Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the ADM Second Quarter 2023 Earnings Conference Call. All lines have been placed on a listen-only mode to prevent background noise.

As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s call, Megan Britt, Vice President, Investor Relations for ADM. Ms. begin. may you Britt,

Megan Britt

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

X. Slide to turn Please

and assumptions of subject statements management’s views industry and based reflect uncertainties. conditions, materials comments statements economic and to performance many of current materials constitute are and may Some forward-looking and our financial are that company future risk estimates factors that circumstances, and results. on These

additional cause provided reports from file events. of result to forward-looking has ADM To its ADM information and or no information law, on new applicable presentation. materially assumes with any in statements assumptions the obligation concerning as factors differ under update future extent those this a the actual SEC in that permitted, could results to

perspective today’s Juan Officer, accomplishment share highlights Chief on webcast, our quarter the Luciano, will provide our and our half results, On our second second half. progress on Executive first outlook for Chairman discuss and

Our will Vikram remarks, questions. quarter Chief have our actions. closing level will generation provide he and then and segment Luthar, your update cash an Juan review Vikram first half the capital and some for will allocation performance take and and Officer, Financial on

Please over I'll turn to now Slide call to Juan. X. turn the

Juan Luciano

and those you, for who to thanks Thank today's Megan, have joined call. us

$X.X first billion. half with per operating share $X.XX first of billion. an with per $X.XX Combined operating results, to earnings of of quarter an share of ADM adjusted $X.X second adjusted earnings Today, reported adjusted segment this profit adjusted profit and a quarter equates

was average XX.X%. Our adjusted quarter ROIC trailing fourth

strategic as last as half demand by environment to strong nearly financial end-to-end strong results earnings performance the first and from chain bolstered a the and leveraging macroeconomic even of challenging replicates unfolded of year. we enterprise. diverse and a power expected active across Through ROIC geographically the maintain our has we accomplishments more supply margin we performance start The half key positioning, and XXXX record first our management year, network, face our probably the

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Let leveraged of business. leverage port our past the across crush Brazilian me record out partnerships regenerative capacity higher volumes facilities, Ag capitalize flex on our in team Oilseeds, agriculture margins. capabilities expanded our ability highlight just Services to origination a our & canola crush produce few investments In to to and

of in for our milling to strategic instance, more Solutions, tons XXX,XXX latter BioSolutions additional liquid of record the demand an corn In captured operating modernization than ton capacity drive manage we and optimization increased margin. sweeteners, and growth team results our Carbohydrate businesses. investments flexed $XX international per allowed produced in in and and In metric profit and revenue

When one of you full segment another. able drivers business portfolio, to product these challenges geography, strategy to to Flavors in In and impressive in drive thanks Nutrition, EMEA double-digit our value performance continues unique across into are aspects business, sales in a or deliver North business the how clear in growth and wins new convert in combine we pipeline go-to-market ADM's all it's larger an America.

Next slide, please.

half the see XXXX. we strong a review Let's important factors second finish that for drivers as in

expect We for Brazil year. the strength remainder of continued the in origination

crops. trade record facilities deep Brazil strong network corn Brazilian our will optimize strategic to volumes, us connection marketing in export port investments past capitalizing origination soybean to global teams the and Our in and destination allow and on

in for increasing the the renewable this year, half robust Biofuels strong. half. first ethanol and trends green of diesel strong vegetable second we we to to an from Through demand biodiesel, continues demand and from oil remain for expect saw margins demand the continue

for sustainable producing QX, support diesel for fuel to our low soy JV start our and metric crush soybean Marathon's capacity facilities of demand tons Dakota adding North processing to and renewable will is oil renewable this diesel annual X.X like facility. aviation Spiritwood, Projects scheduled partner the up growing throughout portfolio Our in carbon nearby million intensity industry.

We also core in continued demand see resilience for products. food

and environment volume for starches solid We expect flours. and sweeteners, the continued margin

to Nutrition there into Human predictor our a beginning positive convert growth profit. factors is of pipeline Flavors wins have the some healthy are portfolio, are in We from in Well, momentum we that believe hindered of operating rebound. a

commodity with ADM half. the ability agility continued execute see in second also We a to environment. the market unique in has dynamic dislocations

chain asset adapt global global meet evolving supply to team conditions security strong footprint and Our food needs utilizes and returns. market to unparalleled driving our end-to-end while

toward flexing share and remains sheet it balance healthy, we our opportunistic and buybacks. investments Lastly, organic are

to programs the innovation-oriented to repurchases as Valencia continue plant broad well our our $X Spiritwood, invest as in billion And and share of company. Marshall efforts our half and in strong capital We in initiatives. deploy such drive and in confidence automation potential organic first decarbonization growth generation our highlights as and our the productivity cash

full halfway year opportunities XXXX. are and of the proud second how our the program. intend collectively, more our team we Taking to factors half repurchase year am strong half continue feel of the even these in through what back raising share and our the has can of that fundamental are drivers we half We at look team presented delivered I the performance. year, we our earnings our As expectations excited deliver. about for second

more turn Vikram? it go will on me detail over of to With into Vikram, results who the let operations. that,

Vikram Luthar

Juan. Thank you,

Please but turn a exceptional results slightly in second quarter continues prior the results extremely strong dynamic with the first the an Ag line Services were Oilseeds half outstanding of The first to of XXXX. half were prior Services QX X. of to year period. below performance results in surpassing the team to strong, Slide strong in the year. XXXX, & deliver leading environment, Ag

margins expand our higher to team record strong to record South crop. American investments year-over-year export soybean demand, on higher the capacity were origination leveraging on results the delivered volumes strategic port and capitalize as Brazilian

by export driven lower was for volumes year-over-year, due America South slightly large lower Results North to origination suppliers. America

as marketing though effective execution results, deliver strong last Our destination continue year. to trade global than management well risk lower quarter record the in as

the In soy in soybean lower demand were softer U.S. but to regions quarter results result year. both a our crush all due year-over-year record second strong last from meal margins the lower were for carryout. remained and and tight crushing Global subsegment, much oil than

This in was margins strong softseed by partially use offset Canadian supported and volumes our strong and capacity higher crop canola a flex by of EMEA.

current in as there Additionally, timing contracts reverse negative $XXX the million to periods. were that expected approximately are mark-to-market in of execute future the effects quarter

improved quarter. other driven demand and prior the America volumes. results products year record achieving than were by biodiesel higher, results Refined a higher food oil second and North were significantly period, strong

demand In and food biodiesel domestic demand oil stronger margins. strong for export EMEA, supported

the Additionally, execute there from timing expected in earnings the current of were periods. Equity effects million versus quarter future $XX approximately were XXXX. of are reverse lower the quarter mark-to-market as that to Wilmar positive second contracts in

the quarter, Services Oilseeds. Ag results solid for & third anticipate ahead in we Looking

We heavily demand We exports to and volumes anticipate demand on expect Brazilian strong oil. and America canola origination outlook for strong crush for crop and South weighted based soy footprint. for grain towards margins the be and improving meal Argentine and our tight

quarter, timing have to lower well RPO execution expect margins. to the but We significant leading impacts reversals of second net from perform

during mills, strong the demand last quarter delivered Sweeteners ethanol Solutions the on record results including environment Starches quarter. and of The lower our capitalized year. in second Carbohydrate a production subsegment, please. X, solid QX, wet Slide but than from

the to similar and were Sweeteners North as moderated America relative but and ethanol Starches volumes and years, margins delivered year. prior to industry solid margins stocks prior lower the

team posted EMEA, our milling QX the supported germ one business negatively by at effectively managed results. due improved margins, wheat deliver higher of impacted results plants. steady corn The were demand. to In downtime customer margins to unplanned global

continued ethanol were margins. also due revenue year-over-year. Vantage includes The on lower onetime million biofuel recovery year-over-year producer from growth with trajectory BioSolutions growth the prior excellent year its Processors to a $XX Corn results USDA benefit lower XX% period program.

footprint generation. initiatives our agreement and on well our decade additional decarbonizing wells, through our decarbonize definitive progress sequester to continued to as carbon including sequestration and Solutions ultra-low-carbon capture steam make our facility to complex on as continue Columbus, electricity from intensity, the Tallgrass carbon Nebraska and with progress Carbohydrate We

steps growth acid SAS, BioSolutions These with LG acid Chem. polylactic venture such lactic are in feedstocks in for use CPG our us major CI to low opportunities, many applications and our joint customers as our underpinning enabling key produce for and

we Ethanol margins Looking products. continued wheat steady the solid. are to in expect ahead demand third quarter, margins flour also remain sweeteners and for expected starches, for our

year's up On X, were prior basis. Slide Nutrition a results significantly than record lower the results quarter. Nutrition currency constant year-over-year on were Human slightly

due growing revenues improving QX, America. in EBITDA in margins improved pricing results and well as record EMEA, mix posted as North demand and to in business Flavors Our

Customer is as for innovation year ever. a Nutrition accelerate, engine Flavors a the and the driving Human of our beverage our rest value to will portfolio. will significant sales proposition for beginning growth and largest is its be setter pipeline our pace act to remainder in of the for

by offset in was results Flavors in lower Growth Specialty year-over-year Ingredients.

While has like softening nutrition specialized been alternative providing particularly and opportunities. other plant-based dairy of demand proteins, categories for well alternative as for space, goods the baked are meat as there snacks growth

relationships. and contributor, global offered and still from through geographic opportunities probiotics Although recovery Health Wellness ADM's expansion is customer a OP demand in and footprint small benefiting seeing is

largest affected in lower and significantly margins were been volumes business has global much challenge amino Animal feed driving Nutrition Our lower has demand XXXX acid the softer in results.

go-to-market to and this made have facilities consolidating changes simplifying reporting environment, several in and strategy, our rightsizing the to enhance past brands important we the synergies. including footprint, align months, the aligning our these the with and association Over workforce structure to business optimizing adjustments

in We and will growth actions improve. supporting to these the areas. are refocusing and profitable We believe when specialty improved offerings also efforts fundamentals lead feed increase operational ingredients performance, to our higher-margin market commercial

When the Human to a similar now Animal Nutrition lower to growth in we be Nutrition Nutrition. be offset to expect as looking years, XXXX by as results whole, prior results we expect in at

actions the confident growth customer our innovation However, Animal in wins seen as well we've business we across future Nutrition, and the growth Human in outlook recent in remain for prospects the increase in taking given our Nutrition, as pipeline about Nutrition. and we are Flavors

prior prior In results, Slide similar higher as due X, premiums claim costs primarily health for new net interest to year-over-year, higher quarter the earnings increased from year were global income. technology costs higher million partially please. settlements. lower offset net corporate services on insurance $XXX of ADM Unallocated increased than Other was spend. improved improved significantly offset business versus interest on interest the rates. expense on results the Captive corporate quarter were investor by by insurance year short-term increased programs,

project unfavorable -- the billion XXXX prior to the corporate still was Other to foreign currency of versus the second hedges. rate We costs tax approximately corporate be the year. primarily XX%, was due year. with was in for The effective approximately for prior $X.X year, quarter line

be to XX% rate For our and the between still year, full tax we expect effective XX%.

Through please. and returned the to strong $X.X shareholders we slide, Next well billion share through before $XXX repurchases We cash had to dividends. working capital capital of expenditures million flows billion. operating as second quarter, allocated as $X.X

We with are of at ratio continue to have ample adjusted X.X. an nearly credit, cash and and debt-to-EBITDA billion available low our with leverage net ratio liquidity $XX

sheet Our billion our of to XXXX. and financial expenditures capital strong to in footing returning ADM also growth still while capital for provide balance strategic a $X.X credit shareholders. pursue We initiatives ratings stable anticipate

to As Juan that very year strategic have share already first intend January for with raising of strong upside. to our on Based $X more billion potential outlook subject repurchases the mentioned, half, full in of announced even We we our $X other share we we earnings are repurchase our to per program, this capital. uses continue around share year. completed

Juan?

Juan Luciano

you, Vikram. Thank

generation up strategic As have our execute opportunities and plans few a call, to today agenda, as where excited that we highlight continues ADM today's we're me about value let seeing to wrap accelerate. we're

start Let's digitization and with automation.

automate work to our ramping modernize ongoing is up. Our and operations

QX current implementations more generating benefits. in benefits. XX across similar the And rate and scalable Our Europe in expectation we America of with millions eight run have are North starting

board. program in next XADM is find With and accelerating part on is our the faster bringing capabilities now place milestone business our Our Nutrition company, systems us analytics flavors the path our across decision-making globally, productivity. HR helping of to

In trade and logistics while and have technology to optimize contracting. digitizing freight implemented commercial LatAm, we processes

helping is this of costs faster better, and our deliver value to All ADM decisions us reduce make and to customers.

across growth the and ensuring for footprint. are we own actions our enterprise on taking Sustainability decarbonization new while have opened avenues necessary the

ahead progress, greenhouse to traceability waste STRIVE of in efforts our and recent Our targets report program important continues shows reduction, deliver XX deforestation our gas no crop emissions, sustainability plan. achieving and

acres to X most with million in we X As advantage we support carbon Ag program continue additional an announced crop recently sources, our customers XXXX with by XXXX. targets regenerative million significant of acres

COX from and targeted helps and submissions, stored our Tallgrass opportunity important safely captured well our fuel. capacity. permanently sustainable and facilities This Illinois With be within agreement and CCS BioSolutions underground spaces ADM and now in across the our value customers' is recent expand chains permit indicator and decarbonize Nebraska, own aviation Iowa to like

we invest to phase And continuing next innovation. in of are the

science partners new areas protein tomorrow's and Our alternative to help protein ADM's take in us engaged capabilities Collaboration nutrition affordability. most between important and Decatur consumer address on solution technology our wellness ventures world-class to sources center ADM critical deliver trends. today's beyond of and sustainability, is

well-being our ADM industry connected next even opportunities, fuel, the industrial of is partners. food fabrics transforming agriculture fermentation confidence more in and and pace our generation trends to century. and us with technology give expertise long-range and this the growth us transformation alongside Leveraging deep products global and at plans. is the in the positioning since other of sustainability, fastest And which feed, capacity The food, of forefront growth security key at scale the food is combination last

for and I Alex, today. time please you line. questions. Thank look your to the Vikram forward open your

Operator

Instructions] Ben, line your [Operator is for now question first from Ben from you. go Please Theurer today ahead. Thank Barclays. comes open. Our

Ben Theurer

Good you Vikram. Good morning, morning, very Thank Juan. much.

Juan Luciano

morning. Good

Vikram Luthar

Good morning.

Ben Theurer

I'd the to obviously, -- like question like a just general and takes. So on puts

You're at very And around obviously, now the a raising then Nutrition. you're of higher what little time, looking was in X% the a same for to your had X%. strong you softness but end half, more first at X% guidance

general demand? an general the assumptions environment XXXX, Thank as are geopolitical just help your then feel to and have about maybe outlook feel about in you how you maybe where picture how that and you second in What So we're demand you. beyond behind half macro understand us also it right in into relates now.

Juan Luciano

predicted let the first of for Sure, us the would of ahead reasons quarter certainly, results of pick accomplished I we all, the started -- Ben. course, ADM. They to are half. have in very for continue before. of some first And to crush more confident and proud better. say that. Certainly, we environment of me the get Yes, as we we're highlight margins the up in about

dropped has firmer crush anticipated. basis have U.S. and been Board we been mill has and stronger have BIM the in as basis

I cover more a Argentina in shortcomings think mill, then the needs we this need which there and we world can is shift more for protein, year.

we very QX. going happening be and good as for predicted. So it's that QX is And certainly, to

grains, we're seeing companies Brazil. think Santos in the did, those to in these Barcarena congestion procure driving able be capitalize and huge infrastructure that, basis Brazil. We invested see which allowing I port us in both crops that to the margins Brazilian cheaper a on lower in we to have in and interior giving to

that's for So, well playing very us.

ethanol to inventories XX million last The we talked, barrels. were time XX around million

are a about to we we corn There Now of and the demand for ethanol at tough see at buy. is -- June strong end XX million. spot

holding. they and strengthen, margins made are has that So

positive regard. that ethanol are margins we about So in continued

a see book for We the and biodiesel in biofuels have on to this we strong trend quarter. continue

good feel we about So that.

seeing are And food and resiliency U.S. challenges the resilient, recession sweeteners starches whether we carb solutions, whether and that products in bringing in in We our that's very lower it's for see core and demand. or it's milling. consumer

our how issues as more say course, is would of little of business, there. went innovation you we bit a feel to you resonate in The good deep Flavors continues highlighted, value and into the flavors. that, Nutrition, kind faster happens if about in I will. So Vikram beverage proposition

well XXXX. to potential grow. we see the our what bodes we continues is very revenue for That So in know pipeline

flavors example. geopolitics and for driving us destination all and with to see decarbonization. the sustainability services, to these food trends, innovation the assets security well-being, our continue ADM We show continues seeing makes And align three with in in customers. that big and the see weather these margin all that health the we opportunities in company we're valuable all that the trend more more again, So gives and to we marketing

multiyear for the on for when we that this, progress are would the either mentioned and forget I industry innings say decarbonization, early in of shouldn't at we ADM. we automation

So I better feel good feel we think future. and about 'XX that about the even very we

Ben Theurer

very you, much. Thank Perfect.

Operator

you. Thank

your Our Bienvenu ahead. now Ben, from next question Stephens. for open. today comes line go Ben from Please is

Ben Bienvenu

taking morning, everybody. for good question. Thanks my Hi,

Juan Luciano

morning, Good Ben.

Ben Bienvenu

I things. and I on follow-up business you want the Nutrition on updated But -- we little appreciate comments of there's -- the on with maybe back bit just flat morning, the half to year. the year-over-year. the just about extent cadence that talk the overall a talk good results being in through to can then move the XQ as be would as human visibility into to pretty can helpful. down the to of that? Maybe bit that you expected you Nutrition the there's XQ extent could about little year-over-year, have parse today, and if ramp it a the side substantial that see between you you a Animal And be

Vikram Luthar

Yes, Ben.

So minutes weakness Animal I to from higher intensive more XX% think for take has just to proteins. feed to persisting feed let's talk less anticipated. growth about why cyclical we guide from Consumers down is gone than longer Nutrition lower intensive value, few to trade flat. continue our value, a

has meats particularly feed category. to to than And continues signaled still cost actually also that anticipated. broader is be Reformulation the the volumes. alternative The continuing impacting Plant-based we in also had destocking proteins, reduce softer is moderated, before. market in which growth

the you by demand anticipated in taking that And COVID, if also had small anticipated fulfillment of delayed and primarily recent made integration. that was slower in than acquisition America. North delay challenge than resolve. we the business are pet the remember, The solutions longer Third, integration driven we

think we future. as half are what the doing? working back you as that's well we're the that. And But So about as through important

we've in had. talked and rates. XX% grew about pipeline We pipeline in first half QX. the actually ever Flavors Strong profits win X%, the Flavors. largest

So Human sign very that's we recovery of the seeing a parts Nutrition of business. are the good in

Flavors XX% overall the The other to thing operating contributed note, profit of first that's half. for important almost actually in the Nutrition

that's important was but the in that opportunity primarily as think category, an food Yes, we growth So the signal Nutrition. see shoots future driven you category the beverage well. of about as of in green

All to SI dairy meat accelerate our protein some QX. alternative And innovation but alternative capabilities the launching to are alternative growing. penetration actually takes categories. Decatur growing. allows mentioned I CD&D into spaces, side, that faster-growing the to the we are of soft categories has that, And some been pivot that In our and categories of sometimes other us in capabilities CD&D we given center our are time. leveraging

So we frame, of to year. this anticipate less more in recovery XXXX possibly that come half the in in back the time

In margins rationalization markets to to and as and profitable improve footprint are drive Nutrition, taking Animal margins, the recover. actions cost growth to we improve and product also

feel at our we what the So recovers. increased in to we about there. specialty as penetration Nutrition drive looking are our Human leverage go-to-market part the doing recovery good capabilities to portfolio able market be the CD&D Nutrition, to is parallel, And of Animal and

challenges year, perspective. in it we of still be given if On add to this the for our strong of into side, the take and year and longer-term you want back growth. clearly of longer, I we to see forward and we know robust faced, half don't going little terms similar But Juan, to outlook creation possibly Nutrition some signs to is is expect of year. This last pet recovery, the demand a into overall, XXXX. some

Juan Luciano

two we going said, ask we're the best nutrition trying started this team we when measure be build very -- in which still company into Vikram to we're them the as to Ben, world, We to factors. that Nutrition look we business, our positive. continue Listen, the remember, by at

the is you can we've we are was and where growing customers far. seen so it faster the that One innovation Flavors, market, and in market in markets coming, than still like that we're faster than by moving growing see double-digit growth have and

other on sales marginal we grew was sales and growing, And we then EBITDA that margin the said in EBITDA Flavors. thing

been has think Pet. this others, Vikram going So and is like this things some small facility has the self-inflicted of I difficult that think I a in in integration there destocking through the -- year industry

through build as we're our think I portfolio. So working pains growing some of we the

new we're outperform think important value customers proposition than to the faster to that results. industry continues and to our seeing in I But system, thing anybody the our bring the recipes is else innovation have the takes customers little excel. in When projects destocking, similar are trajectory customers that all still flat it When we like expect and longer. or regard. We beverage in a to that, be

Ben Bienvenu

second question My Sweeteners. and is Very Okay. Starches on good.

You the margins noted similar in volumes second quarter. and

Or You plant the and the the second that down you discrete quarter? unexpectedly. did to about flour you half of that's talk this you was of you starches that for volumes -- have to would back you And impact point then half in Thank as more year? an the Could back improvement margins expect margins sweetener, of expect solid a the would do year, in similar you. characterize specifically that again? and

Vikram Luthar

Sure.

indicator. results by So strong. as our Ben, at incident were ethanol processing actually outage. margins sold germ, into markets a reduce impacted lowering Germ to at were of facility production let's plant when ADM's to the also was significant exposure one time wet talk the ethanol volumes feed about In overall the our at QX West complex germ Solutions an amount. slow had negatively we mills the a grain Carbohydrate April, within This crush elevators

to QX. back this in anticipate come We

get it But impacted. for enough So specifics yes, it QX the back out won't meaningful significant to call in I number. is QX. but was that us was fact a was to it means come going the into it

still full some can QX that, seasonality, very the the So of therefore, for remain But remains from the still we a based very that. full to you consequence as outlook year strong. -- QX shift year, on for expect some

starch more but in side the milling seen and actually mix of by been sweeteners been that's and We've resilient. the volumes softening offset growth of very margins. portfolio, the have specialty also than and The some

QX. due germ we a in solid. I'd to impact, So a the did say, have is significant yes, overall, impact outlook And the corn material

Ben Bienvenu

Okay. congratulations. and Thanks

Vikram Luthar

you. Thank

Operator

you. Thank

Palmer open. line go Please JPMorgan. Our now Tom, next of Tom ahead. question is from your comes

Tom Palmer

Good question. for the morning, and thanks

Juan Luciano

morning. Good

Tom Palmer

through North strengthen, We've in month of talk margins Perhaps just other pieces moving seen a little Looks past harvest. we as the bit the crush beginning a migrate we of like could in to maybe we've in regions so. America seen especially the the or world. the just U.S.

harvest, think regions country, I world out the of as of know often for point, other guys of the we in do coming to supply seen we mean, about see the benefit. often, balance necessarily at weaker-than-expected progressing? expectations that I think our margins. about I haven't the think when least how And you ahead up kind of and we're the of regional you year, crush this

Juan Luciano

Tom. you, Thank Yes.

GAAP the was them locating As I to which to we more reallocating we are see are that's certainly, crush million locating expecting maybe soybeans two reallocating said before, crush you tons they to and to the world XX needs less places; U.S. I Brazil produce, crush, crush and we given Argentine when think million, produce XX see probably is can that that the world protein , and

of So of the that time course, different. is

we margins for and the And the U.S. then so in we that see QX that into QX. see coming

much continues types whether be it's for protein that. won't There going protein wheat of to and going that be to soybean so not meal. but to be other feed Demand is be strong feed, meal, there's all just

from from If supported is are and food from oils but margins food like everywhere. X% take up for coming that, increased But maybe combined soybean demand consumption. my you when crush go So fuels, expect also X% to oil coming demand the point X%, fuel. from it's like we about with

and the we excel. course, ADM for where soybeans. physical And as will gets Of footprint these try margins have ADM product origination be access to that's where combined cover soybeans, the world physical closer the you are where trade the to and to to with global to

So expecting I for time. the anything that quite some and see team that had second great provides don't perspective. they some are we this can I first half. derail half, think hope a great a And

Operator

Thank you.

question next Manav comes from Gupta of Our UBS.

now is Please line go ahead. Your open.

Manav Gupta

on partners, on R&D of up bigger of My question starting second which number including the phase the are Hi. one plants this Coast. in new the side where a half the we is start plant a West is of quick will up second year your in here

So this of we from demand first oil, what environment perspective do expect the year? of soyabean in I'm a much saw stronger understand the than trying just demand half to you

Juan Luciano

at Yes, I plants of that those time all the probability coming And that are have think that we plants we're have these all coming. course, announced. of looking the been

when you an But not right you time. the plants coming two the second comes or industry, everything and now in in three demand. to build are before, will as increase at large half, said Sometimes continue that there the

crush our Of well - we're comes from capacity course, X.X year. partner plant our tons in per as with our that this building, million

for of feedstock feedstocks to the the continue So potential. that maybe but come overall look Manav, we day, will at the needed. these crush this to to need industry think will at fulfill the when we -- of but of oil believe us XX% continue demand And end for the through. enough we to day, soybean grow, pool At that, being participate other we that end of to the we have will attract

is tight. get So going the to industry

Spiritwood way capabilities, if very that, transition. to the you And think ADM. But industry that and and technology in but for budget. that's deliver make we're favorable on order capacity, bring building need to through in going you pleased that's on the new a to going will, time You're an harvest, very I energy progress, for

are very has implementation. we way that pleased the So managed team the

Operator

you. Thank

your ahead. question Please comes next go open. Adam, Adam line is from now Sachs. Goldman of Samuelson Our

Adam Samuelson

everyone. Good Yes. morning, Thank you.

Juan Luciano

Good morning, Adam.

Vikram Luthar

Hi.

Adam Samuelson

Hi.

question, guess my I first to coming So back Nutrition. maybe

XXXX about more should I has XXXX, been As that animal about than $X.X the Nutrition. for prior outlook in revised flat. split the that, the animal billion pathway XXXX of achievability we the maybe the think OP and now I How And between believe, kind Human and human clearly think segment? the year, profit of within of target, pressured

So the about help think get as of the what was relative to your are XXXX to think goals? me kind about plans in we Thanks. just targets, kind implied XXXX where to you of

Juan Luciano

Yes.

on back EBITDA the grow put than we continue when do applications we target me When to how at I look margin and market our the comments So we on and we projects how faster at look do before. made implement XXXX grow let go plans, we to goals, sales.

margins Nutrition, The and you number goals story was profiles so Nutrition are two and Nutrition develop from continue up roll businesses, Animal in to stickier In much a since coming the higher final lower the as a that Animal better we Nutrition solutions. out. and regard, plans combination to margins. make margin it is more better see they when customers different and different of is In Human all had those were Human

you are applying numbers EBITDA a of growing about on our number. think when faster and sales margin to our than market a So combination our market

this course, our in and it by time and in is competitors because whether point not order. is either chains sure Of as destocking enough having tough they customers times, are making their can have at you see innovating through supply fast or ourselves this industry,

to be percentages So the number. will a those projections of extent applied those to smaller that are reduced, be to going our numbers

do that through honest, gone be to current how looking because, we we address our are haven't we So at challenges.

make. make we we XXXX we worried sure So the all about want we're need to now, not right make adjustments to that that

about there me very as part, matches before, And continue maybe talk Animal let of we in there part to become side. business, with resources is to adjustment, adjustment, that. human growing we and part we the specialty the will. Nutrition, repurposing a will that -- playbook The well we more part. a Vikram you the and is said And more is accelerate. the And me what if the have are bit talk we commodity the specialty Animal add little talk know let a about We into Nutrition. about as that

the is commodity that, we at for when There they beginning, it the two to the if put of a we open together, that was be but going part to have thought will, good you innovation dynamics. different businesses a way doors,

we some not readjust people that thought. the are of we and as to in resources the the different at intensity we part or as and the how And so specialty part do with either coming as those that need dynamics is looking of associated fast capacities

So little the of to with specialty bit slower. we while deal is commodity the volatility part the a need part

commodity we adding to, resources are the and to animal specialty take So rate XXXX that, in business. We're going as and those animal, part through part things a to that I believe adding that are for again, into we growth will productivity think of balance, those the us that. we more

We in more to that plants. this developed But all us our in different we're we interventions, testing will have as cover we're Investor rest active in manage also, Adam very order options assured, will better. and for Day

apply we because and difficult on This is in operations globally it Southeast specific have something also sometimes Asia. to characterize

have in Brazil. operations We

markets in We all those perfectly the in not U.S. all And and dynamics the Mexico aligned all have have synchronized. operations Europe, be go and those in to together put things and

in So bit in need little to a to little that's portray be slides. more able more we why a which granularity without December is a any I think call numbers to that, articulate difficult bit or

Operator

Thank you.

Please open. now Andrew, BMO. comes Our line Strelzik is from your next Andrew go ahead. question from

Andrew Strelzik

your grain maybe strong. are But that would back that know are in question. on very that Hi, good It are flips. for it about supplies Ag oils obviously, like global I seems wanted to record. year. the Refined we taking the margins, thought of though calendar guide doesn't we've ask Services end you morning. for were Argentina got U.S. feel out tighter Thanks things next like than because going to just just XXXX we Crush strength durability. that the premiums maybe the things comes view I these even

how maybe long services the seems guess, continue setup you because do And risks so What it in can are extend. should the like I Ag strength for? the think

So your there. for perspective curious Thanks.

Juan Luciano

Andrew. Thank you, Yes.

are probably strong years we're U.S. in the in to have crop for and two of great We going a Brazil, crops Volumes had good have us.

more unfortunately, in So that like there said, when we Sea more become geopolitics volatile. more or of can and we you complicated weather has as where has place course, and But violent is is transpiring are become, what the volumes. Black world the see, the

go dealing go very El Nino, dry from can and temperatures extreme lot we that we into temperature, that record around and the a you of with see more are now. La a then right locations So Nina impacted we the a may world

the of see investments. and that all When would the invest leverage that we value I increases volatility Brazil, that all in uncertainty we has So more our ports say that, today.

the we're Of little is export each not course, because less perfectly. probably to to to bit And other from export U.S. offset a going we're from that more probably Brazil. going going

Services Ag maybe So based on a earnings will little bit be down that.

But U.S. the processing on help the our crops in businesses. other hand, the big availability of will

bases is have look as soybean because you basis the lower oils, soybean at If strengthened. mill it are in strength

margin we where that's get expansion. So, the

that way. our grain claims also grain also and we also limits crops certain The the affecting deforestation world into going The -- a more for in and regen are but increasing. people the industry And and leading are grow with program more is regeneration that's decarbonization, Ag, want in industry.

So in say billion people into production land maybe the you of it's the people. But see future be I number world the will of brought as are in a less number climbing in would people. into XX not which just we

the consumed per the we of you pounds about If think consumption, about - XXX year the per in U.S. proteins. protein U.S., capita

China on world, is XXX. The is average, XXX. a about

can the of world be to XXX. we the we a need to amount if per U.S., year. to needs of you level produced the average grain to pounds the of were That's not amount If need So get an significant China, per huge to person in was that of land. get XX expanding

have lot is will go to a there through. So that we

people given you plants all where and we've pockets have, tightness secure world, be no the marketing assets destination and try to the footprint they have continue in geopolitics, to logistic weather valuable will you ports for blessed origination the more the we population. our the continue So people, will global to and food of our into marketing with the and that doubt, the our been future, and as the

Operator

you. Thank

Our next question Bank of comes Tiano from from Salvator America.

open. is go line ahead. Please Your now

Salvator Tiano

Yes. very you much. Thank

up, of the in at do the where stand least -- year? crush And balance have also, Brazil And a the margins and the provide your more your in On on the color why crush down come forward? margin aside, book curve you forward bit substantially, recently. what's you Argentina, margins, for going little setting the U.S. approach Europe, of of course, why hedging having can gone now with kind

Juan Luciano

Salvator. Yes, Okay.

in So to as weakened weeks in transition through said, a in maybe you $XX crop margins all new a U.S. maybe basis crush with Europe, the have little firmer especially weakened to oil recent oil. $XX good to bit U.S. this have is maybe and global

to We biodiesel there. continue bring from

is continues bit little the in maybe value But businesses. protein to add a Europe. weaker industry to the that European So

Brazil, to I is how that the all trying Brazil soybean something, out have say think I Brazil, and of In corn, if maybe to accommodate figure to production have. they

of think in So I are made the that there And basis challenges -- logistics beans country has pressure Brazil. lot has a side.

Brazil would you of domestic market, lack I soybean Brazil domestic oil, have pressure places a one but is And demand. is in of also say, of export have market. you because where those

Argentina will those I gap be weaker. slack a are places realistically, the And up would market, domestic But may we the little for bit left. is a maybe here the policies pick would with that or U.S. say huge Argentina in the benefit that I bit say, And two biofuels and that weak. soybean oil the right little the Brazil now, that have without

the So those are beans are. where

and crushing So we U.S. Brazil high the expect both for rates

Operator

you. Thank

for line Steve Please Our Stanley. Morgan ahead. final question today your now comes Haynes Steve, open. is go of from

Steve Haynes

Hi. taking question. Thanks my for

Just maybe two quick ones on Nutrition.

kind the -- just cost able of amount losses to XXXX just things side to what's on the into some the Pet Solutions? a could secondly, on bit little kind of quick baked in savings to dollar guide. First, actions are detail a on various of you're were Thank the taking put what -- you. then maybe regards animal maybe you more inventory of the you a the And

Vikram Luthar

Yes.

actions side, we've tell last be but lot I'm those year. Animal vast numbers, a the as taken not So the should in of the on majority the ongoing Nutrition of of you of latter results half the specific course well call year. over going to part realized this of as the year out yes, I'll back

going would come as about So think But XXXX. full in be analyzed obviously so likely it. -- you benefit it's the to

XXXX, a full So a of as but as those you you'll coming partial should basis year uplift a benefit in in see on an clearly see consequence actions XXXX well.

Pet to as again, called integration was, had of we related losses this referenced, integration where we of it had inventory that that the business we facility of the challenges acquired in with part that some the we've acquired On small inventory out, XXXX. some the

we contamination some of related is that that it So saw. to some inventory acquired and

perspective. reason it the clearly it material enough solutions. called was from overall That's not -- that's it So was we Pet ADM material an to out,

Operator

At you. no Thank questions. we have time, currently this further

to Britt further back Megan any remarks. hand I'll So for

Megan Britt

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

Operator

you today's call. Thank for joining

now may disconnect lines. your You

Archer-Daniels-Midland (ADM) 25 Jul 232023 Q2 Earnings call transcript