Good day, and thank you for standing by. Welcome to the Third Quarter 2022 Ingredion Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advice that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Noah Weiss, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Good morning, and welcome to Ingredion's Third Quarter 2022 Earnings Call. I'm Noah Weiss, Vice President of Investor Relations. I'm delighted to have joined Ingredion at such an exciting time for the company, and I'm glad to be part of such a terrific organization. It is great to connect with you all virtually this morning. And for those I haven't met yet, I look forward to meeting you soon. On today's call are Jim Zallie, our President and CEO; and Jim Gray, our Executive Vice President and CFO. The press release issued today and the presentation will reference for our third quarter results can be found on our website, ingredion.com, in the Investors section. As a reminder, our comments within the presentation may contain forward-looking statements. These statements are subject to various risks and uncertainties and include expectations and assumptions regarding the company's future operations and financial performance. Actual results could differ materially from those estimated in the forward-looking statements, and Ingredion assumes 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 10-Q and 8-K. During this call, we will also reference certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating income and adjusted effective tax rate, which are reconciled to US GAAP measures in Note 2 non-GAAP information included in our press release and in today's presentation appendix. Now, I'm pleased to turn the call over to Jim Zallie.

Thank you, Noah, and good morning, everyone. We had another strong quarter, and I'm pleased to discuss our continued progress and the momentum we are building in the business. For the third quarter, we delivered excellent top line performance, achieving 15% net sales growth, up 19% on a constant currency basis. Our team has continued to do an outstanding job, managing inflation by offsetting higher corn and other input costs as well as foreign exchange impacts. Our third quarter results validated these efforts. We expanded our gross margins and grew adjusted operating income by 17% year-over-year, which was up 23% on a constant currency basis. Looking at our net sales performance in a little more detail. Across all four regions, comparable net sales demonstrated considerable strength in the third quarter. Notably, a few of our businesses achieved record all-time sales levels, including Brazil and China, to name two of our most important markets. Our commercial teams addressed head-on persistent global challenges such as input cost inflation, foreign exchange weakness and continued supply chain pressures. Our operations and supply chain teams remained intensely focused on getting our ingredients to our customers when and where they need them. Now turning to our strategic pillars. Our four strategic pillars continue to guide our execution and drive our business momentum, and I am once again proud of what our team accomplished during the quarter. Starting with specialties, this business grew mid-double digits in the first nine months and continue to demonstrate strong top line growth in the quarter. All five growth platforms performed well with texturizing ingredients and sugar reduction as standouts. Additionally, plant based protein sales were up strongly in the quarter and are now more than 145% greater year-to-date. Excitingly, we also commissioned our Shandong, China production facility in July and are…

Thank you, Jim, and good morning to everyone. Starting first with our Q3 regional performance. North America net sales were up 17%, when compared to the same period in 2021. The increase was driven by strong price mix, which was achieved in two parts. First, during contracting last fall, which anticipated inflation; and second, due to dynamic in-year price adjustments for freight costs and spot pricing for volumes beyond contract commitments. North America operating income was $126 million, up $6 million versus the prior year. The increase in operating income was driven by strong price mix that more than offset change in input costs. In South America, reported net sales were up 13% versus prior year, which includes the impact of the Argentina JV presentation change. On a comparable basis, net sales in the quarter would have been up 21%, excluding the contribution of Argentina to the JV in the prior year. South America operating income was $48 million, up $13 million with favorability being driven by stronger performance in India and Brazil, as well as positive contribution from the Argentina JV. Excluding foreign exchange impacts, adjusted operating income was up 43% in the quarter. Moving to Asia Pacific. Net sales were up 13% in the quarter. Absent foreign exchange, sales were up 23%. Asia Pacific operating income was $27 million, up $6 million versus prior year, with favorable price mix that more than offset higher input costs and foreign exchange impacts. Excluding foreign exchange impacts, adjusted operating income was up 43% in the quarter. In EMEA, net sales increased 9% for the quarter, and absent foreign exchange impacts, net sales were up 27%. EMEA operating income was $30 million for the quarter, up $7 million compared to prior year due to resilient performance in Europe, which was partially offset…

Thanks, Jim. Before we open the call for Q&A, I'd like to conclude today's remarks by reflecting on how we perceive both the near-term navigation of the macro environment while we pursue the long-term opportunities inherent in our driving growth road map. As I mentioned earlier, our growth road map is centered around the customer and the breadth and diversity of our customer base is a tremendous asset in times like these. We sell across the many end-use markets of retail, private label and food service and to thousands of local customers as well as large multinational CPG companies. With a broad core and specialty food ingredients portfolio, our products benefit regardless of consumer product price points. For example, when our consumer is economizing, demand for core sweeteners is strong, and our customers also find uses for specialty starches when formulating for affordability. Of particular relevance as it applies to the largest component of our specialty sales, the global market for texturants is growing 3% to 5% and generally experiences consistent demand through different economic cycles. This is due to their versatility, their functionality and their affordability. Therefore, to ensure we have capacity where we anticipate it will be most needed ahead of growing demand. we are investing $160 million over three years to support our texturizer growth. I'm pleased to say that we have already invested about a third of that amount supporting the growth of our clean label franchise and we are localizing more production in all four regions. These investments offer attractive returns with low execution risk. In closing, our third quarter was very strong and exceeded our expectations. Sales growth, operating efficiencies and our ability to more than offset inflationary headwinds and underpinned our performance. As we close out 2022 and we look forward into next year, we are confident that the company is well positioned to deliver long-term growth and value for shareholders. And now let's open the call for questions.

[Operator Instructions] Our first question comes from the line of Ken Zaslow with BMO. Q – Ken Zaslow: Good morning everyone. A – Jim Zallie: Hi, Ken A – Jim Gray: Hi, Ken Q – Ken Zaslow: A couple of questions I have. The first one is, can you talk about your opportunities for pricing into 2023? If you go through 2022, it looks like you are in the 15% to 20% pricing across your businesses. Do you expect to be able to take another pricing across the business? Will there be ones that have greater pricing ability? How do you think about that into 2023 broadly?

All right. Let me take a shot at that first, and then Jim can add some color commentary. So with respect to inflation in the US, so my comments are specific to the US we're seeing both corn as well as some other input costs being up. So as it relates to corn inflation, as an example, if you look today at the comparable US future strip, it's up about $1 to $1.20 a bushel, which is approximately 20% from our prior year contracting reference point. And so if you look at that and then you look at other input cost inflation, for example, energy and packaging, we're seeing mid-single-digit inflation in chemicals and packaging. -- energy costs will be up considerably, but we're largely hedged for 2023. And that will all be taken into consideration into our 2023 pricing. So, as it relates to contracting, and it's early to talk about that, we will be seeking price increases which will pass through the expected cost of inflation. And I think there's a general acknowledgment to all of those elements that I just described that those are just real input costs that are going up year-on-year. The other thing that's, again, very noteworthy is in our industry, growing utilization still is at very high levels of 89%, for example. And typically, when that's the case, along with the environment that I just described, that acknowledgment and that enablement for pricing does continue. So that's how I would describe, I guess, how we're thinking right now about 2023 pricing has. Q – Ken Zaslow: Great. And then just on Pakistan, you were able to deliver a very strong number in EMEA. I'm assuming that, the packet did you – did you quantify the impact of Pakistan and I'm assuming it's not going to repeat next year? Is that a fair way? And I'll leave it there.

I'm going to let Jim Gray take that one.

Sure. I think previously, when we're finishing Q2 and we were kind of noting that, there have been some significant flooding in Pakistan. We were somewhat cautious. We didn't know how broadly the flooding kind of throughout kind of one of the major rivers in Pakistan would impact both customers – and largely, I think that we've seen that has rolled through September, and we were really modestly impacted. Obviously, there are temporary road closures and some of our customers were closed. We really worked through that. So, really not too much impact, Ken, to your point, maybe less than $1 million of impact to EMEA during the quarter. I think maybe more going forward is some of the flooding had an impact on the cotton crop, and a portion of our starches are sold into textile industry in Pakistan, which then exports, gray cloth and materials to Europe and to the US. We're going to see that slow down just because of the domestic availability of cotton, so that – we'll watch that a little bit but not as concerned about that. I think more broadly, when we look at Pakistan, we're just concerned about the corn costs. The corn cost has risen significantly – and what we're finding is that, our team is quite agile on the ground. As an example, overall inflation is probably in the 23% range in September of this year, and we're probably looking at food inflation that's maybe even north of 50%. So we're just sensitive in terms of watching the cost of corn, watching our energy costs in Pakistan, and making sure that we recognize that in our pricing that we need in the country.

Great. I really appreciate. Thank you, guys.

Your next question comes from the line of Adam Samuelson with Goldman Sachs. Your line is now open.

Yes. Thanks. Good morning, everyone.

Good morning, Adam.

Hey, Adam.

So I guess my first question, as I think about the – the volume outlook across the business into the fourth quarter and into the first part of 2023. Jim, you said just made the allusion to kind of corn grand utilization being high in the – I think you said, 89%, if I heard correct. But can you just talk about what you're seeing kind of by different product types, categories, regions on the volume side and overall volumes in the quarter were flat. I know, there's moving pieces. You have the – the strike in Cedar Rapids, which is, I can't imagine helping kind of the utilization throughput. So, just maybe some color on what you're seeing in different categories and any sense on customers that may be looking at their inventories in a different way than they were six months ago?

Sure. Sure. Thank you for the question, Adam. So I would say, first, just starting from where we just finished. Through quarter three, volumes have been steady and robust we're certainly carefully watching the impact of continued inflation on customer demand and the potential that's still out there for a resurfacing, for example, of a rail strike in the US in November. I would say there are some signs that food service demand is bifurcating right now with quick service demand increasing at the expense of full service and fast casual. We're certainly seeing at the retail level that private label is growing both in Europe as well as in the US at the expense of some of the branded type products, which is typical in a somewhat recessionary environment. Interestingly, corn sweetener demand has been particularly strong, and our starch demand has continued to be very strong. And we believe that those products lend themselves to affordable formulating. What I would also say is in relationship to your comments around Cedar Rapids, demand for paper-making starches are also robust, and that continues. And as it relates specifically to the Cedar Rapids facility, after an adjustment month, I would say, in August after the work stoppage began August 1. The plant is now operating, actually very well under business under our robust business continuity plan, and we're steadily increasing production to meet customer needs. We're currently in active discussions with the union. We continue to bargain in good faith, and we're hopeful that will reach a mutually beneficial agreement there that will allow us to continue to service the paper-making market and also corrugated box market going forward, where again, demand certainly paper making, on uncoated free sheet remains strong and corrugated is a little bit soft just related to the overall economy, but nonetheless, we're in good shape there. I would say that it's just important to remember coming back to food that we have a broad customer base, again, and we service both branded, private label, food service large CPGs, many, many local companies given our breadth in 120 countries around the world. And typically, our products go in at such small levels, they're very multifunctional and versatile. And I think they weather typically not any kind of fees to famine type demand moves just based on history of going through different recessions. So hopefully, that gives you some color for how I'm thinking about volume.

No, that's all, some really helpful color. And then just a follow-up on cash flow. I know the outlook for cash from ops kind of was trimmed on working capital intensity. And Jim Gray, maybe just help us think about the implications of that into 2023? And is there reason to believe that there's a -- so were some working capital release that would be likely next year, absent another step-up in corn prices and inflation, or how does that actually flow through the balance sheet and cash flow statement over the next 12 months?

Yes. Sure, Adam. I think what we're seeing is that, when we look at the cash from ops read that's in our supporting tables, it's taking the endpoint at 2021. And I think at that time, both corn was lower as well as we move through, we've seen corn costs rise globally since the beginning of the Ukraine conflict. What we're now seeing, I think, in our AR is kind of a steady run rate. So if I look at the -- I'm looking at the end of Q1 to Q2, the end of Q2 to end of Q3, the accounts receivable is relatively in line with our quarterly sales. And so, I'm encouraged there. I think we are still seeing some of the corn costs pass through our inventory. And also just recognize that this is a seasonal type of the year, so most of the harvests are done in the northern hemisphere. And so, this is when we have in some markets where we have to buy our corn and so, for example, like Pakistan, we bought a lot of spring corn, much of that's on our balance sheet. And so, I think as we just roll forward and we'll finish out Q4 and then we'll look at the beginning of 2023. Likely, there'll be price increases that will still be rolling through some of our invoicing, but I generally see the net demand for working capital to be much, much less than what we've experienced in the first nine months. And then -- and that's kind of assuming that the overall global corn market stays elevated, kind of reflecting the US strip price, mid-6s per bushel, right? If -- and then just for everybody on the call, post the '23 crop size in the US as we get into a feeling for the carryout next year or even '24. If we see corn coming down, and that usually is beneficial to our working capital.

That's helpful color. I pass it on. Thanks.

Thanks, Adam

Thank you.

Your next question comes from the line of Rob Moskow with Credit Suisse. Your line is now open.

Hi guys. I have a few questions. One is, on the plant-based business, can you give us an update on how you're doing versus your internal targets? I know you said, 145% sales growth, but that was off a very small base last year. So what I'm interested to know is, I think you said, it would be a drag on operating profit this year and then maybe better next year. So, maybe an update there. My second question is about your FX outlook for the year. Maybe I missed it, but do you have higher headwinds from FX to your EPS than you thought, but how does that impact your EPS guidance, if at all? And then maybe I'll wait for a follow-up.

Right. I'll take the PBP question or base proteins, which is the acronym we use here, and Jim will take the 4x question. So, as it relates to plant-based proceeds specifically, as it relates to your direct question, for 2022, our revenues are trending within the range we provided at the beginning of the year, albeit on the lower end, but they are trending within the range that we had provided. With regards to the anticipated operating income improvement, we continue to improve our production each month. In fact, at the two facilities in October, we had record production months from a standpoint of quality of inventory and salable product. And we have -- we'll have a much more complete look at the go forward in relationship to the operating income improvement at the end of the year and probably be providing an update on that in quarter one. As it relates just to the entire plant-based protein category, I would say that, I would remind everybody that the approach that we've taken is to build a broad portfolio across protein flowers, concentrates and isolates across four types of pulse-based proteins. So we're not dependent, for example, just on P-protein isolate that goes into alternative meats. So it's a systems approach, it's a formulation approach. And while there has been weakness in demand for certain portions of the market, we're not dependent on sales into one product category exclusively, for example, alternative meats, and we were not, from the beginning, a large supplier to any one of the large alternative meat producers. So we still have a very robust project pipeline with many customers. And we're monitoring the category just like everybody else is, and clearly, price points and perhaps other questions around clean label, formulating, et cetera, for alternative…

Yeah.

Rob, you had a follow-up on plant-based proteins?

No, go ahead, please.

Okay. So on FX, I think as we have seen the dollar really strengthen is, obviously, we're absorbing that foreign exchange impact, and we're pretty clear on our tables. I would say that our full year updated outlook does include where the dollar is at today relative to other foreign currencies that are key in our markets. It's part of our business model, and we've consistently been able to try and offset foreign exchange headwinds, because it impacts the cost of corn, which is traded globally in dollars. And so that's going to show up in our local pricing models as we're looking at changes in the value of corn, I think it's somewhat well-understood by our customer base. And maybe just to highlight, it's pretty noteworthy that both South America and EMEA, which had a fair amount of foreign exchange weakness had expanding gross margins. So what we're trying to do, Rob, is really become tight and resilient on seeing that FX change, seeing that impact on our raw materials, which is either energy or corn, and then being able to be pretty agile in passing that through. We're still going to have lags, so just -- I think we have built some roll muscles on our execution around that.

Okay. Actually, my follow-up. You said that you're now at the lower end of your range for your plant protein revenue target. Is that because the alternative meat category has softened?

Not specifically, because again, our projections were across the entire platform of applications that I described and customer base. So we were never entering the space to be supply a magic bullet for one product for one category. That again has not been our approach or strategy. I just think that if you remember, we had at the beginning of the year, a little bit of challenges just ramping up into an entirely new product category for us, but we've demonstrated each and every month improvements in our production and our ability to make food-grade products at the highest quality. And so I think it's a timing issue related to that. But look, the category is evolving and going through changes. And we'll continue to monitor it. So for the long-term, we're still optimistic about the plant-based protein category.

Got it. Thank you.

Thank you, Rob.

Thanks, Rob.

Your next question comes from the line of Benjamin Theurer with Barclays. Your line is now open.

Thank you very much. Good morning, Jim and Jim. Congrats on

Good morning, Ben.

Good morning.

So two questions. So one -- and this was just a couple of weeks ago that when you talked about some of the potential risks in EMEA and more specific within Europe, given the developments that we've seen in some of the countries, be it Germany, be it France and so on and efforts to try to bring electricity prices down, supply to support of industries consumers, et cetera. Are you feeling more comfortable within your outlook as to not running into shortages and actually getting some government support? And how do you think this is going to play out, particularly into 1Q, maybe and a little bit into 2Q, if you could give us a little bit of an preview, just on your expectations on Europe, energy side and the risks associated with that? That would be my first question.

Okay. Let me take that. And what I would say is that we're obviously very pleased with our performance in quarter three for EMEA in total. As it relates specifically to Europe, we are cautiously optimistic in relationship to the energy situation. As you highlighted, compared to the peak of energy costs in Europe they have declined sharply since the summer peak. And it is though noteworthy that they still are 2 to 3 times higher than they were at the beginning of 2021 prior to the Ukraine conflict and they still 6 times the level of the US from a standpoint of gas prices. What we are seeing, and I think that everybody is encouraged by the fact that the EU and solidarity has built gas storage to levels approaching 90% to 100%, and that is including Germany. At this point, we do not foresee any government curtailment of natural gas in Germany for the winter and we're anticipating that we will be able to manage through the situation as it continues to develop. Europe also has been impacted, as you know, by a tough summer drought, and that has impacted the corn crop as well as the wheat crop, for example. And we, though, one of the comments that we made in the presentation is that we've looked at our contingency plans and business continuity plans to support our customers leveraging and flexing our global network. And we genuinely believe that given some of the decisions we took to say, go long on our corn positions and our specialty corn crop positions, not just in Europe, but also in the US as well as now the new network capacity from China. All of that allows us to flex and leverage that global network on behalf of our European customers that are concerned about potential shortages of, say, grain that can be turned into starch for their needs going forward. We believe we're actually going to be able to support them, leveraging our network. All that being said, what we are, I think, concerned about is how much of the inflationary increases that we're all reading about that are impacting the EU at 10% just this past month today, I believe it was announced that the UK just is at 11% inflation in the month. What that's going to do to the consumer ultimately? And how that affects consumer buying behavior? And that's kind of hard to predict at this point in time, except to say that we're in the food industry. And at the end of the day, again, we've weathered recessions based again on the diversity of how diversified our products are that go into all the different elements of food consumption.

Okay. perfect. And that actually nicely brings me to my second question. It was kind of interesting to see if we take a look into the volume, -- so if we think about APAC also South America, volume growth was definitely on the positive side, while within EMEA and in the US, we've seen it on the negative side. And I've heard there's a lot from some of the other companies out of LatAm, et cetera. Just talking about how the they've lived with inflation for much longer, right? I mean, if your operation in Argentina, they know what inflation is about. So, the question really is, have you seen significant differences in how your customers accept price increases and actually can pass this on and even consumers just look through it by being a little less sensitive to price increases, lower elasticities, maybe in some of the emerging markets. And that in the end has been a benefit to you just given your global footprint between emerging markets, developed markets? And how do you think how resilient that consumer down in South America in APAC actually is given all the price increases you've been pushed through?

I'll let Jim take a shot at it, and I'll add any color or comment. Jim?

Yes. Ben, as you know, and I think we've noted -- when we think about various economies, particularly some of the South American countries, I also add Pakistan to that, where we have -- it looks like emerging and/or kind of more developing economies and you've seen inflation. And inflation is an ongoing presence in daily life. You get price changes. Clearly, both our customers are more open to and agile in looking at, well, the cost of the ingredient from Ingredion has changed how do I work that into my costing and therefore, how do I think about my pricing going forward? So, to the extent -- unless you have real true economic disparity in one of those more developing economies, generally you're going to see consumer acceptance and kind of absorption of that higher pricing. And we definitely have kind of more resilience in the populous as well as some of our customer base. When you move to more of a slower growth economy that maybe more develop like you can see US, maybe Northern Asia, and you get these changes in the cost of the underlying raw material, the big part of our COGS, we then have to work through those pricing centers of excellence with those customers to introduce and explain why is our cost changing, why does our price to them for ingredients need to change. And that's what we work on in our commercial teams as well as our pricing centers of excellence and advertising that. And to the extent that I think that our customer base and what I'll call, lower growth. Historically lower inflation economies is now becoming much more agile and accepting that, well, yes, we're seeing the change in the energy. We're seeing the change in the raw materials. And I think that's kind of contributed to our success in putting pricing through this year.

Yes. Perfect. Thank you very much, Jim.

Your last question comes from the line of Ben Bienvenu with Stephens. Your line is now open.

Hey. Thanks. Good morning, guys.

Hey, Ben and good morning.

So I want to ask about the guidance, and in particular, recognizing that you guys did narrow the range a little bit for the year. It's still -- the implied range for the fourth quarter is still quite wide. And so, I want to unpack a little bit of kind of the elements of variability that you see ahead and what ultimately prompted you all to obviously narrow the range, but still leave it as wide as it is?

Sure. Ben, I'll take that, and I deserve to be beat up for that one. I think when we look at our business, which largely is manifested in the Northern Hemisphere, and we come through the year. We can look at the layout of the corn. We can look at the spring crops and kind of anticipate what the harvest is going to be. So we get better, I think, consistency in view into the business for Q2 and Q3 in terms of the poll. Traditionally or at least historically, what we've seen in our customer base as we finish the year, particularly with multinationals, CPG firms has been, what's their focus on their inventory levels as they're closing out their fiscal year, if that happens to coincide with the calendar year. And so, particularly in some of our specialty ingredients, what's their stocking behavior. I think one of you asked previously, I do see that I think inventory levels are going to be carried a little bit higher into the end of the year just because there has been some various supply chain disruptions either in moving ingredients, either around a country or continent and/or across oceans. And so, we're a little bit of a -- well, so we see somewhat elevated inventory levels. I think some of our procurement officers that our customers are saying, yes, that makes sense. It's prudent. It's smart. It's a little bit against what we've probably seen in maybe the last five or six years where we've usually seen a little bit of a kind of more of a drawdown on inventory to try and post a lower number. So, we're anticipating that inventories will carry through, but that could be a downside. I think most -- probably more importantly, Ben, is that there still is and in particularly in the US, some supply chain issues. We're going to get through the midterm elections, but there is still rail union labor issues to be resolved. And that is November 19 is the deadline for a number of the rails in the US to say, either they agree or they don't agree. So you're and that causes all sorts of potential truck and intermodal disruption. And then you still have a port issue on the West Coast. And so those things, I think, are just -- like they're not in our center cut guidance. We think we're going to be able to get through those. But if you look at the range, I think it's also helpful for you all to understand that some of us are looking at that and saying, yes, that could have an impact.

Yes. So

Low probability, but it could have an impact. A –Jim Gray: Yes. And that's exactly what I would say. I would say that we just are taking a cautious view towards the there's still uncertainty in relationship to that rail situation. Again, November '19 is a big date. We'll see if there is either a slowdown or potentially a strike. Hopefully, the government again intervene and avoid something like that. Let's say, 4x timing, Jim, right, we say 3 to 6 months or the dollar continues to remain very strong. So that's kind of factored in, I think, just a timing issue related to that. And as Jim said, it's just, I think, common sensical to assume that companies we'll be making some year-end adjustments into their inventory positions, probably for working capital reasons as well. And so we've kind of reflected on all of that and factor that into the go-forward guidance here for the full year.

Okay. Great. Makes perfect sense. My second question is just related to margins. The -- taking into account roughly the midpoint of the guidance implied in the fourth quarter, there is still material sequential compression in operating margin -- but year-over-year, you can be making progress on margin expansion. And I would think that would continue to be a trend as we move into next year, margin expansion year-over-year. So can you talk about the things that when you look out on the horizon, and the visibility that you have, can you talk about the path back to 2021 or 2020 margins and how you get there?

So Jim and I can tag team on that. Do you want to go from that A –Jim Zallie: Yes. I think, Ben, you touched on a great question, and I've had a conversation with a number of you on how we think about the corn layout and how it impacts each quarter. Previously, we talked about a hedging strategy, which may have lapped us a little bit more exposed in Q3 or particularly Q4, which I think is what we felt in the end of 2021 when kind of corn started to rise up. Here you get into 2022, we're expanding our hedging strategies and we have not exactly all the kind of the evenness of the coverage over all of the quarters and so as the Ukraine conflict impacted, as Jim mentioned, corn is probably up between $1 to $1.20 a bushel year-over-year. There's still a little bit of that compression that is in Q4, but largely, largely, we've mitigated a lot of that impact as we even further kind of mature and dial in what we're hedging relative to our contracting, particularly for US, Canada business into 2023, I really think the layout of that that kind of net corn impact is even going to be smoother, right? So Ben, what we're trying to do with respect to some of the Ag movement is really get to a consistent base level of either gross profit or OI that you all can see. And then for us moving forward, and getting to higher levels of gross margin, it's really focused on where is the value in either specialty ingredients and can be focused on the value of upgrading some of our core ingredients into new uses as well as really focus on operating and operating efficiencies. But I mean, turn it to Jim –

Yeah, I would say, we have margins as a key performance indicator that is very strongly in focus for our leadership team. And that's about mix enhancement on the specialty side. And we have an intense focus to grow our Food Systems business, which we believe has a lot of things going in its favor from a standpoint of more integrated systems and solutions to offer to customers that typically come with a higher margin threshold. So upgrades in our specialties, but also upgrades in our core from a standpoint of trading up on the margins there for that grind utilization, which is, again, operating at the higher levels of historical norms in our industry. And we do see opportunities, and we are already capitalizing and pursuing on opportunities for that two-thirds of our business, to move up the margins in that core as well. And that's, I think, a very significant point to emphasize in addition to specialties and not just think about it in the specialties way. And the other thing I would say is that, you can't count on ForEx and certainly, we don't, because we've lived for the last x number of years, since I've been in my role, with significant dollar strength. But at some point, the dollar will moderate and all of the hard work we've put in, when that does moderate will also help our margins. So I think that for all those reasons, we think that we will see, certainly, modest improvements in our margins going forward. We're working on it. We're very, very focused on it.

Yes. And Ben, as we've said in the past, I mean, we're at the height of a corn price cycle, right? So we're witnessing some of the highest corn costs that we've seen in years, right? And then as we get hopefully that higher corn price and sense farmers to grow relative to other ag inputs and as we get better carryout and maybe crop sizes, right, that's going to help us. I think as we've seen -- it makes one, it makes our products more attractive because, we do pass through some of that corn cost decrease when that occurs. But generally, it's also then we're holding on to our gross profit dollars per ton, and then that is gross margin expensive.

Very good. Thank you so much and good luck for the fourth quarter.

Thank you, Ben.

Thanks, Ben.

There are no further questions at the queue. I will now turn the call back over to Jim Zallie for closing remarks.

All right. Thank you. And I want to thank everyone for joining us this morning. We look forward to seeing many of you at our upcoming investor events and I just -- agreed on continued interest in Ingredion.

This concludes today's conference call. Thank you for your participation. You may now disconnect.