Archer-Daniels-Midland Company (ADM) Earnings

Management highlights

Management remains focused on reducing manufacturing and transaction costs, generating strong cash flows, investing in growth platforms, and developing talent. Achieved progress in areas like higher North American export activity in Ag Services, capturing margin opportunities in Crushing and refined products, ethanol margins strengthening, Nutrition's flavor sales growth. Made strides in increasing throughput and decreasing unplanned downtime in manufacturing. Pursuing reduction in transaction costs via automation and AI. Created new senior innovation and growth leadership role. Focused on workforce talent and capabilities, established ADM capability center in India.

Guidance

Raised 2026 adjusted EPS guidance range to $4.15 to $4.70 from $3.60 to $4.25. Majority of $275 million net negative mark-to-market and timing impacts in Q1 forecasted to reverse in Q2. Expect China to resume normalized buying pattern for North American soybeans in Ag Services. Expect strength in ethanol margins in Carb Solutions to offset softness in starches and sweeteners. Nutrition expected to see operating profit increase due to higher flavor sales, Decatur East recovery, etc.

Segment performance

AS&O segment operating profit for the first quarter of 2026 was $273 million, down 34% compared to the prior year quarter. Ag Services subsegment generated operating profit of $200 million, an increase of 26% compared to the prior year quarter. Crushing subsegment reported an operating loss of $79 million for the quarter. Refined products and other subsegment operating profit was $86 million, down 36% compared to the prior year quarter. Carbohydrate Solutions segment operating profit was $356 million, representing an increase of 48% compared to the prior year quarter. Starches and sweeteners subsegment operating profit was $229 million, up 11% compared to the prior year quarter. Vantage corn processors subsegment operating profit was $127 million, a $94 million increase from prior year quarter. Nutrition segment revenues in the first quarter were $1.8 billion, down 1% compared to the prior year quarter. Nutrition segment operating profit was $135 million for the first quarter, an increase of 42% compared to the prior year quarter.

Risks & headwinds

Monitor external factors including consumer trends, energy costs, supply chain dislocations, global trade and tariff dynamics, foreign exchange and ethanol industry development.

Analyst Q&A

• Q: Congrats on a strong quarter and a guidance raise. My quick question here is, obviously, sir, there's one part where the RVO is helping you, policy formalization is helping you. But there is another part where [ world ] is generally short diesel, and what we are seeing out there is globally shortages of diesel and one area where U.S. is somewhat unique is we have this level of higher renewable diesel, biodiesel production, we can do to meet some of those challenges. And I just wanted your view on it. Are you already seeing out there, producers with ideal plants who are not running that hard in 2025 already looking to run much harder in 2026? And how does that benefit ADM?

  A: Yes. Thank you, Manav. Listen, I think we said it in the previous quarter what we expected the RVO impact was going to be in the market. The first thing that we said, it was going to come in RINs coming up, and we saw RINs going up by $1. Then that created a margin for all these biodiesel plants and renewal diesel plants to come on stream. That pulled soybean oil demand and that increased crush margins, so crush rates. So if you look at on margins. So if you look at crash rates for March, we jumped 6%. So crush rates in March for North America run about 10% higher than last year. So I think that it happened in the sequence we expected. Probably, it's happened with more violence than we expected. It was faster maybe because of pent-up demand. We've been waiting for RVOs for a couple of years or maybe the effects of shortages or the perception of shortages given the Strait of Hormuz issues. But -- so we see that. We see that biodiesel traded mostly with RVOs, I would say. And we see those plans coming on stream. So yes.

• Q: Congrats on a very good first quarter. Maybe just following up on some of the changes to guidance, and if you could maybe help us frame a little bit the high versus the low end of it? I mean, I guess the market was expecting some sort of a race. But just to understand what factors you're kind of like seeing that could drive you to the higher end of that new guidance versus what are the risks that keep you on the lower side?

  A: Yes. Let me give you a flavor, and maybe Monish can chime in later. So we underpin the raising guidance on, of course, the continued advancement of our priorities that the team continues to execute well, and this constructive biofuels environment that we got after the clarity with the RVOs. If you think about the businesses, from an AS&O Ag Services perspective, we expect a normalization of the offtake of soybeans from China. And then we continue to expect a constructive biofuel environment going forward. We expect the majority of our -- you know the big mark-to-market, we have $275 million in Q1. We expect the majority of that to come back in Q2. But of course, margins, as they continue to climb, we may generate new mark-to-market that we don't have the ability to forecast, that is not included in our guidance. From a Carb Solutions perspective, we expect the same dynamics, a little bit of softer sweeteners and starch, with a strong ethanol dynamics to continue into Q2 and probably the rest of the year or at least the rest of the summer. And nutrition growth continued to be intact the way we see it forward with strong flavors, with still a strong recovery of specialty ingredients given by the Decatur plant being back. And animal nutrition continues to -- on a smaller scale because it's smaller than human continue to put very good year-over-year improvements based on their improvement plan, but now they are shifting to more specialty products. So all in all, we see most of our business doing very, very well.

• Q: Congrats on the strong results here. I maybe wanted to just focus on -- absolutely, the first question, just wanted to focus on ethanol. Can you talk about what is driving margin strength here? I think it's export demand. And there was momentum prior to the start of the conflict with Iran. So just want to understand from your point of view, what is -- what's driving this? And have you seen any incremental upside from the conflict?

  A: Yes. Listen, as you said, before the conflict, we were already seeing good margins for ethanol. I think that we had rough weather, in general, that affected some of these plans with the polar vortex in January or something. So we were coming into an environment we had strong domestic demand, given by the tightening of the RINs and the values of the RINs. Also a strong export demand. Demand for exports were about 10% year-over-year. So that was pulling on an industry that was not producing fully, and I draw down inventory. So we are going a little bit through maintenance now before the driving season anyways as well. So we expect that to do well. Don't forget that ethanol at about $2 per gallon is incredibly competitive globally. You have [ our but ] trading at north of $3.50. So there is a big incentive here to blend domestically, so we expect domestically to something in the range of 14.5 billion gallons, give or take. When you add to that, 2.4 billion gallons, that is our expectation for exports, that's almost close to 17 billion gallons. I still remember how much I was celebrating with our exports worth 1 billion gallon a few years back. So now we're talking about 2.5 billion gallon. Whether those exports are being held by maybe the conflict or the tightness, maybe there is some of that. But you see more and more countries trying to bring resilience to their fuel system by diversifying into biofuel. So you see Vietnam increasing now to E10, you see Brazil going now to B32. So you have many countries popping up into that, and they are -- all of that is helping the U.S. export.