Q3 2025 Archer-Daniels-Midland Co Earnings Call
Today, ADM reported adjusted earnings per share of 92 cents and total segment, operating profit of 845 million for the third quarter.
Our trading for quarter adjusted. Roc was 6.7% and cash flow from operations before working capital changes was 2.1 billion dollars year to date.
With the challenging industrywide. Operating environment will remain flexible. Adapting plans were needed taking action on what it is in our control and investing for long-term growth.
A key part of this Dynamic, environment relates to the status of Highly anticipated, us biofuel policy.
We Believe progress on this, front will drive significant by your fuel and renewable diesel demand.
And lead to elevated, pricing volumes and margins across several of our key operating areas.
Which we expect will set up a constructive environment over the long run.
But based on the current short-term environment, our asno business is significantly impacted.
Against this backdrop, we have made good progress with our self-help agenda.
We made strides in improving our plant efficiency.
We've entered into numerous strategic transactions which Advance our portfolio. Optimization objectives.
And we are accomplishing cost savings through several targeted streamlining initiatives.
This actions have generated robust cash flow, this quarter, and strengthen our business going forward.
Our strong balance sheet driven by a disciplined Capital. Allocation process, give us flexibility to invest for growth and continued to return value to shareholders.
following our second quarter earnings call, we announce our 3755 consecutive quarterly dividend,
please turn to slide 5.
simplification optimization and execution Excellence across our segments, through our self-help agenda,
for our services and oil seeds.
Results for third quarter were sequentially in line and aligned to the expectations we set out in our second quarter earnings call.
The team continued to focus on operational excellence, which was reflected in Crash volumes, increasing 2.6% sequentially and 2.2% compared to the third quarter of last year.
Elevating and lower than expected margin environment.
Our Act Services sub-segments executed the robust export program during the quarter.
Supported by strong corn and meal programs.
We achieved the best total export volume for the months of September since 2016, which helped offset some of the weakness. We experience in our crash business.
For carbohydrate Solutions.
The business delivered sequentially steady results. Overall with lower Global demand for sweeteners and starches of set by strength in ethanol, pricing and exports.
We achieve a key milestone in our decarbonization strategy, connecting our Columbus Nebraska dry corn, meal plant into Tall, Grass dry Blazer, CO2 Pipeline and are commencing CO2 injections.
This marks the second ADM facility that is reducing its carbon footprint by CO2 sequestration.
And for nutrition.
The team drove another quarter of sequential Improvement led by our flavors and animal nutrition portfolios.
Flavors. North America achieved record, coordinate with Revenue in the third quarter, and flavors internationally recently won a notable contract. That is connected to a deep asno, customer relationship,
We're engaged in directly with major customers of as Ando and carbohydrate Solutions. On our nutrition portfolio.
Highlighting the power of our interconnected value chain.
Our special ingredients sub segment is expected to benefit from dedicated East, plant being back online, and consistently producing white. Flake
During the quarter, we announced Network amplification in specialty ingredients to streamline our production footprint.
And we expect the results to improve as this takes. Hold and we build back, our third-party sales business.
Within our animal nutrition portfolio. Our turnaround continues to deliver better results with more progress to come.
In Q3 we announced plans for a North American animal feed joint, venture with alltech. To further transition, our animal nutrition business into higher margin specialty, ingredients. And we expect this JB to commence operation in 2026.
Through these efforts and several other initiatives. We have undertaken this year, we remain on track to achieve. Our targeted, 200 to 300 million dollars in cost Savings in 2025,
As well as our aggregate cost Savings of 500 to 750 million dollars over the next 3 to 5 years.
Strong cash management allows us to continue to invest in areas of innovation where we see attractive growth potential.
For example, we are developing the next generation of flavor systems for our growing energy drinks portfolio.
Our Cutting Edge energy. Emulsion technology provides enhanced product stability, consistent quality and a simplified supply chain.
Additionally, there is a strong demand momentum behind our natural colors portfolio and we are exploring a creative opportunities to expand, both products and geographies in this business.
Another area of attractive growth for us is postbiotics. Where ADM is investing in innovation?
Recently, we were honored with an innovation award at the global Premier trade event for our proprietary, postbiotic, formulation designed to support human immunity and digestive Wellness.
we also launched our second pet Focus postbiotic,
These are examples of the diverse in-house research and development expertise, we've developed in the biotics space.
We're also underway with advancing ethanol, production performance improvements.
Through close collaboration between R&D and operations. We've implemented advancements. That are delivering improved yield gains.
To drive ongoing optimization across our facilities.
We're also investing in side stream valorization as part of our continuous efforts to optimize our production processes and add value to our byproducts.
As we close out 2025, we will continue to action our self-help agenda while adapting to evolving trade policy and remaining flexible to upset the impact of challenging Dynamics to the best of our ability.
Given the deferral in US biofuel policy and other Global movements. It is difficult to predict the timing of when we will see a structural increase in biofuel demand.
The result, we are lowering our expectations for full year 2025.
We now expect adjusted earnings per share to be between $3.25 to $3.50 down from the approximately $4 per share. As we discussed last quarter, money will review this in more detail.
Overall the recent progress with the trade deal with China, coupled with our expectation of gaining us biofuel policy Clarity within the next several weeks, or months, is an encouraging setup for next year.
We expect 2026, we offer a more constructive environment for both the industry, and the American Farmer and that should create both positive economic opportunities, and drive additional long-term investment, throughout our business, and the agricultural sector.
With that, let me hand it over to Ms, to share a deeper dive into third quarter Financial results and our full year 2025 Outlook.
Thank you Juan, please turn the slide 6. If no segment operating profit for the third quarter was 379 million down 21%, compared to the prior quarter.
The difference of us buy fuel policy and the evolving global trade landscape continued to impact demand for asno primarily in our crushing and refined products businesses.
In the ACT Services sub segments, operating profit was 190 million dollars, representing an increase of 78% compared to the prior quarter.
The increase was driven primarily by higher export activity in North America with support from our operations in South America.
South America improved year-over-year as the prior quarter was negatively impacted by.
Higher costs related to Logistics.
Take or pay.
if a net positive, timing impacts of approximately 54 million dollars year-over-year
In the crushing. Sub-segment, operating profit was $13 million down 93% from the prior quarter.
Both Global soybean and canola Crush execution. Margins were significantly lower than the prior quarter both soybean and canola Crush. Margins were down, most significantly in North America, driven by global trade Evolution and reduced biofuel production.
There were net positive timing. Impacts of approximately 41 million dollars in the third quarter of 2025 compared to the prior quarter.
partially offsetting the net timing benefit year over year, where insurance proceeds of 24 million in the prior quarter,
In the refined products and other sub-segments, operating profit was 120 million dollars down 3%. Compared to the prior quarter, as positive timing impacts helped offset, lower biodiesel and refining margins.
there were net positive timing impacts of approximately 12 million dollars, year-over-year
Earnings from our investment in Willmar were 56 million for the quarter down, 10% compared to the prior quarter, and excluding specified items.
We typically record our share of wilmar's financial results on a 3-month lag basis with the exception of material transaction or events that occur during the intervening period. That materially affect the financial position of results of operations.
During the third quarter, we recorded a 163 million charge related to the Penalty imposed on Willmar by the Indonesian Supreme Court and for our asno segments have presented this as a specified item.
Turning now to slide 7.
For the third quarter carbohydrate Solutions. Segment, operating profit was 336 million down 26% compared to the prior year quarter.
Primary due to a decline in global SNS demand which impacted both volumes and margins.
This is a continuation of consumer buying Trends. We have been experiencing throughout 2025 with softness and demand in sweeteners and a reduction in starches, demand primarily from less consumption of packaged goods and corrugated paper.
Additionally in emea SNL volumes and margins continue to be impacted by persistent highcon. Costs related to crop quality issues. We discussed in the last quarter.
Global wheat Milling margins and volumes were fairly stable in the third quarter relative to the prior quarter.
Additionally, the prior quarter benefited from approximately 45 million dollars of insurance proceeds.
In the Vantage, contract processes sub segments, operating profit was 43 million up from a 3 million dollar loss in the prior, quarter driven by strong export activity. Coupled with industry downtime for scheduled maintenance decreased ethanol, inventory, stocks and strengthened pricing.
Overall ethanol ibida margins per gallon for the quarter were approximately double and the volumes were roughly flat compared to the prior quarter.
Human nutrition Revenue increased by 6% and the animal nutrition Revenue increased by 3% compared to the prior quarter.
Human nutrition. Operating profit, was 96, million up, 12% compared to the prior quarter, as a result of strong flavors growth and an uptick in biotics, demand.
The third quarter of 2024 also benefited from approximately 25 million dollars of insurance proceeds as compared to 10 million dollars. In the third quarter of 2025 animal nutrition, operating profit was 34 million for the quarter up 79% compared to the prior quarter, as a result of the combination of an increased focus on higher margin product lines.
Disciplined cost control and progress with ongoing portfolio, streamlining initiatives.
Turning now to slide 9.
The ADM model is that we generate strong cash flow through multiple commodity Cycles.
For the first 9 months of the year, ADM generated cash flow from operations before working capital of approximately $2.1 billion, down by $254 million relative to the prior quarter as a result of lower overall total segment operating profits.
We continue to maintain a solid cash position and have made good progress in improving our working capital efficiency.
For example, we reduce inventory by 3.2 billion year to date compared to 1.2 billion dollars during the prior year, period, largely driven by sharpening our inventory management practices.
We continue to be very disciplined in the areas in which we invest.
During the first 9 months of 2025, we invested 892 million and maintain our expectations of full year. 2025 capex to be in the range of 1.3 billion to 1.5 billion.
Year to date. We have distributed 743 million in dividends.
The last point I'll mention on this slide is that our net leverage ratio, as of the end of September, was 1.8 times.
Improved from last quarter and in line with our previously communicated year-end target ratio of approximately 2 times.
now, turning to slide 10, we have provided details on our revised 2025 Outlook
Earlier today, as Juan mentioned, we revised our full year 2025 adjusted, EPS, expectations.
Down from the approximate 4 dollars per share guide. We provided during our second quarter earnings
I will now provide some color on several assumptions that are underpinning. Our revised guidance range.
First with our self-help agenda, we remain on track to deliver between 200 to 300 million in cost savings for 2025.
Second for asno.
As we have previously discussed, as we move through each quarter, we increasingly lock in our book of business for the upcoming quarter.
Based on the portion of our business already booked plus our view of the market. We are expecting continued softness in global soybean Crush margins.
This is a step down from our expectations last quarter, when we were expecting global soybean margins to be in the range of approximately $60 to $70 per metric ton.
Our act Services sub segment is expected to benefit from the robust harvest season. We are having in North America but given trade Dynamics results, the projected to be weaker than we had forecasted at the time of our second quarter earnings and the team will continue to progress our advancements related to plant up Time Manufacturing efficiencies and working Capital Improvements.
We expect insurance proceeds of dollars in the fourth quarter as compared to 50 million in the prior year quarter.
Thirdly for carbohydrate Solutions.
On the sweeteners and starches front, we expect a continuation of the same pressure from software demand trends that we have experienced throughout 2025 and expect High corn cost to persist in emea.
Ethanol, export flows are projected to drive similar sequential demand throughout the fourth quarter. However, margins are expected to be lower than the highs we experienced during third quarter.
Ethanol EBITDA margins for the fourth quarter of 2025 are expected to be roughly 10% lower than the fourth quarter of 2024 EBITDA margins.
We expect insurance proceeds of approximately 20 million dollars in the fourth quarter of 2025 as compared to approximately 40 million in the prior quarter.
And lastly for our nutrition segment. We continue to take action on our portfolio. Optimization and are making sequential progress in network streamlining and cost improvements.
In human nutrition flavors, typically experience seasonal softness in the fourth quarter. Given a product concentration in the beverage categories.
This is expected to be partially offset by Improvement in specialty ingredients. Now that our decator is Planned is returning to plan utilization rates.
In animal nutrition. We will continue to pursue our ongoing turnaround actions which includes a transition into higher margin specialty ingredients.
We expect insurance proceeds of approximately 5 million dollars in the fourth quarter of 2025 as compared to 45 million in the prior year quarter.
Insurance proceeds at the segment level for fourth quarter, 2025 are expected to be funded roughly half by a captive, insurer and half by Third parties as compared to third parties, funding. The vast majority of insurance proceeds in the priority of water.
As Juan mentioned, we have continued to make good progress on our self-help agenda, focusing on strategic portfolio, optimization
Cost reductions and improved working Capital Management.
All of which are strengthening our cash flow.
Further, we have refined our digital strategy, and our pivoting away from large Global implementations and are directing our resources to prioritize Regional and more agile projects and accelerating our data Journey while continuing to invest the appropriate amount in cyber security and network and application resilience.
To conclude. I want to take a moment to thank all our admin colleagues for their focus, adaptability and contributions to the company's long-term success.
These efforts are integral to our ability to navigate the current Dynamic environment.
Back to you, Juan.
Thanks Manish.
Let me wrap up by saying overall, we will continue to drive. Operational excellence and strong cash flow through. Our focus on manufacturing. Efficiencies portfolio, simplification and cost streamlining.
The result of global trade Evolution and depending us biofuels policy.
In carbohydrate Solutions, we will continue to drive. Operational excellence, and closely monitor softening consumer, demand Trends and broader economic signals while maintaining momentum around our decarbonization strategy, which we expect will open value opportunities in low carbon Solutions.
And for nutrition, we expect steady progress across our portfolio with additional opportunities in natural colors.
With that.
We'll take your questions now. Operator, please open the line.
Thank you. If you like to ask a question, please press star. Followed by 1 on your telephone keypad. Please ensure you are unmuted locally. When asking your question,
First question for, today comes from Ben Aura of Barkley's. Your line is now open. Please go ahead.
Uh, yeah, good morning. And, uh, thank you very much, uh, for taking my question, Juan. When we sell, first of all, on Crush and the outlook, obviously a lot of things have changed. But can you help us reconcile a little bit, um, the sequential decline, uh, in the third quarter for Crush versus what you had, uh, in the second quarter and, to a degree, in the first quarter? When actually the Crush environment was, I would say, lower, but I mean more stable, but at a lower level. So just help us recognize.
Arkansas. Like how much was like, maybe locked in carried into it and how we should think about Crush sequentially, just crush on a standalone basis. Uh, into the fourth quarter, just given the uncertainty that you've mentioned on bio fuel. And then I have a very quick follow-up on those Insurance numbers.
Sure been, good morning, um, listen. Uh, as you remember. So I've been uh, board crash rally sharply, post the rvo announcements. And if you recall at the time of our last earnings calls, borash was about like 225, uh, then after that, it, uh, um, has moved lower because of a variety of factors. Uh, we had a little bit of, uh, decrease in acres in the US. Then there was this chapter about the, uh, trade deal with China that, uh, you know, made the pick up in in uh, in bins, uh, basis here. Uh, and certainly we have the uncertainty about uh, bio fuels policy. There was a large amount of SRS granted in the period with the supplemental proposal. Um,
To, at least partially relocate, that but it is in common period until the end of October and now a little bit delayed because of the government shut down. So, um, then in the period also Argentina has a tax holiday that create the potential for increased crash in October November, December period. So we saw that 225 turning into something like a dollar 20 and now currently bounce back to about the dollar fifty. So, um, in Q4 we expect B crash to remain in the current range if you will. And as we are here today, we're probably, uh, booked about 80% of Q4. So certainly, uh,
You know the 4 range is out of range right now with no no extra policy and uh so that's what we're seeing at the moment. So the plans are ready to crash harder. We still see with optimism 2026
The the team has executed well in everything they could do in this in this environment and especially in the inventories when money is reported 3.2 billion dollar lower in inventory, helping our cash position that was that was basically a lot of that is the heavy lifting of the, as an no team trying to make improvements out of a difficult condition. So we still feel
Very strong about 2026, all these, uh, things that are under uh, in motion right now, where there is the rbo finalization, the rbo is positive for domestic. Uh, feed stocks and certainly the trade deal potentially to have more sales to China is also positive but all those things need to be finalized during the next, you know, 1690 days or something like that. Then we will have more clarity about where margins will move.
Okay, and then, just to manage real quick on those insurance gains. You said half and half come from so that half that, that kept us, that somehow reflected in the other segment. Just wanted to confirm that.
Most of that was funded by third-party insurance this year. It's give or take 35 million half of it right now is funded by captive and we assume that the other half will be
okay, that's all I wanted to clarify. Thank you very much.
Thank you, man.
Thank you. Our next question comes from manav Gupta of UBS. Your line is now open. Please go ahead.
Um, my first question is on your, uh, September announcement of forming a JV with All Tech. Help us understand how this came together, and help us understand the benefits of this JV and how it helps EDM.
Yeah, thank you man. Good morning. Um
Listen, the the um if you recall our strategy in animal nutrition or has 2 phases, if you will 1 is what we call fit for growth. And that has been driving. Operational improvements, and we have seen, I think sequential improvements in operations uh for the last like 8 consecutive quarters in in animals. Uh but the ultimate objective was to execute the pivot that were more Specialties in animal nutrition. And so uh we basically combined here um,
The compound feed businesses of ADM 1, 1 of the leaders of the market which is alltech and combined really 2 Powerhouse is here. Combining Decades of experience, and and parallel capability. Um, with production expected to come in 2026 and with that, the ADM part that remains is, uh, is more concentrated on a specialty ingredients, or or premixes and basically, we're going to be playing a little bit the, uh, human nutrition Playbook which is to have a specialty uh, pipeline that can grow faster than maybe the big Commodities that we have put in the joint venture. So we expect big synergies from that joint venture, big operational improvements and we expect them the remaining animal nutrition in ADM to be a high margin, high growth type of segment if you will.
Manova, I will add to 1 piece on 1, is you ask for the JV, but I also want to just look credit Ishmael and Ian, and the team on the progress they made in General on animal nutrition, you can see the results showing from the operational side, which is the fit for growth that 1 mentioned. So overall really good progress by that team on execution,
Perfect, sir. My quick follow-up is and I understand there's a lot of policy non Clarity here, but what the pieces which are on the table and not fully solved are a much higher rvo.
Uh, a scenario in which there is no production tax credit for imported renewable diesel.
Only 50% rinse for imported feed stocks and the possibility of removing that indirect land use penalty clause which will make soybean oil, a very competitive in terms of production tax credits with Tallow and other waste oil. So when you put all these things together, eventually when the policy comes around, do you see a very, very strong 26 and 27 whereby?
You will have to make more renewable diesel in the US and make it more with domestic feed. Stocks and more like domestic soybean oil, if you could talk about all those policies which are on the table,
I understand they're not finalized, but they create a very strong momentum for you. If they do come together, if you could talk about that.
Yes, I think that you highlighted it correctly. All those pieces came very, very favorable, as I said in my initial remarks to domestic fit stock. So um
We expect as these policies are enacted and finalized. And again, there are many aspects of that that needs to be finalized. We need to have the final rbl numbers. We need to have the, the treatment of the, you know, SRS. So that there are many of those things that needs to be enacted but when all that is finalized, you can see a scenario in which, um,
RS will probably pop first so it's going to be a gradual Improvement. But the way we have seen it in the past is really R RS, need to climb to allow uh renewal digital plans to have margins for them to run that in line will pull on more demand for uh soybean oil.
You can see margin coming up into bio fuels as well. So that's kind of the way we see it running through our pnl
Uh, you have to remember that in Crash. The big problem we have, is this oil leak. That is relatively soft right now. That will be addressed by the rvos whenever they are ready. Um,
in the, in the other leg meal has been very strong growth in meal, has been like globally, like 8 and a half percent. We expect in at about a very strong 6%, still for next year. Um, the US continues to be very competitive meal and meal continues to buy themselves into Russian. So, um,
most of the customers of meal in the protein sector are are showing profitability and good time. So that side of the leg is strong. If we can strengthen the rvos and and bring more clarity, they are we expect strong Crush margins going forward and that's why I think if you remember last quarter, we said that we were setting up our footprint of plants to make sure that it will be able to run harder and we are demonstrating that. So so we are pleased with the setup. It's just from here to there, there is a lot of clarity that needs to happen that doesn't depend on us.
We like to take to talk more about the things that we can do to improve. We have improved the company in terms of cost in terms of cash. In terms of portfolio, we've been running these Triple C that we call it cost cash and capital since 2014. When we launched it and I think the organization has this memory that we, we need to act into that, they quickly go and um, and help us with the cost reduction, targets with the cash targets. And certainly we make consistent and steady improvements in our, um,
In our portfolio optimization. So we we, we look at 26.
With, you know, with optimism, we just don't know if it's 12 months of 26, with optimism or 9 months of 26, with Optum missing because that depends on the government.
Thank you so much. We all hope this policy uncertainty gets results sooner than later. Thank you, sir.
You're welcome.
Thank you. Our next question comes from Heather. James of Heather, James Research. You’re now open. Please go ahead.
Good morning. Thanks for the question.
um,
I wanted to go back to crush 1, um, and I understand all that you were saying as far as the crush curve, Etc, but in the US fuel basis,
Was pretty strong throughout um Q3 and has been strong stronger than expected in early Q4 and it's based on our data and anecdotal reports. Cash margins were strong for much of Q3 and into early Q4. So given the performance shall put up for Q3 and crush. And then the, um, and then the outlook for Q4
just wondering if you could just
break out, where you think the big differences were, was it, did you have, like, most of your, physical meals sold before the rally or y'all short beans, or just,
Just hoping you could help us understand. Um,
You know, reconcile, the 2, if you could thank you.
yeah, I think uh, um,
I think it's a little bit of uh, of both but for the most part when we get into the quarter. Yeah. Uh, you know, by the time we do earnings calls, we are like 75% sold for the next quarter. So we probably, uh, were sold before that rally and then the rally didn't last that much that long to be honest. So then then
Uh today we were booking is very much similar in Q4 to what we booked in Q3. So uh, so I don't I don't see a significant Improvement, there is a lot of variability and I think that when I look at the performance of the commercial team, they've been that they done very well. So we I can pinpoint to 1 thing that and that we really regret uh, in the business. Uh,
I would say our services was uh a little bit softer but not much. I think that we have a good meal and corn program exporting from the US. Of course we didn't have any beans growing to China, but the volumes kind of held if you will. Um,
in uh,
May be exports to China. Um, but in Crash.
We are seeing again an environment for us for our business in Q4, kind of similar to what we booked Q3 but maybe mohnish can give more granularity on the numbers. Yeah, sure. So Heather what 1 said is, is absolutely correct. So there was a period of time. If you look at, when we had earnings last time and board was high replacement, margins were high at that point too. And then as a quarter progress, which is, when we do a lot of our books of Q4, you actually saw a replacement margins come down. Uh, and and that's why Crush margins right. Now, what we are seeing is flat to slightly up, depending on the geography you look at I think North America. You seeing Crush margins will be slightly higher than Q3 but then you got to remember, we got a global business. So then you got uh you got all these other business other regions and depending on how basis plays out in those you would actually see a a lower number. So net-net, when we put it all together Heather, we are saying it's somewhere flattish to a little higher.
Higher. We'll see where it actually lands. As 1 said we are uh decent sized books coming into Q4, but of course, there are spot deals still available for the balance of the book. And as you know, I know Greg and the team, they're going to take every opportunity to get what they can.
Uh and so that's what we're going to work on. But nothing changes on the fact that the team is very focused. On driving value. Driving inventory, driving cost out, and S1 is mentioned, when, when the crash comes,
Our plants are ready and he talked about that too as well. We are seeing plant operations better. So hopefully, you know, as all these things come together, the team can continue to keep executing and keep driving, uh, more than than where we are right now, but that's where we see it right now, and that's why we're calling it as is
Yeah, Heather 1 thing that I noticed and I I've been running maybe for like 10 years.
is that right now, uh,
both farmers and customers.
are um,
Are very reluctant to book long. So farmers are kind of selling uh reluctantly and buyers are kind of hand to mouth if you will. So that that doesn't allow for, you know, a full uh orderly flow of the chain. If you will, that that we we normally see and because of all these uncertainty nobody knows exactly what's going to happen with, you know, soybean basis and all that based on the trade deal. And nobody knows exactly what's going to happen with the oil leak because of the policy uncertainty. So everybody is like, uh,
Trying to go hand to mouth and that, that makes it a little bit more difficult for for for us to reflect some of the conditions in the pnl.
That may be one thing I noticed from the past.
Thank you for that. It's helpful. And just my quick, follow-up is just as we extrapolate forward. I know the hope is that we get to finalize our video before the end of the year. But
I think prudencia would say, um, it's probably coming in q1 so just wondering. Um, how are you thinking about replacement? Margins for um, q1. And I'm like you said, farmers and customers are hand and mouth but as as much visibility as you do have, what are you seeing on that front?
Yeah. So
Basically layout again. It depends on timing of clarity. So whether it's a 6 months or 9 months, but sitting today since we still don't have Clarity, the book that we are booking at for q1 right now is I would say flat-ish to Q4
but again we are open so it's not like we have already booked all of
Q1 uh but I think the timing of when the policy comes in will actually have an impact you're seeing right now. I think uh,
The the oil leak leaking with the current where soybean prices have gone up.
Uh, but let's see how that plays itself out. So to answer your question succinctly on q1 right now, we haven't seen a big pop in margins but hopefully post regular post regularity Clarity. You you will start seeing that to move up. The question is whether you see it for the first quarter? You see it for 2 quarter, it'll all depend on the timing of the policy and also what's in that policy
Okay, thank you so much. I appreciate it.
Your line is now open. Please go ahead.
Hey, good morning. Thanks for taking the questions. Um, I wanted to start by asking about, uh, your, your outlook for a services and, you know, the third quarter was, was stronger than we anticipated. You mentioned the um, uh, trade deal with China, but, um, you're talking about 4q maybe being a little bit softer than you had originally anticipated. So, I guess, you know, was there a timing dynamic in the third quarter or what else has changed for the fourth quarter? And and as you think about, maybe that bit more subdued Outlook, is that really a 4 quq issue or or does that linger as well into into 26?
Uh, listen. I think our services is it was uh, higher in in, in Q3 as you notice. And, and I would say versus last year,
We had good volumes in, in, in in, in North America when you consider our export of meal and of corn, um, our system work well. And last year, we had the problem of the take of pay in Brazil that we sold for this year so that, that that has a Delta there as we look forward. I think the the market right now is all about. Uh so we also have good destination, marketing operations and and and our global trade operated. Well we expect those things to continue but margin opportunities are are more difficult right now.
um,
I would say we really need this Clarity on the trade deal, but although on the surface it is possible, it is possible for ADM. And for grain in general, we haven't seen yet uh a join document uh, highlighting the details of this. So we really it's a big difference. Whether the 12 million tons of soybeans will happen in calendar year, or in marketing year, of course. And, uh, whether that's counted, the material that is sold versus the material that is shipped at what price is that will happen. So a lot of that is still in the air. So that's what I was telling, uh, header before that. There's a lot of people going hand to Mouse and and, and the C the farmers as well. If you look globally.
Farmers selling has been uh slow when you compare to historical average probably with the exception of Argentina when they have the tax holiday because Farmers want to see what's happen next. And and I think that that this point in time, the 2, big events that will move commodity prices will be Clarity on the, on the, on the China trade deal and, uh, regulatory, uh, Clarity on the bio fuels policy and until then, things are going to be a little bit hand to Mouse for for, for a while.
Andrew just added one more here, so an AC across the business is execution. That was the other thing in Q3: Greg and his team continue to drive good cost control. Very good job on inventory management, as you can see from the results.
and that cost control or the self-help that 1 is mentioned was across all the businesses. So when you put all that together, that's how we came in with the adjusted EPS of 92 cents,
And I would say we continue that Journey on self-help including in the fourth quarter. So to answer you had a second part to your question which is this? This is just a fourth quarter issue or not. So as I think about it, good execution in 3Q, once policy Clarity comes in in in 2026 that sets us up great for 26 and 27 as manav also said. And so this is just that transition quarter and the team will continue to drive every self-help idea they can operationally uh to keep getting better.
Okay, thank you very much.
You're welcome.
Sorry to uh, just the labor on this point, but maybe wanted to just talk about um, some of the the the moving pieces here for for uh Clarity in the bio fuel policy.
I think, you know, you, you have, uh, the S kind of comment period out of the way. And I know you have some noise with the government shutdown but we've been hearing reports that the, you know, the EPA has prioritized the, the rvo through the shutdown and that maybe you could see something uh, in the hands of the OM by early to mid December.
You know, set the 2025 compliance date.
Towards the end of q1. And if you think about what the
industry would do, like, the obligated parties would would then need to shore up their 2025 books. So do you kind of see a, uh, from a timing benefit, as it stands right now? Um, this being kind of a, an early to mid q1 event, or or how should we think about kind of the moving pieces here?
Thank you. Uh listen. Uh let me tell you what we know. We know that EPA is aligned with the agricultural industry.
to support American Agriculture and energy dominance uh, through strengthening of the domestic demand for uh domestic fit so and prioritizing that
uh,
I don't want to speculate on who's working on what at the EPA. I think that the EPA is committed to that, and as quickly as they can, they're going to resolve that because they know the industry needs that and the agricultural industry needs that. So our role is to be prepared, and we will be prepared. You will see, as I explained before, a gradual improvement of these. Whenever the market will detect that there is movement, you're probably going to see RINs popping up, and then eventually we're going to see crush margins popping up. So we are ready to do that. Other than that, I would...
Will be speculating and I have no basis to do that for him. So I will leave it there.
Okay, great. Uh, appreciate the the color there, maybe just shifting over to, uh, starches and sweeteners. I think we're approaching that time of the year where where you get into Contracting season and just was wondering how we should think about the the moving pieces here. I think uh you know you have buyers pushing for lower prices uh, amid a larger carry out and and I I think, you know, you and and others have noticed noted some softness in demand, uh, in the industry. Um, but at the same time, you're you're you have really good export volumes. Um, so it was just wondering if you could, you could tell us how how negotiations, uh, have been Fairing and and do you think there's the potential for this Contracting season to get stretched out like it did last year?
um,
I would say we are, uh,
Maybe 20 30 days away from, you know, knowing what happened in the in the contract system. So, you know, negotiations are happening right now. So I I I I won't comment on that.
uh, I would say, um,
corn is plentiful and uh the us will have a very large crop.
Based on good yields and higher acreage. I think that Brazil will have a record. Crop Argentina will have another 50 million ton crop. So I would say, uh, raw material will be plentiful but there has been good demand for, uh, for corn around the world corn. I think this is is is being used uh in many ways, of course in feeding, but also in biofuels policy. And and if you think about uh
Uh, you know, the US is competitive to in, in, in, in ethanol to Brazil and Brazil has a E30. There are there are governments out there that are enacting like E10 for next year, we have E15 all year round in California.
So ethanol continues to be the cheapest oxygenate out there. So you know,
To 2 billion, gallons of export this year, maybe 2.2 2.3 for next year. So I think that's going to be, that's going to be uh, a lot of corn. But the man, this robust, as well as you said, um,
in general, in the products, in car Solutions, we have seen some softness both in sweetness and starches and um,
And yeah, in sweeteners and also in starches due to corrosive boxes and and cardboard. Um, so, um,
We'll have to see our our team produces more than 20 products from the wet mils from corn. So we balance that equation as we go into the negotiating contracts. Uh,
so we continue to feel good about the negotiation, uh,
As I said, we are doing it now.
Report this in February. That's what we finish every year.
we have as you heard me saying over the years,
we have um avoided the cliff that we used to have in which every contract will end at the same time so we have a more balanced portfolio of contracts that makes us
As this time of the year less concerning for, for at least ADM, but as I said, I think that contract.
Season is going up, normal. I, I I wouldn't describe anything else, but we will have more to say in February
great. Appreciate the detail.
Thank you. Our next question comes from Tom Palmer of JP Morgan. Your line is now open. Please go ahead.
Uh, good morning, thanks for the question. I wanted to ask on the nutrition business. I you cited seasonality is I think the main quarter over quarter headwind to think about, but at the same time I I think previously you you had a bit more of a sequential Improvement, embedded in the Outlook. So curious about what might have have shifted. Um and and to what extent seasonality is, is normal versus maybe there are some extra factors this year. Thank you.
Sure. Tom. Yes.
I think what we see in in nutrition is um sequential Improvement in operational. Uh, capabilities of of of the nutrition business. It was being fixing things and you know now we're very happy that the East plant is back up. So uh and and you saw animal nutrition continues to be uh sequentially improving.
I think that flavors is a big part of the business, of course and flavors. We are heavily. Tilted, towards Beverages and beverages all more in the summer. So as the northern hemisphere's faces, the winter now and enters into the winter, we normally see about the 15% reduction in in in our volumes as we go into Q4. So that will be partially upset by the fact that the we will have a full quarter hopefully of operations of this plant that will bring our cost down as we are producing White Flags versus buying it from competitors.
But we are in the process of recovering customers there. So you have those puts and takes but I would say the business continued is passed to uh to improve to operational improvements.
Okay. Uh thanks for that and and I did have a clarification question. Just on aervices, there was the export window in Argentina late in 3Q.
um, to what extent was that a benefit in 3Q and will there be just
Curious how the booking works, right with shipments. For survivals. Will there be a boost to think about in 4 q from that as well? Thanks.
so, uh, the the way it works is
That we, we did get a piece of that export license.
I'll go back and check memory but some of our uh, shipments did happen in Q3, and you're going to see some of that in Q4, but that will be, that's already reflected in our export numbers. And in our
Guide that we've given you Tom, so, so no doubt that from there, but I would say, we we, we we, we continue to watch that, uh, Tom in Argentina because of course, after this holiday, and after the, uh, the election success. Um, farmer has not been selling that much as there has been no devaluation in Argentina. So we will have to see, um, how the commercialization happen. We think it's going to be tight commercialization till the end of the year. So, um,
For watching that closely.
Okay, thank you.
Thank you. Our next question comes from Stephen Haynes of Morgan, Stanley, your lines are open, please go ahead.
Good morning and uh thanks for taking my question. I was hoping you could maybe put a finer point on the crush outlook for 4 q.
I think you mentioned before that the, the margins are going to kind of be stable in that binds might be higher quarter over quarter.
Um, maybe just to frame it versus last year, would also help in terms of the actual segment dollars. I think it was around 200 million. Would you expect a fourth quarter to be above that or in line or or maybe a dip below? If you could just help frame it that way? That'd be helpful. Thank you.
Crushed. Right?
so then as I told you,
if you look at crush crush, margins are going to be lower on a year-over-year basis.
Just based on where we've talked about already about all the factors impacting it where it's flat to slightly up from Q3 but still down on a year-over-year basis. So, based on that, we would expect that crush on a year-over-year basis would definitely get impacted. Uh, secondly, just remember that in our results, we normally Mark to Market our derivative positions at the end of every quarter. So depending on where Crush margins or bases ends up being on 31st December, you could see a positive Mark or a negative Mark at the end of the day that all that Mark is doing is moving money between quarters, but it doesn't change the overall economics.
Uh, so that's how we'll have to figure out and then figure out how bold Crush timing goes because that also has an impact. But if you just look at pure execution margins on a year-over-year basis, it is lower and therefore the result of that execution margins in crush will be lower in dollars also on a year-over-year basis.
Even though Greg and ta continuing to drive higher volume, uh, in the factories as can be evidenced by the work that you saw in Q3 where we have managed tricks, uh, have production greater than uh 2% on a gyro.
I would also add canola into that same complex uh Stevens just to let you know. It's the same Dynamic even canola is down on a year-over-year basis so that that will also have an impact.
Both of those show up in crush.
Thank you. Our final question for today comes from Salvatore Tiano of Bank of America.
Your line is now open. Please go ahead.
Uh, yes, thank you very much. Um, I'm just wondering you got a lot of questions about next year's crash margin and and uh what would happen. I'm just wondering uh, on trade Dynamics uh, and the potential new um,
You know, the the higher demand, assuming the arbios are approved as the proposed right now? Whether it's in q1 or Q2 could we see the us at that point uh becoming a net importer of soybean oil. Um, and if that happens uh given that we have you know we have a bunch of tariffs assuming the same place. Um what kind of move could we see in domestic soybean oil prices? That could.
You know, going to your your bottom line as a domestic producer.
Yeah, a lot of, uh,
speculation in that question. Uh,
Uh, we do, as you suggest, we run scenarios all the time and and there are many things that could happen. So let's let's chop it by pieces here. Um,
On rbo, we know.
Whenever the policy is enacted, we going to be crushing more and soybean oil will be more demanded. Um,
We have the beans to take care of that today, but of course you bring the possibility of 12 to 25 million tons in exports to China, and you know, that moves the equation. If the 12 million tons is on a calendar, a marketing year basis, it is a different pipeline. That is a different carryout that we have in the U.S. versus if it's on a schedule that needs to be shipped all in 2025.
so all those things are put into into the consideration, I would say uh,
Marcus tends to adjust. So there is going to be a strong crash in Argentina. There's going to be a strong crash in Brazil. If the US has more demand than than than we can supply internally, then prices will come up and we will attract other Productions. And and and we could end up importing soybean oil at this point in time. Um,
At this point in time we are uh exporting the soybean oil. So it will be it will be a significant change but the significant change will be brought by policy and rinse popping up and and the things that we described before, so uh, it is a possibility. And but before that, we're ready to crash very, very hard Supply domestically before Imports come in,
Thank you very much.
Effects on the fact that, uh, we have improved our operations to supply exactly, this kind of environment, I think our work services and also, it is ready to tackle any commitment that the US or China will make in terms of exporting and ADM has a big percentage of all those exports and the capabilities to do so.
An ADM has the plans ready to crash very hard and Supply the policy. The domestic policy that the the EPA is supportive. So uh we got ourselves ready to do that. The company is in good shape from the cache and cost perspective and we are continue to adjust our our portfolio. So we look at 26 and 27 with a lot of optimism.
Thank you.
Thank you, thank you at this time, I'll now hand it over to Kate Walsh for any further, remarks.
Thank you all for joining.
Me, we appreciate your continued interest and support and wish you a great rest of your day.
Thank you all for joining us today is cool. You may now disconnect your lines.