Welcome to Ingredion Incorporated Second Quarter 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded. If you should have any objection, you may disconnect at this time. It is now my pleasure to turn the call over to Mr. Aaron Hoffman, Vice President of Investor Relations and Corporate Communications for Ingredion Incorporated. Thank you. Sir, you may begin.

Thanks, Emily. Good morning to everyone on the call, and welcome to Ingredion's Second Quarter 2012 Earnings Call. Joining me on the call this morning are Ilene Gordon, our Chairman and CEO; and Cheryl Beebe, our Chief Financial Officer. Our results were issued this morning in a press release that can be found on our website, ingredion.com. The slides accompanying this presentation can also be found on the website and were posted about an hour ago for your convenience. As a reminder, our comments within this presentation may contain forward-looking statements. These statements are subject to various risks and uncertainties. Actual results could differ materially from those predicted in the forward-looking statements, and Ingredion is under no obligation to update them in the future as or if circumstances change. Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in this morning's press release can be found in the company's most recently filed annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. With all that out of the way, I'm happy to turn the call over to Ilene.

Thanks, Aaron, and let me add my welcome to everyone joining us today. We appreciate your time and interest. Ingredion delivered a very good quarter in the face of headwinds that include rising corn costs, foreign exchange devaluations and challenging macroeconomic conditions in a number of markets. In spite of this, we achieved a record level of quarterly sales and adjusted earnings per share. As you digest the results, you'll see that we continue to take appropriate pricing action that allows us to generally cover higher input costs. We also continue to generate volume growth. While the world is certainly a challenging place, we have repeatedly demonstrated that we have a business model that helps mitigate risk while capitalizing on growth opportunities. It has enabled us to reliably deliver our guidance over many years and allows us to maintain our 2012 guidance. As we have stressed, our business model is actually quite straightforward. We take a readily available raw material, for the most part, corn, and process it to add functionality and value for our customers who are primarily in the food, beverage and brewing industries. At the same time, we manage risk quite well. Our North American business operates largely under annual contracts. Generally, about half of the contracts are firm-priced and backed up by hedges, so we eliminate most of the input volatility. The other half are generally what we refer to as grain-related contracts. These contracts allow our customers to take the input price risk and thus remove it for us. The conclusion is that for more than 50% of our total company, we have a formula for managing input price risk. Outside of North America, we have regular opportunities to adjust pricing to reflect market price movements with historically little lag or dislocation. At this time,…

Thank you, Ilene, and again, good morning. The second quarter, as Ilene mentioned, is the best in the company's history. It is reflective of the strength of the business model and the company's risk management philosophy and execution. While no business model is immune to the economic ups and downs of the world, our business model is holding up well. As we have discussed in both the year-end and first quarter calls, we expected a few headwinds this year and some tailwinds as well. Our forward-looking guidance incorporated volume growth, increased pricing to cover higher year-over-year input costs and weakening foreign currencies. Since the first quarter call, we have seen a continued decline in currencies and most recently, a major spike in corn prices. We are not changing guidance as we move into the second half. The adjusted earnings per share range remains at $5 to $5.25. Given the economic climate and the volatility in the market, we are pleased to be able to maintain this outlook. Moving to the second quarter, reported earnings per share were $1.40. Included in this number is approximately $0.16 related to the reversal of a tax asset valuation allowance set up 3 years ago against our South Korean business. At that time, we wrote down the goodwill of our Korean operations to reflect the change in the economics of that business. The write-down was $119 million. We did not recognize the full tax benefit of that write-down, which is in line with the appropriate accounting rules. Following the same rules, we are now required to release the valuation allowance. Obviously, the tax rate for the year and the quarter are impacted by this. Without the valuation allowance and restructuring costs, we are estimating the annual effective tax rate to be between 31% and 33%.…

Thanks, Cheryl. As I've done on previous calls, I'll wrap up with our strategic blueprint, which continues to guide our decision-making and strategic choices with an emphasis on value-added ingredients for our customers. The blueprint is a good reflection of our successful business model, which I detailed earlier. With a balanced geographic footprint and product portfolio, along with prudent risk management, we have an enviable position that has led to attractive, reliable historical growth, and we see no reason to believe that we won't continue this year and beyond in spite of the turbulent world in which we operate. As both Cheryl and I have noted, we are holding guidance in a tough business environment and feel very good about that. In sum, I believe that we are well positioned to deliver another good year while setting ourselves up for the future. And now we're glad to take your questions. Operator?

[Operator Instructions] And our first question today comes from Ken Zaslow.

Bank of Montreal. I get the question a lot from investors and it's probably pretty obvious given the recent environment, is how do you guys describe your ability to navigate the higher corn cost and be able to pass it on just not in terms of this quarter but, really, 2013 and beyond?

Well, Ken, this is Ilene. Of course, we work with our customers in terms of the business environment, but we've always had a model where we pass those corn costs on to our customers. And in most cases, they pass them on to the consumer and work through their own strategy. And of course, the brand owners are competing with the private label people, so there's always that challenge for them to figure that out. But for us, you know our business model and that as soon as we make a contract, we hedge immediately. So it's certainly a challenging environment as we come up to next year, but we've seen the success of our customers creating value for the consumer, and our job is to create successful products for our customers.

So I guess given that ability plus your CapEx spending, your mix shift opportunities, would you be surprised if you did not generate at least mid-single or high-single digit growth into 2013 given your ability to pass on the corn cost? Or is there any sort of concern or caution that you would lay out there?

Ken, it's Cheryl. I would answer that 2 ways. 2013, it's really early to be thinking about a guidance range. I can look at the business model and say we have successfully dealt in the short term with higher input costs, specifically corn, currencies and volume ups and downs, and there's nothing that we see that says that the business model changes. We would continue to expect in North America, because of high utilization, strong export demand, that we will -- our expectations would be to continue to price. And the same thing in the international markets. We haven't changed our long-term view of what drives the business, and that's the low-double digit earnings per share growth of between 10% and 12%.

So it's fair to say that the recent move in corn doesn't change how you guys think about your business model. Is that fair?

It will make it more challenging, but this is an experienced business team, and we've dealt with extreme volatility. 2007 to 2008, corn prices were running through the roof, and then they dropped. And when you look at our net sales variance, the reason that we are confident of the business model is that time and time again, we've shown, through the net sales variance analysis, the ability to adjust for declining corn costs or rising corn costs. And again, last year, we repriced $931 million is the exact number on the net sales variance 2011 versus 2010. So we're confident in the business model's ability to deal with the challenges we're facing.

And my last question is just -- can you talk about what the outlook for Mexican because it seems like Mexico and South Korea were exceedingly strong? Can you talk about your ability there because those would be the businesses that would be more reliant on sugar pricing environment? Can you just talk about that? And then I'll pass it on.

Yes. Well, the Mexican GDP this year, in 2012, the forecast is about 3.9%, which is actually one of the best around the world. In fact, it's better than Brazil, which is at 2.5%. And even next year, the number's at 3.6%. So as you know, in Mexico, we continue to serve that market both with local production and with exporting from the U.S. and that we do have a focus on the brewing industry, as well as food processors and industrial. And so we continue to see opportunities in Mexico to grow, and we have the capacity to serve it. I don't know if, Cheryl -- anything else you want to add?

I think again, given the business model, what I would add to Ilene's comments is as we look at South Korea, we adjusted our asset base to be able to compete with sugar. We do hedge our book of business, so even though corn prices have risen, we are hedged for the book of business that we have.

Our next question comes from David Driscoll.

David Driscoll from Citigroup. A couple of questions, Cheryl and Ilene. First one is on foreign exchange. Did you quantify what your new range is for the year? Is it still $0.17 to $0.20 negative impact from FX?

Actually, Dave, I think it's going to be a little bit higher, assuming that the basket of currency stay where they are today. From when we did the first quarter call, we've seen some pretty significant movements in a number of the currencies. So if I think about year-to-date, it's $0.11. If I were to hold those, assuming that there was some revaluation in some of the currencies, then that would stay about $0.22. I think it could be up to $0.26 or $0.27 for the year if currencies stay as weak as they are, and that's incorporated in the guidance of the $5 to $5.25.

Okay. On South America, you've mentioned that volumes would be -- I think you said constant or flat year-on-year for second half. I thought we had some new capacities coming online in South America, particularly in Brazil. I was hoping that you could maybe review what's coming online, how much volume does it actually add to the business, and then if volumes are flat, then that would suggest that there's offsets in the base business. If you could just explain a little bit about what those offsets are.

This is Ilene. I'll start out. Well, basically, the capacity that we announced, the first piece came on the end of last year, focused, again, on the brewing industry in the Northeast. And so I think certainly, this year, the economy has been slower than we anticipated, but we've continued to perform and obviously, are focused on the brewing industry as well as the food and industrial. Now if you look at the second half of the year in terms of the comparables, we feel that we can be certainly even with last year because the weakness was starting to happen by the fourth quarter. And if you look at the GDP forecast by the country, by the government now, the third quarter is supposed to be not that exciting, but it firms up to 4% in the fourth quarter, which is actually incorporated in their total year for next year GDP forecast of 4.6%. So with the capacity that we have, with the improving forecast of the economic situation, we certainly feel that we'll have the capacity and the demand to fill it during the second half of the year. I don't know if Cheryl has any other color there.

Again, as Ilene said, when we hit the fourth quarter, we will have a weaker comparative, and so that's why we feel that the fourth quarter will be up. But I think we're going to be relatively flat in the third quarter versus last year. And Brazil just has not kicked in. The GDP in May was down to 0.5%, and so the impact of the global economic challenges is impacting Brazil a little bit harder than what we thought was going to happen. As Ilene said, we're still very confident in the business model in the medium to long term, and we've incorporated that weakness in our guidance range of the $5 to $5.25.

And I appreciate the detail. On the U.S. weather, obviously, Ken was asking about the impact to corn, and you mentioned it in your own script. But the weather has another impact. It's been remarkably hot. Remarkably hot generally is good for cold beverages. Can you talk about what you've seen in North America? And I would note July, in particular, versus May, June, July. July was remarkably deviant in terms of months as regards deviant from normal weather. Are you seeing an ongoing and significant improvement in beverage demand, i.e. high-fructose corn syrup going into the beverage customers, and do you expect that to continue into the back half?

Yes, I think as you look at what we announced for Q2, when you look at the North America numbers, the strength of that volume growth certainly reflects more than just, as we said, the weak comparable from a year ago in that there's strength in the demand for high-fructose and the beer industry in Mexico. So we continue to see the soft drink demand increasing in the second quarter. It's early to have any July numbers, but we do see that strength, and that's what's reflected also in our second half. And Cheryl talked about those comments. So we think the weather is certainly a positive from that point of view.

Okay. So let me just pull it altogether then. So I feel like foreign exchange, Cheryl and Ilene, it looks like it's maybe worse by $0.07 kind of max, and it looks like your South American volumes -- I don't know that you've made any real changes here versus how you were looking at it. I think on the last quarter call, you said South America was going to be a little bit weaker on volumes than maybe your January forecast had it, so that feels reasonably consistent. U.S. weather certainly looks like a positive. In the quarter, you have a $0.10 beat versus the consensus estimates. Why not raise the 2012 numbers? I mean, you held the range constant, and it's a reasonably wide range. So I think where a lot of questions will be is number one, the range is very wide, and then number two, it actually feels like conditions are going very well for you, and perhaps, you could even have raised the guidance today.

Well, we are pleased that we're holding our guidance when many others are really lowering it, and I think it's really the uncertainty in the economic environment that makes us hesitant to raise it. And again, when you looked at -- you were laying out the different headwinds and certainly, foreign exchange is one of them, we do have the weather on our side, but I think it's just the uncertainty in the global economy. And even going back to what Cheryl said about South America, the GDP forecast is to go up the fourth quarter. We've been hearing that for a while from those economic indicators in South America. And so maybe you'd say we may or may not believe completely that 4% GDP growth in South America for the fourth quarter. So again, I think that we're just being cautious but prudent in really holding our guidance.

In other words, Dave, we haven't changed our stripes. It's still a conservative management team.

I appreciate that very much, and I appreciate even that comment. Just to be reiterated here, I mean, your stock has been just phenomenally weak. I think the indication by the stock is that investors expected a disaster here. And everything that we looked at said that was absolutely not happening and that conditions were good. So my comments are just almost simply to almost have you guys express just this absolute confidence in the business going forward, and I think you have, and I appreciate it. I'll pass it along.

Our next question comes from Farha Aslam.

Stephens Inc. I just want to flesh out growth for next year. Have you had opportunities to discuss the high corn environment with clients, and how have they reacted to kind of early pricing discussions, if you've had any? And going along Dave's questions, could you just highlight for us the CapEx investments that will come online over the next year that should help drive volumes for your business, excluding whatever would happen with the economy?

Sure. This is Cheryl. As we look at the corn market, there's a tremendous amount of volatility, which is driving the price. The million-dollar question is what's the state of the crop and what's the yield going to be. We do not do the farming, so from our business model, the question is at the level of current corn prices, will we be able to pass those through when we redo our North American contracts. If I look at what the fundamentals of the market are, high-capacity utilization, higher average selling prices have been achieved in order to cover higher corn costs in 2012. And so I don't expect that to change based upon the business model. If I think about the impact to our customers, those who are doing grain-related formulas, they may or may not have taken that risk off the table in their own hedging strategies, but again, back to the corn products, that's a pass-through. For the customers who like the certainty of knowing what their price is, I would expect that with the volatility in the marketplace, they may wish to have conversations sooner rather than later. But that is on an individual customer-by-customer basis. And last but not least is when we look at what the cost of the sweeteners and starches are as a percentage of our customers' cost of goods sold, it's relatively low. So while there is a significant price-increasing action that needs to happen if corn prices stay at these levels, again, because it's a relatively small percentage of our customers' cost of goods sold, we think we will be able to maintain our spread. I wouldn't be looking for any spread enhancement at corn prices at these levels, but I would say that our marching orders are to cover the increase in net corn cost. Relative to capital projects, we have a number that we would expect both from a volume standpoint and from a cost-saving standpoint to impact in 2013. We are bringing on our third plant in Pakistan, and that comes up in the fourth quarter. So we would expect to see a positive volume growth not only in Pakistan but exporting into the Middle East with that facility. We have made investments in Argentina. We've made investments in Brazil for volume growth in the core business around sweeteners, whether it be for the confectionery, the baking, the brewing industry, which we would expect to have a positive impact in 2013. And then we have a number of cost-savings initiatives that really -- Colombia, North America, where we would expect to see some benefits on the manufacturing efficiencies. Last but not least, we have made 2 significant investments in the specialty starch line in Europe to support the NOVATION and Springboard areas. And so we would expect that to have a positive impact in 2013 as well.

Great. And my final question is really regarding your cash flow. It's quite strong. Could you share with us your priorities of uses of cash, whether it's to buy back, dividends or what the M&A environment is for you?

Okay. Well, certainly, as I've said before on other calls, always, our first priority is to fund our organic growth that Cheryl just referred to, and that continues to go well. At the same time, we are looking at bolt-ons, again, that would support our ingredient strategy and that again, support making our customers more successful in having a variety of ingredients to supply to them. And so again, those bolt-ons are more on the smaller side as opposed to the larger acquisition, like in National Starch. And so again, those bolt-ons are certainly a priority, and we continue to look for those. But I've also said on calls that we understand, as an ingredient company, we ought to be able to be looking at our dividend, and in fact, we've raised it twice in the past year or so. And certainly, we're looking at that. So I would say what we do is -- we can balance -- we feel confident we can balance all 3 of those priorities and meet investor expectations.

Our next question comes from Heather Jones.

BB&T Capital Markets. First, on North American volumes, if you look at some of the big soft drink -- the big beverage purveyors, your volume numbers seem better than even what they're reporting. So I was wondering if you could give us some sense of what's driving that. Are you gaining -- not only growing with the GDP, but gaining new business plans, or if you can just give us some color.

Well, certainly, when you look at some of the numbers, I mean, I know Coke announced an increase of 1% for North America. Pepsi was pretty flat. I think some of the other players are also experiencing growth for North America for soft drinks. So we continue to serve them very well in those regions. And of course, Cheryl did mention that a couple of our percentage growth year-over-year was certainly accounting for that maintenance project we had the year before. So we continue to serve those customers very well, and again, their numbers aren't always captured the exact same way, but we continue to be very important to them.

So do you -- I mean, I know you don't have the maintenance project comparison at back half, but adjusting for that, would you expect this type of growth to continue into the back half for North America?

I wouldn't expect it to be quite as robust. What we have said is that we would expect for the full year, that we'd be on the high side of our historical norms, and so you're talking several percentage points for the full year for North America. Second quarter -- again, as we have talked in the past, the quarterly lineups are always a bit unusual. So if we look at last quarter, North America did not have an increase in OI, and that was because the prior year, we had the benefit of the lower-priced inventory, even though full year, we were fine, but that gets a little bit noisy quarter by quarter. Second quarter this year is the comparison because we were managing the inventory through the Argo shutdown for the steam pipe replacement, and so it makes the quarters a little bit difficult to track. Year-over-year, we tend to be much more in line, and we expect full year volume growth coming from the beverage industry, brewing industry and just better general growth through the rest of the food category. And that gives us a couple of percentage points, 2% to 3%.

Okay. When I go back to your Q4 call and you were talking about your outlook for 2012 and how the progression would be, it seems as if your first half came in meaningfully stronger, and mainly Q2 came in meaningfully stronger than you had originally anticipated. Was it the growth in North America, the volume growth? Or I mean, what would you attribute that to?

It was better growth in North America and Asia Pacific.

Okay. And then going back to the whole use of the cash question, I mean, frankly, your response to a question regarding the ability to price through in 2013 sounds fairly confident. To your point about the outlook for Brazil ramping up in 2013, it just seems like, while it's clearly a very challenging environment, that you're confident in your ability to be able to navigate it to continue to grow your earnings. And so I guess you talk about bolt-on acquisitions and all, and you have raised your dividend, but the yield is still not that robust. And then I think about where your stock has traded at times, and I guess I was wondering if you could respond to the question of what you're seeing out there that would be a better return than more aggressively buying your stock, given the weakness that we've seen in it, particularly what the stocks seems to be discounting in contrast to what you foresee.

Well, certainly, we look at the business model in our long-term view, and we feel very confident in our business model. I was just having a bit of an echo here. So I think that we see -- as you say, we're looking at next year. We're in the process, obviously, as everybody is, but again, we see some of the uncertain economic environment. But we have a very strong, experienced management team, maybe a bit conservative, but we've done very well in navigating through these headwinds, and there are -- certainly, as everybody around us is looking at the same headwinds, we feel confident. At the same time, we want to be sure that we're contributing value to shareholders, and so that's why we feel very good about the organic growth that we're investing in. We're going to be very smart about bolt-on acquisitions and look at the best strategic fit. And at the same time, we appreciate the investor interest in dividends and how we use our long-term cash. So we're balancing all that. And so again, the experienced management team and our strong business model make us feel very confident, but we want to make sure that we plan this out over the next couple of months so that we withstand all the headwinds in a very positive way.

So your major pushback, as somebody said -- just asked you to give one major reason why you wouldn't hike your dividend more dramatically and/or institute a more aggressive share buyback, would be just uncertainty -- or just economic uncertainty in 2013? I mean, what would be your primary reason?

Heather, it's Cheryl. The primary reason for not buying back the stock, I think Ilene said that we are looking at continuing to make sure we have a dividend payout ratio that is more in line with the ingredient company. And so if you think about our dividend payout ratio, somewhere today it's 16%, 17%. The historical range has been 15% to 20%, and so I don't think it's unreasonable based upon what's been said to get closer to the 20%. With regards to the best use of cash as to do you buy back stock because the value is down and the intrinsic value is significantly higher than what it's currently trading at, it becomes the question of are we able to find bolt-on acquisitions which, in the long term, would be a better investment than buying back the shares. And frankly, if we don't, if we don't find bolt-on acquisitions, then we're going to have to do something with that cash flow that we're generating. And I think, again, based upon the conservative nature of the team, the belief in the business model and the commitment to shareholder value is that we would make the right decision with that excess cash. There's 3.4 million shares outstanding on the stock repurchase program. Pick a number, you want to do it at $50, you want to do it at $55, depending upon what the view is of where the value of the stock, is it $60, $65, $70 based upon analysts' estimates? Then you can quickly do the math and say, all right, if you bought back 3.4 million shares, how much cash flow would you spend and what's the return on that? It really boils down to it's not a short-term issue that the stock took a hit, it's the long-term view is are we better off in buying back the shares for the shareholders or continuing to look for acquisitions that will add long-term value. And at this point, I would say it's more a question of timing than anything else. Obviously, based upon our history, we are a conservative group. We look for acquisitions that will be a homerun for our shareholders, a.k.a. National Starch. And we're patient. But if the business continues to generate the positive cash flow that we're seeing, then we're going to have to come to grips in a short time frame as to what's the better choice, hold off for the acquisition or buy back the shares. I hope that adds sufficient color.

Our next question comes from Tim Ramey.

D.A. Davidson. I have to say I was pleasantly surprised. Maybe I'm just -- I was too conservative on the North American operations in that normally, I guess my bias was to think that when pricing is strong, you may not be able to -- it's a pass-through environment. You may not be able to hang on to margins. And margins really performed very well, much better than I was expecting them to be up based on the comp, but it was better. And it was really too early to maybe be attributable to some of the stuff I think Ken might have been saying, the weather impact. Can you talk through why you think that was, or was I just too conservative?

Well, certainly, as we look at our business model, we planned it obviously last fall and early in the year as we worked with our customers in North America. And obviously, we've talked a little bit about South America has been kind of lackluster, and we have the Asian and the Europe opportunities. I think the other piece, certainly, as being an ingredient company, I mean, we are very much focused on our customers' needs and creating value for the customers with new products. And so we are formulating, and we've done well with our integration of National Starch. So you don't want to say the whole thing is attributable, the margin improvement, to growing specialty. I'd say that's a piece of it. But I think the other piece of it is when you look at North America and the volume growth, we ran very well in North America, in Mexico, in U.S., in Canada. And so I think the combination of the strength of our volume and then running operational excellence through the facilities, as well as gearing up with our R&D efforts and our product development to try to grow our specialty and serve value, so whether it's a yogurt market or, as Cheryl mentioned, the NOVATION product in terms of a clean label, those higher-end products actually are doing okay. Certainly, when there's economic headwinds, you think there's a retreat to some of the basic products, but the higher end is actually also performing, granted they're smaller segments. So I'd say that the improvement in the margin was a combination of the throughput, as well as some of the growth in specialty.

Got you. And on the guidance, I actually was pleasantly surprised that you maintained guidance just given the huge move in currencies. Are you doing anything special to mitigate currency impact in the second half, or is it just the operational strength that makes you feel comfortable that we can maintain?

Tim, it's Cheryl. It's the operational strength of the business model. And so again, we look for dollar returns. The ability to reprice, which we continue to see across the business, will, in South America especially, will take some volume hit for that repricing and in the case of South America, where -- the 2 biggest currency moves have been the real and the euro. And that's not to say that the Argentine peso hasn't declined and that the rest of the basket of currencies also hasn't devaluated. But the big movements are, again, the euro and the real. And so with the South American model, we have successfully demonstrated over time the ability to reprice. The lower corn costs, as opposed to, say, North America in the second quarter, helped with some of that pricing pressure. And Europe, as we have talked about, we cannot reprice. And the issue with Europe is that we have local competitors and we import from our other affiliates to support the specialty business. We've done 2 things to help mitigate that. One, on the transactional exposure, we do hedge for the European movement. And that is strictly the intercompany so that there is pricing stability, and we have a rolling 12-month hedge relative to that book of business. With regards to changing the business model, the investments that I talked about earlier, we continue to make investments locally so that we take it back more towards the local execution business model that we so well run on a global basis at Ingredion.

The next question comes from Christine McCracken.

Cleveland Research. Just real quick here, Ilene, you mentioned that you don't expect any issues with getting enough corn. I'm just curious if for some reason, these farmers don't deliver product or the other side, the counterparty doesn't deliver, are there penalties to nondelivery? Has that ever been an issue?

It's never been an issue, and by having many locations around North America with our regional model, as well as Canada, Mexico, U.S., we feel confident that we can procure what we need. And our whole global footprint is also very helpful in this situation. So that's why we feel confident we'll be able to get what we need in the next 18 months.

Do you think you'll be importing South American corn, for example, into North American operations to kind of -- if there is any kind of shortfall?

It's Cheryl. If this crop turned out to be a complete disaster and there was not enough availability, then I think given the fact that we have such a strong South American footprint, we would look to see whether or not we could import from either Brazil or Argentina.

But you haven't done that yet?

No. And it becomes a question of price, and so you've got to look at what the cost of bringing it in and the logistics behind it. I have no doubt that the team is sophisticated enough to be able to do it. We do move corn into Korea. We do move corn between the countries to support the various businesses. While that's not the basis of the model, we know how to do it. And so I think that if there was really a disaster here in the United States, there would probably be, perhaps, some policy change with regards to food versus fuel. There would, perhaps, be some policy changes with regards to importation of raw materials, and I think that we would continue to manage through it. It really boils down to is what's the cost's going to be and can you pass that cost through.

And that would be part of your conversations as you go into fall contracting, I would assume, right?

Absolutely.

Right. And then just one last question. Because in drought-stressed years, sometimes, we have issues with corn quality, does that become an issue for you in any way with aflatoxin levels, or is that something, given your process, that's kind of a non-issue?

I think we have to wait and see depending upon what the levels of aflatoxin may be. It's a bit too early to comment on what the implication would be until we know what those levels are.

And that question will be from Akshay Jagdal. [Technical Difficulty]

We'll just go ahead and wrap up there.

So this is Ilene. I just want to say the ingredient business model is performing very well and delivering strong results. In fact, the strength of the model becomes more obvious in these difficult times, when many other companies struggle to weather various headwinds. We delivered a record quarter, and we believe we are positioned to achieve our full year guidance, and we look forward to posting you on our growth and success in the coming quarters. So that brings our second quarter 2012 earnings call to a close, and again, we'd like to thank you again for your time today. Thank you.

This does conclude today's conference. Thank you so much for joining. You may disconnect at this time.