Good morning, and welcome to the ADM First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's call, Megan Britt, Vice President, Investor Relations for ADM. Ms. Britt, you may begin.

Welcome to the first quarter earnings conference call for ADM. Our prepared remarks today will be led by Juan Luciano, Chair of the Board and Chief Executive Officer; and Monish Patolawala, our EVP and Chief Financial Officer. We have prepared presentation slides to supplement our remarks on the call today, which are posted on the Investor Relations section of the ADM website and through the link to our webcast. Some of our comments and materials may constitute forward-looking statements that reflect management's current views and estimates of future economic circumstances, industry conditions, company performance and financial results. These statements and materials are based on many assumptions and factors that are subject to numerous risks and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation and the materials. Unless otherwise required by law, ADM assumes no obligation to update any forward-looking statements due to new information or future events. In addition, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and presentation slides, which can be found in the Investor Relations section of the ADM website. I'll now turn the call over to Juan.

Thank you, Megan. Hello, and welcome to all who have joined the call. Please turn to Slide 4. Today, ADM reported adjusted earnings per share of $0.70. Total segment operating profit was $747 million for the quarter. Our trailing fourth quarter adjusted ROIC was 7%, and cash flow from operations before working capital changes was $439 million. ADM's first quarter results were aligned with our outlook and market expectations and our business operated well in a dynamic external environment. With uncertainty related to global trade and regulatory policy continuing to have an impact on the business, we were able to drive positive momentum in focused areas. Our Carbohydrate Solutions team delivered solid results supported by positive margins in sweeteners, along with strong execution in ethanol. Nutrition's performance in the first quarter, specifically in our Flavors and Animal Nutrition portfolios, is on a path to recovery. We also made important progress in getting our Decatur East facility back online as it moves into the final stages of recommissioning. Ag Services and Oilseeds was impacted by challenging conditions and overall market uncertainty and took actions to drive organizational realignment and network optimization. And thanks to our team's continued diligence in safety, I'm pleased to report that our Q1 total recordable incident rate was the lowest it has been in the history of ADM. These examples highlight our team's ability to drive our strategy forward, while focusing attention on the self-help and execution excellence agenda we outlined earlier in the year. Let's take a closer look at our progress in the first quarter. Please turn to Slide 5. In our last call, we shared a slate of self-help activities to enable us to deliver on execution and cost goals, drive simplification and strategic growth while maintaining continued capital discipline. We're taking a balanced…

Thank you, Juan. Please turn to Slide 6. To start, let me provide some perspective on the operating backdrop that shaped the first quarter for the AS&O segment. As we expected, market disruptions related to biofuel policy uncertainty negatively impacted biodiesel and renewable diesel margins and U.S. vegetable oil demand. We also experienced higher global soybean stock levels and an increase in Argentinian crush rates, which pressured global soybean meal value. Additionally, trade policy uncertainty, particularly with Canada and China, created volatility throughout the quarter for canola meal and oil. Taken together, these factors resulted in significantly lower meal and vegetable oil values, pulling down margins across our businesses. Overall, against this backdrop, AS&O segment operating profit for the first quarter was $412 million, down 52% compared to the prior year quarter with declines across all subsegments. In the Ag Services subsegment, operating profit was $159 million, down 31% versus the prior year quarter, driven primarily by lower North American origination export volumes as order flow was impacted by trade policy uncertainty. North American origination results also reflect the additional expense of $34 million recorded in the period for anticipated export duty. Global trade results were lower relative to the same quarter last year, largely due to the negative timing impact, partially offset by higher destination marketing volumes and margins. Total net timing impacts were approximately $48 million year-over-year. In the crushing subsegment, operating profit was $47 million, down 85%. Consistent with the previously provided outlook, both global soybean and canola crush execution margins was significantly lower than the prior year quarter. Global executed crush margins were approximately $13 per ton lower in soybeans compared to the prior year quarter and approximately $40 per ton lower in canola. By region, crush margins were down significantly in North America. North America…

Thanks, Monish. I'll briefly close by recapping our focus as we continue the path into 2025. As I said at the top of the call, we will continue to focus on both execution, agility and our self-help agenda. Our teams are monitoring the evolving geopolitical and macroeconomic landscape, and they are taking actions as we get more clarity about both the short and long-term situation. Importantly, we are leveraging cost management, strategic simplification, targeted investments and capital discipline to ensure we are prepared for a multitude of scenarios. The potential impacts on our mitigating actions look different for each part of the business. For Carbohydrate Solutions and Nutrition, we are paying close attention to overall consumer sentiment and the potential for an economic slowdown to mitigate against this, we're taking aggressive action on our manufacturing and SG&A costs. In Nutrition, specifically, we are focused on getting our East plant fully ramped up, optimizing our Animal Nutrition business model, leveraging our leading specialty ingredients portfolio, including all natural colors and flavors, and ensuring we are continuing to execute against a healthy opportunity pipeline in flavors and health and wellness. For Ag Services and Oilseeds, we are monitoring the global trade and biofuel policy environment to ensure that we can enable the export market for our vast origination footprint and take advantage of improving demand conditions later in the year. On trade policy, we have seen positive signals with both delays in implementing tariffs to potential avoidance of tariffs and counter tariffs. The decision regarding USTR's Section 301 proposal have mitigated some of the potential impact of transporting commodity products between China and the U.S. And more broadly, for China exports, we will need to see where things stand as we approach the U.S. soybean harvest in the October to December period. Beyond trade, strong policy support for biofuels, including clarity on RVO is expected to support strong U.S. demand for crop-based vegetable oils. In this business, beyond general market improvements, we will continue our focus on both cost management and strategic simplification self-help efforts to manage through uncertainty. As noted by Monish, these factors support our confidence in our full year guidance for 2025, though with current fundamentals, we will be at the lower end of our range. We are a U.S. company that is fundamental to the global food, feed and energy supply chains, connecting consumers with farmers to fuel the world and keep the U.S. agriculture sector competitive. We have a long track record of navigating cycles and are focused on resiliency, which comes from our unparalleled asset network and our employees' commitment to excellence. As in the past, regardless of external challenges and market disruptions, ADM is working with our farmers and customers to be a source of strengthening the economy, always fulfilling our mission to unlock the power of nature, to enrich the quality of life. With that, we'll take your questions now. Operator, please open the line.

Thank you. [Operator Instructions] Our first question for today comes from Tom Palmer of Citi. Your line is now open. Please go ahead.

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

Yes. Thank you, Tom, for the question. As you pointed out, we see a strong RVO as the most important driver for the biofuel outlook. We understand that the RVO's role is being developed, and we are engaged with the administration on the important role of the RFS and strong RVOs to support the domestic market for U.S. farmers, and to support a strong American energy independent. And we are confident that EPS is a priority. So of course, at the moment, the industry is not running at rates to satisfy mandated volumes. And we expect, and the logic implies that margins need to go up to bring run rates higher in the second half. When we go to crush, and we're probably going to see that by RINs improving as we go forward. When we go to crush, we have seen strong demand for soybean meal. Of course, there has been a strong crush rates in Argentina, Brazil and the U.S. But we've seen that leg is supportive. Of course, when we cannot produce all these biofuels in the U.S., oil goes to fight with -- for export markets. And that's the weak leg at this point in time. So we expect that with RVOs coming back, we will be able to come back to the original expectations and maybe we had at the beginning of the year.

Just from a math perspective, since you asked specific comp. First quarter we -- as my script says, we ended $13 below last year, so around $40, $43 in Q1. In soy, canola was last year, was around $100. So we are somewhere -- we were $40, $35 to $40 lower. Q2 is currently trending lower than Q1 from a crush rate perspective. Part of it is timing because we do get book on before the quarter is in. So Q2 is lower both in canola and in soy. And then as Juan said, we are expecting a ramp-up in the second half. Of course, now it's going to be a wider range because Q1 and Q2 are lower. So when we originally said we would be in the 40 to -- we had said 45 to 55, we are now saying $40 to $65 for the year on soy and then canola, we had said 50 to 70, we are at the 45 to 65. So as Juan explained it, when we do come back in the second half, you would come back to margins that we had originally expected. But since the first half is lower, the total number gets impacted. So hopefully, I answered your question.

Thank you. That was very helpful.

Thank you. Our next question comes from Andrew Strelzik of BMO. Your line is now open. Please go ahead.

Hi, good morning. Thanks for taking my question.

Good morning.

I actually wanted to follow up on the RVO. Good morning. Just wanted to follow up on the kind of RVO line of questioning. Is there a specific RVO kind of number or range that you're assuming to get to those types of outcomes or how do you maybe think about that, number one? And number two, just more broadly, what is a positive RVO outcome for ADM? Is there like a breakeven RVO above which you see it as a positive outcome below, which is negative. We've obviously seen the reporting north of $5 billion. So I'm just curious how you think about maybe the range of outcomes and how it impacts your business? Thanks.

Yes. Thank you, Andrew. I would say the industry ask to a certain degree is like $5.2 billion of biomass-based biodiesel and maybe $15 billion conventional, so a total of $25 billion, $25.5 billion I think, as I said, we are engaged with administration. We understand that the EPA understands the importance of this. It helps with all the priorities the administration has set up, which is to help the agricultural farming. We need to do that by expanding export markets but also by solidifying internal consumption and biofuel is an excellent way to do that, and also to improve energy dominance, which another objective. So we're engaged. I mean we finished -- as you know, the guidance on all these ended on the 90-day comment period ended in April. So we are expecting that the administration is tackling these hopefully soon. So -- but the industry depends on that.

Just Andrew, I'll build on you asked the impact to ADM for like -- I'll just talk second half of 2025, because the assumption is that replacement margins would move up. So if replacement margins did not move up between now to the end of the year, then that's a $0.50 additional headwind. So that's the impact that we are counting on a recovery in the second half from an RVO perspective or from crush margins, which is heavily driven by what RVOs become.

Got it. Thank you very much.

Thank you. Our next question comes from Heather Jones of Heather Jones Research. Your line is now open. Please go ahead.

Morning. Thank you for the question. I had a question about RPO. So I know there was a -- I think it was a $34 million year-on-year positive timing benefit. But even adjusted for that, given how weak the environment was in the U.S. and the lower -- much lower export volumes out of EMEA. Just curious what drove the strength there? And I know it's significantly lower than the past few years, but prior to the RD rush we saw over the past few years, I mean that was a pretty good showing. But just wondering what were the positives in that given the very challenged backdrop here in the U.S.?

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

Okay. Thank you.

Thank you. Our next question comes from Ben Theurer of Barclays. Your line is now open. Please go ahead.

Hi everyone. This is Rahi on for Ben. Thank you so much for the color today. Just regarding tariffs, can you give us more color on trade flow shift, i.e., how you're replacing Chinese demand? And maybe how much of a drop in volume was related to China and Ag Services. Do you have a percentage of profit or revenue that normally relates to China? Thank you so much.

Yes. Hi Rahi, listen, at the end of the day, I would say, if you look at Q1. If you think how all these tariffs or this thing has settled, the impact has not been that significant in Q1. Probably the biggest impact we have had has been from speculation about what the USTR Section 301 maritime issue was going to be. But in reality, when USTR issued a ruling, it basically almost removed all the risk from agricultural experts. So we've been pleased to see the administration have paused for 90 days, the implementation of some of these, while we still try to negotiate agreements with the different parties. But if you think about Mexico and Canada export tariffs, basically 98% of our products are exempt from that. So we didn't feel any impact there. Corn, Europe, they delayed the retaliation on corn until July and in soybean until December. And although on China, we escalated, the reality is the U.S. is not going to be competitive to China for the second and third quarter because that's when Brazil and Argentina become most competitive. And we come back in October when there is the U.S. harvest. So we have until then to see how this clarifies. So that's where we see the situation today. Again, we are working as you said how to offset the impact of that, for us. We work directly in the U.S. with 60,000 farmers. It's important for them the access to export markets. So there are going to be export markets where we're going to be gaining share. Remember also that China has moved to Brazil to a certain, -- to a bigger extent in the previous issue with trade in 2017 or 2018. So the reliance on U.S. export into China is not that big, probably for soybeans is in the range of 20 million tons, if you will, if that were the total impact. And then I think China export, so I think that that's the impact at this point in time, we were pleased to see, as I said, USTR Section 301, was sold favorably for agricultural experts.

Okay. Thank you so much.

You're welcome.

Thank you. Our next question comes from Pooran Sharma of Stephens. Your line is now open. Please go ahead. Sorry, Pooran, your line is now open. Please go ahead.

Apologies about that. Hi, good morning. Thanks for taking the question, here. Just wanted to ask about the soy crush industry. Just with all the announcements with new crush capacity coming online in North America and then just with the weak fundamental backdrop that we've had over the last several months, how have you heard of any signs of rationalization or signs of pause in adding this new capacity in the industry? Do you anticipate anything to come online or be delayed in 2026 and beyond?

Yes. Listen, we can speculate for what others are doing. I mean we try to manage what we can control. As you heard in the prepared remarks, I mean we are in the process of shutting down one of our plants in Kershaw. And I think we continue to see -- continue to check for the competitiveness of our plants. We have a lot of self-help agenda to try to continue to improve that. Volumes have been improving there on an unplanned nature. Of course, the industry will take some plant shutdowns when demand is not there. We have seen it also in biodiesel where a lot of the nonintegrated plants have to go down. I think it's important to know that all these capacity, the crush capacity has been brought to comply with the expected RVO mandates, and that's what we think is so important to bring clarity into that because we were in the process of building a renewable green diesel industry and everybody built in anticipation of that supporting U.S. manufacturing. So I think it's important that at the moment we clarify the rules, all this capacity that has been invested in will make sense.

Thank you.

Thank you. Our next question comes from Steven Haynes of Morgan Stanley. Your line is now open. Please go ahead.

Good morning. And thanks for taking my question. I wanted to ask on Argentina, cited as a headwind for crush in the quarter. But we've been kind of seeing some headlines that farmer selling there is off to a historically slow start. So maybe you could just put a finer point around what you've assumed for the commercialization of that crop for the balance of the year as it relates to the guidance? Thank you.

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

Thank you.

Thank you. Our next question comes from Tami Zakaria of JPMorgan. Your line is now open. Please go ahead.

Hi. Good morning. Thank you so much. So my question is on Starches and Sweeteners. Could you comment what volume growth was for S&S in the quarter? And more importantly, what volume growth you expect for the full year? I heard you say you're seeing some weakness in some customer demand and adjusted volume outlook because of that. So any thoughts on volume growth as we think about 2025?

Yes. Thank you for the question, Tami. Listen, when I think about the overall Carb Solutions business, and we have said our guidance was slightly lower than last year, and we are reiterating that guidance. We see, in general, solid demand, solid volumes and margins across the business. There are some pockets of weakness here or there. One, our results in Europe, are going to be a little bit lower because we have higher corn costs in Europe and a little bit lower volumes. And there is some weakness in Starches in either the paper industry, maybe not running in all cylinders, and some of the exports to Mexico with all this uncertainty about tariffs or no tariffs, I think that maybe some of the exports from the U.S. to Mexico has been a little bit soft in March, maybe picking up a little bit in April. So I would say the overall tone is in general solid but not very robust, if you will.

Understood. Thank you.

You're welcome.

Thank you. Our next question comes from Salvator Tiano of Bank of America. Your line is now open. Please go ahead.

Yes. Good morning. I want to ask about a couple a couple of things that -- to clarify a couple of things about your Q1 earnings and the outlook. In VCP, firstly, you had some pretty solid operating income, even though AS&O margins by calculations were at multiyear lows. So how was it so much better both year-on-year and quarter-on-quarter? And how should we think about it for the rest of the year? And similarly, on Nutrition, I think the Q1 guidance was for a 50% drop year-on-year and said you delivered 13% growth. So what was the difference versus expectations? And does this mean that the full year directional guidance that you reiterated now implies much stronger earnings growth than before?

Yes. Thank you, Salvator. So let me take that by pieces. So on the ethanol side, as you pointed out, I think our team outperformed the markets and the industry. I think it was good risk management by the team. So, kudos to the team. In general, we see, hopefully, margins improving over the year for ethanol. But ethanol in this environment is a little bit of a question mark. We believe that ethanol could potentially see some benefits from higher exports as some of these trade agreements get resolved, because there are opportunities as a very cheap oxygenate for ethanol to make it into blends around the world. When we think about Nutrition, I think we've been highlighting that we've been doing a lot of foundational improvements in Nutrition. And at one point in time, they start to come into the P&L. So we started to see the fruits of some of these improvements. I think that our value proposition continues to resonate strongly in the Flavor area, in the Health & Wellness area, especially Health & Wellness, a lot of the biotics coming into play. They do very well there. I think we have had a lot of successes or we are working a lot in terms of things like Ag replacement or Ag extension, data replacement, Beverage industry continues to favor some of our solutions. And we have seen a lot of activity and requests for our line of natural colors. And we see our teams engaging with our customers on that. So it was purely driven by the improvement in Flavors, the strength in Health & Wellness and also improvements in Animal Nutrition. Animal Nutrition, although not a revenue growth story, it's a margin improvement story, and the team has been working hard at that. And we started to see the improvements to that as well. Of course, Specialty Ingredients has been the downside of Nutrition and the headwind, and we have been to report that finally, the East plant is being commissioned right now. So it's starting to operate. And we expect that to be a positive year-over-year for the second half of the year if the plant gets to full capacity.

Salvator, just one more for you on ethanol cadence, we were slightly below breakeven in Q1. And we expect to be slightly above breakeven in Q2 based on where we are today.

Thank you, Monish.

Thank you.

Thank you. Our final question for today comes from Manav Gupta of UBS. Manav, your line is now open. Please go ahead.

Good morning guys. I just wanted to confirm, Decatur would be fully restarted by the second quarter. So should we assume some contribution for the second quarter? Or should we assume the contribution starting in second half? And remind us of all the benefits for the company once this plant is fully up and running and operational. Thank you.

Yes, Manav. I think you should consider, given that it is a very complex plant that the impact will be in the second half of the year. So the plant is ramping up capacity right now, but effectively, it will impact the P&L in the second half. And we have said before, the impact of this plant being down was about $25 million per quarter for Nutrition, so that's kind of the expectation for the second half of the year.

Thank you.

Thank you, Manav.

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

We'd like to thank everyone for joining the call today and for their ongoing interest in ADM. If there are additional questions following the call today, please feel free to reach out directly to me. Have a wonderful rest of your day.

Thank you all for joining today's call. You may now disconnect your lines.