Archer-Daniels-Midland Co. Q2 FY2025 earnings call

Key points include adjusted earnings per share of $0.93, total segment operating profit of $830 million for the quarter, trailing fourth quarter adjusted ROIC of 6.9%, and cash flow from operations before working capital changes of $1.2 billion for the first half of the year. Progress on self-help initiatives such as portfolio management (ceasing operations at certain facilities, moving Lubbock cotton seed plant into JV), Decatur East plant restart (ramping to planned run rates), and progress on targeted $500 million to $750 million in aggregate cost savings over 3-5 years. Operational resilience improvements with best performance in limiting unscheduled and unplanned downtime in over 5 years, and being named America's greatest workplaces in manufacturing.

AS&O segment operating profit for the second quarter was $379 million, down 17% compared to the prior year quarter. Ag Services subsegment operating profit was $113 million, down 7% versus the prior year quarter. Crushing subsegment operating profit was $33 million, down 75% from the prior year quarter. Refined Products and Other subsegment operating profit was $156 million, up 14% compared to the prior year quarter. Carbohydrate Solutions segment operating profit was $337 million, down 6% compared to the prior year quarter. Starches and Sweeteners subsegment operating profit was $304 million, down 6% compared to the prior year quarter. Vantage Corn Processors subsegment operating profit was $33 million, flat relative to the prior year quarter. Nutrition segment revenues were $2 billion, up approximately 5% compared to the prior year quarter. Nutrition segment operating profit was $114 million for the second quarter, up 5% versus the prior year quarter.

Tightened expectations for adjusted earnings per share to land around $4 per share for full year 2025. Expect improved biofuels and trade policy clarity in the second half. Q3 and Q4 split anticipated, impact of insurance proceeds, ethanol margins expected to be mid-single-digit decline for 2025, Nutrition segment to continue improvement with Decatur East plant full production, and Carb Solutions impacted by soft starch demand and higher corn costs in EMEA.

External factors like legislative and biofuel policy uncertainty impacting margins, trade policy impacts, currency fluctuations, ethanol margin pressure, and consumer spending cautiousness affecting certain segments.

Q: You gave a lot of helpful color for the back half of the year, but I was hoping you could maybe a little bit more explicitly give us kind of the earnings split between 3Q and 4Q or at least a little bit more guide kind of at the total company level.

A: As you said or are you implying in your question, we see the perspectives for ADM improving and getting more clearer as we go into the second half. Of course, first half has a lot of headwinds. Second half with the benefits now of a little bit more clarity on RVOs and 45Z, we certainly see the potential for soybean oil to be much more demanded, and that will be the preferred feedstocks for North America. Unfortunately, by the time this was announced, we have already contracted more -- most of our Q3. So you will see the impact for us mostly in Q4. So as such, it's probably going to be something in that, I don't know, 35-65 type of split between Q3 and Q4.

Q: Congrats on the solid results for the second quarter. I wanted to dive into the outlook for the Nutrition segment into the back half. Obviously, with Decatur East coming back, as we look into this and kind of like have like an LTM run rate, kind of call it about $400 million operating income now in that segment. But clearly, with all these headwinds, what would you suggest us assuming has been kind of like that incremental cost that you called out for not having Decatur East over the last couple of quarters.

A: Yes. Thank you for the question, Ben. Let me address Nutrition and how is it going. So Nutrition continues recovery. We're very pleased with that. If I take it into pieces, if you take Animal -- Human Nutrition, Human Nutrition is being driven by Flavors, strong revenue growth. We are holding to our EBITDA margins. So we are very pleased with that, mostly driven by beverages in North America, but also strength in Europe. And we have an opportunity to grow geographically as our plants in Asia Pacific are increasing output. In terms of Health and Wellness, Biotics has grown so far 9% revenue. So that's going very, very well. And we will be releasing some data of studies that we perform in 2025. We're going to be -- or in the past that we were releasing in '25 and '26 that will give much more opportunities for us to penetrate more applications, especially in the heat-treated probiotic area where ADM is one of the leading companies. In terms of Specialty Ingredients was the headwinds for the human nutrition part. And as you said, we have mentioned before, the headwinds in terms of cost for having the Decatur plant down was about $20 million to $25 million per quarter. That will be -- hopefully be behind us as we go into 2026. So then you have the Animal Nutrition. The Animal Nutrition side has been an improvement story, if you will, a margin up story. Remember, I mentioned that from the time that -- from like 3 or 4 years ago. And they've been executing on that. They've been executing for the last, I think, 7 quarters. They've been presenting better results based on self-help. The market is a relatively good market in the sense that all the protein customers are making money. Feed is relatively cheap right now, so profitability is there. And our portfolio is slightly shifting into more specialty products as we go along. So we are deemphasizing some of the commodities and emphasizing a little bit more our innovation in those segments. So we feel good about that piece continuing . So I think we are setting up well for continued growth into 2026. Numbers-wise or run rate, I wouldn't like to venture at this point in time. But I think you can, for sure, add about $100 million of specialty ingredient headwinds that we're not going to have in 2026. The plant so far is running well since it started up back. The team brought it back safely. So we're very proud of the team. So, so far, so good.