Q2 2025 Bunge Global SA Earnings Call
so,
Mark Hayden: Good morning and welcome to the Bunge Global SA Q4 Earnings Release and Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mark Hayden, Vice President of Investor Relations. Please go ahead.
On your telephone keypad, to withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Marc Heiden, Vice President of Investor Relations. Please go ahead.
Drew Burke: Thank you, Drew. Thank you all for joining us this morning for our second quarter earnings call. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found at the Investor Center and our website on bunge.com for events and presentations. Reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measure will sit on our website as well. I'd like to direct you to slide two to remind you that today's presentation includes forward-looking statements that reflect Bunge's current view respect to future events, financial performance, and industry conditions. The forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors.
Thank you, drew.
Thank you all for joining us this morning for our second quarter earnings call.
Before we get started, I want to let you know that we have slides to accompany our discussion, which can be found at the Investor Center on our website at buggy.com/events-and-presentations.
Reconciliations are non-gaap measures to the most directly comparable gaap Financial measure posted on our website as well?
I'd like to direct you to slide 2 to remind you. That today's presentation includes forward-looking statements that reflect Bungie's current view, inspect your future events financial performance and Industry conditions.
Before looking statements are subject to various risks and uncertainties.
Drew Burke: On the call this morning are Greg Heckman, Bunge's Chief Executive Officer; John Neppl, Chief Financial Officer. And I'll turn the call over to Greg.
He has provided additional information and his reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors.
Greg Heckman: Thank you, Mark, and good morning, everyone. Before we get started, I just wanted to mention you may have noticed Mark's now leading IR, and I wanted to give a quick thank you to Ruth Wisener for her years of service in IR. And she'll now be leading our government affairs team globally, so they'll still be working closely together. So welcome. This is a pivotal quarter for Bunge, and I want to begin by thanking the team for continued focus and execution. We successfully navigated a highly complex period, both internally and externally, and delivered better than expected results for the quarter, especially given the market conditions. The team continues to demonstrate agility in an ever-changing environment while also making significant progress against our strategic priorities.
On the call this morning or Greg Heckman Bungie's chief executive officer, John nepil Chief Financial Officer. I'll turn the call over to Greg.
Thank you, Mark, and good morning everyone. Uh, before we get started, I just wanted to mention you may have noticed Mark's, now, leading ir. And I wanted to give a a quick, thank you to Ruth Anne uh for her years of service in IR. Uh and she'll now be leading our government Affairs team globally. So they'll still be working closely together.
So welcome. Uh, this is a pivotal quarter for Bungie and I want to begin by thanking the team continued focus and execution.
Successfully navigated a highly complex period of internally and externally.
And delivered better than expected results for the quarter.
Especially given the market conditions.
Your team continues to demonstrate agility in an ever-changing environment.
Greg Heckman: We're very pleased to have completed our combination with Vytera earlier this month, creating the premier agribusiness solutions company positioned to address some of the most pressing needs of the 21st century for farmers and consumers across food, feed, and fuel. It's been a long time in the making, and we use that time well for finding our integration plans and preparing for execution. Now that the combination is complete, teams are moving quickly to identify and capture cost savings along with commercial opportunities we couldn't pursue before closing. We are already moving to implement logistical and transportation efficiencies with the potential to reduce expenses between origin and destination. These are durable synergies that will benefit everyone across the value chain. Our teams have hit the ground running. I've been impressed by the seamless collaboration, partnership, and unified sense of purpose across the company.
I'll also making significant progress against our strategic priorities.
Very pleased. If completed, our combination with Vera earlier this month,
Creating the premiere Agri Business Solutions company position to address some of the most pressing needs of the 21st century.
Farmers and consumers across food, feed, and fuel.
This has been a long time in the making and we use that time. Well,
For finding our integration plans for execution.
Now, that the combination is complete, teams are moving quickly to identifying capture cost savings.
Along with commercial opportunities we couldn't pursue before closing.
we are already moving to implement logistical and transportation efficiencies
potential to reduce expenses between origin and destination.
These are durable synergies that will benefit everyone across the value chain.
Our teams have hit the ground running. I've been impressed by the seamless collaboration.
Partnership unified sense of purpose across the company.
Greg Heckman: We remain as excited as ever about our path ahead. Vytera brings a very talented team and a robust network of strategically positioned assets. We move into the integration phase. We are leveraging core aspects of the playbook that has served Bunge so well over the past several years. We'll move quickly to apply many of the same proven standardized approaches to reach the full potential for a combined company. This includes utilizing the value chain operating model, our global functional centers of excellence, and structuring our reward system to ensure our teams are working together toward the common goals of our global company while always staying aligned with our shareholders.
We remain as excited as ever about our path ahead.
My team brings a very talented group, along with a robust network of strategically positioned assets.
We move into integration phase. We are leveraging core aspects of the Playbook that is served by you. So well, over the past several years,
we'll move quickly to apply many of the same proven standardized approaches to reach the full potential or combined company.
This concludes utilizing the value chain operating model.
Our global functional centers of excellence.
Structuring our reward system to ensure our teams are working together toward the common goals of our global company. Well, always staying aligned with our shareholders.
Greg Heckman: We are applying a global approach to risk management that aligns with the earnings power of our combined company in today's environment, positioning us to better capture value from our expanded global asset base while prudently allocating risk to the best opportunities. As we integrate these two highly complementary businesses, we're optimistic about the value we will generate. The rigorous integration planning that's been done, we have a clear path to bring our companies together, capturing meaningful efficiencies and operational synergies. I'm especially excited about the potential commercial synergies. We are already identifying opportunities to run a more efficient processing and logistics network. We use our combined information to better manage risk for Bunge and our customers. It's been great to see the teams working quickly to identify and tackle these areas together. Beyond Vytera, we continue to focus on our broader strategic priorities, including ongoing portfolio optimization.
We are applying a global approach to risk management.
The lines with the earnings power of our combined company. And today's environment,
Positioning us to better capture value from our expanded Global asset base.
While prudently allocating risk, the best opportunity.
As we integrate these 2, highly complimentary businesses.
You're optimistic about the value we will generate.
The rigorous integration planning has been done.
We have a clear path to bringing our companies together.
Capturing meaningful efficiencies and operational synergies.
Especially excited about the potential commercial synergies.
There are already identifying opportunities to run a more efficient processing and logistics network.
Use our combined information to better manage risk for Bungie and our customers.
It's been great to see the teams working quickly to identify and tackle these areas together.
Continue to focus on our broader, strategic priorities.
Greg Heckman: Earlier this month, we announced the completion of the sale of US corn milling, which further simplifies our business along our global value chains. Shifting to our operating performance, our second quarter results were largely driven by better than expected processing results in South America, higher margins in Brazil and Argentina. Buying of specialty oils was negatively impacted by uncertainty related to US biofuel policy. John will go into more detail about the second quarter financials in a moment. Looking ahead, we are maintaining our full-year adjusted EPS outlook of approximately $7.75 with a legacy standalone Bunge. This no longer includes the second half earnings from our corn milling business due to its sale, which closed on June 30th. With that, I'll turn it over to John for a deeper look at our financials and outlook. John?
Including ongoing portfolio optimization.
Earlier this month, we announced the completion of the sale of us corn Milling.
Further simplifies our business along, our Global value chains.
Shifting to our operating performance.
Our second quarter results were largely driven by better-than-expected processing results in South America.
Higher margins in Brazil and Argentina.
Oils were negatively impacted by uncertainty related to U.S. biofuel policy.
Now, we'll go into more detail about the second quarter financials in a moment.
Looking ahead, we are maintaining our full-year adjusted EPS outlook of approximately $7.75 for the legacy standalone Bungie.
It's no longer includes the second half earnings from our corn Milling business due to its sale which closed on June 30th.
John Neppl: Thanks, Greg, and good morning, everyone. Now let's turn to the earnings highlights on slide five. As Greg mentioned, the second quarter exceeded our expectations primarily by processing. The team's execution allowed us to benefit from the late quarter market volatility. Our reported second quarter earnings per share was $2.61 compared to $0.48 in the second quarter of 2024. Our reported results included a favorable mark-to-market timing difference of $0.69 per share, a net favorable impact of $0.61 per share for notable items, consisting of an $0.87 gain in the sale of our US corn milling business, offset in part by $0.26 transaction and integration-related costs related to Vytera. Adjusted EPS was $1.31 in the second quarter versus $1.73 in the prior year. Adjusted segment earnings before interest and taxes PBIT was $376 million in the quarter, which was $519 million last year.
With that. I'll turn it over to John for a deeper. Look at our financials and Outlook guns. Thanks Greg, good morning, everyone. Now, let's turn to the earnings highlights and slide 5.
as Greg mentioned the second quarter seated, our expectations through primarily by processing
Teams' execution allowed us to benefit from the late-quarter market volatility.
Report a second quarter earnings per share was $2.61 compared to 48 cents in the second 2024.
Reported results include a favorable mark-to-market timing difference of 69 cents per share that favorable impact of 61 cents per share from notable items consisting of an 87 Cent. Gain sale of our us corn Milling business.
All set in part by 26 Cents.
Transaction and integration related costs.
Related to Vera.
Adjusted EPS for the $131 in the second quarter, versus $1.73 in the prior year.
Adjusted segment earnings before interest in taxes, keep it was 376 million in the quarter, which is 519 Million last year.
John Neppl: In processing, our results in South America, both Brazil and Argentina benefited from large soybean crops and free farmer selling. Our results in Asia were more than offset by lower results in Europe and North America. In merchandising, improved performance in global grains and oils were more than offset by lower results in our financial services and ocean freight businesses. While largely driven by North America and Europe, results in refined specialty oils were down in all regions, reflecting a more balanced global supply and demand environment and uncertainty in US biofuel policy. Milling high results in North America were more than offset by lower results in South America. In corporate, another decrease in corporate expenses was primarily driven by performance-based compensation. Prior year other results include a loss of $21 million from our defibrillator bioenergy joint venture that we divested in the fourth quarter of last year.
In processing, our results in South America, Brazil and Argentina benefited from large soybean crops fruit farmer selling High results in Asia more than offset by lower results in Europe. North America.
The merchandising improved performance in global grains. And oils was an offset by lower results in our financial services and ocean. Freight businesses.
But largely driven by North America and Europe results and refined a specialty oils were down in all regions collecting a more balanced Global supply and demand environment and uncertainty in US biofuel policy.
Milling results were higher in North America, offset by lower results in South America.
The increase in corporate expenses was primarily driven by performance-based compensation.
Are your other results include a loss of 21 million from our, the sugar and bio energy joint venture that we divested in fourth quarter of last year.
John Neppl: The interest expense of $60 million was down in the quarter compared to last year due to lower average net interest rates, increased capitalized interest on capital projects, and higher interest income from investments in interest-bearing investments. The increase in income tax expense for the quarter was primarily due to lower pre-tax income by 25%. Let's turn to slide six, where you can see our adjusted EPS and EBIT trends over the past four years, along with the trailing 12 months. Over this period, our team has excelled in managing a variety of different market environments while also executing on numerous internal initiatives, most notably Vytera integration planning. Recent performance trend reflects a more balanced global supply and demand environment and the impact of ongoing trade and biofuel uncertainty that has created a very spot market environment. Slide seven details our capital allocation.
That interest expense is $60 million was down in the quarter compared to last year, due to lower average. Net interest rates.
Increase capitalized interest on capital projects and higher interest income from investments in interest-bearing.
Increase in income tax expense for the quarter was primarily due to lower pre-tax income.
25.
Let's turn to slide 6 where you can see our adjusted EPs and ebit trends for the past 4 years along with the trailing 12 months.
Well, this period our team has excelled in managing a variety of different Market environments but also executing on numerous internal initiatives. Most notably by Terry integration planning.
Recent performance Trend reflects a more balanced Global supply and demand environment the impact of ongoing trade. And biofuel uncertainty is created a very spot Market environment.
John Neppl: Year to date, we have generated $693 million of adjusted funds from operations. After allocating $133 million to sustaining capex, which includes maintenance, environmental health, and safety, we had a $560 million of discretionary cash flow available. We had $185 million in dividends and invested $583 million in growth and productivity-related capex. We also received $776 million of cash proceeds related to the sale of our US corn milling business, the sale of an interest in our soy crush footprint in Spain to Repsol, and the final payment for the sale of our interest in the sugar and bioenergy joint venture that closed in 2024. This resulted in approximately $570 million of retained cash flow. Moving to slide eight, the year-end readily marketable inventories, or RMI, exceeded our net debt by approximately $2.2 billion.
Flight. 7 details are capital, allocation.
Here to date. We have generated 693 million of adjusted funds from operations.
After allocating 133, million to sustaining cat bags.
Which includes maintenance environmental health and safety. We had a 560 million dollars of discretionary cash flow available.
The 185 million in dividends invested 583 million in growth, in productivity related capex.
We also received 776 million of cash proceeds related to the sale of our shift, 4 Milling business.
2024.
This resulted in approximately 570 million of retained cash flow.
Moving to slide 8.
John Neppl: Our adjusted leverage ratio, which reflects our adjusted net debt to adjusted EBITDA, was 1.1 times at the end of the second quarter. Slide nine highlights our liquidity position. A quarter in, we had committed credit facilities of approximately $8.7 billion, of which approximately $7.6 billion were unused, providing ample liquidity to manage the ongoing capital needs of our larger combined company. In addition, we had a cash balance of approximately $6.8 billion in anticipation of our merger with Vytera. I would also like to point out that following our closing of Vytera, S&P upgraded our credit rating to A-, reflecting our improved business risk profile, given a step change in our scale and diversification. Please turn to slide 10. Trailing 12 months, adjusted ROIC was 8.4%, and ROIC was 7.4%.
Year end readily marketable inventories or RMI exceeded our net debt by approximately 2.2 billion dollars.
Adjusted. Leverage ratio. Reflects our adjusted, net debt to adjusted Eva was 1.1 times in the second quarter.
Flight 9 highlights are liquidity position.
A quarter in, we had committed credit facilities for approximately $8.7 billion, of which approximately $7.6 billion were unused due to ample liquidity. This meets the ongoing capital needs of our larger combined company.
In addition, we had a cash balance of approximately 6.8 billion dollars in anticipation of our merger with Vera.
I would also like to point out that following our closing of Itera, SNP upgraded our credit rating to A-minus, reflecting our improved business risk profile, given the step change in our scale and diversification.
Please turn to slide 10.
John Neppl: Adjusting for construction in progress, our large multi-year projects not yet operating, in the excess cash on our balance sheet at Vytera closing, adjusted ROIC increased by 1.6 percentage points and ROIC by approximately 1 percentage point. Moving to slide 11. Trailing 12 months, we produced discretionary cash flow of approximately $1.1 billion. Cash flow yielded 9.8% compared to our cost of equity of 8.2%. Please turn to slide 12 in our 2025 outlook. As Greg mentioned in his remarks, taking into account second quarter results, current margin of macro environment, and forward codes, we continue to forecast full-year 2025 EPS of approximately $7.75. This forecast no longer includes second half earnings in the corn milling business due to the sale on June 30th and also excludes the impact of Vytera, which closed on July 2nd.
Trailing 12 months, adjusted. Our OIC was 8.4%, and our YC was 7.4%.
Adjusting for construction and progress for large multi-year projects, we are not yet operating in excess cash on our balance sheet if I tear closing.
Adjusted roic, increased by 1.6 percentage points and roic by approximately 1 percentage point.
Looking to slide 11.
Troy Lane 12 months, we produce discretionary cash flow, approximately 1.1 billion dollars.
Cash flow. Yield is 9.8% compared to our cost of equity. You may point to 2%.
Please turn to slide 12 in our 2025 Outlook.
As Greg mentioned in his remarks taking into account, second quarter results, current margin of macro environment and 4 encoders, continue to forecast full year 2025 EPS of approximately 7.75.
This forecast includes second half earnings, excludes the corn milling business due to the sale on June 30th, and also excludes the impact of Itera. It closed on July 2nd.
John Neppl: The agribusiness full-year results are forecasted to be higher than previous outlook driven by processing but remain down from last year. Refined specialty oils full-year results are expected to be down from our previous outlook, reflecting the softer second quarter performance down from the last year. In milling, full-year results are expected to be down from our previous outlook, reflecting the sale of corn milling but still in line with last year. Corporate, another full-year results are expected to be in line with our previous outlook but favorable to last year. Additionally, the company expects the following for 2025: adjusted annual effective tax rate in the range of 21% to 25%; net interest expense at the lower end of the range of 220 to 250 million dollars; capital expenditures in the range of 1.5 to 1.7 billion dollars; and depreciation and amortization of approximately $490 million.
The agribusiness fully your results are forecasted to be higher in a previous outlook driven by processing but remained down from last year.
Find a special oils for for your results. Are expected to be down from our previous Outlook reflecting the softer. Second quarter performance down from the last year.
Milling full year, results are expected to be down from our previous Outlook reflecting the sale of corn Milling still in line with last year.
Corporate another full year results are expected to be in line with our previous Outlook, but favorable to last year.
Additionally, the company expects a falling trend for 2025.
Just at annual effective tax rate in the range of 21 to 25%.
And interest expense at the lower end of the range of 220 to 250 million.
Capital expenditures in the range of 1.5 to 1.7 billion dollars depreciation in the Amor of approximately 490 million dollars.
John Neppl: Prior to reporting third quarter earnings, we anticipate providing a forecast for the buying company, along with the historical Bunge information reported in a new segment reporting structure that will be used going forward for the combined company. With that, I'll turn things back over to Greg for some closing comments.
Prior to reporting third quarter earnings. We anticipate providing a forecast for the buying buying company along with the historical, Bunkie information, recorded in our new segment reporting structure, that will be used going forward for the combined company.
Greg Heckman: Thanks, John. Before we go into Q&A, I just wanted to offer a few closing thoughts. So when we first announced our combination with Vytera two years ago, we saw opportunities with the combined company to accelerate our strategy, enhance our diversification across crops and geographies, and increase the impact of our investments. Those same benefits hold true today and are especially relevant as we navigate the current macro environment. With greater diversification across assets, geographies, and crops, the more data to provide us insight, supply and demand dynamics, we're even better positioned to serve our customers at both ends of the value chain, regardless of the market environment.
With that, I'll turn things back over to Greg for some closing comments.
Thanks, John. Before we go into Q&A, I just want to offer a few closing thoughts.
so when we first announced our combination with Vera 2 years ago,
Opportunities with the combined company to accelerate our strategy.
And our diversification across crops and geographies.
And increase the impact of our investments.
The same benefits hold true. Today, our special relevance is if we navigate the current macro environment.
With the greater diversification.
Thus assets geographies and crops.
More data to provide us Insight supply and demand Dynamics.
Greg Heckman: With the increased scale of our platform, we will get a better return on investments to further improve our business, including technology in areas such as data analytics to enhance supply chain transparency, logistics planning, processing efficiency, risk management, and decision-making support. I'm confident that we have the right people, platform, and strategies in place to deliver value for our stakeholders, farmers to consumers across feed, food, and fuel markets. We will have a stronger, better-positioned company with even greater flexibility and resources to address global food security and renewable energy needs. With that, we'll turn to Q&A.
Or even better position to serve our customers at both ends of the value chain regardless of the market environment.
And with the increased scale of our platform, we will get a better return on investments further, improve our business.
Including technology in areas such as data analytics to enhance supply chain transparency.
Logistics planning.
Processing, efficiency.
Risk management and decision-making support.
I'm confident that we have the right people, platform, and strategies in place to deliver value for our stakeholders.
Feed food and fuel markets.
We will have a stronger better positioned company.
It's even greater flexibility and resources.
Addressing global food security and renewable energy needs.
That will turn to Q&A.
Mark Hayden: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Strzelczyk with BMO. Please go ahead. Mr. Strzelczyk, your line is open. Is it possible your line is muted accidentally? Okay. We'll move to the next question then. The next question comes from Puron Sharma with Stevens Inc. Please go ahead.
We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
If at any time your question has been addressed and you would like to withdraw your question, please press star. Then 2 at this time we will pause momentarily to assemble our roster.
The first question comes from Andrew Stroik with BMO. Please, go ahead.
Mr. Strazik, your line is open.
Is it possible? Your line is muted accidentally.
Okay, we'll move to the next question, then.
The next question comes from Puran Sharma with Stevens Inc. Please go ahead.
Puron Sharma: Good morning, and thanks for the question. Just wanted to start off by just asking about the soy crush performance throughout the quarter in your regions. You provided a little bit of detail in the press release, but just wondering if you could you could flesh that out a little bit. And as we look to the back half of the year, how should we think about fundamentals, especially with the recent RVO in mind? And then my follow-up would just be in regards to the SREs. You know, have you heard anything? How soon do you think we can get an announcement? How have your conversations been regarding this matter? And any sort of details you could provide there would be helpful. Thanks.
Good morning and, and thanks for the question. Um, just wanted to start off by, um, just asking about the soy Crush performance, um, throughout the quarter in your regions. You provided a little bit of detail, um, in the press release. But just wondering, if you could, you could flush that out, uh, a little bit. And as we look to the back half of the year, how should we think about, uh, fundamentals, especially with the recent rvo in mind? And then my, my follow-up would would just be, um, in regards to the sres. Um, you know, have you heard anything, how soon do you think we can get an announcement? Um, how have your conversations been, uh, regarding this matter? And any sort of details, you could provide, that would be helpful. Thanks.
Greg Heckman: Sure. I'll start, and John, you can come in. Yeah, as far as Q2, look, the outperformance that was almost stronger than we expected came really kind of second half June, and that was the South America and North America processing margins really driven by the rising veg oil values and lower bean costs, and primarily in the US. So that was that was what really delivered that. As you look kind of towards the current market conditions, looking across, you know, soy, while Q3 improved a little bit, it's still kind of unclear due to, you know, continued soft bio demand and South American supply. Margins definitely are better in Q4 and back above baseline with the harvest outlook that's coming. And then if we walk quickly around the globe, if you look at Brazil, Q2 margins are better year over year.
I'll uh I'll start John, you can come in. Uh yeah. As far as as Q2 looked the the outperformance um that was a little strong to be expected, came really kind of second half June and that was the South America and North America processing margins.
Um really driven by the rising veg oil values and and lower Bean costs and primarily in the US. So um that was that was really delivered that um, as you look kind of towards the current market conditions,
Looking across, you know, soy y. Q3, you know, improved a little bit. It's still kind of unclear due to, you know, continued soft bio demand and South American Supply. Uh, margins definitely are better in Q4 and back above Baseline with the with the Harvest Outlook, that's that's coming. Um and then if we walk, you know, quickly around the globe, if you look at at Brazil Q2 margins,
Greg Heckman: There's no logistical challenges with take or pay now. You've got a record bean crop. And of course, that's offset a little bit by some of the demand of exports of beans to China. And then the deferral of the B15, which we'll see coming in in the second half. But we expect that second half to be better year over year. And oil demand, of course, is expected to pick up from energy, although we haven't seen it yet. And then in Argentina, Q2 margins have been better year over year. That was strong farmer selling driven by the big crops and the export window looking like it was, you know, coming to an end. And so that got from a strong prior year. Second half will probably be a little tougher if you've got some competing imports from the South American flows.
Uh, we're better year-over-year. Uh, there's no logistical challenges with take or pay. Now you've got a record bean crop, and of course, that's offset a little bit by some of the demand of exports of beans to China.
And then the deferral of the B15 was we'll see coming in, uh, in in the second half. But we expect that second half to be better year-over-year. Um, and oil demand, of course, is expected to pick up from energy, although we haven't seen it yet.
And then in Argentina, uh, 222 margins have been better year-over-year and I have a strong farmer selling and written by the big crops and and the export window looking like, it was, you know, coming to an end. And so that got
Greg Heckman: And in China, our Q2 margins improved in the second half, although they were still slightly down from prior year. You know, second half margins will probably be lower than Q2, but still look pretty good versus historical levels. So that's the look on soy. And then on soft, well, Q2 margins and volumes were down in all regions versus prior year. And that was really as across Europe, Black Sea, Canada, we had, you know, smaller seed production last year. Crops are developing well in all regions, and you see that as the forward crush curves are supported starting late Q3 as we're expecting an arrival in new seeds, so.
From a strong prior year, the second half will probably be a little tougher if you have some competing imports from the South American flows.
In China or Q2 margins improved in the second half, although they were still slightly down from prior year.
Um,
you know, second half margins will probably be lower than Q2 but still look pretty good versus uh historical levels.
So, that's, that's the look on, on soy. And then on soft look, Q2 margins and volumes were down in, in all regions versus prior Year. And that was really, as across Europe. Black Sea Canada. We had, you know, smaller seed, production last year.
John Neppl: Yeah, in terms of the SREs, you know, obviously, we've been plugged in pretty closely monitoring that. And I think our belief is, you know, the administration has done a great job of supporting the US farmer, and we think they clearly understand the impact of what the SREs could potentially have on the RVO. And but so we'll see. We don't we probably don't have any special insights into where it's going to end up, but we do expect we do expect decisions sometime in August or September. And again, I think given the supportive nature of the policy that around 45(z) and around BOs, we would expect the SRE to be well thought through and supportive.
The crops are developing well in all regions, and you see that as the forward Crush groups are supported, starting in Q3. We're expecting an arrival of new seeds.
It's done a great job of supporting the US farmer. And and we think that clearly understand the impact of what the SRS could potentially have on the rvo, um, and uh, but, but so, we'll, we'll see. We don't, we probably don't have any special insights into where it's going to end up, but we do expect, we do expect a decision sometime in August or September. And again, I think given the support of nature of the the policy that the, you know, around 45z and around. We always we would expect expect the sres to be well, thought through and
Mark Hayden: Appreciate the call. The next question comes from Andrew Strzelczyk with BMO. Please go ahead with your question.
appreciate the color.
The next question comes from Andrew Stroik with BMO. Please go ahead with your question.
Greg Heckman: Hey, good morning. Can you hear me now?
Hey, good morning. Can you hear me now?
Puron Sharma: Yes.
Greg Heckman: Yes. Good morning.
Puron Sharma: Morning, Andrew.
Greg Heckman: Okay. Wonderful. Sorry about that. I know you're going to give the the combined company Vytera guidance, including Vytera, you know, before the third quarter call. But you put out some pro forma numbers, including Vytera, that I think have have created some concern. And I know there's some noise in there. So I was just wondering if you're able to help us kind of think about what a clean Vytera earnings base for 2024 would have looked like or some of the factors that impacted kind of the underlying Vytera earnings numbers in that pro forma that you shared. Or maybe if you wanted to compare 2026 fundamentals for Vytera versus '24, if you see the environment, you know, on a relative basis getting better or worse, just some color around that would be helpful. Sure. Let me start. And if John could come in.
Yes, yes, good morning. Good morning, Andrew wonderful. Sorry about that. Um, I I know you're going to give the the combined company vitera. I got guidance including vitera, you know, before the third quarter call, but you put out some, uh, proforma numbers including vitera, um, that I think have have have created some concern. And, and I know there's some noise in there. So I was just wondering if if you're able to help us kind of think about what a clean Vera, earnings base for 2024 would have looked like or some of the factors that impacted kind of the underlying vitera earnings, uh uh uh uh uh numbers in that proforma that you shared.
Or maybe if you wanted to compare 2026 fundamentals for Terra versus 2024, if you see the environment, you know, on a relative basis, getting better or worse, just some color around that would be helpful.
Greg Heckman: Look, I'd just like to start by saying, look, Vytera's got a great team and an excellent platform, and the strategic rationale is absolutely still in place. You know, as far as prior to close, I'd say, you know, John and I in our past life have walked that path, so we probably have as good an understanding about that as anyone. And you know, it definitely was a challenging time, no doubt, for the team. You know, you're moving a private company into a larger public company, which we'd lived before. We had the regulatory delay. You know, we understand how disruptive that can be to the team and the business. I think the good news is we understand what those challenges were. There's really nothing we haven't seen before. And we know how to address those going forward.
Sure. Let let me start in. Uh, in John, if you come in look, I just like to start by saying look, uh, my chair's, got a great team and an excellent platform and the Strategic rationale is is absolutely still in place. Um, you know, as far as
Uh, prior to close. I I'd say you know, John and I and our our past life have walked that, that path. So we probably have a a good understanding about that as anyone and, you know, it's a, it definitely was a challenging time, no doubt for, for the team, you know, you're moving a, a private company into a larger public company.
Greg Heckman: So when you look at the combined, you know, company going forward, look, biofuel policies and large crops, you know, are generally supported above our crush assets. You look at the storage assets now, the combined company has. Those benefit from large crops globally, you know, not only in the storage but in the optionality then when the demand calls for that stored product. And then you look at our new combined expanded network. It's much more balanced now between, you know, crush and origination, how the origination from the farmer to support our assets fits so well together. You know, it's really a vertical merger if you think about it. And that's really going to increase commercial optionality for us. And then the other is we're now the largest and lowest-cost crusher in Argentina. And that's right as that country continues to stabilize.
Which which we'd live before, we had the regulatory delay. You know, we understand how disruptive that that can be to the to the team and the business. I think that the good news is we understand what those challenges or there's really nothing we haven't seen before uh and and we know how to how to address those going forward. So when you look at the, the combined, you know, company going forward, look, biofuel policies and large crops, you know, are are generally supportive of our our fresh assets. Um, you look at the storage Assets Now, the combined company has those benefits from large crops globally. Um, you know, not only in the storage but in the optionality, then when when the demand calls, uh, for that
Stored product and then you look at our, our new combined expanded Network, it's much more balanced now between, you know, crush and origination uh how the origination from the farmer to support our assets fits so well together. You know, it's really a vertical merger if you think about it, and that's really going to increase commercial optionality for us.
Greg Heckman: And it's important to the overall crush franchise. So really, you know, love the combination. And so kind of regardless of what cycle we're in going forward, what we do know is the combined business, we are very, very comfortable. And we'll have, you know, higher lows in the tough cycle and higher highs as we get into mid and better cycles.
And then the other is, we're now the, the largest and lowest cost Crusher in Argentina. And that's right as as that country, uh, continues to, to stabilize, um, and it's important to the overall Crush franchise. So,
Really uh, you know, love the combination and so kind of regardless of what cycle we're in going forward, what we do know is that combined business, we are very, very comfortable.
and we'll have, you know, higher lows in the, in the tough cycle and higher highs as we get into mid,
And and better Cycles.
John Neppl: Yeah, and I would just add on, Andrew, you know, when you look at the pro formas, I mean, they don't have synergies captured, and they have costs, and they're related to the deal. And I think the Vytera team would tell you that they could have executed better in some ways. And so I think these are things that are easily fixed. And obviously, we, you know, we're hyper-focused on synergies going forward, both on the cost side and on the commercial side. And I think we're seeing so far there is this optimism that we'll get every dollar synergy that we forecast, if not more on the cost side, you know, and certainly going to be as aggressive as we can be. We still support the business, you know, comfortably, obviously.
Yeah, I would, I would just add on Andrew, you know, when you, when you look at the full forms, I mean, they don't have synergies captured, and they have costs and they're related to the deal. And and I think the, the vital team would tell you that, you really could have executed a better in some ways. And so, I think these are things that are easily fixed and obviously we uh, you know, we're hyper focused on synergies going forward, both on the cost side and on the commercial side and everything we're seeing so far. There didn't stop theism that we'll give you every dollar Synergy that we forecast if not more on the cost.
Side, you know, and certainly going to be as aggressive as we can be.
John Neppl: But then on the commercial side, as Greg alluded to, you know, I think there's some great opportunity there that we'll see going forward.
Still support the business, you know, comfortably, obviously. But then on the commercial side, as Greg alluded to, I think there's some great opportunity there that we'll see going forward.
Greg Heckman: Okay. That's super helpful. And then I apologize if this was already asked, and I might have missed it, but I guess I'm curious. I mean, we can see in the US crush curve post the RVO how things have evolved. How are you thinking about the implications kind of on a more global basis with the US potentially out of the global market for bean oil and, you know, maybe how you might see the ripple effects play out through the crush margins in Brazil and Europe and Argentina kind of, you know, relative to what we're able to see in the US? Thanks.
Post the rvo, how how things have evolved? How are you thinking about the implications kind of on a more Global basis with the US potentially out of the global market? Um uh for for bean oil and you know maybe how you might see the Ripple effects play out through the crush margins in Brazil and Europe in Argentina. Um, kind of, you know, you know, relative to what we're able to see in the US. Thanks.
John Neppl: Yeah, we, you know, if you look back, kind of the first run when oil share was as strong in the US with the draw from biofuels, right? We've got a bit of a test run, if you will, for our global system. But the key, I think, this time is we've got even a better, more complete system. And as you've seen when we've been challenged with whatever, you know, macro economic, you know, situation the last few years, we've been able to adjust to that, whether it's, you know, being there to buy the beans from the farmers or to serve our customers from the best market with meal or from the best market with oil. So, you know, we see this as a great opportunity. I think the other key is, you know, B15 is coming in in Brazil.
yeah, we you know, if you look back uh kind of the the the first run when when oil share was as strong,
In the US with the draw from from bio fuels, right? We we've got a bit of a of a test run run, uh, if you will for our global system, but the, the key, uh, I think this time is we've got even a better more complete system. And as you've seen, when we've been challenged with whatever, you know, macro, uh, economic
John Neppl: We've got to balance, you know, some of the demand there on oil as well as the demand that we see coming in North America. So, you know, we're, you know, we're excited to run this combined platform in what's a pretty complex macro environment, but we know we're well suited for it.
Um, you know, situations, the last few years we've been able to adjust to that, whether it's, you know, being there to buy the, the beans from the farmers or to serve our customers from the best Market with meal, or from the best Market with oil. So, you know, we see this as a as a great opportunity, I think the other key is, you know, B15 is coming in in Brazil. So, that'll balance, you know, some of the, the demand there uh, on on oil as well, as well as the demand that we see coming in North America. So you know, we're you know, we're uh, you know, we're excited to run this combined platform and what's a pretty complex macro environment.
Environment. But uh, but we know we're we're well suited for it.
Greg Heckman: Great. Thank you very much.
Great, thank you very much.
Mark Hayden: The next question comes from Ben Toer with Barclays. Please go ahead.
The next question comes from Ben, a toyer with Barkley's. Please go ahead.
Puron Sharma: Hi. Yeah, good morning, and thanks for taking my question. Just wanted to squeeze in two quick ones. So one, as you look into the back half, and obviously, you made some adjustments for the divestiture of the corn milling business in North America. Now, that put aside, as you look into the second half versus what you initially expected for the second half, has anything materially changed to the upper of the downside just given that there's a little bit of a stronger crush environment, particularly in North America? That would be my first question.
Uh, yeah, good morning and uh, thanks for taking my question. Um, just wanted to to squeeze in 2 on. So, uh, 1 as you look into the back half and obviously you, you made some adjustments for the divestiture of of the Corn Milling business and, and, and North America. Now, that put aside, as you look in to, uh, the second half versus what you initially expected, for the second half, has anything materially changed to the upper of the downside? Just given that there's a little bit of a stronger Crush environment, particularly in North America that would be my first question.
John Neppl: Yeah, Ben, I can take that. I think, you know, overall, you know, while we're holding the year, and we look at the second half just to be clear, you know, we're going to have likely a weaker Q3, you know, given by the fact that we had a lot of our crush margin locked coming into the quarter and some of this run-up we saw recently. And crush margin in the US captured a little bit of that in Q3, but most of it we were already locked. So we're really looking at a second half, kind of a 30/70 split of earnings second half. And I would say, while we are predicting and we're forecasting a stronger processing in the second half, you know, and primarily in Q4, driven by the improvement in crush margins, especially in the US, we've got offsets in other parts of the business.
Yeah, Ben, I could take that. I I I think, you know, overall you know, while we're holding the year, uh, and we look at the second half just to be clear. We're going to have likely a week or 2 3. Um, you've given, by the fact that we had a lot of our Crush margin, a lot coming into the quarter. And some of this run-up we saw recently and Crush margin in the US, uh, capture a little bit of that in Q3, but but most of it we were already locked. So we're really looking at a second half, kind of a 3070 split of earnings, second half, and I would say, well, we are predicting and and we're forecasting a, a stronger processing in the the second half, you know, and
John Neppl: You know, merchandising continues to be challenging and I think, you know, tough to predict. And so we've got a conservative forecast in, we think, for merchandising. And we've seen a little bit of softness on the specialty oil side. So overall, you know, kind of a shift to more of the processing side away from parts of the business.
Mark Hayden: Okay. That brings me actually to my second question on the oil piece because that seems like that was probably a little bit softer than what you initially expected for the quarter. And also, I mean, the tone for the guidance is a little weaker. So just wanted to understand what are the issues here? Is it too much supply or is it not enough demand or is it a combination of both of it?
Primarily in Q4 by the Improvement in Brush margins, especially in the US. We've got offsets in other parts of the business, you know, merchandising continues to be challenging and and I think, you know, tough to predict. And so we've got a conservative forecast in we think for merchandising. I'm seeing a little bit of softness on the specialty oil side. So overall, you know, kind of a shift to 1 of the processing side away from parts of the business.
Get up, brings me actually to my my second question on, on the oil piece because that seems like that was a probably a little bit softer than what you initially expected for the quarter. And it was a, I mean, the tone for the guidance is a is a little weaker. So just wanted to understand what are the issues here? Is it is it, is it too much Supply? Or is it not enough demand or is it a combination of both of it?
Greg Heckman: Yeah, if you look at the RSO, definitely was impacted by the lower energy demand, you know, due to the uncertainty around the biofuels policy. And then we also saw, you know, customers with some of the uncertainty around tariffs until those get set, going to customers going very spot. So that definitely affected some of the flows. But we are expecting, you know, the RSO to improve coming off the Q2 levels in the second half.
Mark Hayden: Okay. Perfect. Thank you. The next question comes from Salvatore Tiano with Bank of America. Please go ahead.
Yeah, if you look at the the RS, so definitely was impacted by the lower energy demand, you know, due to the uncertainty around the bio fuels policy. And then we also saw, you know, customers with some of the in uncertainty around tariffs until those get set. Um, going customers going very spot, so that definitely affected some of the flows. But we are expecting, you know, the RSO to, to improve coming off the Q2 levels, uh, in the second half.
Okay, perfect. Thank you.
The next, the next question comes from Salvatore Tano with Bank of America. Please go ahead.
Salvatore Tiano: Yes, good morning. So firstly, I want to ask a little bit about your investments, the organic investments that you have for the next couple of years, including, I believe, Morristown is supposed to come online later this year. How is the Dash Hand crush expansion going? And if you can provide, you know, any commentary with regard to CapEx there, expected earnings contribution, and progress.
Contribution. Uh, and progress.
John Neppl: This is John. I'll take those. So, yeah, Morristown is moving along extremely well. We're going to basically go into commissioning and go live on that plant and expecting in October. So we'll call it mid-Q4. Really pleased about the progress we made there on getting ready to go. It's obviously going to take a bit of time commissioning. It's a big plan. It's a bit complex. So, you know, it takes time to work through the bugs and the, you know, initially. But really pleased to have an expectation that thing will be humming by, you know, early to mid next year with, again, a start probably, like call it mid-Q4. Destroy Hand, both projects in Destroy Hand are moving along well. Of course, we have the crush project that's in our joint venture with Chevron.
This is John. I'll take those so yeah.
Forest town is moving along. Extremely well, we're going to
we're going to basically go into commissioning and go live on that uh, plant and expecting in October. So we call it mid Q4. Um really pleased about the progress. We made there on getting ready to go. It's obviously going to take a bit of time commissioning. It's a it's a big plan. It's
John Neppl: You know, we're expecting that to come on probably, call it late Q2 of next year. And then forward probably about a month later by the Barge Unloading project, which is a 100% owned project. But both going along well. And, you know, largely, obviously, most of the CapEx will be completed on those three projects by the end of this year. A little bit of spillover on Destroy Hand, two Destroy Hand projects into next year in the 2026 first half. And then the other big project we have, of course, is our Weston plant in Europe. That's probably been delayed a bit just given some contractor issues. And looking probably at early 2027 commissioning on that plant versus late '26 at this point. I would say all in all, the projects are moving along well and teams are doing it safely and effectively.
A bit complex. So, you know, it takes time to to work through the, the bugs and the, you know, initially but, uh, really pleased to and have an expectation that thing will be, you know, humming by, you know, early to mid next year with the, again a start, probably like call it mid 244, um, just a hand whole projects industrial and are moving along. Well, of course, we have the crush project that's in our joint, venture with Chevron. Um, you know, we're expecting that to to come on, probably call it late Q2 of next year. Um, and then what would probably about a month later by the barge on loading project which is 100% owned project, but both going along well um and you know, a largely obviously most of the capex will be complete on those 3 projects by the end of this year. A little bit of spill over on dester hand to destroy hand projects into next year.
Um, in the 2026 first half.
Uh, and then the other big project we have, of course, is our Wesson plant in Europe. Uh, that's probably been delayed a bit, just given some contractor issues. Uh, and looking probably at early 2012, 2027 commissioning, uh, on that plant versus late 26. At this point.
I would say all in all
John Neppl: And we're optimistic that all these are going to be good projects when they're wrapped up.
the projects are moving along well and and uh teams are teams are doing it, safely and effectively. And and uh optimistic that all these are going to be good projects when get wrapped up.
Salvatore Tiano: Perfect. And the other thing I want to ask is, what does your outlook I guess on the meal side in the US, both on demand, whether that's domestic or on the export market, but also supply? Because obviously, we're talking with the RVOs about the improved outlook for the oil side, but it looks like, you know, we're still adding probably a good 10, 15 percent to meal supply in North America in the next two years. And obviously, prices there are moving lower.
Perfect. And the other thing I wanted to ask is, um, what is your outlook, I guess, on the meal side in the U.S.? Both on the amount of whether that's domestic or on the export market, but also supply. Because obviously, we're talking with the RVOs about the improved outlook for the oil side. But it looks like, you know, we're still adding probably a good 10 to 15% to meal supply in North America over the next two years. Um, and obviously, prices there are moving lower.
Greg Heckman: Yeah, I think the key is to continue to watch their good economics in the animal protein segment. So demand has been very good. They like using soybean meal at prices itself, you know, into the formula. The other factor is that North America has added some export capabilities. And so we've got a lower supply chain cost to get from the interior plants to the export and get it on a ship, making the US more competitive in the global markets as well. And if you remember, we sell more soybean meal than we produce. We're a net short. So we're able to find, you know, the best market for that, whether it's being consumed domestically or going to our customers in the global market.
yeah, I think the the key is to continue to watch their uh, good economics, uh, in the
Animal protein segment. So demand has been very good. They like using soybean meal and prices itself, you know, into the formula.
John Neppl: Salvatore just noted that we've seen the meal situation coming, obviously. And we have the expansion of our Destroy Hand Barge Unloading facility and the expansion we did at our P&W facility are both intended to take on some of that soybean meal that is going to go to export.
The other factor is the North. America has added some export capabilities and so we've got a lower supply chain cost to get from the interior plants to the export and get it on a ship making uh the us more competitive in the global markets as well. Uh, and if you remember, we sell more soybean meal than we produce. We're we're a net short. So we're able to find, you know, the best market for that whether it's being consumed domestically or or going to our customers in the global market.
Salvatore just note that, you know we've seen the meal meal uh situation coming obviously and we the the the expansion of our der hand barge unloading facility and expense we did at our p&w facility are both intended to take on some of that soybean meal that someone's going to go to export.
Salvatore Tiano: Great. Thank you very much.
Great, thank you very much.
Mark Hayden: The next question comes from Heather Jones from Heather Jones Research. Please go ahead.
The next question comes from Heather Jones from Heather Jones, research. Please go ahead.
Heather Jones: Good morning, and congratulations on closing Vytera.
Good morning and congratulations on closing beta.
John Neppl: Morning. Thank you.
Heather Jones: Yeah. My first question is on your RSO business. So just assuming a relatively benign SRE outcome, you know, demand for North American veg oil is set to explode. And but the vast majority of your big RD producers now have PTUs in place. So I'm just wondering, do you think this is going to set up a situation in which refining margins could potentially go to zero in the US? And if so, your outlook for the rest of the world, would that still allow for a normalized EBIT target of about 400 million, I think is what y'all laid out in '22?
Um, good morning. Thank you.
My first question is on your RSO business. So just assuming a relatively benign SRE outcome, um, you know, demand for North American veg oil, set to explode. And but the vast majority of your big Rd producers now have PT use in place.
So I'm just wondering, do you think this is going to set up a situation in which refining margins could potentially go to zero?
In the US. And if so,
Your outlook for the rest of the world. Would that still allow for a normalized? EV Target of about 400 million? I think is what y'all laid out in 22.
Greg Heckman: Let me start. I'll let John come back. Remember when we talked in the past that we expected the refining margins, you know, to moderate over time, and that was always our plan. Some of that will work back into the crush margin because the demand for crude, of course, will go up. And so kind of depending on that balance, who's running, how hard they're running the pretreatment will make a difference on where the refining margin falls out. But the, you know, it probably, you know, will keep it tighter than, you know, historical, but not, you know, long-term historicals, but not better than, you know, kind of the peak period. And of course, if you remember, we had it much lower in our model.
Ed the refining margins. Uh, you know, to moderate over time and that was always our plan. Some of that will work back into the crush margin because the demand for crude, of course, will go up and so kind of depending on that balance who's running how hard they're running. The pre-treatment we'll make a difference on where the refining margin uh, falls out but the uh, you know,
John Neppl: I would just add, Heather, that if you look at the last couple of quarters, the amount of refined oil going into energy has been significant to our overall demand. Demand still has been solid on the food side. And so that we would expect to continue. And we'll see what the, you know, things ramp up on the RD side. We'll see what kind of demand's there. But just to point out, by far, most of our refined oil is going into the food industry there.
It probably, you know, will keep it tighter than, you know, historical but not, you know, long term historicals, but not better than, you know, kind of the peak period. And of course, if you remember, we had it much lower in our, in our model.
I would just add Heather that if, if you look at the last couple quarters,
Amount of refined oil going into energy has been significant to our overall Leo and still uh has been solid on the food side and so that that we would expect to continue uh, and we and we'll see what the, you know, the things ramp up on the on the RV side. We'll see what kind of Demands there, but just to point out our by far, most of our refined oils going into the food industry.
Heather Jones: Okay. And then a follow-on is, like you mentioned, Greg, about the demand for crude oil is obviously going to skyrocket. So just thinking of the interplay between those, maybe refining margins get really compressed in the US, but how do you think about the normalized range for soy and soft crush margins given that crude oil demand is going to surge and you're also going to have this very large meal production? And I know we won't know until we know. And but just how are y'all thinking about that setup, the potential there?
okay, and then a follow on is
Um, like you mentioned, Greg, about the demand for crude oil, it's obviously going to skyrocket. So just thinking of the interplay between those, maybe refining margins get really compressed in the U.S., but...
How do you think about the normalized range for soy and soft crushed? Margins. Um,
Given that crude oil demand is going to Surge and you're also going to have this very large meal production. And I I know we won't know until we know and but just how are y'all thinking about that?
That setup, um, the potential there.
Greg Heckman: Yeah, I mean, I think we're, you know, we're encouraged. You got big bean crops. You've got good animal profitability on the meal takeaway and inclusion rates. You've got the biofuel policy, you know, with the RVO being constructed in the US. You've got the B15 coming on in Brazil. So, you know, from an overall setup, exactly how it'll play out, you know, we've got, you know, our theories. But the one thing I'm really glad is that we're running what is now a pretty balanced global crushing footprint, you know, in soy and soft. So I think we'll, you know, we feel the balance of supply and demand is going to be pretty good. And I think we'll be able to most efficiently serve it from the best origins.
Yeah, I mean I think we're, you know, we're encouraged, you got big bean crops that? You've got good animal profitability on the on the meal takeaway and inclusion rates. Um, you've got the biofuel policy, you know, with the rvo, being constructed in the US and then you got the B15, uh, coming on in Brazil. So, you know, from an overall setup exactly how it'll play out.
You know, we've got, you know, our theories, but the 1 thing I'm really glad is that we're running. What is now a pretty balanced Global crushing? Uh, footprint, uh, you know, in soy and soft. So I think we'll, you know, we feel the the balance of supply and demand is going to be pretty good and I think we'll be able to most efficiently serve it you know from from the best Origins.
Heather Jones: Okay. Thank you so much.
Okay, thank you so much.
Greg Heckman: Thank you.
Thank you.
Mark Hayden: The next question comes from Derek Woodfield with Texas Capital. Please go ahead.
The next question comes from, Derek Woodfield with Texas Capitol. Please go ahead.
Stephen Haynes: Good morning, Alan. Thanks for taking my questions.
Good morning Allan. Thanks for taking my questions.
Greg Heckman: All right.
Stephen Haynes: Similar to Heather's question, given the meaningful step up in domestic SBA demand for fuel, how do you see the interplay between SBL and other seed oils as it relates to food in the US?
Similar to Heather's question given the the meaningful Step Up in domestic, SBA demand for fuel. How do you see the interplay between sbl and other seed oils as it relates to to food in the US?
Greg Heckman: Yeah, as I said, I think the good news is we've seen a bit of a test run, you know, on this. And as market, you know, tightens up on the demand, you have certain food customers that, you know, will switch to other oils. And some of that's functionality. Some of that's from a price standpoint. So we're working with those. So we like being able to offer the full suite of the seed oils, you know, to our customers. So we see it as opportunities.
yeah, as I as I said, I think that the, the good news is we've seen a, a bit of a test run, you know, on this and as, as Market,
tightens up on the on the demand, you have certain food customers that, you know, will switch to other oils and
Some of that functionality, some of that from a, a price standpoint. So we're working with those. So we like being able to offer the full Suite uh of of the seed oils uh you know, to our customers. So we we see it as uh, as opportunities.
Stephen Haynes: Terrific. And then with regard to the one big beautiful bill, it appears 45(z) policy will have a longer and greater impact on SBO economics based on the removal of the indirect land use charge. Do you guys have a sense of how material ILEC is on average? And then as a build on that from an OBB perspective, have you been able to quantify how material of a help the 100% bonus depreciation is to your business?
Terrific. And then, with regard to the big, beautiful bill, it appears the 45Z policy will have a longer and greater impact on SBO economics, based on the removal of the indirect land use charge.
Um, and then, as a build on that from an obb perspective, have you been able to qualify quantify, um, how material of a health? 100% of bonus depreciation is to your business.
John Neppl: Yeah, so starting with the ILEC change, that's obviously going to, number one, is we're very pleased that the 45(z) includes all North American feedstocks. So that benefits our crush in Canada as well on the canola side. And the indirect land use change impact is going to be significant because it really puts soybean oil and canola oil much more on par with the lower CI feedstocks. And when you think about the prevalence of soybean oil and the ease of moving it in large quantities, you know, it's going to be very price competitive, but also, you know, it's a much easier feedstock to process. And so we think it's going to bode well for demand for crude, certainly crude soybean oil, crude and canola oil. See about the refined side as we talked about earlier. So I think there's going to be some good demand there.
Large quantities. You know, it's going to be.
Very price competitive but also you know, it's a much easier feed stock to process. And so we think it's going to bode well for demand for
John Neppl: So all in all, pretty positive on that piece. You know, accelerated depreciation side, you know, clearly, where we have an opportunity to take advantage of it, we will on some of these bigger capital projects. I don't know that it will necessarily change strategy around CapEx, but it certainly is going to be a tailwind if we, you know, as we see opportunities.
Crude certainly crude soybean oil crude oil, see about the refined side, as we talked about earlier, still think there's going to be some good demand there. So all in all pretty positive on that piece. Um, you accelerate depreciation side, uh, you know, clearly where we have an opportunity to take advantage of it. We will on some of these bigger capital projects, um I don't know that it will necessarily change strategy around capex, but it certainly is going to be a Tailwind if we if we uh you know as we see opportunities.
Stephen Haynes: That's helpful. Thanks for your time.
It's helpful. Thanks for your time.
Mark Hayden: The next question comes from Stephen Haynes with Morgan Stanley. Please go ahead.
The next question comes from Stephen Haynes. With Morgan Stanley. Please go ahead.
Stephen Haynes: Hey, good morning. Thanks for taking my question. I wanted to ask on some developments in the global trade market with China taking some soybean meal from Argentina and sending some soybean oil into India. I guess not typical behavior from them. So these kind of one-off weird kind of moves, or do you think there's kind of just, you know, more of a structural change going on? Just curious on any thoughts there. Thank you.
Hey, good morning. Thanks for taking my question. Um,
I wanted to ask on some, some developments in the global trade.
Market with China, taking some soybean meal from Argentina, and sending some
Some soybean oil into India. Um,
I guess not typical behavior from them. So, these kind of 1-off weird kind of moves, or do you think there's kind of just, you know, more of a structural change going on. Uh, just curious on any thoughts there. Thank you.
Greg Heckman: I think the one thing the last, you know, five, six years have taught us is the world's a pretty dynamic place now. And I know I'm repeating myself, but it's why we love, you know, our balanced global footprint of crushing as well as origination. And I think, you know, China's very, very, you know, public, you know, that they're focused on food security. So I think it's, you know, absolutely, you know, logical and rational that they continue, you know, to build different optionality. And I would say the importation of soy meal is a new option that they're now developing. So, you know, it seems like a logical and rational action. And then as far as, you know, commodities, you know, moving in untraditional flows, I think that's the norm now. I think that's the norm going forward. And I really feel that Bunge's built for it.
I think the, the 1 Thing, the last, you know, 5 6 years have have taught us, this is the world's, a pretty Dynamic place now and I I know I'm repeating myself but it's why we love, you know, our our balance Global footprint uh, of crushing as well as origination and I think you know China's very very you know public uh, you know, that they're focused on food security. So I think it's, you know, absolutely, you know, logical and rational that they continue, you know, to build different optionality and and I, I would say the importation of soy meal is, is the new, uh, a new option that they're now now developing? So, you know, seems like a logical and, and, and rational, uh, action and then, as far as, um, you know, Commodities, you know, moving in untraditional flows. I think that's, I think that's the norm now. I think that's the norm going forward. And I, and I really feel that that Bungie's built for it.
Stephen Haynes: Fair enough. We appreciate that. And then maybe just on the commercial synergy side, I realize it's early days. But do you have like kind of a timeline roughly for when you think some of these could be realized? I'm sure there are some that are more low-hanging that could be immediate, maybe some that are a bit longer term. But any way to help us think about kind of at a very, very high level how to just kind of conceptualize when you could start realizing some of those synergies?
Fair enough, appreciate that and then maybe just on the commercial Synergy side. I realize it's early days. Um,
But do you have, like, kind of a timeline roughly for when you think some of these could be realized? I'm sure there are some that are more low-hanging, that could be immediate, maybe some that are a bit longer term. But any way to help us think about, kind of at a very, very high level, how to just kind of conceptualize when you could start realizing some of those energies?
Greg Heckman: Yeah, it's, look, it's too early to put any new targets out there, but you know, let me say, you know, we're very optimistic. Our goal all along has been to deliver, you know, more than we promised and deliver them faster than we promised. So that's what we've got the focus, you know, the team focused on. There's no doubt, though, when we start thinking about the commercial synergies, just the, you know, the global scale that we've got now and with the local granularity, whether it's on originating from farmers or distributing to end customers, you know, the capabilities that we've got on the logistical and transportation side, the ability to manage our risk and help our customers manage their risk so that we can be the partner of choice, that's exciting.
Yeah, it's, uh, look, it's...
Too early to put any new targets out there. But you know, let me say, you know, we're very optimistic. Our our goal all along has been deliver, you know, more than we promised in delivering faster than we promise. So that's what we've got, the focus, you know, the team focused on, uh, there's no doubt that when we start thinking about the commercial synergies,
Just the, you know, the global
Scale that we've gotten now. And with the local uh, granularity, whether it's on originating from Farmers or Distributing to in in customers. You know, the capability is that we've got on the, the logistical and transportation side, the ability to manage, uh, uh, our risk and help our customers manage their risk, so that we can be the partner of choice.
Greg Heckman: And you know, I'll tell you, just since we've closed, I've had the opportunity to sit with the commercial teams and some of the functional teams as, you know, we're now one team, one company. And the way that people are working together has been fantastic, right? Everybody is really transparent and collaborative. We've got the ego. You know, we're focused on earnings is what we're focused on. And hearing the teams and the opportunities that they're finding together in the plans. Look, it takes some time to execute. But as we add teams together here in North America a couple of weeks ago, I was in Europe all last week listening to the teams and work and hearing the report out to the working sessions. And you know, I'm excited about it. I'm really excited.
Uh, that's exciting. And you know, I tell you just since we've closed
Greg Heckman: It'll take some time to do, but the reason that we did this deal, they're all still in place.
Uh, I've had the the opportunity to sit with the the commercial teams and some of the functional teams. Uh, as you know, we're now wanting 1 company and the way that people are working together has been, fantastic. Alright, everybody is, is really transparent and collaborative. We, we dropped the ego. You know, we're focused on earnings and what we're focused on, uh, and hearing the teams and the opportunities that they're finding together. Um, in the plans. Look, it takes some time to execute. But, uh, you know, as I as we had teams together here in North America, a couple weeks ago, I was in Europe all last week uh, listening to the teams and and work and hearing the report out to the working sessions and, you know, I'm, I'm excited about it. I'm I'm really excited.
We'll take some time to do, but, uh,
John Neppl: Yeah, I would just add, Stephen, that I think the first focus item for the commercial team was one voice to the market. And I think the, you know, as Greg mentioned, the team set aside, you know, who was doing what and figured out very quickly what's the right approach in every market that we're in to make sure we're one voice to the customer and both ends, the farmer on one side and customers on the other. And we couldn't be more pleased with the coordination among the teams that are just now starting to figure out what the real opportunities are.
the reason that we did this deal there, they're all still in place.
Mentioned, the team set aside, you know, who was doing what and, and figured out very quickly, who, what's the right approach in every Market that that, uh, that we're in, to make sure we're 1 voice to the customer, and both ends of the armor on 1 side and customers on the other. And we couldn't be more pleased with the coordination among the teams that are, you know, just now starting to figure out what the real opportunities are.
Stephen Haynes: Okay. Thank you.
Thank you.
Mark Hayden: The next question comes from Manav Gupta with UBS. Please go ahead.
The next question comes from manav Gupta with UBS. Please go ahead.
Heather Jones: Hi. So I wanted to ask about the shareholder returns post the closure of the deal. How much is remaining under the buybacks? Could you accelerate the buybacks to offset the dilution from the Vytera deal?
Hi. So I wanted to ask about the shareholder returns, uh, post the closure of the deal. How much is remaining under the BuyBacks? Could you accelerate the BuyBacks uh to offset the dilution from the vitera deal?
John Neppl: Yeah, Manav, thanks. This is John. The original $2 billion commitment, we have $800 million left. And obviously, we've, you know, that's going to be an important part of our capital allocation here going forward. We anticipated that all along. We have a big outflow of cash relative to getting the deal closed. But it's always been built into that. And obviously, we've talked to the rating agencies about our plans there. And we expect to execute on that fairly soon. And you know, we'll see. I mean, technically, we have a period of time post-close to do that. We'll look for the right opportunities to execute on that remaining balance. And then going forward, you know, we do expect this machine to generate a lot of cash going forward once we hit our stride.
Yep, thanks. This is John um, the original 2 billion dollar commitment, we have 800 million left. And obviously we've we've uh you know, that's that's going to be a an important part of our Capital allocation here going forward. Um we we anticipated that all along. We have a big outflow of cash relative to getting the deal closed. Uh but but it's it's always been uh,
John Neppl: And capital allocation in the form of share buyback will likely become a pretty important part of our ongoing strategy.
Built into that. And and obviously, we've talked to the rating agencies about our plans there, uh, and, and we expect to execute on that, um, fairly soon. And, uh, you know, we'll see, I mean, technically, we have a period of time. Post close to do that. We'll look for the right opportunities to, to, to execute on that remaining balance. And then going forward, um, you know, we do expect this this machine to generate a lot of cash going forward. Once we hit our stride and and uh Capital allocation in the form of share, buyback will quickly become a pretty important part of our ongoing strategy.
Heather Jones: Thank you. And the follow-up here is when you look at the RVO, and if you look actually closely, not many people do, unfortunately, is that you're getting 50% rent on imported feedstocks. That means domestic soybean oil could actually price at a significant premium to some of these imported RD feedstocks. So would that lead to a situation where you would actually see your domestic soybean oil actually competing against low CI feedstocks and the premium that those low CI feedstocks get versus your domestic soybean shrink meaningfully and maybe go even the other way if you could comment on that?
Thank you. And the follow-up is when you look at the RV. And if you look actually closely, um, not many people do, unfortunately, is that you're getting 50% rent on imported feedstocks. That means domestic soybean oil could actually price at a significant premium to some of these imported feedstocks. So would that lead to a situation where you would actually see your domestic soybean oil?
Actually competing against low CI feed stocks and the premium that those low CI feed stocks get versus your domestic soybean, shrink meaningfully, and maybe go even the other way if you could comment on that.
John Neppl: Yeah, I think it's a little early to tell, but I don't think that's out of the realm of possibility. You know, certainly, the rules that were put in place around BO and wind generation were meant to incent domestic production and use of domestic feedstocks. So soybean oil obviously being a key part of that and being, you know, something that can be supplied in a large quantity, we think is going to give it, as I mentioned earlier, a bit of an advantage, particularly over imported feedstocks. So we'll see how the market plays out. The market always works and it finds a balance. But we like the setup, you know, and we always do. We think we'll be in a good position to take advantage of whatever the market.
Yeah, I I think it's, it's a little early to tell but I, I don't think that's out of the realm of possibility.
Um, you know, certainly the rules were put in place around EO and, and in generation were.
Meant to and sent domestic production and use of domestic feed stocks. So soybean oil, obviously being a key part of that and and being, you know, a a something that can be supplied in large quantity, we think is going to give it I mentioned earlier bit of an advantage particularly over imported feed stocks. So we'll see how the market plays out. The market always works and it finds a balance, but we like to set up um you know and we'll we always do well we we think we'll be in a good position to take advantage of whatever the market.
Heather Jones: Thank you so much.
Thank you so much.
Mark Hayden: This concludes our question and answer session. I would like to turn the conference back over to Greg Heckman for any closing remarks.
This concludes our question-and-answer session. I would like to turn the conference back over to Gregory Heckman for any closing remarks.
Greg Heckman: I'd like to thank everybody for joining us today and for your interest and support of Bunge. As you can tell, this is a really key time in the life of the company. We're really excited to bring these teams together and run this incredible global footprint that we've got to serve our customers. And there's no doubt whatever environment that we're in, we've got to trust that our team is going to get our share. So thank you much and have a great day.
I'd like to thank everybody for joining us today and, uh, and for your interest and support of Bungie, as you can tell, this is a a really key time in the life of the company, really excited, uh, to to bring these teams together and and and run this. Incredible Global footprint that we've got to to serve our customers. And that there's no doubt, whatever environment that we're in. We've got the trust that that our team is is going to get, uh, our shared. So
Mark Hayden: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Thank you much and have a great day.
The conference has now concluded, thank you for attending today's presentation. You may now disconnect