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INGR Q3 Earnings Miss Estimates as Higher Costs Hurt Margins
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Key Takeaways
Ingredion's Q3 adjusted EPS fell 17.1% to $2.28, missing estimates as net sales declined 1.3%.
Higher Argo manufacturing and tapioca costs drove a 280-basis-point drop in gross margin to 22.3%.
INGR cuts its 2026 adjusted EPS outlook to $9.25-$9.70 amid higher costs and softer demand.
Ingredion Incorporated (INGR - Free Report) reported weak third-quarter 2026 results as elevated manufacturing costs, a slower-than-expected recovery at its Argo facility, and softer food and beverage demand pressured profitability. Continued growth in Texture & Healthful Solutions and stronger Latin American volumes partly offset these challenges.
Adjusted earnings were $2.28 per share, which dropped 17.1% year over year and lagged the Zacks Consensus Estimate of $2.55.
Ingredion Incorporated Price, Consensus and EPS Surprise
Net sales declined 1.3% to $1,792 million but surpassed the consensus mark of $1,766 million. Excluding the Pakistan divestiture, sales increased 2%, supported by favorable currency movements and higher volumes.
Reported gross profit declined 12.3% to $399 million, while the cost of sales increased to $1,393 million from $1,361 million. Gross margin contracted 280 basis points to 22.3%, reflecting elevated manufacturing costs and unfavorable input-cost dynamics.
Adjusted operating income decreased 18.9% to $206 million from $254 million. The decline primarily reflected higher manufacturing expenses at Argo, rising tapioca costs and softer customer demand. Favorable foreign exchange and volume growth partly mitigated these pressures.
Reported operating expenses increased 5.9% to $215 million. Adjusted operating income was also affected by margin pressure, which reduced adjusted earnings by 72 cents per share. Positive volume and currency movements provided partial offsets.
Texture & Healthful Solutions sales increased 0.8% to $610 million. Higher volumes contributed $12 million, partly offset by a $4 million unfavorable price-mix effect and a $3 million foreign exchange headwind. Segment operating income declined 9.5% to $95 million, reflecting higher tapioca and manufacturing costs. Operating margin contracted to 15.6% from 17.4%.
The segment recorded its 10th consecutive quarter of net sales volume growth, with volumes increasing 2%. Demand for clean-label ingredients remained strong as customers continued reformulating products for simpler labels, affordability and improved nutrition.
Food & Industrial Ingredients-LATAM sales increased 6.7% to $624 million. Favorable currency movements added $30 million, while higher volumes contributed $21 million. Segment operating income declined 6% to $109 million, primarily due to transactional currency pressure in Mexico and disruptions following an earthquake in Colombia. Stronger brewing and beverage demand provided some support.
Food & Industrial Ingredients-U.S./Canada sales declined 0.6% to $504 million. Segment operating income plunged 35.8% to $52 million, reflecting elevated Argo manufacturing expenses and lower volumes. Favorable price mix partly offset these headwinds.
Argo production stabilized for a second consecutive quarter, with inventories largely rebuilt and service levels improving. However, elevated maintenance expenses, manufacturing inefficiencies and softer demand delayed its earnings recovery. Management remains focused on reducing operating costs, improving production yields and rebuilding customer volumes.
All Other sales declined 54.6% to $54 million, primarily reflecting the divestiture of Ingredion's majority stake in its Pakistan business. The segment's operating loss widened to $11 million from $4 million, as the absence of Pakistan's earnings contribution outweighed continued improvements in Protein Fortification.
INGR's Cash Flow and Balance Sheet Position
Cash provided by operating activities totaled $389 million during the first nine months of 2026 compared with $539 million in the year-ago period. Capital expenditures increased to $313 million from $299 million.
Ingredion paid $158 million in dividends and repurchased $85 million of common stock during the period. Cash and short-term investments stood at $993 million at September-end, while total debt was $1,775 million.
The company increased its quarterly dividend to 83 cents per share, marking its 12th consecutive year of dividend increases. Management remains on track to complete its $100 million share repurchase commitment for 2026.
Ingredion Lowers Its 2026 Earnings Outlook
Ingredion lowered its full-year 2026 adjusted earnings guidance to $9.25-$9.70 per share. Net sales are expected to remain flat, while adjusted operating income is projected to decline by a mid-teens percentage, reflecting persistent manufacturing headwinds and softer demand.
Texture & Healthful Solutions operating income is forecast to range from flat to low-single-digit growth. LATAM operating income is expected to decline by a mid-to-high-single-digit percentage, while U.S./Canada operating income is expected to fall 35%-40%.
Cash from operations is now projected between $650 million and $750 million, with capital expenditures expected at $450-$490 million.
INGR Advances Its Tate & Lyle Acquisition Plans
Ingredion continues progressing through regulatory and antitrust reviews for its pending acquisition of Tate & Lyle. The transaction has an enterprise value of approximately $5,000 million, with closing anticipated in the second half of 2027, subject to regulatory approvals.
Management expects approximately $130 million in annual run-rate cost synergies by 2030. The acquisition is projected to be more than 15% accretive to adjusted earnings per share in the first full calendar year following completion, with integration planning already underway.
The Zacks Rank #4 (Sell) stock has tumbled 8.5% over the past year compared with the industry’s decline of 8.2%.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS implies growth of 7.6% from the year-ago figure. LW delivered a trailing four-quarter earnings surprise of 22.1%, on average.
The J.M. Smucker Company (SJM - Free Report) , a leading manufacturer and marketer of branded food, beverage, pet food and pet snack products, currently carries a Zacks Rank #2 (Buy). SJM delivered a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current fiscal-year EPS implies growth of 17.1% from the year-ago figure.
Altria Group, Inc. (MO - Free Report) , a leading U.S. tobacco and nicotine company, currently carries a Zacks Rank of 2. MO delivered a trailing four-quarter earnings surprise of 1.3%, on average.
The Zacks Consensus Estimate for Altria Group’s current fiscal-year sales and EPS indicates an increase of 3% and 5.2%, respectively, from the year-ago period.
View the Zacks #1 Rank List
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INGR Q3 Earnings Miss Estimates as Higher Costs Hurt Margins
Key Takeaways
Ingredion Incorporated (INGR - Free Report) reported weak third-quarter 2026 results as elevated manufacturing costs, a slower-than-expected recovery at its Argo facility, and softer food and beverage demand pressured profitability. Continued growth in Texture & Healthful Solutions and stronger Latin American volumes partly offset these challenges.
Adjusted earnings were $2.28 per share, which dropped 17.1% year over year and lagged the Zacks Consensus Estimate of $2.55.
Ingredion Incorporated Price, Consensus and EPS Surprise
Ingredion Incorporated price-consensus-eps-surprise-chart | Ingredion Incorporated Quote
Net sales declined 1.3% to $1,792 million but surpassed the consensus mark of $1,766 million. Excluding the Pakistan divestiture, sales increased 2%, supported by favorable currency movements and higher volumes.
INGR's Profitability Faces Manufacturing Cost Pressure
Reported gross profit declined 12.3% to $399 million, while the cost of sales increased to $1,393 million from $1,361 million. Gross margin contracted 280 basis points to 22.3%, reflecting elevated manufacturing costs and unfavorable input-cost dynamics.
Adjusted operating income decreased 18.9% to $206 million from $254 million. The decline primarily reflected higher manufacturing expenses at Argo, rising tapioca costs and softer customer demand. Favorable foreign exchange and volume growth partly mitigated these pressures.
Reported operating expenses increased 5.9% to $215 million. Adjusted operating income was also affected by margin pressure, which reduced adjusted earnings by 72 cents per share. Positive volume and currency movements provided partial offsets.
Ingredion's Segment Performance Shows Mixed Trends
Texture & Healthful Solutions sales increased 0.8% to $610 million. Higher volumes contributed $12 million, partly offset by a $4 million unfavorable price-mix effect and a $3 million foreign exchange headwind. Segment operating income declined 9.5% to $95 million, reflecting higher tapioca and manufacturing costs. Operating margin contracted to 15.6% from 17.4%.
The segment recorded its 10th consecutive quarter of net sales volume growth, with volumes increasing 2%. Demand for clean-label ingredients remained strong as customers continued reformulating products for simpler labels, affordability and improved nutrition.
Food & Industrial Ingredients-LATAM sales increased 6.7% to $624 million. Favorable currency movements added $30 million, while higher volumes contributed $21 million. Segment operating income declined 6% to $109 million, primarily due to transactional currency pressure in Mexico and disruptions following an earthquake in Colombia. Stronger brewing and beverage demand provided some support.
Food & Industrial Ingredients-U.S./Canada sales declined 0.6% to $504 million. Segment operating income plunged 35.8% to $52 million, reflecting elevated Argo manufacturing expenses and lower volumes. Favorable price mix partly offset these headwinds.
Argo production stabilized for a second consecutive quarter, with inventories largely rebuilt and service levels improving. However, elevated maintenance expenses, manufacturing inefficiencies and softer demand delayed its earnings recovery. Management remains focused on reducing operating costs, improving production yields and rebuilding customer volumes.
All Other sales declined 54.6% to $54 million, primarily reflecting the divestiture of Ingredion's majority stake in its Pakistan business. The segment's operating loss widened to $11 million from $4 million, as the absence of Pakistan's earnings contribution outweighed continued improvements in Protein Fortification.
INGR's Cash Flow and Balance Sheet Position
Cash provided by operating activities totaled $389 million during the first nine months of 2026 compared with $539 million in the year-ago period. Capital expenditures increased to $313 million from $299 million.
Ingredion paid $158 million in dividends and repurchased $85 million of common stock during the period. Cash and short-term investments stood at $993 million at September-end, while total debt was $1,775 million.
The company increased its quarterly dividend to 83 cents per share, marking its 12th consecutive year of dividend increases. Management remains on track to complete its $100 million share repurchase commitment for 2026.
Ingredion Lowers Its 2026 Earnings Outlook
Ingredion lowered its full-year 2026 adjusted earnings guidance to $9.25-$9.70 per share. Net sales are expected to remain flat, while adjusted operating income is projected to decline by a mid-teens percentage, reflecting persistent manufacturing headwinds and softer demand.
Texture & Healthful Solutions operating income is forecast to range from flat to low-single-digit growth. LATAM operating income is expected to decline by a mid-to-high-single-digit percentage, while U.S./Canada operating income is expected to fall 35%-40%.
Cash from operations is now projected between $650 million and $750 million, with capital expenditures expected at $450-$490 million.
INGR Advances Its Tate & Lyle Acquisition Plans
Ingredion continues progressing through regulatory and antitrust reviews for its pending acquisition of Tate & Lyle. The transaction has an enterprise value of approximately $5,000 million, with closing anticipated in the second half of 2027, subject to regulatory approvals.
Management expects approximately $130 million in annual run-rate cost synergies by 2030. The acquisition is projected to be more than 15% accretive to adjusted earnings per share in the first full calendar year following completion, with integration planning already underway.
The Zacks Rank #4 (Sell) stock has tumbled 8.5% over the past year compared with the industry’s decline of 8.2%.
Stocks to Consider
Lamb Weston Holdings, Inc. (LW - Free Report) , a leading global manufacturer, marketer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS implies growth of 7.6% from the year-ago figure. LW delivered a trailing four-quarter earnings surprise of 22.1%, on average.
The J.M. Smucker Company (SJM - Free Report) , a leading manufacturer and marketer of branded food, beverage, pet food and pet snack products, currently carries a Zacks Rank #2 (Buy). SJM delivered a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current fiscal-year EPS implies growth of 17.1% from the year-ago figure.
Altria Group, Inc. (MO - Free Report) , a leading U.S. tobacco and nicotine company, currently carries a Zacks Rank of 2. MO delivered a trailing four-quarter earnings surprise of 1.3%, on average.
The Zacks Consensus Estimate for Altria Group’s current fiscal-year sales and EPS indicates an increase of 3% and 5.2%, respectively, from the year-ago period.