Q4 2021 Bunge Ltd Earnings Call

Speaker 1: Good day and welcome to the Bungee Limited fourth quarter 2021 earnings release and conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. And I'd like to turn the conference over to Ruth Ann Weisner. Please go ahead.

Good day and welcome to the Bhangi Ltd fourth quarter 2021 earnings.

The release and conference call all participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded and I would like to turn the conference over to Ruth Ann Wisener. Please go ahead.

Speaker 2: Thank you, operator, and thank you for joining us this morning for our fourth quarter earnings call.

Thank you operator, and thank you for joining us this morning for our fourth quarter earnings call.

Speaker 2: Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found in the investor section of our website at bungie.com under events and presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well.

Before we get started off well, let you know that we have slides to accompany our discussion. These can be found in the investors section of our website at bhangi dot com under events and presentations reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well.

Speaker 2: I'd like to direct you to slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bungie's current view with respect to future events, financial performance, and industry conditions.

I'd like to direct you to slide two and remind you that today's presentation includes forward looking statements that reflect monkeys current view with respect to future events financial performance and industry conditions.

Speaker 2: These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors. On the call this morning are Greg Heckman, Bunge's Chief Executive Officer, and John Nepple, Chief Financial Officer. I'll now turn the call over to Greg......................

These forward looking statements are subject to various risks and uncertainties, but he has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation and we encourage you to review these factors on the call. This morning are Greg Heckman Buggies chief.

Second of Officer, and John <unk>, Chief Financial Officer, I'll, now turn the call over to Greg.

Thank you Ruth Ann and good morning, everyone.

Speaker 3: Turning to the agenda on slide three, I'll start with some highlights of 2021 and accomplishments of the last few years, and then share a look into 2022. Then I'll hand it over to John , who will go into more detail on our performance. I'll then share some closing thoughts before...

Turning to the agenda on slide three I'll start with some highlights of 2021 and accomplishments in the last few years and then sure look into 2022.

Then I'll hand, it over to John who will go into more detail on our performance.

I'll then share some closing thoughts before opening the line for your questions.

Let's start with an overview of the year turning to slide four.

Speaker 3: Let's start with an overview of the year, turning to slide 4.

Speaker 3: I'm incredibly proud of our team and the outstanding results they achieved in 2021, allowing us to deliver adjusted EPS of $12.93.

I'm incredibly proud of our team and the outstanding results. They achieved in 2021, allowing us to deliver adjusted EPS of $12 93.

Speaker 3: Our team's performance in a dynamic market environment is evidence that the way we've transformed the business over the last three years is creating the collaborative global culture that we believe would maximize the value of the company.

Our team's performance in a dynamic market environment is evidence that the way we've transformed the business over the last three years is creating the collaborative global culture that we believed would maximize the value of the company.

Speaker 3: When we began this transformation in 2019, one of our first changes was moving from a regional to a global operating model to improve visibility and speed to act.

When we began this transformation in 2019, one of our first changes was moving from a regional to a global operating model to improve visibility and speed to act.

Speaker 3: Creating end-to-end value chains enables our team to focus on serving our farmer and consuming customers rather than competing with ourselves.

Creating Indian value chains enables our team to focus on serving our farmer and consuming customers rather than competing with ourselves.

Speaker 3: This approach also encourages the sharing of information and best practices.

This approach also encourages the sharing of information and best practices, which allows us to work more efficiently and use our resources more effectively.

Speaker 3: which allows us to work more efficiently and use our resources more effectively.

Speaker 3: Once we were all pulling in the same direction, the next steps became more clear.

Once we were all pulling in the same direction. The next steps became more clear.

Speaker 3: Bungie had an industry-leading portfolio with assets in some of the best locations around the globe.

Bhangi had an industry leading portfolio with assets in some of the best locations around the globe.

Speaker 3: But we also had individual assets and businesses that did not fit the company's goal of growing our relevance with customers at both ends of the supply chain.

But we also had individual assets and businesses that did not fit the company's goal of growing our relevance with customers at both ends of the supply chain.

Speaker 3: And after a number of divestitures, we now have a footprint that's stronger than ever and a solid base in which to grow.

After a number of divestitures.

Now I have a footprint that is stronger than ever and a solid base on which to grow.

Speaker 3: One example is a successful plant-based lipids platform we're building through the combination of loader's croquin and the legacy bungie oil.

One example is a successful plant based lipids platform. We're building through the combination of Lotus Croak, one and the legacy bhangi oils business.

Speaker 3: The Lotus Tropical Oils portfolio and innovation capabilities supported by Bunge's strength in supply chains and seed oils is a proposition that resonates with customers.

The Lotus tropical oils portfolio and innovation capabilities supported by bhangi strengthened supply chains and seat oils as a proposition that resonates with customers.

Speaker 3: While the entire oil segment delivered a record year, 2021 was also the best year for the former Lotus business.

Well the entire oil segment delivered a record year 2021 was also the best year for the former loaders business.

Speaker 3: We use the same methodical approach in evaluating how we can improve financial discipline in the organization.

We used the same methodical approach in evaluating how we can improve financial discipline in the organization.

Speaker 3: We've rewired our systems so we have better visibility to our data, and we use that information in a structured way to make better commercial, risk management, and capital decisions.

We've rewired our systems, so we have better visibility to our data and we use that information in a structured way to make better commercial risk management and capital decisions.

Speaker 3: The team also embraced the spirit of continuous improvement throughout our operation.

The team also embraced the spirit of continuous improvement throughout our operations.

Speaker 3: In the past year alone, the team set records in total crush volume, refining performance, and port volume.

In the past year alone the team set records in total crush volume refining performance in port volumes.

Speaker 3: We had over 100 CapEx projects greater than 1 million each in 2021.

We had over 100 capex projects greater than 1 million each in 2020 one.

Speaker 3: We delivered them safely with 95% of them on budget and on time.

We delivered them safely with 95% of them on budget and on time.

Speaker 3: And the team accomplished all of this while doing it the right way, taking care of each other, and that's especially during COVID.

And the team accomplished all of this while doing it the right way taking care of each other and that's especially during COVID-19 .

Speaker 3: We're also continuing to focus on fighting climate change with carbon-focused decisions.

We're also continuing to focus on fighting climate change with carbon focused decisions.

Carbon focused decision, making across our organization.

Speaker 3: In 2021, we announced science-based targets to achieve absolute reduction in carbon emissions for our own operations and in our supply chains.

In 2021, we announced science based targets to achieve absolute reduction in carbon emissions for our own operations and in our supply chains.

Speaker 3: Our industry leading commitment to have deforestation free supply chains in 2025 is a big part of our path to our Scope 3 target.

Our industry, leading commitment to have deforestation free supply chains in 2025 is a big part of our path to our scope three targets.

Speaker 3: We also closed on the refinancing of a credit facility tied to sustainability targets.

We also closed on the refinancing of our credit facility types of sustainability targets.

Speaker 3: and we're actively engaging with other stakeholders to promote change at scale across the entire supply chain.

And we're actively engaging with other stakeholders to promote change at scale across the entire supply chain.

Speaker 3: While we certainly made tremendous progress, we know our work is not done.

Well, we certainly made tremendous progress, we know where it works not done well.

Speaker 3: focus on continuous improvement, finding ways to make Bungee stronger and grow the business as we move forward.

Focus on continuous improvement finding ways to make bhangi stronger and grow the business as we move forward.

Now, let's turn to slide five.

Speaker 3: team delivered an outstanding Q4 in full year performance across all of Bungie's operations.

The team delivered an outstanding Q4, and full year performance across all among these operations.

Speaker 3: Results in agribusiness were driven by strong execution throughout the value chains, with refined and specialty oils posting record Q4 and full year results.

In agribusiness, we're driven by strong execution throughout the value chains with refined, especially oils posting record Q4 and full year results.

Speaker 3: Thanks to their efforts, Bungie delivered a positive earnings trend for a ninth consecutive quarter.

Thanks to their efforts buggy delivered a positive earnings trend for a ninth consecutive quarter.

Speaker 3: Before handing the call over to John , I want to spend a moment on our outlook for 2022.

Before handing the call over to John I want to spend a moment on our outlook for 2022.

Speaker 3: we expect favorable market conditions to continue in 2022.

We expect favorable market conditions to continue in 2022.

Speaker 3: Based on what we see in the forward curves, we expect to deliver adjusted EPS of at least $9.50 for the full year, which would be the second highest earnings result in Bungie's history.

Based on what we see in the forward curves, we expect to deliver adjusted EPS of at least $9 50 for the full year, which would be the second highest earnings result in buggies history.

Speaker 3: With that, I'll hand the call over to John now to walk through the financial results in detail and we'll then close with some additional thoughts on the year ahead.

With that I'll hand, the call over to John now to walk through the financial results in detail and will then close with some additional thoughts on the year ahead.

John .

Speaker 4: Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on slide 6.

Thanks, Greg and good morning, everyone, let's turn to the earnings highlights on slide six.

Our reported fourth quarter earnings per share was $1 52 compared to $3.74 in the fourth quarter of 2020.

Speaker 4: Our reported fourth quarter earnings per share was $1.52 compared to $3.74 in the fourth quarter of 2020.

Speaker 4: A report of results included a negative mark-to-market timing difference of 90 cents per share and $1.07 per share of impairment charges primarily related to our Mexico wheat milling business which is now classified as held for sale.

Our reported results, including the negative mark to market timing difference of 90 cents per share and $1 seven per share of impairment charges, primarily related to our Mexico wheat milling business, which is now classified as held for sale.

Adjusted EPS was $3.49 in the fourth quarter versus $3.05 in the prior year.

Speaker 4: Adjusted EPS was $3.49 in the fourth quarter versus $3.05 in the prior year.

Speaker 4: Full year 2021 earnings per share was $13.64 versus $7.71 in 2020.

Full year 2021 earnings per share was $13.64 versus $7 71 in 2020.

Speaker 4: Adjusted full year EPS was $12.93 versus $8.30 in the prior year.

Adjusted full year EPS was $12 93.

Versus $8 30 in the prior year.

Speaker 4: Adjusted core segment earnings before interest in taxes, or EBIT, were $766 million in the fourth quarter versus $636 million last year, reflecting higher results in agribusiness and refined and specialty oil.

Adjusted core segment earnings before interest and taxes or EBIT were $766 million in the fourth quarter versus $636 million last year, reflecting higher results in agribusiness and refine and specialty oils.

Speaker 4: Agribusiness completed an outstanding year with another strong quarter.

Agribusiness completed an outstanding year with another strong quarter.

Speaker 4: In processing, results were higher in all value chains with notable strength in North American soy and European soft seed crushing, both of which benefited from large crops, strong oil, and meal demand.

And processing results were higher in all value change with notable strength in North American soy and European soft seed crushing both of which benefited from large crops and strong oil and meal demand.

Speaker 4: Merchandising had a strong quarter driven by our global vegetable oil and green value chains, as well as good execution and ocean freight. However, results were slightly lower.

Merchandising had a strong quarter driven by our global vegetable oil and grain value chains as well as good execution in ocean freight however.

However results were slightly lower than a strong prior year.

Speaker 4: Refined specialty oils finished off a record year with strong fourth quarter results of $154 million, up $42 million compared to last year.

Refining of specialty oils finished off a record year with strong fourth quarter results of $154 million up $42 million compared to last year.

Speaker 4: Results were primarily driven by improved margins in North America and Europe , which benefited from strong food and fuel demand. Results in South America and Asia were...

<unk> were primarily driven by improved margins in North America, and Europe , which benefited from strong food and fuel demand.

Our results in South America and Asia.

Were down due to lower margins and volumes.

Speaker 4: In milling, lower results in the quarter were driven by Brazil, where higher volume was more than offset by lower margins.

In milling low results in the quarter were driven by Brazil, where higher volume was more than offset by lower margins.

Speaker 4: Results in North America were higher than last year, driven by improved margin.

Results in North America were higher than last year, driven by improved margins.

Speaker 4: The increase in corporate expenses during the quarter was primarily driven by performance-based compensation accruals.

The increase in corporate expenses during the quarter was primarily driven by performance based compensation accruals.

Other was comparable to last year.

Speaker 4: Lower results in our non-core sugar and bioenergy joint venture were primarily driven by lower ethanol volume, which more than offset higher sugar and ethanol prices.

Lower results in our noncore sugar and bioenergy joint venture were primarily driven by lower ethanol volume, which more than offset higher sugar and ethanol prices.

Speaker 4: For the quarter ended December 31st, 2021, gap basis income tax expense was $64 million compared to $97 million for the prior year.

For the quarter ended December 31, 2021, GAAP basis income tax expense was $64 million compared to 97 million for the prior year.

Speaker 4: The decrease in income tax expense was due to lower gap pre-tax earnings.

The decrease in income tax expense was due to lower GAAP pre tax earnings.

Speaker 4: Adjusted for notable items, the effective tax rate for the full year was 16.5%, which was in line with the prior year.

Adjusted for notable items the effective tax rate for the full year was 16, 5%, which was in line with prior year.

Net interest expense of $45 million in the quarter was below last year, primarily due to lower average debt levels.

Speaker 4: Net interest expense of $45 million in the quarter was below last year, primarily due to lower average debt level.

Speaker 4: Let's turn to slide 7 where you can see our positive EPS and EBIT trends adjusted for notable items and timing differences over the past five years.

Let's turn to slide seven where you can see our positive EPS and EBIT trends adjusted for notable items and timing differences over the past five years.

Speaker 4: This is an outstanding performance by our team, especially when considering numerous company initiatives and the challenge of navigating through the global pandemic over the past two years.

This is an outstanding performance by our team, especially when considering numerous company initiatives and the challenge of navigating through the global pandemic over the past two years.

Slide eight compares our full year SG&A to the prior year.

Speaker 4: We achieved underlying addressable SG&A savings of $32 million, of which approximately 65% was related to non-employee costs.

We achieved underlying addressable SG&A savings of $32 million of which approximately 65% was related to the unemployed costs.

Speaker 4: Like other companies, we too are experiencing inflation, particularly related to energy and employee costs. We are working to mitigate the economic crisis in the U.S. and the U.S. economy.

Like other companies, we too are experiencing inflation, particularly related to energy and employee costs.

We are working to mitigate the impact of inflation, where we can.

Speaker 4: In 2022, we expect higher addressable SG&A versus 2021, reflecting increased travel.

In 2022, we expect higher addressable SG&A versus 'twenty, 'twenty, one reflecting increased travel.

Speaker 4: investment in our people, processes, and technology, and in growth initiatives to strengthen our capabilities to drive future value.

Investment in our people processes and technology and in growth initiatives to strengthen our capabilities to drive future value.

Slide nine details our capital allocation of approximately $2 billion of adjusted funds from operations that we generated in 2021.

Speaker 4: Flight 9 details our capital allocation of approximately $2 billion of adjusted funds from operations that we generated in 2020.

Speaker 4: As we highlighted before, our first priority is managing our balance sheet leverage ratios and rating metrics.

As we highlighted before our first priority is managing our balance sheet leverage ratios and rating metrics.

Speaker 4: We enter 2022 with a very strong financial position as a result of our recent credit rating upgrades and our strong full year 2021 performance.

We enter 2022 with a very strong financial position as a result of our recent credit rating upgrades and our strong full year 2021 performance.

Speaker 4: Our second priority is sustaining CAPEX where we allocated $226 million for maintenance, environmental health and safety.

Our second priority is sustaining capex, where we allocated $226 million toward maintenance environmental health and safety.

Speaker 4: These investments will typically run around $275 million.

These investments will typically run around $275 million per year.

Next we allocated 34 million to preferred dividends, which left us with approximately $1 $7 billion of discretionary cash flow available to allocate toward growth and productivity investments and returns to shareholders, which we view on a relatively balanced basis.

Speaker 4: Next, we allocated $34 million to preferred dividends, which left us with approximately $1.7 billion of discretionary cash flow available to allocate toward growth and productivity investments and returns to shareholders, which we view on a relatively balanced basis.

Speaker 4: Of the $1.7 billion, we invested $173 million in growth and productivity capex, paid $289 million in common dividends, and repurchased $100 million of common shares, for a total return to common shareholders of nearly $400 million, leaving approximately $1.1 billion of retained cash.

Of the $1 $7 billion, we invested $173 million in growth and productivity Capex paid $289 million in common dividends and repurchased $100 million of common shares for a total return to common shareholders of nearly $400 million, leaving approximately.

At $1.1 billion of retained cash flow.

Speaker 4: With the increased flexibility and borrowing capacity that our balance sheet now provides, we are in a position to comfortably deploy excess cash toward areas that will provide longer-term growth benefits, such as greenfield investments, and toward areas which will have a more immediate impact, such as M&A opportunities and returning capital to shareholders.

With the increased flexibility and borrowing capacity that our balance sheet. Now provides we're in a position to comfortably deploy excess cash toward areas that will provide longer term growth benefits, such as greenfield investments and toward areas, which will have a more immediate impact such as M&A opportunities and returning capital to shareholders.

Speaker 4: Slide 10 highlights our 2022 CAPEX forecast, along with the listing of some key projects.

Slide 10 highlights our 2022 Capex forecast along with the listing of some key projects.

Our primary focus is on debottlenecking capacity in both agribusiness and refine our specialty oils as well as greenfield investments in both segments to enhance our efficiency through more sustainable modern and flexible capabilities.

Speaker 4: The primary focus is on de-bottlenecking capacity in both agribusiness and refined especially oils, as well as greenfield investments in both segments to enhance our efficiency through more sustainable modern and flexible capability.

Speaker 4: Our cap expendable 2020 and 2021 was below our previous $450 million baseline level, primarily due to COVID-related resource and supply chain.

Our capex spend in both 2020 and 2021 was below our previous $450 million baseline level, primarily due to COVID-19 related resource and supply chain constraints.

Speaker 4: We expect our spend over the next three years to be well above our prior baseline levels as a result of these project delays, as well as execution on a robust pipeline of growth and productivity investments.

We expect our spend over the next three years to be well above our prior baseline levels. As a result of these project delays as well as execution on our repos robust pipeline of growth and productivity investments.

Speaker 4: Over time, as returns from our growth investments are realized, we will periodically update our earnings baseline model to reflect the increased earnings capability.

Overtime. This returns from our growth investments are realized we will periodically update our earnings baseline model to reflect the increased earnings capability.

Speaker 4: Leading up to our May shareholders meeting, we will again review our common dividend, giving strong consideration for our higher baseline, the success in strengthening our balance sheet and our earnings outlook.

Leading up to our May shareholders meeting, we will again review, our common dividend, giving strong consideration for our higher baseline the success in strengthening our balance sheet and our earnings outlook.

Speaker 4: We also have the entirety of our recently replenished $500 million share repurchase program remaining. This will continue to be a tool for returning capital to shareholders.

We also have the entirety of our recently replenished $500 million share repurchase program remaining this will continue to be a tool for returning capital to shareholders.

Speaker 4: As we have communicated previously, we will maintain a prudent and stable dividend, along with a balanced and disciplined approach to capital allocation through the summer.

As we have communicated previously we will maintain a prudent and stable dividend along with a balanced and disciplined approach to capital allocation through the cycle.

Speaker 4: As you can see on slide 11 at year end, readily marketable inventories, or RMI, exceeded our net debt by approximately $1.7 billion, a significant change from a year ago.

As you can see on slide 11 at year end readily marketable inventories our rmi exceeded our net debt by approximately $1 7 billion a significant change from a year ago.

Speaker 4: This reflects our use of retained cash flow and proceeds from portfolio actions to fund working capital while reducing debt, strengthening our balance sheet and improving our credit.

This reflects our use of retained cash flow and proceeds from portfolio actions to fund working capital, while reducing debt strengthening our balance sheet and improving our credit metrics.

Speaker 4: Please turn to slide 12. For the trailing 12 months, adjusted ROIC was 19.9%. 13.3 percentage points over our RMI adjusted weighted average cost of capital of 6.6%.

Please turn to slide 12 for the trailing 12 months adjusted ROIC was 19, 9% 13, three percentage points over over our Rmi adjusted weighted average cost of capital of six 6%.

Speaker 4: ROIC was 13.9% or 7.9 percentage points over our weighted average cost of capital of 6%.

Our ROIC was 13, 9% or seven nine percentage points over our weighted average cost of capital of 6%.

Speaker 4: The spread between these metrics reflects how we use RMI in our operations as a tool to generate incremental profit.

The spread between these metrics reflects how we use rmi in our operations as a tool to generate incremental profit.

Speaker 4: Moving to slide 13. For the trailing 12 months, we produce discretionary cash flow approximately $1.7 billion and the cash flow yield of $21.4.

Moving to slide 13.

For the trailing 12 months, we produced discretionary cash flow of approximately $1 $7 billion and a cash flow yield of 21, 4%.

Speaker 4: The decline in cash flow yield from 2020 reflects a growth in discretionary cash flow which was more than offset by the increase in book equity to come.

The decline in cash flow yield from 'twenty 'twenty reflects the growth in discretionary cash flow, which was more than offset by the increase in book equity of the company.

Speaker 4: The moderate year-over-year growth in discretionary cash flow versus EPS growth reflects the impacts of significantly higher undistributed earnings from JVs as well as deferred taxes related to mark-to-market.

The moderate year over year growth in discretionary cash flow versus EPS growth reflects the impacts of significantly higher undistributed earnings from JV as well as deferred taxes related to mark to market.

Please turn to slide 14, and our 2022 outlook.

Speaker 4: As Greg mentioned in his remarks, taking into account the current margin environment and forward curves, we expect full year 2022 adjusted EPS of at least $9.50 per share.

As Greg mentioned in his remarks, taking into account the current margin environment in forward curves.

Full year 2022, adjusted EPS of at least $9 50 per share.

Speaker 4: In agribusiness foliar results are forecasted to be down from a record 2021 primarily due to low results in merchandising and soft seed crushing, which had exceptionally strong

In agribusiness full year results are forecasted to be down from our record 2021, primarily due to lower results in merchandising and soft seed crushing which had exceptionally strong year.

Speaker 4: While we are not forecasting the same magnitude of margin-enhancing opportunities that we captured in the past year, we do see potential upside to our outlook if strong demand and tight commodity supplies continue to rise.

Well, we are not forecasting the same magnitude of margin enhancing opportunities that we captured in the past year, we do see potential upside to our outlook is strong demand and tight commodity supplies continue.

Speaker 4: In refining specialty oils, full year results are expected to be up from last year, delivering another record year, driven by strong demand from food and fuel customers in our North American and European businesses.

In refining of specialty oils for the full year results are expected to be up from last year delivering another record year, driven by strong demand from food and fuel customers in our North American and European businesses.

Speaker 4: In milling, full year results are expected to be up from last year, primarily driven by improved market conditions in Brazil.

In milling full year results are expected to be up from last year, primarily driven by improved market conditions in Brazil.

Speaker 4: Incorporate another results are expected to be comparable to last year.

In corporate and other results are expected to be comparable to last year.

Additionally, the company expects the following for 2022.

Speaker 4: an adjusted annual effective tax rate of 19 to 21 percent.

And adjusted annual effective tax rate of 19% to 21%.

Speaker 4: Net interest expense in the range of $210 to $230 million.

Net interest expense in the range of $210 million to $230 million.

Speaker 4: Capital expenditures in the range of 650 to 750 million and depreciation amortization of approximately 4 or 20 million dollars.

Capital expenditures in the range of $650 to $750 million and depreciation and amortization of approximately $420 million.

Speaker 4: In non-core, foliar results in the sugar and bioenergy joint venture are expected to be in line with last year. With that, I'll turn things back over to the...

The noncore full year results in the sugar and bioenergy joint venture are expected to be in line with last year.

With that I'll turn things back over to Greg for some closing comments.

Thanks, John .

Speaker 3: Before opening the call to Q&A, I want to offer a few closing thoughts.

Before opening the call to Q&A I want to offer a few closing thoughts.

First I want to thank our team.

Speaker 3: Not only have they continued to execute well and deliver for our customers.

Not only have they continued to execute well and deliver for our customers, but they've done so against the volatile backdrop, including the continued impact of the COVID-19 pandemic in a highly dynamic market.

Speaker 3: But they've done so against the volatile backdrop, including the continued impact of the COVID-19 pandemic and a highly dynamic mark.

Speaker 3: The changes we began making three years ago have resulted in tangible improvements to our business and our earnings potential.

The changes we begin making three years ago have resulted in tangible improvements to our business and our earnings potential we're.

Speaker 3: We're excited about the additional opportunities we see to continue to grow the company, while we do our part to lower carbon emissions and encourage best practices across the entire supply chain.

We're excited about the additional opportunities we see to continue to grow the company, while we do our part to lower carbon emission and encourage best practices across the entire supply chain.

Speaker 3: Beyond our continued work to capture the upside we see in our core oilseeds processing and origination business.

Beyond our continued work to capture the upside we see in our core oilseeds processing and origination business.

Speaker 3: We've also increased our capabilities and focus on three additional areas of growth.

We've also increased our capabilities and focus on three additional areas of growth cap.

Speaker 3: capitalizing on the increasing demand for renewable feedstock.

Capitalizing on the increasing demand for renewable feedstocks.

Speaker 3: for plant-based lipids or especially fats and oils, and plant-based food proteins. With our global platform, through the yard, the

For plant based lipids or specialty fats and oils.

And plant based food proteins.

With our global platform.

Our culture of innovation and Oilseeds leadership.

Speaker 3: I believe we're especially well positioned to benefit from the long term secular growth we're seeing in these areas.

I believe we are especially well positioned to benefit from the long term secular growth we're seeing in these areas.

Speaker 3: We're confident the investments we're making today will set us up for continued growth in the years ahead. And with that...

We're confident the investments, we're making today will set us up for continued growth in the years ahead.

And with that we'll open the call for your questions.

Speaker 1: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Speaker 1: If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.

Speaker 1: Our first question comes from Ben Bienvenue from Stevens. Go ahead.

Our first question comes from Ben B B N venue from Stephens. Please go ahead.

Hey, Thanks, good morning, everybody.

Good morning, Ben.

Speaker 5: So I want to ask a two part question about guidance. First is it relates to the Arnie's guidance, and then second does it relate to the CAPEX commentary provided. So.

To ask a two part question about guidance first as it relates to the earnings guidance and then second as it relates to the Capex commentary you provided so.

Speaker 5: on the 950 in earnings or at least 950 in earnings for this year. I know your inclination is to be conservative.

On the 950 in earnings or at least 950 of earnings for this year I know your inclination is to be conservative historically.

Speaker 5: I'm asking a bit of question from the context of looking at.

I'm asking the question from the context of looking at as you said the curves from here and perhaps what they looked like during the fourth quarter. It seems like the first quarter or even the first half should be pretty strong for 2022.

Speaker 5: here and perhaps what they looked like during the fourth quarter. It seems like the first quarter or even the first half should be pretty strong for 2022. So the inference is that maybe the outlook for the back half of next year.

And so the inference is that that maybe the outlook for the back half of next year.

Speaker 5: a bit more draconian. Is that conservatism? Is there anything that underpins that beyond the commentary that you provided? Because it seems a little bit antithetical to just the sustained strong.

There's a bit more draconian is that conservatism is there anything that that underpins that beyond the commentary that you provided because it seems a little bit antithetical to just the sustained strong and and environment and kind of a tight F&D that exist in the in the value chain.

Speaker 5: environment and the tight SMD that exists in the value.

Speaker 3: Yeah, let me start here, John . John , you can fall on if I miss something here. So...

Yeah, Let me, let me start here, John John meaningful follow on if I Miss something here so yeah.

Speaker 3: Yeah, I think it's a little bit like, you know, when we sat here a year ago, we're definitely telling you what we can see going forward. Now, you're right. We were carrying some good momentum in from Q4. You know, the team did a fantastic job of executing there and carrying that momentum into Q1.

Yeah, I think it's a little bit.

You know when we sat here a year ago.

Definitely telling you what we can see going forward you're right. We're carrying some good momentum in from Q4.

The team did a fantastic job of executing there.

That momentum into Q1.

Speaker 3: While we don't see Q1 being quite as strong as last year, which was really extraordinary, we are off to a very good start.

Well, we don't see Q1 being quite as strong as last year, which was really extraordinary we are off to a very good start.

Speaker 3: And as far as the the calendarization and then benefit of funny when we when we look at it, it's it's generally a stronger second half for our business when you look at it historically.

And as far as the calendar is Asian, and Ben it's kind of funny when we when we look at it. It is generally a stronger second half for our business. When you look at it historically.

Speaker 3: And when we roll the forecast to what we can see now and looking at the forward curves, you know, in our outlook, the balance is roughly the same as it was the same time last year. So I guess the one thing that you can count on is that, you know, I think we've got the right global network and we've absolutely got the team that can execute. And if the opportunities here will deliver more and, you know, we give you that view a quarter of the time as it rolls out.

And when we roll the forecast of what we can see now and looking at the forward curves you know in our outlook. The balances is roughly the same as it was the same time last year. So I guess the one thing that you can count on is that you know I think we've got the right Global network and we've absolutely got the team that can execute and.

And if the opportunities here will deliver more than you know, we'll give you that view a quarter at a time as that rolls out.

Speaker 5: Yeah, okay, that's fair enough and understood. The second part to the guidance question is related to CAPX. So...

Yeah, Okay, that's fair enough and understood.

The second part to the guidance question is related to Capex. So.

Speaker 5: It's been potentially more growth cat-backs over the next several years. You outlaid some of those projects that you intend to put long-lifed capital on the ground for.

You're spending substantially more growth capex over the next several years are you out laid some of those projects that you that you intend to put long with capital on the ground floor.

I'm just thinking about.

Speaker 5: kind of two things. One, the actual ability to deploy all of that capital beyond the projects you've stated over the next several years just because it seems like you all will have so much discretionary cash flow that you'll generate.

Kind of two things one the actual ability to deploy all of that capital beyond the projects you've standard over the next several years just because it seems like you all will have so much discretionary cash flow that you'll generate.

And then too.

Speaker 5: You know, if I go back to your $7 of baseline earning.

If I go back to your $7 a baseline earnings and you know if you.

Speaker 5: You know, if you guys deploy all of this discretionary growth capital into the business that your target returns versus your whack, it just, it seems like that number should continue to grind up pretty meaningfully. And so I'm wondering how we should think about the evolution of that baseline earnings number as we go through the next several years. And that's all I have. Thanks.

Guys deploy all of this discretionary growth capital into the business at your targeted returns versus your WAC. It just it seems like that number should continue to grind up pretty meaningfully.

I'm wondering how we should think about the evolution of that baseline earnings number as we go through the next several years and that's all I have thanks, so much.

Speaker 4: So, Ben as we look forward and I think we can expect.

You bet, yeah, So Ben as we look forward and I think we can expect capex of is like we said $50 to $7 50. This year and I think we'll see a higher number in 2023 and 2024, but a lot of that is on long term AR.

Speaker 4: Cap X, you know, is like we said, 657 to 750 this year, and I think we'll see a higher number in.

Speaker 4: 2023 and 2024, but a lot of that is a long-term Pride greenfield projects and so We probably aren't gonna see the big impact and the big impact on our numbers until probably 2025 and beyond Given given the the pipeline that we have today in the major projects that we're investing in

Greenfield projects and so we.

We probably aren't going to see the.

The big impact in the the big impact on our numbers until probably 2025 and beyond.

Even given the pipeline that we have today and the major projects that we're investing in we are excited about those projects. We also recognize that there's going to be potential opportunity deploy capital in the near term as well and that's important we want a balance between long term growth opportunity that will certainly impact our baseline over.

Speaker 4: We are excited about those projects. We also recognize that there's, you know, going to be potential opportunity to deploy capital in the near term as well. And that's important. You know, we want to balance people.

Speaker 4: long-term growth opportunity that will certainly impact our baseline over time. And in near-term-

Time, and and near term opportunities.

Speaker 4: you know, and so we'll look at, we'll look at, you know, shorter term projects, whether it's bull tons or deboddling like projects that we have underway, things like that, as well as looking at, you know, if we don't have good returning immediate projects or things on the M&A front, you know, we'll look at returning capital shareholders in the near term as well, because we recognize that it's important to balance between long term and near term opportunities and returns.

So we'll look at we'll look at shorter term projects, whether it's bolt ons or debottlenecking projects that we have underway things like that as well as looking at if we don't have good returning immediate projects or things on the M&A front you know, we'll look at returning capital to shareholders in the near term as well because we recognize that it's important to balance.

The long term and near term opportunities and returns.

Speaker 4: But over time, certainly, we'll be updating the baseline as it makes sense. And we believe that three or four years down the road, if we do our job, it should be very positive to the base.

But over time, certainly, we'll we'll be updating the baseline as it makes sense.

And.

We believe that.

Three or four years down the road.

If we do our job it should be very positive to the baseline.

Speaker 1: The next question comes from Thomas Palmer from JP Morgan. Please go ahead.

The next question comes from Thomas Palmer from J P. Morgan. Please go ahead.

Good morning, and thanks for the question.

Speaker 6: Maybe I could follow up first off on Ben's question on catbacks.

Maybe I could follow up.

First off on on Ben's question on Capex.

Is the elevated.

Speaker 6: Is the elevated run rate over the next three years? Is that mainly that these projects you've highlighted that are Greenfield are going to be multi-year projects? And that's why their benefits are deferred to 2025, or is kind of the list you outlined in the presentation, mainly the list for kind of 2021, maybe into 23, and then there's a second layer of Greenfield projects to come.

Run rate over the next three years is that mainly that these projects you highlighted that are greenfield.

Are going to be multi year projects and that's why their benefits or deferred to 2025 or is kind of the the list you outlined in the presentation, mainly the list for 2021, maybe into 'twenty three and then there's a second layer of greenfield projects to come.

Yeah. Those are really projects that have that are either already underway or are in the final stages of approval, but you can think about it that this.

Speaker 4: Yeah, those are really projects that are either already underway or in the final stages of approval, but you can think about it that this next year here in 2022, probably about 30% of our CAPEX spend will be on those large multi-year projects, but that will go to about 50 to 60% of our spend in 23 and 24, but it's the same projects. These are three-year builds, and so there's three to four of major projects that make up a bulk of that.

This next year here in 2020 to probably about 30% of our Capex spend will be on those large multi year projects, but that will go to about 50% to 60% of our spend in 'twenty three 'twenty four but it's the same projects. These are three year builds.

So there's there was three to four major projects that make up a bulk of that spend.

Okay. Thank you for that and then I just wanted to ask on the refined and specialty oils outlook.

Speaker 6: Okay, thank you for that. And then I just wanted to ask on the refined and specialty oils outlook. In North America cash markets, we have seen a narrow price spread between refined and crude oils.

In North America cash markets, we had seen a narrower price spread between refined and crude oils.

Speaker 6: down from mid-2020, one of the highs. Just hoping for some clarity on what would drive segment profit higher year over year, where cash markets just not a good indicator of your margin capture last year. Are you expecting refined crude oil to widen given this supply demand environment? Just hoping for some clarity on the key driver there. Thank you.

Down from mid 2021 highs.

Hoping for some clarity on what would drive segment profit higher year over year, where cash market is just not a good indicator of your margin capture last year are you expecting refine crude oil to widen given the supply demand environment, just hoping for some clarity on the key driver there. Thank you.

Speaker 3: Yeah, it's the timing of customer booking. So when we came in the last year, we had a lot of the book already on with our food customers for the majority of the year. And we didn't start to see the benefit of those higher refining premiums until later in the year. And as we saw some of the refines.

Yeah.

Timing of customer bookings. So when we came into last year, we had a lot of the book already on with our food costs customers for the majority of the year and we didn't start to see the benefit of those higher refining premiums until later in the year and as we saw some of the refined.

Speaker 3: or some of the renewable diesel demands start to come on. Now as we're coming into this year, of course, majority of that business has all been done at the higher refining overages.

Or some of the renewable diesel.

Demand start to come on now as we're coming into this year.

Of course, the majority of that business has all been done at the are at the higher refining Overages and so that's we have that visibility and that is why we have the confidence in that call for this year.

Speaker 3: And so we had that visibility and that's why we have the confidence in that call for this year.

Alright, thank you.

The next question I'm sorry.

Speaker 1: The next question comes from Steve Bern from Bank of America. Please go ahead.

The next question comes from Steve Byrne from Bank of America. Please go ahead.

Speaker 7: Yes, thank you. I'm interested to hear your view on the likelihood that the US develops 5 billion gallons of renewable diesel capacity in the next few years. And if so,

Yeah. Thank you I am interested to hear your view on the likelihood that the U S develops 5 billion gallons of renewable diesel capacity in the next few years and if so.

Speaker 7: Where do you think the feedstock comes from? And will that be a benefit to you or is there a potential detriment to you if that leads to less exports?

Where do you think the feedstock comes from and will that be a benefit to you or is there a potential detriment to you.

That leads to less exports.

Speaker 3: Yeah, it definitely had benefit and it's a number of ways. So one...

Yeah, definitely a benefit and that's a number of ways. So one we like the fact that we're we're basic in all of the oils and that we've got a global platform. So as we see this shift and I and I think it's going to take kind of kind of everything to supply that industry and the demand that is coming from from that industry.

Speaker 3: We like the fact that we're basically all the oils and that we've got a global platform.

Speaker 3: So as we see this shift and I think it's going to take kind of everything to supply that industry and the demand that is coming from that industry. So everything from, you know, we'll see.

So everything from you know, we will see the U S go from being an export or to an importer of vegetable oils, we will see expansion in capacity, we will probably see technology around the percent of oil in the.

Speaker 3: The U.S. go from being an exporter to an importer of vegetable oils. We'll see expansion and capacity. We'll probably see technology around the percent of oil in the seed. You'll see cover crops be developed.

The seed you'll see cover crops be developed that will add to it.

Speaker 3: that will add to another supply of oil and even higher capacity utilization of the crushing footprint. And you'll probably continue to...

Another supply of oil and even higher capacity utilization of the crushing footprint.

And you'll probably continue to see a mix on what supplied on soy versus soft oils. So you know.

Speaker 3: a mix on what's applied on soy versus soft oil. So, you know, the one thing, the market is sending the signals and the market will do its work here with innovation and with investment. So, we think we're right in the bull's eye of that. We've got, you know, our portfolio is focused on oil seed crushing and the origination.

The one thing that the market is sending the signals in the market will do its work here with innovation and with investment. So we think we're right in the Bull's eye of that we've got you know our portfolio is focused on oilseed crushing in the origination and marketing of the products to support that so we think we're in a.

Speaker 3: and marketing of the products to support that. So we think we're in a great position for that, and it's also one of the reasons that we're in the process of...

Great position for that and it's also one of the reasons that we're in the process of the JV with Chevron is to have a great partner.

Speaker 3: The JV with Chevron is to have a great partner with visibility now from the farmer to the end fuel consumer. So where we make those investments and how we develop, we think we're as well positioned as any.

With visibility now from the farmer to the into fuel consumer so where we make those investments and how we develop we think we're as well positioned as anyone.

Speaker 7: And you've made a comment just now about seeds with higher oil content. Would you be interested in investing in that technology, essentially going upstream into crop genetics so that you could have some ownership over that technology. It could be higher oil content. It could be also the plant-based proteins and the specialty lipids you talked about.

And you made a comment just now about seeds with higher oil content would you be interested in investing in the technology essentially going upstream into into a crop genetics. So that you could have some ownership over that technology it could be higher oil cut.

Content it could be also the plant based proteins and the specialty lipids you talked about the <unk>.

<unk> really is would you would you want to invest upstream to have more ownership there.

Speaker 7: Would you want to invest upstream to have more ownership there?

Speaker 3: And look, we continue to work with our partners in the supply chain. And that can take on a number of different relationships from, you know, providing our expertise and partnering to join venturing to us making direct investment. So that'll, that'll be what we believe the return profile looks like versus our other alternatives on a risk adjusted basis.

Yeah look we continue to work with our partners in the supply chain.

And that can take on a number of different relationships from <unk>.

Providing our expertise and partnering to joint venturing, just making direct investment so that'll that'll be what we believe the return profile looks like versus our other alternatives on a risk adjusted basis.

Thank you.

Thank you.

Speaker 1: The next question comes from Adam Damielson from Goldman Sachs. Please go ahead. Yes, thank you.

The next question comes from Adam Samuelson from Goldman Sachs. Please go ahead.

Yes. Thank you good morning, everyone.

Good morning, Adam.

Speaker 8: So I guess first is we think about how you're looking at 2022. Maybe thanks just to give a little bit more color around the little speed crushing environment and what...

So I guess first is as we think about.

How you're looking at 2022 .

Can you, maybe just give a little more color around that well see crushing.

And environment and what.

Speaker 8: How you see Soy and Soft Sea crush playing out in your key regions, certainly in the first half where I imagine you've got a little bit more visibility and I guess specifically how some of the weather issues in South America right now are playing into that outlook, both positively aren't it?

How you see soy and soft seed crush.

Playing out in your key regions certainly in the first half where I imagine you've got a little bit more visibility and I guess, specifically have some of the weather issues in South America right now.

Are playing into that that outlet both positively or negatively.

Speaker 3: Sure, we definitely very, very good environment right now. We saw that.

Sure.

We definitely very very good environment right now we saw the.

Speaker 3: If you look from an overall we'll expect year over year Structural margins to be better in soy We had a real strong Q4 in the US and of course we're carrying that into 22 we've seen the weather make the source South American crops a little bit smaller and you know the US had a big crop and and we'll need another big crop that was strong oil and and meal demand

If you look at from an overall will expect year over year structural margins to be better in soy.

<unk> had a real strong Q4 in the U S and of course, we're carrying that into.

22, we've seen the weather makes a south American crops are a little bit smaller.

And you know.

The U S had a big crop and will need another big crop, but with strong oil and meal demand.

Speaker 3: The curves, of course, are telling us that they're strong now. They'll get a little softer before new crop and the new crop gets stronger again. So the US looks very instructive. You know, China continues to be volatile, but we'll see lower wheat feeding this year versus last year. Margin's are okay on the front end and the customer's over there generally pretty spot. So that's pretty normal. We're enjoying very good margins in Brazil right now. And the question will be about the second half and how the farmer responds.

The curves of course, theyre, telling us that there is strong now they'll get a little softer before new crop and the new crop get stronger again so.

S looks looks very constructive.

And it continues to be volatile, but we will see lower wheat feeding this year versus last year margins are okay on the front end and in the customers over there generally pretty spot so that's pretty normal.

We're enjoying very good margins in Brazil, right now and the question will be about the second half and how the farmer responds.

Speaker 3: you know, to smaller crops and then of course we're in an election year which always if we get some effects volatility we'll be watching that closely and how the how the farmer performs.

To the smaller crops and then of course, we're in an election year, which always if we get some FX volatility, we'll be watching that closely and how the how the farmer performs.

Speaker 3: And then our Argentina, again the weather impacted the crop a little bit. And then Argentina, of course.

And then our Argentina again, the weather impacted the crop a little bit.

And then Argentina courses is affected by the fact that Paraguay, the crops down about 50%, which feeds in there and that'll keep.

Speaker 3: is affected by the fact that Paraguay, they cross down about 50% which feeds in there, and that'll keep.

Speaker 3: you know, farmer retention probably pretty high in Argentina, but you remember that generally is pretty good for our global system with that scenario. And then the EU is kind of feeds off the US of you, you've got strong oil and then reduced amount of Argentine soybean meal going in there.

Farmer retention, probably pretty high in Argentina, but you remember that generally is pretty good for our global system.

With that scenario and then the EU has kind of got a feeds off the U S have you you've got strong strong oil and then reduce the amount of Argentine soybean meal going in there and so you've got higher energy costs in Europe is one of the things but.

Speaker 3: And so you've got higher energy cost in Europe is one of the things, but that's priced in or is being reflected as we flex the rest of our global system. But you know, overall, we'll see better year over year structural margins and see how it plays out. But our core are.

That's priced in or is being reflected as we flex the rest of our global system, but overall, we will see better year over year structural margins and see how it plays out but our core are.

Speaker 3: You know, the fundamentals are good and our current outlook is what we can see forward.

The fundamentals are good and our current outlook is what we can see forward.

Speaker 8: Okay, that's all very helpful. And then I guess the follow up on capital allocation.

Okay. That's all that's all very helpful. And then if I guess a follow up on capital allocation and obviously theres been a lot of good work done on the balance sheet over the last couple of years.

Speaker 8: Obviously there's been a lot of good work done on the balance sheet over the last couple of years.

Speaker 8: stepping up growth investments on the CAP-X-FIDE you alluded to

You're stepping up growth investments on the Capex side, you alluded to reevaluating.

Speaker 8: reevaluating kind of the dividend payout ahead of the annual meeting in May.

Reevaluating the dividend payout them ahead of the annual meeting in May.

Speaker 8: Can you help us think about how do you think what your balance sheet capacity, I mean, the net leverage now on an even, or not that the evid-debasis at least would seem to be pretty low for your business. How do you think about your balance sheet capacity today to deploy opportunistically into M&A versus cash return? Just trying to think about how much cash we could really be thinking about this.

Can you help us think about kind of how you think about your balance sheet capacity.

Leverage now and an EBIT or net debt to EBITDA basis at least would seem to be.

Pretty pretty low for your business.

How do you think about your balance sheet capacity today to deploy opportunistically enter into M&A versus versus cash return.

I'm just trying to think about how much cash we can really be thinking about the play here.

Speaker 4: Yeah, I think, you know, we look at our balance sheet at the end of the year, we probably have, you know, a billion and a half or so of additional debt capacity available today, just given kind of where we see 2022 progressing in our credit metrics. I think we feel pretty, pretty good to stay within, you know, to stay well within our, our kind of our target.

Yeah, I think when we look at our balance sheet at the end of the year, we probably have one.

1 billion and a half or so of additional debt capacity available today, just given given kind of where we see 2022.

Progressing and our credit metrics I think we feel pretty pretty good to stay within to stay well within our kind of our target metrics.

Speaker 4: On top of that, of course, we expect to generate strong cash flow again in 2022. So I think we feel very confident that

On top of that of course, we we expect to generate strong cash flow again in 2022. So I think we feel very confident that the capex forecast that we have in <unk>.

Speaker 4: you know the CapEx forecast that we have in still leaves us you know

It still leaves us.

Some dry powder for opportunities whether that ends up something on the M&A front or we add.

Speaker 4: some dry powder for opportunities, whether that ends up something on the M&A front or we allocate more to returning to shareholders or additional debotlenecking and near term returning projects. I think everything's on the table. And I think we feel like we're in a very good position to deploy the capital.

Allocate more to returning to shareholders or additional debottlenecking and nearer term returning projects I think everything's on the table and I think we feel like we're in a very good position to to deploy the capital.

Speaker 4: You know, we don't plan to just sit there and pile up cash. So we're going to be prudent about where we spend it and make sure that we hold ourselves to the same standard we have over the last few years in terms of where we allocate it. You know, I might-

We don't plan to just sit there and pilot cash so we get but we're gonna be prudent about where we spend it and make sure that we hold ourselves to the same standard we have over the last few years in terms of where we allocate it.

I might add on.

Speaker 3: Everybody had one quick comment, you know, I think the thing, it is one of the things we're proud of stuff with the change we've made here. I think before we had to kind of talk about...

I might add one quick comment you know I think the thing. It is one of the things we're proudest of with the changes we've made here I think before we had to kind of talk about.

Speaker 3: you know, whether we were we were going to do this or this. And I think what feels good is that with the earnings profile that we've got and what we've done with the balance sheet.

You know, whether we were we were going to do this or this and I think what feels good is that with the earnings profile that we've got and what we've done with the balance sheet that really it's more of an an situation now for us and we feel we can pull levers and we are thoughtful about the tenor of those different things and the impact that they can have on earnings so.

Speaker 3: that really it's more of an end situation now for us and we feel we can pull all levers and we are thoughtful about the tenor of those different things and the impact that they can have on earning so whether it's the stock repurchases or or increasing the dividend or more near-turn

Whether it's the stock repurchases or increasing the dividend or more near term of course, the capex, we're spending on debottlenecking of productivity.

Speaker 3: Of course, the CAPEX we're spending on deboddling and a productivity can come in question.

Can you come in quicker bolt on M&A that doesn't have any regulatory complications can can be quicker and then of course more transformational M&A has a little longer tail is it has to go through regulatory and then somewhere in between there Theres Brownfields and then the longest of course are the greenfields that John was talking about but I think what's exciting us.

Speaker 3: You know, bolt on M&A, that doesn't have any regulatory complications, can be quicker, and then of course, more transformational M&A has a little longer tail as it has to go through regulatory.

Speaker 3: and then somewhere in between there there's brown fields and then the longest the course of the green fields that John was talking about.

Speaker 3: But I think what's exciting is being in position to be able to do kind of all of those and all the levers and being thoughtful about the returns on those and which ones have the greatest long term earnings impact.

In position to be able to do kind of all of those and Paul all of the levers and being thoughtful about the returns on those and which ones have the greatest long term earnings impact in our growth.

Speaker 8: Okay, can I ask it's just a very quick follow up then? Given that balance sheet capacity, and this is again a high quality problem, just make sure we're clear just no share of your purchases in the fourth quarter, just how we think about kind of the timing and phasing of that, just given how much stripe out of use we have.

Okay can I ask just a very quick follow up then.

Given that balance sheet capacity and this is again a high quality problem just just to make sure. We're clear just no share repurchases in the fourth quarter, just how we think about kind of the timing and phasing of that just given how much dry powder you seem to have.

Speaker 4: Yeah, we're not gonna predict when, you know, we'll do Sherry purchases that I would say that the key is.

Yeah, we we don't we're not going to predict when we will do share repurchases did I would say that the key is.

Speaker 4: We'll have the ability to do it and and I think even with a lot of the growth

We will have the ability to do it and I think even with a lot of the growth projects that we have in the pipeline and the other things where we're assessing that arent even in the you know.

Speaker 4: projects that we have in the pipeline and the other things we're assessing that aren't even in the, you know, what I call in the pipeline yet. It's still going to be an option for us. And I think we will continue to do like we always do is look at it very hard every quarter. I don't necessarily look at it from what we got to do something this quarter from a calendar standpoint. It's when we think it makes sense and, but, but it will continue to be as Greg pointed out an important part of our allocation here going forward. Okay, I appreciate all of you doing. Oh, my gosh.

What I would call in the pipeline yet.

It's still going to be an option for us and I think we will continue to do like we always do is look at it very hard every quarter.

I don't necessarily look at it from what we Gotta do something this quarter from a calendar standpoint, it's when we think it makes sense and and but but it will continue to be as Greg pointed out an important part of our allocation here going forward.

Okay I appreciate all that color I'll pass it on thank you.

Speaker 1: The next question comes from Vincent Andrews from Morgan Stanley . Please go ahead.

The next question comes from Vincent Andrews from Morgan Stanley . Please go ahead.

Speaker 6: Hey, this is Speetans, here at Vincent. Thanks for taking my question. Just wanted to ask a question around. SGNA.

Hey, this is Steve Haynes or Vincent Thanks for taking my question.

Just wanted to ask a question around SG&A.

Speaker 6: I just want to ask you a question around SGNA. I think there's a comment about being up year on year. Can you just kind of remind us what level of cost savings I guess we're baked into the baseline kind of cadence for this year and if that's kind of changed at all, as it relates to the 950. So, VTIA.

I just want to ask a question around SG&A I think there was a comment about it being up year on year can you just kind of remind us what.

Level of cost savings I guess were baked into the baseline kind of cadence for this year and that's kind of changed at all.

As it relates to the 950 of.

Yeah.

Speaker 4: Yeah, we don't expect a substantial increase in SGN next year. You know, we've been around the 1.2 billion level in total the last couple of years after, you know, a number of years of state of cutting costs. I think we're looking at somewhere, you know, less than $100 billion of total increase across the business and probably half that. And it's going to be primarily an inflation and things like that. But all it's been baked into the 954 cash.

Yeah.

We don't expect a substantial increase in SG&A next year.

We've been around the $1 2 billion level.

In total the last couple of years after.

A number of years as say cutting costs I think we're looking at somewhere less than $100 billion in total increase across the business probably have that and it's going to be primarily in inflation and things like that but all of that's been baked into the 950 forecast.

Speaker 4: So, you know, we will of course manage it as best we can, but in some areas of the world, you know, it's inflation's a real thing and we're not immune to it, unfortunately, but I think we feel pretty good that we can absorb that and inside our 950, at least 950 call.

So we will of course manage it as best we can but in some some areas of the world.

Inflation is a real thing and we're not immune to it Unfortunately, but I think we felt pretty good that we can absorb that and inside our 950 <unk>.

At least 950 <unk> call.

Okay. Thank you.

Speaker 7: The next question comes from Ben Kalo from Bear. Please go ahead. Hey, thanks for taking my questions. Thanks for all the detail. Just on going back to M&A, could you just talk about what you're seeing in current valuations and if that has you, you know, kind of backing away from some deals or not? And then you talked about, you called out plant-based food proteins, the question we get quite a bit. Just talk about the investment being made there. Thank you.

The next question comes from Ben <unk> from Baird. Please go ahead.

Hi, Thanks for taking my questions and thanks for all the detail just on the going.

Going back to M&A could you just talk about what you're seeing in current valuations and if that helps you.

Go back away from some deals for them or not and then you talked about you mentioned you called out 10 basis. Two proteins of course, we get quite a bit and just talk about the investment being made there. Thank you.

Okay.

Speaker 3: Sure, valuation always matters. As John says, we don't have any hot money. We'll be thoughtful and we'll do the deals that make sense for bungie for the long term.

Sure.

About valuation matters as John says, we don't we don't have any hot money will be thoughtful and we'll do the deals that make sense for for bhangi for the long term.

On the protein side.

Speaker 3: You know, that continues to be what we see as an organic build. Any of the M&A that's been done on the plant protein side is very, very high multiples. And we think where we create the most value there is working with our customers who we're already working with on the plant lipid side and especially fats and oils as part of those.

That continues to be what we see as an organic build.

Any of the M&A that's been done on the on the plant protein side is very very high multiples and we think where we create the most value. There is working with our customers who were already working with on the plant lipid side on the specialty fats and oils as part of part of those products and working with them and organically building our portfolio in the on the plant protein side, that's how we will create the most about.

Speaker 3: and working with them and organically building our portfolio on the plant protein side. That's how we'll create the most value. It will be...

It will be.

Speaker 4: uh... farfall and in the article about it uh... we just agree that if you as you look at the pipeline projects on the plant lipids and protein site uh... we we've got

Thoughtful and methodical about it.

I would just add Greg that if you as you look at the pipeline of projects on the plant lipids that protein side.

We've got.

Speaker 4: projects identified in that pipeline of about $850 million over the next three years. So we definitely find that an important area and we will be investing, you know, meaningful dollars into that space.

Projects identified in that pipeline of about $850 million over the next three years. So we definitely find out an important area and we will be investing meaningful dollars into that space.

Great. Thank you.

Thank you.

Speaker 1: The next question comes from Robert Moscow from Credit Suisse. Please go ahead.

The next question comes from Robert Moskow from Credit Suisse. Please go ahead.

Speaker 6: Hi, a couple of questions. I might have missed a Greg, but when you went down the list of how things are going in the question environment regionally and by seed, I didn't quite get.

Hi, a couple of questions.

I I might have missed it Greg, but when when he went down the list of of how things are going in the crush environment regionally and and by seed I didn't quite get.

Speaker 6: where the weaknesses or the tough comps are on soft seeds. So can you be a little more specific as to, you know, what region you're referring to in your guidance for having a tough comp? And then just to follow up on the CAPEX guide, I mean, is it possible to just take this incremental CAPEX in our numbers and say, hey, I'll put a, you know, midteens return on that spend?

Where are the weaknesses or the tough comps are on soft seeds. So can you can you be a little more specific as to what region.

You're referring to in your guidance for being for having a tough comp.

And then just a follow up on the Capex Guide I mean is it possible to just take this incremental capex in our numbers and say Hey, I'll put a mid teens return on that spend and then assume that it is highly incremental so that in 2025.

Speaker 6: and then assume that it's highly incremental so that in 2025, that adds to the earnings base. Is that, you know, that's just basic math, but is that how you do your planning as well? Thanks.

That adds to the earnings base.

And is that.

Nic math, but is that how you do your planning as well thanks.

Speaker 3: Yeah, thanks Rob. Yeah, you caught me there. I only talked to Soy. I didn't talk to Softseeds. So let me talk to that real quick. Of course, in North America with the Canola crop, 35% lower this year, that'll be a tough comp until we get the new crop in. So that'll be challenged, which will make globally, I think Softseeds will be a little bit challenged on the Canola side.

Yeah. Thanks. Thanks, Rob Yeah. You are you caught me there I only talked to soy I didn't talk to soft seed. So let me talk to that real quick.

With the in North America, with the canola crop 35% lower.

This year that'll be a tough comp until we get the new crop.

And so that'll be challenged.

Which will make globally.

So obviously there'll be.

A little bit challenge on the on the canola side.

Speaker 3: We do continue to have strong oil demand, which is helpful, but we'll need that new crop in the second half of the year. And then in Europe , you know, that record sun crops, we continue to monitor the Ukrainian situation. But, you know, the farm economics are definitely...

We do continue to have strong oil demand, which is helpful. But we'll need that new crop in in the second half of the year.

And then in Europe .

No bad record Sun crops, we continue to monitor the Ukrainian situation.

You know the farm economics are definitely.

Speaker 3: good for everyone and that should mean big crops. I think we'll see acres planted and net net that should be positive. But year over year, soft will be down.

Good for everyone and that should mean.

Big crops, I think we'll see acres planted in.

Net net that should be should be positive, but year over year <unk> will be down.

Speaker 4: And Rob is like, yeah, and as I mentioned on the CapEx side, you know, the big jump we do see is in 2025, but you know, as those projects come online and most of them are gonna come online in early 2025 or in that range, you know, you usually have about a year of commissioning and working the bugs out. So the real benefits.

Okay, and Rob as I, Yeah, I mean, as I mentioned on the Capex side, you know the big the big jump, we do see as in 2025, but but.

As those projects come online and most of them are going to come online in early 2025 or in that range you usually have about a year of commissioning and working the bugs out so the real benefits.

Speaker 4: You know, a run rate would be closer to beginning in 2026, but you're right how to think about it. I mean, the kind of mid teens return overall and the portfolio between the big growth projects and I'll call the smaller debondling and productivity projects in total, that's probably a fair assessment with a little bit of lagging just from the standpoint of the first year or so, it takes time to get those things up and running as efficiently as they will in the long run.

Run rate would be closer to beginning in 2026, but but you're right how to think about it I mean, the kind of mid teens return overall in the portfolio between the big growth projects and I'll call the smaller debottlenecking and productivity.

<unk> in total that's probably a fair assessment with a little bit of you know.

Lagging just from the standpoint of the first year or so it takes time to get those things up and running as efficiently as they they will in the long run.

Speaker 6: Okay, great. And then just a follow up. Your merchandising results really, really strong in 2021 and you're citing a tough comp in 22. Can you point to like decisions that you made in 21 that drove the outperformance, you know, more evidence that the, your new global management team is working.

Okay, Great and then just a follow up your merchandising results really really strong in 2021, and you're you're citing a tough comp in 'twenty. Two can you point to like decisions that you made in 'twenty, one that drove the outperformance.

You know more evidence that the the your your new global.

Management team is working and.

Speaker 6: And, you know, and then it may be explained like, you know, why you wouldn't say, hey, that's repeatable in 2022. What makes it unique?

And then maybe explain like why you Wouldnt say, hey, that's repeatable in 2022, you know what makes it unique.

Yes.

Speaker 3: Yeah, I think one you're right, the system that we've got is definitely more resilient than it's been in the past. Those are the hardest margins, I think, to forecast and they'll depend on the environment. And we're definitely starting at higher flat prices this year than a year ago, so just kind of a slightly different environment. Even if you look from the freight markets, you had a disruption.

You know I think one youre right. The system that we've got is is definitely more resilient than it's been in the past those are the hardest margins I think the forecast and nil.

<unk> depend on the environment, we're definitely starting it at higher.

Flat prices this year than a year ago, So just kind of a slightly different environment.

Even if you look from the freight markets you had a disruption last year with the hurricane in North America.

Speaker 3: last year with the Hurricane in North America that created some challenges and opportunities. And there's just some of those things that in those kind of full chain margins through the distribution and merchandising business that are just...

That created some challenges and opportunities and just some of those things that.

In those kind of full chain margins through the distribution and merchandising business that are just more difficult to forecast but.

Speaker 3: more difficult to forecast, but really like the way the team executed last year and I feel with the opportunities are there, we'll get them.

Really like the way the team executed last year and I feel with the opportunities are there we'll get them.

Speaker 4: And I just say we're out of the comment we made regarding, you know, if we see some tightness and supply and disruption, it should give us some upside. That really is going to show itself on the merchandising side of the business.

Yes, just say Rob to comment we made regarding if we see some tightness in supply and disruption should give us some upside that really is going to show itself on the merchandising side of the business.

Got it thank you.

Thank you.

Speaker 1: The next question comes from Kanz Aslow from Bank of Montreal. Please go ahead. Hey, good morning guys.

The next question comes from Ken Zaslow from Bank of Montreal. Please go ahead.

Hey, good morning, guys.

Thanks again.

Speaker 9: A couple of questions. One is we haven't had you know many years in which the South American margin actually has been this strong

Couple of questions. One is we haven't had.

Many years in which the South American margin.

Actually it's been this strong.

Speaker 9: particularly in Brazil. So when you're thinking about the year, are you incorporating that type of strength? Are you waiting for it to kind of really, kind of elongate to make you sure that's the real thing? And are you in position to be able to capitalize it with the security by securing the soybean? Just how you're thinking about that is just somewhat of a new phenomenon. I don't remember seeing for quite some years.

Particularly in Brazil.

Brazil, so when you're thinking about the year are you incorporating that type of strength are you waiting for it.

Really kind of elongate to making sure that you know the real thing.

And are you in position to be able to capitalize it with the secure by securing the soybeans, just how you're thinking about that.

Somewhat of a new phenomenon I don't remember seeing for quite some years.

Speaker 3: Yeah, I think we say that fundamentals are good overall.

Yeah, I think when we say the fundamentals are good overall.

<unk>.

Speaker 3: That's definitely what we're looking at here with the start that we're getting. Now the curves are reflecting, you know, some of the fact that the weather's taken the top off the crop a little bit of course in, you know, hurt it in a pair of ways took the top off a little bit in Brazil and then we'll continue to watch how.

That.

That's definitely what we're looking at here with the start that we're getting now that the curves are reflecting.

Some of the fact that the weather has taken the top off the crop a little bit of course.

You heard it in Paraguay took the top up little bit in Brazil, and then we'll continue to watch out Argentina develops it was hurt a little bit but looks like that stabilized.

Speaker 3: Argentine develops, it was hurt a little bit, but looks like that's stabilized. So, you know, we've got to see how that plays out and how the farmer responds. And I think we talked about in Brazil, of course you had in the back that you've got an election. And that may create...

So we've got to see how that plays out and how the farmer.

Response, and I think we talked about in Brazil of course, you add in the fact that you've got an election and that may create.

Speaker 3: you know, make create a situation with the effects volatility in the farmer, maybe a little more reluctant to sell. But we'll, you know, we'll see how that, how that plays out. But we do like how the fundamentals look overall. We like the optionality, you know, that exists in this, this big, a global network and that we've seen.

You know may create a situation with the FX volatility and the farmer may be a little more reluctant to sell but we will oh, well, we'll see how that how that plays out but we do like how the fundamentals look overall, we like the Optionality you know.

That exists in this big global network and that we've seen.

Speaker 3: You know, we're able to take care of the opportunities when there is dislocation and ask things develop. Okay, but it's not fully included just because you're kind of more on a waiting seat. Have you secured soybeans? On it, work.

You know, we're able to take care of the opportunities when there is dislocation and as things develop.

But it's not fully included just because you're kind of more of a wait and see have you secured soybeans on at work.

Speaker 3: Yeah, you would be correct. We're more on a wait and see. And that's consistent with where we stood a year ago at this time and how we talk to each quarter. It's what we can see in the...

Yeah, you would be correct, we're more on a wait and see and that's you know.

That's consistent with you know, where we stood a year ago at this time and and you know kind of how we talk to each quarter. It's what we can see in those.

Speaker 9: So it would be another opportunity for upstarts and numbers. You mentioned a couple of things throughout the call. That has reasons for upside-ups if things develop the way they are. And I know you dig a wisely thoughtful approach rather than just don't all in. But is that a fair way of thinking about it? And then I have a second question.

Yes.

So it would be another opportunity for upside to the numbers that you mentioned a couple of things throughout the call.

Reasons for upside if things develop the way they are and I know Jay.

He wisely.

Wisely.

<unk> thought.

Ball approach rather than just don't all in but is that a is that a fair way of thinking about it and then I have a second question.

Speaker 3: Absolutely very fair and probably the last nine quarters might prove that out.

Yeah, absolutely very fair and probably the last nine quarters might prove that out.

Speaker 9: And then I think after a short term question, it's just about that such good questions. But the quarter of a quarter and the first quarter, it looks like things are setting up a little bit stronger. Your rear, is that a fair way of looking at it? And then I'll leave it there. And I really appreciate your time.

And then I don't know about.

I hate to ask a short term question.

Everybody's got such good questions, but.

The quarter over quarter in the first quarter. It looks like things are setting up a little bit stronger year over year is that a fair way of looking at it and then I'll leave it there and I really appreciate your time.

Speaker 3: You bet thanks Ken, but no, Q1 was really extraordinary last year and why we're off to a very good start here in January and carried momentum out of Q4. We currently don't see Q1 being as strong as last year. Thank you.

You bet, Thanks, Ken but no Q1.

It was really extraordinary last year and why we're off to a very good start here.

In January and carried momentum out of Q4, we currently don't see Q1 being as strong as last year.

Thank you guys very much.

You bet Thanks, Ken.

Speaker 1: This concludes our question and answer session. I'd like to turn the conference back over to Bungie for any closing remarks.

This concludes our question and answer session.

Like to turn the conference back over to Bunkie for any closing remarks.

Speaker 3: Thank you very much. I'd like to thank everyone for their interest. And I just overall like to wrap up by couldn't be more proud of the team for the execution. And it really feels good to be in this position, focused on growth and having the capacity to really pull all the levers. And so look forward to talking to you in the future.

Thank you very much like to thank everyone for their interest and just overall like to wrap up I couldn't be more proud of the team for the execution and it really feels good to be in this position focused on growth and having the capacity.

To really pull all the levers and so look forward to talking to you in the future. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 1: Conference is now concluded. Thank you for attending today's presentation. You may now.

Speaker 10: The.

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Speaker 10: And and.