Q1 2025 Archer-Daniels-Midland Co Earnings Call

Operator: All lines have been placed on a listen-only mode to prevent background noise. As a reminder, this conference call is being recorded.

All lines have been placed on a listen only mode to prevent background noise.

As a reminder, this conference is being recorded.

Megan Britt: I'd now like to introduce your host for today's call, Megan Britt, Vice President Investigations for ADM. Miss Britt, you may begin. Welcome to the First Quarter Earnings Conference Call for ADM.

making britain: I'd like to introduce your host for today's call, making Britain, Vice President Investor Relations for IBM.

You may begin.

Nick Huddle: Welcome to the first quarter earnings conference call for ADM, our prepared remarks today will be led by Juan Luciano Chair of the board and Chief Executive Officer, and in the niche huddle, our la our EVP and Chief Financial Officer.

Megan Britt: Our prepared remarks today will be led by Juan Luciano, Chair of the Board and Chief Executive Officer, and Monish Patolawala, our EVP and Chief Financial Officer.

Megan Britt: We have prepared presentation slides to supplement our remarks on the call today, which are posted on the Investor Relations section of the ADM website and through the link to our webcast. 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 of factors that are subject to numerous 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 and the material.

Nick Huddle: We have prepared presentation slides to supplement our remarks on the call today, which are posted on the Investor Relations section of the <unk> website and through the link to our webcast.

Nick Huddle: 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.

Nick Huddle: These statements and materials are based on many assumptions and factors that are subject to numerous risks and uncertainties.

Nick Huddle: 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 and the materials.

Megan Britt: Unless otherwise required by law, ADM assumes no obligation to update any forward-looking statements due to new information or future events.

Nick Huddle: Unless otherwise required by law ADM assumes no obligation to update any forward looking statements due to new information or future events.

Megan Britt: In addition, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and presentation slides, which can be found in the investor relations section of the ADM website.

Nick Huddle: In addition, during today's call, we will refer to certain non-GAAP or adjusted financial measures.

Nick Huddle: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and presentation slides, which can be found in the investor Relations section of the <unk> website.

Juan Luciano: I'll now turn the call over to Juan. Thank you, Megan. Hello and welcome to all who have joined the call. Please turn to slide four. Today, ADM reported adjusted earnings per share of $0.70. Total segment operating profit was $747 million for the quarter. Our trailing four-quarter adjusted ROIC was 7%. and cash flow from operations before working capital changes was $439 million. ADM's first quarter results were aligned with our outlook and market expectations, and our business operated well in a dynamic external environment. With uncertainty related to global trade and regulatory policy continuing to have an impact on the business, we were able to drive positive momentum in focused areas.

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

Juan Luciano: Thank you Meghan Hello, and welcome to all who have joined the goals. Please turn to slide four.

Juan Luciano: Today, <unk> reported adjusted earnings per share of 70%.

Juan Luciano: Segment operating profit was $747 million for the quarter.

Juan Luciano: Our trailing four quarter adjusted <unk> was 7% and.

Juan Luciano: Cash flow from operations before working capital changes.

Juan Luciano: $439 million.

Juan Luciano: <unk> first quarter results would align with our outlook and market expectations.

Juan Luciano: Our business operated well in a dynamic external environment.

Juan Luciano: With uncertainty related to global trade and regulatory policy continuing to have an impact on the business.

Juan Luciano: We were able to drive positive momentum in focused areas.

Juan Luciano: Our Carbohydrate Solutions team delivers solid results, supported by positive margins in sweeteners, along with strong execution in effort. Nutrition's performance in the first quarter, specifically in our flavors and animal nutrition portfolios, is on a path to recovery. We also made important progress in getting our Decatur East facility back online as it moves into the final stages of recommissioning. Our services and oil seeds was impacted by challenging conditions and overall market uncertainty. and took actions to drive organizational realignment and network optimization.

Juan Luciano: Carbohydrate solutions team delivered solid results supported by positive margins in sweeteners, along with strong execution in ethanol.

Juan Luciano: Operations performed well in the first quarter, specifically in our flavors and animal nutrition portfolio is on a path to recovery.

Juan Luciano: We also made important progress in getting out of the gate or is facility back on line as it moves into the final stages of re commissioning.

Juan Luciano: Our services in oilseeds was impacted by challenging conditions, and overall market uncertainty and took actions to drive organizational realignment and network optimization.

Juan Luciano: And thanks to our team's continued diligence in safety, I'm pleased to report that our Q1 total recordable incident rate was the lowest it has been in the history of ADM. These examples highlight our team's ability to drive our strategy forward while focusing attention on the self-help and execution excellence agenda we outlined earlier in the year. Let's take a closer look at our progress in the first quarter. Please turn to slide five. In our last call, we share a slate of self-help activities to enable us to deliver on execution and cost goals, drive simplification and strategic growth, while maintaining continued capital for taking a balanced approach to these efforts across the business.

Juan Luciano: Thanks to our team's continued diligence in safety.

Juan Luciano: To report that our Q1 total recordable incident rate was the lowest it's been in the history of ADM.

Juan Luciano: Sample to highlight our team's ability to drive our strategy forward, while focusing attention on the self help on execution excellence agenda, we outlined earlier in the year.

Juan Luciano: Let's take a closer look at our progress in the first quarter.

Juan Luciano: Please turn to slide five.

Juan Luciano: In our last call, we shared a slate of self help activities to enable us to deliver on execution and cost goals drive simplification in our strategic growth, while maintaining continued capital discipline.

Juan Luciano: We're taking a balanced approach to these efforts across the business.

Juan Luciano: Let me share a few highlights. From a cost perspective, we made important progress on our target of $500 to $750 million in cost savings over the next three to five years. This included a targeted workforce reduction to align our organization to our most critical priorities. along with a thorough review of third-party consulting. With this, we are seeing a reduction in our overall SG&A cost. We made strategic decisions to deliver optimization across the network, including the recently announced closure of our Kershaw, South Carolina crush facility, exit of domestic trading operations in China and Dubai, as well as the consolidation of several grain warehouses.

Juan Luciano: A few highlights from a cost perspective, we've made important progress on our target of $500 million to $750 million in cost savings over the next three to five years.

Juan Luciano: This included a targeted workforce reductions to align our organization to our most critical priorities.

Juan Luciano: Along with a photo review of third party consulting spend.

Juan Luciano: With this we are seeing a reduction in our overall SG&A costs.

Juan Luciano: We made the strategic decision to delivery optimization across the network, including the recently announced closure of our carrier show South Carolina crush facility.

Juan Luciano: <unk> of domestic trading operations in China, and Dubai, as well as the consolidation of several green warehouses.

Juan Luciano: We don't take actions that impact our colleagues and the communities where we operate live. I have engaged with these groups to clearly explain the rationale for our decisions and provide them with necessary transition support. We're also addressing challenges with operations uptime for our North America soy assets. And we're now live with Decatur East and expect to have the plant at full run rates by the end of the second quarter. The focus on our nutrition business is beginning to show positive results. addressing demand fulfillment issues and leveraging our innovation capabilities in flavors has supported a strong year-over-year operating profit.

Juan Luciano: We don't take actions that impact our colleagues and the communities, where we operate lightly.

Juan Luciano: Having engaged with these groups to clearly explain the rationale for our decisions and provide them with necessary transition support.

Juan Luciano: We're also addressing challenges with operations uptime for all over North America soy assets and we are now live with Decatur East unexpected to have the plant at full run rate by the end of the second quarter.

Juan Luciano: The focus on our nutrition business is beginning to show positive results already.

Juan Luciano: Addressing demand fulfillment issues and leveraging our innovation capabilities in flavors.

Juan Luciano: Fourth the strong year over year operating profit.

Juan Luciano: We've unlocked both simplification and growth potential in our recent Mitsubishi MOU announcement, focusing our combined teams on what they do best. We advance automation and digitization across our global manufacturing network. scaling successful pilots, improving reliability and efficiency, and driving over a dozen new projects to deliver cost-saving and smarter operations. We continue to invest in R&D related to health and wellness solutions. And in February, we announced a partnership with Asahi Global Foods Corporation to distribute an innovative postbiotic design to address challenges with stress, mood, and sleep. The expansion of our REGEN-AG partnership and Biosolutions business is playing an important role in driving farmer resiliency, creating new, high-value avenues for the sale of differentiated crops.

Juan Luciano: We've unlocked both simplification and growth potential in our recent Mitsubishi Mou announcement, focusing our combined teams on what they do best we advanced automation and Digitization across our global manufacturing network.

Juan Luciano: Link successful pilots, improving reliability and efficiency.

Juan Luciano: And over a dozen new projects to deliver cost savings on a smarter operations.

Juan Luciano: We continue to invest in R&D related to health and wellness solutions.

Juan Luciano: And in February we announced a partnership with a softer global Foods Corporation to distribute an innovative biotech designed to address challenges with the stress mood and asleep.

Juan Luciano: The expansion of our <unk> partnership owned by your solutions business is playing an important role in driving farmer resiliency, creating new high value avenues for the sale of differentiated crops.

Juan Luciano: underpinning all this work. will remain focused on capital discipline and actively managing traditional channels to return cash to shareholders. As we look ahead to the reminder of the year, this self-help agenda will be critical to positioning ADM to manage through what continues to be an uncertain external land. We remain confident in our team's ability to take the balance of actions needed to support a result that matches the high expectations we've set for ourselves. Our team is keeping close to our customers and remain alert to both the challenges and the opportunities that we're seeing in the market.

Underpinning all of this work.

Juan Luciano: We'll remain focused on capital discipline and actively managing traditional channels to return cash to shareholders.

As we look ahead to the remainder of the year. This self help agenda will be critical to positioning ADM to manage through what continues to be an uncertain external landscape.

Juan Luciano: We remain confident in our team's ability to take the balance of actions needed to support the result that much as the high expectations, we've set for ourselves.

Juan Luciano: Our team is keeping close to our customers and remain alert to both the challenges and the opportunities that we're seeing in the market.

Juan Luciano: We're taking full advantage of the breadth of the investment we have made in our business over the past decade and the agility that provides. From our crash and export capabilities across the U.S., Argentina, and Brazil, to our expansive origination network, to our expertise in formulation, to our portfolio of ingredients including all natural colors and flavors. All of these add to ADM's ability to support rapidly evolving needs.

Juan Luciano: We're taking full advantage of the breadth of the investment we have made in our business over the past decade, and the agility that provides.

Juan Luciano: From our crush and export capabilities across the U S, Argentina, and Brazil to our expansive origination network through our expertise in formulation to our portfolio of ingredients, including all natural colors and flavors all of these add to adm's ability to support rapidly evolve.

Juan Luciano: Being needs.

Monish Patolawala: With that, let me hand it over to Monish to share a deeper dive into first quarter financial results and our 2025 outlook. Thank you, Juan. Please turn to slide 6. To start, let me provide some perspective on the operating backdrop that shaped the first quarter for the AS&O segment. As we expected, market disruptions related to biofuel policy uncertainties. negatively impacted biodiesel and renewable diesel margins and U.S. vegetable oil demand. We also experienced higher global soybean stock levels and an increase in Argentinian crush rates, which pressured global soybean meal value. Additionally, trade policy uncertainty, particularly with Canada and China, created volatility throughout the quarter for canola meal and oil.

Juan Luciano: With that let me hand, it over to Monish to share a deeper dive into first quarter financial results and our 2025 outlook.

Monish: Thank you Juan.

Juan Luciano: Please turn to slide six.

Juan Luciano: To start let me provide some perspective on the operating backdrop that shape the first quarter for the ethanol segment.

Juan Luciano: As we expected market disruptions related to biofuel policy uncertainty negatively impacted biodiesel and renewable diesel margins in U S vegetable oil demand.

Juan Luciano: We also experienced higher global soybean stock levels, and an increase in Argentinian crush rate, which pressured global soybean meal value.

Juan Luciano: Additionally, trade policy uncertainty, particularly with Canada, and China created volatility throughout the quarter for canola meal and oil.

Monish Patolawala: Taken together, these factors resulted in significantly lower meal and vegetable oil values, pulling down margins across our business.

Juan Luciano: Taken together these factors resulted in significantly lower meal and vegetable oil values.

Juan Luciano: Laying down margins across our businesses.

Monish Patolawala: Overall, against this backdrop, AS&O's segment operating profit for the first quarter was $412 million, down 52% compared to the prior year quarter with declines across all subsegments. In the ag services sub-segment, operating profit was $159 million, down 31% versus the prior quarter, driven primarily by lower North American origination export volumes, as order flow was impacted by trade policy uncertainty. North American origination results also reflect the additional expense of $34 million recorded in the period for anticipated export. Global trade results were lower relative to the same quarter last year, largely due to the negative timing impacts, partially offset by higher destination marketing volumes and margins.

Juan Luciano: Overall against this backdrop ethanol segment operating profit for the first quarter was $412 million down 52% compared to the prior year quarter with declines across all sub segments.

Juan Luciano: In the AG services sub segment operating profit was $159 million down.

Juan Luciano: Down 31% versus the prior year quarter, driven primarily by lower North American origination export volume.

Juan Luciano: Order flow was impacted by trade policy uncertainty.

Juan Luciano: North American origination results also reflect the additional expense of $34 million recorded in the period for anticipated export duty.

Juan Luciano: Global trade results were lower relative to the same quarter last year, largely due to the negative timing impact.

Juan Luciano: Actually offset by higher destination marketing volumes and margins.

Monish Patolawala: Total net timing impacts were approximately 48 million year over year.

Juan Luciano: Total net timing impact of approximately $48 million year over year.

Monish Patolawala: In the crushing subsegment, operating profit was $47 million, down 85%. consistent with the previously provided out both global soybean and canola crush execution margins were significantly lower than the prior quarter. Global executed crush margins were approximately $13 per ton lower in soybeans compared to the prior quarter and approximately $40 per ton lower in canola. By region, crush margins were down significantly in North America. North America's soybean crush margins were negatively impacted by additional capacity from new crushing facilities and lower soybean oil demand stemming from biofuel policy uncertainty. North America canola crush margins were negatively impacted by trade policy uncertainty and lower canola oil demand for biofuel production.

Juan Luciano: In the crushing sub segment operating profit was $47 million down.

Juan Luciano: Down 85%.

Juan Luciano: Consistent with our previously provided outlook.

Juan Luciano: Both global soybean and canola crush execution margin was significantly lower than the prior year quarter.

Juan Luciano: Global executed crush margins were approximately $13 per ton lower in soybeans compared to the prior quarter and approximately $40 per ton lower in canola.

Juan Luciano: By region crush margins were down significantly in North America.

Juan Luciano: North America soybean crush margins were negatively impacted by additional capacity from new crushing facilities and lower soybean oil demand stemming from biofuel policy uncertainty.

Juan Luciano: North America Canola crush margins were negatively impacted by create policy uncertainty and lower canola oil demand for biofuel production.

Monish Patolawala: There were net negative timing impacts of approximately $36 million year over year.

Juan Luciano: There were net negative timing impacts of approximately $36 million year over year.

Monish Patolawala: In the refined products and other subsegments, operating profit was $134 million, down 21% compared to the prior quarter due to lower biodiesel and refining margins. In EMEA, margins declined due to significantly lower biodiesel export volumes. In North America, refining margins were negatively impacted by additional industry crush capacity and lower demand for vegetable oil due to biofuel policy uncertainties. There were net positive timing impacts of approximately $34 million year over year.

Juan Luciano: In the refined products and other sub segment operating profit was $134 million.

Juan Luciano: Down 21% compared to the prior year quarter due to lower biodiesel in refining margins.

Juan Luciano: In EMEA margins declined due to significantly lower biodiesel export volume.

Juan Luciano: In North America refining margins were negatively impacted by additional industry crush capacity and lower demand for vegetable oil due to biofuel policy uncertainty.

Juan Luciano: They are a net positive timing impacts of approximately $34 million.

Juan Luciano: Year over year.

Monish Patolawala: Equity earnings from the company's investment in Wilmar were $72 million, down 52% compared to the prior quarter. Overall, during a challenging quarter, the ASNO team executed an operational improvement like plant and network consolidation. and took actions to actuate cost savings. starting with targeted organization realignment. to partially mitigate the less favorable market conditions and be in an excellent position to capture opportunities as we move through the remainder of the year.

Juan Luciano: Equity earnings from the company's investment in Wilmar was $72 million.

Juan Luciano: Down 52% compared to the prior year quarter.

Juan Luciano: Overall during the challenging quarter.

Juan Luciano: Ethanol team executed our operational improvement like plant network consolidation.

Juan Luciano: And took actions to accelerate cost savings.

Juan Luciano: Starting with targeted organization realignment.

Juan Luciano: Partially mitigate the less favorable market conditions and being an excellent position to capture opportunities as we move through the remainder of the year.

Monish Patolawala: Turning to slide seven. For the first quarter, Carbohydrate Solutions Segment operating profit was $240 million, down 3% compared to the prior quarter. Operating profit for this segment came in slightly ahead of our previously provided segment guidance for the quarter.

Juan Luciano: Turning to slide seven.

Juan Luciano: For the first quarter of carbohydrate solutions segment operating profit was $240 million.

Juan Luciano: Down 3% compared to the prior year quarter.

Juan Luciano: Operating profit for the segment came in slightly ahead of our previously provided segment guidance for the quarter.

Monish Patolawala: In the starches and sweeteners sub-segment, operating profit was $207 million, down 21% compared to the prior quarter. In North America, S&S results were lower due to lower starch margins from demand softness in the paper and corrugated markets, as well as lower North American wet mill ethanol results due to lower ethanol margins. In EMEA, SNS volumes and margins declined as higher CON costs and increased competition negatively impacted results. As a partial offset, North American liquid sweetener margins improved relative to the prior year quarter due to better product quality. Global wheat milling margins and volumes also improved relative to the prior quarter, largely due to volume growth with key companies.

Juan Luciano: In the starches and sweeteners sub segment operating profit was $207 million down.

Juan Luciano: Down 21% compared to the prior year quarter.

Juan Luciano: In North America, <unk> results were lower due to lower starch margins from demand softness in the paper and corrugated markets as well as lower North American West mill ethanol results due to lower ethanol margins.

Juan Luciano: In EMEA, <unk> volumes and margins decline as higher corn costs and increased competition negatively impacted results.

Juan Luciano: As a partial offset north American liquid sweetener margins improved relative to the prior year quarter due to better product mix.

Juan Luciano: Global wheat milling margins and volumes also improved relative to the prior year quarter, largely due to volume growth with key customers.

Monish Patolawala: In the Vantage Con Processor sub-segment, operating profit was $33 million up compared to the prior quarter due to higher ethanol volumes and improved ethanol margins relative to the prior quarter. Overall, ethanol EBITDA margins per gallon were slightly negative in the quarter.

Juan Luciano: In the vantage corn processors or sub segment operating profit was $33 million up compared to the prior year quarter due to higher ethanol volumes and improve ethanol margins relative to the prior year quarter.

Juan Luciano: Overall ethanol EBITDA margins per gallon, but slightly negative in the quarter.

Monish Patolawala: Turning to slide 8. In the first quarter, nutrition segment revenues were $1.8 billion, down 1% compared to the prior quarter, primarily due to negative currency impact. Human nutrition revenue was up 4% due to strong flavors growth and M&A, which offset headwinds related to supply chain challenges from Decatur.

Juan Luciano: Turning to slide eight in.

Juan Luciano: In the first quarter Nutrition segment revenues were $1 8 billion.

Juan Luciano: Down 1% compared to the prior year quarter, primarily due to negative currency impact.

Juan Luciano: Human nutrition revenue was up 4% due to strong flavors growth and M&A, which offset headwind relative to supply chain challenges from Decatur East.

Monish Patolawala: Animal nutrition revenue was down 6% as negative currency impacts and lower volumes offset mixed benefits. Nutrition segment operating profit was $95 million for the first quarter, up 13% versus the prior quarter.

Juan Luciano: Animal nutrition revenue was down 6% as negative currency impact and lower volumes offset mix benefit.

Juan Luciano: Nutrition segment operating profit was $95 million for the first quarter up 13% versus the prior year quarter.

Monish Patolawala: Human nutrition sub-segment operating profit was $75 million, down 1% compared to the prior quarter, as improved performance and flavors was more than offset by declines in specialty ingredients and health and wealth. Animal nutrition subsegment operating profit of $20 million was higher than the prior quarter due to higher margins supported by ongoing turnaround action.

Juan Luciano: Human Nutrition segment operating profit was $75 million.

Juan Luciano: Down 1% compared to the prior year quarter as improved performance in flavors was more than offset by declines in specialty ingredients and health and wellness.

Juan Luciano: Animal nutrition sub segment operating profit of $20 million was higher than the prior year quarter due to higher margins supported by ongoing turnaround actions.

Monish Patolawala: Please turn to slide 9. To the end of the first quarter, the company generated cash flow from operations before working capital of approximately $439 million, down relative to the prior quarter due to lower total segment operating profit.

Juan Luciano: Please turn to slide nine.

Juan Luciano: Through the end of the first quarter the company generated cash flow from operations before working capital of approximately $439 million down relative to the prior quarter due to lower total segment operating profit.

Monish Patolawala: Solid cash generation and our strong balance sheet remain a critical differentiator for the company. We will continue to seek opportunities to further strengthen our balance sheet, to provide financial flexibility, to organically invest in the business, to enhance returns and create long-term value. We are also taking actions to ensure working capital excellence through stronger rigor on working capital planning, inventory rationalization, improvement of key account table metrics, and more timely collection of past due balance.

Juan Luciano: Solid cash generation and a strong balance sheet remain a critical differentiator for the company.

Juan Luciano: We will continue to seek opportunities to further strengthen our balance sheet to provide financial flexibility to organically invest in the business to enhance returns and create long term value.

Juan Luciano: We are also taking actions to ensure working capital excellence through stronger rigor on working capital planning inventory rationalization improvement of key account payable metrics and more timely collection of past due balances at.

Monish Patolawala: At the same time, we remain committed to returning cash to shareholders, and we returned $247 million to shareholders in the form of dividends in the quarter.

Juan Luciano: At the same time, we remain committed to returning cash to shareholders and we returned $247 million to shareholders in the form of dividends in the quarter.

Monish Patolawala: Turning to slide 10, we have provided details to support our 2025 consolidated outcome. Earlier today, we affirmed our fully-adjusted EPS guidance. We continue to expect adjusted earnings per share to be between $4 to $4.75 per share, though we now expect to be at the lower end of the guidance range given the current market backdrop. In particular, we remain cautious about our second-half outlook for crush margin improvement as current domestic crush replacement margins are below our outlook.

Juan Luciano: Turning to slide 10, we have provided details to support our 2025 consolidated outlook.

Juan Luciano: Earlier today, we affirmed our full year adjusted EPS guidance.

Juan Luciano: We continue to expect adjusted earnings per share to be between $4 to $4 75 per share. We now expect to be at the lower end of the guidance range given the current market backdrop.

Juan Luciano: In particular, we remain cautious about our second half outlook for crush margin improvement at current domestic crush replacement margins are below our outlook.

Monish Patolawala: With the uncertainty related to tariff policy and macroeconomic conditions, we are not providing segment operating profit guidance for future quarters. We are providing directional guidance at the segment level for the full year. Our directional guidance for operating profit for the full year for carbohydrate solutions and nutrition has not changed from our previously provided indication. With performance to date and continued pressure on crush margins in the second quarter, we are lowering our directional guidance for ASNO for the full year to be lower than the prior year. As an additional data point, current crush margins for the second quarter are trending lower than the first quarter.

Juan Luciano: With the uncertainty related to tariff policy and macroeconomic conditions, we are not providing segment operating profit guidance for future quarters.

Juan Luciano: We are providing directional guidance at the segment level for the full year.

Juan Luciano: Directional guidance for operating profit for the full year for carbohydrate solutions and nutrition has not changed from our previously provided indications.

Juan Luciano: With performance to date and continued pressure on crush margins in the second quarter, we are lowering our directional guidance for ethanol for the full year to be lower than the prior year.

Juan Luciano: As an additional data point current crush margins for the second quarter are trending lower than the first quarter.

Monish Patolawala: I also want to share some updates on our overall assumptions. We still expect better crush and biodiesel margins in the second half of the year, as clarity on Renewable Volume Obligations, or RVOs, is expected to support strong U.S. demand for crop-based vegetable oil. We also expect to deliver our $200-$300 million cost savings target for the year and have already taken several actions that are delivering savings. We are working thoughtfully to accelerate saving realization where possible. We have seen some signs of weakening customer demand, particularly in carb solutions, and have lowered our volume expectations for select markets and products.

Juan Luciano: I also wanted to share some updates on our overall assumption.

Juan Luciano: We still expect better crushing biodiesel margins in the second half of the year as clarity on renewable volume obligations or RVO is expected to support strong U S demand for crop based vegetable oil.

Juan Luciano: We also expect to deliver our $200 million to $300 million cost savings target for the year and have already taken several actions that are delivering savings.

Juan Luciano: We are working thoughtfully to accelerate savings realization where possible.

Juan Luciano: We have seen some signs of weakening customer demand, particularly in carb solution and have lowered our volume expectations for select markets and products.

Monish Patolawala: While we are not embedding any significant macroeconomic slowdown in our guide, we are actively monitoring consumer demand.

Juan Luciano: While we are not embedding any significant macroeconomic slowdown in our guide we are actively monitoring that similar demand.

Monish Patolawala: To conclude, as we navigate 2025, our focus will remain on what is within our control. A full commitment to remediating the material weakness and making strides to strengthen our internal control. driving execution to improve operational performance and lower costs while sustaining functional excellence. Simplifying our portfolio to enhance focus on core competencies while unlocking additional capital to drive value and position the company for long-term success. These efforts position us in our ability to navigate the current dynamic environment and reinforce our confidence in delivering on our commitments.

Juan Luciano: To conclude as we navigate 2025, our focus will remain on what is within our control.

Juan Luciano: A full commitment to remediate the material weakness and making strides to strengthen our internal controls.

Juan Luciano: Driving execution to improve operational performance and lower cost while sustaining functional excellence.

Juan Luciano: Simplifying our portfolio to enhance focus on core competencies, while unlocking additional capital to drive value and position the company for long term success.

Juan Luciano: These efforts position us and our ability to navigate the current dynamic environment and reinforce our confidence in delivering on our commitments.

Juan Luciano: Before I hand it back to Juan, I want to take a few minutes to thank all my ADM colleagues for their dedication and focus in delivering for our customers and helping to create long term value for our shareholders. Back to you, Juan. Thanks, Monish.

Speaker Change: Before I hand, it back one I want to take a few minutes to thank all my ADM colleagues for their dedication and focus in delivering for our customers and helping to create long term value for our shareholders.

Juan Luciano: Back to you Juan.

Juan Luciano: I'll briefly close by recapping our focus as we continue the path into 2025. As I said at the top of the call, we will continue to focus on both execution, agility, and our self-help agenda. Our teams are monitoring the evolving geopolitical and macroeconomic landscape, and they are taking actions as we get more clarity about both the short and long-term situation. Importantly, we are leveraging cost management, strategic simplification, targeted investment, and capital discipline to ensure we are prepared for a multitude of scenarios. The potential impacts and our mitigating actions look different for each part of the business.

Juan Luciano: Thanks, Monish I'll briefly close by recapping, our focus as we continue the bus into 'twenty or 'twenty five.

Juan Luciano: As I said at the top of the call. We will continue to focus on both execution agility and our self help agenda.

Juan Luciano: Our teams and monitoring the evolving geopolitical and macroeconomic landscape.

Juan Luciano: Taking actions as we get more clarity about the both the short and long term situation.

Juan Luciano: Importantly, where liberty <unk> cost management strategic simplification targeted investments and capital discipline to ensure we are prepared for a multitude of scenarios.

Juan Luciano: The potential impact.

Juan Luciano: Got it in actions look different for each part of the business.

Juan Luciano: For Carbohydrate Solutions and Nutrition, we are paying close attention to overall consumer sentiment and the potential for an economic slowdown. To mitigate against this, we're taking aggressive action on our manufacturing and SG&A costs. In nutrition specifically, we are focused on getting our east plant fully ramped up, optimizing our animal nutrition business model, leveraging our leading specialty ingredients portfolio, including all natural colors and flavors, and ensuring we are continuing to execute against the healthy opportunity pipeline in flavors and health and wellness. For our services and oilseeds, we are monitoring the global trade and biofuel policy environment to ensure that we can enable the export market for our vast origination footprint and take advantage of improving demand conditions later in the year.

Juan Luciano: <unk> solutions in nutrition, we're paying close attention to overall consumer sentiment and the potential for an economic slowdown.

Juan Luciano: To mitigate against these we're taking aggressive action on our manufacturing and SG&A costs.

Juan Luciano: Nutrition, specifically, we are focused on getting our east plant fully ramped up.

Juan Luciano: Optimizing our animal nutrition business model.

Juan Luciano: <unk>, we're leaving our specialty ingredients portfolio, including all natural colors and flavors.

Juan Luciano: Ensuring we are continuing to execute against a healthy opportunity pipeline in flavors and health <unk> wellness.

Juan Luciano: Product services in Oilseeds, we are monitoring the global trade and biofuel policy environment to ensure that we can enable the export markets for our robust origination footprint and take advantage of improving demand conditions later in the year on.

Juan Luciano: On trade policy, we have seen positive signals, with both delays in implementing tariffs to potential avoidance of tariffs and counter-tariffs. The decisions regarding USTR's Section 301 proposal have mitigated some of the potential impact of transporting commodity products between China and the U.S., and more broadly, for China exports, we will need to see where things stand as we approach the U.S. soybean harvest in the October to December period. Beyond trade, strong policy support for biofuels, including clarity on RBOs, is expected to support strong US demand for crop-based vegetable oil. In this business, beyond general market improvements, we will continue our focus on both cost management and strategic simplification self-help efforts to manage through uncertainty.

Juan Luciano: On trade policy, we have seen positive signals with both delays in implementing <unk> to potential avoidance of 30% Counterparties.

Juan Luciano: The decision regarding Ustr's section 301 proposal have mitigated some of the potential impact of transport and commodity products between China and the U S and more broadly for China exports, we will need to see where things stand as we approach the U S. Soybean harvest in the October to December period.

Juan Luciano: Beyond trade strong policy support for Biofuels, including clarity on <unk> is expected to support the strong U S demand for our broad based <unk>.

In this business beyond general market improvements.

Juan Luciano: We will continue our focus on both cost management and strategic simplification self help efforts to manage through uncertainty.

Juan Luciano: As noted by Monish, these factors support our confidence in our full year guidance for 2025, though with current fundamentals we will be at the lower end of our range.

Juan Luciano: As noted by Monish. These factors support our confidence in our full year guidance for 2025.

Juan Luciano: So with current fundamentals, we will be at the lower end of our range.

Juan Luciano: We are a U.S. company that is fundamental to the global food, feed, and energy supply chains, connecting consumers with farmers to fuel the world and keep the U.S. agriculture sector competitive. We have a long track record of navigating cycles and are focused on resiliency, which comes from our unparalleled asset network and our employees' commitment to excellence. As in the past, regardless of external challenges and market disruptions, ADM is working with our farmers and customers to be a source of strength in the economy, always fulfilling our mission to unlock the power of nature to enrich the quality of life.

Juan Luciano: We are at a U S company that is fundamental to the global food feed and energy supply chains.

Juan Luciano: And consumers with farmers to fuel the world and keep the U S agriculture sector competitive.

Juan Luciano: We have a long track record of navigating cycles and are focused on resiliency, which comes from our unparalleled asset network and our employees' commitment to excellence.

Juan Luciano: As in the past regardless of external challenges and market disruptions ADM is working with our farmers and customers to be a source of strength in the economy always fulfilling our mission to unlock the power of nature to enrich the quality of life.

Juan Luciano: With that we.

Operator: We'll take your questions now.

Juan Luciano: We will take your questions now operator, please open the line.

Operator: Operator, please open the line. Thank you. As a reminder, if you'd like to ask a question you can press star followed by one on your telephone keypad.

Juan Luciano: As a reminder, I'll ask a question.

Juan Luciano: One on your telephone keypad.

Thomas Palmer: Our first question of the day comes from Tom Palmer of Citi. Your line is now open, please go ahead. Good morning and thanks for the question.

Tom Palmer: Our first question comes from Tom Palmer of Citi.

Speaker Change: Please go ahead.

Good morning, and thanks for the question.

Juan Luciano: Maybe just to start out, I wanted to ask on your expectation for the RVO and how this guides your outlook for 2025. So when we think about biodiesel margins in the back half of the year, should we be thinking that we could see a return to last year's levels. When we look at crush margins, is the assumption that we could see a return to kind of the original guidance, which I think was 45 to 55 per metric ton per soy and 50 to 70 per canola. Just any help on kind of the shape of the year in terms of the second half and how the RVO influences that, thank you.

Speaker Change: Maybe just to start out I wanted to ask on your expectation.

Speaker Change: The RVO and how this guidance your outlook for 2025, so when we think about.

Speaker Change: Oh diesel margins in the back half of the year should we be thinking.

Speaker Change: That we could see a return to last year's levels. When we look at crush margins is the assumption that we could see a return to kind of the original guidance, which I think was $45 to $55 per metric ton for soy and 50 to 70 for canola just just any help on kind of the shape of the year in terms of the <unk>.

Speaker Change: Half the RVO influences that thank you.

Juan Luciano: Yes, thank you, Tom, for the question. As you pointed out, we see strong RBOs as the most important driver for the biofuel outlook. We understand that the RBO's rule is being developed, and we are engaged with the administration on the important role of the RFS and strong RBOs to support the domestic market for U.S. farmers and to support strong American energy independence. And we are confident that EPS sees this as a priority. So, of course, at the moment, the industry is not running at rates to satisfy mandated volumes. And we expect, and the logic implies that margins need to go up to bring grant rates higher in the second half.

Tom Palmer: Yes. Thank you Tom for the question as you pointed out.

Speaker Change: See a stronger <unk>.

Speaker Change: The most important driver for the biofuel outlook.

Speaker Change: We understand that <unk>.

Speaker Change: Rule is being developed and we are engaged with the administration on the important role of the RFS and the stronger to be owes to support domestic markets for U S farmers and to support.

Speaker Change: Strong American energy independence, and we are confident that EPS Ccs is a priority so of course at the moment the industry.

Speaker Change: Is not running at the rates to satisfy mandated volumes.

Speaker Change: We expect in the logic implies that margins need to go up to bring blend rates higher in this cycle.

Juan Luciano: When we go to crash, and we're probably going to see that by RINs improving as we go forward, when we go to crash, We have seen... strong demand for soybean meal. Of course, there have been strong crash rates in Argentina, Brazil, and the U.S., but we've seen that leg is supported. Of course, when we cannot produce all these biofuels in the U.S., oil goes to fight for export markets, and that's the weak leg at this point in time. So we expect that with RBOs coming back, we will be able to come back to the original expectations, and maybe we have a debate.

Speaker Change: When we go to crush.

Speaker Change: And we're probably going to see that by liens improving.

Speaker Change: Go forward when we go to crash.

Speaker Change: We have seen.

Speaker Change: Sure.

Speaker Change: Strong demand for soybean meal of course, it has been a strong crush rates in Argentina, Brazil, and the U S. But we've seen that leg is supported of course, when we cannot produce all these biosimilars in the U S oil goes to five.

Speaker Change: X for export markets.

Speaker Change: The week late at this point in time, so we expect with <unk> coming back we will be able to come back to the original expectations. We set at the beginning of the.

Monish Patolawala: Just from a math perspective, since you asked a specific tome. First quarter, as my script says, we ended $13 below. Last year, so around 40, $43. In Q1, in SOI, canola was, last year was around 100, so we were somewhere, we were 40, 35 to $40 lower. Q2 is currently trending lower than Q1. From a cross-rate perspective, part of it is timing because we do get book on before the quarter is in. So Q2 is lower both in canola and in SOI. And then as Juan said, we are expecting a ramp up in the second half.

Speaker Change: Just from a math perspective since you asked specific com.

Speaker Change: First quarter.

Speaker Change: As my script says we ended $13 below last year, so around 40% $43 in Q1 in soy canola was last year was around 100. So we are somewhere 40 35 to $40 lower Q2 is currently trending lower than Q1.

Speaker Change: From a crush rate perspective part of it is timing because we do get book on before the quarter is in.

Speaker Change: So Q2 is lower both in canola and in soy and then as <unk> said, we are expecting a ramp up in the second half.

Monish Patolawala: Of course, now it's gonna be a wider range because Q1 and Q2 are lower. So when we originally said, we would be in the 40 to 60, we had set 45 to 55, we are now saying 40 to 65 for the year on SOI, and then canola, we had set 50 to 70, we are at the 45 to 65. So as Juan explained it, when we do come back in the second half, you would come back to margins that we had originally expected, but since the first half is lower, the total number gets impacted. So hopefully I answered your question.

Speaker Change: Of course, now it's going to be a wider range because Q1 and Q2 are lower so when we originally said we would be in the 40% to be had.

Speaker Change: Said 45 to 55, we are now saying, 40% to 65 for the year on soy and then canola, albeit set 50% to 70, where at the 45 to 65, so as foreign explained it when we do come back in the second half you would come back to margins that we had originally expected, but since the first half is lower.

Speaker Change: Total number gets impacted so hopefully answered your question.

Thomas Palmer: Thank you, that was very helpful. Thank you.

Speaker Change: Thank you that's very helpful.

Thank you. Our next question comes from Andrew <unk> of P&I. Your line is now open. Please go ahead.

Andrew Strelzik: Our next question comes from Andrew Strelzik of BMO. The line is now open. Please go ahead. Hey, good morning. Thanks for taking the question. I actually wanted to follow up on the RVO. I just wanted to follow up on the kind of our RVO line of questioning. Is there a specific RVO kind of number or range that you're assuming to get to those types of outcomes? Or, you know, how do you maybe think about that number one? And number two, you know, just more broadly, What is a positive RVO outcome for ADM? Is there like a breakeven RVO above which you see it as a positive outcome below, which is negative?

Andrew: Hey, good morning, Thanks for taking my question.

Speaker Change: I actually wanted to follow up on the RVO.

Andrew: Right.

Andrew: I just wanted to follow up on the RVO.

Andrew: <unk> line of questioning is there a.

Andrew: Specific RVO kind of number or range that you're assuming to get to those types of outcomes or.

Andrew: How do you maybe think about that number one and number two just more broadly.

Andrew: What is a positive outcome for ADM is there what are you doing.

Andrew: Breakeven RVO above, which you see it as a positive outcome below which is negative we've obviously seen the reporting north of $5 billion. So I'm just curious how you think about it.

Andrew Strelzik: We've obviously seen the reporting north of 5 billion. So I'm just curious how you think about. maybe the range of outcomes and how it impacts your business. Thank you.

Andrew: And maybe the range of outcomes and how it impacts your business. Thanks.

Juan Luciano: Yeah, thank you, Andrew. I would say the industry asked to a certain degree is like 5.2 billion of biomass based biodiesel diesel, and maybe 15 billion conventional so a total of 25 billion 25 and a half billion I think, as I said, we are engaged with the administration. We understand that the EPA understands the importance of this. It helps with all the priorities the administration has set up, which is to help the agricultural farming. We need to do that by Thank you for your attention. and others. is another objective. So we're engaged. I mean, as you know, the guidance on all these...

Andrew: Yes, Thank you Andrew.

Speaker Change: I'd say the industry ask to a certain degree is like.

Speaker Change: $5 2 billion of biomass based biodiesel diesel and maybe 15 billion conventional so a total of 25 billion $25 5 billion.

Speaker Change: I think as I said, we are engaged with the administration, we understand that the EPA understands the importance of these helps with all the priorities of the administration has set up which is to help the agricultural farming.

Speaker Change: We need to do that.

Speaker Change: Expanding export markets, but also by solidifying internal consumption and biofuel is an excellent way to do that and also to improve.

Speaker Change: Domino's, which.

Speaker Change: Is another objective so we're.

Speaker Change: We are engaged.

Speaker Change: <unk>.

Speaker Change: As you know the guidance.

Speaker Change: On all of these.

Juan Luciano: ended on the 90-day comment period, ended in April. So we're expecting that the administration is tackling this hopefully soon. But the industry depends.

Speaker Change: And at the.

Speaker Change: The 90 day comment period ended in April.

Speaker Change: Blue so.

Speaker Change: And the administration is.

Speaker Change: Tackling these hopefully soon so but the industry depends on that.

Monish Patolawala: Just Andrew, I'll build on you ask the impact to ADM for like, I'll just talk second half of 2025. Because the assumption is that replacement margins would move up. So if replacement margins did not move up between now till the end of the year, then that's a 50 cent additional headwind. So that's the impact that we are counting on a recovery in the second half from an RVO perspective or from crush margins, which is heavily driven by what our Got it. Thank you very much. Thank you.

Speaker Change: Just Andrew I'll build on you asked the impact to ADM for like I'll, just talk second half of 2025, because the assumption is that replacement margins would move up so if replacement margins did not move up between now till the end of the year, then thats a 50% additional headwind. So that's the impact that we are counting on a recovery.

Speaker Change: In the second half from RVO perspective, or from crush margins, which is heavily driven by what our views.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you. Our next question comes from Heather Jones of Heather.

Heather Jones: Our next question comes from Heather Jones of Heather Jones Research. The line is now open. Please go ahead. Thank you for the question. Um, I had a question about RPO. So, um, I know there was a, I think it was a 34 million year-on-year positive timing benefit. But even adjusted for that, given how weak the environment was in the US and the lower, much lower export volumes out of EMEA, just Curious what drove the strength there. And I know it's significantly lower than the past few years, but prior to the RD rush we saw over the past few years, I mean, that was a pretty good showing.

Speaker Change: This research.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Thank you for the question.

Speaker Change: I wish I had a question about RPM so.

Speaker Change: No. There was I think it was $34 million year on year positive timing benefit.

Speaker Change: But even adjusting for that.

Speaker Change: Given how weak the environment was in the U S and.

Speaker Change: The lower much lower export volumes out of EMEA.

Speaker Change: Yes.

Curious what drove the strength, there and I know, it's significantly lower than the past few years, but prior to that.

Speaker Change: R&D rush, we saw over the past few years I mean that was a pretty good showing.

Speaker Change: <unk>.

Monish Patolawala: Wondering what were the positives in that, you know, given the very challenged backdrop here in the U.S.?

Speaker Change: Wondering.

Speaker Change: What are the positives in that.

Speaker Change: Given the very challenging backdrop here in the U S.

Monish Patolawala: So Heather, I would say, yes, in the short run it was a little better, but when you look at it for the whole year and how our guide is based, I would say in total we still continue to see RPO to be softer. And you have seen most of the items, biodiesel margins have already come off significantly. and part of it is driven by just extra volume, pretreatment capacity, et cetera. In EMEA, the margins are also significantly lower than the prior where, again, we experienced benefits from U.S. SME market flows. And then third, you know, when you just think about the backdrop with the implementation of 45Z as well as all the extra refining capacity that exists, that will continue to weigh on margins.

Speaker Change: So I would say, yes in the short run it was a little better but when you look at it for the whole year in our guidance is based I would say in total we still continue to see our appeal to be softer and you have seen most of the items biodiesel margins have already come off significantly.

Speaker Change: And part of it is driven by just extra volume pretreatment capacity et cetera. In EMEA. The margins are also significantly lower than the prior year, where again, we experienced benefits from U S. SME market flows.

Speaker Change: And then third any.

Speaker Change: Think about the backdrop with the implementation of 45 Z as well as all the extra refining capacity that exists that will continue to weigh on margins. So I would say in total taken together, our appeal will be significantly lower versus the prior year and Thats, what we had thought coming into the year and Thats. What we continue to think sitting as of right now.

Monish Patolawala: So I would say in total, taken together, RPO will be significantly lower versus the prior. And that's what we had thought coming into the year and that's what we continue to think sitting as. Okay, thank you. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks Keith.

Ben Theurer: Our next question comes from Ben Theurer of Barclays. Your line is now open, please go ahead. Hey, everyone.

Speaker Change: Question comes from.

Speaker Change: Ben Theurer of Barclays. Your line is now open. Please go ahead.

Rahi: This is Rahi on for Ben. Thank you so much for the color today. Just regarding tariffs. Can you give us more color on trade flow shifts, i.e. how you're replacing Chinese demand and maybe how much of a drop in volume was related to China and ag services? You have a percentage of profit or revenues that normally relates to China. Thank you so much.

Speaker Change: Hey, everyone. This is <unk> on for Bob. Thank you so much for the color today, just regarding Paris can you give us more color on <unk>.

Speaker Change: We are replacing Chinese demand.

Speaker Change: How much of a drop in volume related to China and activity do you have a percentage of profit or revenue that relates to China. Thank you so much.

Juan Luciano: Yeah, hi, Rahib. Listen, at the end of the day, I would say, if you look at Q1, if you think how all this started, or this thing has settled, the impact has not been that significant in Q1. Probably the biggest impact we have had has been from speculation about what the USTR Section 301 maritime issue was going to be. But in reality, when USTR issued a ruling, it basically almost removed all the risk from agricultural activity. So, um, we, uh... We've been pleased to see the administration. have paused for 90 days the implementation of some of these while we still try to negotiate agreements with the different parties.

Speaker Change: Yes.

Speaker Change: Listen at the end of the day I would say if you looked at Q1.

Speaker Change: If you think how all this started.

Speaker Change: This thing has settled.

Speaker Change: The impact has not been that significant in Q1, probably the biggest impact. We have had has been from speculation about what the USTR section 301 maritime issue, what's going to be.

Speaker Change: But in reality when when USTR issued a ruling.

Speaker Change: Basically almost removals, but risk.

Speaker Change: From agricultural exports.

Speaker Change: No.

Speaker Change: We.

Speaker Change: We've been pleased to see the administration.

Speaker Change: Hum pause.

Speaker Change: For 90 days the implementation of some of these while we still try to negotiate agreements with the different embarked is but if you think about Mexico and Canada export base.

Juan Luciano: But if you think about Mexico and Canada export tariff, basically 98% of our products are exempt from that. So we didn't feel any impact there. Corn, Europe, they delay the retaliation on corn until July and in soybean until December. And although on China, we escalated, the reality is the U.S. is not gonna be competitive to China for the second and third quarter because that's when Brazil and Argentina become most competitive. And we come back in October when there is a U.S. harvest. So we have until then to see how this clarifies. So that's where we see the situation today.

Speaker Change: Basically 98% of our products our extent from that so we didn't feel any impact there.

Speaker Change: Core Europe, they delay the retaliation on corn until July and in soybean until December.

Speaker Change: Though in China, we escalated the reality is the U S. It's not going to be competitive to China for the second and third quarter, because thats, when Brazil, and Argentina become most competitive on weekend.

Speaker Change: October when there is a U S harvest. So we have until then to see how this clarifies so.

Speaker Change: That's where we see the situation today again, we are working.

Juan Luciano: Again, we are working, as you said, how to offset the impact of that. For us, we work directly in the U.S. with 60,000 farmers. It's important for them the access to export markets. So there are gonna be export markets where we're gonna be gaining share. Remember also that China has moved to Brazil to a certain, to a bigger extent in the previous. you know, issue with trade in 2017 or 18. So the reliance on U.S. exporting to China is not that big, probably for Soybeans is in the range of 20 million tons, if you will, if that were the total impact.

Speaker Change: As you said helped to offset the impact of that for US we work directly in the U S. With 60000 farmers is important for them the access to export markets. So there are going to be export markets, where we're going to be gaining share.

Speaker Change: Remember also that China has moved to Brazil to a sort of thing.

Speaker Change: Good extent in the previews.

Speaker Change:

Speaker Change: The issue with trade in 2017 or 18, so the reliance on U S exporting to China.

Speaker Change: Probably for.

Speaker Change: Soybeans is in the range of $20 million, if you will.

Speaker Change: Doug.

Speaker Change: The total impact and then.

Juan Luciano: And then, um... I think China Export, so I think that that's the impact at this point in time. We were pleased to see, as I said, USTR Section 301 was sold favorably for agricultural export.

Speaker Change: <unk>.

Speaker Change: I think China and export.

Speaker Change: No.

Speaker Change: So I think that.

Speaker Change: Thus the impact at this point in time, we were pleased to see as I said USTR section 301 was sold.

Speaker Change: Favorably for.

Speaker Change: Okay cultural experts.

Juan Luciano: Okay, thank you so much. Thank you.

Speaker Change: Okay. Thank you so much.

Speaker Change: Youre welcome.

Speaker Change: Thanks Keith.

Pooran Sharma: Our next question comes from Pooran Sharma of Stevens. Your line is now open, please go ahead. Good morning. Hello. Sorry, Pooran, your line is now open, please go ahead. I apologize about that. Good morning, thanks for the question here.

Speaker Change: Question comes from <unk> Sharma of Stephens.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Good morning, Hello.

Speaker Change: Your line is now open Hi go ahead.

Speaker Change: Apologies about that.

Speaker Change: Hi, Good morning. Thanks for the question here just wanted to ask about the soy crush industry.

Juan Luciano: Just wanted to ask about the soy crush industry. Just, you know, with all the announcements with new crush capacity coming online in North America, and then just with the weak fundamental backdrop that we've had over the last several months, have you heard of any signs of rationalization or signs of pause in adding this new capacity in the industry? Do you anticipate anything to come online or be delayed in 2026 or beyond? Yeah, listen, we can speculate for what others are doing. I mean, we try to manage what we can control.

Speaker Change: Just with all the announcements with new crush capacity coming online in North America.

Speaker Change: And then just with the weak fundamental backdrop that we've we've had over the last several months.

Speaker Change: Have you heard of any signs of rationalization.

Speaker Change: Or signs of pause.

Speaker Change: And adding this new capacity in the industry do you.

Speaker Change: Anticipate.

Speaker Change: Any any anything.

Speaker Change: To come online or be delayed in 2026 and beyond.

Speaker Change: Yes.

Speaker Change: Listen I, we can speculate photo what others are doing I mean, we try to manage what we can control.

Juan Luciano: As you heard in the prepared remarks, I mean, we are in the process of shutting down one of our plants in Kershaw. And I think we continue to see the. continue to check for the competitiveness of our plants. We have a lot of self-help agenda to try to continue to improve that. Volumes have been improving there on an unplanned nature. Of course, the industry will take some planned shutdowns when demand is not there. We have seen it also in biodiesel, where a lot of the non-integrated plants have to go down. I think it's important to know that all this capacity, the crash capacity, has been brought to comply with the expected RBO mandates.

Speaker Change: As you heard in the prepared remarks, I mean, we.

Speaker Change: We are in the process of shutting down one of our plans in Cardiff show.

Speaker Change: I think we continue to see.

Speaker Change: <unk> continued.

Speaker Change: Continued to check for the.

Speaker Change: Competitiveness of our plants, we have a lot of.

Speaker Change: Self help agenda to try to continue to improve that volumes have been improving there on unplanned nature of course, the industry will take some planned shutdowns.

Speaker Change: Demand is not there we have seen it also in biodiesel with a lot of the non integrated plants up to go down.

Speaker Change: I think it's important to know that all of these.

Speaker Change: Capacity the crush capacity.

Speaker Change: But I'll have to comply with the expected RVO mandates and that's where we think is so important to bring clarity to that because we were in the process of building our renewable green diesel industry and everybody builds in anticipation of that support in the U S factory. So I think it's important.

Juan Luciano: And that's why we think it's so important to bring clarity into that, because we were in the process of building a renewable green diesel industry and everybody built in anticipation of that, supporting U.S. manufacturing. So I think it's important that the moment we clarify the rules, all this capacity that has been invested in will make sense. Thank you.

Speaker Change: The moment, we clarify the rules all this capex capacity.

Speaker Change: Being invested in will make sense.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Steven Haynes: Our next question comes from Steven Haynes of Morgan Stanley. Your line is now open, please go ahead. Good morning and thanks for taking my question. I wanted to ask on Argentina, cited as a headwind for crushing the quarter. But we've been kind of seeing some headlines that farmer selling there is off to a historically slow start. So maybe you could just put a finer point around what you've assumed for the commercial commercialization of that crop for the balance of the year as it relates to the guidance. Thank you.

Speaker Change: Thank you our next.

Speaker Change: Next question comes from Steven Haynes of Morgan Stanley Your line.

Speaker Change: Please go ahead.

Speaker Change: Hi, good morning, and thanks for taking my question.

Speaker Change: I wanted to ask on Argentina side, it is a headwind for crushing in the corner.

Speaker Change: But we've been kind of seeing some headlines that farmer selling there is off to a historically slow start. So maybe you could just put a finer point around <unk>.

Speaker Change: You've assumed for for the commercial commercialization of that crop for the balance of the year as it relates to the guidance. Thank you.

Juan Luciano: Yes, Steven. In Argentina, the farmer basically kept about seven million tons of the old crop waiting for devaluation that in reality did not happen. So I would say you should expect now the farmer to become a little bit more regular commercializer of the crop as they need to take advantage of the tax advantages they got from the government before they expire in about two months. So I think you're going to see a little bit of an acceleration. But yeah, as an Argentine farmer myself, we withheld about $7 million. expecting a devaluation that didn't come. Thank you.

Stephen: Yes Stephen.

Speaker Change: In Argentina.

Speaker Change: The farmer basically kept about 7 million tons of deal growth.

Speaker Change: <unk> for the devaluation that in reality it did not happen.

Speaker Change: So I would say you should expect now the farmer to become.

Speaker Change: A little bit more regular commercial noise out of the crop.

Speaker Change: They need to take advantage of the tax advantages they got from the government before they expire in about two months.

Speaker Change: So I think youre going to see a little bit of an acceleration, but yes.

Speaker Change: Argentine farmer myself, we withheld about 7 million tons of these expecting a devaluation that is income.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you our next.

Tami Zakaria: Our next question comes from Tami Zakaria of J.P. Morgan. Your line is now open, please go ahead. Hi, good morning. Thank you so much. So, my question is on starches and sweeteners. Could you comment what volume growth was for S&S in the quarter? And more importantly, what volume growth do you expect for the full year? I heard you say you're seeing some weakness in some customer demand and adjusted volume outlook because of that.

Speaker Change: Question comes from Tami Zakaria of Jpmorgan.

Speaker Change: Your line is now open. Please go ahead.

Tami Zakaria: Hi, good morning. Thank you. So much. So my question is on starches and sweetener sweeteners.

Speaker Change: Could you comment what volume growth was for SMS.

Speaker Change: Quarter and more importantly, what volume growth you expect for the full year I heard you say youre seeing some weakness in some customer demand and adjusted volume outlook because of that so any thoughts on volume growth.

Monish Patolawala: So, any thoughts on volume growth as we think about 2025? Yes, thank you for the question, Tami. Listen, when I think about the overall carb solutions business, and we have said our guidance was slightly lower than last year, and we are reiterating that guidance, we see in general solid demand, solid volumes and margins across the business. There are some pockets of weakness here or there. One, our results in Europe are going to be a little bit lower because we have higher corn costs in Europe and a little bit lower volumes. And there's some weakness in starches in either the paper industry, maybe not running in all cylinders, and some of the exports to Mexico.

Speaker Change: We think about <unk>.

Speaker Change: Yes.

Speaker Change: Yes. Thank you for the question.

Speaker Change: Listen when I think about sweeten the overall.

Speaker Change: <unk> solutions business, and we have set our guidance with a slightly lower than last year.

Speaker Change: And we are reiterating that guidance.

Speaker Change: We see in general.

Speaker Change: Solid demand solid volumes and margins across the business. There are some pockets of weakness here or they are one our results in Europe are going to be a little bit lower because we have higher corn costs in Europe.

Speaker Change: Little bit lower volumes.

Speaker Change: And there is some weakness in the starches in either of the paper industry may be not running in all cylinders and some of the exports to Mexico with all these uncertainty about dilution military assessing that.

Monish Patolawala: With all this uncertainty about tariffs or no tariffs, I think that maybe some of the exports from the U.S. to Mexico have been a little bit soft in March, maybe picking up a little bit in April. So I would say the overall tone is is in general solid, but not very robust.

Speaker Change: Maybe some of the exports from the U S to Mexico has been a little bit soft in March maybe picking up a little bit in April so I would say the overall tone is.

Speaker Change: Is engendered a solid but not very robust if you will.

Tami Zakaria: Understood, thank you. Thank you.

Speaker Change: Understood. Thank you.

Speaker Change: Elizabeth.

Speaker Change: Thank you. Our next question comes from Salvator Tiano of Bank of America.

Salvator Tiano: Our next question comes from Salvator Tiano of Bank of America. Your line is now open, please go ahead. Yes, good morning. I want to ask about a couple of things that, to clarify a couple of things about your Q1 earnings and the outlook. In VCP, firstly, you had some pretty solid operating income, even though ethanol margins, bar calculations were at the multi-year lows. So, how was it so much better both year-on-year and quarter-on-quarter, and how should we think about it for the rest of the year? And similarly, on nutrition, I think the Q1 guidance was for a 50% drop year-on-year, and said you deliver 13% growth.

Speaker Change: Line is now open. Please go ahead.

Speaker Change: Yes, good morning, I wanted to ask about a couple of things.

Speaker Change: To clarify a couple of things about your Q1 earnings and the outlook in.

Speaker Change: In PCB, Firstly, you had some pretty solid operating income, even though ethanol margins by our completions were up.

Speaker Change: Multiyear lows.

Speaker Change: So how was it so much better both year on year and quarter on quarter and how should we think about it for the rest of the year.

Speaker Change: Similarly on nutrition I think the Q1 guidance was for a 60% drop.

Speaker Change: Year on year and serve you delivered 13% growth. So what was the difference versus expectations and does this mean.

Monish Patolawala: So, what was the difference versus expectations, and does this mean that the full-year directional guidance, which you reiterated now, implies much stronger earnings growth than before? Yeah, thank you, Salvator. So let me take that by pieces. So on the ethanol side, As you pointed out, I think our team outperformed the markers in the industry. I think it was good risk management by the team. So kudos to the team. In general, we see, hopefully, margins improving over the year for ethanol. But ethanol in this environment is a little bit of a question mark. We believe that ethanol could potentially see some benefits from higher exports as some of these trade agreements get resolved.

Speaker Change: Full year directional guidance, which you reiterated now implies a much stronger earnings growth on before.

Speaker Change: Yes. Thank you.

Speaker Change: Salvador, So let me take that buy pieces, so on the ethanol side.

Speaker Change: As you pointed out I think our team outperformed the markers in the industry I think it was good risk management.

Speaker Change: The team so.

Speaker Change: Orders to the team.

Speaker Change: In general, we see hopefully margins improving over the year for ethanol.

Speaker Change: But.

Speaker Change: All in this environment is a little bit of a question Mark.

Speaker Change: We believe that.

Speaker Change: <unk> could potentially see some benefits from higher exports. Some of these trade agreements gets result, because there are other opportunities.

Monish Patolawala: Because there are opportunities as a very cheap oxygenate for ethanol to make it into blends around the world.

Speaker Change: A very cheap proposition eight for ethanol to make it into blends around the world.

Monish Patolawala: When we think about nutrition, I think we've been highlighting that we've been doing a lot of foundational improvements in nutrition, and at one point in time they start to come into the P&L. So we started to see the fruits of some of these improvements. I think that our value proposition continues to resonate strongly in the flavor area, in the health and wellness area, especially health and wellness, a lot of the biotics coming into ed, they do very well there. I think we have had a lot of successes, or we're working a lot in terms of things like egg replacement or egg extension, dietary replacement, beverage industry continues to favor some of our solutions.

Speaker Change: When we think about nutrition.

Speaker Change: I think we've been high.

Speaker Change: Highlighting that we've been doing a lot of foundational.

Speaker Change: Yeah.

Speaker Change: Improvements in nutrition.

Speaker Change: Point in time do you start to come into the P&L.

Speaker Change: So we started to see the fruits of some of these improvements.

Speaker Change: I think that our value proposition continues to resonate strongly in the Flavoured area in the health and wellness area, especially hailstorm willingness of lot of their biotics coming into into pads do pretty well there.

Speaker Change: I think we have had a lot of.

Speaker Change: Successes, we are working a lot in terms of things like that.

Speaker Change: <unk> replacement or extension data replacement beverage industry.

Speaker Change: Continues to favor some of our solutions and we have seen a lot of activity and request for our line of natural colors.

Monish Patolawala: And we have seen a lot of activity and requests for our line of natural colors. And we see our teams engaging with our customers on that. It was purely driven by the improvements in flavors, the strength in health and wellness, and also the improvements in animal nutrition. Animal nutrition, although not a revenue growth story, is a margin improvement story, and the team has been working hard at that, and we started to see the improvements to that.

Speaker Change: And we see our teams engaging with our customers on that so.

Speaker Change: <unk>.

Speaker Change: It was purely driven by the improvement in flavors this strength in health and wellness and also the improvements in animal nutrition animal nutrition, although.

Speaker Change: Not a revenue growth story is a margin improvement story and the team has been working hard at that.

And we started to see the improvements to that that's worth of course specialty ingredients has been.

Monish Patolawala: Of course, specialty ingredients have been the downside of nutrition and the headwind, and we are happy to report that finally the yeast plant is being commissioned right now, so it's starting to operate, and we expect that to be a positive year-over-year for the second half of the year if the plant gets to full-time.

Speaker Change: The downside of nutrition and the headwind.

Speaker Change: Happy to report that.

Speaker Change: Finally, the east plant.

Speaker Change: <unk> is being commissioned right now so it's starting to operate and we expect that to be.

Speaker Change: A positive year over year for the second half of the year is the plan to get to full capacity.

Monish Patolawala: Salvatore, just one more for you on ethanol cadence. We were slightly below break-even in Q1, and we expect to be slightly above break-even in Q2, based on where we are today. Thank you, Monish. Thank you.

Speaker Change: Salvatore just one more for you on ethanol cadence we were slightly below.

Speaker Change: Breakeven in Q1, and we expect to be slightly above breakeven in Q2 based on where we are today.

Speaker Change: Thank you. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Manav Gupta: Our final question for today comes from Manav Gupta of UBS.

Speaker Change: Our final question for today comes from.

Speaker Change: Of UBS.

Manav Gupta: Manav, your line is now open, please go ahead. Good morning, guys. I just wanted to confirm Decatur would be fully restarted by the second quarter. So should we assume some contribution for the second quarter, or should we assume the contribution starting in second half? And remind us of all the benefits for the company once this plant is fully up and running and operational. Thank you. Yeah, Manav, I think you should consider, given that it's a very complex plant, that the impact will be in the second half of the year. So that the plant is ramping up, is ramping up capacity right now, but effectively, it will impact the P&L in the second half.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Good morning, guys just wanted to confirm that.

Speaker Change: <unk> would be fully restarted by the second quarter and so should we assume some contribution for the second quarter or should we assume the contribution starting in second half and remind us all the benefits for the company. Once the plant is fully up and running and operational thank you.

Speaker Change: Yes, Manav I think you should consider.

Speaker Change: Given that this is a very complex plans that the impact will be in the second half of the year.

Speaker Change: So the plant is ramping up.

Speaker Change: Is ramping up capacity right now but effectively.

Speaker Change: It will impact the P&L in the second half and we have said before the impact of these plants being down with about $25 million per quarter.

Juan Luciano: And we have said before, the impact of this plant being down was about $25 million per quarter for nutrition. That's kind of the expectation for the second half of the year.

Speaker Change: For nutrition so.

Speaker Change: Thats kind of the.

Speaker Change: Expectation for.

Speaker Change: The second half of the.

Megan Britt: Thank you.

Speaker Change: Thanks.

Speaker Change: Thank you Linda.

Megan Britt: At this time, I will now turn the call back to Megan Britt for any further remarks.

Speaker Change: Thank you at this time I will now turn the call back to Megan Britt for any further remarks.

Megan Britt: We'd like to thank everyone for joining the call today and for their ongoing interest in ADM. If there are additional questions following the call today, please feel free to reach out directly to me.

Megan Britt: We'd like to thank everyone for joining the call today and for their ongoing interest in ADM. If there are additional questions. Following the call today. Please feel free to reach out directly to me have a wonderful rest of your day.

Operator: Have a wonderful rest of your day.

Operator: Thank you all for joining today's call.

Speaker Change: Thank you for joining today's call you may now disconnect your lines.

Operator: You may now disconnect your lines.

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Megan Britt: Okay.

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