ADM(US:ADM)2025-11-04 14:32Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $0.92 and total segment operating profit of $845 million for the third quarter [4] - The trailing four-quarter adjusted return on invested capital (ROIC) was 6.7% [4] - Cash flow from operations before working capital changes was $2.1 billion year to date, down by $254 million compared to the prior year [19][20] Business Line Data and Key Metrics Changes - Ag Services & Oilseeds (AS&O) segment operating profit was $379 million, down 21% year-over-year, primarily due to the deferral of U.S. biofuel policy [14] - AX services subsegment operating profit increased by 78% to $190 million, driven by higher export activity in North America [14] - Carbohydrate Solutions segment operating profit was $336 million, down 26% year-over-year, with starches and sweeteners subsegment profit down 36% due to declining global demand [16][17] - Nutrition segment revenues were $1.9 billion, up 5% year-over-year, with operating profit increasing by 24% to $130 million [18] Market Data and Key Metrics Changes - The company achieved the best total export volume for September since 2016, which helped offset some weakness in the cash business [7] - Global soybean and canola crush execution margins were significantly lower than the prior year quarter, particularly in North America [15] - Ethanol EBITDA margins per gallon for the quarter were approximately double compared to the prior year quarter [17] Company Strategy and Development Direction - The company is focused on operational excellence, portfolio optimization, and cost savings, targeting $200-$300 million in cost savings for 2025 [9][21] - A joint venture with Alltech in animal nutrition aims to transition the business into higher-margin specialty ingredients, expected to commence operations in 2026 [9][40] - The company is investing in innovation, particularly in flavor systems for energy drinks and postbiotics, to drive growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, anticipating a more constructive environment for the industry and American farmers, contingent on clarity regarding U.S. biofuel policy [13][46] - The company lowered its full-year 2025 adjusted earnings per share expectations to a range of $3.25 to $3.50, down from approximately $4 per share [12][21] - Management noted that the current operating environment is challenging, with uncertainty around biofuel policy impacting demand [11][27] Other Important Information - The company announced its 375th consecutive quarterly dividend [6] - Strong cash management has allowed the company to continue investing in areas of innovation [9] Q&A Session Summary Question: Can you help reconcile the sequential decline in the third quarter for crush versus previous quarters? - Management explained that soybean crush rallied sharply post-RVO announcements but then moved lower due to various factors, including uncertainty about biofuels policy [30] Question: Can you clarify the insurance gains and their funding sources? - Management confirmed that half of the insurance proceeds are funded by a captive insurer, with the other half expected from third parties [35] Question: What are the benefits of the joint venture with Alltech? - The joint venture aims to combine the strengths of both companies to pivot towards higher-margin specialty ingredients in animal nutrition, with production expected to start in 2026 [40] Question: How does the company view the clarity on biofuel policy? - Management indicated that clarity on biofuel policy is crucial for future margins and operational planning, with expectations for gradual improvements once policies are finalized [45][76] Question: What is the outlook for ag services in the fourth quarter? - Management noted that while Q3 was strong, the outlook for Q4 is more subdued due to ongoing uncertainties in trade and biofuel policies [66]