The operator introduces the Bunge Global SA Second Quarter 2024 Earnings Release Conference Call and reminds participants of the format. Ruth Ann Wisener, the speaker, directs listeners to the accompanying slides and provides a disclaimer regarding forward-looking statements. Bunge's CEO, Greg Heckman, thanks the team for their efforts and highlights their progress on integration planning.

The speaker expresses their admiration for the team's passion and drive, and their excitement for the future combination with Viterra. They also mention the progress of the regulatory approval process and their solid adjusted EBIT for the quarter. They acknowledge the challenges of the current market and their efforts to adapt and control what they can. They then hand the call over to John to discuss the financial results and outlook, and mention a reported second quarter earnings per share of $0.48 compared to $4.09 in the previous year.

In the third quarter, the company reported unfavorable results due to a mark-to-market timing difference and transaction costs related to a business combination. Adjusted EPS was lower compared to the previous year. Agribusiness, processing, and merchandising segments all saw lower results, while refined and specialty oils and milling performed well. Corporate expenses decreased due to lower performance-based compensation. The non-core sugar and bioenergy joint venture also saw lower results due to lower ethanol prices and foreign exchange losses. The company's income tax expense and net interest expense were also lower compared to the previous year.

On Slide 6, we can see the adjusted EPS and EBIT trend over the past four years and the trailing 12 months. This reflects a strong performance due to favorable market conditions and effective execution by our team. Our capital allocation for the first half of the year shows that we generated $895 million in adjusted funds from operations. After allocating for necessary expenses, we had $704 million available for discretionary spending. We used this to pay dividends, invest in growth and productivity, and repurchase Bunge shares. Our readily marketable inventories exceed our net debt by $3 billion, and our adjusted leverage ratio is 0.5 times. On Slide 9, we can see our strong liquidity position, with $8.7 billion in committed credit facilities and $5.7 billion currently available. We also have secured $8 billion in term loan commitments for the Viterra transaction. Please turn to Slide 10 for more details.

The company's trailing 12 months adjusted ROIC was 15.2%, well above their RMI adjusted weighted average cost of capital of 7.7%. They also produced discretionary cash flow of approximately $1.5 billion, with a cash flow yield of 13.7% compared to their cost of equity at 8.2%. The company's 2024 outlook includes a forecasted adjusted EPS of approximately $9.25, with expected results in the Agribusiness, refined and specialty oils, milling, corporate and other, and non-core sectors. They also expect an adjusted annual effective tax rate of 22% to 25%, net interest expense of $280 million to $310 million, capital expenditures of $1.2 billion to $1.4 billion, and depreciation and amortization of $450 million.

The speaker concludes by stating that the company is well-positioned for future success due to increasing demand for their products and their strategic combination with Viterra. They also mention progress on other initiatives, such as the sale of their interest in a joint venture and their efforts to provide lower-carbon solutions. The company hopes to meet consumer demand for energy and create a more sustainable future while also generating more revenue for farmers.

The speaker is asking about the factors that led to the company's current guidance and how it has changed from three months ago. They mention the significant changes in market conditions, particularly in crush, and want to understand how the company has been affected and what actions they have taken to mitigate the impact.

The company's gross margin improved in the second quarter, which gave them confidence to roll it through to the third quarter. However, there is little visibility for the fourth quarter due to the variability of demand from farmers and consumers. The forecast for the second half has shifted slightly towards the third quarter. The pending regulatory approvals for the deal with Viterra may require some divestitures, but the company does not expect any significant financial impacts. Negotiations are ongoing and the company is working towards getting the deal approved.

The team has been successful in obtaining clearances from the majority of jurisdictions for the integration plans and financing of the company. They are currently engaging with a few remaining countries and expect to close the transaction in the next few months. The merchandising side of Agribusiness has seen improved crush margins, but farmer selling in Brazil and Argentina has been slow due to lower prices and government policies.

The second half of the article will focus on the FX and government policy in Argentina. In Brazil, the combined bean and corn crop was 30 million metric tons lower than expected, leading to pressure on logistics and margins. Globally, demand for meal and oil is good, but consumers are being rewarded for moving to the spot, causing challenges in the supply chain. In North America, slower farmer selling and lower prices are impacting the merchandising environment, but livestock margins are improving. The focus will now shift to weather in the Northern Hemisphere and its impact on soybeans and canola crops in Canada.

Heather Jones from Heather Jones Research asks about Bunge's coverage going into Q3 and Q4, as the soy crush in the U.S. has been lower than expected and prices have rallied. Greg Heckman mentions that customers and farmers have been slow to buy or sell, but it's unclear how much of this is covered. Bunge may have some exposure to the robust margins currently seen.

In paragraph 12, Greg Heckman discusses the company's hedging strategy and how it helped them navigate the global market in the second quarter. He also mentions the team's successful execution of their crush strategy and their ability to hedge for the third and fourth quarters. John Neppl adds that they are largely covered for Q3, but there is some uncertainty around Sun as it is affected by crop. The discussion then shifts to the Argentina side of the business, with Heather Jones asking about the difference between the company's outlook and the industry's reported cash margins. Greg Heckman clarifies that while there were some surges in farmer selling, the company did not see as strong margins as reported.

The speaker discusses the impact of lower soybean meal exports on margins in Europe and how the company's merchandising earnings have been below their baseline assumptions. They attribute this to a transition in the market from higher to more balanced prices, resulting in pressure on margins. The speaker also mentions how farmers are holding onto inventory while consumers are reducing their supply chains.

The market is putting pressure on margins as it transitions back into balance, but there are potential opportunities for upside. Refined products have exceeded expectations, with both food and energy demand remaining resilient and cocoa butter supply tightening. The team has been successful in working with customers in this challenging environment.

Tom Palmer asks about capital allocation and if the company will continue with share repurchases until the Viterra transaction closes. John Neppl responds that they are committed to the program but won't commit to any repurchases before the close due to leverage commitments and targets. They expect to execute the program post-close and the proceeds from the sugar sale could play a meaningful role. Palmer also asks about the capital plan for the next couple of years and Neppl says they will be at the high end of their range for this year and could exceed $1.4 billion.

The company expects next year's revenue to be around $2 billion due to the development of several major projects. However, there may be a 50% drop in capital expenditure in 2026 compared to 2025. The acquisition of Viterra is progressing well and the company is impressed with the quality of their people. The divestment of Non-core business has been marked as non-core for some time and the company is pleased with the deal.

During a recent conference call, Greg Heckman and John Neppl of Bunge Limited discussed their satisfaction with the transaction price of their joint venture with BP. They stated that they had always planned to eventually exit the business and were proud of the work the team did to improve it. They expect to close the transaction later this year and are looking forward to releasing resources, including capital and employees. In response to a question about farmer selling, Heckman and Neppl expressed confidence that it will not be a prolonged slow cycle, as producers are getting used to the lower price environment.

The speaker discusses how the company has built inventories and is anticipating larger crops in Argentina. They expect to see more farmer marketing as the North American crop develops. However, they are closely monitoring factors such as currency and government policies in South America. The team remains focused on executing and managing risk. In an environment with inverted curves, the company may delay growth CapEx, but their global platform has helped them navigate challenges in the past.

The company's flexibility and execution have improved, allowing them to stay focused on controllable factors in the market. They are constantly thinking about improvement and investing in assets and systems for the long-term. These transitions in the market are a test of their execution and reveal the company's progress.

During a recent earnings call, the company's executives expressed their satisfaction with the team's performance in a challenging external environment, while also handling integration planning and regulatory matters. They are proud of their execution and believe they are performing well above their baseline expectations. The company has already secured financing for the upcoming Viterra transaction, although there may be some adjustments made after the close of the deal.

The CEO, Greg Heckman, thanks everyone for joining the call and expresses excitement about the merger between Bunge and Viterra. He believes that the combined company will be better equipped to serve customers in a complex environment with growing populations, climate volatility, and uncertain policies. He also mentions the importance of transparent and sustainable feedstocks. The call ends with the operator thanking everyone for participating.

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