The first quarter earnings conference call for ADM was led by CEO Juan Luciano and Interim CFO Ismael Roig. They discussed the company's adjusted earnings per share, segment operated profits, and operating cash flow. The team also discussed their three priorities for value creation in 2024, which include managing through the cycle, nutrition recovery, and disciplined management of their balance sheet. The company is proactively taking action to navigate through the expected pressure on margins in the upcoming year.

In the first quarter, ADM made progress on their three priorities: managing through the cycle, building on global trends, and returning cash to shareholders. They have seen growth in their Green Bison joint venture and their carbohydrate solutions business, and have exceeded their goal for regenerative agriculture acreage. ADM also has a program in place to improve efficiency and effectiveness, resulting in cost savings and improved operating performance in various areas of the company.

The company is focused on achieving a cost savings objective of $500 million over the next two years through various projects. The team is also making progress in improving nutrition and operations, and has maintained a balanced approach to capital allocation. The company has returned a significant amount of cash to shareholders and plans to continue prioritizing their needs. Overall, the company is making measurable progress in their three major priority areas for 2024 and is well-positioned to navigate market challenges and meet expectations. Ismael Roig will now provide more detail on the first quarter financial results.

In the first quarter of 2024, ADM's overall segment operating profit and EPS decreased by 24%. This was mainly due to lower profits in ag services and oil seeds and nutrition, but the other segment saw an increase in operating profit. Adjusted earnings per share were $1.46, with factors such as lower pricing and execution margins, improved operational excellence, and increased equity earnings from Wilmar impacting the results. The AS&O segment delivered $864 million in operating profit, with challenges from lower commodity prices but improvements in process volumes and manufacturing costs.

The Ag Services subsegment operating profit was lower due to stabilization of trade flows and slower farmer selling. Crushing subsegment operating profit was also lower due to increased imports and anticipation of large South American supplies. Refined products and other subsegment results were weaker due to increased imports of used cooking oil. Equity earnings from Willmar were higher than the prior year. In the carbohydrate solutions segment, operating profit was $248 million, with strong demand and growth in the BioSolutions platform. Strong starches and sweeteners margins in North America were offset by pressured domestic ethanol margins and moderating margins in the EMEA region. The vantage corn processing subsegment saw improved results due to strong export demand for sustainably certified ethanol.

In the first quarter, nutrition revenues were $1.8 billion, with strong contributions from recent acquisitions and demand creation in the human nutrition subsegment, offset by lower volumes in plant-based proteins and normalizing pricing in the texturants market. The animal nutrition subsegment had lower revenues due to lower pricing and mix, but demand fulfillment is expected to improve throughout the year. The nutrition segment operating profit was $84 million, with lower results in the human nutrition subsegment but higher results in the animal nutrition subsegment due to cost optimization efforts and lower commodity prices. Other segment operating profit was $121 million, a 25% increase from the prior year, driven by improved Captive Insurance results and higher global technology investments and legal fees in the corporate unallocated costs.

The company's other corporate segment had a loss due to an investment valuation loss, but they have a strong balance sheet and have returned $1.3 billion to shareholders through share repurchases. They plan to execute an additional $1 billion in share repurchases throughout the year and will keep capital expenditures aligned with depreciation and amortization. The company's first quarter results were in line with expectations and their 2024 planning assumptions and EPS guidance remain unchanged. They have raised their net interest expense guidance and anticipate that commodity prices will continue to ease and trade flows will adjust. They also expect global soybean crush margins to moderate in 2024.

The team executed well in the first quarter, with strong soy crush margins due to high demand for meal. However, the forward curves reflect the assumption of ample South American supplies and the return of Argentinian production in Q2 and Q3. Despite this, demand for vegetable oil is expected to remain strong due to growth in renewable diesel. In the second quarter of 2024, the AS&O segment is expected to be lower than the previous year, while carbohydrate solutions and nutrition are expected to be higher and lower, respectively.

The speaker discusses the company's anticipated improvement in the upcoming quarter and their focus on execution excellence and agility. They mention their business priorities and confidence in their outlook for the year. They then open the line for questions and the first question is about the interplay between US and South America crops and its impact on crush margins.

Juan Luciano, CEO of a company, is discussing the balance between crush margins in South America and the confidence in their expectations for the rest of the year. He mentions that Brazil has had a better selling season due to the harvest and devaluation of the real, while Argentina is more difficult to predict due to economic plans and strikes. He also states that the company operated in the higher end of their crush margin range in the first quarter, but expects to move toward the lower end in the second and third quarter before recovering at the end of the year when the U.S. has a crop. He also mentions that there is a strong demand for soybean meal, which becomes more favorable as it becomes cheaper.

The company is optimistic about the rest of the year for their carbohydrate solution segment, with strong volumes and good margins. They have seen solid demand across all segments and expect a better second quarter compared to last year, with strong exports to Mexico and other countries.

The paragraph discusses the current state of the ethanol industry and the company's outlook for the future. While there is uncertainty surrounding ethanol, the company remains cautiously optimistic that maintenance systems will help balance inventories and improve margins. The rest of the business is operating well, but there are lower biodiesel margin expectations due to pressure from imported used cooking oil. The company saw lower results in Q1 compared to the record year prior, mainly due to the negative impact of imported used cooking oil on North American refining margins. However, refining margins in EMEA were in line with the prior year, and South American results were stronger due to increased biodiesel demand. The company expects similar dynamics for the second quarter, with lower refining margins in North America and stronger margins in South America.

The speaker discusses the negative impact on net timing in the first quarter, with a $72 million decrease compared to the previous year. They also mention a negative mark-to-market of $30 million, compared to a positive of $42 million in the previous year. The speaker cannot provide specific details on the restart of the Decatur East plant, but expects it to be operating in the fourth quarter. They also mention that the headwinds for nutrition and specialty ingredients will continue throughout the year due to this. A question is then asked about the crush margin outlook, specifically on the soy side, and the speaker provides more information on this, mentioning that the current curve for the U.S. has margins below the range and some regions are below the 35 mark. They mention that the rest of the year will be offset by regions like Brazil and Europe or increased soybean oil demand.

A question was asked about the margins for ADM and how they are being affected. The CEO responded, saying that they are currently seeing a decrease in margins in North America, but expect them to improve in the fourth quarter due to increased bean supply and renewable green diesel volume. In Brazil, margins have improved due to increased farmer selling and devaluation of currency. Europe is expected to have average margins, while China is more uncertain. The CEO also mentioned a difference in commentary between starches and sweeteners and VCP regarding ethanol.

Juan Luciano, CEO of ADM, discussed the company's recent results and mentioned that the ethanol margins at VCP were supported by stronger export demand for sustainably certified ethanol. He also explained that ethanol is in high demand globally and that inventories are expected to come into balance in the summer. The company is also focusing on simplification and portfolio optimization within its Nutrition business. Despite some challenges, ADM remains optimistic about the future of Nutrition.

Juan Luciano discusses the structure and future of the business, mentioning the sequential improvement and the need to see through some short-term headwinds. He also talks about the shift in demand for plant-based proteins and the potential for emerging technologies and ingredients to revitalize that demand. In the present, the flavor and biotics segments are performing well, but there are supply constraints in Europe that need to be addressed.

The Nutrition business has seen a 100% increase in OP due to Biotics, but is facing some challenges in the fibers sector. However, the long-term outlook for fibers is positive due to global nutrition trends. Animal Nutrition is undervalued and there will be a focus on refining the portfolio. Different strategies are being applied to different regions, with a focus on fewer platforms and customers to execute the pipeline faster. The speaker offers a complementary view, but the paragraph does not specify what this view is.

Juan and the speaker agree with Juan's comments on Animal Nutrition and the broader portfolio. They have seen the benefits of cost improvement programs and expect the business to become more focused on specialty products in the future. There was a slight decrease in income in the first quarter due to commodity price headwinds, but the recent M&A deals are expected to contribute to revenue for the full year.

The company expects mid-single digit revenue growth for the full year with better operating profit due to lower costs. Volume has generally improved except for the Specialty Ingredients business. The company anticipates an increase in soy meal demand and inclusion ratios later in the year, despite forecasts for poultry supply remaining steady. The $500 million in cost savings will come from various areas, including operating segments and corporate unallocated.

The speaker is explaining that the industry is going through a transition period with ample supplies and slow farmer selling. The proteins industry is starting to see growth in poultry but is still struggling with profitability in beef and pork. Pricing is having an effect and trade flows are shifting. The speaker believes that with increased RGD capacity and soybean oil from Brazil, crush margins will be a determining factor for the year. The drive for excellence profitability is also making progress.

Juan Luciano mentioned during the remarks that the company has more than 1,200 initiatives, which can be grouped into three main areas: plant process optimization, business process optimization, and supply chain and demand fulfillment. The company has already made significant progress in these areas, with about 1/3rd of the $500 million goal for 2024 already in sight. In response to a question about the dynamic of the blenders tax credit changing to a producers tax credit and its impact on soy oil demand in the U.S., Juan explained that the company is advocating for the use of grid CA modeling to be included in the new tax credit system and is urging government officials to provide clarity on the matter to avoid uncertainty in the market.

Juan Luciano discusses the importance of providing regulatory certainty for industries investing in the U.S. He also talks about the renewable diesel industry and its use of various feedstocks, including soybean oil. He mentions that the industry is currently relying on temporary imports of used cooking oil, but expects soybean oil to recover its percentage of use. In response to a question about the Green Bison JV, Luciano mentions that it contributed to the company's process volume growth and resulted in a $10 million non-controlling interest loss. He does not have specific numbers on hand but expects the JV to become profitable in the future.

ADM's first quarter saw a 9% increase in oilseed volumes, driven by the new Spiritwood plant and improvements across their plants. The Green Bison joint venture will also be a contributor to profit in 2024. ADM has a decarbonization strategy and is working on increasing carbon capture sequestration, with plans to go from 2 to 7 wells. This is driven by their own goals and customer demand for low carbon intensity products.

The speaker reminds the audience that 4.5 million tons of CO2 have been captured in the last 10 years, and pipelines are being built to bring more to the carbon capture units. The region acreage is doubling due to both excitement from farmers and demand from customers for sustainable practices. The speaker commends the team for their work and states that ADM is seen as a leading program in the world.

This summary was generated with AI and may contain some inaccuracies.