 4% pushed by weaker volumes throughout brewing adjunct meals industrial components US Canada internet gross sales declined 7%, gross sales quantity fell 4% primarily because of beforehand talked about challenges at our Argo facility and weaker sweetener demand. Now let’s flip to a abstract of outcomes by section for full yr 2025 texture and healthful options internet gross sales was up 1% and working earnings was up 16% which translated into a better working earnings margin of 16.9%, up greater than 200 foundation factors from the prior yr. The rise for the total yr was pushed by decrease uncooked materials and enter prices in addition to improved margin volumes partially offset by unfavorable value combine.
As well as, one remark concerning Texture and Healthful Options Quarter 4 Working Earnings Final yr’s fourth quarter had one time advantages from SGA which we had been lapping. We anticipate that Texture and Healthful will proceed to generate constructive working earnings development in meals and industrial components. Latam internet gross sales had been down 4% versus final yr. Nevertheless working earnings elevated to 493 million and op earnings margin reached a file 21.1%. Shifting to meals and industrial components US Canada full yr internet gross sales had been down 7%, working earnings was $315 million down 16% pushed by manufacturing challenges at our Argo plant and decrease than anticipated beverage and meals quantity demand for the fourth quarter.
We estimate that working challenges have had a $16 million loss influence and that the entire 2025 influence is roughly 40 million. For the all different group of companies, the two% improve in internet gross sales was pushed by development each in our sugar discount and protein fortification companies. Working loss improved by 20 million versus prior yr pushed primarily by important positive aspects in protein fortification. Turning to our full yr earnings bridge the place we illustrate a 4.5% yr over yr improve in adjusted diluted earnings per share. Operationally we noticed a rise of $0.13 per share pushed by an elevated working margin equal of $0.39 and different earnings of $0.15 partially offset by quantity of minus $0.47 per share.
Shifting to the change in non operational objects we had a rise of 35 cents per share. Shares excellent had a good influence of 23 cents per share, a decrease tax price equal of 9 cents per share and decrease financing prices of three cents per share. Shifting to money stream full yr money from operations was $944 million, which incorporates funding in working capital of 75 million for 2025 full yr. Capex funding internet of disposals was 433 million. The corporate continues to put money into natural development alternatives that present a considerably increased return than our value of capital.
We repurchased $224 million of excellent widespread shares exceeding our $100 million share repurchase goal introduced at first of the yr. Moreover, we paid out $211 million in dividends and elevated the dividend per share to $0.82 in the course of the third quarter, which represents our eleventh consecutive annual dividend. Now let me flip to our 2026 outlook for the total yr 2026. We anticipate internet gross sales to be up low single digits to mid single digits, reflecting higher quantity demand. We anticipate the reported and adjusted working earnings will probably be up low single digits for full yr 2026. Our 2026 financing value estimate is within the vary of 40 to $50 million and a reported and adjusted efficient tax price of 25.5% to 27%.
Our full yr adjusted EPS is anticipated to be within the vary of $11 to $11.80, reflecting continued gross sales quantity development in texture and healthful options and comparatively slower working earnings development from our meals industrial components segments as we face trade quantity demand softness and better manufacturing inflation not totally offset by pricing. This adjusted EPS vary is predicated upon a share depend of 64 to 65 million shares. We anticipate our 2026 money from operations will probably be within the vary of 820 million to 940 million, reflecting barely extra working capital funding as internet gross sales are anticipated to develop.
Capital expenditures for the total yr are anticipated to be between 400 to $440 million. Please word that our steering displays present tariff ranges in impact on the finish of January 2026. As well as, this steering excludes any acquisition associated integration and restructuring prices in addition to any potential impairment prices. Turning to our full yr outlook by section for T and H, we estimate internet gross sales to be up low single digits to mid single digits and for working earnings development to be up low single digits to mid single digits pushed by gross sales quantity development. For F and I latam, internet gross sales are estimated to be up low single digits to mid single digits and working revenue to be flat to up low single digits reflecting gross sales quantity development partially offset by overseas foreign money transactional headwinds particularly in Mexico.
As a reminder, we’re greenback practical in Mexico. Subsequently, a stronger peso inflates native manufacturing prices and working bills for FNII US Canada. Our outlook for internet gross sales is within the vary that’s usually flat yr over yr and working earnings is projected to be flat. Whereas we’ve close to finish confidence in Argo’s restoration, we anticipate continued challenges by the primary quarter according to the earlier quarter. Moreover, whereas contract pricing lined uncooked materials value adjustments, we weren’t totally in a position to cowl anticipated manufacturing value inflation. For all different companies. We anticipate the mixed internet gross sales to be up excessive single digits and working earnings to enhance between 5 to 10 million {dollars}.
Lastly, for the primary quarter of 2026 we anticipate internet gross sales to be down low single digits and working earnings to be down mid double digits primarily because of the power of first quarter 2025s 26% working earnings development. As regards to my introduced retirement, it has been a Privilege to host 35 quarterly calls with you, our shareholders, analysts and staff. Ingredion has a tremendous management group led by Jim Zally and can proceed to be supported by a really, very sturdy finance group. As a shareholder, I sit up for ingredion’s continued success as the corporate navigates any challenges with confirmed agility and seizes future development alternatives to ship options that make wholesome style higher.
That concludes my feedback and I’ll hand again to Jim.
Jim Grey
Thanks Jim. In closing, 2025 was one other yr the place we displayed significant progress in opposition to our strategic pillars, led by the sturdy gross sales quantity momentum we noticed from our texture and healthful options section. We consider the clear buyer focus that has resulted from the resegmentation accomplished two years in the past together with our superior strategy to options promoting positions us effectively for continued development on this section in 2026. We’re additionally inspired by the continued advantages we anticipate to see from the almost $60 million of value to compete run price financial savings we delivered by the top of final yr.
Our dedication to value competitiveness will proceed ahead as we pursue enterprise productiveness for long run effectiveness and effectivity. We anticipate meals and industrial components US Canada to meaningfully overcome its operational setbacks as we stay laser targeted on stabilizing Argo and we anticipate regular enchancment from the ability all year long. Lastly, our monetary place stays a supply of power. We delivered almost $950 million of money from operations in 2025 and returned $435 million to shareholders. And as Jim defined, we anticipate money stream from operations to proceed at these ranges, offering flexibility to pursue development. Now let’s open the decision for questions.
operator
Thanks. As a reminder to ask a query, please press Star one one in your phone and wait on your Title to be introduced to your query, please press Star one one once more. One second whereas we compile our Q and A roster. Our first query goes to return from the road of Kristen Owen with Oppenheimer and Firm. Your line is open. Please go forward.
Kristen Owen — Analyst
Hello, good morning. Thanks a lot for taking the query. And Jim Grey, greatest needs. Thanks a lot for the assistance over the past a number of years. So kicking off then with the outlook, you sprinkled some breadcrumbs all through the ready remarks concerning the facility. Simply assist me perceive how a lot within the fourth quarter was Argo versus the quantity decline after which how we must always take into consideration that enjoying out in 2026. As a result of I might have thought with a $40 million headwind from that facility that perhaps the op earnings information could be a bit increased in FI North America.
Possibly assist me bridge all these items collectively that you just left for us all through the decision.
Jim Grey
Yeah, certain. So clearly in This fall, the first subject was the operational challenges there. As we stated, we felt that that was about $16 million influence as we’re form of estimating between idle and yield loss and a few incremental upkeep prices. That was the influence to the U.S. can F&I section in This fall. So after which for, in whole for 2025, the influence to the U.S. canada and I section was about 40 million. As we roll ahead and we take a look at, you already know, form of the 2026 information for that section, we additionally then, you already know, we had some lapse once we go from again you as much as 2024 versus 2025.
Proper. So we’re down about, let’s name it 58 million. So 40 million is Argo. We had a pair different earlier occasions within the yr, form of extra manufacturing occasions associated. We had a small practice derailment in Cedar Rapids and let’s say that was about 10. After which from 24 to 25 we had in all probability about 8 by way of simply quantity softness. So by 2025 and doubtless extra June on, you noticed some response by a few of our prospects to tariffs. We noticed some pricing will increase throughout some classes. Soda drinks, beer in cans, et cetera, the place we offer a whole lot of sweetener quantity or adjunct quantity into and naturally these classes are elastic.
So that you’re going to see some quantity softness. And actually within the second half, perhaps that began in Could, Could, June, however all through summer season and all through fall. In order we go into 2026, we’ll nonetheless have some Argo prices and people will probably be principally impacted in Q1, however we are going to in all probability get again a few of the Argo one time impacts within the again half of 2026. So then what it says is although, so that ought to say, hey, you need to be up yr over yr, 26 versus 25 in your op earnings. And perhaps you need to be up, you already know, 15, 20 million.
And what I feel what we’re actually seeing is that once we checked out contract pricing, we completely had been in a position to cowl any change, anticipated change within the internet value of corn. However we do have some manufacturing inflation, we’ve some increased pure fuel, and we’ve some increased labor charges. And so these are enjoying in opposition to our COGS price of change in U.S. canada. And that’s in our information. So our upside to our information could be that our inflation is much less. Possibly there’s a stronger quantity that reveals up within the second half, and all of these could be pluses.
However we felt it form of prudent to information form of flat yr over yr.
James Zallie
And Jim, simply to reply the query concerning the proportion or say the apportionment of the decline within the quarter Argo vis a vis sweetener volumes, we are saying 2/3. Argo, 1/3 sweetener volumes.
Jim Grey
Yeah, 2/3, 3/4.
James Zallie
After which along with that, you already know, the influence for the total yr of $40 million for Argo, after all, you already know, should you checked out that as restricted to 2025, and I might say January’s been a bit of little bit of a tough begin to January.
Jim Grey
It’s been fairly chilly.
James Zallie
It’s been fairly chilly. It’s been fairly chilly in January. And as we sit right here proper now, the plant is operating effectively. It really ran effectively from a standpoint of by the very extreme chilly spell. However January was not as sturdy as we had anticipated. And I feel that along with all the pieces else, that Jim, is the explanation why we’re placing ahead a flat yr on yr projection for the total yr.
Jim Grey
Sure. And perhaps, Kristen, I feel it’s useful to then say, effectively, what do you anticipate USCAN F&I’s potential to be? I feel as soon as by Argos restoration and we take a look at a few of the investments that we’ve made and the way we’re positioned with prospects, this section can positively nonetheless obtain a 16 to 17% op earnings margin.
Kristen Owen — Analyst
Okay, that’s tremendous, tremendous useful. I’m going to ask one right here additionally on texture and healthful options, as a result of I feel, Jim, you referred to as out perhaps some tapioca headwinds right here, perhaps some blended headwinds. One of many questions that we get about ingredion is thru this texture and healthful options, actually seeking to see that asp per ton transfer increased assist contribute to that OI earnings outgrowth. So perhaps pencil out for us the one time objects there after which the worth combine headwinds that you just’re anticipating in 2026. Simply assist us unpack these a bit of bit. Thanks.
Jim Grey
Sure. Look, I feel should you checked out simply the print on the OP earnings margin for tax return well being for fourth quarter, it’ll present OP earnings down yr over yr by slight proportion. That was all actually pushed by some opinion, some profit and op expense in This fall of 2024. One timers, you already know, as you adjusted there was some, some comp profit and we needed to take that within the This fall and accrue for that. And so we actually, you already know, it’s simply, it’s form of simply the yr over yr cleanup while you’re attending to the way you’re one yr’s ending.
So I actually didn’t see that as a result of I need to spotlight gross margins for texture and healthful. For This fall, gross revenue had grown and gross margins had expanded. Proper. So I feel that’s all the time a greater measure of the well being of the product combine and texture and healthful. As we sit up for 2026 and we discuss a bit of bit about what’s the expectation for value combine to lastly transfer constructive. Proper. And to lastly present form of yr over yr positive aspects in ASPs, that’s completely going to be mirrored by a few of the feedback Jim made on options development on texture elevation.
These are all very a lot positives which can be driving a lot increased common promoting costs per ton and I feel are mirrored in worth to the client. I do need to remind everyone although that so we’re in, we simply completed the second yr of this resegmentation and we’re going into 2026 and we nonetheless have some little pockets of enterprise that is probably not at that increased common asp. And so a type of enterprise is in Thailand and we nonetheless have a tapioca glucose syrup enterprise. It’s fairly huge quantity relative to our extra increased worth tapioca texture options.
And so when it has a whole lot of demand and it strikes up, it’s going to have an effect on value combine and or we had a wholesome tapioca crop and tapioca costs got here down. And so once more we’re going to mirror these adjustments within the uncooked supplies. We move these by. We’ll all the time attempt to name that out. However I feel we’re fairly assured and fairly excited concerning the texture options development and what it implies for ASP as we go ahead yr over yr.
James Zallie
Yeah, it’s noteworthy I feel for the total yr texture and healthful working earnings margins had been up 210 foundation factors.
Jim Grey
Yeah.
Kristen Owen — Analyst
That’S nice. I’ll depart it there. Thanks.
operator
Thanks. And one second as we transfer on to our subsequent query. Our subsequent query comes on-line of Josh Spector with ubs. Your line is open. Please go forward.
James Cannon — Analyst
Hey guys, you have got James Cannon on for Josh. I wished to ask on the Latam enterprise, you had some blended administration, some enterprise rationalizations earlier within the yr and also you talked within the quarter about underlying demand there being enhancing. I used to be simply questioning should you might. Form of escape a few of the. Quantity actions that you just noticed there, form.
Jim Grey
Of such as you did with USCAN earlier. Yeah. Quarter 4 internet gross sales had been up 1% for the section. Quarter 4 gross sales quantity declined by 3%. However that was largely attributable to the brewing adjunct quantity declines. Greater than 100% of the draw back was attributed to brewing adjunct, whereas there was gross sales quantity development for meals and beverage, and that was constructive. And since the brewing adjunct enterprise represents 18% of internet gross sales and a bigger proportion of our quantity, we’ve been actively pursuing different paths to make the most of the grind extra profitably by buying and selling as much as help increased margin merchandise in meals and confectionery.
And this actually represents an thrilling incremental alternative to diversify past brewing and valorize our grind far more profitably. You realize, only for some extra colour, Mexico meals volumes had been up 3% and beverage volumes had been up 1%.
James Cannon — Analyst
For the quarter.
Jim Grey
For the quarter. For the quarter. Yeah. So we’ve began that, James. We’ve began that transition. Proper. So we nonetheless have. Mexico nonetheless has, you already know, I might say no less than one to 2 years of ramp from the quantity that it kind of launched by form of. Proper. Sizing and managing by the client change. Nevertheless it’s beginning effectively. So we’re enthusiastic about that.
James Cannon — Analyst
Okay, nice. After which I simply wished to poke one factor on ths as effectively. You discuss concerning the options enterprise being increased margin than the remainder of the section. May you simply give us some quantification of how a lot of the combo is. Bought as options right this moment, what that margin differential seems to be like?
James Zallie
Yeah, certain, go forward.
Jim Grey
Yeah. Hey, so you already know, options has been one thing the place we’ve been engaged on establishing a baseline, actually tightly defining that and actually accomplished that work in 2024. And in 2025 we’re in a position to, you already know, Jim and Patrick Coladis and Michael Reardon had been in a position to form of set some actual targets for the gross sales groups. In order that enterprise proper now in 24 and 25 is simply over a billion {Dollars}. And you already know, the gross margins are positively increased than the section common and so they’re like 30, 35%.
James Zallie
Yeah, I might say 5% increased than the, the section’s total common. And it’s about 40% of the income roughly of the section.
Jim Grey
Yeah.
James Cannon — Analyst
Nice. Thanks very a lot.
Jim Grey
Thanks.
operator
Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Ben Thurer with Barclays. Your line is open. Please go forward.
Benjamin Theurer — Analyst
Good morning, Jim. And Jim, thanks for taking my query. Jim, I’ll discuss to you in a while, however get pleasure from retirement. Two fast ones. So primary, simply selecting up on ta texture and healthful options a bit of bit. Are you able to assist us perhaps perceive inside the framework of the steering the place you stand by way of like contracting pricing for 2026, is there something off cycle by way of just like the pricing mechanisms going out to. As a result of if I bear in mind proper, I feel you set one thing like flat for the start, at first of 25 after which form of like ended up considerably unfavorable mid single digits.
So simply understanding a bit of bit the drivers and also you’ve already talked about Tapioca and people components. So how ought to we take into consideration 26 nonetheless, in your present expectations because it pertains to TNH? That may be my first query.
Jim Grey
Yeah, so let me take that after which let Jim add some colour commentary. I might say that contracting for TH&S within the US was accomplished with pricing barely down. And we anticipate that we lined any adjustments in the price of corn and different uncooked supplies. We’re anticipating quantity positive aspects yr over yr. That stated, some giant prospects had been speaking that unit volumes is likely to be decrease given their pricing actions and the truth that US Shoppers proceed to wrestle with affordability. We anticipate that we’ll not totally cowl the anticipated manufacturing value inflation and that may maintain our gross margins mainly flat basically for that section.
James Zallie
And Ben, you already know, only for texture and healthful. Proper. So barely increased semi variable and glued prices in that enterprise. Proper. As we use extra manufacturing strains to create worth. So manufacturing value inflation, 2, 2.5%. A few of that mirrored in vitality value change yr over yr, a few of that in labor prices. And as you go into your pricing, clearly you’re having a dialog with the client about any change within the uncooked materials. However you’re additionally all the time making an attempt to cost in sufficient to cowl that manufacturing value inflation. And I feel this yr we’re trying on the outlook and saying, effectively, a few of that manufacturing value inflation goes to point out up and we’ll see clearly our operations group will all the time take up the mantle to work enterprise productiveness to decrease that, our procurement group goes to go and work in opposition to any price adjustments yr over yr.
However that might be upside to our steering for texture and healthful.
Benjamin Theurer — Analyst
Okay, good. After which, Jim, for you on the outlook, clearly money from operations anticipated one other sturdy yr, near $1 billion with capex rather less than, name it half a billion. In order that leaves me with half a billion free money stream. You’ve spent a bit of over 200 million for repurchases after which there’s a bit of over 200 million on dividends. How ought to we predict for 26 by way of repurchases of inventory? And that could be in context to M and A, what you may need in your pipeline or not. So what, what are the important thing preferences right here between one or the opposite given the place the inventory value is at the moment at?
Jim Grey
I suppose proper now the view that we’ve is, as we’ve accomplished in earlier years, we’ve established a share repurchase dedication of no less than 100 million for 2026. The money on the steadiness sheet does, as you indicated, stay sturdy by this yr, producing almost $950 million of money from operations. And, you already know, we predict it’s essential to stay versatile and retain optionality for strategic M and A alternatives. And clearly our steadiness sheet gives us, you already know, that chance to try this. So. However that’s the view for, you already know, the buybacks. Only a reminder, I feel, Jim, in 24, we additionally purchased again greater than $200 million of shares as effectively.
So.
Benjamin Theurer — Analyst
However for 26, we’ve established the identical goal we’ve had in earlier years of no less than 100 million. Yeah, and perhaps only for everybody listening.
Jim Grey
As a result of once we take into consideration capital allocation priorities, you already know, we’re placing on the market that capex will probably be between 440, 400 and 440 million. Tongue tornado. However inside that’s nonetheless a, you already know, a wholesome finances for development. You realize, anticipating between like 80 to $100 million in development for 2026. Fairly enthusiastic about these initiatives. You realize, Jim highlighted a couple of initiatives that we’ve accomplished in 2025. We nonetheless see alternatives around the globe that basically help us having the capability in addition to the product strains to proceed to drive development, supporting options and supporting a few of our different sectors the place we see development.
After which we even have about 40 million or so in form of giant value financial savings and infrastructure enchancment initiatives. And so these will end up in 26. However for instance, you already know, at our Indianapolis plant, we’re engaged on a brand new cogeneration and that challenge will end in 2026. So we’ve some very discretionary, discrete alternatives that we’re pursuing in our CapEx finances that we predict is a good deployment of capital to create returns for shareholders.
Benjamin Theurer — Analyst
Thanks very a lot.
Jim Grey
Thanks, Ben.
operator
Thanks. One second for our subsequent query. Our subsequent query goes to return from the road of Heather Jones with Heather Jones Analysis llc. Your line is open. Please go forward.
Heather Jones — Analyst
Good morning. Thanks for the query. And Jill, I’m really going to overlook working with you. It’s been an ideal pleasure, however I’m certain you’ll get pleasure from retirement. I suppose my first query is on latam, given the current surge in currencies. I feel you referred to as out the peso and the Mexican peso after which a few of the tax regulatory adjustments that we’ve received happening on this yr in Mexico. Simply questioning what are the positives that may offset these potential dangers and drive development in that section in 26?
Jim Grey
Yeah, perhaps let me take some upsides and disadvantages perhaps to what’s at the moment in our forecast with regard to latam. So that you’re proper. In order I discussed within the remarks, so we’re greenback practical in Mexico, which implies that a powerful peso will increase our working expense and will increase a few of our manufacturing expense. And so we’re feeling that proper now. And in order that’ll be the transactional value headwind as we go into 2026. Now there are alternatives. We’re going to look at the worth of the peso versus the greenback. But when that peso will get stronger, that’s form of actually the draw back estimate.
And so, you already know, the other is we’d have upside. If we noticed moments the place the peso was weaker versus the greenback, then that’s one thing that we will go in and form of safe for the, for the steadiness of the yr. I feel inside latam, what we’re actually, I feel is encouraging to see no less than is that there’s a few of just like the meals and perhaps the beverage class quantity at retail. So the extra the Nielsen information was displaying quantity up in This fall. And so there’s been a little bit of noise economically round Mexico by way of its GDP development.
You realize, the place would possibly inflation wind up? And so hopefully what we’ll see in 2026 is a barely stronger shopper in Mexico as soon as form of wage impacts are felt. In order that’s a bit of little bit of what we’re watching in all probability principally in Latam is the quantity pull that we see in Mexico.
James Zallie
Yeah, and I feel it’s noteworthy additionally we received requested about this on one of many prior calls that the sugar tax on sweetened drinks went into impact on January 1st. And basically the quantity is roughly 7 to eight% on single serve full calorie sodas and a brand new tax of three to 4% on lighter eating regimen drinks. Prior to now what we’ve seen this sort of tax has an early unfavorable influence on volumes within the first few months after which after implementation then these influence subside. So we’re going to look at that now. Additionally it’s noteworthy to level out and we’ve seen this repeatedly each 4 years is it is a World cup yr.
And so we predict incremental quantity from the World cup which ought to profit volumes in Q2 and Q3. And that goes for drinks in addition to brewing as effectively.
Heather Jones — Analyst
Okay, that is sensible. And may you remind me in Mexico particularly what’s a tough breakdown of your gross sales which can be meals versus Bev. So we will simply since you’re speaking about like stronger volumes now in meals and simply how as we take into consideration the chance of that new tax simply would assist body it in our minds should you might give us a tough breakdown of the meals versus Bev.
Jim Grey
So I’m going to say I’m going to and Noah, perhaps we’ll replace this however I’m going to guess that between form of brewing adjunct and drinks that that quantity is about 40% and that the meals in addition to industrial and confectionary and all different could be the rest.
James Zallie
But additionally Jim, the breakdown of sentimental drinks vis a vis in Mexico vis a vis brewing is far smaller, a lot smaller proportion, a lot smaller. And so we’re not an enormous exporter into Mexico of HFCS as a result of we produce domestically. And so we’ve talked about that in years previous on how we strategically diminish that publicity so it’s extra weighted in the direction of brewing and fewer so in the direction of smooth drinks publicity.
Heather Jones — Analyst
Okay, thanks. After which the observe up is you talked about that you just anticipate to get a few of the Argo impact again within the second half of this yr. Simply was questioning in like your base case for the US can enterprise, what’s your assumptions of how a lot of that $40 million you’ll get again within the again half?
Jim Grey
I’d in all probability, I imply I feel it will be truthful to say. Look, look, I feel in Q1 we’re in all probability going to have one other wherever between 10 and $15 million of influence. And in order that gained’t lap and so that you would possibly see $20 million of Argo profit come again within the second half.
Heather Jones — Analyst
Okay, thanks a lot. There’s a variety round that assumption, proper?
Jim Grey
Yeah. It’s simply value reminding everyone in relationship to quarterly phasing that quarter one working earnings final yr was up 26% versus 2024. And particularly Argo was operating fairly effectively in 2025, first quarter and likewise in first quarter final yr Latam had a file. So that is also impacting the phasing for quarter one.
Heather Jones — Analyst
Okay, that is sensible. I admire it.
operator
Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Benjamin Mayhew with BMO Capital Markets. Your line is open. Please go forward.
Benjamin Mayhew — Analyst
Hello. Thanks for taking the questions. And Jim Grey, congratulations on retirement. We’re going to overlook you numerous. Thanks, Invoice. You’re welcome. So my first query has to do with the long run algo. That you just. Put out on the investor Day for working earnings development. And I’m simply questioning, given all that’s been stated on the decision to date, you already know, when wouldn’t it be doable to form of get again to that algo degree, to achieve that algo degree? Would it not be in second half 26 the place you already know, you’re rising once more at 5 to 7% working earnings development or you already know, how ought to we take into consideration accelerating in the direction of that run price?
Jim Grey
Yeah.
James Zallie
Hey Ben, let me set the stage.
Jim Grey
Just a little bit as a result of you already know, I imply, I feel 2025 and the primary a part of the yr had some surprises for all of us inside the US Market. So our investor day in September was primarily based upon 2024 full yr Actuals and at the moment form of our first half, 2025 momentum. So 2025 launched new challenges to the enterprise atmosphere which had secondary results on the remainder of the world by tariffs, had impacts on immigration within the US and altering dietary tips inside the US and these adjustments impacted our prospects, our prospects prices, our prospects pricing actions, our prospects quantity, demand.
And our long run technique and the route of the three yr outlook that we laid out Investor Day form of stays intact. However given these components, we’re going to evaluate whether or not and the way greatest to replace the present three yr outlook. And we’re getting our heads round how we utterly end 25, ensuring that each one of our contracting info is in our forecasting instruments for 26. And so we’ll share our newest pondering with you at Cagny. I feel the one perspective although that I might share with you now with regard to meals and industrial components, U.S.
canada particularly, is that I might characterize our outlook as extra form of measured versus September. We are going to seemingly form of reset to 2025’s base outcomes and that I feel that this section can return to a 17 to 18% op earnings margin in all probability extra evident in 2027 and perhaps 2028. And once more, our enterprise targets are actually delivering throughout cycles. Proper. So at any time limit there could also be like one time while you’re form of taking a bit of bit extra of a flat yr versus the possibility and the chance the place your entire development bets are coming into place and you’ve got no less than favorable wins by way of managing your value, inflation and pricing and buyer and product combine is working in your favor.
And in order that very a lot permits this enterprise to form of hit these mid single digits and excessive single digits sorts of yr over yr op earnings. Hope that characterizes it a bit of bit.
Benjamin Mayhew — Analyst
Yeah, no, that’s nice. Thanks for the colour there. My final query is extra form of broad primarily based right here by way of what we’re seeing within the CPG trade by way of like portfolio shift. And I’m simply questioning, you already know, how do you guys view your positioning as we form of take in this secular shift packaged meals trade? Like how do you view your capabilities within the true alternatives that you just may need to assist your prospects reshape their portfolios? And likewise you talked about earlier the benefit of each producing and promoting domestically, that stood out to me.
So should you might simply form of tie that each one in to perhaps your aggressive benefit there transferring ahead as your prospects look to actually shift their choices for the buyer.
Jim Grey
Yeah, thanks for the query, Ben. I feel one of many issues that we really feel excellent about and it’s been enhanced by the work that we did with the resegmentation is our work on buyer segmentation and one thing that we name buyer channels for development and actually understanding the place the buyer is transferring inside these buyer channels together with who’re the purchasers which can be most effectively positioned to learn from these channel shifts. So what we’re enhancing each day is the chance throughout what we name international key accounts, which we’ve a program and we’ve a management group that manages multinational and multinational accounts or regional main accounts, firms which can be in meals service after which most just lately we’re doing an exhaustive quantity of labor to map the entire personal label channel for development and the co packing community, co man community that produces for personal label in addition to reaching the place the innovation begins for these firms.
Both the consultants, the advisors which can be partnering with some or most of the giant personal label producers which have made important investments to be not simply producing themselves and vertically built-in, however to be thought leaders on this area. You realize, instance you noticed Kroger most just lately come out with information on the buyer that they’re changing into a thought chief. So we’re doing an terrible lot of labor to map that entire ecosystem. And we’ve employed specialists and assets to allow us to form of skate to the place the puck goes in relationship to the buyer throughout these classes.
And we’re the place the expansion is coming. So, for instance, dairy class was one of many few classes that confirmed constructive unit quantity development. And naturally, that’s all the time been a powerful swimsuit of ours. In order that’s how we’re approaching this. And the options promoting strategy marries very effectively to that. The opposite factor additionally that we’re is how can we sequentially proceed to strengthen our partnerships and relationships with our distributors, as a result of usually our distributor margins are very engaging, very engaging, in actual fact, increased than our common margins. And so we’re seeking to be actually good and the way can we maximize these partnerships as effectively? So hopefully that offers you a bit of little bit of perception into buyer channels for development and buyer segmentation that we predict, once more, we’ve been doing this now for quite a lot of years, however we’ve actually intensified the main target throughout meals service and personal label simply inside the final two years and bolstered it with assets.
And we’re seeing the dividends paying off.
Benjamin Mayhew — Analyst
That’s nice. Thanks a lot.
Jim Grey
Thanks.
operator
Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Poor and Sharma with Stevens. Your line is open. Please go forward.
Pooran Sharma — Analyst
Good morning. Thanks for the query and congrats on the retirement. Jim, it’s been good working with you. Thanks. Simply wished to perhaps begin off and perceive how broader industrial starch demand tendencies have been faring. I feel on the final name you talked about you’re beginning to see momentum there. Simply questioning should you might give an replace on that after which form of on that. Can you give us a. Little little bit of. Readability as to how a lot, what sort of profit you’re going to anticipate right here and perhaps like a cadence or a pacing to that profit for the Indianapolis starch modernization challenge.
James Zallie
Okay, let me take a bit of little bit of the economic after which it’s distinct and totally different than the Indianapolis as a result of the Indianapolis produces completely for meals. However let me tackle your industrial starch demand query. To begin with, it’s a enterprise that we don’t actually discuss quite a bit, however we in all probability ought to as a result of it’s accomplished exceptionally effectively in recent times, not simply from a standpoint of natural development, but in addition in margin development and total working earnings contribution. I might say this previous yr in contracting and pricing was a bit of bit extra intense than it had been in prior years.
And usually it’s Clearly an indicator of total financial well being for the trade, for the macroeconomy. And I might say that volumes within the second half had been a bit of bit softer than we noticed within the first half. However as you already know, we introduced, I feel it was early final yr, a $50 million funding in Cedar Rapids to increase capability and modernize a few of our drying capability. And it’s as a result of the enterprise has accomplished exceptionally effectively and we would have liked to solidify our place as a dependable provider to prospects. So. And that’s going to, I feel, full within the second half of this yr and place us effectively for 2027.
So we really feel excellent about our place there. The opposite factor that we’re doing in industrial is working with prospects to capitalize on the pattern and requirement for what we name superior packaging supplies. And these are supplies that might have a price proposition round sustainability or biodegradability. And so they may very well be corrugating adhesives, which we’ve a distinct segment market that’s rising properly, or for binders, for compostable bowls. And so that is totally different than simply starch for tensile power or moist finish power or coating. And so very effectively positioned, pursuing pockets of development there. However the underlying base enterprise may be very strong.
Very sturdy buyer relationships, exceptionally sturdy. I feel, Jim, it’s possible you’ll need to touch upon the Indy modernization and the commissioning of that and the place that’s trending. And perhaps it’s possible you’ll need to make a touch upon even our cogen funding there as effectively.
Jim Grey
Sure. So what we did announce is that we had a possibility to actually form of debottleneck, to take out some awkward product handoffs that had been occurring throughout the plant, actually, with simply steady stream of merchandise. After which additionally form of actually upgraded a whole lot of our drum drying unit inside Indy. And it’s simply while you come into this and these difficult investments in an older plant and also you see as soon as it’s accomplished and the great thing about the engineering and the debottlenecking. So first it’s a a lot safer and cleaner atmosphere. Two, it’s lowered value, and three, it’s barely expanded our capability capability.
And so glad to have that a part of our modified starch, considered one of our modified starch models accomplished. After which individually we’ve form of, due to the infrastructure, funding, tax alternative, we jumped into changing into extra sustainable, self sustainable at Indy with regard to our cogen unit. And that’s making very good progress. And we will probably be commissioning that, I feel, within the third quarter of this yr. And it’ll simply permit us to then form of actually take a look at our personal pure fuel provide, permit us to hedge, permit us to cut back future revenue volatility round vitality prices and actually drive some simply continued financial savings with regard to vitality at Indy and sit up for that basically in This fall of this yr.
Pooran Sharma — Analyst
Nice. Recognize the colour there. After which simply my observe up right here could be across the you’ve given good commentary round contracting. You talked about the pricing declines, you talked about form of the tariff impacts after which simply shopper affordability economics. Simply wished to get a way if GLPs got here up in your discussions with shoppers. Does that development in form of GLP ones or simply curiosity in that? Has that been sending folks extra to identify? We’d simply love to listen to your commentary on GLP1s.
Jim Grey
Nicely, I imply I feel everyone is ready to see what the making an attempt to get some quantification round what they suppose the influence will probably be. It’s little doubt having some kind of an influence, however what I can let you know on a constructive word is in relationship to our protein fortification enterprise, which we haven’t talked about in quite a lot of quarters, however we determined to clearly emphasize the total yr efficiency of the double digit improve in gross sales that we noticed with income rising 40%. And it’s additionally noteworthy that for that enterprise the discount in working earnings loss was higher than $20 million in 2025.
And we’ve energetic packages in place to extend the valorization of P starch Pfiber together with the expansion of pea protein isolate. And so we’re totally contracted for 2026 which once more reveals the power, we predict on the again of the GLP1 impact for protein fortification and anticipate one other yr of notable income development and working earnings enchancment for protein fortification. So we’re like everybody else monitoring GLP1, however I can let you know it’s having an influence for our protein fortification enterprise.
Pooran Sharma — Analyst
Nice. Recognize the caller. Thanks very a lot.
Jim Grey
Constructive influence.
operator
Thanks. And I might now like handy the convention again over to Jim Zali for closing remarks.
Jim Grey
Thanks operator and thanks all for becoming a member of us this morning. We sit up for seeing a lot of you at our upcoming investor occasions, with the following important engagement being CAGNY on February seventeenth. At the moment I need to thank everybody on your continued curiosity in ingredion. Thanks very a lot.
operator
This concludes right this moment’s convention name. Thanks for collaborating. You might now disconnect. Everybody. Have an ideal day. Sa. Sa.
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