Q2 2024 Bunge Global SA Earnings Call
Good morning, everyone and welcome to the buggy Global S. A second quarter 2024 earnings release conference call.
All participants will be in a listen only mode excuse you need assistance. Please they know a conference specialist by pressing the snarky followed by zero.
After todays presentation, there will be an opportunity to ask questions. That's a question you May Press Star then one to withdraw your question you May press Star and two.
Please also note today's event is being recorded.
At this time I'd like to turn the floor over to Ruth Ann Wisener Ma'am. Please go ahead.
Thank you operator, and thank you for joining us this morning for our second quarter earnings call.
Before we get started I want to let you know that we have slides to accompany our discussion. These can be found at the Investor Center on our website at <unk> com under events and presentations.
Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well.
Nike direct you just like remind you that today's presentation includes forward looking statements. It was like <unk> current view with respect to future events.
I mentioned the industry conditions.
Forward looking statements are subject to various risks and uncertainties.
He has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation and we encourage you to review. These factors on the call. This morning are Greg Heckman, Magee, Chief Executive Officer, and John Gamble, Chief Financial Officer.
I'll now turn the call over to Greg.
You Ruth Ann and good morning, everyone.
I want to start by thanking the team for their dedication and focus.
We continued to effectively deliver on our commercial and operational priorities.
Excellent progress on the integration planning.
I'm so impressed by this team's passion and drive.
So I am by the opportunities to grow our existing business and look forward to the future combination with like Tara.
Two teams are working very well together in the planning process and are identifying the many ways will be a more complete company post close.
The regulatory approval process is continuing to progress.
Well, we have the bulk of the approvals required we're continuing to constructively engage with relevant authorities in the remaining jurisdictions.
Based on ongoing discussions see no issues it would be material to the economics of the deal and.
And we expect to receive the remaining approvals and close the transaction in the next several months.
Turning to our results.
We delivered solid adjusted EBIT.
The improved margin environment in some regions during the second half of the quarter, partially offset by more muted conditions in others.
Speaker Change: Our balance market requires a different approach.
Very proud of the team for their ability to adapt the liver.
The rest of 2024.
Speaker Change: The dynamics, we have discussed are still in place.
Demand is good customers at both ends of the supply chain.
I mean, largely in the spot market Flemons visibility later in the year.
We're controlling what we can meet the evolving supply demand environment in markets around the world.
Tapping into the tremendous work we've done over the past several years to strengthen our business.
So what we see in the market and the forward curves today I'll expect full year adjusted EPS.
Approximately $9.25.
Now I'll hand, the call over to Jon to walk through our financial results and outlook in more detail and then we'll close with some additional thoughts.
Thanks, Greg and good morning, everyone, let's turn to the earnings highlights on slide five.
Reported second quarter earnings per share was 48 cents compared to $4 nine <unk> second quarter 2023.
Reported results included an unfavorable mark to market timing difference at <unk> 82 per share.
The impact of <unk> 43 per share related to transaction and integration costs.
Speaker Change: Created with our announced business combination by Terra.
Adjusted EPS was $1 73 in the quarter versus $3.72 in the prior year.
Adjusted core segment earnings before interest and taxes or EBIT was $519 million in the quarter was $893 million last year.
Agribusiness, Washington results of $265 million in the quarter were down from last year as higher results in Europe, soy and soft seed crush more than offset by lower results in North and South America and Asia.
Merchandising lower results were primarily driven by global grain volumes.
Volumes were more than offset by lower margins.
And especially oils performed well, but down from a strong prior year higher results in Asia were more than offset by Lawrence and Northern South America and Europe.
Milling results were driven by South America, reflecting higher volumes and margins.
So it's in the U S were in line with the prior year.
Corporate and other improved from last year.
Decrease in corporate expenses is largely due to lower performance based compensation.
Our results and other were primarily related to our captive insurance program.
And our noncore sugar and bioenergy joint venture.
Our results were due to lower Brazil, ethanol prices, which more than offset higher sugar prices.
Results were also negatively impacted by approximately $15 million and foreign exchange translation losses.
S dollar denominated debt.
Results in the prior year included a $39 million benefit reversal of a tax valuation allowance.
First six months of the year reported income tax expense was $147 million compared to $381 million in the prior year.
The decrease was primarily due to lower pretax income.
Net interest expense of $86 million in the quarter was in line with last year.
Let's turn to slide six where you can see adjusted EPS and EBIT trend over the past four years, along with the trailing 12 months.
Strong performance over the period reflects a combination of a favorable market environment and excellent execution by our team.
More recent trend reflects more balanced and less volatile market translating into lower earnings.
Slide seven details our capital allocation.
First half of the year.
<unk> $895 million of adjusted funds from operations.
After allocating $191 million to sustaining Capex, which includes maintenance environmental health and safety, we had $704 million of discretionary cash flow available.
This amount, we paid $191 million in dividends and invested $342 million in growth and productivity related capex.
About half of which relates to our large multiyear greenfield investments.
We repurchased $400 million in buying shares.
This resulted in a use of $229 million of previously retained cash flow.
Depending on the progress on our Greenfield projects, we could end the year toward the higher end of our Capex range of one two to $1 $4 billion.
Or perhaps slightly above.
However, this would reduce our 2025 expectations.
Moving to slide eight quarter and readily marketable inventories or am I see that our net debt by approximately $3 billion.
Our adjusted leverage ratio, which reflects our adjusted net debt to adjusted EBITDA.
Five times at the end of the quarter.
Speaker Change: Slide nine highlights our liquidity position.
At quarter end, we have committed credit facilities and approximately $8 $7 billion, which includes $3 billion that will become available to draw upon the close of the Rytary transaction.
Speaker Change: But the $5 $7 billion available to US currently all was unused at the end of the quarter, writing sample liquidity to manage on an ongoing capital needs.
These amounts are in addition to the $8 billion of term loan commitments that we have secured the funding by Jerry transaction.
Let me turn to slide 10.
The trailing 12 months adjusted ROIC was 15, 2% well above our Rmi adjusted weighted average cost of capital of seven 7%.
Oh I see.
2%.
Well above our weighted average cost of capital of 7%.
Moving to slide 11.
The trailing 12 months, we produced discretionary cash flow approximately $1 $5 billion cash yield of 13, 7% compared to our cost of equity of eight 2%.
Speaker Change: Please turn to slide 12, and our 2020 for outlook.
As Greg mentioned in his remarks, taking into account first half results. The current margin environment in Florida curves. We now expect full year 2024, adjusted EPS of approximately $9.25.
So with that this forecast excludes any pending transactions that are expected to close during the year.
Speaker Change: Agribusiness full year results are forecasted to be in line with our previous outlook.
Speaker Change: The higher results in processing, largely offset by lower results in merchandising.
Oleds are expected to be down compared to last year.
Refined specialty oils full year results are expected to be up from our previous outlook due to a better than expected second quarter, but down compared to last year's record performance.
Milling full year results are expected to be similar to our previous outlook and up from last year.
Corporate and other full year results you expect it to be similar to our previous outlook.
Noncore full year results in our sugar <unk> bioenergy joint venture are expected to be down slightly from our previous outlook and down significantly from last year.
Additionally, the company expects it flowing through 2024.
Adjusted annual effective tax rate of 22% to 25%.
Interest expense in the range of $280 million to $310 million.
Capital expenditures in the range of one two to $1 $4 billion as I mentioned earlier.
Depreciation and amortization of approximately $450 million.
With that I'll turn things back over to Greg for some closing comments.
Speaker Change: John.
We'll go to Q&A I, just want to offer a few closing thoughts.
As we look ahead, the fundamental drivers of our business remains strong.
Long term demand for food feed and fuel products and services continues to increase.
With our global platform, we're very well positioned to find solutions that meet the needs of our customers at both ends of the value chain, regardless of the market environment.
Our strategic combination with Vitaros will help us accelerate our diversification.
Speaker Change: Assets geographies and crops, providing us with even more capabilities and optionality to address the world's most pressing food security needs.
As I mentioned earlier, both teams have been hard at work planning our integration and we look forward to unlocking additional organizational capacity post close.
We're also progressing on a range of other strategic initiatives that will strengthen our company for the future.
Including the sale of our interest in the sugar and bioenergy joint venture in Brazil to our partner BP.
I've been pleased with the great work the team has done to become a leader in the industry.
Speaker Change: However, this business is not core to buggies and long term strategy.
Speaker Change: Divesting it will allow us to focus those resources on our core businesses.
We also recently completed a commercial pilot season, and our effort to provide lower carbon solutions for farmers.
Consumers.
Working with our partners, Kurt even chevron farmers planted over 5000 acres of winter canola in the southern U S.
For successful harvest the plan is to significantly increase acreage to 35000 for the next crop year.
Speaker Change: We hope to build on these promising results to meet consumers' growing demand for energy, creating more environmentally sustainable future driving additional revenue sources for farmers.
In addition, we jointly tested the traceability platform using blockchain technology for sustainable soy with Dean foods.
The leader in food and feed committed to nutritious safe and traceable products.
We successfully shipped several vessels of deforestation free soybean meal from Brazil to Asia, allowing CP foods to trace the product from farm through processing and transportation all the way to destination.
This is another example of the work he is doing to increase transparency and reliability in India and traceability to help our customers.
Film their sustainability commitments.
Our focus remains on delivering great value to all stakeholders.
Speaker Change: <unk> to strengthen our strengthen our business. So that we can provide customers with solutions not only today, but over the longer term.
And while we always look for opportunities to improve.
Speaker Change: Well positioned to deliver on our critical mission of connecting farmers to consumers to deliver essential food feed and fuel to the world.
Speaker Change: And with that we'll turn to Q&A.
Ladies and gentlemen at this time well begin the question and answer session.
To ask a question you May press Star and then one.
For all your questions you May press star two.
You are using a speakerphone please pick up the handset prior to pressing the teams to ensure the best sound quality.
Once again that is star and then one enjoying the questions.
Our first question today comes from Ben <unk> from Barclays. Please go ahead with your question.
Hi, Yes, good morning, Greg John Thanks for the presentation.
Just my first question really is it's just around understanding the drivers are behind behind the guidance and as you look at it.
If we go back three months, you said around $9 roughly 50, 50 split, which obviously if we just do the math, we take $4 50 for the second half at the 470, something now gets us to 925, but clearly from three months ago, we seen them complete.
Speaker Change: Complete different environment and crush nearby just conditions have changed so wanted to understand what are you seeing in the market to what feels to be coming out with the Robert Conservative guidance, just given birth crusher. That's right now what have you been able to lock in or not how the volume S and how.
Speaker Change: We should think about this usual fourth quarter skew that seems to be not as pronounced this year as maybe in prior years. So that that just conceptually if you could explain that to us.
Speaker Change: Sure.
Speaker Change: Start and good morning.
Speaker Change: Yes.
Wait it out.
Under performed in the first half to what we had talked about since we were together last time.
Gross margin did improve late in Q T Q2, and that also gave us.
<unk> into Q3, and where we have been able to work some margins and that that gave us the confidence to roll it through now that being said.
Q4 margin curves are very inverted, we've got very little visibility and while the demand for oil and meal remains strong.
And customers I think as everyone knows the farmer very spot as well and even consumer various spots and we just don't have much visibility in that Q4, and as you called out as well.
Likely an important one for us so I think.
We have the we have the confidence to roll it through and call it but that's what we see now and that's why we said the approximately 925.
Speaker Change: Bill maybe just to add one thing when you look at the second half.
Bill: The overall forecast for second half didn't change we've shifted a little bit more towards Q3, we were 40 60 before I'm not allowed to ship, but probably more like $45 55.
At this point, so slight shift to Q3 from Q4.
Okay. That's good color and then just on I know you might you might not be able to talk too much about it but you've you've made some comments on on the pending a road you break military approvals with Vaitarani at your conversations imply not any meaningful financial adversity that you potentially have to look.
And divestitures just wanted to see if you could give us a little bit more color on how the negotiations are going and whats like the kinds of things you might be asked to do in order to get this deal over the finish line.
Bill: Sure.
The team has been doing great work and we have the majority of the jurisdictions have all issued clearances we are.
Were currently engaging with the EU, Canada, China, and then just a handful of others as we're kind of getting to the end of the process.
The team has done a great job on the integration plans.
On preparing for the financing in the capital structure and in the plans around the leadership team.
Bill: Those plans are in place.
Bill: You know as we know we have to continue to operate as separate companies until we're able to close the transaction.
Bill: But as I said, we're making progress and we expect to conclude that in the next several months.
Any of the current com.
Conversations are going on are confidential, but you know those some of those timelines are rolling up on us pretty quick and as things become public then we'll be able to share those.
Okay. Thank you very much.
Our next question comes from Adam Samuelson from Goldman Sachs. Please go ahead with your question.
Adam L. Samuelson: Yes. Thank you good morning, everyone.
Good morning.
Yeah, maybe a first question.
On the merchandising side of Agribusiness me. So as you alluded the crushing crush margin environment has improved and the nearby.
I'm not going to comment on on the merchandising piece or a little bit.
Speaker Change: More tempered I guess I'd love some additional color on what Youre seeing in terms of farmer selling in Brazil.
In Argentina, and how those are influencing kind of your outlook for for merchandising over the balance of the year I got a follow up question on our hydrogel side.
Yeah.
Speaker Change: Okay sure.
Yeah. So if you look at Argentina.
Crop definitely has recovered right 23 crop was about half of what we're going to get this year, but the selling has been.
So very slow and part of that of course is the shift to lower prices as the producers don't like that and then.
With the government policy, there really hasn't been the economic catalyst.
To drive them becomes selling so it's been a very very slow pace there.
Speaker Change: In the second half is really going to be about you know the FX and the government policies to see how that develops in Argentina.
In Brazil.
You ended up with a combined being in corn crop that was about 30 million metric tons lower than I think what the industry expected and I think the industry had logistics in place to be able to handle that larger crop as we saw last year and some of the tightness and constraints in that.
And then you end up with that 30 million metric tons smaller crop and the farmer selling again being very spot and very opportunistic as a farmer doesn't like the the lower prices.
But that smaller crop than drove a lot of pressure around the logistics and that's hurt margins and especially in the merchandising and then when you take the other piece that globally. While the demand is good for for meal and oil the consumer has been rewarded for moving to the spot right. There are there arent the same challenges in the supply chain.
On worried about deliveries so they pulled down inventories it pulled down the length of their supply chain.
Speaker Change: And they've been rewarded for buying in the spot prices have become lower and so that's been a little bit tougher for that for the environment and merchandising.
As well.
And then North America.
Again slower farmer, selling again don't like the lower prices as markets become more balanced on the S. A D. Although we have seen the livestock margins improving there.
This will really be about weather in the northern hemisphere, we got soybeans entering kind of a critical window and the producer generally is when theyre looking out their door and what they see and how that see that developed here in North America as you can see.
How the marketing will continue and then of course, we're also watching in the northern hemisphere. The weather attempts on the canola crop there in Canada.
Speaker Change: That's us some really helpful color and then just on the refined.
Refined oil side you.
Speaker Change: You talked about raising the outlook largely to reflect the second quarter performance, which the release, you said that Asia being kind of the area of year on year strength was that what surprised you relative to your own expectations three months ago and.
Just help us think about the forward for why you don't think that strength would be persisting.
In the second half quite the same level.
We received.
Speaker Change: It was a little bit of help on the tight cocoa butter supply in our cocoa butter equivalents on our tropical oils side in the RSO that was somewhat helpful. And then we did see.
Some stronger energy demand some additional energy demand come in late.
That we werent expecting in the U S. So that was constructive and I think when we look at the at the balance of the year, we don't have that visibility.
But we're calling that out and the puts and takes and I think the lower prices always drive demand and that's I think true not only in the inclusion side on soybean meal, but we're seeing that drive demand on soybean oil for both food.
Speaker Change: And especially on the energy side here.
Alright, I appreciate that that color I'll pass it on thank you.
Our next question comes from Heather Jones.
Research. Please go ahead with your question.
Good morning, and thanks for taking the question.
Good morning, I, just wanted to ask it good morning.
Heather Jones: I want to ask about just coverage going.
Going into Q3 and for Q4, Greg you've mentioned the customers and the farmers have been.
Hmm.
I'm very sorry to buy or sell but just wondering.
Because we had this year.
Dan: Soy crush of the U S is Dan <unk>.
Markedly lower than people expected and say you've had these.
Rallies and so as we're thinking about your Q3 and Q4, but particularly Q3.
Much of that.
Dan: If covered and so do you have any exposure to the robust margins that we're seeing right.
Right.
Speaker Change: I think if you look at Q2 and kind of the global set up.
We were pretty well hedged.
Speaker Change: And a lot of that strength came very late in the quarter now I'll say the team also did a great job of executing.
Speaker Change: You know as they executed the crush we have on and then closing out.
Closing out the balance of the open capacity that we had as we've seen that run up late Q2, we have been able to go ahead and hedge some of our key.
Q3, and lock that in and that's what gave us some of the confidence.
To roll to roll that over performance there in the first half to roll it through the year. When we went to 90 day quarter.
That being said in Q3 and Q4, there's really no no liquidity, yet and very low visibility. So I think those are those are the keys and we'll be watching here as things develop.
Late Q3, and the balance Q4, yeah, maybe just to add there Heather that we're largely covered for Q3 at this point.
Speaker Change: Especially on the on the canola side signings affected a little bit by crop.
So maybe not as much coverage, there, but but pretty heavily covered on soy as well.
Speaker Change: At the end of July.
Okay.
And then on.
Speaker Change: On the Argentina side.
This I was wondering if you could help us understand not only.
More of the outlook, but also what happened in Q2, because I have repeatedly.
I heard from those in the industry and just read that there were periods during the quarter were cash margins for some of the best that industry has ever experienced and that is that it was around times one day.
Farmer with cell, but clearly you all are talking to.
Your commentary is very different from that so I'm just wondering if you could help.
Me to understand.
Speaker Change: The difference between those and then how youre thinking about that business for the second half.
Yeah, I think youre right on the fact that the farmer selling came in some.
Speaker Change: Sporadic given it was slow and it came at the kind of drill out and in different different surges that did provide some ability to crush above about fixed costs, but I would not say we saw robust margins.
Yes.
You may have picked up.
That being the case.
It really depends on how the how the farmer reacts on the second half now that.
The offset of that right what was the lower soybean meal.
Exports that were moving into Europe, and so we continue to see strong margins that are in Europe with good demand unless meal imports. So I was kind of a.
The other side of the sword.
Okay, alright, thank you so much.
Our next question comes from Salvator Tiano from Bank of America. Please go ahead with your question.
Salvator Tiano: Thank you very much.
Speaker Change: Personally on merchandising.
I'm wondering I think it was two years ago. When you said that your normalized merchandising earnings should be around 75 to 100 million per quarter. So we've been below the low end for a few quarters now and <unk>.
Even more so this Q2 has this made you change your your normalized.
Normalized earnings outlook or is it simply that the var situations, so Bob but your earnings are so much below.
Below normalized and when do you expect us to go back to the 75 to 100 million.
Speaker Change: Figure.
Speaker Change: Yes.
Yes, I'd say remember those were our assumptions in the model for our baseline and we are operating below baseline today now that's always the toughest one to predict and as those opportunities come up but I think the team does a good job of.
Speaker Change: Capitalizing on those well we'd been in a you know.
Speaker Change: A pretty.
Speaker Change:
Interesting time of transition right and when these markets generally transition.
Speaker Change: From higher prices into a more balanced F N b.
What do you see this this adjustment and the pressure on margins right. The farmers have good strong balance sheets, they have a lot of storage available.
Don't like selling lower prices, so they're building inventory.
If you will and seeing how the weather plays out and how the Smbs play out and then you've got the consumer.
Speaker Change: Which is actually reducing inventories.
Shrinking their supply chains and their patients is also being rewarded so the market gets much more spot it puts pressure on the margins until we get back in balance and I think we're getting pretty close there now.
Some of the.
Speaker Change: Puts and takes around what could happen from a weather and what could happen from a demand start to be more of an upside.
On an as opportunities develop and I think that's really what you've seen the transition of the market going through and that's what we've been saying.
Okay perfect. Thank you and also I want to ask a little bit about refined products. It continues to be the one segment that quarter after quarter and read your your it looks like Youre dumping your own expectations and if you can say why.
Where did things go better than you expected and also ease it mostly on the fuel side. These are mostly on the people side.
Yeah.
It's been it's been both are our food customers why we're seeing the customers trade down some on the.
Brands and things that they're on the eating at home as well as mix shift of where they are eating away from home, we probably been maybe a little bit of a beneficiary to that did that favorable mix for oil demand and then also when you think about.
Speaker Change: Oil demand it doesn't go one for one.
Speaker Change: The food demand so that's been pretty resilient on the food side, and then with the lower price we've seen some.
Speaker Change: Improvement on the on the energy demand as well.
And then lastly, as I was talking about on the tropical side.
We've definitely been been a benefit of the tighter cocoa butter supply.
Speaker Change: Our cocoa butter equivalents and helping some of our customers solve problems on the supply side and or.
Lowering their cost for me as a reformulated into our products. So it seems to be doing a great job technical team and the execution team working with our customers is there.
A little bit of a challenging environment.
Thank you very much.
Our next question comes from Tom Palmer from Citi. Please go ahead with your question.
Good morning, Thanks for the question.
I wanted to ask on capital allocation.
He's done with share repo until the transaction closes or might we see something sooner just given the slightly extended timeline and if not repo, what's kind of the use of the excess free cash flow would it just be for that.
Speaker Change: Thanks, Tom This is John.
Speaker Change: Yeah, I think look we're not going to probably commit to any share repurchases prior to vitol are closed.
Mainly because we got leverage commitments.
Target should we want to hit a going into the close process as we're expecting.
Our ratings upgrade relative to that is related to the transaction, but we are still very committed to.
Speaker Change: That program and expect to execute that post close we didn't give ourselves an 18 month window post close, but we will obviously do what makes sense when it makes sense and I would just add that with the announcement of sugar, we're hoping to close that maybe late this year certainly proceeds from that.
Speaker Change: Could play a meaningful role in the purchase repurchase program, increasing it by some meaningful amount of that those proceeds.
Speaker Change: Oh great.
The color there and then.
Speaker Change: I just wanted to ask on kind of capital plans over the next couple of years, you've got this multiyear capex cycle I think we're getting a little bit longer in the tooth here in terms of projects will start opening next year.
Speaker Change: Just any early thoughts on how to think about 2025, capex and how it might compare to what we're seeing this year.
Speaker Change: Again this is more of a tariff.
Yeah. So.
Our range I think we're going to be at the high end of our range. This year could be a little bit above the $1 four depending on how things play out here towards the end of the year on some bigger capex expenditures, but we do expect next year to be up from that.
Probably closer to the $2 billion range $1 92, just given all of these projects are going to really be in full full swing in terms of.
Speaker Change: Development.
And then.
And we should make great progress next year on getting those close to commissioning by commissioning will really be probably in 2026 on the four major projects that we're working on today.
Speaker Change: But we will see a significant drop off and probably.
As of today absent any other opportunities coming along we do expect capex to drop potentially up to 50%. This is all excluding by tariff, but we could see a 50% drop in capex in 'twenty six versus 25.
Speaker Change: Great. Thank you.
Monopoly: Our next question comes from monopoly.
Speaker Change: UBS.
Good morning. My first question is since the time, you announced the like in our transaction and can now than there has been some financials reported my like data and I'm just trying to understand if those numbers are reported make good expectations or maybe even exceeded the expectations.
Speaker Change: Yeah.
Speaker Change: As you know we've got to run the company.
Separately.
Speaker Change: Until close so the <unk> team I think continues to do very.
Good job in running their business definitely got the extra strain as our team does have the integration planning as well as all the work being done on the regulatory side and we're doing that all during.
Speaker Change: A pretty challenging.
Speaker Change: Environment, but it's a it's a great platform the engagement that we've had with their people will continue to just be.
Speaker Change: Very impressed by the quality of their people and the capabilities and their ability to really.
Speaker Change: Step up.
The challenges of all the work that's being done so we continue to feel very good about the transaction and really look forward to the future.
Speaker Change: Well I think my quick follow up there.
Speaker Change: Divestment of the noncore business that had been marked following in our noncore for some time. So how did this particular BP have come about and were you happy with the transaction price.
Speaker Change: Yes.
Speaker Change: It started jai can finish but look we very early on when we got here and we're able to put sugar into the joint venture with BP.
Speaker Change: <unk> declared then that we would eventually exit the business when we thought.
Speaker Change: It was the right time for our shareholders and for the stakeholders and in the meantime.
Speaker Change: BP and ourselves supported that team, which did a fantastic job of really improving that business with the combination that we did there and really becoming an industry leader.
Speaker Change: We're very proud of it but that didn't change our long term strategy and so when the timing was right and the values lined up there.
Speaker Change: We've done the second part of that transaction and to exit. So we do look to as John said, we look forward to closing that transaction hopefully later this year.
John: Releasing those those resources not only the capital, but but even some of our folks that are focused there and supporting the JV.
John: Just to add that yes, we were pretty happy with where we ended up from a value standpoint.
Speaker Change: Thank you so much.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Steven <unk> from Morgan Stanley. Please go ahead with your question.
Steven: Hey, good morning, Thanks for taking my question.
Steven: Wanted to ask.
Steven: A quick one on farmer selling you alluded I think before it is.
Speaker Change: The idea that it might be a source of upside.
Speaker Change: Going forward.
Speaker Change: I was just hoping maybe you could put it in a little bit of a broader.
Speaker Change: Context, like where you think we are in the evolution of.
Speaker Change: Farmer, selling slowing down through the course of the year.
Speaker Change: And I guess, what kind of gives you confidence that it's not going to be kind of a more prolonged.
Speaker Change: So farmer selling cycle like we might have seen in some past down cycles. Thank you.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Thank you look at the at the overall setup.
Speaker Change:
Speaker Change: <unk> been making that transition rates at a lower price environment I think the producers are getting.
Speaker Change:
Speaker Change: Are getting used to that at the same time as we said they definitely built some inventories.
Speaker Change: As the next crops get produced right much bigger crop in Argentina.
Speaker Change: We still got to develop the crop here in North America, but the weather.
Speaker Change: It looks good and I think as you see that north American crop develops.
Speaker Change: We will see some more farmer marketing there and then as we also know South American farmers are often watching north American price development.
Speaker Change: And whats happening.
Speaker Change: In the futures market to do drive some of those currency still a driver.
Speaker Change: Of course in Brazil, and mostly.
Speaker Change: In Argentina, where the farmers are watching the government very closely for what their policy action will be.
Speaker Change: Any FX activity so.
Speaker Change: I think it's I think it's all unfolding kind of adds wood as would be expected in.
Speaker Change: And what I feel good about is the you know the team remains very focused on executing and ensuring that we manage the risk that's appropriate you know for.
Speaker Change: Or the environment that we're in and pretty proud of how we're executing.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Andrew Charles with BMO. Please go ahead with your question.
Andrew Strelzik: Hey, good morning, excuse me thanks for taking the questions you you talked about the inverted curves and so I was curious are there.
Andrew Strelzik: Internal levers you can pull in an environment, where U S crush margins get more challenged across operations or I guess growth capex would probably be more delayed than any other levers that we should think about that you might have at your disposal as as the environment.
Speaker Change: You know plays out potentially in that inverted way.
Speaker Change: I would just say I mean, the one thing that we've seen in the last five years.
Speaker Change: With all the different things has been thrown at US we love that we're running a very global platform because we would be.
Speaker Change: Overweighted in one region versus another this would've been much more challenging and I don't think.
Speaker Change: But I don't think that's going to change going forward. So the optionality and the flexibility that we have in our system to run harder.
Speaker Change: Harvest, where the margins are there and to be able to react to whether it's farmer selling or weather.
Speaker Change: Whether it's demand and then I think the changes that we've made and the company and the operating model and this allowed the execution and discipline to be much better which is really key when you get in these in these tougher market. So the team's doing a doing a great job staying focused on the things that we can control as the market develops.
Speaker Change: Got the confidence that as we as we see the balance of the year play out that will we will get those opportunities to the bottom line.
Speaker Change: Okay. That's that's helpful and then I guess.
Speaker Change: Kind of related to that is yes.
Speaker Change: You've gotten a little bit farther out from the really elevated crush margin environment I know there's been obviously some recent strength, but are you better able to decouple the internal improvements to the business from the last several years away from kind of the operating environment and the strength of that over the last couple.
Speaker Change: Years, and do you think you kind of appropriately captured that in the baseline assumptions are or.
Speaker Change: Has your thinking evolved at all thanks.
Speaker Change: I think one we're never done right, we're constantly thinking about continuous improvement so whether it's.
Speaker Change: The assets were that are getting the capital whether it's in a debottlenecking or the brownfields and greenfields.
Speaker Change: But also thinking about over the long term, what we believe and what assets may not fit the footprint. It's the investments, we're making in our systems and digitalization.
Speaker Change: And some of the things in the <unk>.
Speaker Change: Crushing plants that are improvements in the metrics that are multi year programs. So I think it's just a.
Speaker Change: A very different company than we were in the way that we approach things and so you know these are the times as the market is kind of a reset in these transitions that you really find out how good you are executing and so we're very very very pleased with the team but.
Speaker Change: We're never focused in.
Speaker Change: Or we're doing it in a challenging external environment.
Speaker Change: And while we're doing an enormous amount of integration planning and providing an enormous amount of information on the regulatory front, so really really proud of the execution.
Andrew: Thank you Andrew.
Andrew: We still feel.
Andrew: We set out on page 50 baseline a couple of years ago, and we're still performing above that even in a little bit more challenged environment. We're in this year. So.
Speaker Change: To Greg's point earlier, I think we're a different a different machine that we were and.
Speaker Change: I think it's you know we're going to be able to show that here, despite a little bit more challenging environment I think we're performing pretty well versus what we had set out as a baseline.
Speaker Change: Great absolutely. Thank you very much.
Speaker Change: And our next question comes from Carla Casella from Jpmorgan. Please go ahead with your question.
Carla Casella: Hi, Ann.
Carla Casella: My question relates to financing and you got a question about the dividends and buybacks.
Carla Casella: I had to do the transaction, but what are you thinking in terms of pre financing that transaction and how much you may want to come to market for.
Speaker Change: Or would you wait till you, yes, we will look for those.
Speaker Change: Yeah, we've already syndicated out the debt on that and so we've got the commitments in place.
Speaker Change: Finance the transaction itself. There is some obvious some nuances that won't take place around some of the <unk> bonds and things ahead of close but.
Carla Casella: We're pretty much set in terms of the initial allocation of the financing and the commitments are all in place there'll be some fine tuning post close I'm sure.
Carla Casella: And then when we will be decided exactly how much we need that could have an effect on the total amount, but it's it's all pretty much ready to go.
Speaker Change: Okay, great. Thank you.
Speaker Change: And ladies and gentlemen, with that we'll be ending today.
Speaker Change: And answer session I'd like to turn the floor back over to CEO, Greg Heckman for any closing comments.
Gregory A. Heckman: Thank you very much thanks, everybody for joining us today, and we just like to say, we're really excited about the longer term here.
Speaker Change: Bringing the post close and bringing buggy in Vitaros together.
Speaker Change: We're going to be a more complete company and we're going to have more capabilities to serve our customers in what continues to be a more complex environment with population continuing to grow well.
Speaker Change: We will per capita continuing to increase climate volatility, making things more challenging and what looks like.
Speaker Change: Policy environment to continues with more uncertainty.