Q2 2024 Archer Daniels Midland Co Earnings Call

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Operator: Good morning and welcome to the ADM second quarter 2024 earnings conference call. All lines should be placed on listen-only mode to prevent any background noise.

Operator: Good morning and welcome to the ADM's second quarter 2024 earnings conference call. All lines have been placed on Mr. Lonimo to prevent any background noise. As a reminder, this conference call has been recorded.

Megan Britt: Good morning and welcome to the ADM second quarter 2024 earnings conference call. All lines be placed on listen-only mode to prevent any background noise. As a reminder, this conference call is being recorded. And I'd like to introduce your host for today's call, Megan Britt, Vice President Investor Relations for ADM. Ms. Britt, you may begin.

Megan Britt: And I'd like to introduce your host for today's call, Megan Britt, Vice President Investor Relations for ADM.

Operator: As a reminder, this conference call is being recorded, and I'd like to introduce your host for today, Megan Britt, Vice President, Investor Relations for ADM. Ms. Britt, you may begin. Thank you, Elliot. Hello and welcome to the second quarter earnings webcast for ADM. Starting tomorrow, a replay of this webcast will be available on our Investor Relations website. Please turn to slide 2.

Megan Britt: Miss Britt, you may begin.

Megan Britt: Thank you, Elliot.

Megan Britt: 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 uncertainty. ADM 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.

Megan Britt: Hello and welcome to the second 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.

Megan Britt: Thank you, Elliot. Hello and welcome to the second quarter earnings webcast for ADM. Starting tomorrow, a replay of this webcast will be available on our Investor Relations website.

Megan Britt: 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 risks and uncertainties. ADM 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 committed under applicable law, ADM assumes no obligation to update any forward-looking statements as a result of new information or future events.

Speaker Change: Please turn to slide 2.

Speaker Change: 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.

Speaker Change: These statements and materials are based on many assumptions and factors that are subject to risk and uncertainty. ADM 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.

Megan Britt: 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 recent accomplishments on our strategic priorities. Our Chief Financial Officer, Ismael Roig, will review segment-level performance and provide an update on our Cash Generation and Capital Allocation Act. Juan will have some closing remarks, and then he and Ismael will take your questions. Please turn to slide four. I'll now turn the call over to Juan.

Speaker Change: 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.

Megan Britt: On today's webcast, our Chairman and Chief Executive Officer, Juan Luciano, will discuss our third quarter results and share recent accomplishments on our strategic priorities. Our Chief Financial Officer, Ishmael Royg, will review segment level performance and provide an update on our Keshteneration and capital allocation actions. Juan will have some closing remarks, and then he and Ishmael will take your question.

Speaker Change: On today's webcast, our Chairman and Chief Executive Officer, Juan Luciano, will discuss our third quarter results and share recent accomplishments on our strategic priorities.

Ismael Roig: Our Chief Financial Officer, Ismael Roig, will review segment-level performance and provide an update on our cash generation and capital allocation actions.

Speaker Change: Juan will have some closing remarks and then he and Ismael will take your questions. Please turn to slide four. I'll now turn the call over to Juan.

Megan Britt: Please turn to slide four.

Megan Britt: I'll now turn the call over to Juan.

Juan Luciano: Thank you, Megan. I'm good morning to all who have joined for today's call. Today, ADM reported second quarter the adjusted earnings per share of $1.3, with an adjusted segment operating profit of $1 billion. Our trading for quarter average adjusted ROIC was 9.7%. We delivered strong cash flow from operations before working capital at $1.7 billion. Here today, this equates to an adjusted earnings per share of $2.49 and an adjusted segment operating profit of $2.3 billion. Our team delivered solid results in challenging market conditions, highlighting the efforts of our teams across the business to manage through the commodity down cycle while putting our nutrition business on a path to recovery.

Juan Ricardo Luciano: Thank you, Megan, and good morning to all who have joined for today's call. Today, ADM reported second quarter adjusted earnings per share of $1.03, with an adjusted segment operating profit of $1 billion. Our trailing four-quarter average adjusted ROIC was 9.7%. We deliver strong cash flow from operations before working capital at $1.7 billion. Year-to-date, this equates to an adjusted earnings per share of $2.49 and an adjusted segment operating profit of $2.3 billion.

Juan Ricardo Luciano: Thank you, Megan, and good morning to all who have joined for today's call.

Juan Ricardo Luciano: Today, ADM reported second-quarter adjusted earnings per share of $1.03, with an adjusted segment operating profit of $1 billion. Our trailing four-quarter average adjusted ROIC was 9.7%.

Juan Ricardo Luciano: We deliver strong cash flow from operations before working capital at 1.7 billion dollars.

Juan Ricardo Luciano: Year-to-date, this equates to an adjusted earnings per share of $2.49 and an adjusted segment operating profit of $2.3 billion.

Juan Ricardo Luciano: Our team delivered solid results in challenging market conditions, highlighting the efforts of our teams across the business to manage through the commodity down cycle while putting our nutrition business on a path to recovery. Additionally, we saw signs of improving fundamentals within crash and ethanol later in the quarter, positioning us for a strong second half. We're also flexing our capital allocation strategy to return cash to shareholders, completing our planned share repurchases for the quarter, and delivering our 370th consecutive quarterly dividend. Next slide.

Juan Ricardo Luciano: Our team delivered solid results in challenging market conditions.

Juan Ricardo Luciano: Highlighting the efforts of our teams across the business to manage through the commodity down cycle while putting our nutrition business on a path to recovery.

Juan Luciano: Additionally, we saw signs of improving fundamentals within crash and ethanol later in the quarter, positioning us for a strong second half. We're also flexing our capital allocation strategy to return cash to shareholders, completing our planned share repurchases for the quarter and delivering our 370th consecutive quarterly dividend.

Juan Ricardo Luciano: Additionally, we saw signs of improving fundamentals within crash and ethanol later in the quarter, positioning us for a strong second half.

Juan Ricardo Luciano: We are also flexing our capital allocation strategy to return cash to shareholders, completing our planned share repurchases for the quarter and delivering our 370th consecutive quarterly dividend.

Juan Luciano: Next slide, please. Let's start by reviewing the top-line results of our business units alongside our efforts to manage the cycle through productivity and innovation. Our services and our seed results are significantly lower than the record results of prior years due to the ongoing rebalancing of the supply and demand environment and overall lower farmers.

Juan Ricardo Luciano: Let's start by reviewing the top-line results of our business units alongside our efforts to manage the cycle through productivity and innovation. Our services analysis results are significantly lower than the record results of prior years due to the ongoing rebalancing of the supply and demand environment and overall lower farm income. In anticipation of this year's challenges, we focus on driving stronger production volumes and actively leveraging our footprint to match supply to demand around the globe.

Juan Ricardo Luciano: Next slide, please.

Juan Ricardo Luciano: Let's start by reviewing the top-line results of our business units alongside our efforts to manage the cycle through productivity and innovation.

Juan Ricardo Luciano: Our service analysis results are significantly lower than the record results of prior years due to the ongoing rebalancing of the supply and demand environment and overall lower farmer selling.

Juan Luciano: Marcelo. In anticipation of these years' challenges, we focus on driving stronger production volumes and actively leveraging our footprint to much supply to demand around the globe. We also focus on differentiation opportunities, extending margin and growing volumes by more than 20% year over year in areas like destination marketing, achieving our targeted run rate in our green buys and JP for the new green diesel feedstocks, and bringing new solutions to our customers through innovations, such as our recent EUDR-compliant, fully traceable soybean program, and the expansion of our regenerative agriculture partnerships and acreage. This regenerative program highlights our leadership in this space.

Juan Ricardo Luciano: In anticipation of this year's challenges, we focus on driving stronger production volumes and actively leveraging our footprint to match supply to demand around the globe.

Juan Ricardo Luciano: We've also focused on differentiation opportunities, extending margins and growing volumes by more than 20% year-over-year in areas like destination marketing, achieving our targeted run rate in our Green Bison JP for renewable green diesel feedstocks, and bringing new solutions to our customers through innovation, such as our recent EUDR-compliant, fully traceable soybean program and the expansion of our regenerative agriculture partnerships and agribusiness. These REGEN Act programs highlight our leadership in this space. AVM was named a finalist in Fast Company's world-changing ideas in May.

Juan Ricardo Luciano: We've also focused on differentiation opportunities.

Juan Ricardo Luciano: Extending margins and growing volumes by more than 20% year-over-year in areas like destination marketing.

Juan Ricardo Luciano: Achieving our targeted run rate in our Green Bison JP for renewable green diesel feedstocks.

Juan Ricardo Luciano: and bringing new solutions to our customers through innovations such as our recent EU DR compliant fully traceable soybean program and the expansion of our regenerative agriculture partnerships and acreage.

Juan Ricardo Luciano: These REGEN Act programs highlight our leadership in this space.

Juan Luciano: AVM was named the finalist in Fast Company's World Changing Ideas in May, and just last week we released our second annual regenerative report detailing the data-backed results we are achieving across our global operations. Carbohydrate solutions have continued the solid performance trajectory driven by strong margins for sweeteners, starches, and flowers with higher volumes year over year. Ethanol margins also strengthen as industry production try to keep pace with robust export and domestic demand. Along with this performance, we are continuing to drive innovation-based growth through the sustainability center evolution of the business. We have delivered 7% year-to-date volume expansion across our biosolution platform, increased start capacity in our Marshall Minnesota facility to meet growing demand from food, beverage and industrial customers, and in a milestone for our strategic partnership, Soligen recently broke ground on a 500,000 square foot biomanufacturing facility that will use AVM source dextrose for applications in water treatment, agriculture, energy and home and personal care.

Juan Ricardo Luciano: AVM was named the finalist in Fast Company's world-changing ideas in May, and just last week we released our second annual REGENAG report detailing the data-backed results we are achieving across our global operations.

Juan Ricardo Luciano: And just last week, we released our second annual REGEN-AG report detailing the data-backed results we are achieving across our global operation. Carbohydrate solutions continued a solid performance trajectory, driven by strong margins for sweeteners, starches, and flour, with higher volumes year over year. Ethanol margins also strengthened as industry production tried to keep pace with robust export and domestic demand.

Speaker Change: Carbohydrate solutions have continued a solid performance trajectory, driven by strong margins for sweeteners, starches, and flour with higher volumes year over year.

Juan Ricardo Luciano: Ethanol margins also strengthened as industry production tried to keep pace with robust export and domestic demand.

Juan Ricardo Luciano: Along with this performance, we are continuing to drive innovation-based growth through the sustainability-centered evolution of the business. We have delivered 7% year-to-date volume expansion across our biosolutions platform, and increased start capacity in our Marshall, Minnesota facility to meet growing demand from food, beverage, and industrial customers. And in a milestone for our strategic partnership, SoluGen recently broke ground on a 500,000 square foot biomanufacturing facility that will use ADM-sourced dextrose for applications in water treatment, agriculture, energy, and home and personal care.

Juan Ricardo Luciano: Along with this performance, we are continuing to drive innovation-based growth through the sustainability-centered evolution of the business.

Juan Ricardo Luciano: We have delivered 7% year-to-date volume expansion across our Biosolutions platform.

Juan Ricardo Luciano: increased start capacity in our Marshall, Minnesota facility to meet growing demand from food, beverage, and industrial customers, and in a milestone for our strategic partnership, SoluGen recently broke ground on a 500,000 square foot biomanufacturing facility.

Juan Ricardo Luciano: that will use ADM-sourced dextrose for applications in water treatment, agriculture, energy, and home and personal care.

Juan Luciano: Within our productivity agenda, the drive for execution excellence is continuing to deliver simplification and cost-saving opportunities across the enterprise. In Q2, we advanced hundreds of projects that put us clearly on the path to the plan $500 million in cost reduction over the next two years. We are accelerating this effort and expect to see a significant portion of these savings by the end of 2024. Our focus on returning nutrition to its growth projectory is also taking hold, and we are seeing sequential top line improvement as compared to our previous two quarters. While we are experiencing some downward pressure with texture and some protein demand, we drove strong growth in health and wellness sales, along with flavor sales growth and excellent contributions from our recent acquisitions.

Juan Ricardo Luciano: Within our productivity agenda, the drive for execution excellence is continuing to deliver simplification and cost-saving opportunities across the enterprise. In Q2, we advanced hundreds of projects that put us clearly on the path to the planned $500 million in cost reduction over the next two years. We are accelerating these efforts and expect to see a significant portion of these savings by the end of 2024. Our focus on returning nutrition to its growth trajectory is also taking hold, and we are seeing sequential top-line improvement as compared to our previous two quarters, where we are experiencing some downward pressure on texture and some protein demand.

Juan Ricardo Luciano: Within our productivity agenda, the drive for execution excellence is continuing to deliver simplification and cost-saving opportunities across the enterprise.

Juan Ricardo Luciano: In Q2, we advanced hundreds of projects that put us clearly on the path to the planned $500 million in cost reduction over the next two years.

Juan Ricardo Luciano: We are accelerating these efforts and expect to see a significant portion of these savings by the end of 2024.

Juan Ricardo Luciano: Our focus on returning nutrition to its growth trajectory is also taking hold, and we are seeing sequential top-line improvement as compared to our previous two quarters.

Juan Ricardo Luciano: While we are experiencing some downward pressure with texture and some protein demand, we drove strong growth in health and wellness sales, along with flavor sales growth and excellent contributions from our recent acquisitions.

Juan Ricardo Luciano: We drove strong growth in health and wellness sales, along with flavor sales growth, and excellent contributions from our recent acquisition, in our targeted areas of focus. We are continuing to make progress. For example, we continue to improve demand fulfillment for flavors in our Imeria region following the implementation of 1ADM.

Juan Luciano: In our targeted areas of focus, we are continuing to make progress. We continue to improve demand fulfillment for flavors in our media region following the implementation of 1 A.D.M. We are optimizing costs across the animal nutrition portfolio, building the foundation to drive continued sequential improvement across the core of the segment. The use of our refined M&A playbook with our recent labor acquisitions has proven to be an important accelerator to integration and the ongoing growth of our leading global labor's business. And our innovation agenda is paying off, driving human nutrition revenues at 6% year-to-date, driven by flavors and our science-backed health and wellness portfolio.

Juan Ricardo Luciano: In our targeted areas of focus, we are continuing to make progress.

Juan Ricardo Luciano: We continue to improve demand fulfillment for flavors in our EMEA region following the implementation of 1ADM.

Juan Ricardo Luciano: We're optimizing cost across the animal nutrition portfolio, building the foundation to drive continued sequential improvement across the core of the sector. The use of our refined M&A playbook with our recent flavor acquisitions has proven to be an important accelerator to integration and the ongoing growth of our leading global flavors business, and our innovation agenda is paying off, driving human nutrition revenues up 6% year-to-date, driven by flavors and our science-backed health and wellness portfolio. Our capital allocation efforts continued through the second quarter as we completed our planned share repurchases and announced our most recent dividends. We have already returned $2.8 billion of capital to shareholders today.

Juan Ricardo Luciano: We are optimizing costs across the animal nutrition portfolio, building the foundation to drive continued sequential improvement across the core of the segment.

Juan Ricardo Luciano: The use of our refined M&A playbook with our recent flavor acquisitions has proven to be an important accelerator to integration and the ongoing growth of our leading global flavors business.

Juan Ricardo Luciano: And our innovation agenda is paying off.

Juan Ricardo Luciano: driving human nutrition revenues up 6% year-to-date driven by flavors and our science-backed health and wellness portfolio.

Juan Luciano: Our capital allocation efforts continued through the second quarter as we completed our plan share repurchases and announced our most recent dividend. We have already returned 2.8 billion dollars of capital to shareholders to date. The second quarter marked an important point in our efforts to manage through the market realities of 2024 and deliver on our priorities. Across all three businesses, we are evolving to drive new pockets of growth in the near term while positioning ADM to take full advantage of macro trends of sustainability, health and well-being, and food security in the longer term. As we continue to drive operational excellence and make progress on our key priorities, we have confidence in our full-year expectations despite uncertainties in the external environment.

Juan Ricardo Luciano: Our capital allocation efforts continued through the second quarter as we completed our planned share repurchases and announced our most recent dividend.

Juan Ricardo Luciano: We have already returned $2.8 billion of capitals to shareholders to date.

Juan Ricardo Luciano: The second quarter marked an important point in our efforts to manage through the marked realities of 2024 and deliver on our priorities. Across all three businesses, we are evolving to drive new pockets of growth in the near term, while positioning ADM to take full advantage of macro trends of sustainability, health and well-being, and food security in the longer term. As we continue to drive operational excellence and make progress on our key priorities, we have confidence in our full-year expectations, despite uncertainties in the external environment.

Juan Ricardo Luciano: The second quarter marked an important point in our effort to manage through the market realities of 2024 and deliver on our priorities.

Juan Ricardo Luciano: Across all three businesses, we are evolving to drive new pockets of growth in the near term, while positioning ADM to take full advantage of macro trends of sustainability, health and well-being, and food security in the longer term.

Juan Ricardo Luciano: As we continue to drive operational excellence and make progress on our key priorities, we have confidence in our full-year expectations, despite uncertainties in the external environment.

Juan Luciano: Before I hand over to Ismael for his eating review of our second quarter results, I would like to first thank him for his leadership and guidance as Interim CFO through the first half of the year. It's a hallmark of ADM leaders to step up when our organization asks for their support. And Ismael has shown that his experience, passion, and knowledge of our business set him apart as one of our best.

Juan Ricardo Luciano: Before I hand over to Ismael for the detailed review of our second quarter results, it is the hallmark of ADM leaders to step up when our organization asks for their support. We're excited to be welcoming Monish Pattolawala to ADM as our new CFO in August. I know Ismael has important work to do as he returns to lead EMEA and Animal Nutrition's continued growth. Ismael, over to you.

Ismael Roig: Before I hand over to Ismael for a detailed review of our second quarter results, I would like to first thank him for his leadership and guidance as interim CFO through the first half of the year.

Ismael Roig: is the hallmark of ADM leaders to step up when our organization asks for their support.

Ismael Roig: And Ismael has shown that his experience, passion, and knowledge of our business set him apart as one of our best.

Juan Luciano: We are excited to be welcoming Monish Patolawala to ADM as our new CFO in August. And now Ismael has important work to do as he returns to lead EMEA and Animal Nutrition's continued growth.

Ismael Roig: We're excited to be welcoming Monish Pattolawala to ADM as our new CFO in August , and know Ismael has important work to do as he returns to lead EMEA and Animal Nutrition's continued growth.

Ismael Roig: Ismael, over to you.

Ismael Roig: Ismael, over to you.

Ismael Roig: Thank you, Juan. Let me begin by sharing my own thanks and congratulations for what our finance team has accomplished over the first six months of this year. As a 20-plus year employee of the company, I have seen amazing things our colleagues can accomplish when we work collectively to achieve them. And this was again the reality as I stepped in as interim CFO.

Ismael Roig: Let me begin by sharing my own thanks and congratulations for what our finance team has accomplished over the first six months of this year. Adjusted segment operating profit was $1 billion for the second quarter, a 37% decrease versus the prior year period. Lower pricing and execution margins led to a decline of $1.03 per share versus the prior year period, largely reflecting the impact of lower crush and origination margins. Higher costs of $0.07 per share were primarily related to $0.06 per share of unplanned downtime at Decatur East.

Ismael Roig: Thank you, Juan.

Ismael Roig: Let me begin by sharing my own thanks and congratulations for what our finance team has accomplished over the first six months of this year.

Ismael Roig: As a 20-plus year employee of the company, I have seen amazing things our colleagues can accomplish when we work collectively to achieve them. And this was again the reality as I stepped in as interim CFO .

Ismael Roig: I'm proud to have served the company in this capacity over the last several months, and I'm excited to welcome and support Monish as he joins the team. For the second quarter and the June 30, 2024, earnings per share on a GAAP basis were 98 cents. Segment operating profit on a GAAP basis was $1 billion and included charges of $7 million, or approximately one cent per share, related to impairments. Adjusted segment operating profit was $1 billion for the second quarter, a 37 percent decrease versus the prior year period. Adjusted earnings per share were $1.3. Loer pricing and execution margins led to a decline of a dollar and three cents per share versus the prior year period, largely reflecting the impact of lower-crush and origination margins.

Ismael Roig: I am proud to have served the company in this capacity over the last several months, and I am excited to welcome and support Monish as he joins the team.

Monish: For the second quarter ended June 30, 2024, earnings per share on a gap basis were $0.98. Segment operating profit on a gap basis was $1 billion and included charges of $7 million, or approximately $0.01 per share, related to impairments.

Monish: Adjusted segment operating profit was $1 billion for the second quarter, a 37% decrease versus the prior year period.

Monish: Adjusted earnings per share were $1.03.

Monish: Lower pricing and execution margins led to a decline of $1.03 per share versus the prior year period, largely reflecting the impact of lower crush and origination margins.

Ismael Roig: Volume improvement represented a 19 cent per share increase versus the prior period, primarily reflecting higher volumes in AS&O and carbohydrate solutions. Higher costs of 7 cents per share were primarily related to 6 cents per share of unplanned downtime at Decatur East. Sherry purchases represented a 10 cent per share increase versus the prior year. During the quarter, there was approximately a 2 cent per share negative impact from market to market timing in the AS&O segment.

Monish: Volume improvement represented a $0.19 per share increase versus the prior period, primarily reflecting higher volumes in ASNO and carbohydrate solutions.

Monish: Higher costs of $0.07 per share were primarily related to $0.06 per share of unplanned downtime at Decatur East.

Monish: Sherry purchases represented a 10 cent per share increase versus the prior year.

Ismael Roig: During the quarter, there was approximately a two-cent-per-share negative impact from mark-to-market timing in the ASNO sector, please turn to slide 7, reflecting a challenging operating environment compared to the prior year. As Juan mentioned, strong supplies out of South America have led to a rebalancing of the supply and demand environment, while also shifting export market competitiveness from North America to South America. From the demand side, inclusion rates for meals continue to be robust, supporting domestic and export demand. However, the return of Argentinian crush combined with the increased imports of used cooking oil also weighed on crush margins. Driving an Improvement in Board Crush

Monish: During the quarter, there was approximately a two-cent-per-share negative impact from market-to-market timing in the ASNO segment.

Ismael Roig: Please turn to slide 7. For the second quarter, the ACC services in O116 delivered 459 million in operating profit, reflecting on a challenging operating environment compared to the prior year. On a year-over-year basis, market-to-market timing for the segment was relatively muted. As Juan mentioned, strong supplies out of South America have led to a rebalancing of the supply and demand environment, while also shifting export market competitiveness from North America to South America. These ample supplies have also pressured commodity prices compared to the past two years, resulting in slower-than-expected farmer selling relative to last year and the five-year averages.

Monish: Please turn to slide 7.

Monish: For the second quarter, the Ag Services and Oil Seeds team delivered $459 million in operating profit.

Monish: Reflecting on a challenging operating environment compared to the prior year.

Monish: On a year-over-year basis, mark-to-market timing for the segment was relatively muted.

Monish: As Juan mentioned, strong supplies out of South America have led to a rebalancing of the supply and demand environment, while also shifting export market competitiveness from North America to South America.

Juan Ricardo Luciano: These ample supplies have also pressured commodity prices compared to the past two years, resulting in slower-than-expected farmer selling relative to last year and the five-year averages.

Ismael Roig: From the demand side, inclusion rates for me will continue to be robust, supporting domestic and export demand. Oil values were pressured during the quarter, as imports of used cooking oil as a feedstock for renewable diesel continued to grow. ACC services results were lower than the prior year. From early, driven by lower results in South American origination, as slower farmer selling due to a smaller than expected crop in Madagrosa, and higher logistic costs related to industry take-or-pay contracts led to lower margins. North America origination saw lower volumes and margins as strong crop yields out of both Brazil and Argentina led to a shift in export competitiveness to South America, as well as limited carries and trading opportunities.

Speaker Change: From the demand side, inclusion rates for meal continue to be robust, supporting domestic and export demand.

Speaker Change: Oil values were pressured during the quarter as imports of used cooking oil as a feedstock for renewable diesel continued to grow.

Speaker Change: Ag services results were lower than the prior year, primarily driven by lower results in South American origination, a slower farmer selling due to a smaller than expected crop in Mato Grosso, and higher logistic costs related to industry take or pay contracts led to lower margins.

Ismael Roig: As we began the quarter, global demand for both meal and oil remained strong. However, the return of Argentinian crush combined with the increased imports of used cooking oil also weighed on crushed margins. As we progress later in the quarter, slower farmer selling in Argentina brought tighter S&D dynamics, driving an improvement in board crush. The team performed well in this environment, leading to an executed soy crush margin of approximately $45 per metric ton for the quarter. While fundamental supported improving crush margins as we expected, the more balanced S&D environment led to lower margins versus the prior year.

Speaker Change: However, the return of Argentinian crush combined with the increased imports of used cooking oil also weighed on crush margins.

Speaker Change: As we progress later in the quarter,

Speaker Change: Slower farmer selling in Argentina brought tighter S&D dynamics.

Ismael Roig: The team performed well in this environment, leading to an executed soy crush margin of approximately $45 per metric ton for the quarter. However, in refined products and others, results were lowered due primarily to the reversal of prior positive market-to-market timing impacts. The biodiesel margin structure has also come off of record levels versus the prior year as a result of lower LCFS credits and RIN values. Additionally, equity earnings from Walmart of $16 million were lower compared to the prior year quarter.

Speaker Change: Driving an Improvement in Board Crush.

Speaker Change: The team performed well in this environment, leading to an executed soy crush margin of approximately $45 per metric ton for the quarter.

Ismael Roig: translating to lower results. During the quarter, there were approximately $15 million of negative timing impacts versus negative timing impacts of approximately $195 million in the comparable period. In refined products and other, results were lowered due primarily to the reversal of prior positive market timing impacts. In North America, increased pre-treatment capacity at renewable diesel plants and higher imports of used cooking oil cost refining margins to ease relative to the record levels of last year. The biodiesel margin structure has also come off of record levels versus the prior year as the result of lower LCFS credits and RIN values.

Speaker Change: During the quarter, there were approximately $15 million of negative timing impacts versus negative timing impacts of approximately $195 million in the comparable period.

Speaker Change: In refined products and others, results were lowered due primarily to the reversal of prior positive market-to-market timing impacts.

Speaker Change: In North America, increased pre-treatment capacity at renewable diesel plants and higher imports of used cooking oil caused refining margins to ease relative to the record levels of last year.

Speaker Change: The biodiesel margin structure has also come off of record levels versus the prior year as a result of lower LCFS credits and RIN values.

Ismael Roig: During the quarter, there were approximately $90 million of negative timing impacts versus positive timing impacts of approximately $90 million in the comparable period. Equity earnings from Wilmar of $16 million were lower compared to the prior year quarter. Moving to slide 8, the Carbohydrate Solutions team executed well, delivering $357 million in operating profit for the second quarter, which was higher versus the prior year. Industry fundamentals in the starches and sweetener space continued to be supported by strong sweetener demand and an improving starch market. With an ethanol, markets became more constructive as we advanced later in the quarter, and stocks moved lower, firming up both domestic and export margins.

Speaker Change: During the quarter, there were approximately $90 million of negative timing impacts versus positive timing impacts of approximately $90 million in the comparable period.

Speaker Change: Equity earnings from Walmart of $16 million were lower compared to the prior year quarter.

Speaker Change: Moving to slide 8.

Speaker Change: The Carbohydrate Solutions team executed well, delivering $357 million in operating profit for the second quarter, which was higher versus the prior year.

Ismael Roig: Industry fundamentals in the starches and sweeteners space continue to be supported by strong sweetener demand and an improving starch market. Within ethanol, markets became more constructive as we advanced later in the quarter and stocks moved lower, firming up both domestic and export margins. Demand for ethanol remained robust, supported by the summer driving season in the U.S., solid domestic blending rates, and export demand.

Speaker Change: Industry fundamentals in the starches and sweeteners space continue to be supported by strong sweetener demand and an improving starch market.

Speaker Change: Within ethanol, markets became more constructive as we advanced later in the quarter and stocks moved lower, firming up both domestic and export margins.

Ismael Roig: Demand for ethanol remained robust, supported by the summer driving season in the US, solid domestic blending rates, and export demand. The starches and sweetener sub-segment results were higher year-over-year as strong margins and volumes in North America were partially upset by lower margins in the near region as they came off historically high levels. And our operational excellence efforts have helped streamline our processes and overall efficiencies, leading to improved cost positions. In the vantage corn processing sub-speckment, strong export demand for ethanol supported solid ethanol margins, leading to higher year-over-year results. Moving to slide 9, nutrition revenues were $1.9 billion for the second quarter, up 3% on a year-over-year basis and sequentially improved from the first quarter.

Speaker Change: Demand for ethanol remained robust, supported by summer driving season in the U.S., solid domestic blending rates, and export demand.

Ismael Roig: The starches and sweeteners subsegment results were higher year over year as strong margins and volumes in North America were partially offset by lower margins in the EMEA region as they came off historically high levels in the Vantage Quantum Processing Subsector. However, strong export demand for ethanol supported solid ethanol margins, leading to higher year-over-year results. Our human nutrition sub-segment grew 10% year-over-year, as strong M&A revenue contributions, as well as improved volumes and mix-in flavors, combined with strong growth in our health and wellness business, more than offset headwinds from lower pricing in the texture market and lower plant-based protein demand. Our animal nutrition sub-segment had lower revenues versus the prior year as lower pricing and mix was partially offset by improved volumes in the base Please turn to slide 10.

Speaker Change: The starches and sweeteners subsegment results were higher year over year as strong margins and volumes in North America were partially offset by lower margins in the EMEA region as they came off historically high levels.

Speaker Change: And our operational excellence efforts have helped streamline our processes and overall efficiencies, leading to improved cost positions.

Speaker Change: In the Vantage Quantum Processing Sub-Segment

Speaker Change: Strong export demand for ethanol supported solid ethanol margins, leading to higher year-over-year results.

Speaker Change: Moving to slide 9.

Speaker Change: Nutrition revenues were $1.9 billion for the second quarter, up 3% on a year-over-year basis and sequentially improved from the first quarter.

Ismael Roig: Our human nutrition sub-speckment grew 10% year-over-year, as strong M&A revenue contributions, as well as improved volumes and mix in flavors, combined with strong growth in our health and wellness business, more than upset headwinds from lower pricing in the texture and market and lower plan-based protein demand. Our animal nutrition sub-segment had lower revenues versus the prior year, as lower pricing and mix was partially upset by improved volumes in the base business.

Speaker Change: Our human nutrition sub-segment grew 10% year-over-year, as strong M&A revenue contributions, as well as improved volumes and mix-in flavors, helped us to meet the needs of the population.

Speaker Change: combined with strong growth in our health and wellness business more than upset headwinds from lower pricing in the texture market and lower plant-based protein demand.

Speaker Change: Our animal nutrition sub-segment had lower revenues versus the prior year as lower pricing and mix was partially upset by improved volumes in the base business.

Ismael Roig: Please turn to slide 10. The second quarter marked another quarter of progress, with sequential improvement in operating profit for the nutrition business. When comparing to the prior year, human nutrition results were lower, primarily driven by unplanned downtime at Decatur East and lower texturance pricing in the specialty ingredients business. Within flavors, we have continued to improve operations, which has led to higher shipment sequentially. In animal nutrition, results were higher versus the prior year as improved execution in the base business has led to higher volumes and cost optimization actions, and lower commodity prices helped support margins, partially upset by lower pet solutions performance in North America and Brazil.

Ismael Roig: The second quarter marked another quarter of progress with sequential improvement in operating profit for the nutrition business. However, when compared to the prior year quarter, human nutrition results were lower, primarily driven by unplanned downtime at Decatur East and lower texture and spricing in the specialty ingredients business. ADM Investor Services results decreased on lower interest income.

Speaker Change: Please turn to slide 10.

Speaker Change: The second quarter marked another quarter of progress

Speaker Change: When comparing to the prior year quarter, human nutrition results were lower, primarily driven by unplanned downtime at Decatur East and lower texture and spricing in the specialty ingredients business.

Speaker Change: Within flavors, we have continued to improve operations, which has led to higher shipments sequentially.

Speaker Change: In animal nutrition, results were higher versus the prior year as improved execution in the base business has led to higher volumes, and cost optimization actions and lower commodity prices helped support margins.

Speaker Change: Partially upset by lower PET solutions performance in North America and Brazil.

Ismael Roig: Turning to slide 11, for the second quarter, other segment operating profit was $96 million, up 12% compared to the prior year period, supported by higher captive-insurance results due to lower claim activities. A.D.M. Investors Services results decreased on lower interest income incorporates for the second quarter. An allocated corporate cost increased on higher global technology investments to support digital transformation efforts, increased legal fees, and increased secularization fees.

Speaker Change: Turning to slide 11. For the second quarter, other segment operating profit was $96 million, up 12% compared to the prior year period, supported by higher captive insurance results due to lower claim activity.

Speaker Change: ADM Investor Services results decreased on lower interest income.

Speaker Change: In corporate for the second quarter, an allocated corporate cost increased on higher global technology investments to support digital transformation efforts, increased legal fees, and increased securitization fees.

Ismael Roig: Turning to our balance sheet and cash flows on slide 12. Through the second quarter, the company has continued to generate healthy cash flows with $1.7 billion of operating cash flow before working capital. Our current leverage ratio is now within our targeted range, reflecting our disciplined approach to balance sheet management and robust cash flow generation. With robust financial flexibility, we have been able to support both strategic initiatives to support long-term growth and also leverage excess cash for enhanced shareholder returns. During the quarter, we repurchased over $16 million shares through our open market repurchased program, returning approximately $1 billion of capital, thus making the completion of our targeted $2.3 billion of share repurchases for the year.

Ismael Roig: Turning to our balance sheet and cash flows on slide 12, our current leverage ratio is now within our targeted range, reflecting our disciplined approach to balance sheet management and robust cash flow generation. With robust financial flexibility, we have been able to support both strategic initiatives to support long-term growth and also leverage excess cash for enhanced shareholder returns. We also continue to invest in the business with an enhanced focus on the reliability of our asset performance, allocating $700 million to capital expenditure.

Speaker Change: Turning to our balance sheet and cash flows on slide 12.

Speaker Change: Through the second quarter, the company has continued to generate healthy cash flows with $1.7 billion of operating cash flow before working capital.

Speaker Change: With robust financial flexibility, we have been able to support both strategic initiatives to support long-term growth and also leverage excess cash for enhanced shareholder returns.

Speaker Change: During the quarter, we repurchased over 16 million shares through our Open Market Repurchase Program, returning approximately $1 billion of capital, thus making the completion of our targeted $2.3 billion of share repurchases for the year.

Ismael Roig: In total, we have returned $2.8 billion of capital to shareholders through repurchases and dividends so far in 2024. We also continue to invest in the business with an enhanced focus on the reliability of our ask performance, allocating $700 million to capital expenditures.

Speaker Change: In total, we have returned $2.8 billion of capital to shareholders through repurchases and dividends so far in 2024.

Speaker Change: We also continue to invest in the business with an enhanced focus on the reliability of our asset performance, allocating $700 million to capital expenditures.

Ismael Roig: Now, breaking down our expectations for the third quarter by segment on slide 13. In ASNO, we anticipate the third quarter to be lower versus the prior year, but improved from the cyclical low margin environment from the second quarter. We anticipate the demand for both meal and oil to remain robust and support crush margins; however, likely lower than the levels in the prior year. We anticipate improved process volumes in the third quarter as we enhance our focus on operational excellence across our network and as our green buys and JV achieves full run rates. It is also important to note the prior year period also included a $48 million insurance recovery related to damages from Hurricane Ida.

Ismael Roig: Now, breaking down our expectations for the third quarter by segment on slide 13. For ASNO, we anticipate the third quarter to be lower versus the prior year, but improved from the cyclical low-margin environment from the second quarter. We anticipate demand for both meal and oil to remain robust and support crush margins, although likely lower than the levels in the prior year. We anticipate improved process volumes in the third quarter as we enhance our focus on operational excellence across our network and as our Green Bison JV achieves full run rate. It is also important to note that the prior year period also included a $48 million insurance recovery related to damages from Hurricane Ida.

Speaker Change: Now, breaking down our expectations for the third quarter by segment on slide 13.

Speaker Change: In ASNO, we anticipate the third quarter to be lower versus the prior year, but improve from the cyclical low margin environment from the second quarter.

Speaker Change: We anticipate demand for both meal and oil to remain robust and support crush margins, however, likely lower than the levels in the prior year.

Speaker Change: We anticipate improved process volumes in the third quarter as we enhance our focus on operational excellence across our network, and as our Green Bison JV achieves full run rates.

Speaker Change: It is also important to note, the prior year period also included a $40 million insurance recovery related to damages from Hurricane Ida.

Ismael Roig: In carbohydrate solutions, we anticipate a strong third quarter, but lower than the prior year as wheat milling margins moderate off elevated levels. Network optimization and operational excellence will continue to support strong earnings in the second half. We anticipate solid demand for ethanol both domestically and in the export markets, and upside opportunities could be presented if fundamentals hold. In nutrition, we expect a third quarter to be higher than the prior year period. The team is systematically optimizing the organizational and operational structure across both human and animal nutrition, which are expected to continue to yield cost benefits throughout the year.

Ismael Roig: In carbohydrate solutions, we anticipate a strong third quarter, but lower than the prior year as wheat milling margins moderate off elevated levels. Network Optimization and Operational Excellence will continue to support strong earnings in the second half. We anticipate solid demand for ethanol both domestically and in export markets, and upside opportunities could be presented if fundamentals hold. The team is systematically optimizing the organizational and operational structure across both human and animal nutrition.

Speaker Change: In carbohydrate solutions, we anticipate a strong third quarter, but lower than the prior year as wheat milling margins moderate off elevated levels.

Speaker Change: Network Optimization and Operational Excellence will continue to support strong earnings in the second half.

Speaker Change: We anticipate solid demand for ethanol both domestically and in the export markets and upside opportunities could be presented if fundamentals hold.

Speaker Change: In nutrition, we expect the third quarter to be higher than the prior year period.

Speaker Change: The team is systematically optimizing the organizational and operational structure across both human and animal nutrition.

Ismael Roig: Coupling this with our efforts to convert pipeline opportunities and drive improved volumes, we anticipate seeing continued sequential improvement in the nutrition business throughout the year.

Speaker Change: which are expected to continue to yield cost benefits throughout the year.

Speaker Change: Coupling this with our efforts to convert pipeline opportunities and drive improved volumes, we anticipate to see continued sequential improvement in the nutrition business throughout the year.

Ismael Roig: Turning to slide 14 to discuss our full-year guidance assumptions. We anticipated increased crop production in South America would lead to lower margins across the ASNO segment in 2024, and that global soybean crushed margins would likely be in the range of $35 per metric ton to $60 per metric ton for the year, which performance around the midpoint determined by the strength of soybean meal and oil demand. Though the larger crop production in South America did materialize, we experienced slower-than-average farmer selling in that region, as well as fewer merchandising opportunities in North America through the first half, which weighed negatively on margins and act services.

Ismael Roig: We anticipated increased crop production in South America would lead to lower margins across the ASNO segment in 2024 and that global soybean crush margins would likely be in the range of $35 per metric ton to $60 per metric ton for the year, with performance around the midpoint determined by the strength of soybean meal and oil demand. We expect these dynamics to continue to pressure margins in our third quarter. On soybean crush margins, we continue to see robust soybean meal demand based on solid livestock margins and some supply tightness among competing feedstuffs.

Speaker Change: Turning to slide 14 to discuss our four-year guidance assumptions.

Speaker Change: We anticipated increased crop production in South America would lead to lower margins across the AS&O segment in 2024.

Speaker Change: and the global soybean crush margins would likely be in the range of $35 per metric ton to $60 per metric ton for the year, with performance around the midpoint determined by the strength of soybean meal and oil demand.

Speaker Change: Though the larger crop production in South America did materialize, we experienced slower than average farmer selling in that region, as well as fewer merchandising opportunities in North America through the first half, which weighed negatively on margins in ag services.

Ismael Roig: We expect these dynamics to continue to pressure margins in our third quarter. On soybean crush margins, we continue to see robust soybean meal demand based on solid livestock margins and some supply tightness among competing feedstocks. From the soybean oil side, we expect that as renewable diesel production continues to grow in the second half, the demand for vegetable oil will remain well supported. And with the prospects of a large crop in North America, we perceive increased opportunities for our interior elevator network and processing plants within oil seeds and carbohydrate solutions in the second half. Taking this all together, our expected crush margin remains unchanged from $35 per metric ton to $60 per metric ton, with recent fundamentals supporting margins above the midpoint.

Speaker Change: We expect these dynamics to continue to pressure margins in our third quarter.

Speaker Change: On soybean crush margins, we continue to see robust soybean meal demand based on solid livestock margins and some supply tightness among competing feedstuffs.

Speaker Change: From the soybean oil side, we expect that as renewable diesel production continues to grow in the second half, the demand for vegetable oil will remain well supported.

Ismael Roig: And with the prospects of a large crop in North America, we perceive increased opportunities for our interior elevator network and processing plants within oilseeds and carbohydrate solutions in the second half. With the first half results largely in line and balancing an improving crush environment with less opportunities in merchandising in the second half, our 2024 earnings per share range remains unchanged. Thank you, Ismael.

Speaker Change: And with the prospects of a large crop in North America, we perceive increased opportunities for our interior elevator network and processing plants within oilseeds and carbohydrate solutions in the second half.

Speaker Change: Taking this all together, our expected crush margin remains unchanged from $35 per metric ton to $60 per metric ton, with recent fundamentals supporting margins above the midpoint.

Juan Luciano: With the first half results largely in line and balancing an improving crush environment with less opportunities in merchandising in the second half, our 2024 earnings per share range remains unchanged. Looking at the other metrics included in our total consolidated guidance, our full year 2024 indications remain unchanged. Back to you, Juan.

Speaker Change: With the first half results largely in line and balancing an improving crush environment with less opportunities in merchandising in the second half, our 2024 earnings per share range remains unchanged.

Speaker Change: Looking at the other metrics included in our total consolidated guidance, our full year 2024 indications remain unchanged.

Juan Luciano: Thank you, Smile. As we think about the rest of 2024 and the lead up to 2025, we remain optimistic about ADM's ability to execute against our priorities while remaining agile in an evolving environment. The pressures of the current commodity cycle do not seem to be demand-driven, as we see continuous robust demand for mill and oil. We will continue to focus on how we can actively manage our global footprint to best match these realities moving through the remainder of the year. Our processing capacities are improving throughout the year across our production operations, including the ramp up of green buys and to full capacity and growing production in Ukraine.

Juan Ricardo Luciano: As we think about the rest of 2024 and the lead up to 2025, we remain optimistic about ADM's ability to execute against our priorities while remaining agile in an evolving environment. Our processing capacities are improving throughout the year across our production operations, including the ramp-up of green bison to full capacity and growing production in Ukraine. And our forward book indicates that ADM is well-positioned to drive value through improved margin opportunities as we move into the back half of the year.

Juan Ricardo Luciano: Back to you, Juan.

Juan Ricardo Luciano: Thank you, Ismael.

Juan Ricardo Luciano: As we think about the rest of 2024 and the lead-up to 2025, we remain optimistic about ADM's ability to execute against our priorities while remaining agile in an evolving environment.

Speaker Change: The pressures of the current commodity cycle do not seem to be demand-driven, as we see continued robust demand for mill and oil.

Juan Ricardo Luciano: We will continue to focus on how we can actively manage our global footprint to best match these realities moving through the remainder of the year.

Juan Ricardo Luciano: Our processing capacities are improving throughout the year across our production operations, including the ramp-up of green bison to full capacity and growing production in Ukraine.

Juan Luciano: And our forward book indicates that ADM is well positioned to drive value through improved margin opportunities as we move into the back half of the year. Eth and all results have remained robust, and we expect solid demand through 2024. Assuming fundamental schools, we have an opportunity for upside in this part of the business through the year. Our initiative to manage through the current cycle are expanding additional margin opportunities and opening up new channels to our customers, whether in the growth of destination marketing, the expansion of detailed technologies focused on farmer needs, the extension of our region act program and partnerships, or the growth of our biosolutions platform.

Juan Ricardo Luciano: And our forward book indicates that ADM is well positioned to drive value through improved margin opportunities as we move into the back half of the year.

Juan Ricardo Luciano: Ethanol results have remained robust, and we expect solid demand through 2024.

Juan Ricardo Luciano: Assuming fundamentals hold, we have an opportunity for upside in this part of the business over the years. Our initiatives to manage through the current cycle are expanding additional margin opportunities and opening up new channels to our customers, whether through the growth of destination marketing, the expansion of digital technologies focused on farmer needs, the extension of our REGENE-ACT programs and partnerships, or the growth of our biosolutions platform. So, as market conditions improve, ADM has even more exciting platforms for growth and differentiation. As noted, we expect a significant portion of the planned $500 million cost savings driven by the drive for execution excellence to be realized by the end of this initial year of the program.

Juan Ricardo Luciano: Assuming fundamentals hold, we have an opportunity for upside in this part of the business through the year.

Juan Ricardo Luciano: Our initiatives to manage through the current cycle are expanding additional margin opportunities and opening up new channels to our customers.

Juan Ricardo Luciano: Whether in the growth of destination marketing, the expansion of digital technologies focused on farmer needs, the extension of our REGEN Act programs and partnerships, or the growth of our biosolutions platform.

Juan Luciano: So as market conditions improve, ADM has even more exciting platforms for growth and differentiation.

Juan Ricardo Luciano: So as market conditions improve, ADM has even more exciting platforms for growth and differentiation.

Juan Luciano: As noted, we expect to see a significant portion of the plan $500 million cost savings driven by the drive for execution excellence to be realized by the end of this initial year of the program, setting up for potential upside in 2025 as more projects are identified and executed. I will nutrition business and move beyond green shoots of positive momentum. We now see cyclical improvement across the broader portfolio, flavors, health and wellness, animal nutrition. As this continues through year end, we expect a return to growth that will continue and expand in 2025.

Juan Ricardo Luciano: As noted, we expect to see a significant portion of the planned $500 million cost savings driven by the drive for execution excellence.

Juan Ricardo Luciano: to be realized by the end of this initial year of the program, setting up for potential upside in 2025 as more projects are identified and executed.

Juan Ricardo Luciano: Our nutrition business has moved beyond green shoots of positive momentum. We now see cyclical improvement across the broader portfolio, flavors, health and wellness, and animal nutrition. In short, progress against our priorities, along with our experienced team's ability to pivot in response to an ever-changing external environment, give us confidence in a solid close to the year and set ADM up well for a continued growth trajectory for our food business in 2025. Thank you.

Juan Ricardo Luciano: Our nutrition business has moved beyond green shoots of positive momentum.

Juan Ricardo Luciano: We now see cyclical improvement across the broader portfolio, flavors, health and wellness, animal nutrition. As this continues through year-end, we expect a return to growth that will continue and expand in 2025.

Juan Luciano: In short, progress against our priorities, along with our experience and ability to pivot in response to a never-changing external environment, it was confidence in a solid close to the year and set ADM up well for a continued growth trajectory for our business in 2025. Thank you.

Juan Ricardo Luciano: In short, progress against our priorities, along with our experienced team's ability to pivot in response to an ever-changing external environment, gives us confidence in a solid close to the year.

Juan Ricardo Luciano: and set ADM up well for a continued growth trajectory for our food business in 2025.

Juan Ricardo Luciano: Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Operator: Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to cure your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. And today, we ask you to limit yourself to one question and to read you on a queue if you have any follow-ups.

Speaker Change: Thank you. Operator, please open the line for questions.

Speaker Change: Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. And today we ask you limit yourself to one question and to rejoin the queue if you have any follow-ups.

Operator: And today, we ask you to limit yourself to one question and to rejoin the queue if you have any follow-up. Our first question comes from Andrew Strelzik with BMO. Your line is open. Please go ahead. Hey, good morning.

Andrew Strelzik: Our first question comes from Andrew Streltsick with BMO. Your line is open. Please go ahead.

Speaker Change: Our first question comes from Andrew Strelzik with BMO. Your line is open, please go ahead.

Andrew Strelzik: Thank you, Maureen. Thanks for taking the questions.

Andrew Strelzik: Thanks for taking the questions. I guess I wanted to ask you about the, the... Good morning. I wanted to ask about the guidance.

Andrew Strelzik: I guess I wanted to ask about the guidance. It seems like you tempered a little bit the language on the ASNO side. Nothing else really was changed, and you kept the EPS guidance. I guess I'm curious if there are any other underlying offsets or if you're thinking about the range differently at all. And maybe, you know, as we've seen more crush margin strength materialized through the year, how much visibility do you have to that?

Andrew Strelczyk: Thank you, good morning. Thanks for taking the questions. I guess I wanted to ask about the guidance.

Juan Ricardo Luciano: It seems like you tempered the language a little bit on the ASNO side, but nothing else really was changed, and you kept the EPS guidance. So I guess I'm curious if there are kind of any other underlying offsets, or if you're thinking about, you know, kind of the range differently at all. And maybe, you know, as we've seen more crush margin strength materialize through the year, how much visibility you have on that. Yes. Thank you, Andrew.

Andrew Strelzik: It seems like you tempered a little bit the language on the ASNO side.

Speaker Change: And nothing else really was changed, and you kept the EPS guidance. So I guess I'm curious if there are kind of any other underlying offsets, or if you're thinking about, you know, kind of the range differently at all.

Speaker Change: And maybe, you know, as we've seen more crush margin strength materialize through the year, how much visibility you have to that.

Juan Luciano: Yes, thank you, Andrew. As you know, we have three businesses: our services.

Juan Ricardo Luciano: Listen, as you know, we have three businesses and our services. I know it's in this, what we call a transition year, if you will, a rebalancing year from tight supplies to more comfortable SMDs. And so we expected to have a Q2 that was more, that was challenging, facing challenging conditions, which we did. And I think we navigated well.

Juan Luciano: I know this is in this, what do we call it, transition year, if you will, a revalence in here from tight supplies to more comfortable SMDs? And so we expected to have a queue too that was challenging, facing challenging conditions, which we did. And I think we navigated well. As we look at the rest of the year and the improvements we have over the quarter in terms of crush margins, we're executing at this point in time even outside the range of 35 to 60 dollars per metric ton that we gave. So, but of course, when you think about our forecast for our services and all city, it was heavily weighted on Q4.

Speaker Change: Thank you, Andrew.

Speaker Change: Listen, as you know, we have three businesses, our services, I know it's in this, what we call a transition year, if you will.

Speaker Change: a revival engineer from tight supplies to more comfortable SMDs.

Speaker Change: And so we expected to have a Q2 that was challenging, facing challenging conditions, which we did, and I think we navigated well. As we look at the rest of the year and the improvements we have over the quarter in terms of crash margins,

Juan Ricardo Luciano: As we look at the rest of the year and the improvements we've made over the quarter in terms of crash margins, we're executing at this point in time, even outside the range of $35 to $60 per metric ton that we gave. So, but, of course, when you think about our forecast for our services, and also, it was heavily weighted on Q4. So to a certain degree, until we can put more businesses into Q4, it's probably unlikely that we'll have the same kind of visibility we had before. That's why we decided not to touch the road.

Speaker Change: We are executing at this point in time, even outside the range of $35 to $60 per metric ton that we gave. But of course, when you think about our forecast for Arc Services and All-City, it was heavily

Juan Luciano: So, to a certain degree, until we can put more businesses into Q4, it's probably that we'll have the same kind of visibility we had before. That's where we decided not to touch the range. On the other hand, car solutions continue to be improving. And I think that, as Ishmael said in his remarks, if current national margins that have improved over the quarter continue to stay that way, we could have an upside there. And certainly, nutrition continues to make significant improvements year over year now, but such as being sequential before.

Speaker Change: Waited on Q4. So to a certain degree until we can put more businesses into Q4 It's probably that we'll have the same kind of visibility we had before that's why we decided not to touch the range

Operator: On the other hand, CARB solutions continue to be improving, and I think that, as Ismael said in his remarks, if current ethanol margins that have improved over the quarter continue to stay that way, we could have an upside there. And certainly, nutrition continues to make significant improvements year over year now versus just being sequential before. So we're optimistic about the second half. We just didn't want to change the guidance at this point in time since it's heavily loaded towards Q4. We now turn to Tom Palmer with City.

Speaker Change: On the other hand, CARB solutions continue to be improving.

Speaker Change: And I think that, as Ismael said in his remarks, if current ethanol margins that have improved over the quarter...

Speaker Change: continue to stay that way, we could have an upside there. And certainly nutrition continues to make significant improvements year over year now versus just being sequential before. So we're optimistic about the second half. We just didn't want to, you know...

Juan Luciano: So, we're optimistic about the second half, which just didn't want to change the guidance at this point in time since it's heavily loaded towards Q.

Tom Palmer: We now turn to Tom Palmer with City. Your line is open. Please go ahead.

Speaker Change: change the guidance at this point in time since it's heavily loaded towards Q4.

Thomas Hinsdale Palmer: Your line is open, please go ahead. Good morning, and thanks for the question. I wanted to ask on the nutrition side. You reiterated the outlook for segment profit to increase year-over-year for the full year. But first, I wanted to confirm that this is after adding back the write-down in the fourth quarter, so off, I think, kind of a $495 billion base. And second, I wondered if you could elaborate a bit on the key drivers of these improvements over the next couple of quarters.

Tom Palmer: Good morning, and thanks for the question. Wanted to ask on the nutrition side, you reiterated the outlook for segment profit increase your year for the full year. I first just wanted to confirm that this is after adding back the right down to the fourth quarter. So off, I think, kind of a 495 billion base. And then second, I wondered if you could elaborate a bit on the key drivers of these improvements over the next couple of quarters. The implication would seem to be that 3Q is up year over year. And sorry, the implication of 3Q being up year over year would seem to imply like a pretty meaningful increase between 2Q and 3Q.

Speaker Change: We now turn to Tom Palmer with City. Your line is open, please go ahead.

Thomas Hinsdale Palmer: Good morning and thanks for the question.

Thomas Hinsdale Palmer: on the nutrition side, you reiterated the outlook for

Thomas Hinsdale Palmer: I first just wanted to confirm that this is after adding back the write-down in the fourth quarter, so off, I think, kind of a $495 billion...

Thomas Hinsdale Palmer: The implication would seem to be that 3Q is up year-over-year. And I'm sorry, but the implication of 3Q being up year-over-year would seem to imply a pretty meaningful increase between 2Q and 3Q. I think historically we've seen the opposite, where 2Q is a bit more seasonally strong. So any help on that sequential improvement and then just the base that we're looking to grow as we look at this year. Thank you. Yeah, Tom.

Tom Palmer: I think historically we've seen the opposite. We're 2Qs a bit more easily strong. So just any help on that sequential improvement and then off just the base that we're looking to grow as we look at this year.

Speaker Change: And sorry, the implication of 3Q being up year over year would seem to imply like a pretty meaningful increase between 2Q and 3Q. I think historically we've seen the opposite where 2Q is a bit more seasonally strong. So just any help on that sequential improvement and then just the base that we're looking to grow as we look at this year. Thank you.

Tom Palmer: Thank you. Yeah, Tom. Yeah, the base is what you describe. You are correct in your assumption there. Let me give you some fill here. The sequential improvement continues in the business, as we said. And that when we start looking at Q3, it looks like it's going to be year-over-year improvement, which marks a significant improvement in Q3 versus Q2. If I go through the different segments, if you will, flavors continues to do well. I think the business is up in sales 6% excluding M&A. Of course, still reeling with some higher cost because of all the demand for so many improvements we needed to make.

Juan Ricardo Luciano: Yeah, the base is what you described. You are correct in your assignment, there. Let me give you some feel here. The sequential improvement continues in the business, as we said, and when we start looking at Q3, it looks like it's going to be a year-over-year improvement, which marks a significant improvement in Q3 versus Q2. If I go through the different segments, if you will, flavors continue to do well. I think the business is up in sales 6%, excluding M&A. Of course, it's still dealing with some higher costs because of all the demand-fulfillment improvements we needed to make. But demand is coming back to normal, recovering after this stocking period.

Speaker Change: Yeah, Tom. Yeah, the base is what you described. You are correct in your assumption.

Speaker Change: Let me give you some feel here. The sequential improvement continues in the business, as we said, and that, when we start looking at Q3, it looks like it's going to be year-over-year improvement, which

Speaker Change: which marks a significant improvement in Q3 versus Q2. If I go through the different segments, if you will, flavors continues to do well. I think the business is up in

Speaker Change: Sales at 6%, excluding M&A. Of course, still dealing with some higher costs because of, you know, all the demand fulfillment improvements we needed to make.

Tom Palmer: But demand is coming back to normal, recovering after this talking period. So we feel good about our pipeline there; we feel good about our prospects for flavor. Special ingredients continue to have a challenge in time. The demand is often we are working through our plant issues. Also, we have the issue of texturants or, more specifically, emulsifiers in that area, coming down after significant record prices last year, if you will. Health and wellness continues to be very strong. Biotic sales growth are up to 22%. And I think that the pipeline there and the prospects continue to be very strong.

Juan Ricardo Luciano: So we feel good about our pipeline there. We feel good about our [inaudible]. Health and wellness continues to be very strong. Biotics sales growth is up to 22%.

Speaker Change: But demand is coming back to normal, recovering after this stocking period, so we feel good about our pipeline there, we feel good about our...

Speaker Change: Prospects for Flavor

Speaker Change: Specialty ingredients continue to have a challenging time, demand is soft and we are working through our plant issues.

Speaker Change: Also, we have the issue of texturants or more specifically emulsifiers in that area.

Speaker Change: are coming down after significant record prices last year, if you will.

Speaker Change: Health and wellness continues to be very strong. Biotic sales growth are up to 22%.

Juan Ricardo Luciano: And I think that the pipeline there and the prospects continue to be very strong. When you think about the animal sector... Our next question comes from Heather Jones with Heather Jones Research. Your line is open, please go ahead.

Tom Palmer: When you think about the animal sector, in animal nutrition, excluding bad improvement continues. And based on strong self-help plants, so very much under our control, so we feel good about that. But solutions is finding mixed results around the growth. I would say Brazil market conditions continue to be challenging. North America, specifically the U.S. is still having some demand for human issues. But we are looking good in terms of the improvements we are making towards Q3. And Mexico, our B2C business continues to be very strong. So I would say overall, with the exception of special ingredients, which is the weak part, the rest of the business is looking good.

Speaker Change: and and and I think that

Speaker Change: The pipeline there and the prospects continue to be very strong. When you think about the animal sector,

Speaker Change: In animal nutrition, excluding pets, improvement continues, and based on a strong self-help plan, so it's pretty much under our control, so we feel good about that.

Speaker Change: But solutions is finding mixed results around the globe if I would say Brazil market conditions continue to be challenging.

Speaker Change: North America, specifically the U.S., is still having some demand fulfillment issues, but

Speaker Change: You know, we are looking good in terms of the improvements we are making towards Q3.

Speaker Change: And Mexico, our B2C business continues to be very strong. So, I would say overall, with the exception of specialty ingredients...

Tom Palmer: So we expect significant improvements sequentially, and that will start making them improvements year-over-year.

Speaker Change: which is the weak part, the rest of the business is looking good. So we expect significant improvements sequentially and that will start making them improvements year over year.

Tom Palmer: Thank you.

Heather Jones: Our next question comes from Heather Jones with Heather Jones Research. Your line is open.

Heather Jones: Please go ahead.

Heather Jones: Good morning. Thanks for the question. I would just want to ask about oil-free process volume. They were up 1% for the quarter, but in Q1, they were up nearly 9%, and you remarked that utilization of spirit wood was fall for the quarter. So, just wondering if there were one-time issues during the quarter, and so have they been rectified in order to reach out mid to high-single-digit growth outlook for the year? Yeah.

Speaker Change: Our next question comes from Heather Jones with Heather Jones Research. Your line is open, please go ahead.

Heather Lynn Jones: Good morning. Thanks for the question.

Operator: But in Q1, they were up nearly 9%, and you remarked that utilization of spirit wood was full for the quarter. So I was just wondering if there were one-time issues.

Heather Lynn Jones: I just wanted to ask about oil feed process volumes. They were up 1% for the quarter.

Heather Lynn Jones: But in Q1 they were up nearly 9% and you remarked that utilization at Spirit Wood was full for the quarter. So I was just wondering if there were run-time issues?

Heather Lynn Jones: During the quarter, and so there's been rectified in order to reach all mid to high single digit growth outlook for the year. Yeah. Thank you, Heather. As you said, yeah, Spiritwood is performing very well, so it's coming out in volumes. Traditionally, I would say, in North America, when we have our low part of the cycle in North America, where South America has all the capacity, we take shutdowns in anticipation of demand not being very strong, and we want to have our plants ready for the harvest. So I think that that's a traditional seasonal slowdown that we experience. So there was nothing unusual in that room.

Speaker Change: During the quarter and so there's been rectified in order to reach all mid to high single-digit growth outlook for the year.

Juan Luciano: Thank you, Heather. As you said, the spirit wood is performing very well, so it's coming up in volumes.

Juan Luciano: Traditionally, I would say North America, when we have our low part of the cycle in North America, where South America has all the capacity, we take shutdowns in anticipation of demand not being very strong, and we want to have our plants ready for the harvest. So, I think that that's a traditional seasonal slowdown that we do. So, nothing unusual in that regard.

Heather Lynn Jones: Yeah.

Speaker Change: Thank you, Heather. As you said, yes, Spiritwood is performing very well, so it's coming up in volumes.

Speaker Change: Traditionally, I would say, in North America...

Speaker Change: When we have our low part of the cycle in North America, where South America has all the capacity, we take shutdowns.

Speaker Change: in anticipation of demand not being very strong and we want to have our plants ready for the harvest. So I think that that's a traditional seasonal slowdown that we do.

Adam Samuelson: Our next question comes from Adam Samuelson with Goldman Sachs. Your line is open. Please go ahead.

Operator: Our next question comes from Adam Samuelson with Goldman Sachs. Your line is open. Please go ahead. Yes, thank you. Good morning, everyone.

Speaker Change: So, nothing unusual in that regard.

Adam Samuelson: Yes, thank you.

Adam Samuelson: Good morning, everyone. I was hoping to maybe drill in on some of the cost and productivity initiatives that you have underway right now. I think one, there's a target of 500 million savings by the end of 2025, split between the two years. Can you maybe provide an update on what you've realized to date in 2024 or what the 2024 savings kind of are expected to be on a net basis? And maybe any additional color in terms of where within the portfolio, those are actually hitting of the PML. I really appreciate it.

Speaker Change: Our next question comes from Adam Samuelson with Goldman Sachs. Your line is open, please go ahead.

Adam Samuelson: I was hoping to maybe drill in on some of the cost and productivity initiatives that you have underway right now. And I think, Juan, there's a target of $500 million of savings by the end of 2025, kind of split between the two years. Can you maybe provide an update on what you've realized to date in 2024, what the 2024 savings... Thank you.

Adam Samuelson: Yes, thank you. Good morning, everyone. I was hoping to maybe drill in on some of the cost and productivity initiatives that you have underway right now, and I think, Juan, there's a target of $500 million of savings.

Juan Ricardo Luciano: By the end of 2025, kind of split between the two years, can you maybe provide an update on what you've realized to date in 2024?

Speaker Change: 2024 savings

Speaker Change: All of those are expected to be on a net basis. Any additional caller in terms of where within the portfolio those are actually hitting the P&L. Thank you.

Adam Samuelson: Thank you.

Adam Samuelson: Yeah, thank you, Adam, for the question. We're very proud of how this initiative that we put together at the beginning of the year has continued to accelerate. So, so far we are on track. If you think about 500 million in over two years, that's about $25 million per half. We delivered about $127 million in the first half. So, we're pretty much on track there. But this group of activities and projects and ideas continue to accelerate. So, that's not going to be linear. It's going to be an accelerated bringing up to the PML and to the bottom line.

Juan Ricardo Luciano: Yeah, thank you, Adam, for the question. Yeah, we're very proud of how this initiative that we put together at the beginning of the year has continued to accelerate. So, so far, we are on track. If you think about $500 million in over two years, that's about $125 million per half.

Speaker Change: Thank you, Adam, for the question. We're very proud of how this initiative that we put together at the beginning of the year has continued to accelerate.

Juan Ricardo Luciano: We delivered about $127 million in the first half, so we're pretty much on track there. But this group of activities and projects and ideas continues to accelerate, so that's not going to be linear.

Speaker Change: So, so far we are on track, if you think about $500 million in over two years, that's about $125 million per half.

Speaker Change: We delivered about $127 million in the first half, so we're pretty much on track there. But this group of activities and projects and ideas continue to accelerate. So that's not going to be linear. It's going to be an accelerated bringing up to the P&L and to the bottom line. So we feel very good about it. We are very confident that...

Juan Ricardo Luciano: It's going to be an accelerated return to the P&L and to the bottom line. So we feel very good about it. We are very confident that our forecast shows that we're going to deliver on the 500 million wave before the two-year mark.

Adam Samuelson: So, we feel very good about it.

Adam Samuelson: We are very confident that our forecast shows that we're going to deliver on the 500 million wave before the two-year mark. With regard to what's the distribution of that, of course, sometimes when you have more bigger manufacturing units or bigger energy consumption, like in car solutions, you have more opportunities to bring that. So, I would say, if I were to name a ranking today, initially out of the gates, we see more in-car solutions and nutrition because of some of the improvements we needed to make in the mantle film. And maybe our services and oil systems are having to pick a moment during the second half.

Juan Ricardo Luciano: With regard to what's the distribution of that, of course, sometimes when you have more bigger manufacturing units or bigger energy consumption, like in-carb solutions, you have more opportunities to bring that in. So I would say, if I were to name a ranking today, initially, out of the gate, we see more in-carb solutions and nutrition because of some of the improvements we needed to make in demand fulfillment and maybe ag services and oilseeds having to pick up momentum during the second half.

Speaker Change: Our forecast shows that we're going to deliver on the 500 million wave before the two-year mark.

Speaker Change: with regards to what's the distribution of that. Of course, sometimes when you have more...

Speaker Change: bigger manufacturing units or bigger energy consumption, like in current solutions, you have more opportunities to bring that. So I would say

Speaker Change: If I were to name a ranking today, initially, out of the gate, we see more in carb solutions and nutrition because of some of the improvements we needed to make in demand fulfillment.

Adam Samuelson: So, but overall I think good distribution of projects around the four geographies and the three businesses, and again catching momentum when you have a big organization that you need to promote all these activities. So not everybody, not everybody starts at the same time, so we feel very good by being on track, and again we think ahead of scheduled for our 500 million over two years.

Juan Ricardo Luciano: So we will see. But overall, I think a good distribution of projects around the four geographies and the three businesses. And again, catching momentum. When you have a big organization, you need to promote all these activities.

Speaker Change: and maybe AgServices and OASIS having to pick up momentum during the second half, so we will see that.

Speaker Change: So, but overall, I think good distribution of projects around the four geographies and the three businesses.

Operator: So not everybody starts at the same time. So we feel very good by being on track. And again, we think ahead of schedule for our 500 million. Our next question comes from Ben Theurer with Barclays. Your line is open, please go ahead. Good morning, Juan, Ismael.

Speaker Change: And again, catching momentum, you have a big organization that you need to promote all these activities, so not everybody starts at the same time, so we feel very good by being on track, and again, we think ahead of schedule for our $500 million over two years.

Ben Feurer: Our next question comes from Ben Feurer. With your line open, please go ahead. Hi, good morning, Juan, Ishmael. Thanks for taking my question. I wanted to go back to the nutrition business and just understand a little bit what your cadence is into the back half as the Dikatur East plans going to come back and if you select the 25 million higher fixed cost observation. We just wanted to understand how immediate you are going to be able to gain this back, so as we move into the ramp up of this East part of the Dikatur, how should we think about those cost headwinds that we've been seeing all the past? Is that to be recovered in 24, is that more of the 25 thing? Thank you.

Benjamin M. Theurer: Thanks for taking my question. I wanted to go back to the nutrition business and just understand a little bit what your cadence is for the back half as the Decatur East plan is going to come back in. You've flagged the $25 million higher fixed cost observation. I just wanted to understand how immediately you are going to be able to gain this back?

Speaker Change: Our next question comes from Ben Theurer with Barclays. Your line is open, please go ahead.

Benjamin Shelton Bienvenu: Good morning, Juan and Ismael. Thanks for taking my question.

Benjamin Shelton Bienvenu: I wanted to go back to the nutrition business and just understand a little bit what your cadence is into the back half as the Dicatur East plan is going to come back in. You've flagged the $25 million higher fixed cost observation. I just wanted to understand how immediately are you going to be able to gain this back? So as we move into the ramp up of this, the East part of Dicatur, how should we think about those cost headwinds that we've been seeing over the past? Is that to be recovered in 2024 or is that more of a 2025 thing? Thank you.

Juan Ricardo Luciano: So as we move into the ramp-up of the East part of Decatur, how should we think about those cost headwinds that we've been seeing in the past? Is that to be recovered in 24? Is that more of a 25 thing?

Ben Feurer: Yes, thank you for the question. From the point of view of plant protein, we do expect the plant to come online again in Q4, so we will see some of that recovery coming in. I think as we look at the at the second half we significantly pulled, you know, quite a bit of volume out in in 2023. Is also obviously of the Dikatur East facility, but also we had an demand from Thulman. So I did report; we did report a 3% revenue growth. As we look into the second half, we are seeing an acceleration of that. We expect overall to be on track to deliver roughly in the mid single-digit growth when we bring back some of these facilities and demand fulfillment capabilities that we had lost in the second half of 23.

Speaker Change: Yes, thank you for the question.

Speaker Change: From the point of view of plant protein, we do expect the plant to come online again in Q4. So we will see some of that recovery coming in. I think as we look at the second half, we significantly pulled.

Speaker Change: You know, quite a bit of volume out in 2023 as a result, obviously, of the Decatur East facility, but also we had in demand fulfillment. So...

Speaker Change: I did report, we did report a 3% revenue growth as we look into the second half, we are seeing an acceleration of that. We expect overall...

Speaker Change: to be on track to deliver roughly in the mid-single-digit growth when we bring back some of these facilities and demand fulfillment capabilities that we had lost in the second half of 2023.

Ben Feurer: And I would say that a complement may be complementing the smile. I think it's a 25 impact, not very much at 24 impact even if the Q4, so.

Speaker Change: And I would say then a compliment, maybe complimenting Ismael, I think you said 25 impact.

Salvator Tiano: Our next question comes from an I've got that worth UBS. Your line is open, please go ahead.

Operator: Thank you. And I would say then, a compliment. Not very much of a 24-hour impact, even if the... Our next question comes from Manav Gupta with UBS. Your line is open. Please go ahead.

Ismael Roig: Not very much a 24 impact, even if the Q4.

Salvator Tiano: I could question you're seeing a very strong rebound and at all margins and it's just seasonal. Is it what else going out there do you think the sustain itself in the second half and then how does that position you well in the sweetness and start your business across in the second half? Thank you. Thank you, man, for the question. We have been seen for a while that exports have been increasing year over year. So it's not continues to be one of the cheapest coxulates out there, and it's very competitive with gasoline in many parts of the world. So we have seen strong domestic demand because of miles driven in the US, especially now with the summer.

Manav Gupta: I have a quick question. We are seeing a very strong rebound in ethanol margins, and it's just seasonal. Is there anything else going on out there? Do you think this sustains itself in the second half?

Speaker Change: Our next question comes from Manav Gupta with UBS. Your line is open, please go ahead.

Manav Gupta: Hi, quick question. We are seeing a very strong rebound in ethanol margins and it's just seasonal. Is it what else going out there? Do you think this sustains itself in the second half? And then how does that position you well in the sweeteners and starches business across in the second half? Thank you.

Juan Ricardo Luciano: And then how does that position you well in the sweeteners and starches business in the second half? Thank you. Yeah, thank you, Manav, for the question. We have been seeing for a while that exports have been increasing year over year. So ethanol continues to be one of the cheapest alkoxylates out there, and it's very competitive with gasoline in many parts of the world.

Manav Gupta: Thank you, Manav, for the question.

Speaker Change: We have been seeing for a while that exports have...

Juan Ricardo Luciano: So we have seen strong domestic demand because of miles driven in the U.S., especially now with the summer. We have been seeing good blending in the U.S. And we have seen exports at levels that we've never seen before, probably north of 1.7, maybe even 1.9 billion gallons per year. So I think that that was a very logical kind of when you see that the strong demand was a very logical predictor of prices will rebound. And again, we don't see any change for now. It will depend on how much the U.S. produces, of course, ethanol.

Speaker Change: been increasing year over year.

Speaker Change: So, ethanol continues to be one of the cheapest alkoxylates out there, and it's very competitive with gasoline in many parts of the world. So we have seen strong domestic demand because of miles driven in the U.S., especially now with the summer. We have been seeing good blending in the U.S. I think that the price of ethanol is very competitive to encourage blending.

Juan Luciano: We have been seeing good blending in the U.S. I think that the price of an all is very competitive to encourage blending. and we have seen exports at levels that we never seen before, probably north of 1.7, maybe even 1.9 billion dollars per year. So I think that that was a very logical kind of when you see that strong demand was a very logical that prices will rebound. And again, we don't see any change for now; it will depend on how much the U.S. produces, of course, of ethanol. But at this point in time, margins are holding, and we think that it boasts wealth for a strong QC.

Speaker Change: And we have seen exports at levels that we've never seen before, probably north of 1.7, maybe even 1.9 billion gallons per year.

Speaker Change: So I think that that was a very logical kind of, when you see that the strong demand was a very logical that prices will rebound.

Juan Ricardo Luciano: But at this point in time, margins are holding, and we think that it bodes well for a strong QC. In terms of sweeteners and starches, that business continues to have very robust volumes and very good margins. If anything, you can see a little bit of a pullback in the energy complex, if you will.

Speaker Change: And again, we don't see any change for now. It will depend on how much the U.S. produces, of course, of ethanol. But at this point in time, margins are holding, and we think that it bodes well for a strong Q3.

Juan Luciano: In terms of sweetness and starches, that business continued to have very robust volumes and very good margins. If anything, you can see a little bit of a pullback of the energy complex, if you will, that boasts wealth for manufacturing costs, because these are big facilities; they consume a lot of energy. So natural gas price is being close to two dollars; it's a little bit of a tailwind for us. So car solution is having a very good year, and so we expect that to continue. I'd like to compliment on the sweetness and starches side. As you know, there's been a fairly low crop in Mexico, and that has certainly helped with exports of sweetened and starched products into Mexico, so it's created a demand pool into Mexico that has helped the overall margin structure for our business in North America.

Speaker Change: In terms of sweeteners and starches, that business continues to have very robust volumes and very good margins.

Juan Ricardo Luciano: That bodes well for manufacturing costs because these are big facilities. They consume a lot of energy, so natural gas prices being close to $2 is a little bit of a tailwind for us. So Carb Solution is having a very good year, and so we expect that. I'd like to compliment you on the sweeteners and starches side. As you know, there's been a fairly low corn crop in Mexico, and that has certainly helped with exports of sweeteners and starches products into Mexico. So it's created a demand pool in Mexico that has helped the overall market structure for our business.

Speaker Change: If anything, you can see a little bit of a pullback of the energy complex, if you will. That bodes well for manufacturing costs because these are big facilities, they consume a lot of energy.

Speaker Change: So natural gas prices being close to $2 is a little bit of a tailwind for us. So Carb Solution is having a very good year, and so we expect that to continue.

Speaker Change: I'd like to compliment with on the sweetness and starches side, as you know there's been a fairly low crop

Speaker Change: on Crop in Mexico, and that has certainly helped.

Speaker Change: with exports of sweetener and starch products into Mexico. So it's created a demand pool into Mexico that has helped the overall market structure for our business in North America.

Operator: As a reminder, if you'd like to ask a question or have any follow-ups, please press on the line. Your line is open. Please go ahead.

Juan Ricardo Luciano: As a reminder, if you'd like to ask a question or have any follow-ups, please press star 1 on your telephone keypad now. We now turn to Salvatore Tiano with Bank of America. Your line is open. Please go ahead. Thank you very much.

Speaker Change: As a reminder, if you'd like to ask a question or have any follow-ups, please press star one on your telephone keypad now.

Andrew Strelzik: Thank you very much. I just wanted to clarify a little bit on the crash margins. Again, I think you made the end of your particular marks, a comment that soybean crash margins were $45 per ton in Q2, and at least based on the reported DB time, I don't know if I'm missing something, and I know it may not be fully comparable, but it looks like that your crash margins per ton were much, much lower than that. So what am I missing here?

Operator: I just wanted to clarify a little bit on the crash margins. Again, I think you made in your prepared remarks a comment that soybean crash margins were $45 per ton in Q2, and at least based on the report that they beat, I don't know if I'm missing something, and I know it may not be fully comparable, but it looks like your crash margins per ton were much, much lower than that. So, what am I missing here?

Speaker Change: We now turn to Salvatore Tiano with Bank of America. Your line is open, please go ahead.

Salvator Tiano: Thank you very much.

Salvator Tiano: I just wanted to clarify a little bit on the crash margins again, I think you made in your previous remarks a comment that...

Speaker Change: Soybean crash margins were $45 per ton in Q2.

Speaker Change: And at least based on the report that they did, I don't know if I'm missing something and I know it may not be fully comparable, but it looks like...

Juan Luciano: Is your benchmark the way you're presenting the $35 to $60 material different from what we would see, for example, in Bloomberg synthetic margin? You made also the comment that you recently executed the trades, I guess, above the top end of the range, above $60. Can you elaborate a little bit of that? Are we talking about just one of trades or is it something that you're actually consistently generating so far in Q3? Sure, let me clarify for you.

Speaker Change: But your crash margins per ton were much, much lower than that. So what am I missing here? Is your, I guess, benchmark the way you're presenting the $35 to $60?

Speaker Change: material different from what we would see, for example, in a Bloomberg synthetic margin. And you made also the comment that you recently executed the trades, I guess, above the top end of the range, above $60. So,

Juan Ricardo Luciano: Is your, I guess, benchmark the way you're presenting the $35 to $60? Sure, yeah, let me clarify for you. First of all, the $45 per ton is the $45 per ton we made this year. So we can work offline to walk you through the arithmetic, if you will, but there's nothing.

Speaker Change: Can you elaborate a little bit on that? Are we talking about just one of trades, or is it something that you're actually consistently generating so far in Q3?

Juan Luciano: First of all, the $45 per ton is a $45 per ton we made this year, so we can work offline to walk you through the analytics if you will, but there's nothing strange on that. If I go around the world, if you will, on crash margins, at this point, between $60 to $70 in the US, that's where we are making businesses, about similar margins for soy in Europe. Brazil may be something between 10 and 50, depending if they are domestic plants or export plants. China, $22.25; that's kind of the margin environment. I would say when we started the quarter, we were doing margins in the low end of our range.

Speaker Change: Sure. Yeah, let me clarify for you. First of all, the $45 per ton is the $45 per ton we made this year. So we can work offline to walk you through the arithmetics, if you will, but there's no, nothing.

Speaker Change: If I go around the world, if you will, on crash margins,

Speaker Change: At this point, between $60 to $70 in the U.S., that's where we are making businesses, about similar margins for soy in Europe .

Juan Luciano: And as maybe Argentine farmers did not sell, as maybe the industry was expecting, we saw more demand for soybean milk coming into North America that made an improvement in our crash margin. So we finished the quarter, a little bit better than maybe we thought about the $45 per ton. We are selling; we said before that we were relatively open going out. We have some of the Q3 sold, but we don't have sold. We are selling at about $60 to $70 per ton. So that's the crash reality at this point in time.

Speaker Change: China, $20 to $25, that's kind of the margin environment. I would say...

Speaker Change: When we started the quarter, we were doing margins in the low end of our range.

Speaker Change: and

Speaker Change: As maybe Argentine farmers did not sell, as maybe the industry was expecting, we saw more demand for soybean milk coming into North America that make an improvement in our crush margin. So we finished the quarter.

Speaker Change: A little bit better than maybe we thought with the $45 per ton.

Speaker Change: We are selling, we said before that we were relatively open going out. We have some of the Q3 sold. What we don't have sold, we are selling at about $60 to $70 per ton. So that's the crash realities at this point in time.

Juan Luciano: I think that then we're going to leap into Q4, where we have hopefully a very large crop here in the US. Crops look so far in the US, so we expect to have plenty of raw materials in that. And the demand for soybean milk continues to be strong around the world. And I think low prices have been decimated demand. The demand is driven a lot by poultry, as you know, and soybean milk has been increasing in the Russians. And then on the other side, we continue to see a little bit more RGD plants coming on the stream on the second half, so that will boil too well as well.

Speaker Change: I think that then we're going to leap into Q4, where we have hopefully a very large crop here in the U.S. Crops look terrific so far in the U.S., so we expect to have plenty of raw materials in that. And demand for soybean meal...

Speaker Change: continues to be strong around the world and I think low prices have incentivated demand. Demand is driven a lot by poultry as you know and soybean milk has been increasing in the rations.

Juan Luciano: So we are positive about crash margin for the rest of the year for North America.

Speaker Change: And then on the oil side, we continue to see a little bit more RDD plants coming on a stream on the second half, so that will bode well as well. So we are positive about crash margin for the rest of the year for North America.

Dushyant Ailani: We now turn to Dishant Elanning with Jeffries. The line is open; please go ahead. Hi, yes, can you hear me?

Juan Ricardo Luciano: And then on the oil side, we continue to see a little bit more RDD plants coming on stream in the second half, so that will bode well as well. So we are positive about the crash market for the rest of the year for North America. We now turn to Dushyant Ailani with Jeffreys. Your line is open, please go ahead. Not yet, can you hear me?

Dushyant Ailani: Yes, I can.

Operator: Yes, thank you for taking my question. I just want to talk about the CapEx guide. I think it's improved or it's increased by up to $100 million. I just wanted to see what's driving that.

Dushyant Ailani: Yes, thank you for taking my question. I just want to talk on the CapEx guide. I think it improves, or it's increased by, or up to $100 million. Do you want to see what's driving that? Yeah, I think CapEx is always the prioritization of CapEx is always NDE, some maintenance and safety and quality we do first. So whatever the plants need at any point in time, so that's a bottom sub roll-up of their respective needs. Then we fill it up with cost projects, which the execution excellence challenge that we have to deliver 500 million that bring in more ideas. Some of those ideas require CapEx.

Speaker Change: We now turn to Dushyant Ailani with Jeffreys. Your line is open, please go ahead.

Dushyant Ailani: Hi guys, can you hear me?

Dushyant Ailani: Yes, thank you for taking my question. I just want to talk on the CAPEX guide. I think it's improved. It's increased by roughly $100 million. I just wanted to see what's driving that.

Juan Ricardo Luciano: Yeah, I think CAPEX is always the prioritization of CAPEX is always The Execution Excellence Challenge that we have to deliver $500 million and bring in more ideas. Some of those ideas require CAPEX, so you can see that growing. And then there are growth projects around the world. So I would say nothing specifically; it's a little bit of everybody else executing on their plans. I would say nothing; there is a little bit of complex inflation in our numbers because things are a little bit more expensive than maybe they were two years ago.

Speaker Change: Yeah, I think CAPEX is always... the prioritization of CAPEX is always...

Speaker Change: We do some maintenance and safety and quality first. So whatever the plant needs at any point in time. So that's a bottom-up roll-up of their respective needs. Then we fill it up with cost projects, which

Juan Luciano: So you can see that growing. And then there are growth projects around the world. So I would say nothing specifically is a little bit of everybody else executing on their plans. So I would say nothing; there is a little bit of CapEx inflation as well in our numbers because things are a little bit more expensive than maybe they were two years ago.

Speaker Change: The Execution Excellence Challenge that we have to deliver 500 million and bring in more ideas. Some of those ideas require CAPEX, so you can see that.

Speaker Change: And then there are growth projects around the world. So I would say nothing specifically, it's a little bit of everybody else executing on their plans.

Stephen Haines: Oh, the next question comes from Stephen Haines with Moltman Stanley. Your line is open. Please go ahead.

Juan Ricardo Luciano: Our next question comes from Steven Haynes with Morgan Stanley. Your line is open, please go ahead. Good morning. Thanks for taking my question. I wanted to come back to Argentina.

Speaker Change: I would say nothing, there is a little bit of capex inflation as well in our numbers because things are a little bit more expensive than maybe they were two years ago.

Stephen Haines: Good morning, thanks for taking my question. I wanted to come back. Sorry, it was for Argentina. You mentioned, you mentioned, you were one. You mentioned, it's kind of slower than expected farmers selling. So how are you kind of thinking about how that evolves over the balance of the year? And what's kind of helped us think about the risk of, you know, Argentina kind of coming back into the market in a more meaningful way going forward.

Operator: You mentioned it's kind of been a bit of a headwind kind of towards the end of the second quarter on some slower-than-expected farmer selling. So, how are you kind of thinking about how that evolves over the balance of the year, and what's kind of helped us think about the risk of, you know, Argentina kind of coming back into the market in a more meaningful way going forward? Thank you. Yeah, so, what happened in Argentina; there was a big expectation for the unification of the exchange rate. And, of course, that hasn't happened so far.

Speaker Change: Our next question comes from Steven Haynes with Morgan Stanley . Your line is open, please go ahead.

Steven Haynes: Hey, good morning. Thanks for taking my question. I wanted to come back to Argentina. You mentioned...

Steven Haynes: You mentioned, you mentioned it's kind of been a bit of a head tailwind kind of towards the end of the second quarter

Steven Haynes: on some slower than expected farmer selling. So how are you kind of thinking about how that evolves over the balance of the year and what's kind of help us think about the risk of you know Argentina kind of coming back into the market and in a more meaningful way going forward. Thank you.

Juan Luciano: Thank you.

Heather Jones: Yeah, so what happened in Argentina, there was a big expectation for the unification of the exchange rate and, of course, that hasn't happened so far; on the contrary, the gap has increased to about 50% or 55%. So, at this point in time, when you combine low commodity prices because of all the abandoned production, and then the exchange rate is not very favorable for the farmer to sell, so the farmer in Argentina is selling a little bit more corn but trying to hold the beans. You know, will the government—so the question is, will the government be able to unify the exchange rate? I think the government's priorities right now is to fight inflation, and that's what the whole plan is. So, they don't have a lot of room to maneuver to change something because the moment you divide, you or you change the exchange rate, everything is translated into prices, and the priority right now is to control prices. So, I think this is for the good of Argentina long term as a country, but I think short term will present the problem for the farmer to sell. So, I think the farmer will hold as much as possible unless there is a special program that the government rolls out that they don't seem to have a lot of latitude to do so at this point in time. So, I think we need to be cautious about the thinking that a lot of the crop will come as a glad toward Argentina; it hasn't happened so far. We have a follow-up question from Heather Jones with Heather Jones Research; your line is open, please go ahead.

Speaker Change: Yeah, so

Juan Ricardo Luciano: On the contrary, the gap has increased to about 50 percent or 55 percent. So at this point in time, when you combine low commodity prices because of all the abundant production and then the exchange rate, it's not very favorable for the farmer to sell. So the farmer in Argentina is selling a little bit more corn but trying to hold the beans. Unless there is a special program that the government rolls out, they don't seem to have a lot of latitude to do so at this point in time. So I think we need to be cautious about thinking that a lot of the crop will come as a glut to Argentina. It hasn't happened so far.

Speaker Change: And of course, that hasn't happened so far. On the contrary, the gap has increased to about...

Speaker Change: 50% or 55%. So at this point in time, when you combine low commodity prices, because of all the abundant production.

Speaker Change: And then the exchange rate is not very favorable for the farmer to sell. So the farmer in Argentina is selling a little bit more corn but trying to hold the beans.

Speaker Change: Will the government be able to unify the exchange rate? I think the government's priority right now is to fight inflation, and that's what the whole plan.

Speaker Change: So, they don't have a lot of room to maneuver to change something because the moment you devalue or you change the exchange rate...

Speaker Change: Everything is translated into prices, and the priority right now is to control prices. So I think this is for the good of Argentina long term as a country, but I think short term will present a problem for the farmer to sell. So I think the farmer will hold as much as possible.

Speaker Change: Unless there is a special program that the government rolls out, that they don't seem to have a lot of latitude to do so at this point in time. So I think we need to be cautious about the thinking that a lot of the crop will come as a glut to Argentina. It hasn't happened so far.

Operator: We have a follow-up question from Heather Jones with Heather Jones Research. Your line is open, please go ahead. Thanks for taking the follow-up. I wanted to ask about the Chinese Yuko into the U.S. situation.

Heather Jones: and to the Chinese U.K. and to the U.S.

Speaker Change: We have a follow-up question from Heather Jones with Heather Jones Research. Your line is open, please go ahead.

Juan Luciano: situation so our understanding is those are slowed some and then there's an expectation that with Europe and posing anti-Duffin duties on Chinese biodiesels that China may shift more of their U.K. to that market and not as much to the U.S. and just wondering what y'all are seeing in there and how you're how are you expecting that to evolve throughout the year. yeah thank you Heather. so of course there was a lot of noise by the industry about the prospects of maybe some adulterated or not quite truly U.K. Coming into the U.S. and checking for that so we have seen we have seen some significant moderation of that coming. I don't I don't want to that what you mentioned maybe in Europe is true as well. Europe will not allow roadcrops to be part of that, so as they start to build the CF, they will have to use more U.K.

Heather Lynn Jones: So our understanding is that those have slowed some, and then there's an expectation that with Europe imposing anti-dumping duties on, I've heard a lot about Chinese biodiesel, that China may shift more of their UCO to that market and not as much to the U.S. I was wondering what y'all are seeing there and how you're expecting that to evolve throughout the year. Yeah, thank you, Heather. Yes, thank you very much.

Heather Lynn Jones: Thanks for taking the follow-up. I wanted to ask about the Chinese Yuko into the U.S. situation.

Speaker Change: So our understanding is those have slowed some and and then there's an expectation that with Europe imposing anti-dumping duties on

Speaker Change: Chinese biodiesel that China may shift more of their UCO to that market and not as much to the U.S. and just I was wondering what y'all are seeing there and how you're how you're expecting that to evolve throughout the year.

Speaker Change: Yeah, thank you, Heather.

Speaker Change: So, of course,

Speaker Change: There was a lot of noise by the industry about the prospects of maybe some adulterated or not quite truly yuko coming into the US and checking for that. So we have seen We have seen some significant moderation of that coming

Speaker Change: I don't want to pinpoint a particular reason, but part of that, what you mentioned maybe in Europe is true as well. Europe will not allow row crops to be part of that, so as they start to build SAF, they will have to use more yucca, so it's naturally that.

Juan Luciano: So it's naturally that some of those flows would move to Europe. The current North American fits of market is better balanced after the situation we have in Q1. So I think also we saw palm oil going up in prices. So I think that it's both better for soybean oil going forward for the. We have another follow-up from Salvator Tiano with Bank of America.

Speaker Change: Some of those flows would move to Europe . The current North American feedstock market is better balanced after the situation we have in Q1.

Speaker Change: I think also we saw palm oil going up in prices, so I think that it bodes better for soybean oil going forward for the U.S.

Juan Luciano: Your line is open; please go ahead. This year, we're as VCP being the dry mills; it was much, much higher year and year.

Juan Ricardo Luciano: I just wanted to ask about the ethanol outlook, and I know you talked about a lot of factors here, but clearly your commentary on the starches and sweeteners, which include, I guess, the wet meals, was more negative, saying about lower ethanol margins year-on-year, whereas VCP, being the dry meals, it was much, much higher year-on-year. So can you discuss a little bit the differentiation there? And it seems like a lot of the delta is from the export side.

Speaker Change: We have another follow-up from Salvatore Tiano with Bank of America. Your line is open, please go ahead.

Salvator Tiano: Yes, thank you very much. I just want to ask about the ethanol outlook and I know you talked about the...

Juan Luciano: So can you discuss a little bit the differentiation there? And it seems like a lot of the delta is from the export side. So essentially, are you seeing different pricing, different margins from the export and as they become a much more important part of the ethanol mix, which weren't used in the past. Is this something that, besides being a driver of demand and operating rates, is it something that's margin accretive, or do the netbacks tend to be lower for export ethanol? Yeah, there are several factors Salvator here in place. So, first of all, the ethanol margins are the ethanol margins, and they are better right now; they are probably twice as big as they were at the beginning of the quarter.

Salvator Tiano: But clearly, your commentary on the starches and sweeteners, which include, I guess, the wet meals, was...

Juan Ricardo Luciano: So essentially, are you seeing different pricing, different margins from the exports? And as they become a much more important part of the ethanol mix, which we weren't used to in the past, is this something that, besides being a driver of demand and operating rates, is it something that's margin accretive, or do the netbacks tend to be lower for export ethanol?

Speaker Change: More negative saying about lower ethanol margins here whereas

Speaker Change: VCP being the dry meals, it was much, much higher year on year. So can you discuss a little bit the differentiation there? And it seems like a lot of the delta is from the export side. So-

Speaker Change: Essentially, are you seeing different pricing, different margins from the exports and as they become a much more important part of the ethanol mix, which we weren't used to in the past?

Speaker Change: Is this something that, besides being a driver of demand and operating rates, is it something that's margin accretive or do the netbacks tend to be lower or extra decimal?

Juan Luciano: There are some particular export markets where we can export as a premium, and we're taking advantage on that.

Speaker Change: Yeah, there are several factors, Salvador, here in play. So first of all, the ethanol margins are the ethanol margins, and they, you know, they are better right now. They are probably twice as...

Juan Luciano: I don't have top of my head where we export those from in terms of plants. But at this point in time, I would say the challenge, not the challenge, but maybe the activity has been on the logistics side to make sure that we can fulfill all the exports and we can get the materials to the port. Because, as you said, and I said before, the man has been very strong, and margins are very good. So we need to take advantage on that. Plants are running well, as I said. Costs are coming a little bit lower, and so this all both well for the forecast, and there's no reason for demand to change significantly outside of the world.

Speaker Change: Big as they were at the beginning of the quarter.

Speaker Change: There are some particular export markets where we can export as a premium, and we're taking advantage of that. I don't have top of my head where we export those from in terms of plants, but at this point in time...

Speaker Change: I would say that the challenge, not the challenge, but maybe the activity has been on the logistics side to make sure that we can fulfill all the exports and we can get the materials to the port.

Juan Ricardo Luciano: Plans are running well. As I said, costs are coming a little bit lower. So this all bodes well for the forecast. And there's no reason for demand to change significantly outside of the world. We have a basket of countries where we are exporting. It's very well balanced.

Juan Luciano: Because we have a basket of countries where we are exporting, it is very well balanced.

Speaker Change: Plans are running well. As I said, costs are coming a little bit lower. So this all bodes well for the forecast. There's no reason for demand to change significantly outside of the world. We have a basket of countries where we are exporting. It's very well balanced. So at this point in time, we're looking at Q3 with optimism.

Juan Luciano: So at this point in time, we're looking at Q3 with optimism.

Juan Ricardo Luciano: So at this point in time, we're looking at Q3 with optimism. We have another follow-up from Andrew Strelzik with BMO. Your line is open, please go ahead.

Andrew Strelzik: We have another follow-up from Andrew Strelzick with BMO. Your line is open. Please go ahead.

Andrew Strelzik: Great. Thank you.

Operator: Great, great. Thank you. I wanted to just get your perspective on broader biofuels policy. You know, as we get deeper into the back part of the year here, we're getting close to some upcoming changes, obviously, the PTC, maybe decisions around the RVO import/export dynamic. So, you know, just wanted some updated thoughts about how those policy shifts will impact your business and whether you think there's, you know, risk in the timing of some of those things getting done. It feels like some of the timing on biofuels policy has been a moving target in a number of different ways.

Juan Luciano: I wanted to just get your perspective on broader biofuels policy. You know, as we get deeper into the back part of the year here, we're getting close to some upcoming changes. Obviously, the PTC maybe decisions around the RVO import export dynamic. So you know, just was curious for some updated thoughts about how those policy shifts will impact your business and whether you think there's, you know, risk on the timing some of those things getting done. It feels like some of the time around biofuels policy has been a moving target in a number of different ways.

Speaker Change: We have another follow-up from Andrew Strelzik with BMO. Your line is open, please go ahead.

Andrew Strelzik: Great, thank you. I wanted to just get your perspective on broader biofuels policy, you know, as we get

Andrew Strelzik: Deeper into the back part of the year here, we're getting close to some upcoming changes, obviously the PGC.

Operator: So just curious about how you're thinking about that progressing and impacting your business from here. Thanks. Thank you for joining us today. Please feel free to follow up with me if you have additional questions. Have a good day and thanks for your time and interest in ADM.

Speaker Change: Maybe decisions around the RVO, import-export dynamic.

Speaker Change: You know, just was curious for some updated thoughts about how those policy shifts will impact your business and whether

Juan Luciano: So just curious for how you're thinking about that progressing and impacting your business from here.

Juan Luciano: Thanks. Yeah, I think all these regulatory frameworks create, you know, movements and uncertainty. The more clarity the industry can have, of course, the better. I think the, I think you have to think about the message around biovisual, you know, blend of credit to it, producer credit is, at the end of the day, we still have a higher mandate for 2025. And a real deficit in 2024. So I think that you have to think that vegetable oil will be part of the solution to fill in that mandate. Ultimately, the pie is getting bigger here, and not the vegetable oil should be gaining on the low sea.

Speaker Change: You think there's, you know, risk on the timing of some of those things getting done. It feels like some of the timing around biofuels policy has been a moving target in a number of different ways. So just curious for how you're thinking about that progressing and impacting your business from here.

Speaker Change: Yeah, I think all this regulatory framework creates, you know, movements and uncertainty. The more clarity the industry can have, of course, the better. I think that...

Speaker Change: I think you have to think about the message around biodiesel, you know.

Speaker Change: Blender's credit to a producer credit is at the end of the day, we still have a higher mandate for 2025.

Juan Luciano: I probably especially now that California's CFS credits have come down a little bit.

Speaker Change: and a green deficit in 2024. So I think that you have to think that vegetable oil...

Juan Luciano: So. I think that the problem with these are the short-term gyrations of that it's very difficult to know what's going to happen Q4. So maybe we have accelerated buying Q4, maybe we have a little bit of some flow down in Q1, but I think overall as we look at that overall policy is constructive for all these and we see more demand and the pie getting bigger. So I think it's all positive for crash margins in the medium or long-term. You know calling it by Q4 is more difficult.

Speaker Change: will be part of the solution to filling that mandate.

Speaker Change: Ultimately, the pie is getting bigger here, and not the vegetable oil should be gaining on the low-CI products, especially now that California's CFS credits have come down a little bit.

Speaker Change: I think that the problem with these are the short terms.

Speaker Change: It's very difficult to know what's going to happen in Q4. So maybe we have an accelerated buying in Q4. Maybe we have a little bit of a slowdown in Q1. But I think overall, as we look at that overall policy, it's constructive for all this. And we see more demand and the pie getting bigger. So I think it's all positive for crash margins in the medium or long term. You know, calling it by quarter is more difficult.

Megan Britt: We have no further questions, so on our hand back to Megan Britt for closing remarks. Thank you for joining us today. Please feel free to follow up with me if you have additional questions. Have a good day, and thanks for your time and interest in ADM.

Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thanks for your participation.

Speaker Change: We have no further questions, so I'll now hand back to Megan Britt for closing remarks.

Operator: You may now just connect your arms. Thank you very much.

Megan Britt: Thank you for joining us today. Please feel free to follow up with me if you have additional questions. Have a good day and thanks for your time and interest in ADM.

Speaker Change: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

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