Image source: The Motley Fool.

Date

  • Tuesday, Aug. 5, 2025, at 2 p.m. ET

Call participants

  • Chairman, President, and Chief Executive Officer — Juan Luciano
  • Executive Vice President and Chief Financial Officer — Monish Patolawala

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

  • AS and O segment operating profit declined 17% year over year in the second quarter of 2025, as "limited clarity on legislative and biofuel continued to impact margins in the segment."
  • North American canola crush margins decreased by approximately $50 per ton in the second quarter of 2025 due to "headwinds from trade policy and lower canola oil demand for biofuel production."
  • The Carbohydrate Solutions segment is expected to be impacted in fiscal 2025 by softness in starch demand for paper and corrugated box, as well as higher corn costs in EMEA related to corn quality issues.
  • Robust industry-wide ethanol production is expected to sustain pressure on margins, and management anticipates for the year 2025 a mid-single-digit decline in overall ethanol EBITDA margins compared to the prior full year.

Takeaways

  • Adjusted earnings per share-- Adjusted earnings per share was $0.93 in the second quarter of 2025.
  • Total segment operating profit-- Total segment operating profit was $830 million in the second quarter of 2025, demonstrating performance across business lines.
  • Trailing four-quarter adjusted ROIC-- Adjusted ROIC was 6.9% for the trailing four quarters, as reported by management.
  • Cash flow from operations (pre-working capital)-- Cash flow from operations before working capital changes was $1.2 billion in the first half of 2025.
  • AS and O segment operating profit-- AS and O segment operating profit was $379 million in the second quarter of 2025, down 17% from the prior year quarter.
  • Crushing subsegment operating profit-- Crushing subsegment operating profit was $33 million in the second quarter of 2025, a 75% year-over-year decline, with global executed crush margins in soybeans $7 per ton lower in the second quarter of 2025 compared to the same period in 2024, and $29 per ton lower in canola in the second quarter of 2025 compared to the prior year quarter.
  • Refined products and other subsegment profit-- Refined products and other subsegment operating profit was $156 million in the second quarter of 2025, up 14% year-over-year, "as positive timing impacts offset lower biodiesel and refining margins."
  • Equity earnings from Wilmar-- Equity earnings from Wilmar were $77 million in the second quarter of 2025, up 13% year-over-year.
  • Carbohydrate Solutions segment operating profit-- Carbohydrate Solutions segment operating profit was $337 million in the second quarter, down 6% compared to the prior year quarter.
  • Starches and sweeteners subsegment profit-- Starches and sweeteners subsegment operating profit was $304 million in the second quarter of 2025, down 6% year over year; global wheat milling margins and volumes improved in the second quarter of 2025 versus the prior quarter.
  • Vantage Corn Processor subsegment profit-- Vantage Corn Processor subsegment operating profit was $33 million in the second quarter of 2025, flat year over year. Overall, ethanol EBITDA margins per gallon were positive in the second quarter of 2025, though lower than the prior year quarter.
  • Nutrition segment revenue-- Nutrition segment revenue was $2 billion in the second quarter of 2025, up approximately 5% year over year, including a $55 million benefit from a contract cancellation in health and wellness in the second quarter of 2025.
  • Nutrition segment operating profit-- Nutrition segment operating profit was $114 million in the second quarter, up 5% versus the prior year quarter. Human nutrition subsegment operating profit was $92 million in the second quarter of 2025, down 11% compared to the prior year quarter, and animal nutrition operating profit was $22 million in the second quarter of 2025, higher year over year.
  • Inventory reduction-- Inventories decreased by $2.2 billion in the first half of 2025, compared to a $1.4 billion decrease in the first half of the prior year, attributed to volume management.
  • Leverage ratio-- Leverage ratio was 2.1x at the end of the second quarter of 2025.
  • Capital expenditures-- Year-to-date capital expenditures were $596 million in 2025; the full-year capital expenditures range was lowered to $1.3 billion-$1.5 billion from previous guidance of $1.5 billion-$1.7 billion for 2025.
  • Shareholder returns-- $495 million returned to shareholders via dividends during 2025.
  • Full-year 2025 adjusted EPS guidance-- The company tightened guidance and now expects adjusted EPS to be approximately $4 per share for the full year 2025.
  • Fourth quarter crush margin guidance-- Projected global soybean crush margins are $60-$70 per metric ton for the fourth quarter of 2025, and canola margins are projected at $55-$65 per metric ton for the fourth quarter of 2025.
  • Remediation of material weakness-- Monish Patolawala stated, "we have successfully remediated the material weakness in internal controls for segment disclosures related to reporting, pricing, and measurement."

Summary

Archer-Daniels-Midland (ADM 6.00%) management highlighted that the recommissioning of Decatur East within the Specialty Ingredients business is ramping operations to planned run rates, which is expected to eliminate a $20 million to $25 million quarterly headwind beginning in the fourth quarter of 2025. New biofuel policy developments, including the proposed RVO for 2026-2027 and extension of the 45Z tax credit, are set to improve board crush margins, according to management commentary in the second quarter of 2025, though most financial benefit is expected in the fourth quarter of 2025 due to the timing of prior quarter bookings.

  • Juan Luciano said, "We are tightening our expectations for adjusted earnings per share and expect it to land around $4 per share for the full year 2025," explicitly aligning the outlook with recent external policy clarity.
  • Network optimization and targeted asset shutdowns are being executed globally, including exiting select origination sites, a port facility in Florida, an aquaculture plant in Ecuador, and a joint venture for the Lubbock cottonseed plant.
  • North American origination improved on higher volumes and margins, aided by a $19 million USDA grant benefit in the second quarter of 2025.
  • Luciano stated that consumer demand is being "closely monitor[ed]," and lower volumes in specific pockets and geographies have been embedded into guidance, reflecting continued market caution.
  • The company achieved "best performance in limiting unscheduled and unplanned downtime in more than five years," supporting improved asset reliability as global crush rates are projected to remain elevated.
  • On the nutrition segment, headwinds from Decatur East downtime and lower specialty ingredients performance are being resolved, with animal nutrition showing continued margin expansion from self-help actions.
  • Material weakness in financial controls related to segment disclosures has been remediated after an 18-month program of enhanced controls, staff training, and internal/external review.
  • Guidance embeds a third-quarter/fourth-quarter split of approximately one-third/two-thirds of second-half earnings for 2025, with fourth-quarter improvement driven by anticipated higher crush margins and resumed full operations at Decatur East.

Industry glossary

  • AS and O: Ag Services and Oilseeds segment, including origination, crushing, and related operations.
  • Decatur East: ADM's Specialty Ingredients plant in Decatur, Illinois, important for high-margin nutrition and specialty products.
  • RVO (Renewable Volume Obligation): Regulatory mandate for the volume of renewable fuel blended into transportation fuel, as set by the EPA.
  • 45Z: Federal tax credit for biofuel producers, incentivizing renewable diesel and advanced biofuel production with specific feedstock requirements.
  • EBITDA margins per gallon: Profitability metric for ethanol indicating earnings before interest, taxes, depreciation, and amortization per unit produced.
  • Wilmar: Affiliate company in which ADM holds an equity stake, providing earnings contribution through joint ventures and investments.
  • Replacement curve: Forward margin curve for crush or refining operations, indicating potential profits based on current and future commodity pricing.

Full Conference Call Transcript

Juan Luciano: Thank you, Megan. Hello, and welcome to all who have joined the call. Please turn to slide four. Today, Archer-Daniels-Midland Company reported adjusted earnings per share of $0.93. Total segment operating profit was $830 million for the quarter. Our trailing fourth quarter adjusted ROIC was 6.9%, and cash flow from operations before working capital changes was $1.2 billion for the first half of the year. The team focus has been on managing what we can control in a dynamic environment, and we continue to drive positive momentum in those areas in the second quarter. Our carbohydrate solutions team again delivered steady results with strong execution and disciplined risk management.

The nutrition team drove another quarter of sequential improvement, led by our flavors and animal nutrition portfolios. We also made important progress in getting our Decatur East plant back online, already ramping to our planned run rates. Our services and oilseeds performed in line with our expectations. The team worked to offset lower margins this quarter through targeted organizational realignment and network consolidations, enabling us to be well-positioned to take advantage of expected improved conditions in the second half of the year. Across our global operations network, our efforts to improve operational resiliency delivered outstanding results. We achieved our best performance in limiting unscheduled and unplanned downtime in more than five years.

Also proud to have been named as one of America's greatest workplaces in manufacturing, a testament to the tireless efforts of our colleagues across the operations workforce. The external environment became clear in some critical areas for our business throughout the quarter. The US administration drove positive tax and biofuel policies and feedstock demand. The agility with which we managed the first half of 2025 demonstrates 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 on key strategic objectives in the quarter. Please turn to Slide five.

We're making strong progress against the areas of self-help we identified at the beginning of the year. The balance of efforts across cost management, execution excellence, targeted simplification, strategic growth, and capital discipline are providing an important foundation to work from. Let me share a few examples of what we accomplished in the quarter. We are continuing our portfolio management activities. We made decisions to cease operations at certain facilities that no longer align with our long-term goals, including several AS and O origination sites globally, a port transload facility in Florida, an aquaculture plant in Ecuador, a pet and animal nutrition plant in Brazil, and two assets no longer strategic to the specialty ingredients business.

We focused on optimizing our AS and O network and aligning our base to the most critical parts of the business while ensuring we effectively manage uptime and production capacity. And we announced our intention to move our Lubbock Texas cottonseed plant into a joint venture. As I mentioned earlier, we achieved a critical milestone in recommissioning our Decatur East facility within our Specialty Ingredients business as we move through the back half of the year. Through a combination of these efforts and others throughout the first half of the year, we're also continuing our capital discipline focus with an eye on returning capital to shareholders. Following our Q1 earnings call, we announced our 374th consecutive quarterly dividend.

While we've been keeping our efforts in cost and capital management at the forefront, we have never stopped smart organic investments that provide us options to accelerate growth at the appropriate time. Archer-Daniels-Midland Company's integrated business model provides significant opportunities to generate value across our entire production ecosystem. A few examples include repositioning co-products from our operations into new solutions, such as converting fatty acid residues found in waste materials into biofuels, addressing a growing carbon economy through the expansion of our decarbonization capabilities in CARB solutions, and taking advantage of available capacity in nutrition plants to expand product lines and enter new markets. All of these represent ways Archer-Daniels-Midland Company can reduce waste, accretively deploy capital, and increase returns.

As we look to 2025 from an external perspective, we anticipate increasing biofuels and trade policy clarity that accelerate our ability to create positive economic opportunities and drive additional investments such as these throughout our business and the agriculture sector. Archer-Daniels-Midland Company is poised to play a pivotal role in driving that progress. In the US, for instance, as policies are finalized to accelerate the adoption of renewable fuels, Archer-Daniels-Midland Company is ready to lead, advancing innovative solutions that open new high-value markets for American farmers and strengthen the broader bioeconomy.

We will also continue to shape our own path through the self-help agenda that is already driving impact that helps offset some of the market dynamics seen in the first half of the year. Because several external factors and self-help efforts will activate in the third and fourth quarters, we are tightening our expectations for adjusted earnings per share and expect it to land around $4 per share for the full year 2025. We believe Archer-Daniels-Midland Company is in a solid position to exit 2025 with operational momentum, and we are confident that our team's ability to execute against our strategy will set the company up for a strong finish to the year and a launch into 2026.

With that, let me hand it over to Monish to share a deeper dive into second-quarter financial results and our 2025 outlook. Monish?

Monish Patolawala: Thank you, Juan. Please turn to slide six. AS and O segment operating profit for the second quarter was $379 million, down 17% compared to the prior year quarter as limited clarity on legislative and biofuel continued to impact margins in the segment. $113 million, down 7% versus the prior quarter. Global trade results were lower relative to the same quarter last year, largely due to the lower trading volumes, partially related to the trade policy uncertainty as well as lower margins due to lower commodity price negative freight timing, and currency impact.

South American origination results were lower primarily due to lower volume and margins stemming from the loss of operations at a key port facility in Brazil and foreign exchange impact. North American origination results improved in the quarter due to higher margins and volumes, as well as from a timing benefit associated with receiving $19 million in proceeds from a USDA grant earlier this year compared to in 2024. There were net negative timing impacts of $27 million year over year. In the crushing subsegment, operating profit was $33 million, down 75% from the prior year quarter. Consistent with our expectations for the quarter, both global soybean and canola crush execution margins were lower than the prior year quarter.

Global executed crush margins were $7 per ton lower in soybeans compared to the prior year quarter, and approximately $29 per ton lower in canola. By region, crush margins were down significantly in North America. North America soybean crush margins were negatively impacted by higher crush rates and lower soybean oil demand, stemming from biofuel policy uncertainty earlier in the quarter. North America canola crush margins were approximately $50 per ton lower due to headwinds from trade policy and lower canola oil demand for biofuel production. There were net positive timing impacts of approximately $37 million year over year.

In the refined products and other subsegment, operating profit was $156 million, up 14% compared to the prior year quarter as positive timing impacts offset lower biodiesel and refining margins. In EMEA, margins declined due to significantly lower biodiesel export volumes. In North America, positive timing impacts offset lower biodiesel and refining margins, which were negatively impacted by additional industry crush capacity and lower demand for vegetable oils due to biofuel policy uncertainty. There were net positive timing impacts of approximately $119 million year over year. Equity earnings from the company's investment in Wilmar was $77 million, up 13% compared to the prior year quarter. Turning now to slide seven.

For the second quarter, carbohydrate solutions segment operating profit was $337 million, down 6% compared to the prior year quarter. In the starches and sweeteners subsegment, operating profit was $304 million, down 6% compared to the prior year quarter. In EMEA, sweeteners and starches volumes and margins declined as higher corn cost due to crop quality issues continue to negatively impact results. In North America, sweeteners and starches results were up slightly as higher liquid sweetener and con co-product margins offset the negative impact of weaker starch margins and volumes and lower wet mill ethanol margins. Global wheat milling margins and volumes also improved relative to the prior quarter, largely due to volume growth with key customers.

In the Vantage corn processor subsegment, higher ethanol volumes and improved risk management operating profit was $33 million, flat relative to the prior year quarter as largely offset lower ethanol margins. Overall, ethanol EBITDA margins per gallon were positive in the quarter, though lower than the prior year quarter. Turning to slide eight. In the second quarter, nutrition segment revenues were $2 billion, up approximately 5% compared to the prior year quarter. The increase includes a $55 million benefit from a contract cancellation in health and wellness, the full amount of which is not included in the nutrition segment of operating profit.

Excluding this benefit, human nutrition revenue was up approximately 4%, primarily driven by flavors growth partially offset by headwinds related to supply challenges from Decatur East. Animal nutrition revenue was down 2% as negative currency impacts and lower volumes offset mix benefits. Nutrition segment operating profit was $114 million for the second quarter, up 5% versus the prior year quarter. Human nutrition subsegment operating profit was $92 million, down 11% compared to the prior year quarter as improved performance in flavors was more than offset by declines in specialty ingredients and health and wellness. In specialty ingredients, operating profit declined due to lower margins and impacts related to the Decatur East plant.

In health and wellness, higher margins from biotics and improved product mix were more than offset by reduced tolling margins from a contract cancellation. Animal nutrition subsegment operating profit of $22 million was higher than the prior year quarter due to higher margins supported by ongoing turnaround action. Please turn to Slide nine. For the first half of the year, the company generated cash flow from operations before working capital of approximately $1.2 billion, down relative to the prior year period due to lower segment operating profit.

We continue to make progress with our actions to ensure working capital excellence through stronger rigor on working capital planning, inventory rationalization, improvement of key account payable metrics, and more timely collection of past due balances. For example, inventories decreased by $2.2 billion during the first half of this year as compared to a $1.4 billion decrease in the prior year period, in part due to improved management of volume. Solid cash generation and our strong balance sheet remain important differentiators for the company. Our leverage ratio was 2.1 times for the quarter end, and we will continue to seek opportunities to further strengthen our balance sheet to enhance financial flexibility.

We are dedicated to organically investing in the business to elevate returns and create long-term value. To this end, we have been very prudent with our CapEx spending. Year to date, we have invested $596 million in capital expenditures and have lowered our expected CapEx spend range to $1.3 billion to $1.5 billion for 2025, down from previous expectations of $1.5 billion to $1.7 billion. At the same time, we remain steadfast in our commitment to returning cash to shareholders, and we returned $495 million to shareholders in the form of dividends during 2025.

Juan Luciano: Turning to slide 10. We have provided details to support our 2025 outlook. We have tightened our range and now expect adjusted earnings per share to be approximately $4 per share for the full year 2025. Tax and biofuel policy proposals introduced towards the end of the second quarter and beyond have now created market insight to incentivize higher biofuel and renewable diesel production levels. In June, the Environmental Protection Agency released its first renewable volume obligation or RVO proposal for 2026 and 2027 with favorable provisions for domestic feedstock.

In July, the tax reconciliation package signed by the administration improved and extended the 45Z biofuel producer tax credit an additional two years to 2029 and clarified that the credit is limited to fuels created from North American feedstock. With the favorable proposed RVO and finalization of the 45Z producer tax credit, soybean oil has rallied and board crush margins have improved. Combined with the focused actions of our teams on network consolidation and cost savings, we expect to be in a better position to capture opportunities as we enter the fourth quarter and move through the final months of the year. Let me provide some color on several assumptions for the second half.

We are closely monitoring customer demand and have embedded expectations for lower volumes in certain pockets and geographies in our guidance. With policy developments coming at the end of the second quarter, we had already booked a portion of our third-quarter business, which will limit our ability to take full advantage of higher expected margins from these developments in the third quarter. We expect soybean crush margins in the third quarter to be in a similar range to the second quarter.

We expect improved AS and O margins will primarily impact our fourth-quarter results, where we project global soybean crush margins to be in the range of $60 to $70 per metric ton and global canola crush margins to be in the range of $55 to $65 per metric ton. We also expect improvement in ag services in the fourth quarter as we expect strong crops in North America and a solid North American export season supported by increased trade policy clarity. We expect carbohydrate solutions to continue to be impacted by softness in starch demand for paper and corrugated box and higher corn cost in EMEA, related to corn quality issues.

Robust industry-wide ethanol production is expected to sustain pressure on margins, and we anticipate for the year 2025 a mid-single-digit decline in overall ethanol EBITDA margins compared to the prior full year. We anticipate continued improvement in nutrition through a focus on supply chain excellence, and in 2024, we had $231 million in insurance proceeds with $96 million in the third quarter and the balance in the fourth quarter. The third-quarter insurance proceeds were largest in CARB Solutions, and will impact third-quarter year-over-year comparisons in that segment.

Monish Patolawala: To close, we are making progress. My top priority coming to Archer-Daniels-Midland Company was to remediate the material weakness we identified. This quarter, we announced that we have successfully remediated the material weakness in internal controls for segment disclosures related to reporting, pricing, and measurement. Going forward, we will continue to focus on broader initiatives that will enhance our transparency and compliance processes while maintaining an effective operating environment. We have also aggressively acted on opportunities to improve operational performance and lower costs. And we are seeing through these actions that our assets are running better. We are benefiting from the restored and ramping operations at our Decatur East plant.

We also continue to work in a measured manner to simplify our portfolio to enhance focus on core competencies while unlocking additional capital to drive value and position the company for long-term success. In particular, on cash, we have delivered an improvement in working capital efficiency and we have taken actions to further optimize our CapEx. These efforts position us in our ability to navigate the current dynamic environment and reinforce our confidence in delivering on our commitments. Before I hand it back to Juan, I want to take a moment to thank all my Archer-Daniels-Midland Company colleagues for their dedication and focus in delivering for our customers, helping to create long-term value for our shareholders. Back to you, Juan.

Juan Luciano: Thanks, Monish. Let me wrap up by highlighting some of the ways we are setting our business up for the back half of 2025 and into 2026. Along with the positive signals we see that are providing momentum. Overall, we will continue to drive operational excellence through our focus on cost savings and cash and by simplifying our business through targeted portfolio optimization, including the recent examples I mentioned earlier in today's call. In carbohydrate solutions, we'll continue to drive operational excellence and closely monitor both consumer sentiment and broader economic signals while maintaining momentum around our decarbonization and cost reduction initiatives.

For nutrition, the ramp-up of Decatur East and an optimized portfolio will support continued recovery of the business while we focus on building upon our strong opportunity pipeline in segments like flavors and health and wellness. In ag services and oilseeds, our active network optimization and operations focus is positioning us with the agility to capture opportunities from improved market conditions in the back half of the year. Additionally, we're closely monitoring global trade developments, particularly in relation to China and broader export market dynamics, as we head into the critical US harvest season later this year. These factors will play an important role in shaping opportunities in the months ahead.

We are seeing selective market share increases that are offsetting sluggish markets elsewhere, and we're sharpening our focus on good risk management practices. Looking to 2025 and onwards, we see several reasons for optimism. Clarity in biofuel policy and legislative support for agriculture are creating a favorable environment for market access for our farmers and enhance Archer-Daniels-Midland Company's ability to deliver economic value to the broader sector. The foundational work we've done in 2025 sets us up for stronger operational momentum. Our investments in innovative spaces such as postbiotics, natural flavors and colors, and decarbonization position us to capture growth in high-potential markets.

We have recalibrated many variables as we navigate the current complexities, and our confidence in Archer-Daniels-Midland Company's resilience stems from the expertise of our team. Their ability to adapt to challenges and execute against our strategy has been evident throughout the year. We're a company built to endure cycles, and our unparalleled asset network combined with the ingenuity of our workforce ensures we remain a source of strength for our farmers, customers, and partners. As we move forward, our focus on self-help initiatives, execution excellence, and disciplined capital allocation will continue to drive value for our shareholders and position Archer-Daniels-Midland Company for success in 2026 and beyond. With that, let's open the line for questions. Operator?

Operator: Thank you. As a reminder, if you would like to ask a question, our first question for today comes from Andrew Strelzik of BMO. Your line is now open. Please go ahead.

Andrew Strelzik: Hey, good morning. Thanks for taking the question. 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. If I take that, does it make sense to as we start to think about 2026, 4Q as kind of a starting point? I know it's a bit of a bigger quarter, so we can make some mental math adjustments around that. But is there any reason why that kind of doesn't make sense to you? Thanks.

Juan Luciano: Thank you for the question. As you said or you are implying in your question, we see the improving and getting more clearer as we go into the second half. Of course, the first half has a lot of headwinds. The second half, with the benefits now of a little bit more clarity on RVOs and 45Z, we certainly see potential for soybean oil to be much more demanded, and that will be the preferred feedstock for North America. Unfortunately, by the time this was announced, we have already booked most of our Q3. So you will see the impact for us mostly in Q4.

So as such, it's probably gonna be something like, I don't know, 35-65 type of split between Q3 and Q4. If you think about what are the things that we have in Q4 coming from us, we continue with our improvement in cost position. We're gonna see an improvement in crush margins if all these RVO numbers are finally confirmed. We're gonna see the benefit of our yeast plant in nutrition being back into production. And we're gonna see better earnings from our services as we get into our system and probably from a global trade perspective as well. So we have high expectations for that quarter provided all these RVOs are confirmed.

In terms of 2026, probably too early, but most of the time, we said the rate that we exit 2025 becomes the rate that when we entered 2026. Whether that's gonna be multiplied by four, too early to speculate at this point. Sandra, a couple more data points. Two points point, one third, two third, split Q3, Q4. Secondly, just as you're modeling, just remember last year, we had $230 million of insurance proceeds. $96 million of it was in Q3, and the balance was in Q4. And you can see the segments. So in Q3, carbs will be the biggest on a year-over-year basis.

If crush margins don't move up or the replacement curve doesn't move up, that's another 15¢ headwind if the curve doesn't move. Corporate, usually second half is usually higher than the first half due to naturally seasonal items. We'll continue to drive our cost and cash initiatives that we have. Ethanol, when you think about ethanol, it's still lower on a year-over-year basis. While the second quarter was positive, it was still lower than the total than last year. And so we continue to see ethanol to be a little softer in the second half. All of that is currently baked into our guide except, of course, the headwind is if the replacement curve doesn't work.

And timing is another item that could move between quarters or where our mark comes at the end of the year. But hopefully, that answers your question.

Andrew Strelzik: Yep. That's very helpful. Thank you very much.

Juan Luciano: It's all good.

Operator: Thank you. Our next question comes from Ben Theurer of Barclays. Line is now open. Please go ahead.

Ben Theurer: Yes. Good morning. Thank you very much, Juan, Monish. Congrats on the solid results for the second quarter. I wanted to dive into the outlook for the nutrition segment in 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 the Decatur East over the last couple of quarters.

And as we rent this through 3Q into 4Q and then particularly 2026, where do you think, like, kind of, like, a current run rate is for that business on a stand-alone basis? Thank you.

Juan Luciano: Yeah. 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 in two pieces, if you take animal human nutrition, human nutrition is being driven by flavors, strong revenue growth, we are holding to our EBITDA margin, 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 terms of health and wellness, biotics has grown so far 9% revenue. So that's going very, very well. And we are very pleased with that.

And we will be releasing some data of studies that we perform in 2025. We're gonna be oh, or in the past, we would release it in '25 and '26. That will give much more opportunities for us to penetrate more applications, especially in the heat-treated postbiotic area where Archer-Daniels-Midland Company 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 plan down, was about $20 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, three or four years ago. And they've been executing on that. They've been executing for the last, I think, seven 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. Peace continues. 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. $100 million of specialty ingredient headwinds that we're not gonna have in 2026. The plan so far is running well. Since it started up back. So, so far, so good.

Ben Theurer: Perfect, Juan. Thank you very much.

Juan Luciano: Thank you, Ben.

Operator: Thank you. Our next question comes from Manav Gupta of UBS. Your line is now open. Please go ahead.

Manav Gupta: Monish, I just want a little bit of a clarification. I know you had been working very closely with SEC responding to all these queries. And now, basically, you're putting out a statement that the material weakness is no longer there. So am I are we to understand that you reached out to SEC, you gave them what they wanted, and then they did not come back with additional questions. So at this point, would it be fair to say that SEC is okay with your where your financials are being constructed? And what can also be done to make sure this never happens again, if you could just talk about those things? Thank you.

Monish Patolawala: Yes, Manav. I think that two different points that maybe I can make. Number one is, yes, we did remediate the material weakness. Quarter, and the team did a really heavy job. They had created if you think it's eighteen months that the company has worked on this, robust remediation plan. So we designed and implemented a lot of enhanced internal controls, especially in related to our intersegment policies, pricing, and measurement controls, which was the reason for the material weakness. We improved our training. We upgraded talent. We have tested these controls and write and we test them over multiple periods. And right now, we believe these are effective.

The way we do this, Manav, just for your benefit, is management tested. They have their controls. They test it. And then at the end of the day, we consult with the audit committee as well as our auditors to make sure that what we are doing has robust internal control. We have actively engaged our auditors while they're while the audit will not be complete. Till the 10-K is filed, auditors do have an obligation to make sure that what we are publicly disclosing is accurate as well as they feel good that our internal controls have been met.

So based on all of that we have made sure that our controls are working, we, as management, feel that the material weakness has been remediated. And as I said, it's in consultation with our auditors and the audit committee. I would say going forward, we will continue this journey. So we will continue to keep focusing on broader initiatives that will enhance our transparency and compliance processes while continuing to maintain an effective operating environment. So, hopefully, I answered your question, Manav. Is you know, this is based on a robust remediation plan, and we've tested it. And we feel that over the last few quarters that these heart controls have been effective.

And that's why we felt that we are in a position to remediate the material weakness this quarter.

Manav Gupta: Thank you so much.

Monish Patolawala: Thank you.

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

Heather Jones: Good morning. Thanks for the question. I had a two-part question on CRUSH, and the first part was just a clarification. Wondering when you say if the replacement curve doesn't move up from here, are you referring to physical? And then secondly, more big picture, question. If the RVO SREs play out as benignly as expected, just wondering the benefits to your biodiesel business, but more importantly, to your global crush business. When we think about how that business was doing in 2022-23, how would you think about how Archer-Daniels-Midland Company would be positioned going into '26 and '27? If that plays out you know, if the if the policy picture plays out as we're expecting. Thank you.

Monish Patolawala: So just a quick one. Heather, to answer your question. When we think about the replacement curve, yes, we do look at Bold Crush, but at the end of the day, margins have to show up on the cash side, and that's the curve that I've mentioned. So we're combining both, and that's where I came up with the math that I gave you. Now that'll move every day, depending on how markets move, but this is where we are at this point in time.

Juan Luciano: Yeah. Heather, on a on the big picture perspective, as you said, the RVOs have been very positive. For soybean oil, and that can certainly increase demand. There are gonna be adjustments. If you think about at this point in time, we or in the first half, we would exporting soybean oil, and we probably won't do that. And some of our customers are already some of our food customers are we are already offering different mixes of products. Of course, we have peanut oil and cotton oil and rapeseed oil, and we have many different blends because soybean oil will be a preferred feedstock for biofuels.

So I think that we will adjust and we will maximize the profitability for the envelope. If you think about where the margins will fall, I think initially, we will probably have to see RINs popping up. We will see the probably the benefits landing in the crash, because we're gonna have these very strong legs in terms of oil. But also in biodiesel. I think refining will probably be a little bit squeezed refining margins because of all the pretreatment capacity, and we'll have to see how many people run these pretreatment capacities, how many of the refineries come on stream. But that's the way we see it.

We feel very comfortable that the business the places where we have crashed where you have Brazil, and you're gonna have a B14 to B and then the progression of increasing that. The US will have the RVOs. And then in Europe, Germany has abolished the double counting, which also is gonna be good for rapeseed oil. So all in all, you can see about 6 million tons of extra soy extra feedstocks coming into the biofuel area that you are about 800,000 tons of growth in the food, it gives a very good perspective for this. You will see oil taking about 50% of the share of the crush, which hasn't happened in quite a while.

And every time that happens, of course, margins pop up. So we'll have to put pencils to all that when the RVOs are done. But I think if all this is confirmed and the SREs are kept in check, I think it plays very well for Archer-Daniels-Midland Company going forward.

Heather Jones: Thank you so much.

Juan Luciano: Thank you.

Operator: Our next question comes from Pooran Sharma of Stephens. Your line is now open. Please go ahead.

Pooran Sharma: Good morning, and thanks for the question. I was wondering if maybe we could get a little bit more detail on the network optimization plan. I know you mentioned some detail in your prepared remarks that there's some room to go. And so was, just wondering where do you see the most room for kind of your further optimization? Is it more ag services? Processing? Would just love a little bit of color there. And then also how does this optimize your processing kind of OpEx? Like, should we be looking at should we be looking at, like, a $5 per metric ton improvement? Or how should we think about it from a crush perspective?

Juan Luciano: Yeah. Thank you. Yeah. I think that performance improvement around operations is one of the things that we highlighted early in the year we were going to focus on, and we are delivering on that. I'm very proud of the improvements of the team. We were preparing our footprint for all these potential RVO improvements and the ability to have to crash at full rates going forward. So, thankfully, we have the beans to do that, and we needed to have the plants in good shape. So we spend a lot of time optimizing the network.

I'm pleased to report, as we said in our prepared remarks, that some of our unscheduled downtime is, you know, in on RACER, we haven't seen since February. So it's been 2020. I'm sorry. Not February. It's been it's been very good in that regard. I would say selectively, we tend to look at we have many plans and we tend to look instead of having individual plans and pockets of that. We tend to look at the network and what optimizations can we do. To keep plans or expanding plans that are that have lower cost position and maybe redialing plants that have a challenged cost position. We do that across the portfolio.

We've done it in milling, we do it in oilseeds and ag services. In ag services, we constantly shifting the elevators that we own. At times, we sell them. At times, we trade them. We swap them for others. At times, we shut them down or we sell them. The same happened with the facilities. We announced the cursor shutdown. We announced in the joint venture of Lubbock which is for cottonseed oil. So you're gonna see that no spectacular announcement, but to continue a continued trickle down of optimization. We have a large footprint. And we have targets to optimize our cost base. I'm not gonna disclose them right now.

I want to see more stability of the run rates and we still have a few things that we need to get done before maybe we give those numbers. But needless to say, we're very happy with how our plants are operating in the face of, again, hopefully, a few years of very high crush rates.

Pooran Sharma: Great. Thank you.

Juan Luciano: Thank you.

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

Steven Haynes: Good morning. Thanks for taking my question. Wanted to come back to something on the RVO. It seems like since the proposal RD margins have kind of remained pressured and almost all the value has kind of accrued back to the crush complex. So would be curious to hear some thoughts on why you think that is and whether or not you would expect that to kind of remain that way. Thank you.

Juan Luciano: Yeah. Well, this is a very difficult period. You need to understand. We were given an indication of what it may happen. Then there are a lot of rumors one day or the other that are shifting this because the whole numbers have not been confirmed. So although we feel optimistic about the future, we are in an uncertain period until the final numbers are clarified. What are the final RVOs? How are we gonna treat SREs? So I would say we shouldn't take a lot of cues from right now what's happening. I think that we know what happened with industry crush margins when oil in the past have taken about 50, 52% of the crush.

So I wouldn't read that much right now. Until we get more clarity. It is still this is still a forecast. And I think you need to see we have produced very little to comply with the mandates in the first half as an industry. So we will have to pick up those rates in the second half when all this clarity is given. So we see accelerated production, and you're gonna see RINs reacting first. So at this point in time, there's still I mean, they are much bigger than much higher than they were last year. They moved, like, from 40¢ to, you know, $1.15 or $1.16 or whatever they are.

So but we still have rooms to go there. So I think that we're watching it closely. As I said, in the meantime, we're getting ready. There is a big crop coming. Our plants are ready to crush. So when we have the indication, we are well-positioned to do so.

Steven Haynes: Okay. Thank you.

Juan Luciano: Thank you.

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

Salvator Tiano: Yes, thank you. Firstly, if you can I may have misunderstood or missed it. If you can clarify a little bit the $100 million benefit from the Decatur restart? Is that 2026 versus 2025? Or the eventual benefits, includes $20.25 tailwinds. But my primary question is, on high fructose corn syrup, you know, we also saw the news a few weeks ago about Coca-Cola potentially shifting away into cane sugar. I'm just wondering if you can help us a little bit better understand how big this business is for you in terms of perhaps anything like volume, revenues, EBIT, as well as what is the risk if other companies follow suit to the industry?

Juan Luciano: Salvador. So what's the first question? The 100. 100,000,000. Oh, yeah. The Decatur. It's gonna clarify that. Yeah. Yes. Yes. It's yeah. Decatur cost us basically when it was shut down, it's about $20 to $25 million per quarter. So Decatur is back up now. So you should consider that starting Q4, for a full quarter, that's gonna be an impact of run rate from that moment onward.

And then, hopefully, if it continues to run and nothing happens, you will put that into but I would say for 2025, you should consider that we have, like, three quarters of that cost still with us because the plant is ramping up, and we still probably have material that we have bought that needs to go and run through the cost of goods sold. On the high fructose corn syrup, listen. This is we have relationships here in this market that go back decades. With the key players. And we have relationships at every level. And at this point in time, we have no indication of any changes in their order pattern or their projections.

Nor have we seen any volume changes. Based on any announcement. So I would say you know, in that regard, we are not planning on any change. I would say that this business has been working on what we call the fight for the grind. We make more than 22 products in our wet mill. And you think about it, high fructose corn syrup has been a slight declining one or one and a half percent since I've been here. So, and we've been managing to have a CARB solution that is very stable based on optimization, product mix, development of new products, like when we highlight, biosolutions, product like glucose, pro for fermentation.

So there are a lot of opportunities for us to do. This is a big market, and we plan to continue to supply. But we've been servicing the beverage industry again for multiple decades. And we always been very flexible and adjust to the conditions. At times, it's with natural colors or flavors. At times, it's with high fructose corn syrup. At times, it's with other solutions to reduce sweetness. So we will continue to be a major player in that. But at this point in time, I want to tell you there's no change in our volumes in high fructose corn syrup.

So just one piece I wanted to just one I wanted to add on the specialty ingredients to Decatur East. You know, as Juan mentioned, the operating improvement is at $20 to $25 million. You know? At the same time, we have seen higher insurance premiums. Of course, we'll have to see where utility costs, etcetera, keep going and driving the cost out that the team is doing. So just keep that in mind. At the end, when we come to 2026, give you the right guidance.

Salvador, maybe also I would say in terms of the segments in beverage and snacks and all that, we mentioned in our prepared remarks, we've seen some pockets of sluggish demand that I think that you can tell that there is a consumer out there that there is a little bit more stress and maybe making more prudent choices with their spending. So I would say across Archer-Daniels-Midland Company, whether it's on snacks, on sweet, we have seen pockets of softness that think our team has been very good to neutralize or navigate around, but there is some cautiousness from a consumer perspective.

Salvator Tiano: Thank you very much.

Juan Luciano: You're welcome. Thank you.

Operator: At this time, we currently have no further questions for us today. So that concludes today's conference call. Thank you all for joining. You may now disconnect your lines.