Q3 2023 Archer-Daniels-Midland Co Earnings Call
Yes.
Good morning, and welcome to the ATM or third quarter of 2023 earnings Conference call.
Speaker 1: Good morning and welcome to the ADM third quarter 2023 earnings conference call. All lines have been placed on a listen only mode to prevent background noise. As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's call, Megan Britt, Vice President and Vesterrations for ADM. Miss Britt, you may begin.
Your lines have been placed on a listen only mode to prevent background noise.
This conference call is being recorded.
Institutional stays cool, making Brits, Vice President Investor Relations for ATM, Miss Britt you may begin.
Thank you, Alex Hello, and welcome to the third quarter earnings webcast for ADM.
Speaker 2: Thank you, Alex. Hello and welcome to the third quarter earnings webcast for ADM. Starting tomorrow, a replay of this webcast will be available on our investor relations website.
Tomorrow, a replay of this webcast will be available on our Investor Relations website.
Let's turn to slide two.
Speaker 2: Some of our comments and materials may constitute forward-looking statements that reflect management's current views and estimates of future economic circumstances, industry conditions, company performance, and financial results.
Some of our comments and materials may constitute forward looking statements that reflect management's current views and estimates of future economic circumstances industry conditions company performance and financial results. These.
Speaker 2: These statements and materials are based on many assumptions and factors that are subject to risk and uncertainties. ADM has provided additional information and its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation. To the extent permitted under applicable law, ADM assumes no obligation to update any for looking statements as a result of new information or future events.
Statements and materials are based on many assumptions and factors that are subject to risks and uncertainties.
<unk> has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation to the extent permitted under applicable law ADM assumes no obligation to update any forward looking statements as a result of new information or future events.
On today's webcast, our chairman and Chief Executive Officer, Juan Luciano will discuss our third quarter results and share. Some recent accomplishments on our strategic priorities, our Chief Financial Officer, Vikram Luther will review segment level performance and provide an update on our cash generation and capital allocation actions.
Speaker 2: On today's webcast, our Chairman and Chief Executive Officer Juan Luciano will discuss our third quarter results and share some recent accomplishments on our strategic priorities. Our Chief Financial Officer Vikram Luther will review segment level performance and provide an update on our Cash Generation and Capital Allocation Act.
One will have some closing remarks, and then Ian Vikram will take your questions. Please.
Speaker 2: Juan will have some closing remarks, and then Ian Vikram will take your questions.
Speaker 3: Please turn to slide three. I'll now turn the call over to Juan. Thank you, Meghan. And good morning to all who have joined for today's call.
Please turn to slide three I'll now turn the call over to Juan Thank.
Thank you Megan and good morning to all.
I'm joined for today's call.
Today, <unk> reported third quarter adjusted earnings per share of $1.63.
Speaker 3: Today, ADM reported third quarter of adjusted earnings per share of $1.63 with an adjusted segment operating profit of $1.5 billion.
With an adjusted segment operating brokerage one $5 billion.
Year to date this equates to an adjusted earnings per share to $5 62 since that would represent Adm's second best EPS year achieved in just the first nine months.
Speaker 3: Year to date, this equates to an adjusted earnings per share of $5.62.
Speaker 3: that will represent ADM's second best EPS year achieved in just the first nine months.
Speaker 3: and an adjusted operating profit of $4.8 billion.
Adjusted operating profit go for $8 billion.
Our trailing four quarter average adjusted ROIC was 13, 2%.
Speaker 3: Our trailing four quarter average adjusted ROIC was 13.2%.
This result reflects yet another strong quarter for ADM.
Speaker 3: This result reflects yet another strong quarter for ADM.
Speaker 3: I'm proud of the team's nimble execution against our strategic plan, while adjusting our business model in light of both global macro trends, and the evolving needs of our customers.
I'm proud of the team's nimble execution against our strategic plan.
Adjusting our business model in light of both global macro trends and there will be needs of our customers.
The global market is increasingly dynamic with factors that create both opportunities and challenges for ADM to others.
Speaker 3: The global market is increasingly dynamic, with factors that create both opportunities and challenges for ADM to address.
Consumer behavior has shown a growing body ability spending more in some categories slowing spending in others.
Speaker 3: Consumer behavior has shown growing variability, spending more in some categories while slowing spending in others.
Speaker 3: And our team has a proven ability to manage through these and the impacts of geopolitical tensions, inflationary pressures, and the constantly adjusting balances of commodity supply and demand.
And our team has a proven ability to manage through these and the impact of geopolitical tensions inflationary pressures and the constantly adjusting balances of commodity supply and demand.
Within each business, we are focused on navigating these external factors carefully.
Operator: All lines have been placed on a listen only mode to prevent background noise.
Speaker 3: Within each business, we are focused on navigating these external factors carefully, while we're also building on the momentum we've seen through the year today.
Operator: As a reminder, this conference call is being recorded.
We're also building on the momentum we've seen through the year to date.
Megan Britt: I now like to introduce your host phase call Megan Britt's vice president and restorations for ADM. Miss Britt, you may begin. Thank you Alex.
Speaker 3: As we look ahead, we are on track to exceed our 20-23 previous expectations for the total income.
As we look ahead.
We are on track to exceed our 2023 previous expectations for the total company.
Juan Luciano: Hello and welcome to the third quarter earnings webcast for ADM. Starting tomorrow, a replay of this webcast will be available on our investor relations website. Please turn to slide two. Some of our comments and materials may constitute forward-looking statements that reflect management's current views and estimates of future economic circumstances, industry conditions, company performance and financial results. These statements and materials are based on many assumptions and factors that are subject to risk and uncertainties.
In AG services and Oilseeds, we saw the accelerated energy transition support strong demand for vegetable oil leading to a solid crush environment.
Speaker 3: In our services and oil sites, we saw the accelerated energy transition support strong demand for vegetable oil leading to a solid crash and virus.
Juan Luciano: ADM has provided additional information in its reports on file with the SEC concerning a significant assumptions and factors that could cause actual results to differ materially from those in this presentation. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements as a result of new information or future events.
We leveraged our flexible logistics footprint to manage Brazil's record crop.
Speaker 3: We leveraged our flexible logistics footprint to manage Brazil's record crop.
Speaker 3: And I would global trade franchise to best much supply to the man, World Wide. And I would global trade franchise to best much supply to the man, World Wide.
And our global trade franchise to best match supply to demand worldwide.
In color solutions, we delivered a record third quarter on the strength of solid margins in starches and sweeteners from flower as well as a robust ethanol demand that help us drive strong volumes and margins.
Speaker 3: We delivered a record third quarter on the strengths of solid margins of starches, sweeteners and flour, as well as robust ethanol demand that help us drive strong volumes and margins.
Speaker 3: In nutrition, flavors growth continued to outpace the market. What we both grew and executed on our revenue opportunity pipeline.
In nutrition.
Flavors growth continued to outpace the market.
We both grew and executed on our revenue opportunity pipeline.
Juan Luciano: On today's webcast, our chairman and chief executive officer, Juan Luciano, will discuss our third quarter results and shared some recent accomplishments on our strategic priorities.
The deliberate productivity and cost management actions, we have taken in animal nutrition are enabling improved performance as we also see market volume recovery and.
Speaker 3: The deliberate productivity and cost management actions we have taken in animal nutrition are enabling improved performance as we also see market volume recover.
Vikram Luthar: Our chief financial officer, Vikram Luthar, will review segment level performance. And provide an update on our cash generation and capital allocation actions.
Speaker 3: and we continue to navigate pockets of soft demand in certain categories of the nutrition portfolio.
And we continue to navigate pockets of soft demand in certain categories of the nutrition portfolio.
Next slide please.
Juan Luciano: Juan will have some closing remarks and then he and Vikram will take your questions. Please turn to slide three.
One of <unk> greatest competitive advantages is the breadth and integration of our business model.
Speaker 3: One of ADM's greatest competitive advantages is the breadth and integration of our business model. Riching from far...
Juan Luciano: I'll now turn the call over to Juan. Thank you, Megan.
Juan Luciano: Good morning to all who have joined for today's call. Today, ADM reported third quarter adjusted earnings per share of $1.63 with an adjusted segment operating profit of $1.5 billion. Year to date, this equates to an adjusted earnings per share of $5.62. That would represent ADM's second best EPS year, achieving just the first nine months, and an adjusted operating profit of $4.8 billion. Our trailing for quarter average adjusted ROIC was 13.2%. This result reflect yet another strong quarter for ADM.
Reaching from farm to Fork.
Speaker 3: 2023 has offered several examples of how we'll create new areas of growth in each business.
2023 has offered several examples while creating new areas of growth in each business unit.
Speaker 3: on the farm, ADM has one of the largest and most sophisticated global origination networks.
On the farm.
Because one of the largest and most sophisticated global origination networks.
Speaker 3: Connecting with hundreds of thousand farmer-bounders worldwide.
And with hundreds of thousand former partners worldwide.
Speaker 3: We have unique and deep relationships with the people and technologies that are shaping the future of agriculture.
We have unique and deep relationships with the people and technologies that are shaping the future of agriculture.
So it's more of our customers are looking for traceable sustainable crop sources and their own supply chains, we have a natural connector and influencer.
Speaker 3: So as more of our customers are looking for traceable, sustainable crop sources in their own supply chains, we are in natural connection.
Speaker 3: We are proud to have announced partnership with Pesico, Nestle and Karlsberg and have a target of 4 million regenerative acres and goals by 2025. The carbon equivalent of power in more than 100,000 homes a year.
We are proud to have announced partnership with Pepsico Nerf play and Carlsberg.
Have a target of $4 million regenerative acres same goals by 2025.
Juan Luciano: I'm proud of the team's nimble execution against our strategic plan, while adjusting our business model in light of both global macro trends and the evolving needs of our customers. The global market is increasingly dynamic with factors that create both opportunities and challenges for ADM to address. Consumer behavior has shown growing variability, spending more in some categories while slowing spending in others. And our team has a proven ability to manage through these and the impacts of geopolitical tensions, inflationary pressures, and the constantly adjusting balances of commodity supply and demand. Within each business, we are focused on navigating these external factors carefully, while we're also building on the momentum we've seen through the year today.
Carnival in equivalent of power in more than 100000 homes a year.
Moving into production at the base of energy transition accelerates demand for renewables fuel sources is growing rapidly and ADM is in a leading position to capitalize on this trend.
Speaker 3: Moving into production, as the pace of energy transition accelerates, the man for renewable fuels sources is growing rapidly, and ADM is in a leading position to capitalize on this trend.
With our spirit with JV with marathon currently being commissioned we are ready to feed the production of targeted 75 million gallons of renewable green diesel per year.
Speaker 3: With our spirit with JV with marathon currently being commissioned, we are ready to fit the production of a targeted 75 million gallons of renewable green diesel per year.
We have announced the broad wind energy project delivered in a lower emission power source and a critical part of lowering our carbon emissions he used to power to vacate or operations.
Speaker 3: We have announced the Broadwind Energy Process, delivering the lower emission power source and a critical part of lower in our carbon emissions used to power decay or operate.
Speaker 3: And we're innovating to deliver new low carbon intensity products within the fast growing biosolutions for force.
And we're innovating to deliver new low carbon intensity products within the fast growing buy our solutions portfolio.
Juan Luciano: As we look ahead, we are on track to exceed our 20-23 previous expectations for the total company. In our services and oil seats, we saw the accelerated energy transition, support strong demand for vegetable oil, leading to a solid crash environment. We leveraged our flexible logistics footprint to manage Brazil's record crop, and our global trade franchise to best match supply to demand worldwide. In car solutions, we delivered a record third quarter on the strengths of solid margins and starches, sweeteners and flour, as well as robust ethanol demand that help us drive strong volumes and margins.
Speaker 3: And as we connect to the consumer, we're working closely with our customers to serve the challenges of their consumer.
And as we connect to the consumer we're working closely with our customers to serve the challenges of their consumers.
Speaker 3: whether it's sustainable solutions, the latest flavor or a cost-effective ingredient replacement, or exploring the future of nutrients through work with ADM ventures, partners like air protein and nourishing.
Whether it's sustainable solutions, the latest flavor or a cost effective ingredient replacement or explore in the future of nutrition through work with ADM ventures partners like air protein unnoticed.
Speaker 3: And we are differentiating our offerings with the next generation of evidence-based health and wellness solutions.
And we are deferring the cotwo offerings with the next generation of evidence based health and wellness solutions.
Speaker 3: with the world's largest probiotic manufacturing facility in Valencia, more than 50 clinical trials underway, and a growing team of deep scientific experts, we are work position for the expanding demand for functional foods and personalizing.
With the world's largest probiotic manufacturing facility in Valencia.
More than 50 clinical trials underway and a growing team of deep scientific expertise we have.
We're positioned for the expanding demand for functional foods and personalized nutrition.
Juan Luciano: In nutrition, flavors growth continued to outpace the market, where we both grew and executed on our revenue opportunity pipeline. The deliberate productivity and cost management actions we have taken in animal nutrition are enabling improved performance as we also see market volume recovery, and we continue to navigate pockets of soft demand in certain categories of the nutrition portfolio.
And to efficiently execute on all areas of growth, while maintaining an efficient cost structure. We continue to build vigilantly focus on productivity as well as the culture that lets our ADM colleagues bring their best every day.
Speaker 3: and to efficiently execute on all areas of growth while maintaining an efficient cost structure, we continue to vigilantly focus on productivity as well as the culture that lets our ADN colleagues bring their best every day.
Across our global organization, we're standardizing processes and systems through one ADM and modernizing our operations through digital transformation.
Speaker 3: across our global organization, we're standardizing processes and systems through 1 ADM and modernizing our operations through digital transformation.
Speaker 3: driving greater efficiencies while enabling the best use of our workforce and production capacity.
Driving greater efficiencies, while enabling the best use of our workforce and production capacity.
Juan Luciano: Next slide, please. One of ADM's greatest competitive advantages is the breadth and integration of our business model, reaching from farm to fork. 2023 has offered several examples of how we will create new areas of growth in each business unit. On the farm, ADM has one of the largest and most sophisticated global origination networks, connecting with hundreds of thousand farmer partners worldwide. We have unique and deep relationships with the people and technologies that are shaping the future of agriculture.
Our planned modernization program continues to deliver impressive operational benefits, including advanced analytics and safety improvements.
Speaker 3: Our planned modernization program continues to deliver impressive operational benefits.
Speaker 3: including advanced analytics and safety improvements across the 17 operations facilities currently in implementation phase. With more than seven.
Cross the 17 operations facilities currently in implementation phase.
With more than 70 plants in scope the planned recurring cost savings associated with automation across our footprint in 2024 is already nearly $20 million per year.
Speaker 3: plan recording cost savings associated with automation across our footprint in 2024 is already nearing 20 million dollars per year.
Speaker 3: Our cultural efforts are the critical foundation for all of this strategic...
Our cultural efforts are the critical foundation for all of these strategic initiatives.
Juan Luciano: So, as more of our customers are looking for traceable, sustainable crop sources in their own supply chains, we are a natural connector and influencer. We are proud to have announced partnership with Pesico, Nestle and Karlsberg and have a target of 4 million regenerative acres and holes by 2025, the carbon equivalent of power in more than 100,000 homes a year. Moving into production, as the pace of energy transition accelerates, the man for renewables fuels sources is growing rapidly and ADM is in a leading position to capitalize on this trend.
We have ramped up our focus on our culture of caring specifically in regards to the safety of our colleagues.
Speaker 3: We have ramp up our focus on a culture of caring, specifically in regards to the safe.
Speaker 3: This is our top priority. And our recent performance in this area has not led up to our expectation.
This is our top priority.
And our recent performance in this area has not live up to our expectations.
Speaker 3: We are committed to taking action to improve and have already begun to do so with the assistance of both internal and external experts.
We are committed to taking action to improve our.
Already begun to do so with the assistant of both internal and external experts, we will do better.
Speaker 3: By actively managing productivity, innovation and culture, and aligning work to the interconnected trends in food security, health and wellbeing and sustainability, ADM is well positioned for sustainable long-term profit growth across new and adjacent avenues.
By actively managing productivity innovation and culture, and aligning work to the interconnected trends in food security health and wellbeing and sustainability.
Juan Luciano: With our spirit with JV with marathon currently being commissioned, we are ready to fit the production of a targeted 75 million gallons of renewable green diesel per year. We have announced the Broadwind Energy Project, delivering the lower emission power source and a critical part of lowering our carbon emissions used to power decay or operations. And we're innovating to deliver new low carbon intensity products within the fast growing biosolutions portfolio. And as we connect to the consumer, we're working closely with our customers to serve the challenges of their consumer.
<unk> is well positioned for sustainable long term profit growth.
Gross new and adjacent avenues.
And with a strong performance in 2023, and a constructive expectation for the remainder of the year, we're again raising our full year earnings outlook.
Speaker 3: And with a strong performance in 2023 and a constructive expectation for the remaining of the year, we're again raising our full year earnings out.
For a deeper look at our Q3 performance, let me hand over to Vikram, who will cover our results of operations.
Speaker 3: For a deeper look at our Q3 performance, let me hand over to Vikram, who will cover results of operation.
Thank you Juan please turn to slide five the AG services and Oilseeds team. Once again delivered solid results in an increasingly dynamic environment by leveraging our experience scale and integrated global footprint.
Speaker 4: Thank you, Juan. Please turn to slide five. The Act Services and All Seeds team, once again, delivered solid results in an increasingly dynamic environment by leveraging our experience, scale, and integrated global footprint.
Juan Luciano: Evers, whether it is sustainable solutions, the latest flavor or a cost-effective ingredient replacement, or exploring the future of nutrients through work with ADM ventures, partners like air protein and nourished. And we are differentiated at what offerings with the next generation of evidence-based health and wellness solution, with the world's largest probiotic manufacturing facility in India, more than 50 clinical trials underway, and a growing team of deep scientific experts who are work-positioned for the expanding demand for functional foods and personalized nutrition.
Speaker 4: Act services results were lower than the strong third quarter of 2022.
AG services results were lower than the strong third quarter of 2022.
Speaker 4: South American origination results were higher year over year, as our team delivered significantly higher volumes and margins on strong export demand.
South American origination results were higher year over year as our team delivered significantly higher volumes and margins on strong export demand.
Prior investments in port capabilities have enabled us to structurally grow our earnings while capitalizing on a stronger margin environment across the region.
Speaker 4: Prior investments in port capabilities have enabled us to structurally grow our earnings while capitalizing on a stronger margin environment across the region.
Speaker 4: North American results were lower year over year as a result of the shift of export demand to Brazil due to the large crop there, as well as low water levels in the US river system, limiting volume and barge capacity.
North American results were lower year over year as a result of a shift of export demand to Brazil due to the large crop there as well as low water levels in the U S River system, limiting volume and barge capacity.
Juan Luciano: And to efficiently execute on all areas of growth will maintain an efficient cost structure, we continue to vigilantly focus on productivity, as well as the culture that lets our ADM colleagues bring their best every day. Across our global organization, we are standardizing processes and systems through 1 ADM and modernizing our operations through digital transformation, driving greater efficiencies while enabling the best use of our workforce and production capacity. Our planned modernization program continues to deliver impressive operational benefits, including advanced analytics and safety improvements across the 17 operations facilities, currently in implementation phase.
Effective risk management, combined with higher volumes and margins in global trade led to strong results, however, much lower than the record quarter last year.
Speaker 4: Effective risk management combined with higher volumes and margins and global trade led to strong results. However, much lower than the record quarter last year. The current quarter also included a $48 million insurance settlement related to damages from Harkin Ida.
The current quarter also included a $48 million insurance settlement related to damages from Hurricane Ida.
Speaker 4: In crushing, we delivered another strong quarter, but lower than the prior year as global crush margins remained healthy, but lower than the very strong levels of a year ago.
In crushing we delivered another strong quarter, but lower than the prior year as global crush margins remained healthy, but lower than the very strong levels of a year ago.
Speaker 4: Our strong results were led by North America, as the crush margin environment remains well supported by structurally higher demand for vegetable oil.
Our strong results were led by North America as the crush margin environment remains well supported by structurally higher demand for vegetable oils Rio.
Speaker 4: We officially opened our new cross facility in Spiritswood, North Dakota, to meet growing demand.
We officially opened our new crush facility in Spirit would north Dakota to meet growing demand.
Juan Luciano: With more than 70 plants in scope, the plant recurring cost savings associated with automation across our footprint in 2024 is already nearly $20 million per year. Our cultural efforts are the critical foundation for all of these strategic initiatives. We have ramped up our focus on a culture of caring, specifically in regards to the safety of our colleagues. This is our top priority, and our recent performance in this area has not led up to our expectations. We are committed to taking action to improve and have already begun to do so with the assistance of both internal and external experts.
Speaker 4: We are currently in the commissioning process and expected to be running at full rates in early November , adding an additional 1.5 million metric tons of crush capacity per year.
We are currently in the commissioning process and expected to be running at full rates in early November adding an additional one 5 million metric tons of crush capacity per year.
In EMEA, we continued to optimize our flex capacity to prioritize crush a higher margin soft seats in line with market opportunities.
Speaker 4: In EMEA, we continue to optimize our flex capacity to prioritize crush of higher-merge soft seats in line with market opportunity.
In the quarter there were a large net positive mark to market timing effects, which were lower than the net positive impacts in the prior year quarter.
Speaker 4: In the quarter, there were large net positive market timing effects, which were lower than the net positive impacts in the prior year quarter.
Refined products and other posted another strong quarter higher than the prior year period results were led by solid volumes and margins in North America, and EMEA robust export demand for biodiesel in domestic demand for food oil drove higher results versus the prior year in.
Juan Luciano: We will do better. By actively managing productivity, innovation and culture and aligning work to the interconnected trends in food security, health and well-being and sustainability, ADM is well-positioned for sustainable long-term profit growth across new and adjacent avenues.
In the quarter. They are a large net positive mark to market timing effects, which are expected to reverse as contracts execute in future periods.
Speaker 4: Equity earnings from Wilmar was significantly lower versus the third quarter of 2022.
Equity earnings from Walmart was significantly lower versus the third quarter of 2022.
Speaker 4: Looking ahead, for the fourth quarter in Ag Services and Oil Seeds, we anticipate strong results that are slightly lower than last year, excluding the $110 million legal settlement in the Ag Services sub-segment from the fourth quarter of 2022.
Looking ahead for the fourth quarter in AG services and Oilseeds, we anticipate strong results that are slightly lower than last year, excluding the $110 million legal settlement in the AG services subsegment from the fourth quarter of 2022.
Juan Luciano: And with the strong performance in 2023 and a constructive expectation for the remainder of the year, we are again raising our full-year earnings outlook.
Vikram Luthar: For a deeper look at our Q3 performance, let me hand over to Vikram, who will cover results of operations. Thank you, Juan. Please turn to slide five. The ADC Services and Oilseed team once again delivered solid results in an increasingly dynamic environment by leveraging our experience, scale and integrated global footprint. ADC Services' results were lower than the strong third quarter of 2022. South American origination results were higher year over year as our team delivered significantly higher volumes and margins on strong export demand.
We expect AG services results to be in line with the prior year, excluding the legal settlement.
Speaker 4: We expect ag services results to be in line with the prior year, excluding the legal settlement.
Speaker 4: We anticipate similar year over year North American export volumes, a competitive South American export program, and continued strong performance from global trade.
We anticipate similar year over year, North American export volumes are competitive South American export program and continued strong performance from global trade.
Before cast our crushing sub segment will deliver strong results similar to the prior year.
We expect robust soy and canola crush margins and with the ramping of our spirit with operations higher volumes we.
We expect <unk> to perform well, but it'd be significantly below last year as positive timing impacts from prior quarters I expect it to reverse.
Vikram Luthar: Prior investments in port capabilities have enabled us to structurally grow our earnings while capitalizing on a stronger margin environment across the region. North American results were lower year over year as a result of the shift of export demand to Brazil due to the large crop there as well as low water levels in the US river system limiting volume and barge capacity. Effective risk management combined with higher volumes and margins and global trade led to strong results, however much lower than the record quarter last year.
Slide six please.
Carbohydrate solutions delivered an outstanding quarter that was significantly higher than the prior year enabled by the ongoing optimization of our production and supply chain network.
Speaker 4: Cabo-hided solutions delivered an outstanding quarter that was significantly higher than the prior year, enabled by the ongoing optimization of our production and supply chain network.
Speaker 4: The starches and sweeteners subsegment were higher year over year on a healthy demand and strong margin environment across starches, sweeteners, wheat flour and ethanol. Our team generated new customer wins and delivered double digit growth year to date in our BioSolutions platform.
The starches and sweeteners subsegment were higher year over year on a healthy demand and strong margin environment across starches, and sweeteners wheat flour and ethanol our team generated new customer wins and delivered double digit growth year to date in our bio solutions platform.
Vikram Luthar: The current quarter also included a $48 million insurance settlement related to damages from Harkin Eider. In crushing we delivered another strong quarter but lower than the prior year as global crush margins remain healthy but lower than the very strong levels of a year ago. Our strong results were led by North America as the crush margin environment remains well supported by structurally higher demand for vegetable oils. We officially opened our new crush facility in spiritwood North Dakota to meet growing demand.
As <unk> touched on earlier, we also signed a formal agreement with broad Green energy to provide lower emissions power to our Decatur facility, extending our ability to provide low carbon solutions across the value chain.
Speaker 4: As Juan touched on earlier, we also find a formal agreement with broad-wing energy to provide lower emissions power to a decayed-of-facility, extending our ability to provide low carbon solutions across the value.
Speaker 4: In the Vantage Con Processes sub-segment, our team executed well in a strong ethanol demand and margin environment, leading to significantly higher year-over-year results.
In the vantage corn processors sub segment, our team executed well in a strong ethanol demand and margin environment, leading to significantly higher year over year results.
Looking ahead for the fourth quarter, we expect steady demand and margins for our starches and sweeteners and wheat flour products.
Speaker 4: Looking ahead for the fourth quarter, we expect steady demand and margins for our stotchos, sweeteners, and wheat flour products.
Vikram Luthar: We are currently in the commissioning process and expected to be running at full rates in early November adding an additional 1.5 million metric tons of crush capacity per year. In a mere we continue to optimize our flex capacity to prioritize crush of higher margin soft seas in line with market opportunities. In the quarter there were large net positive market timing effects which were lower than the net positive impacts in the prior year quarter.
We remain constructive on ethanol margins driven by solid domestic demand and healthy U S exports supported by lower competing exports from Brazil due to higher sugar prices.
Speaker 4: We remain constructive on ethanol margins driven by solid domestic demand and healthy U.S. exports, supported by lower competing exports from Brazil due to higher sugar price.
Speaker 4: We anticipate results to be similar to the prior year period, but with upside potential if the current ethanol margin structure holds.
We anticipate results to be similar to the prior year period, but with upside potential if the current ethanol margin structure holds.
Speaker 4: On slide seven, in nutrition strong results in flavors, health and wellness and recovery in the base animal nutrition business, we're more than offset by continued lower demand for plant-based proteins and persisting demand fulfillment challenges in pet solutions.
On slide seven.
In nutrition strong results in flavors health and wellness and recovery and the best animal nutrition business were more than offset by continued lower demand for plant based proteins and persistent demand fulfillment challenges in pet solutions.
Vikram Luthar: Refined products and other posted another strong quarter higher than the prior year period results were led by solid volumes and margins in North America. In a mere robust export demand for biodiesel and domestic demand for food oil drove higher results versus the prior year. In the quarter there were large net positive market timing effects which are expected to reverse as contracts execute in future periods. Equity earnings from Wilmar were significantly lower versus a third quarter of 2022.
Speaker 4: Flavors reported impressive results in a complex operating environment, delivering a 29% growth in operating profit on a constant currency basis.
Flavors reported impressive results in a complex operating environment, delivering a 29% growth in operating profit on a constant currency basis results were led by pricing actions in EMEA and strong win rates in North America.
Speaker 4: Results were led by pricing actions in EMEA and strong win rates in North America.
Speaker 4: During the quarter, we also implemented a successful goal of our one ADM project in the Emeer region across 18 locations in 12 countries.
During the quarter. We also implemented a successful go lives of our one ADM project in the EMEA region across 18 locations in 12 countries.
Vikram Luthar: Looking ahead for the fourth quarter in ag services and oil seeds we anticipate strong results that are slightly lower than last year excluding the 110 million dollar legal settlement in the ag services sub segment from the fourth quarter of 2022. We expect ag services results to be in line with the prior year excluding the legal settlement. We anticipate similar year over year North American export volumes of competitive South American export program and continued strong performance from global trade.
Speaker 4: This represents a significant milestone as we continue to harness digital across the enterprise to drive productivity gain.
This represents a significant milestone as we continue to harness digital across the enterprise to drive productivity gains.
In specialty ingredients weak market demand, particularly in the alternative meat category inventory adjustments and unplanned downtime, resulting from the recent Takeda incident led to significantly lower year over year results.
Speaker 4: In specialty ingredients, weak market demand, particularly in the alternate meat category, inventory adjustments, and unplanned downtime resulted from the recent Decada incident led to significantly lower year-over-year results.
Speaker 4: The plant-based protein market has been experiencing destocking and consumer demand softness over the course of the year that will likely persist into next year.
The plant based protein market has been experiencing destocking and consumer demand softness over the course of the year that will likely persist into next year.
Vikram Luthar: The forecast of crushing sub segment will deliver strong results similar to the prior year. We expect robust soil and canola crush margins and with the ramping of our spirit with operations higher volumes. We expect RPO to perform well but be significantly below last year as positive timing impacts from prior quarters are expected to reverse.
Speaker 4: Given these recent market dynamics, we have rescoped our decade of protein modernization investment project to better match the expected lower growth demand environment.
Given these recent market dynamics, we have re scoped at Takeda protein modernization investment project to better match, the expected lower growth demand environment.
Speaker 4: Also, we are leveraging our expertise in creation, design and development to differentiate our product offerings to serve evolving consumer.
Also we are leveraging our expertise in creation design and development to differentiate our product offerings to serve evolving consumer needs. These.
Vikram Luthar: Lewis, Slide 6, please. Carbohydrate solutions delivered an outstanding quarter that was significantly higher than the prior year, enabled by the ongoing optimization of our production and supply chain network. The starches and sweetened sub-segment were higher year-over-year on a healthy demand and strong margin environment across starches, sweeteners, wheat flour, and ethanol. Our team generated new customer wins and delivered double-digit growth year-to-date in our biosolutions platform. As Juan touched on earlier, we also signed a formal agreement with broad-wing energy to provide lower emissions power to a decayed-of-facility, extending our ability to provide low carbon solutions across the value chain.
These adjustments will enable a faster pivot to higher growth and more resilient categories, such as specialized nutrition, which have synergies across the nutrition portfolio and we are rapidly building this revenue pipeline.
Speaker 4: These adjustments will enable a faster pivot to higher growth and more resilient categories, such as specialized nutrition, which have synergies across the nutrition portfolio. And we are rapidly building this revenue pipeline.
Speaker 4: Health and wellness results were higher year-over-year due to double-digit biotic sales and a favorable impact related to the revised commercial agreement with Spiver.
Health and wellness results were higher year over year due to double digit biotech sales and a favorable impact related to the revised commercial agreement with fiber.
Speaker 4: During the quarter, we realized a significant expansion in our revenue pipeline, reinforcing the demand for evidence-based solutions.
During the quarter, we realized a significant expansion in our revenue pipeline reinforcing the demand for evidence based solutions and.
In animal nutrition, we are beginning to see the cost optimization actions and the expansion of offerings in the specialty feed ingredients space from earlier this year driving improved performance. However, the recovery in the base business was more than offset by normalized year over year amino acids Maher.
Speaker 4: In animal nutrition, we are beginning to see the cost optimization actions and the expansion of offerings in the specialty feed and ingredient space from earlier this year driving improved performance.
Vikram Luthar: In the vantage-con processes sub-segment, our team executed well in a strong ethanol demand and margin environment, leading to significantly higher year-over-year results. Looking ahead, for the fourth quarter, we expect steady demand and margins for our starches, sweeteners, and wheat flour products. We remain constructive on ethanol margins driven by solid domestic demand and healthy U.S, exports, supported by lower competing exports from Brazil due to higher sugar prices. We anticipate results to be similar to the prior year period, but with upside potential if the current ethanol margin structure holds.
Speaker 4: However, the recovering the best business was more than all said by normalized year-over-year amino acids margins as well as lower profit contribution from the Fed solutions business.
<unk> as well as lower profit contribution from the <unk> solutions business.
Speaker 4: Looking forward, we anticipate flavors to finish the year strong, driven by growth in India and North America. Health and wellness operating profit is expected to finish similar to last year. Animal nutrition operating profit is expected to continue to recover sequentially quarter over quarter.
Looking forward, we anticipate flavors to finish the year strong driven by growth in EMEA and North America.
And wellness operating profit is expected to finish similar to last year.
Animal nutrition operating profit is expected to continue to recover sequentially quarter over quarter.
Specialty ingredients operating profit is expected to be down significantly impacted by the recent Decatur East incident and demand softness all in we now expect full year 2023 operating profit for nutrition to be around $600 million.
Speaker 4: Specialty ingredients operating profit is expected to be down significantly impacted by the recent decadre east incident and demand soft
Vikram Luthar: On slide seven, in nutrition strong results in flavors, health, and wellness, and recovery in the base animal nutrition business were more than offset by continued lower demand for plant-based proteins and persistent demand fulfillment challenges in pet solutions. Flavors reported impressive results in a complex operating environment, delivering a 29% growth in operating profit on a constant currency basis. Results were led by pricing actions in Amir and strong win rates in North America.
Speaker 4: All in, we now expect full year 2023 operating profit for nutrition to be around $600 million.
Speaker 4: While our results in 2023 have been below our expectations, we expect nutrition to return to growth in 2024. We will continue to build on the flavors momentum from 2023. Health and wellness should maintain its steady performance. The cost actions in the shop of pivot to higher margin products will enable animal nutrition to drive growth, further reinforced by improved
While our results in 2023 had been below our expectations, we expect nutrition to return to growth in 2024, we will continue to build on the flavors momentum from 2023 health and wellness should maintained its steady performance.
Cost actions in the shop or pivot to higher margin products will enable animal nutrition to drive growth further reinforced by improved go to market capabilities.
Vikram Luthar: During the quarter, we also implemented a successful go-live of our one ADM project in the Amir region across 18 locations in 12 countries. This represents a significant milestone as we continue to harness digital across the enterprise to drive productivity gains. In specialty ingredients, weak market demand, particularly in the alternate meat category, inventory adjustments, and unplanned downtime resulted from the recent decade of incident led to significantly lower year-over-year results. The plant-based protein market has been experiencing destocking and consumer demand softness over the course of the year that will likely persist into next year.
Lastly for ESI, we will work aggressively to restart operational capabilities at Decatur east to minimize the impact in 2024.
Speaker 4: Lastly, for FI, we will work aggressively to restart operational capabilities at Decatur East to minimize the impact in 2024.
Slide eight please.
Speaker 4: Slide eight, please. Other business results were significantly higher than the prior year quarter due to improved ADM investor services earnings on higher net interest.
Other business results were significantly higher than the prior year quarter due to improved ADM investor services earnings on higher net interest income.
Speaker 4: Captive insurance results were slightly lower on higher claims settlements, partially offset by premiums from new programs.
Captive insurance results were slightly lower on higher claims settlements, partially offset by premiums from new programs.
And corporate results net interest expense for the quarter increased year over year, primarily on higher short term interest rates.
Speaker 4: In corporate results, net interest expense for the quarter increased year over year, primarily on higher short-term interest rates.
Unallocated corporate costs of $298 million were higher versus the prior year on higher global technology spend to support our digital transformation efforts.
Vikram Luthar: Given these recent market dynamics, we have rescorped our decade of protein modernization investment project to better match the expected lower growth demand environment. Also, we are leveraging our expertise in creation, design, and development to differentiate our product offerings to serve evolving consumer needs. These adjustments will enable a faster pivot to higher growth and more resilient categories such as specialized nutrition which has synergies across the nutrition portfolio and we are rapidly building this revenue pipeline.
Other corporate was favorable versus the prior year, primarily due to foreign currency hedges.
We still forecast corporate cost to be approximately one 5 billion for the year the.
Speaker 4: We still forecast corporate costs to be approximately $1.5 billion for the year.
The effective tax rate for the third quarter of 2023 was approximately 20% higher than the prior year, primarily due to change in the geographic mix of earnings for the full year, we still expect our effective tax rate to be between 16% and 19% next slide please.
Vikram Luthar: Health and wellness results were higher year-over-year due to double-digit biotic sales and a favorable impact related to the revised commercial agreement with Spiber. During the quarter, we realized a significant expansion in our revenue pipeline, reinforcing the demand for evidence-based solutions. In animal nutrition, we are beginning to see the cost-optimization actions and the expansion of offerings in the specialty feed and ingredient space from earlier this year driving improved performance. However, the recovering the best business was more than all said by normalized year-over-year amino acids margins as well as lower profit contribution from the pet solutions business.
Speaker 4: Through the third quarter, we had strong operating cash flows before working capital of $3.8 billion. We continued to invest in the business, allocating $1.1 billion to capital expenditures, and have returned $1.9 billion to shareholders through share repurchases and dividends.
Through the third quarter, we had strong operating cash flows before working capital of $3 8 billion.
We continue to invest in the business allocating $1 1 billion to <unk> capital expenditures and have returned $1 $9 billion to shareholders through share repurchases and dividends.
Ample liquidity with over $13 billion of cash and available credit and our balance sheet is very strong with an adjusted net debt to EBITDA leverage ratio of 0.9.
Speaker 4: A fortress balance sheet gives us the financial flexibility to drive a long-term strategic agenda while also returning careful to shareholders.
Our fortress balance sheet gives us the financial flexibility to drive our long term strategic agenda. While also returning capital to shareholders and is also a competitive advantage, particularly in a higher for longer interest rate environment.
Vikram Luthar: Looking forward, we anticipate flavors to finish the year strong driven by growth in India and North America. Health and wellness operating profit is expected to finish similar to last year. Animal nutrition operating profit is expected to continue to recover sequentially quarter-over-quarter. Specialty ingredients operating profit is expected to be down significantly impacted by the recent decade at East incident and demand softness.
Speaker 4: and is also a competitive advantage, particularly in a higher for longer interest rate environment.
Speaker 4: We have completed $1.1 billion of share repurchases through Q3 and expect to increase the base of repurchases in Q4.
We have completed $1 1 billion of share repurchases through Q3, and expect to increase the pace of repurchases in Q4.
Even with the softness in nutrition and lower than expected profit contributions from Wilmar, we are raising our 2023 earnings outlook again, and now anticipate full year EPS in excess of $7 per share.
Speaker 4: even with the softness in nutrition and lower than expected profit contributions from Wilmar, we are raising our 2023 earnings outlook again and now anticipate full year EPS in excess of $7 per share.
Vikram Luthar: All in, we now expect full year 2023 operating profit for nutrition to be around $600 million. While our results in 2023 have been below our expectations, we expect nutrition to return to growth in 2024. We will continue to build on the flavors momentum from 2023. Health and wellness should maintain its steady performance. The cost actions in the shop of pivot to higher margin products will enable animal nutrition to drive growth further reinforced by improved go-to-market capabilities. Lastly, for FI, we will work aggressively to restart operational capabilities at Decatur East to minimize the impact in 2024.
Thank you.
Speaker 3: As we close today's call, let me share a few thoughts about how we'll see in our efforts in 2023 position ADM to continue solid progression into 2024.
As we close today's call, let me share a few thoughts about how we're seeing our efforts in 2023 position ADM to continue solid progression into 2024.
Let's turn now to factors that influence Adm's forward look are closely aligned to the enduring macro trends, we have positioned ourselves to be nimble in managing.
Speaker 3: The terminal factors that influence ADN's forward look are closely aligned to the enduring macro trends we have positioned ourselves to to team in. We want to take the bridge and focus...
We continue to see the interconnectivity across food security health and wellbeing Unsustainability.
Speaker 3: We continue to see the interconnectivity across food security, health and well-being, and sustainability.
Speaker 3: having an amplifying effect across the industries we serve.
Having an amplifying effect across the industries, we serve.
More frequent extreme weather extreme weather geopolitical events and the recent pandemic have all highlighted the criticality of put security within those geographies affordable regions that are served by their agricultural exports.
Speaker 3: More frequent extreme weather, geopolitical events and the recent pandemic have all highlighted the criticality of food security within those geographies and for the regions that are served by their agricultural exports.
Vikram Luthar: Slide 8, please. Other business results were significantly higher than the prior year quarter due to improved ADM investor services earnings on higher net interest income. Captive insurance results were slightly lower on higher claim settlements partially offset by premiums from new programs. In corporate results, net interest expense for the quarter increased year-over-year primarily on higher short term interest rates. Unallocated corporate costs of $298 million were higher versus the prior year on higher global technology spend to support our digital transformation efforts.
Speaker 3: Connected to this, we see areas of supply abundance growing as evidence by Brazil's record recent crop cycles, and areas of need shifts.
Connected to these we see areas of supply abundance growing as evidenced by Brazil's record recent crop cycles and areas of need shifting.
Speaker 3: In some cases, this has resulted in either more domestic consumption in countries like the US, or elevated import demand situations where our unparalleled global asset base and deep experience are becoming...
In some cases this has resulted in either more domestic consumption in countries like the U S.
The elevated input demand situations, where our unparalleled global asset base and deep experience are critical.
Speaker 3: Government policies beginning to support new demand...
Vikram Luthar: Other corporate was favorable versus the prior year primarily due to foreign currency hedges. We still forecast corporate costs to be approximately $1.5 billion for the year. The effective tax rate for the third quarter of 2023 was approximately 20%, higher than the prior year primarily due to change in the geographic mix of earnings. For the full year, we still expect our effective tax rate to be between 16 and 19%.
Government policies, beginning to support new demand patterns, whether based on a move to more renewable energy sources or an effort to increase regenerative agriculture supply.
Speaker 3: whether based on a move to more renewable energy sources or an effort to increase regenerative agriculture supply.
Science continues to accelerate innovation in nutrition with an ever present consumer interest in tune into our food beverage and supplement consumption to their personal health and dietary needs.
Speaker 3: Science continues to accelerate innovation in nutrition.
Speaker 3: with an ever-pressant consumer interest in turning their food, beverage and supplement consumption to their personal health and dietary.
Beyond the challenges and opportunities connected to these external factors. We believe ADM is positioned delivered us productivity and innovation to build momentum in the coming year.
Speaker 3: Beyond the challenges and opportunities connected to these external factors, we will leave ADM its position to leverage productivity and innovation, to build momentum in the coming year. A continuation of the strategic efforts we have been driving throughout 2020.
Vikram Luthar: Next slide, please. Through the third quarter, we had strong operating cash flows before working capital of $3.8 billion. We continue to invest in the business, allocating $1.1 billion to capital expenditures and have returned $1.9 billion to shareholders to share repurchases and dividends. We have ample liquidity with over $13 billion of cash and available credit, and our balance sheet is very strong with an adjusted net debt to EBITDA leverage ratio of $0.9.
A continuation of the strategic efforts, we have been driving throughout 2023.
We anticipate AG services, and oilseeds continue to liberate our sheets extended value chain and delivered and the structural changes to demand.
Speaker 3: We anticipate our services and also is continuing to leverage its extended value chain and deliver a structural changes to the mass.
We anticipate that crush margins will remain healthy.
Speaker 3: We anticipate that crash margins will remain healthy while our productivity measures enable us to have a more efficient cost.
Our productivity measures enabled us to have a more efficient cost structure.
We continue to drive opportunistic extension of our destination markets in scope.
Speaker 3: We continue to drive a opportunistic extension of our destination marketing school.
Speaker 3: grow our regenerative agriculture acres and partnerships, and expand our renewable fuels feedstock production.
What regenerative agriculture acres in partnerships and expand on what renewal fuels feedstock production.
In color solutions.
Speaker 3: the compounding effects of our transformative investments, coupled with early contracting for...
Vikram Luthar: We have completed $1.1 billion of share repurchases through Q3 and expect to increase the pace of repurchases in Q4. Even with the softness in nutrition and lower than expected profit contributions from Will Martin, we are raising our 2023 earnings outlook again and now anticipate full year EPS in excess of $7 per share.
Compounding effects of our transformative investments.
Coupled with early contracting for starches and sweeteners.
Speaker 3: and what we believe to be a positive ethanol environment are setting up for another strong year in 2017.
And what we believe to be a positive ethanol environment.
Setting up for another strong year in 2024.
Our nutrition.
Speaker 3: For nutrition, we expect continued growth in our revenue opportunity pipeline with significant conversions continuing as we move past some near-term demand weeks.
We expect continued growth in our revenue opportunity pipeline with significant conversions continuing as we move past some near term demand weakness.
Juan Luciano: Thank you, Vikram. As we close today's call, let me share a few thoughts about how we're seeing our efforts in 2023 position ADM to continue solid progression into 2024. The external factors and influence ADM's forward look are closely aligned to the enduring macro trends we have positioned ourselves to be nimble in managing. We continue to see the interconnectivity across food security, health and well-being, and sustainability, having an amplifying effect across the industries we serve.
Our expanding resulting flavors continued to signal acceleration across our broader portfolio.
Speaker 3: Our expanding results in flavors continue to signal acceleration across our broader portfolio.
Speaker 3: We expect the positive revenue growth trends in health and wellness to drive into next year. And we're already pivoting specialty ingredients toward high potential areas like alternative daily and specialized nutrition.
We expect the positive revenue growth trends in health and wellness to drive into next year.
And we're already people team specialty ingredients stalwart high potential areas like alternative daily on our specialized nutrition.
Our actions in 91 nutrition or the Liberty and a positive impact on sustained opportunity to growth, which we believe will expand further to sort of the segment in the coming year.
Speaker 3: Our actions in animal nutrition are delivering a positive impact and sustained opportunity growth, which we believe will expand further through the segment in the coming years.
And by applying our commercial excellence efforts to this portfolio.
Speaker 3: And by applying our commercial excellent efforts to this portfolio, we're focusing on the value of innovation in the specialty parts of the...
Juan Luciano: More frequent extreme weather, extreme weather, geopolitical events, and the recent pandemic have all highlighted the criticality of food security within those geographies and for the regions that are served by their agricultural exports. Connected to this, we see areas of supply abundance growing as evidenced by Brazil's record recent crop cycles, and areas of need shifting. In some cases, this has resulted in either more domestic consumption in countries like the US or elevated import demand situations where our unparalleled global asset base and deep experience are critical.
We're focusing on the value of innovation in the specialty parts of the business.
Speaker 3: In closing, I want to express my gratitude to the ADM team for their dedication, hard work and resourceful
In closing I want to express my gratitude to the ADM team for their dedication hard work and resourcefulness.
With the momentum we have been building upon the foundation for growth we have established.
Speaker 3: With the momentum we have been building a pound of foundation for growth we have established.
I am confident in our ability to continue to deliver solid results as we move into 'twenty 'twenty four and continue to pave a path for long term profit growth.
Speaker 3: I am confident in our ability to continue to deliver solid results as we move into 2024 and continue to pave a path for long-term profit growth. Thank you. Operating.
Thank you.
Operator, please open the line for questions.
Thank you Andrew.
Speaker 1: Thank you. As a reminder, if you'd like to ask a question, you can press star followed by one on the telephone keypad. If you'd like to remove your question, you may press star followed by two. Please ensure you're unmuted locally when asking your question. Please limit yourself to one question.
Juan Luciano: Government policies begin to support new demand patterns, whether based on a move to more renewable energy sources or an effort to increase regenerative agriculture supply. Science continues to accelerate innovation in nutrition, with an ever-present consumer interest in turning their food, beverage, and supplement consumption to their personal health and dietary needs. Beyond the challenges and opportunities connected to these external factors, we believe ADM is positioned to leverage productivity and innovation to build momentum in the coming year, a continuation of the strategic efforts we have been driving throughout 2023.
Reminder, if you'd like to ask a question you compress star one on your telephone keypad.
To remove your question you May press star followed by two.
Essentially you're on mute lengthy when asking your question.
Please limit yourself to one question. Thank you.
Yeah.
Speaker 1: Our first question for today comes from Andrew Strelsik of BMO Capital Markets. Andrew, your line is now open, please go ahead.
Our first question for today comes from Andrew Charles.
Capital markets Andrew Your line is now open. Please go ahead.
Hey, good morning, Thanks for taking my question.
Speaker 5: Good morning. Thanks for taking the question. I guess I wanted to ask you about the US Crush Margin outlook. You commented that you expect Crush margins to remain healthy.
Yes, I wanted to ask you about the U S crush margin outlook.
You commented that you expect crush margins to remain healthy and I guess this is really a question about 2024, where the U S Board crush with yours have come down what's your perspective on what's going on there.
Speaker 5: And I guess this is really a question about 2024, where the US board crush readers have come down. What's your perspective on what's going on there? Do you think that the crush capacity that's coming on is having an impact or how is that being absorbed? I guess.
Juan Luciano: We anticipate our services and also continue to leverage its extended value chain and deliver a structural changes to demand. We anticipate that crash margins will remain healthy, whether our productivity measures enable us to have a more efficient cost structure. We continue to drive opportunistic extension of our destination marketing scope, grow our regenerative agriculture acres and partnerships, and expand our renewal fuels feed stock production. In car solutions, the compounding effects of our transformative investments, coupled with early contracting for starches and sweeteners, and what we believe to be a positive ethanol environment, are setting up for another strong year in 2024.
You think that the crush capacity thats coming on is having an impact or how is that being absorbed I guess just trying to frame your commentary around momentum with with what's going on in crush.
Speaker 5: trying to frame your commentary around momentum with what's going on at Crush.
Okay.
Speaker 3: Yeah, thank you, Andrew. Listen, our perspective has not changed. If anything, the...
Yes, Thank you Andrew.
Listen our perspective have not changed if anything.
Yeah.
The perspective that we have for the market has been confirmed by.
By what we're seeing of course is a very dynamic environment with the market trying to balance.
Lot of.
A lot of issues, where there is some more availability of products more demand.
<unk> situation.
Speaker 3: We have seen board crash explode back to near the highs recently and this is just only a reflection of
We have seen both garage explode back to near the highs.
Recently and this is just only a reflection of.
The incredible demand that is coming for soybean meal into the U S. This drive of the board of crashes.
Speaker 3: The incredible demand that is coming for soybean mill into the US, this drive of the board crash has, it was milled driven, maybe before was oil driven, this was milled driven.
Juan Luciano: For nutrition, we expect continued growth in our revenue opportunity pipeline, with significant conversions continuing as we move past some near-term demand weakness. Our outstanding results in flavors continue to signal acceleration across our broader portfolio. We expect the positive revenue growth trends in health and wellness to arrive into next year, and we are already pivoting specialty ingredients toward high potential areas like alternative daily and specialized nutrition. Our actions in animal nutrition are delivered in a positive impact and sustained opportunity growth, which we believe will expand further through the segment in the coming year. And by applying our commercial excellent efforts to this portfolio, we are focusing on the value of innovation in the specialty parts of the business.
Smeal driven maybe before it was oil driven this was middle driven youll see Argentina situation there to get into the end of their inventory theyre probably enough beans at this point for crushers to run until November so what we see the export book of the U S for soybean meal.
Speaker 3: You see Argentina situation, they are getting to the end of their inventory. They're probably enough beans at this point for Crasher to run until November . So what we see, the export book of the US for soybean mill is a record export book from the US, something that is higher than over the last 10 years.
It's a record export book.
The U S something that <unk> done over the last 10 years. So I think that will continue well into Q1 of 2024.
Speaker 3: So I think that that will continue well into Q1 of 2024.
Speaker 3: And fundamentally what has changed, and you have that, if you were Ireland, of strong crash margins in the US, is this demand for oil. We see crash margins have been a little bit lower for soybean, certainly in Brazil or in Europe , and it's because some of the oil prices have declined. But in the US, with the new demand for renewable green diesel, it's not as good as it is in the US.
And fundamentally what has changed and you have that.
If you were island of strong crush margins in the U S is this demand for oil we see crush margins have been a little bit lower.
Soybean certainly in Brazil, or in Europe , and is because some of the oil prices have declined but in the U S and with the new demand for renewable Green diesel.
Juan Luciano: In closing, I want to express my gratitude to the ADM team for their dedication, hard work, and resourcefulness. With the momentum we have been building a foundation for growth we have established, I am confident in our ability to continue to deliver solid results as we move into 2024, and continue to pave a path for long-term profit growth. Thank you.
Speaker 3: and the new, all the new capacity coming, we expect that to remain strong for years to come. So we will continue to be very constructive about crash margins in the US. We will continue to be very constructive about crash margins in the US.
The new <unk>.
All the new capacity coming.
We expect that to remain strong for years to come. So we will continue to be very constructive about crush margins in the U S.
Great. Thank you very much.
Okay. Thank you.
Speaker 1: Thank you. Our next question comes from Ben Thirra of Barclays. Ben, the line is now open, please go ahead.
Next question comes from Ben Theurer.
Please.
Ben Your line is now open. Please go ahead.
Operator: Operator, please open the line for questions. Thank you. As a reminder, if you'd like to ask a question, you can press star 5 by 1 on your telephone keypad. If you'd like to remove your question, you may press star 5 by 2. Please ensure you're unmuted locally when asking your question. Please limit yourself to one question. Thank you.
Good morning Vikram.
Speaker 6: Yeah, good morning, Juan Vikram. Thanks. Thanks for taking my question.
Vikram. Thanks, Thanks for taking my question.
Wanted to follow up on nutrition, and the updated guidance, calling that roughly $600 million op income for the year.
Speaker 6: wanted to follow up on nutrition and the updated guidance calling that roughly 600 million up income for the year. Help us understand if you can putting that into context to what just a while ago we've talked about the path to make this business a 1 billion operating income business.
Help us understand if you can putting that into context to what just a while ago. We've talked about the path to make this business a 1 billion operating income business.
Andrew Strelzik: Our first question for today comes from Andrew Strelseck of BMO Capital Markets. Andrew, your line is now open. Please go ahead.
Speaker 6: What has gone into the wrong direction and what do you still need to correct to bring this business back on track to make it a billion dollar contributor? Thank you.
What has gone into the wrong direction, and what do you still need to correct to bring this business back on track to make it a $1 billion country. Peter Thank you.
Juan Luciano: Good morning. Thanks for taking the question. I guess I wanted to ask about the US Crush margin outlook. You commented that you expect Crush margins to remain healthy, and I guess this is really a question about 2024 where the US board Crush readers have come down. What's your perspective on what's going on there? Do you think that the Crush capacity that's coming on is having an impact or how is that being absorbed?
Yes. Thanks for the question Ben So, let's take it by different business lines. So in flavors as I mentioned Q3 had a very strong performance and if you actually look year to date.
Speaker 4: Yeah, thanks for the question, Ben. So let's take it by different business lines.
Speaker 4: So in flavors, as I mentioned, Q3 had a very strong performance. And if you actually look here today...
Speaker 4: Flavors operating profit is up 16%.
<unk> operating profit is up 16%.
Speaker 4: And I think that's been a very important growth engine. And typically the sales cycle in flavors tends to be shorter than some of our other product portfolios. So just keep that in mind. That momentum is building. And we see that momentum through our revenue pipeline, which is increasing month over month. We anticipate momentum in Q4 and, frankly, continuing into 2024.
And I think thats been a very important growth engine and typically the sales cycle and flavorless tends to be shorter than some of our other product portfolios. So just keep that in mind that momentum is building and we see that momentum through our revenue pipeline, which is increasing month over month, we anticipate momentum.
Juan Luciano: I guess just trying to frame your commentary on momentum with what's going on across. Thanks. Yeah, thank you, Andrew. Listen, our perspective have not changed. If anything, the perspective that we have for the market has been confirmed by what we're saying. Of course, it's a very dynamic environment with the market trying to balance a lot of issues, whether it's a more availability of products, more demand, the Argentine situation. We have seen board Crush explode back to near the highs recently, and this is just only a reflection of the incredible demand that is coming for soybean mill into the US.
In Q4, and frankly continuing into 2024.
Speaker 4: The other aspect is EBITDA margins of flavors is also increasing. It's not just revenue growth. The profit is also at the consequence of EBITDA margin expansion.
The other aspect is EBITDA margins of flavors is also increasing its not just revenue growth and profit is also as a consequence of EBITDA margin expansion.
Juan Luciano: This drive of the board Crush has, it was milled driven, maybe before it was oil driven, this was milled driven. You see Argentina situation, they are getting to the end of their inventory. There are probably enough beans at this point for Crushers to run until November. So what we see, the export book of the US for soybean mill is a record export book from the US, something that is higher than over the last 10 years.
Speaker 4: And finally, flavor's contribution here today, overall as a part of nutrition profitability, is a little over 50%. So important to keep that as a back of your mind as you think about it.
And finally flavors contribution year to date overall as a part of nutrition profitability is a little over 50% so important to keep that as a back a few minor as we think about the future.
Speaker 4: The second part of the human nutrition business health and wellness. Health and wellness has been state.
Second part of the human nutrition business health and wellness health and wellness has been steady actually.
Speaker 4: Actually, the dietary supplements market, which was a little bit of a headwind, has, we see the least talking impacts, tend to recede a bit, and we are optimistic about the outlook next year. The other thing that Juan mentioned is the evidence-based portfolio of ingredients is expanding, and ability to apply that into functional food and solution gives us confidence in that business to continue growing into next year and beyond.
Actually the dietary supplement market, which was a little bit of a headwind as we see the destocking impact then to recede a bit and we are optimistic about the outlook next year. The other thing that one mentioned is the evidence based portfolio of ingredients is expanding.
Juan Luciano: So I think that that will continue well into Q1 of 2024. Fundamentally, what has changed, and you have that, if you were island of strong Crush margins in the US, is this demand for oil. We see Crush margins have been a little bit lower for soybean, certainly in Brazil or in Europe, and it's because some of the oil prices have declined. But in the US, with the new demand for the new oil green diesel and the new, all the new capacity coming, we expect that to remain strong for years to come. So we will continue to be very constructive about Crush margins in the US. Thank you very much. Thank you.
The ability to apply that into functional food and solutions gives us confidence in that business to continue growing into next year and beyond.
Speaker 4: especially ingredients. Actually, it's a tale of two cities within specialty ingredients. There's a texture and sport folio that has done exceptionally well because of expansion of margins. We don't talk much about that, but because it's a smaller part of the business, but that has performed exceptionally well this year. The challenge has been on the plant-based protein mark.
Specialty ingredients actually it's a tale of two cities within specialty ingredients.
The extra <unk> portfolio that has done exceptionally well because of expansion of margins. We don't talk much about that but because it's a smaller part of the business, but that has performed exceptionally well. This year. The challenge has been on the.
Plant based protein market and the plant based protein is driven by market softness right. There is a softness in the market and we've gone down as a consequence of what's happening in the market. What we are doing from that perspective is pivoting the portfolio into somewhat more resilient categories like specialized nutrition like.
Speaker 4: And the planet-based protein is driven by market softness, right? There is a softness in the market and we've gone down as a consequence of what's happening in the market. What we are doing from that perspective is pivoting the portfolio into some of the more resilient categories, like specialized nutrition, like orthoderry.
Ben Theurer: Our next question comes from Ben Theurer, El Barclays, Ben Delanzau Open, please go ahead. Yeah, good morning, Juan Vikram, thanks for taking my question.
Our to dairy.
Speaker 4: It doesn't happen overnight, but remember, we have to see the ND capabilities. It allows us to pivot our product portfolio into the categories that are growing and we will do that. We are in the process of doing this.
It doesn't happen overnight, but remember we have <unk> capabilities and allows us to pivot our product portfolio into the categories that are growing and we will do that we in the process of doing that what happened in the interim.
Vikram Luthar: Wanted to follow up on nutrition and the updated guidance calling the roughly 600 million op-income for the year, help us understand if you can, putting that into context to what just a while ago, we've talked about the path to make this business a 1 billion operating income business. What has gone into the wrong direction and what do you still need to correct to bring this business back on track to make it a billion dollar contributor? Thank you. Yeah, thanks for the question, Ben.
Speaker 4: What happened in the interim is the dictator East...
The Decatur.
Sedan.
Speaker 4: What that's created is a challenge in terms of white flake production for specialty proteins in North America. So that's been a drag that we clearly have not foreseen. And that drag is going to continue into 2024.
That's created is a challenge in terms of white flag production for specialty proteins in North America.
It's been a drag that we clearly had not foreseen and that drag is going to continue into 2024, so within human nutrition flavors, performing exceptionally well outpacing the market health and wellness steady Si is kind of in line with market further exacerbated by them.
Speaker 4: So, with it you have a nutrition, flavors performing...
Speaker 4: exceptionally well, out facing the market, health and wellness study, SI is kind of in line with market, further exacerbated by the recent Decatur East incident.
Vikram Luthar: So let's take it by different business lines. So in flavors, as I mentioned, Q3 had a very strong performance, and if you actually look here to date, flavors operating profit is up 16%. And I think that's been a very important growth engine, and typically the sales cycle in flavors tends to be shorter than some of our other product both for years. So just keep that in mind. That momentum is building, and we see that momentum through our revenue pipeline, which is increasing month over month.
Recent decanter incident.
Stepping to animal nutrition.
What happened to the amino acids, we were coming off very high margins in 2022. The good news is we have done a reset in a much more normalized margin levels. In 2023. So therefore 24 onwards, we won't have that lapping impact of higher asset margins, but if you exclude immunoassay margins the best.
Speaker 4: You know what happened with amino acids? We were coming off very high margins in 2022. The good news is we have done a reset in the much more normalized margin levels in 2023. So therefore, 24 onwards, we won't have that laughing impact of higher amino acid margins. But if you exclude amino acid margins, the best animal nutrition business, excluding pets.
Animal nutrition business, excluding pet solutions, we've talked about all the actions businesses undertaking to optimize costs as well as drive focus and specialty ingredients that is being recognized and performance. We are seeing the benefits of that and you'll see sequential quarter over quarter growth. So that we feel very good about this.
Speaker 4: We talked about all the actions of businesses undertaking to optimize costs as well as drive focus and specialty ingredients. That is being recognized in performance. We are seeing the benefits of that. And you'll see sequential quarter over quarter growth. So that we feel very good about this in Q4 as well as going forward.
Vikram Luthar: We anticipate momentum in Q4 and frankly continuing into 2024. The other aspect is EBITDA margins of flavors is also increasing. It's not just revenue growth. The profit is also as a consequence of EBITDA margin expansion. And finally, flavors contribution here today overall as a part of nutrition profitability is a little over 50%. So important to keep that as a back of your mind as you think about the future.
In Q4, as well as going forward.
Speaker 4: Pet solutions, demand creation remains solid. That category has been fantastic. We've had challenges in demand fulfillment in North America, and particularly we talked about that, primarily in the recent acquisition that we did in 2021, though they're still lingering, but we have very clear action plans and we feel confident that by the end of this year and early next year, we will be able to more than offset that. So all in all,
Solutions demand creation remains solid that category has been fantastic. We've had challenges in demand fulfillment in North America, and particularly we talked about that primarily in a recent acquisition that we did in 2021.
Still lingering, but we have very clear action plans and we feel confident that by the end of this year and early next year, we will be able to more than offset that so all in all combined.
Vikram Luthar: The second part of the human nutrition business health and wellness, health and wellness has been steady. Actually, the dietary supplements market, which was a little bit of a headwind, we see the leastocking impacts tend to recede a bit and we are optimistic about the outlook next year. The other thing that Juan mentioned is the evidence-based portfolio of ingredients is expanding. And ability to apply that into functional food and solution gives us confidence in that business to continue growing into next year and beyond.
Speaker 4: Combined with that new innovation, we feel pretty confident that nutrition will return to growth in 2024. I'll be it maybe at a flyer slightly lower growth rate that we had anticipated before, but getting to a billion dollars is definitely within the horizon. It may not happen in the next year or in year following, but definitely in the new term.
Combined with that of new innovation, we feel pretty confident net nutrition will return to growth in 2024, albeit maybe at a flyer slightly lower growth rate that we had anticipated before but getting to a $1 billion.
Clean within the horizon. It may not happen in the next year youll falling but definitely in the near term either.
Vikram Luthar: Specialty ingredients, actually, it's a tale of two cities within specialty ingredients. There's the texture and portfolio that has done exceptionally well because of expansion of margins. We don't talk much about that, but because it's a smaller part of the business, but that has performed exceptionally well this year.
Or in the medium term.
Okay.
Thank you.
Speaker 1: Thank you. Our next question comes from Tom Palmer of JP Morgan. Tom, your line is now open. Please go ahead.
Our next question comes from Tom Palmer of Jpmorgan Tom.
Tom Your line is now open. Please go ahead.
Vikram Luthar: The challenge has been on the plant-based protein market. And the plant-based protein is driven by market softness, right? There is a softness in the market and we've gone down as a consequence. What's happening in the market? What we are doing from that perspective is pivoting the portfolio into some of the more resilient categories, like specialized nutrition, like or to bury. It doesn't happen overnight, but remember, we have throughout CD&D capabilities, it allows us to pivot our product portfolio into the categories that are growing and we will do that. We are in the process of doing that.
Good morning, and thanks for the question.
Speaker 7: Good morning and thanks for the question. The details on the crush moves, I think Andrew's crushing the telephone, but maybe...
The details on the crush moves.
Andrew's question was helpful, but maybe.
We could dig a little bit more into what's happening on the oil side I mean, we have seen soybean oil prices come down over the past couple of months.
Speaker 7: We could dig a little bit more into what's happening on the oil side. I mean, we have seen soybean oil prices come down over the past couple months.
Speaker 7: Futures curve does suggest some continued pressure as we move into 24. It sounds like you have plenty of visibility that demand is very strong on this side, but maybe just some color on what might have caused this downward price move and whether it's more temporary in nature in your view.
Futures curve does suggest some continued pressure as we move into 'twenty four it sounds like you have plenty of visibility. The demand is very strong on this side, but maybe just some color on what might have caused this downward price move and whether it's more temporary in nature in your view.
Vikram Luthar: What happened in the interim is the decatur of EC&D. What that's created is a challenge in terms of white flag production for specialty proteins in North America. So that's been a drag that we clearly had not foreseen and that drag is going to continue into 2024.
Thank you Tom.
Nathan North America refining margins are lower in this quarter.
Speaker 3: Listen, North America refining margins are lower in this quarter. I think if you look at last year, the high price always were impacted by supply chain disruptions from the Russia-Ukraine war. So I would say this is a more normalized environment.
I think if you look at last year.
The high price oils were impacted by supply chain disruptions from the Russia, Ukraine War. So I would say this is a more normalized environment.
Speaker 3: We have also some positive timing impacts due to the pronounced RIN and HOVO market movements, putting forward some of those gains.
We have also some <unk>.
Was it the timing impacts.
Due to the pronounced Raymond HOV market movements pulling forward some of those gains.
Vikram Luthar: By the recent decade or East incident, then step into animal nutrition. You know what happened to the amino acids. We were coming off very high margins in 2022. The good news is we have done a reset in the much more normalized margin levels in 2023. So therefore 24 onwards, we won't have that laughing impact of higher amino acid margins. But if you exclude amino acids margins, the base animal nutrition business, excluding pet solutions, we talked about all the actions of businesses undertaking to optimize costs as well as drive focus and specialty breeders. That is being recognized in performance. We are seeing the benefits of that and you'll see sequential quarter of a quarter growth. So that we feel very good about this in Q4 as well as going forward.
I would say when.
Speaker 3: I will say when we look at the photo-corder,
When we look at the affordable order quarter.
<unk>.
Speaker 3: we see remain prefining margins to remain strong, but maybe decline from the elevated highs we saw in 2022 and the early part of these years. Bio-distant margins are also coming out of the highs.
We see remain refining margins to remain strong.
But maybe a decline from the elevated highs we saw in 2022 and the early part of this years.
Biodiesel margins are also coming off of.
Both of the highs.
Speaker 3: As maybe the rain-value component of margin has declined, as the industry is building a bank of rain.
As may be the RIN value component of margin has declined as the industry is building a bank offerings.
Speaker 3: So we still have not seen a significant pool from the RD demand that is being built in, but we maintain a more expectation of how much is gonna be built there. So we think that is coming.
<unk>.
We are still have not seen a significant pool from the or the demand that has been building, but we maintain our expectation of how much is going to be build there. So we think that is coming.
Vikram Luthar: Pet solutions demand creation remains solid. That category has been fantastic. We've had challenges in demand fulfillment in North America and particularly we talked about that primarily in the recent acquisition that we did in 2021. Though the still lingering, but we have very clear action plans and we feel confident that by the end of this year and early next year, we will be able to more than offset that.
Speaker 3: The other thing you need to think about oil is that the month for food oil is very strong and has rebound.
The other thing you need to think about oil is that demand for food oil.
Is very strong and coastal rebounded and that our expectations now that with El Nino We may have.
Speaker 3: There are expectations now that with El Niño, we might have, and with the natural maturity of the plantations in all of Southeast Asia, that we might have a little bit less supply of palm oil and all that. Although we're coming off the highs, we continue to be constructive about margin stabilizing at a strong level in the RPO.
And with the natural maturity of the plantations in.
In all of Southeast Asia that we might have a little bit less supply of palm oil and all of that so although we're coming off the highs we continue to be constructive about margin stabilizing as strong at.
Vikram Luthar: So all in all combined with that and new innovation, we feel pretty confident that nutrition will return to growth in 2024. I'll be it maybe at a flyer slightly lower growth rate that we had anticipated before, but getting to a billion dollars is definitely within the horizon. It may not happen in the next year or in year following, but definitely in the near term or in the medium term. Thank you.
At a strong level.
The <unk> area.
Alright, thank you.
Speaker 8: Thank you. Our next question comes from Adam Familson of Goldman Sachs. Your line is now open. Please go ahead. Yes, thank you. Good morning, everyone.
Thank you.
Our next question comes from Adam Samuelson of Goldman Sachs.
Your line is now open. Please go ahead.
Yes. Thank you good morning, everyone.
I was hoping.
Maybe.
Tom Palmer: Our next question comes from Tom Palmer of JP Morgan. Tom, your line is now open. Please go ahead. Good morning and thanks for the question. The details on the question moves.
Speaker 8: Maybe digging on the car solutions, outlook, and maybe if you could just parse.
Maybe dig in on the Carb solutions.
Outlook and maybe if you could just parse the non ethanol pieces, a little bit more and I think in the prepared remarks, you alluded to kind of a favorable start to contracting in North America sweeteners and starches.
Speaker 8: the non-ethanol pieces a little bit more and I think in the for parader marks you alluded to kind of a favorable start to contracting in North America sweeteners and starches and
Vikram Luthar: I think Andrew's question was helpful, but maybe we could dig a little bit more into what's happening on the oil side. I mean, we have seen soybean oil prices come down over the past couple of months. The futures curve does suggest some continued pressure as we move into 24. It sounds like you have plenty of visibility that demand is very strong on this side, but maybe just some color on what might have caused this downward price move and whether it's more temporary in nature in your view. Thank you Tom.
Speaker 8: maybe elaborate on what you are actually seeing there. Maybe better frame kind of the incremental capital investments to come in that business. Obviously there's a lot of transformation we're happening in that business. That's not all much kind of come to fruition in the near term, but better contextualized kind of.
Maybe elaborate on what you are actually seeing there.
Maybe better frame kind of the incremental capital investments to come in that business. Obviously, there's a lot of transformation work happening.
In that business, that's not all kind of come to fruition in the near term but.
Better contextualize kind of what the actual level of investment that you've already committed to their there is and if I could just ask a clarifying question on the last point on <unk>, how much was the timing benefit.
Speaker 8: what the actual level of investment that you've already committed to there is. And if I could just ask a clarifying question on the last point on our PO, how much was the timing benefit in the third quarter?
<unk>.
In the third quarter.
Vikram Luthar: North America refining margins are lower in this quarter. I think if you look at last year, the high price always were impacted by supply chain disruptions from the Russia Ukraine war. I would say this is a more normalized environment. We have also some positive time in impacts due to the pronounced rain and HOVO market movements, pulling forward some of those gains. I will say, when we look at the forward quarter, we see it remains refined in margins to remain strong, but maybe decline from the elevated highs we saw in 2022 and the early part of these years.
About $95 million.
Okay. Thank you.
So on the Cob solutions question Adam.
Speaker 4: So on the Constitution's question, Adam, I think it's important to just frame it. The liquid sweetener volumes have been steady and this has happened throughout this year, almost every quarter we've set that. So the demand has been pretty resilient and the margin structure has been strong.
I think it's important to just framing the liquid sweetener volumes have been steady and this has happened throughout this year almost every quarter. We said that so the demand has been pretty resilient in the margin structure has been strong.
Speaker 4: The other thing that's actually helpful is strong exports to Mexico as well as higher sugar prices.
The other thing Thats actually helpful is strong exports to Mexico, as well as higher sugar prices the.
Speaker 4: The specialty volumes in North America have been a bit soft, but with the improved mix and pricing, our margins have actually expanded. The bio solutions market, we're actually extending in the newer applications, and that revenue growth year to date is 23% higher than the previous year.
The specialty volumes in North America have been a bit soft, but with the improved mix and pricing our margins have actually expanded the bio solutions market, we actually extending into new applications and that revenue growth year to date is 23%.
Vikram Luthar: By Odisson margins are also coming out of the highs, as maybe the rain-value component of margin has declined as the industry is building a bank of rings. So we still have not seen a significant pool from the RD demand that is being built in, but we maintain a more expectation of how much is going to be built there, so we think that is coming. The other thing you need to think about oil is that the demand for food oil is very strong and has rebounded.
Speaker 4: Wheat flour demand has been resilient. The optimization I referred to in my comments has actually helped improve the cost structure and expand margins. Ethanol, you know what's going on in ethanol. The margin structure there is very supportive given domestic demand, blend economics, strong US exports, as well as the fact that we've got a significant, actually higher domestic driving model.
Wheat flour demand has been resilient the optimization I referred to in my comments is actually helped improve the cost structure and expand margins ethanol you know what's going on in ethanol.
The margin structure that is very supportive given domestic demand blend economics strong U S exports as well as the fact that.
We've got a cigna.
Significant actually higher domestic driving miles.
Speaker 4: Now when you think about next year, I think you well set up the Q4 or 23, and I already talked about that. It's a little early.
Now when you think about next year I think we are well set up for the Q4, 'twenty three and I already talked about that.
A little early to say, but based on the strong finish that we anticipate in 'twenty train III and early 'twenty for contracting in North America Sweeteners and starches, we are optimistic for solid volumes and our ability to actually maintain and potentially even expand margins in our core starches.
Speaker 4: But based on the strong finish that we had dissipated in 2023 and early 24 contracting in North America, sweet of the stochers, we are optimistic for solid volume.
Vikram Luthar: There are expectations now that with El Nino, we might have, and with the natural maturity of the plantations in all this Asia, that we might have a little bit less supply of palm oil and all that. So although we are coming off the highs, we continue to be constructive about margin stabilizing as strong level in the RPO area.
Speaker 4: and our ability to actually maintain and potentially even expand margins in our core Starches and Street Transport Follies.
<unk> portfolio will tell you more on our February call, but going in the outlook is constructive and similarly for ethanol you know that tends to be volatile, but right now the general trends to be supportive of.
Speaker 9: We'll tell you more in our February call, but going in, the outlook is constructive and similarly for ethanol. You know that tends to be volatile, but right now, the general trends to be supportive of a higher, for longer ethanol margin environment. We'll tell you more in our February call, but going in, the outlook is constructive and similarly for longer ethanol margin environment.
Vikram Luthar: Thank you.
The higher for longer ethanol margin environment.
Thank you.
Adam Samuelson: Our next question comes from Adam Samuelson of Golden Science. Your line is now open. Please get ahead. Yes, thank you. Good morning, everyone.
Sure.
Yes. Thank.
Thank you.
Our next question comes from Ben <unk> of Stephens.
Speaker 1: Our next question comes from Ben, that be an avenue of Stevens. Ben, your line is out open. Please go ahead. Yep, thanks so much. Good morning, everybody.
Ben Your line is now.
Open. Please go ahead.
Vikram Luthar: I was hoping to maybe dig in on the car solutions outlook. Maybe if you could just parse the non-ethanol pieces a little bit more, and I think in the prepared remarks you alluded to, kind of a favorable start to contracting in North America, sweeteners and starches, and maybe elaborate on what you are actually seeing there. Maybe better frame kind of the incremental capital investments to come in that business, obviously there's a lot of transformation we're happening in that business, that's not all much kind of come to fruition in the near term, but better contextualized kind of what the actual level of investment that you've already committed to there. There is, and if I could just ask a clarifying question on the last point on RPO, how much was the timing benefit in the third quarter? About $95 million. Thank you.
Thanks, so much good morning, everybody.
And I have kind of a two pronged question one is one.
Speaker 8: One, you've kind of hit bits and pieces and Bickerm as well with the nutrition commentary of the overall business outlook into 2024.
Bits and pieces.
Vikram as well with nutrition commentary on the overall business outlook into 2024.
Speaker 8: The kind of implicit takeaway is we should still expect kind of...
The kind of implicit takeaway is we should still expect kind of very strong and above what I guess, we would think of as mid cycle earnings power in 2024, albeit it's early to make that call in 2024. So correct me if I'm wrong, there, but two.
Speaker 8: very strong and above what I guess we would think of as mid-cycle earnings power in 2024, albeit it is early to make that call in 2024. So correct me if I am wrong there.
Speaker 8: But too, when you think about allocating capital at this point in the cycle, how does that change, if at all, with what you've been doing over the last several years? And you've been picking up your buyback activity. How should we be thinking about that as we move through this period of time as well? Thank you.
When you think about allocating capital at this point in the cycle.
How does that change if at all with what you've been doing over the last several years.
You've been picking up your buyback activity, how should we be thinking about that as we move through this period of time as well. Thank you.
Yes. Thank you Ben good question.
Speaker 3: Yeah, thank you Ben. Good question. I think we see 2024 with a lot of optimism. We're working through the plan right now as you can imagine at this time of the year. We continue to see.
Listen we see.
'twenty 'twenty four with a lot of optimism and we're working through the plan right now as you can imagine in this time of the year.
Juan Luciano: So on the cost solutions question, Adam, I think it's important to just frame it. The liquid sweetener volumes have been steady, and this has happened throughout this year, almost every quarter we've said that, so the demand has been pretty resilient, and the margin structure has been strong. The other thing that's actually helpful is strong exports to Mexico, as well as higher sugar prices. The specialty volumes in North America have been a bit soft, but with the improved mix and pricing, our margins have actually expanded.
We continue to see that.
Speaker 3: strengths of ag services and all-seats and car solutions continuing. Ag services and all-seats we have seen some fundamental structural changes and I think that that's a multi-year trend so we're going to see higher crash margins at least in the United States for quite a while and our ag services business continue to grow around the world in the with the strength of the destination market.
Our strengths of AG services, and oilseeds on Carb solutions continuing.
<unk> services on Oilseeds, we have seen some fundamental structural changes and I think that that's a multiyear trend. So we can see higher crush margins at least in the United States for quite awhile.
Our AG services.
Services business continued to grow around the world in that with the strength of destination marketing and and that.
Speaker 3: And that exacerbated concern about food security that brought by all the geopolitics and the weather events and the pandemic and all that continues and continue to enhance margins for us.
That access our baked it concern of boats with security that bring brought by all the geopolitics and the weather events in the pandemic and all of that continues and continued to enhance margins for us.
Speaker 3: to the service we provide around the world. So we see that business being very solid and very strong contribute.
To the service we provide around the world. So we see that business being very solid and very strong contributor.
Juan Luciano: Domestic demand, blend economics, strong US exports, as well as the fact that we've got a significant, actually a higher domestic driving miles. Now, when you think about next year, I think we well set up the Q4 or 23, and I already talked about that. It's a little early to say, but based on the strong finish that we had dissipated in 2023 and early 24 contracting in North America, streeters and starches, we are optimistic for solid volumes and our ability to actually maintain and potentially even expand margins in our core starches and sweetness portfolio.
Speaker 3: Carve Solutions, I think that Vikram touched a little bit on the dynamics of the contracting for next year. But beyond that, I think that you have to remember that we are having different uses. We are finding new demand for those products that will do two things, will grow as revenue into new categories like we are seeing in BioSolutions that is growing double digits.
<unk> solutions, I think that Vikram touch a little bit on the dynamics of the contracting for next year, but beyond that I think that you have to remember that we.
We are having different uses.
We are finding new demand for those products that will do two things we will grow revenue into new categories. Like we're seeing in bio solutions that is growing double digits, but it also is going to tighten up the supply for the existing products. So that will be constructive to margins over time, and we've seen that already so.
Speaker 3: but it's also going to tighten up the supply for the existing product. So that will be constructive to margins over time. And we've seen that already.
Speaker 3: So those are the two. And I think nutrition and Vikram went into a lot of detail into that, into all the different pieces.
Those are the two.
Juan Luciano: We'll tell you more in our February call, but going in, the outlook is constructive and similarly for ethanol. You know that tends to be volatile, but right now the general trends to be supportive of a higher for longer ethanol margin environment. Thank you.
I think nutrition and Vikram went into a lot of detailed into that until the all the different pieces and we're very confident we're going to go back to growth next year.
Speaker 3: And we're very confident we're going to go back to growth next year. This year maybe you call it the post that refreshes. We took a post this year. But the fundamental innovation engine that we have, that's our differentiation. That continues to resonate strong.
Year, maybe you call it the past refreshes with together with Duke.
Both this year, but the fundamental innovation engine that we have that's our differentiation that continues to resonate strongly with the recent health and wellness and what we're seeing in flavors or the specialty pieces of animal nutrition or the demand generation impaired.
Speaker 3: whether it is in health and wellness, in what we're seeing in flavors, or the specialty pieces of animal nutrition, or the demand generation in pay.
Ben Bienvenu: Our next question comes from Ben Bienvenu of Stevens. Ben, you know, is that open? Please go ahead. Thanks so much. Good morning, everybody. I have kind of a two-pronged question. One is, one, you've kind of hit bits and pieces and bickering as well with the nutrition commentary of the overall business outlook into 2024. The kind of implicit takeaway is we should still expect kind of very strong and above what I guess we would think of as mid cycle earnings power in 2024, albeit it's early to make that call in 2024.
Speaker 3: where the markets are normal and we apply that properly. We are winning more than our fair share and we're growing faster than the competitors.
The markets are normal and we apply that properly we are winning more than our fair share and we're growing faster than the competitors. So we see that with you with a lot of optimism for the next year.
Speaker 3: So we see that with a lot of optimism for next year. When we think about how that correlates to our thinking on how to deploy capital, the priority to deploying capital is in our investment plan. And we have been doing that both in OPEX and on CAP.
We think about how that relates to our thinking on how to deploy capital the priority to deploying capital in our investment plan and we are.
Been doing that both in Opex and Capex.
Speaker 3: Unfortunately, Capix continues to be higher inflationary pressure there, whether it's manpower or supply of raw materials. It's in make us take a second look at a lot of the capital, and I think that Big Grant has reflected on some of the adjustment that we made, maybe to special ingredients or others.
Unfortunately, capex continues to be higher than inflationary pressure, there, where there is manpower supply of raw materials.
Ben Bienvenu: So correct me if I'm wrong there. But two, when you think about allocating capital at this point in the cycle, how does that change, if at all, with what you've been doing over the last several years? And you've been picking up your buyback activity. How should we be thinking about that as we move through this period of time as well? Thank you. Yeah. Thank you, Ben. Good question.
And make us take a second look at a lot of the capital and I think that victory has reflected on some of the adjustments that we made maybe to specialty ingredients and others. So we're taking a look at that.
Speaker 3: So we're taking a look at that and we're reviewing us all within our capital discipline and every project. But we have many opportunities in front of us and we're going to continue to fund them. We have increased our return to shareholders. Certainly our cash flow generation is very strong. And to be honest, when we see some of the people we're doing even in the car solution with some of these opportunities, they are not hugely
Reviewing as always in our capital discipline and every project, but we have many opportunities in front of us and we're going to continue to fund them.
We have increased our will return to shareholders certainly our cash flow generation is very strong and to be honest when we see some of the people that were doing even in the current solution with some of these opportunities they're not hugely.
Juan Luciano: I think we see 2024 with a lot of optimism. We're working through the plan right now as you can imagine this time of the year. We continue to see the strengths of our services and all sorts and car solutions continuing. Our services and all sorts, we have seen some fundamental structural changes. And I think that that's a multi-year trend. So we're going to see higher crash margins, at least in the United States for quite a while.
Loading our Capex, if you will some of these things where at least the pipeline for decarbonization is with partners with LG.
LG Cam or other joint ventures are also partnerships. So it's.
Not that <unk> seen in our capital and our Capex budget, if you will.
Juan Luciano: And our access services business continue to grow around the world with the strength of destination marketing. And that exacerbated concern about food security that brought by all the geopolitics and the weather events and the pandemic and all that continues and continue to enhance margins for us to the service we provide around the world. So we see that business being very solid and very strong contribute. Carter Solutions, I think that Vikram touched a little bit on the dynamics of the contracting for next year.
So we think that we're going to continue to increase that return to shareholders.
We've been opportunistic looking at of course.
Speaker 3: the M&A environment and to be candid, we participate in many, we have many items on the fire, but the reality is that valuations have not come down and we plan to continue to keep our discipline in that regard. So we continue to be opportunistic in that and we look at that. I think Bikram has done a great job to follow that needed analysis, and I think he got there fairly possibly.
Yeah.
The M&A environment.
To be candid.
We participate in many we have many items in the fire.
It is the valuations have not come down and we plan to continue to keep our discipline in that regard. So we continue to be opportunistic in that.
And we look at them.
Vikram.
Make a comment.
Speaker 9: Yeah, I think it also and stumped with buybacks good to remind everyone that if you remember in our 2021 Investor Day we talked about five billion dollars of buybacks over the next four years
Also in terms of buybacks, but to remind everyone that if you remember in our 2021 Investor day, we talked about $5 billion of buybacks over the next four years through 2025.
Juan Luciano: But beyond that, I think that you have to remember that we are having different uses. We are finding new demand for those products that will do two things. We'll grow as revenue into new categories, like we're seeing in biosolutions that is growing double digits. But it's also going to tighten up the supply for the existing products. So that will be constructive to margins over time. And we've seen that already. So those are the two.
Speaker 9: If you combine what we've done last year and this year, we've done almost about $2.6 billion of the buybacks. So we're ahead of that pace. And as I mentioned in my comments, and as Juan said, if you don't see compelling valuation. ...
If you combine what we've done last year and this year, we've done almost about two $6 billion of buyback. So we are ahead of that pace and as I mentioned in my comments and as Juan said, if you don't see compelling valuations and given our discipline, we probably at these.
Speaker 9: And given our discipline, we probably at these trading levels, price levels, we probably are going to buy back a little more aggressively. And you probably will see a stronger pace of buyback in Q4 as a consequence of some of those factors.
Juan Luciano: And I think nutrition and Vikram went into a lot of detail into that, all the different pieces. And we're very confident we're going to go back to growth next year. This year, maybe you call it the post that refreshes. We took a post this year. But the fundamental innovation engine that we have, that's our differentiation. That continues to resonate strongly, whether it's in health and wellness, in what we're seeing in flavors, or the specialty pieces of animal nutrition, or the demand generation in pet. Where the markets are normal and we apply that properly, we are winning more than our fair share and we're growing faster than the competitors.
At these trading levels price levels, we probably are going to buyback a little more aggressively and you probably will see stronger pace of buybacks in Q4 as a consequence of some of those factors.
Okay very good thanks, so much.
Thank you Ben.
Yes.
Thank you. Our next question comes from Salvator Tiano from Bank of America.
Speaker 1: Thank you. Our next question comes from a Selva tour, Tiano from Bank of America. Your line is now open. Please go ahead.
Your line is now open. Please go ahead.
Okay. Thank you very much.
Speaker 10: Thank you very much. I want to ask a little bit about decarbonization and the, you know, and the work you're trying to do at Decatur. And I think when we were, you were talking about the 7 million tons of, you know, your trying to sequester per year. The idea is that some of these will come from other facilities where you probably need to build pipelines. I'm just wondering we're seeing a lot of issues with, uh, permitting and other issues with CO2 pipelines in other regions.
I wanted to ask a little bit about the cannibalization.
And then what Youre trying to do at Decatur, and I think when you were talking about the 7 million tons of Youre trying to ask.
Question per year.
Vikram Luthar: So so we see that with with a lot of optimism for next year. When we think about how that correlates to our thinking on how to deploy capital, the priority to deploying capital is in our investment plan. And we have been doing that both in topics and on topics. And fortunately, capex continues to be higher inflationary pressure there, whether it's manpower or supply of raw materials. It's in make us take a second look at a lot of the capital and I think that Vikram has reflected on some of the adjustment that we made, maybe to the patient ingredients on other.
But some of this will come from other facilities, where you probably need to build pipelines I'm. Just wondering we're seeing a lot of issues with permitting and other issues with CL do pipelines from other regions.
These could you faced similar issues and could this affect.
Speaker 10: could you face similar issues and could this affect the total amount you will be able to sequester and decatur? On the other hand,
The total amount you will be able to sequester indicator or on the other hands.
Speaker 10: Could this actually be an opportunity and people that were relying on some other pipelines like the Navigator one may come to you and use your indicator wells for sequestration.
This action will be an opportunity and people, but we're relying on some other pipelines like with navigator one may come to you and your indicator wells for sequestration.
Yes. Thank you for the question.
Vikram Luthar: So we're taking a look at that and we're reviewing as always in our capital discipline on every project. But we have many opportunities in front of us and we're going to continue to fund them. We have increased our return to shareholders. Certainly our cash flow generation is very strong. And to be honest, when we see some of the people we are doing even in car solution with some of these opportunities, they are not hugely loading our capex if you will.
Yes.
Speaker 3: You know, this is a very important initiative for ADM. And it's something that, as you know, we have started like 10 years ago. So it's something that we have a lot of experience in. And we're leveraging that experience and that head start, if you will, in our ability to inject carbon into...
This is.
This is a very important initiative for ADM and is something that as you know we have started like 10 years ago. So it is something that we have a lot of experience in and we're leveraging that experience and that head start if you will.
Our ability to.
To inject colorful and into.
Into the lower surfaces in.
Speaker 3: into the lower surfaces in our facility at the Cade.
Our facility at Decatur, we have a couple of wells there and we are planning as you said two two.
Vikram Luthar: Some of these things where there is the pipeline for decarbonization is with partners whether it's the LGKM or other joint ventures are also partnerships. So it's not that taxing in our capital in our capex budget, if you will. So we think that we're going to continue to increase the return to shareholders. And we've been opportunistic looking at, of course, the M&A environment. And to be candid, we participate in many, we have many items on the fire.
Speaker 3: We have a couple of wells there and we're planning, as you said, to create five more injection wells over the next few years.
To create volume more injection wells over the next few years.
It is through part of that we'll be bringing biogen <unk> generated by our ethanol plants through pipelines and we are working already in two of those pipelines, we have already submitted permits for all that.
Speaker 3: It is true, part of that will bring in biogenics CO2 generated by our ethanol plants.
Speaker 3: through pipelines and we are working already in two of those pipelines. We have already submitted permits for all that.
Those permits have been accepted so they are complete they are in the process of being studied and analyzed and we are reviewing also with our partners.
Speaker 3: Those permits have been accepted, so they are complete. They are in the process of being studied and analyzed.
Speaker 3: And we are reviewing also with our partners the right of way and acquisitions and all those types of agreements.
Vikram Luthar: But the reality is that valuations have not come down and we plan to continue to keep our discipline in that regard. So we continue to be opportunistic in that. And we look at that. I think Vikram will make a comment on that. Yeah, I think also in terms of buybacks, good to remind everyone that if you don't want to buy that. Max, over the next four years through 2025. If you combine what we've done last year and this year, we've done almost about $2.6 billion of the buybacks.
Right of way and acquisitions and all of those type of agreements of course as any any industry that is breaking ground.
Speaker 3: Of course, as any industry that is breaking ground, the pioneers suffer sometimes with the regulatory environment and having to adjust all that. So we're working closely with the authorities across the different states.
Youre near suffer sometimes with.
The regulatory environment, and having to adjust to that so we're working closely with the authorities across the different states.
Speaker 3: in terms of trying to align the regulatory framework to the needs of decarbonization and to the desires of the Department of Energy and the Department of Agriculture to have a smart agriculture in the US and decarbonization.
In terms of trying to align the regulatory framework to the needs of decarbonization onto the desires of the department of energy and the department of Agriculture to cover Smart agriculture in the U S and Decarbonize that so so work in progress as you said, we have seen the news that you do.
Vikram Luthar: So we're ahead of that pace. And as I mentioned in my comments, and as Juan said, if you don't see compelling valuations and given our discipline, we probably at these trading levels, price levels, we probably are going to buy back a little more aggressively. And you probably will see a stronger pace of buyback in Q4 as a consequence of some of those factors.
Speaker 3: So, working progress, as you said, we have seen the news that you do, and you can take two tasks that we might suffer similar fate, or that we will have less competition if you describe. But this point in time, we don't have any bad news to report, other than we continue forward with our efforts, and we will update you in the next call.
You can take to docs that we may suffer a similar similar fate or that we will have less competition have you describe at this point in time.
Don't have any news to report other than we continue forward with our efforts.
We will update you in the next call.
Thank you very much.
Ben Bienvenu: Okay, very good. Thanks so much. Thank you, Ben. Thank you.
Speaker 1: Thank you. Our next question comes from Davis Sunderland of Bares. Davis, your line is now open, please go ahead.
Thank you.
Our next question comes from David Sutherland of bass.
Salvator Tiano: Our next question comes from a Salvator Tiano from Bank of America. Yolani, is that open? Please go ahead. Yes, thank you very much. I want to ask a little bit about decarbonization and the, you know, and the world you're trying to indicate or, and I think when we were, you were talking about the 7 million tons of your trying sequester per year, the idea is that some of these will come from other facilities where you probably need to build pipelines.
Davis Your line is now open. Please go ahead.
Hey, good morning team. Thank you for the time and thank you for taking my question.
Speaker 11: Hey, good morning team. Thank you for the time and thank you for taking my question.
Speaker 11: You're welcome. Juan, you already talked about it a little bit, but just wanted to ask if you could expand a little bit more on the ethanol and renewable diesel supply and demand environment, maybe what you're seeing for 24 and beyond. And if you anticipate any incremental changes in consumer behavior over that time, thank you very much.
Youre welcome one you already talked about it a little bit, but just wanted to ask if you could expand a little bit more on ethanol and renewable diesel supply and demand environment, maybe what youre seeing for 'twenty four and beyond.
And if you anticipate any incremental changes in consumer behavior over that time. Thank you very much.
Salvator Tiano: I'm just wondering, we're seeing a lot of issues with permitting and other issues with CO2 pipelines and other regions. Could this, could you fake similar issues and could this affect the total amount you will be able to sequester and the cater or on the other hand. Could this actually be an opportunity and people that were relying on some other pipelines like the navigator one may come to you and use your indicator wells for sequestration.
Yes.
Speaker 3: Yes, David. Listen, in ethanol, we think ethanol is going to have a very constructive environment. You know, very high sugar prices are driving Brazilians to produce a lot of sugar versus ethanol, so we're going to have less imports.
Listen in ethanol.
We think ethanol is going to have a very constructive environment.
Very high sugar prices are driving Brazilians to produce a lot of sugar versus ethanol. So we're going to have less imports.
Speaker 3: of ethanol biofuels mandates are growing around the world whether it's more ethanol or more biodiesel so we see Brazil going up 1% per year in that regard and
Ethanol.
Biofuels mandates are growing around the world, where there is more ethanol more biodiesel.
Juan Luciano: Yes, thank you, Salvator, for the question. You know, this is, this is a very important initiative for ADM and it's something that, as you know, we have started like 10 years ago, so it's something that we have a lot of experience in. And we're leveraging that experience and that head start, if you will, in our ability to inject carbon into the lower surfaces in our facility indicator. We have a couple of wells there and we're planning, as you said, to create five more injection wells over the next few years.
So we see Brazil going up 1% per year in that regard.
Speaker 3: We see ethanol continues to have very good export. It has a very good value to other oxygenates, you know.
We see ethanol continues to have very good export is has a very good value to other oxygenate.
Speaker 3: that normally they go for like $2.50 per gallon so we have a big advantage around the world and
Normally they go for like $2 50 per gallon. So we have a big advantage around the world and for people that want to.
Speaker 3: And for people that want to increase the obtain in their gasoline, you know, ethanol is a very cheap oxygenator on the wall. So the US is the best producer of that will continue to increase. So you can see export, you know, having maybe a floor of 1.4 billion gallon, going into 1.5. So that's very good. When we look at renewable green diesel, there has been no changes on how we see renewable.
Increase the octane in their gasoline.
Ethanol is a very cheap proposition it around the world. So the U S is the best producer of that will continue to increase so you can see export having maybe a floor of one 4 billion gallons going into one five so that's pretty good when we look at the renewable green diesel.
Juan Luciano: It is through part of that we'll be bringing biogenic CO2 generated by our ethanol plants through pipelines and we are working already in two of those pipelines. We have already submitted permits for all that. Those permits have been accepted so they are complete, they are in the process of being studied and analyzed. And we are reviewing also with our partners the right of way and acquisitions and all those type of agreements.
There has been no changes on how we see renewables.
Diesel growth in the medium term, which is to get to around $5 billion in the U S, but 'twenty 'twenty five 'twenty six.
Speaker 3: Of course, we're a global company. We see that becoming seven to eight billion gallons by maybe...
Of course, we are a global company, we see that becoming seven to 8 billion gallons.
But maybe.
And maybe 14 15 billion gallons of renewable diesel in Scf online by 2026 and 2027. So we are at the very early innings of all these biofuel demand that is coming where there is again for renewable green diesel or the phone.
Juan Luciano: Of course, as any industry that is breaking ground, the pioneers suffer sometimes with, you know, the regulatory environment and having to adjust all that. So we're working closely with the authorities across the different states and in terms of trying to align the regulatory framework to the needs of decarbonization and to the desires of the Department of Energy and the Department of Agriculture to have a smart agriculture in the US and decarbonization.
Miss of Decarbonization that Saf brings to aviation.
It doesn't have any other valid options right now so so again, we're going to be a player that spirit. Good shows that we're going to bring one 5 million tons of capacity that will feed 75 million gallons of RGD.
Speaker 3: So we expect the others will deliver us, we have the liver spirit. So this is an industry we're building, we're excited about.
Juan Luciano: So, working progress, as you said, we have seen the news as you do, and you can take two tasks that we might suffer similar fate, or that we will have less competition if you describe at this point in time, we don't have any bad news to report other than we continue forward with our efforts, and we will update you in the next call. Thank you very much.
So we expect the others will.
Deliberate as we have delivered <unk>. So this is an industry. We are building that you're excited about.
Thank you very much.
Melissa.
Thank you.
Speaker 1: Thank you. Our next question comes from Stephen Haynes of Morgan Family. Stephen, your line is now open. Please go ahead.
Next question comes from Steven Haynes of Morgan Stanley Steven Your line is now open. Please go ahead.
Speaker 12: Hey, thank you for taking my question. I wanted to just ask a question on the guidance. I think previously you're kind of saying.
Hey, Thank you for taking my question.
Davis Sondland: Thank you. Our next question comes from Davis Sondland of Baths. Davis, your line is now open. Please go ahead. Hey, good morning team. Thank you for the time, and thank you for taking my question. You're welcome.
Wanted to just ask a question on the guidance I think previously you're kind of saying.
Speaker 12: You know seven dollars with them upside and now you're saying an X-F-O.
$7 with some upside and now you are saying in excess of.
$7. So maybe if you could just kind of help us maybe quantify the difference in the two guidance Susan.
Juan Luciano: Juan, you already talked about it a little bit, but just wanted to ask if you could expand a little bit more on the ethanol and renewable diesel supply and demand environment, maybe what you're seeing for 24 and beyond. And if you anticipate any incremental changes in consumer behavior over that time, thank you very much. Yes, Davis, listen, in ethanol, we think ethanol is going to have a very constructive environment. You know, very high sugar prices are driving Brazilians to produce a lot of sugar versus ethanol, so we're going to have less imports of ethanol.
And size the upside piece of it would be helpful. Thank you.
Well, so I think the first figure nowadays when in Q2, we said around 704 potential with potential for more upside and what we have seen saying right now is that potential upside is coming through and that's why we are raising our guidance in excess of seven.
If you step back Steven.
Think about what's happened in Q2 and Q3, one is clearly nutrition has been softer we had guided towards similar in Q2 now we are guiding to around $600 million.
Juan Luciano: Biofuels mandates are growing around the world, whether it's more ethanol or more biodiesel. So we see Brazil going up 1% per year in that regard. And we see ethanol continues to have very good export. It has a very good value to other oxygenates, you know, that normally they go for like $2.50 per gallon. So we have a big advantage around the world, and for people that want to increase the octane in their gasoline, ethanol is a very cheap oxygenator around the world. So the US is the best producer of that will continue to increase. So you can see export, you know, having maybe a floor of 1.4 billion gallon going into 1.5. So that's very good.
So you know by definition is a compensation in other parts of the business.
And when you think about the compensation relative to our Q2, that's probably going to come partially from <unk> and partially from CFS and we gave some guidance on SNL for Q4 and also some guidance for <unk> to be relatively flat versus Q4 barring any.
New expansion in ethanol margins, so that could be upside in CSA and in as.
We have some puts and takes in <unk> in particular, one went through this we expect that to be weaker than Q4 of last year, just because we expect these mark to market timing gains you realized in Q3 to be rolling off and then in acts atlas's is going to be generally.
Juan Luciano: When we look at renewable green diesel, there has been no changes on how we see renewable diesel growth in the median term, which is to get to around 5 billion gallons in the US by 2025, 2026. Of course, we're a global company. We see that becoming 7 to 8 billion gallons by maybe 14, 15 billion gallons of renewable green diesel and SAF online by 2026 and 2027. So we are at the very early innings of all these biofuels, the man that is coming, whether it's again for a renewable green diesel or the promise of decarbonization that SAF brings to aviation that it doesn't have any other valid options right now.
A flat excluding the legal settlement that was a onetime thing in Q4 of last year, and then crush is going to be strong and I think.
<unk> talked about that we are continuing to be constructive about the crush outlook, particularly in the U S going forward given some of the structural demand changes related to renewable green diesel in particular.
Thank you.
Thank you.
This time, we currently have no further questions. So I'll hand back to MS Sprint any further remarks.
Thank you for joining us today, please feel free to follow up with me. If you have any other questions have a good day and thanks for your time and interest in ADM.
Juan Luciano: So again, we're going to be a player. A speedy good shows that we're going to bring 1.5 million tons of capacity that will feed 75 million gallons of RGD. So we expect the others will deliver as we have delivered a speedy good. So this is an industry we're building. What about you? Thank you very much. Welcome.
Thank you for joining today's call you may now disconnect your lines.
[music].
Steven Haynes: Thank you. Our next question comes from Steven Haynes of Morgan Family. Steven, your line is now open. Please go ahead. Hey, thank you for taking my question. I wanted to just ask a question on the guidance. I think previously you're kind of saying, you know, $7 with some upside and now you're saying an excess of $7. Maybe you could just kind of help us, I don't know, maybe quantify the difference from the two guidances and size the upside piece would be helpful. Thank you.
Yes.
Vikram Luthar: Well, sorry, I think the first thing to note is when in Q2, we said around $7 with potential for more upside and what we have seen saying right now is that potential upside is coming through and that's why we're raising our guidance in excess of $7. But if you step back Steven, think about what's happened with in Q2 and Q3. One is clearly nutrition has been softer. We had guided towards similar in Q2.
Vikram Luthar: Now we are going to around $600 million. So you know by definition, there's a compensation in other parts of the business. And when you think about the compensation relative to our Q2, that's probably going to come partially from ASNO and partially from CS. And we gave some guidance on ASNO for Q4 and also some guidance to CS. CS to be relatively flat versus Q4. Barring any continued expansion in ethanol margins. So that could be upside in CS.
Vikram Luthar: And in ASNO, we have some puts and takes in RPO in particular and one went through this. We expect that to be weaker than Q4 of last year just because we expect these mop-to-mop timing gains you realize in Q3 to be rolling off. And then in ag services, it's going to be generally flat because excluding the legal settlement that was a one-time thing in Q4 of last year. And then in CRUSH, it's going to be strong.
Vikram Luthar: And I think what I talked about that we are continuing to be constructive about the CRUSH outlook, particularly in the US going forward, given some of the structural demand changes related to renewable green diesel in particular.
Vikram Luthar: Thank you.
Megan Britt: At this time, we currently have no further questions, so I'll hand back to Miss Brit, any further remarks. Thank you for joining us today. Please feel free to follow up with me if you have any other questions. Have a good day and thanks for your time and interest in ADM.
Operator: Thank you for joining us today's call. You may now disconnect your lines.