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% and cash flow from operations before working capital changes was $2.1 billion year to date [4] - Adjusted earnings per share expectations for the full year 2025 have been revised down to a range of $3.25-$3.50, down from approximately $4 per share [12][21] Business Line Data and Key Metrics Changes - The Services & Oilseeds (AS&O) segment operating profit was $379 million, down 21% compared to the prior year quarter, primarily due to the deferral of U.S. biofuel policy [14] - Ag 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, primarily due to a decline in global demand for sweeteners and starches [16] - 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, with volumes roughly flat [17] Company Strategy and Development Direction - The company is focusing on operational excellence, portfolio optimization, and cost savings through a self-help agenda, targeting $200 million-$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 natural colors, as well as postbiotics [10] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging industry-wide operating environment but remains flexible and focused on long-term growth [4] - The deferral in U.S. biofuel policy has led to lowered expectations for full-year 2025, but management remains optimistic about 2026 due to potential improvements in market conditions [11][13] - The company is prepared for gradual improvements in margins as clarity on biofuel policies is expected [76] Other Important Information - The company has maintained a strong balance sheet and disciplined capital allocation, allowing for continued investments and shareholder returns [6] - The company has reduced inventory by $3.2 billion year to date, improving working capital efficiency [20] Q&A Session Summary Question: Can you help reconcile the sequential decline in the third quarter for crush? - Management explained that soybean crush rallied sharply post-RVO announcements but then moved lower due to various factors, including a decrease in U.S. acres and uncertainty about biofuels policy [30] Question: Can you clarify the insurance gains? - Management confirmed that insurance proceeds in the fourth quarter are expected to be funded half by captive insurance and half by third parties, with total proceeds lower than the previous year [35] Question: What are the benefits of the JV with Alltech? - The JV aims to pivot towards more specialty products in Animal Nutrition, combining the strengths of both companies to enhance operational improvements and synergies [40] Question: How does the company view the clarity on biofuel policy? - Management expressed optimism about the eventual clarity on biofuel policies, which is expected to positively impact margins and demand for domestic feedstocks [76] Question: What is the outlook for Ag Services? - Management noted that while Q3 was strong, the outlook for Q4 may be softer due to ongoing uncertainties regarding trade deals and farmer selling behavior [68]