Welcome to Ingredion's First Quarter 2014 Earnings Call. [Operator Instructions] As a reminder this conference is being recorded. Now, I would like to turn the conference over to our host, Mr. Aaron Hoffman, Vice President of Investor Relations and Corporate Communications. Go ahead, sir. You may begin.

Thanks, Marla, and good morning to everyone. Let me add my welcome to Ingredion's first quarter 2014 earnings call. Joining me on the call this morning are Ilene Gordon, our Chairman and CEO; and Jack Fortnum, 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 Form 8K. And now, I'm very pleased to turn the time over to Ilene.

Thanks, Aaron, and let me add my welcome to everyone joining us today. We appreciate your time and interest. As we communicated a few months ago, we fully expected our first quarter to be down on a year-over-year basis, and that was the case. For the most part, results were very much in line with our expectation. North America was the lone exception, and the variance was onetime in nature and entirely related to the extent and severity of the extreme winter weather. I'll provide you with additional details in just a minute. The other 3 regions, in short, delivered results as we anticipated, setting us on a good trajectory for the remainder of the year. You'll note in our press release that we haven't changed our full year guidance, and we also still expect North America to show improved operating income in 2014 as we work diligently to manage controllable costs and capitalize on incremental volume opportunities. The fact that we're able to hold our outlook is a reflection of the onetime nature of the first quarter variance to our original view, as well as the strength of our business model. Let's spend a minute on each region. In North America, we knew that the year-over-year layout of our corn cost for our fixed-price contracts would result in year-over-year unfavorability in the first quarter, but improve later in the year. This played out precisely as expected. As a reminder, in the first quarter of 2013, our corn cost for fixed-price contracts were the lowest for that year, while the first quarter of 2014 will likely be the highest cost we experienced this year. Taken together, this factor contributed to a decline in operating income as we expected. On February 6, we also called out the impact of the weather…

Thank you, Ilene. Good morning, everyone. As we always do, let me start off with some financial highlights. The first thing you'll likely notice is the absence of any adjusted figures as they were not in the first quarter of 2014, and none in all of 2013 so it is a very clean comparison. Sales fell over $200 million, largely as a result of the passing through of lower-priced corn and the impact of numerous currency devaluations. Gross profit dropped $56 million, and that flowed down to operating income for a drop of $53 million. Earnings per share declined 32%, a bit more than we had expected as a result of the weather issues in North America that Ilene discussed. Flipping over to the sales bridge. You can see the significant impact of the lower pricing and currency headwinds. The primary currencies working against us were the Argentine peso, the Brazilian real, Canadian dollar and the Thai baht. Volumes were up $2 million. Looking at the sales variance by region, you'll see the primary source of the currency headwind was South America, while North America was the main driver for lower-priced mix. Positively, we saw the volumes increase in 3 of the 4 regions as we expected. The operating income bridge clearly shows the weather and corn layout impact on North America, combined with the expected decline in South America, driven by Argentina. Both APAC and EMEA were up. Corporate costs were essentially flat. On the earnings per share bridge, the operational impact was negative $0.48 per share, largely a result of weaker margins flowing down from the operating income decline I discussed, as well as a significant foreign exchange headwind. This was partially offset by positive $0.03 per share from the nonoperating items, mostly even lower share count. On…

Thanks, Jack. As we said a few times this morning, our business model, which is reflected in the strategic blueprint, is working. In the case of North America, we faced a onetime truly exogenous situation with historically bad weather that had a dire impact on a wide range of companies and industries. We fully expect that region to be back on track and are already seeing positive signs through the month of April. South America has real opportunity for improvement as Brazil is starting to rebound and should benefit from the World Cup in June. Asia Pacific continues its good trajectory. And EMEA has a solid growth profile that is augmented by new capacity. We sit today with a strong balance sheet and a disciplined team executing a clearly defined strategy. We believe this is a position that will continue to benefit our shareholders in the years to come. Taken together, we believe in our prospects and our ability to deliver shareholder value over the long term. And now we're glad to take your questions.

[Operator Instructions] And the first question comes from the line of Robert Moskow with Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: But I guess, Ilene, I see that the guidance is unchanged, but you did highlight 2 things that are incrementally negative and probably not coming back to you. So that would be the bad weather in first quarter, and then also the outlook for Argentina is more negative. I guess I was a little unclear, like what are the positives that are offsetting that in order to make you feel comfortable that guidance can be truly maintained?

First of all, we did not say that Argentina was more negative. I think the other negative piece we mentioned was the exchange rates. So in other words, both the bad weather and exchange rate are more negative than what we said before. But yes, we held the guidance. Argentina remains exactly on track as we thought it would be. But let me turn to your questions about where we see the opportunities. We continue to be very bullish on Mexico, and again, as we've had double-digit growth in specialty. And when you look at the GDP that's forecasted for Mexico, it's about 3%. So we believe that the economic growth in Mexico should be very helpful during the year. Also, I would say Brazil, we showed some rebound with the volume with the World Cup, of course, that was factored in before. The GDP there is supposed to be just under 2%. But I also would mention Colombia is another region where the GDP is actually over 4%. And so with the trade agreement, we're seeing upside in Colombia. I think the other strength that we're seeing beyond EMEA is in the APAC area. And again, we showed some volume increase there. We see some upside in China. So obviously, our guidance in February was conservative in some ways, didn't anticipate all the bad weather. But now, we feel good about what we see for the rest of the year to be able to hold that guidance. Robert Moskow - Crédit Suisse AG, Research Division: I think that makes sense. And you didn't talk about specialty in the U.S. market. Is there any push or efforts going on by your customers to reformulate for health and wellness purposes or any of those factors that are helping those other countries happening here?

Absolutely. The U.S. -- what I always say is the mature economies actually have a -- are very good market for specialty products because consumers are so conscious of health and wellness. And they're looking for new products also. And so with all the customers that we meet with, we're working on many projects to either come up with new products or reformulate old products that, as an example, have specialty starch that make yogurt very palatable and very healthy. There are formulations going on even in baked goods to have lower calorie, and again, a more healthy makeup. So -- but that has been factored into our guidance, but that continues to perform well. And when you read about the different consumer product companies, especially in the U.S. and North America, you see that they're looking for every way to capture the hearts and minds and dollars of the consumer, who really want everything from non-GMO to a low calorie to very good tasting food. And we're able -- we're one of those top companies who -- able to be positioned to supply, whether it's GMO or non-GMO, whether it's specialty starch or it's a regular calorie count. We have products that supply all those different products.

We shall go to the line of Akshay Jagdale with KeyBanc Capital.

So first question, just a point of clarification on the corn, net corn cost issue. Can you give us some color as to what net corn cost are expected to be down by this year? You reported in your Qs the gross corn cost, which -- it's interesting, I was just looking at those numbers. The comps are actually the easiest in the first half on gross corn based on what you report. I'm a little bit -- it would be great if you could give us some clarity on the corn cost versus pricing dynamic in 1Q because that's going to reverse, I think, significantly in the back half. So it would help if you could give some color on that.

So let me take that question. First of all, let me just talk in terms of gross corn and sort of what happened in the marketplace. I think it's kind of a simple assumption as I think -- kind of share with you. The first one is, is if you go back 1 year, we had a market where there was rising corn cost. And effectively, they were, as you book your business, you end up with the lower corn cost at the beginning of the year and higher corn cost later on in the year. And in this current year and during contracting, effectively, the corn prices were falling. So you end up with a little bit more higher corn cost in the first part of your year versus the second part of the year. I would like to reiterate though, particularly in -- and we're talking about North America when there's volatility in the corn cost in between the quarters, with the full year, our profitability on our fixed-price contract is always the same. In our grain-related type of formulas, the corn cost will move, but that's all our customer direction in terms of how they're booking their corn cost. And so when you look at our Qs, it's a combination. We'd say it's about 50-50 in North America of grain related and fixed price. And what we were trying to illustrate is on our fixed price business, some of our corn costs and the layout per quarter was a little bit negative this quarter, and it will correct over the next 2 quarters -- 3 quarters. And so I think that, that's basically how the corn works. And that's why we try to only give the annual guidance because of the fact the layout of the corn is very challenging in terms of explaining in a detailed level on that. And so I think that, that's what I'd like to comment on at this point.

Yes, that helps. But perhaps, the point I'm trying to get to is you have a major onetime issue here, right, with the weather, which was pretty big driver of the shortfall this quarter. And you're calling it out as a transitory, maintaining the full year EBIT guidance or commentary on your segments. The rest of the year, the EBIT's going to have to grow pretty rapidly for the whole company, and then of course, in the U.S. as well. And so can you, at least, give us a sense of what is modest growth? Is it 2% or 3% EBIT growth in North America? Is that what you mean by modest?

Yes, I think when I'm talking about modest growth in North America, it is -- we were talking low-single digits and probably at the low end of that. I think obviously, it will depend on how the summer unfolds in terms of weather and a number of other variables. But I think that some of our -- what's really helping our margins in North America is some of the switch into the specialties rather than some of our core ingredients, where we've seen some softness, particularly in Mexico. So I would say that, that's the comment that we have there. And so it's going to be a very modest growth in North America. So you could say flat to up type of thing, but i would say that we're still very optimistic in our Mexican numbers. And just in general, in North America, that they're going to be still up in the year.

Can I just ask one on Brazil? You mentioned South America was in line. It seems to us from the public data that beer volumes have really had strengthened significantly, beer industry volumes, that is. And year-to-date, I think they're up by 11% through April. We should be seeing -- I would think there will be more strength than we're seeing in your South American EBIT. Can you give us a sense of what are you expecting for the beer industry volumes to do this year that's -- what's in your guidance? I mean, is it like a 10% increase in that business because that's what we're seeing right now, or is it less than that?

We haven't given a particular number. Obviously, beer consumption was down last year. And there were headwinds in that consumers were -- the food companies, the beer companies were actually buying the corn grits rather than the high maltose. So certainly, this 11% increase that you're quoting, we've experienced obviously that type of beer consumption growth in the first quarter. And I think everybody expects during the second quarter people getting ready for the World Cup, even though it's starting to be wintertime, the third quarter, obviously, is more of a wintertime and then it comes back into summer for Brazil. So I think people believe that it's an exciting time for the beer industry in Brazil. Now at the same time, we note that there's been a new beer tax that came out in early April and actually was slightly adjusted even yesterday by the government in that Ambev, about a month ago, said that they would absorb it. I think the total together is about a 3% tax. The early one, Ambev said they would absorb and not impact the consumers. They have not commented on the one from yesterday. But I think that there is a lot of enthusiasm in the ability for people to drink beer in the stadiums during World Cup that they expect a lot of strength, certainly, in the next 3 to 4 months. And so we've baked all that into our forecast. And we're the leader in South America with a very strong share, and not only in beer but in food products. And we're growing our specialty products, so beer is about 30% of the story. And food and even some industrial products are another important part to our leadership position there. So I think when you look at the whole situation in Brazil, as I've said earlier, we feel very good about the opportunities for brewing and food there.

Is it better or worse than you -- is it better than you had expected, and have you adjusted your estimates to reflect that going back to the previous question? It seems to me that the beer industry volumes are very strong, but what I'm trying to understand is that, has that come in even better than what you had? And is that part of the reason why you're absorbing this extra $0.10 or so in currency headwind?

I would say that it's exactly as we thought it would be. Now, of course, the second quarter hasn't happened yet, the World Cup. So could be a little bit better than we've baked in, so that's a piece. But I would say it's more so, our enthusiasm is also for the food side of the business. And even the specialty food growth that I talked about earlier for North America and even Mexico, I would say, that while the beverage was down, the food part of the business almost offset that. And so that was, I would say, relative strength for both food and specialty ingredients for the food business in Mexico is where we're seeing more strength than I've seen a month ago, a couple of months ago.

We'll go to line of Brett Hundley with BB&T Capital. Brett M. Hundley - BB&T Capital Markets, Research Division: Just have 2 questions. My first, maybe to look at North America margins a little bit differently. So if I look at what you reported, you guys called out weather. And we can do the math on what type of a hit that was to margins. And then if I start to layer in maybe other onetime items, I'm basically trying to understand where margins can go sequentially and you guys mentioned that you expect improvement as the year goes along. So can you give me an idea of outside the weather impact, what percentage of the hit from year-on-year variance in corn hedges dissipates in Q2? Do we see 30% of that dissipate? Do we see 50% of that dissipate? That other piece that impacted North American margins, how do we think about that flowing over the course of the year? I hope that makes sense.

I think -- let me take that question. I think the -- if you think about how it's going to dissipate through the year, obviously, they will have a little bit more carry-through in the second quarter in terms of the higher price, but not to the same -- near magnitude of the first quarter. Third quarter will be probably the best. And then in the fourth quarter, it's kind of the new crop type becoming -- items coming in. So I would say that if you think about how that, I'll call that, that straight-line profitability will flow. It's a little bit better in the second quarter, significantly better in the third quarter and then kind of flat to neutral in the fourth quarter. Brett M. Hundley - BB&T Capital Markets, Research Division: That's helpful. And then as far as margins on some of your other key products, dextrose, maltose, your specialty starches, what are the expectations? Were you happy with the ability to expand, or at least, protect margins in North America this year? And how do we think about that flowing as the year goes on?

Yes, I think most of those -- a lot of those contracts are fixed-price type of contracts. And essentially, what we've said is that I think in the last conference call, I indicated the results of our contracting where we've seen near the tail end on some of the sweetener volumes, a little compression on the margin, but our specialties were up. And we're very pleased with many of the different categories. And so I mean generally, in general, we were happy with some margin improvement in North America. Brett M. Hundley - BB&T Capital Markets, Research Division: Lastly, Ilene, I just wanted to talk about the M&A environment, particularly given the backdrop of how some countries have come up a little bit and bit the commodity environment a little harder this year. There's concerns, I understand your positive outlook on Mexico long term. But there's more short-term talk about you had sugar producers creating a bit of a rift and how that could affect both the Mexican market and back on the domestic market here in the U.S. And so, just given that commodity exposure that remains and potential for these types of issues to come up, the -- I would think that the stock would clearly be rewarded with improved multiple as you guys go out and do more value-add M&A similar to a National Starch. However, I also understand the competitive nature within the M&A landscape. And so I'm just -- I just want to get your thoughts on how you think about all this. Addressing your M&A filter, I understand it's very strict, but just how all that wraps up in your head and how you view the current M&A environment, maybe even versus a year ago?

Okay. Yes, no, I think that, that's a good point. And as I've said, the M&A that we're looking at falls into 2 categories. One is geographic, where we look for opportunities in places like Asia, where we're not as large as we'd like to be. And so we continue to look at those. And again, some of those are families, privately held. And so that actually, I would say, versus a year ago, seems to be a little bit more robust, that people are willing to start to think about selling some of those particular companies. But I would say even more so, there seems to be more activity in what I call the broadening of the portfolio. And you're absolutely right. What we're looking for are those ingredients that make us more important to our customers as we formulate, especially with these specialty product ingredients. And I would say that certainly, these companies are located in different parts of the world. There are quite a few in Europe, but they're global companies. Some are divisions of larger companies, some are owned by private equity, some are privately held, but there does seem to be some momentum there. And again, what we're looking for is what's the right fit to, again, as we formulate with our science people and yet meet the demand of the customer. So what we'll make us more important and at the same time, we're looking for the value proposition that creates value for our company strategically and for our shareholders. And so that's where the whole price value comes in. And again, it builds on the strategy to be a more important global ingredient producer, that's what we're looking to drive. But again, we continue to feel very good. We have a very strong balance sheet. And our customers are looking to us to grow, and we believe that there are opportunities both organically and M&A to do that.

And next, we'll go to Farha Aslam with Stephens.

So circling back on Akshay's question regarding North America and the weather impact versus kind of that corn/price headwind you're seeing, would you say roughly 40% of the hit year-over-year in terms of earnings is related to weather and roughly 60% related to the corn/price headwind? Can you just kind of give us some magnitude on that?

Yes, I'll start out. This is Ilene, and I'll turn it to Jack. But I believe that if you look through all the different numbers that we indicated, it was more of a 50-50 split, half from weather. And as we talked about the different components of energy, maintenance and energy acquisition was a big piece of it. There's always this piece where you don't get to sell everything that you want to. And do you call that weather, or are you able to collect that -- on that later on? And so that's why, it's another reason why the weather had some direct impact to move product around and on our specific factories. But we also feel very capable to deliver the products as needed to our customers as the year goes on. And of course, the other half was the corn hedge, so I think we basically saw 50-50.

I think the 50-50 is correct. I think the one thing I would like to highlight as well is that when we gave the last call, we indicated that there would be some weather impact in the forecast as well. And so we did deal with some of it. I think the thing that changed in our forecast was effectively the continuation and the severity of some of the weather during February and March. And that really did have an impact on our energy cost in terms of both the delivery of our natural gas as well as the impact pertaining to, actually, the usage of our natural gas, which was unexpected at that point in time. And so I think that it was just more the severity of this winter. I know people have quoted it as the worst winter in 100 years in the U.S. And you hear these things, and I think we tried to deal with it as best as we could. But even on the logistics side, we had several issues pertaining to rail cars not getting out and so we had to use over the road. And the over the road was under a great stress because of the snow. That was a record snowfall that we had as well. So we do have several plans up here, both in Canada as well as the north part of the U.S. And that's where we really got hit with some of these unexpected costs. And so it's about a 50-50 split if you look at our numbers. And I think that we factored some of it in back -- at the end of January, first of February, but it wasn't quite as much as we anticipated.

And then just looking at your balance sheet and cash flow, it is quite strong. And Ilene, you'd mentioned that you're starting to see some family businesses willing to sell. What are the size of those family businesses? And couldn't you buy family businesses and do a more share -- aggressive share repurchase program at the same time given the available liquidity that this company has?

Well, the size of the family businesses, there are bolt-ons that I've talked about before, anything from $50 million -- some of them, I don't know, $100 million, $300 million. Some of them are $1 billion, and we're a $6.5 billion company. So it's really all about how do we create value globally, not necessarily just for 1 particular region. And so we're looking at a variety of options in texturizing space in sweetener space and other additives that are part of the whole push on natural food ingredients. And so again, we have a variety of choices there. And at the same time, we do look at shareholder friendly actions. And if you'll recall, we bought back over $200 million worth of shares at the end of last year. We haven't been able to find an appropriate M&A. And then our board, reauthorized a buyback of 4 million shares over the next 3 to 5 years. So we do have choices. And again, it's all about how do you make choices and create value for shareholders. And also, you'll recall we also raised the dividend twice last year. And now, we're certainly at a -- we raised that to 46% during the third quarter. So that's always another shareholder friendly action. But I think when you look at our cash on our balance sheet, I feel good about it. We got through the drought last year and some headwinds. And now we're feeling very good about this year in maintaining our guidance. And I think the M&A environment is very interesting. And we want to, again, do the right thing. And so we'll always look at our choices.

And in terms of regions, where are you seeing the most robust acquisition opportunity?

Well, I think it's really all over the globe. It's Europe, it's Asia, even in North America. I would say there's opportunities in South America, maybe not as robust as the other regions. But there are companies in South America that would sit very nicely and create texturizing opportunities, so really all over the globe.

And next, we'll go to the line of Matthew Korn with Barclays.

So we talked a little about M&A and rounding out the portfolio there. Could you maybe talk a bit about your own product pipeline? Where, in house, you'd see the greatest opportunity to kind of keep ahead of the commoditization of your offering? So kind of -- maybe a little bit on where you are in these focuses today, how successful the process has been? Is there another NOVATION in the wings? Are there other kind of game-changers out there that have the opportunity to really blow things open?

Yes. No, good question. As we talked about at our Analyst Day about 18 months ago, we focused very much on, what I call, seeing consumer themes. So as an example, one of the, we call them springboards and we put specific assets on them and have specific projects. So what was one of our themes, which we call was wholesome is very much focused towards clean-label requirements in Europe. And there's also a clean label kind of effort in certainly, in North America. And that's why, as you mentioned, NOVATION has a patent on it. But we've actually brought to market other variations of NOVATION. In fact, one of them's called Endura, which is another physically modified product aimed at the dairy industry, which is strong in both Europe and in North America. So that's our franchise. We continue to develop a whole family of products that we believe will further strengthen the whole, what I call, the NOVATION area. So certainly, wholesome is a very important area. Then we have a theme that's on the nutrition side. And again, if you look at consumer product companies, they're all looking for ways to have ingredients and texturizers -- and starches are a great way to do this to have the food taste better and then bring nutrition. So fiber, the way people digest fiber, everybody wants fiber to be healthy. And how it's digested, as an example, these fibers that are called resistant fibers, and they slowly digest it, a little bit like a banana. And so people aren't as hungry, so they don't eat as much. So that's part of this whole nutrition area. So we very much focused our R&D pipeline on specific themes that are, again, aimed at the consumer trend looking in these different areas. But those would be 2 important areas.

That's great, that's very helpful. Following-up on that, you did roll back the top end of your CapEx budget for '14. Can you give us a little bit more detail? I mean what's changed given you're maintaining guidance for cash flow and earnings? Were you cutting out any potential projects that had looked attractive, maybe unattractive today. And just kind of -- sketch out again, out of that $300 million, what does it really take to keep the enterprise running? And where exactly, when the kind of growth CapEx be spent in the next year?

First of all, let me say that when we scaled it back to the bottom end of our range, some of it was for some of the growth in South America as we catch up with some of the investments we've previously made as well in terms of some of those in the growth we've been seeing in that environment. But also it was just a good scrubbing of the capital expenditures, a different look at them and trying to say which ones makes sense and which don't. And I would highlight, too, that we're running out about $300 million of capital expenditures versus the depreciation of about $200 million. So we still have a fairly positive outlook in terms of our CapEx program. And if you're asking in terms of what is it costing us to maintain our CapEx type of expenditures, it's always one of those questions in terms of how much is going to stay in business, how much is going into cost savings and cost improvement? Obviously, when we look at our portfolio, the cost improvements are the ones that are very, I would say, we have direct line of sight for and they have immediate results in many cases where they have a high return, and we implement those immediately. In our maintenance capital, I think that, that's the one that we would sustain our facility at a competitive pace on a regular basis. And I think we've kind of commented in the past that it's around a $75 million type of range through $100 million pertaining to those type of components. And so most of our future growth capital is really trying to move into some of the specialty areas. We mentioned our Hamburg expansion in -- off of our specialty starches in Europe. We have other -- our growth opportunities, some of them are going into Mexico, some of them are going into a number of different locations around the globe to supply our specialty. And so Ilene, do you have any other...

Yes, the other thing I'd like to say is that we have a very extensive, continuous improvement effort. And that's all about training people in Six Sigma methodology. And what's important about that is there are projects identified in each region with a very rigorous approach. Some of them need capital, but some of them don't. And so I think you're also seeing reflection of our stepping up that process, especially in South America, where we just have rolled that out in the last 12 months. And that better processes and methodology, when you take best practices as an example from North America to South America, the way to implement that isn't necessarily with capital, but it's in better methods. And so what I would say is that we're not pulling back on, as Jack said, on growth capital and on maintenance and cost reduction. At the same time, we're putting more of an effort on methodology and processes with continuous improvement that don't necessarily take capital. And those are the best projects, those are the ones I like.

And next, we'll go to Ken Zaslow with BMO Capital Markets.

Just talking about your, with your volume outlook in North America, how do you expect utilization rates throughout the year to play out?

Well, utilization rates for the industry, I think what I talked about kind of in the mid-80s last year, maybe a little bit less this year. And so I think we're expecting that to continue on the realm that it's been. And so as we've talked about, we're enjoying some growth in the specialty food products, especially in Mexico. But I think the utilization of the beverage has settled into that rate.

Yes, I would agree with that. I think it's -- there's been no incremental capacity added anywhere from my perspective in the industry. And I think it's kind of moving along in that vein. And you see more and more of the industry capacity being diverted into other finishing channels in the industry as well. So there is some growth in other areas of the industry.

And in South America, have you started to see beer manufacturers move away from corn grits?

Yes, absolutely. With that 11% growth in the first quarter that was quoted in one of the local publications, for the beer industry, they've had to move away. And so obviously, we've seen it in the maltose that we produced, and so that will continue.

And my last question, just to understand from the first questions. What is better than what you expected? You just gave conservative guidance. Is that kind of what your message is to us right now? It's not that anything was better or you just gave a very, very conservative guidance, and that's why you're able to give guidance? Because I didn't really see you say anything that was actually better than expected.

I think if you think about our guidance, you might call it conservative or not. I guess if you think about the exchange headwinds, historically, we've been able to pass those on in terms of our business models. So we're expecting that our units in country, we invest in dollars. Many of our raw materials are in dollars. And so effectively, there may be a slight lag in terms of getting that exchange back. In North America, when we gave the guidance, we did know about some of the weather, and that was factored in. And so not the full weather, granted, I will attest to that. But some of it was factored in and so we continued to have growth in Mexico as well as the fact that Argentina, which is the biggest variable on our guidance, has really just kind of tracked along as we anticipated in the midpoint of it. And so we do have a fair range associated with Argentina in our guidance. And so effectively, I think that, that's kind of where there's probably a little bit of noise because if I think that we're actually hitting our numbers in Argentina, which is nice to see.

I think the other thing, Ken, is that -- and Jack mentioned Mexico. Mexico came off a GDP of 1.1%. And now the numbers have it stronger at 3%. So I would say that, that is the other strength that we're seeing. And of course, if you'll recall, there was a beverage tax. And nobody's quite sure the total impact of that. It has had some impact. The food side though, for us, has been quite positive. So I think part of that reflects the GDP growth and the desire for the growing of the middle class. At the same time, the Mexican consumer really wants value. And so we have products even out of our R&D pipeline that very much is able to substitute some of our products for higher-priced oils. And so again, that makes affordability of some of these new products pretty attractive. And so I think that whole geography has a lot of opportunity.

We'll go to the line of David Driscoll with Citi Research.

This is Cornell actually filling in for David with a couple of questions. So the first thing, I want to get back to the guidance a bit. And when I look at it, obviously, you kept the guidance range the same, but it is wide range and was about $0.25 impact from weather and then FX worsening by about another $0.10. If I were to just start at the top of your range at $5.75 and back that $0.35 out, I get to $5.40. I understand that you might have had a bit of weather in your previous guidance. But I think things got a lot worse in February and March. And so my question is now that we look at the range, just kind of thinking about a number, more towards the bottom of the range, more realistic, giving kind of some of the onetime impacts that happened in the first quarter, which you really won't be able to recover as the year progresses?

Let me start. I think that we're still very comfortable with the range that we're in actually. And I think that there's certain things that can move the range to the bottom, such as the more severe impact in Argentina or some positives that can impact us pertaining to incremental volumes and things. I think the range is kind of where it should be at this point in time, from my vantage point, and so you have to appreciate. When we gave that range, I want to make sure you're clear, you're subtracting out the full weather impact. We had part of it already factored in there. On the FX component, we still believe that our units will pass on FX headwinds, and we're kind of instructing to do so in terms of their adjustments as well. And so we may not, the timing, it may not work 1-to-1 or anything like that, but we usually get those FX headwinds back. And so I think I'm still very comfortable with where we are in the range. And I wouldn't say that we're at the bottom or the top of the range. There's different things that can happen on either side of it that can drive us in the different directions.

Well, and getting back to what you were saying about FX and passing that along. I know in the past, some of the difficulties in Argentina with the economy there, you guys had mentioned that there was some price controls at retail that might have prohibited you from kind of taking pricing up to offset higher costs. Have those controls still been lifted, or are they still in place? And will that make it difficult for you, maybe to pass along some of the things that have happened with the Argentine peso going forward?

I think Argentina is a unique example of where we had some challenges passing on the devaluations because of some of the price controls at the retail level. And I do think that, that's why we do have a fair range around Argentina. And we've explained that the past as well in terms of why we're having some compression in our margins there. And I think the -- I guess I would like to point out from my perspective, it's a little positive that we're -- while we did these different models in terms of how the inflation and devaluation would work, when the farmer would release the corn, none of these things are going to be perfect as they flow through our model. And I -- that's why we do have a fair, a fairly broad range because it's principally about Argentina. The rest of the country is where I was really addressing the FX headwinds because, I think -- I don't think our outlook on the Argentine peso has changed dramatically from the end of last year.

And then if I can sneak in one more, just kind of talking about the North American business. Looking at your numbers, and so if we're going to grow kind of in that low-single digit range for the full year, it would imply something like 16% growth in that business over the remaining 3 quarters. And I was just wondering if you can talk a little bit more on kind of how you get there in light of kind of a volume environment that seems to be kind of flat to down. And maybe some comments from your competitors the other day that kind of signaled that this is a market that still remains very difficult and one where profit growth is going to be tough to come by.

So I would say that if you go back to that capital discussion, we're very good operators. And so now that we're through this weather, we continue to make cost-reduction investments that are very effective around North America. And in fact, they're not just cost reduction. But as the volume is coming back, even in the low-single digit, we run very well. And so you get the throughput, you get a much better environment. And do recall that corn prices are a lot lower this year than they were last year and as the food companies test some of that on to consumers to drive their own growth. As you've heard, a lot of consumer product companies are promoting their products with advertising and different types of promotions, in fact, formulating new products. They're not giving up on trying to drive growth in the food industry. And we're the guys behind that, helping them formulate those new products. So it's -- while it's a challenging, let's say, more in, what I'd call the core commodity side, the specialty food growth continues to be an exciting environment as the consumers are demanding new products and healthy products. So we get to produce both and balance our facilities very well, and therefore, get the throughput. And there's some opportunity and income there.

I would like to highlight one other point to that, just in case you didn't understand. The timing of the corn was significant in terms of how it rolls out during the year. So it is a timing issue between the quarters. And I think I explained it in an earlier question. The first quarter is -- got compression in its margins. But for the total year, it's what we expected, shall I say. And so the second and more so in the third quarter, you'll see improved margins in our North American business. I think that's the way the corn was laid out.

And next, we'll go to the line of Aaron Weitman with Appaloosa Management.

First, in terms of M&A, I guess we saw recently one of the bigger deals was this sensory effects business. Was that a business that you guys have looked at, and how do you compare it with your business?

Well, we don't comment on specific acquisitions. We do get to see what's out there. We're well connected in the market and through the different auctions. What I would say is what we're looking at are ingredients that would go very well with our texturizers and sweeteners, focused primarily on the food and beverage industry. And we're looking obviously at those that would create value on our specialty in nature. When I talk about broadening the portfolio, and of course, geographically, some of those are even in the more core. But we don't comment on specific acquisitions.

Okay. And then just as I look at your business, I tend to view it and I think you guys view it as being far closer to being simpler to a flavor and fragrance-type business versus being anywhere close to a straight commodity-type business, being I guess, even high fructose corn syrup is still an oligopoly with being highly contracted. I'm surprised that, I guess as you guys look at acquisitions, and I guess it's been more than a year that we've been waiting that we're not just seeing a more steady share buyback program, particularly with your stock at this cheap price?

Well, we've always said that when we look at the priorities and after funding -- certainly capital expenditures that we talked about quite a bit, and certainly, we had to rightsize the dividend, but that M&A is a high priority because it's all about growing the company and being more important to our customers. And that's going to create the most long-term value for all of our shareholders. Now last year, where we didn't find the right value proposition in some of the M&A that were just beginning to become available, that's when we did the share buyback during the fourth quarter and then reauthorized our buyback possibilities. And as I said earlier today, we continue to be excited about the M&A possibilities out there. And with our strong balance sheet, we want to be in a position to take advantage of that. But at the same time, we recognized that shareholder friendly actions like dividends and share buyback are part of that mix. So we're always looking at what creates the most value, and we'll continue to do that.

Okay. And then one last question from me. I guess, as you guys continue to spend more than $200 million per year above maintenance CapEx, what shall we look at as, I guess, the incremental yearly benefit from growth CapEx? And are there any, I guess, step-changes in terms of the income from those new projects as they come on?

So I'll start and then I'll turn it to Jack. But I think, as an example, when you look at the capacity additions that we did in Europe and Pakistan and we talked about those, obviously, you should see growth in volume and in income. And especially as we talked about in Europe earlier where we have a proprietary position, Pakistan was a leader there and we have export opportunities. So I would say that certainly in regions where we've added capacity, you ought to be looking at the growth in profit there. And then obviously, the other capital that we've spent, that we talked about maintenance, is all on the cost-reduction area. And that's making us more efficient. And that's a place, like South America, where we added capacity ahead of GDP growth. And now, we're looking at being more cost effective in South America. And so that would manifest itself, obviously, in higher profit. Jack, you want to add?

The only comment I would like to make sure that you appreciate is as we're doing these projects, there is a lag associated with the execution of the return. And we did a project that takes us, perhaps, 18 months to 2 years to do the project. And then effectively, particularly when it's a new capacity type of project, it takes us a while to fill out the channels and really drive those returns home. That's all factored into our returns on the project, obviously, in terms of timing, but there is a lag. And so you'll see some of the growth kick in as time progresses, as well as some of the cost savings. And some of the cost savings are really driven to offset any inflationary increases as well as Ilene mentioned before with the continuous improvement program. And so I think we've basically summarized the whole capital program there from that perspective.

Are there any, I guess, step-changes or any of the, I guess, new plants that you expect to come on in a big chunk at all, those are all still pretty regular?

I think if you think about it right now, it's not like we're building a new plant someplace or anything like that. Most of them are finishing channel type of capacities, and we're changing those around, are cost improvement type of projects. We're not putting in significant new capacity anywhere. We are filling out capacity in different locations from our previous investments.

And next, we'll go to the line of Adam Samuelson with Goldman Sachs.

A lot of ground's been covered today, so I'll try to make this brief. And maybe just a longer-term question on Argentina, I think one of the things that we've had over the last couple of years, given the issues down there, is that, that business was generating some pretty outsized margins for relatively commoditized business. Appreciate some of that's driven by your market share down there. But what is your long-term expectation for profitability in Argentina? And at what point do you think you can get there?

I'll start and then turn it to Jack. We've been in Argentina for a long time. We think that long term, the economics of the country should be attractive. It's a low-cost corn environment. And so when the government -- when things get kind of rightsized, we're excited about Argentina and the desire of the consumer there for both sweetened and starch-based products and beverage and food. I think we did say that, you're right, those were outsized margins and that we ought to be able to get back to more of a norm.

Yes. And I think we always said the norm should be in around that $80 million type of range. I think when we look at our investments there and the risk profile of Argentina, and as Ilene said, it is one of the low cost corn-producing countries in terms of the cost of corn. And so we felt very comfortable in that $80 million range at this point in time. Now having said that, obviously, the government policies and things like that could impact that profitability. And we're assuming that it will get back to that equilibrium very soon. When I say very soon, the next couple of years.

Okay, that's helpful. And just a clarification question in North America. With the guidance for EBIT should be up to low-single digits and majority of that growth seeming to be coming from specialty starches in Mexico, is there an expectation that profit growth in the U.S. specialty starch business is actually up? And it's not -- is that only because of 1Q, or is it just the underlying pricing dynamics in the market?

Yes, actually, we're expecting specialty starch margins to be up in the U.S. as well. What we've said is there is -- the specialty business was actually -- had better margins. And even though there was a little bit of compression in the sweetener side of the business, they more than offset the sweetener business.

And next, we'll go to a follow-up from Robert Moskow with Credit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: Just trying to get total clarity on the guidance, Jack. Does the high end of your EPS guidance assume that you get pricing in Argentina?

Yes, and I think Argentina, that would kind of put it back at the prior year type of levels. And so it would be that the corn got released, and we got some pricing back in -- margin back in Argentina, I would say, where the cost comes down and there was major devaluation and put out costs in check. And so at the top end, we would have to see some improvement in Argentina.

We do have a follow-up from Akshay Jagdale with KeyBanc Capital.

Just follow-up on Argentina. Can you -- previously, that range in your guidance was entirely, I believe, driven by the outcome in Argentina. Is that -- you mentioned you changed certain assumptions in Argentina. Can you just give us some clarity on one, is the range still a function of outcomes in Argentina? And what does it imply for EBIT in Argentina? I believe the midpoint previously was around $27 million in EBIT. That's what it implies for Argentina. If you could help me out with that, that would be great.

There's no change to our assumptions at this point in time with Argentina. I think Argentina's been tracking right in the middle of our range, and that $27 million number is still very valid from our perspective. Actually, just to refresh your memory on the -- what we've said before. We said that we expected the sort of midpoint of our assumptions, took us to Argentina being down about 40% in 2014 compared to 2013. We declined from $45 million to $27 million. The sort of anticipated range would be even in a worst case of our assumption being mildly profitable, making a little bit. And then there is some upside there depending on few circumstances if they played out in our favor depending on the pace of devaluation, the price of corn and government actions, which obviously, we can't control and fully anticipate but that's the full breadth of the assumptions.

And at this time, there are no further questions. Please continue.

Okay. So just a final sign-off. I want to reiterate our confidence in our long-term outlook in our business model. We remain keenly focused on shareholder-value creation, and we're committed to deliver shareholder value. So again, thank you for your attention. And that brings our first quarter 2014 earnings call to a close. Thank you.

That does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference Service. You may now disconnect.