Good morning, and welcome to the Archer Daniels Midland Company First Quarter 2018 Earnings Conference Call. All lines have been placed on a listen-only mode to prevent background noise. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Mark Schweitzer, Vice President, Investor Relations for Archer Daniels Midland Company. Mr. Schweitzer, you may begin.

Thank you, Lindsey. Good morning, and welcome to ADM's first quarter earnings webcast. Starting tomorrow, a replay of today's webcast will be available at adm.com. For those following the presentation, please turn to slide 2, the company's Safe Harbor statement, which says that some of our comments constitute forward-looking statements that reflect management's current views and estimates of future economic circumstances, industry conditions, company performance and financial results. These statements are based on many assumptions and factors that are subject to risks and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning the assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements as a result of new information or future events. On today's webcast, our Chairman and Chief Executive Office, Juan Luciano, will provide an overview of the quarter. Our Chief Financial Officer, Ray Young, will review financial highlights and corporate results as well as the drivers of our performance in the quarter. Then Juan will provide an update of the progress of our strategy and discuss our forward look. And finally, they will take your questions. Please turn to slide 3. I will now turn the call over to Juan.

Thank you, Mark. Good morning, everyone. Thank you all for joining us today. This morning, we reported first quarter adjusted earnings per share of $0.68. Our adjusted segment operating profit was $717 million. ADM executed exceptionally well in the first quarter, and we harvested the benefits of the strategic actions we took over the last few years delivering the strong results. As you remember, last month, we realigned our business units to further accelerate our growth efforts, and each of those business teams performed well this quarter. In Origination, the Global Trade business delivered their fourth consecutive profitable quarter, and they have best first quarter in four years. Our Oilseeds team made the right investments and put the right pieces in place, so they could run at record volumes and capture the benefits from margin opportunities. In both of those businesses, certain mark-to-market timing effects, which should reverse in the coming quarters, mask the underlying strength of the team's performances during the quarter. In Carbohydrate Solutions, our strategic expansions and investments are continuing to deliver results and our Nutrition business had another quarter of top line growth including double-digit year-over-year growth from animal nutrition. Looking forward, we are focusing our growth efforts on five key platforms – animal nutrition, bioactives, carbohydrates, human nutrition and taste, as well as geographic regions that are seeing increasing consumer demand. And through Readiness, we continued to reduce costs, we're enhancing our agility, streamlining and standardizing our processes, and implementing innovative technologies for our businesses and our customers. When taken together, the continued execution of our strategic plan combined with our first quarter results, improving market conditions, and the benefits of U.S. tax reform lead us to be even more confident about 2018. Later on this call, I'll discuss further the outlook for our business. Now, I'll turn the call over to Ray.

Okay. Thanks, Juan. Slide 4 provides some financial highlights for the quarter. Adjusted EPS for the quarter was $0.68, up from the $0.60 in the prior-year quarter. Excluding specified items, adjusted segment operating profit was $717 million, up $39 million from the year-ago quarter. We had some unique factors impacting both our reported and adjusted results for the quarter. We recorded a positive net operational impact related to the retroactive application of the 2017 biodiesel tax credit, which was worth about $120 million. We also had significant negative mark-to-market timing effects related to hedges for future cash contracts in Origination and Oilseeds, which were worth about $150 million in aggregate. So these two impacts, more or less, offset each other in the quarter, particularly on an after-tax basis. I will be further elaborating on these impacts later. The effective tax rate for the first quarter was approximately 15% and was favorably impacted by U.S. tax reform, the 2017 biodiesel tax credit, geographic mix, and several favorable discrete tax items, including a $14 million adjustment to the transition tax recorded in the fourth quarter. If the biodiesel tax credit and the favorable adjustment to the transition tax were excluded, the effective tax rate would be about 19%. After considering our first quarter results, we expect our 2018 calendar year effective tax rate to be between 16% and 18%. Looking ahead, as an ongoing run rate after 2018, we expect the effective tax rate to be between 17% and 20%. This is below the 20% to 23% guidance we provided to you at the end of the fourth quarter, as we have further refined our estimates, taking the consideration a better forecast of the new provisions in the tax code. Our trailing four-quarter average adjusted ROIC of 6.4% is 15 basis points…

Thank you, Ray. Please turn to slide 13. Before we talk about our strategic accomplishments in the first quarter, I would like to take a moment to explain a little bit about some of our recent changes and focus. First, we announced in the first quarter the realignment of our business segments to reflect the company's new operating structure and our continuing evolution. Given our strategies and priorities, our realigned business units will allow for better synergies and utilization of resources and better reflect how we're running now our businesses. For example, moving wheat milling into our new Carbohydrate Solutions business means our two starch processing operations now can work more closely together to develop and sell products. And it offered cost and efficiency synergies as well, but the corn business impressive operational excellence expertise can benefit our milling operations. Moving animal nutrition into the Nutrition business unit means that our pet treat team, which grew significantly with last year's addition of Crosswind Industries, will have the opportunity to work more closely with our flavor and color experts at WILD to create products for this fast-growing market. Bioactives and nutrition will also benefit from being in the same business, as the continued move toward personalized nutrition is closely related to increasing health consciousness among food and beverage consumers. Therefore, the time was right to make the changes in the first quarter and our first quarter reporting reflects the realignment. To assist you with comparisons, we have included a recasting of last year's quarterly segment operating profit under the new segmentation in the Appendix. Looking forward, we're going to continue to drive growth by focusing our efforts on five key platforms that we believe can lead to stronger earnings and returns. They are animal nutrition, bioactives, carbohydrates, human nutrition, and taste.…

Our first question comes from the line of Heather Jones with Vertical Group. Your line is open.

Good morning.

Good morning, Heather.

Good morning, Heather.

I had a quick clarification question. Did you say in Oilseeds that you expect Q2 to be substantially better than last year, but only a portion of the Q1 mark-to-market to reverse?

Yeah, that's correct.

Okay.

And well, actually – we actually expect roughly half of the mark-to-market to reverse in Q2 related to Oilseeds. In the case of ag – Origination, that's going to be more of a Q3 impact, but with respect to the timing of impacts of Oilseeds, roughly half will reverse in Q2.

And when I'm thinking about the year-on-year swing for Q1 in Oilseeds, the mark-to-market, so it's about $110 million this year, but wasn't it a help in Q1 of 2017, so the year-on-year swing was even bigger than $110 million?

Yeah. It was a favorable impact last year. We didn't outline it because it is less than normally a $50 million impact we would online, but it was a small favorable impact last year.

Okay. I wanted to talk to you about the sustainability of the soy crush margin. There seems to be some belief out there that this is just a function of Argentine weather, and that next year we could see a return to more depressed environment like 2017. I was wondering if you could speak to what you think the drivers are of this improved environment and your view of the staying power.

Yes, Heather. The drought in Argentina certainly contributed to the increase in soy crush margins, but we foresaw these crush margins expanding even before the extent of the Argentine drought was known, and it was in the several factors. First of all, there has been not only a drought issue in Argentina, but a little bit of a structural change with the monthly reduction in the soybean export tax that had effectively created a curve in the market and that began in 2018. And also, the U.S. tariff that has been placed on Argentine biodiesel effectively stopping the flow of Argentine biodiesel into the U.S. has changed a little bit the dynamics internally. So, the Argentine crusher has become more disciplined. And I think we see less of mill being subsidized by biodiesel from Argentina, if you will. So, that's one factor there, Argentine dynamic outside the drought. And that's a more permanent dynamic that will stay with us. I think also the Brazilian origination industry has become more rational, following an exceptional challenge in 2017. I think we all learned about that year and we all reduced our take-or-pay commitments, and we are not facing the same mismatch between farmer selling and customer buying that we faced. Demand continues to be strong around the world. We think in this year about 4% increase. And we don't see in the first quarter the same impact we saw last year of having to absorb (00:32:28) that we had last year. So, in that sense, the power of substitute to hurt this year has been reduced and will be into the future. We also – we have seen that with all these changes, the global buyer has become less hand-to-mouth. Over the last few years, there has been a big destocking. And that situation forced us to be more on the spot, if you will, when we cannot buy a book. Now, with the refill with more of a scarcity value returning to the market, the global buyer wants to lock in their cost, and that resulting in better operating environment for us because we can position better. We can work our optionality better. When you add all these, plus everything that we have been doing in terms of cost control and swing capacity in our facilities, we feel very strongly about not only the sustainability of this margin, but the sustainability and improvement of our performance in the years to come.

Awesome. Thank you so much.

Thank you, Heather.

Our next question comes from the line of Adam Samuelson with Goldman Sachs. Your line is open. Adam Samuelson - Goldman Sachs & Co. LLC: Yes. Thank you. Good morning, everyone.

Good morning, Adam.

Hey. Good morning, Adam. Adam Samuelson - Goldman Sachs & Co. LLC: So maybe continuing on Oilseeds, and I don't want you to just lose some of the confidence and some of the drivers there. I think your exact phrasing was significantly ahead of 2017. And I guess I'm trying to frame it given board crush margins today and even forward crush margins today that sit near multi-year highs. And thinking about kind of banding kind of how much improvement you could actually realize in your base results, especially given some of the weakness in cash markets and South American Origination that you experienced last year that seems to be reversing.

Yes. As I described before, I think we're not only going to see an improvement in Origination in South America. (00:34:34) market part is we have improved and our team, but also in Oilseeds. And listen, we have confidence that we could see Oilseeds achieve about $1 billion or north of $1 billion of operating profit in 2018 even after excluding the credit of the retroactive application of the 2017 biodiesel tax credit. So, that's a significant increase over the about $850 million of adjusted OP that we achieved last year. So we feel very good about it. Adam Samuelson - Goldman Sachs & Co. LLC: Okay. And just to be clear on that, I mean ADM crushes 30-or-so million tons a year of soybeans, $150 million increase in profit even exclusive of the biodiesel tax credit. I mean the board crush margins have expanded significantly more than that, so I'm just trying to make sure I'm not thinking about that wrong or where the deltas are on the negative side that would be tempering some of that year-on-year improvement.

Yeah. Don't forget the South America and Brazil Origination is a significant turnaround versus last year. So when you look at the Oilseeds segment, you're not looking solely at the crush margin. You also need to look at the South America, particularly the Brazil Origination. And in the first quarter, it is a significant turnaround, and we expect that to continue over the rest of the year as well. Adam Samuelson - Goldman Sachs & Co. LLC: Okay. And then just a quick question on ethanol, and I think, Juan, you had some pretty tempered comments on the second quarter and maybe for the balance of the year. I mean the margin environment has – I mean it's not great, but it seems like it's actually modestly better than it was a year ago. The inventory picture and production numbers have been reasonably constructive for the industry in the last few weeks. Could you talk about how you think about ethanol over the balance of the year and some of the puts and takes against that outlook?

Sure. Yes. Of course on the positive side, Adam, we see favorable blending economics both domestically and globally. And that will lead to strong exports. At the beginning of the year, we were probably thinking about 1.8 billion gallons of exports. Now with China, we're probably thinking more in the range of 1.6 billion gallons. So you are right. We are entering the driving season with inventories that are lower than last year, so that is on the positive, but we will see. We'll have to see the strengths of domestic gasoline consumption in the driving season given prices. Prices are kind of creeping up for gasoline, so we'll see how that impact demand. And we continue to see exports going to Brazil, and as I said, with the exception of China, we export – I think the industry exported like about 100 million gallons in the first quarter to China, but we're probably estimating 200 million gallons less for the rest of the year. So a lot of volatility and I will say there has been some increase in margins over the recent weeks, but everything will be determined on how do we go through the driving season and the rest of the year. And as I said, there is some optimism in the fact that we're entering the season with a little bit lower inventories on last year. Adam Samuelson - Goldman Sachs & Co. LLC: Okay. That's helpful color. I'll pass it on.

Okay. Thanks.

Our next question comes from the line of Robert Moskow with Credit Suisse. Your line is open. Robert Moskow - Credit Suisse Securities (USA) LLC: Hi. Thank you for the question.

Hi, Rob. Robert Moskow - Credit Suisse Securities (USA) LLC: Hi. You certainly talked about some of the structural improvements going on in Argentina to make the crushing market more favorable going forward and also the reduced take-or-pay kind of activity. Can you speak also about farmer selling in Latin America or in Brazil in particular and is there something structurally improving there as well? It would seem to me that they would – the farmers there would continue to have a pretty good negotiating pattern and perhaps the Argentinian farmers would as well regardless of what's going on with the weather in Argentina. Are these things related to the crushing discipline or is it something separate?

I would say in Argentina, farmer selling remained historically slow. And I think at this point in time, it will continue to do so. We see the farmer has sold – I mean, has priced about 20% of the crop, which is about 8 million tons. Obviously, it's a smaller crop and prices have come up because the crusher needs to entice the farmer to sell in Argentina at this point in time. But I will say, in Argentina, it's going to be a little bit about interest rates, inflation, devaluation of the peso, and the farmer will be playing with that. So we expect that these carry that to a certain degree – the government has put into the market will continue to make the Argentine seller a slow seller. In Brazil, we have seen farmer selling. At this point in time, they price probably about 56% to 60% of their crop versus about 44% a year ago. So we've seen good farmer selling actually in Q1 and during the first weeks of Q2. Rallies in the market and obviously devaluation of the real has brought the farmer to market, so we will have to evaluate how it goes. But so far, the start of the year have played that way. Robert Moskow - Credit Suisse Securities (USA) LLC: But do you see any structural changes in the Brazilian farmers' ability to delay selling or if it's – or not?

Not any significant change versus last year. No, I would say. No. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. Can I ask the last question? Do you have a rough estimate for what animal nutrition's profits are on an annual basis?

Yeah. I think that when you look at the pro forma, we kind of showed you kind of what last year's number was, which I think was about – roughly about $20 million. I think you should expect that's going to improve because of the improvements that have been made in the – particularly the lysine business. We kind of continue to grow that particular business. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay, because you have $23 million in first quarter alone, so...

Yeah. So, that's one thing. We should actually expect a pretty strong growth in the animal nutrition business on a calendar year basis compared to 2017. Robert Moskow - Credit Suisse Securities (USA) LLC: Got it.

Rob, the improvement that we've been talking on lysine all these – for the last year has been significant – have been significant. And you will see a big acceleration in animal nutrition results over time. Robert Moskow - Credit Suisse Securities (USA) LLC: Great. Okay. Thank you.

Welcome.

Our next question comes from the line of David Driscoll with Citi. Your line is now open.

Great. Thanks. And good morning.

Good morning, David.

Wanted to follow up on the oilseed crush questions and just maybe because we've had such a substantial spike in margins, can you guys just talk a little bit about the hedging philosophy on how this works? Like, we're already here into the second quarter. What kind of business is done at these really terrific spot margins versus maybe the team hedged it many months ago for the second quarter at lower margins? I think we're all maybe very interested in that particular point because I think it starts to give us information as to how we think about the profit potential of these businesses as time progresses. I'd also be curious about how you think about hedging Q3 and Q4. Can you even do it? Is there enough liquidity in the market to hedge at this time?

Yeah, David. Normally in our oilseeds crush operation, we do run hedges. We do actually try to lock in margins in the future. The degree that we lock in is a function of our outlook – our perceptions in terms of supply/demand and how margins move. I mentioned to you that a lot of the timing effects will reverse in the second quarter, so that actually gives you an indication that back in the fourth quarter we did lock into quite a bit of margins related to the second quarter and that will unwind. The rest of the other 50% that will unwind, that will unwind over the course of third quarter, fourth quarter and a little bit in 2019, so that gives you a sense that we're always going to be hedging more than nearby and then less on the (00:44:07). But as we pointed out, I mean (00:44:11) the mark-to-market, this is actually very good news. And it tells you that the forward margins look very, very healthy. So the fact that we have a lot of that unhedged, we will be able to benefit from that type of margin in the future when we actually execute. And actually, with the higher margins, we are continuing to hedge, so we are putting on more hedges as we kind of go through every quarter.

Do you have good visibility into the back half of the year then because of the margins – sorry, because of the hedging program? Is it fair to say? I mean would it be north of 50% of the other volumes? Is there any kind of ballpark? I mean I understand proprietary, but we're all struggling here with how we think about the model in Q3, Q4 and a lot of this related just to your strategies on the hedge.

Yeah. I mean we're not necessarily going to go through the specifics in terms of how much we're going to hedge, but we do – I mean just the fact I pointed out that we do have some mark-to-market timing effects in Q3, Q4 indicates that we do have hedges out there.

Okay. I'll leave it there on the Oilseeds one. Just a follow-up on ethanol. We do calculate margins here that are actually reasonable. And just can you explain again why – I didn't understand why you're so – I don't want to say, I don't know the right word – concerned is, but it's a year-on-year negative comparison versus the year ago. And the environment here feels good. Did ADM – again maybe it's a heading question again. Did you guys lock in ethanol business some time ago before we saw the margin structure here lift up?

No. No, David. Maybe the commentary is relative to the other segments. When we were talking about 2018 and how confident we feel about the results being much better than 2017, we see very strong origination comp versus the previous year, and we're going to go up in every segment in origination year-over-year. We see the strengths on Oilseeds, and not only crushing, but also Origination in South America versus the previous year. We think we're going to double-digit growth in Nutrition, and we continue to see very strong sweeteners and starches business. So my point is the only question mark, if you will, in the environment is the ethanol. And especially, given that the duties that China put will reduce the volume on that. So, coming into the year, we thought very strong export will tip off, if you will, and make the margins expand into ethanol. Now, we're going to have to deal with 200 million gallon less of that. And that's why I've been a little bit more cautious. But probably this is relative to how optimistic we are for the rest of our business, if you will.

Okay. I'll pass it along. Thank you.

Okay.

Our next question comes from the line of Ann Duignan with JPMorgan. Your line is open.

Yeah. Hi. Good morning.

Hi, Ann.

Good morning, Ann.

Back to – good morning. Back to Oilseeds, are you running at capacity or do you have room to increase volumes going forward?

We were running at capacity, I would say, March – all the way to March. And then April, we started a little bit with maintenance – with seasonal maintenance in this time of the year. So, that's the dynamic. But before that, we were probably running north of 95%.

Okay. And that's global or U.S.?

No. That was U.S.

U.S. Okay. And then can you talk a little bit about Wilmar? Wilmar is one of the largest crushers in China and it imports most of its beans, I presume that that's through your joint venture. Can you talk about the dynamics and how that relationship might change should the Chinese put a tariff on imported soybeans?

Yeah. So, first of all, Wilmar is a very diversified company. It certainly has a big palm oil and tropical operations, and has developed over the last few years a big consumer products business in China. So it is less exposed of – to soybean crushing than maybe people give them credit for. I would say, if all this U.S.-China trade dispute end up not being resolved, and in June we see 25% duties on beans, I think you will see probably an impact on the volumes of Wilmar crushing because basically China will be buying more expensive beans and soybean meal will become a little bit more expensive and there will be some impact on demand. So I expect capacity utilization to be reduced a little bit. I don't know to what extent. Of course, we know that Brazil exports about give or take 70 million tons of beans and China imports about 100 million tons, so there is a gap there. But at the end of the day, that's the impact we are seeing that potentially will have reduced capacity utilization a little bit in Wilmar.

It's also important to note that Wilmar is probably one of the most efficient crushers in China. And so, whenever there's going to be more input price pressure, they will on a relative basis do better just due to the fact that they have a very, very efficient cost structure.

Okay. I appreciate the color. And if I could just ask one quick follow-up philosophical one, you noted one that part of ADM's vision is to provide better nutrition for consumers. Where do sweeteners and starches fit into that vision or that mission?

Yes. We have a business that has some components of healthy nutrition and we have some parts that are more related to indulgence and fun. So there are some products like high fructose corn syrup that goes into products like carbonated soft drinks that they have a place in nutrition and with moderation they can be consumed as part of our diet. The business as you heard us saying for many, many years has been working on what we call the Fight for the Grind, which has continued to bring other things to do to be produced out of corn and that's why the starches piece of the business continue to grow. So it's part of our portfolio. It may not grow as fast as other parts of the portfolio, but it's part of our portfolio, and it's a healthy part of it.

Okay. Thank you.

Thank you, Ann.

Our next question comes from the line of Michael Piken with Cleveland Research. Your line is open.

Yeah. Hi. I just wanted to circle back to your operational synergies target, and you guys said you might be able to do in excess of $200 million. Could you provide a breakdown a little bit by segment and how much you might be able to exceed that number?

Hi, Michael. Listen, I don't have a breakdown of the whole synergies per the four segments, but in general they are very much allocated, if you will, or they can from the size of the assets. So, normally, in every year, corn tends to take about half of everything we save because they have the biggest facilities. I think Oilseeds has done very well this year, and you're going to see maybe 25% from Oilseeds. And then, if you will, the rest of the 25% is split between Nutrition and Ag Services, give or take.

Okay. That's helpful. And how much in excess of $200 million do you think – you said you guys are running ahead of $200 million. I mean how much upside is there?

It probably may be 10%, 20% upside to that. We were very pleased because, as you know, some of these projects are CapEx-related. And we reduced the amount of CapEx for this year. So we were thinking maybe $200 million will become a difficult target without the ability to do CapEx. But kudos to our operation teams because they look at the pipeline and they found $70 million of run rate with some capital restriction. So we are very pleased about the start of the year and that gives us hope and confidence that we will exceed the $200 million. We have developed – this has become part of the culture. We've been doing this for the last five years. And over the last four or five years, we have saved about $1 billion run rate in this operational excellence. And when we think about going forward, Michael, on Readiness in which we are not only looking at performance excellence for our plants, but also for the whole company, we think that the Readiness programs, and that's why we're putting so much emphasis on it, has probably another $1 billion of savings ahead of us and so – over several years. But we see that that $1 billion that we achieved over the last four years, we have another $1 billion ahead of us. And this start of the year with $70 million run rate in the first quarter give us even more evidence that that is highly achievable.

Okay. Great. That was really helpful color. Just shifting gears, maybe you could talk a little bit in terms of WILD Flavors, and I know 2Q is seasonally the strongest period of the year. But as you sort of look out maybe even a little bit more longer term, I mean what type of revenue and EBIT growth rate should we be thinking about over the next couple of years for WILD Flavors?

Yeah. So, one of our main tenets (00:54:56) in WILD Flavors is that we are providing natural flavors and second that we are focusing on providing total ingredient solutions. So, that value proposition is resonating very well with customers, and you see that WILD Flavors continued to grow earnings of double digits. Actually, at the moment, I will say in places like Asia Pacific, we are capacity-limited. If not, we will be growing revenue faster. And we are expanding. We're doubling that facility as fast as we can. So, I will say we have – still, we have untapped potential because we haven't even started playing the level much (00:55:37) in flavor in South America. We are at capacity in Asia Pacific. We are growing about 30% per year from a small base in Africa. So we think again that this transition from just individual flavors or individual products to more solutions is right in our alley and resonating with customers. And we see the potential of double-digit growth for several years ahead of us as we bring more capacity.

Great. Is that double-digit revenue growth or double-digit percentage?

No. I will say double-digit operating profit growth. Revenue growth should be something between 4% and 7% or 8% depending on the area and depending on when do we bring the next capacity. As I said, right now, we're a little bit constrained on capacity. So you see us shifting the mix to more profitable things. That's why you see OP growing faster than revenue. But as soon as we bring some extra capacity, you will see us growing more like in the 7% to 8% revenue.

Thank you very much. That was very helpful.

Welcome, Michael.

Our next question comes from the line of Ken Zaslow with Bank of Montreal. Your line is now open.

Hey. Good morning, everyone.

Good morning, Ken.

Good morning, Ken.

So, as you're going through this better upswing in the commodity cycle and it's helping your Oilseeds and other parts of your businesses, can you talk about your efforts of how much your earnings power should be higher relative to where it would have been just in an upswing because as a point of reference, again as I think was pointed out earlier if you just take the crush margin in terms of your capacity, they didn't seem there's much upside to your operational efficiencies in all the actions that you've taken. So we're trying to figure out what the implications are on your earnings power of all the stuff that you've done and if you can put in some sort of context given the higher commodity cycle?

Yeah. I mean, Ken, I mean we've talked in the past about how we've been driving earnings improvements over the years. And we've been talking about how we've been, one, driving operational excellence. And so we've seen a lot of benefits from operational excellence. As you know, not all of it flows to the bottom line because we've actually reinvested some of these savings in different initiatives. And secondly, we've talked about growth initiatives. The accretion from recent investments and we're getting a whole lot of that accretion now with these things starting up like Campo Grande and Tianjin. Thirdly, the WILD Flavors was important part of our accretion story, and you're starting to see the traction from WILD Flavors in terms of double-digit growth. And then lastly, we did do quite a few share buybacks over the past couple of years and that's also contributed towards our earnings power. And so I think we've indicated that over the past couple of years some of the headwinds that kind of mask these improvements, and when you can try to figure out how much of these headwinds cost us, you could easily – we talked about the fact that these headwinds could be more than $0.50 a share, right, in terms of the impact on us. And so as these headwinds kind of subside and become tailwinds, more like tailwinds, you're going to see strong recoveries particularly in Oilseeds segment. We're actually very optimistic about Oilseeds in terms of what it can deliver as protein demand continues to be strong, as our U.S. operations continue to drive efficiencies. And so we're probably most optimistic in terms of recovery of the base in the Oilseeds business. In Origination, we're seeing good recoveries right now. As I indicated, we're talking about fundamental improvements in terms of recovery of Origination. But I mean there has been some structural changes. We talked about some of the structural changes that have impacted Origination. And so we're probably never going to get back to the historical ranges in Origination. Then in Carbohydrates or the former Corn Processing segment, we talked about the fact that we're growing the geographic footprint of that. And so, that's how we're going to be driving earnings power in the Carbohydrates segment as we continue to expand that footprint. And then under the new Nutrition segment, we're very optimistic about that one. We talked about 20%-plus operating profit growth in 2018. This really is one of our key growth segments going forward.

So, net-net if you take all the investments that you've made in and then ex out some of the structural, is it a net positive to your earnings power when we see the cycle completely turn or is it a net neutral? How do you think about that? I guess it's just philosophically, and then I mean if you put numbers through, that would be all better, but it does (01:00:32)

No. I mean philosophically, Ken, it's a net positive. There's no doubt about it. And I think that as we kind of go through this year, I think you're going to start seeing how these earnings power translates into stronger earnings for our company and that's the reason why we're so confident about this particular year.

Ken, I think if you think about how we navigated the down cycle, I think we navigated the down cycle very well and mostly through good execution and great cost position. I do believe that we have the leading cost position in the industry and we will continue to enhance that advantage. What you haven't seen much of it has been the rewards from all the results of all the growth investments. Just because in order to build a plant, it takes you 18 to 24 months, and then it takes you another 12 to 18 months to start making money after you fill it up. So we have a lot of latent earnings power there coming on a stream. And I think you're going to see that in 2019 and 2020. And we don't stay still. Look at our operational excellence, now then into Readiness, and Readiness is going to drive not only maybe an extra $1 billion of cost, but also revenue growth. And we feel very good how we continue to get better of how do we execute our strategy. I think we will learn it ourselves and our team are getting better on that. And then I think it's paying off to sticking to the strategy because we're becoming better. And every one of these improvements or tweaks that you make, whether this is small realignment of Readiness, it's just another page of the strategy that we are unveiling. But it's because we're getting more comfortable and we've become better. And I think you're going to see that coming into the P&L now that maybe the down cycle subsided a little bit.

Great. I appreciate it.

Our next question comes from the line of Farha Aslam with Stephens. Your line is now open.

Hi. Good morning.

Good morning, Farha.

Good morning, Farha.

A question on Ag Services. You guys highlighted that you have a good export program out of the U.S. going into the second half. Some color on the elevation margins on that export program? And kind of what degree you think we could see growth in that segment this year?

Yeah. Elevation margins have moved up. I mean that's part of the reason why we took the negative timing effect related to Origination. Beginning of the year, we had about maybe $0.10 forward of elevation margins. They've moved up to about $0.20 to $0.30 right now. So, that's a positive. We are seeing demand out of United States. As we indicated, we had river condition issues at the beginning of the quarter, so it was tough to actually get product down to the Gulf. And secondly, with some challenges down South America, we're seeing customers actually come to us right now in order to source their product. And so overall, we expect the elevation margins to remain robust as we kind of move through the year.

So in terms of earnings for that segment versus last year or versus historical levels, I mean you earned $900 million in that segment in 2014. Is that a number that's just too big to repeat given the strong export program? And last year, you earned a low of around $585 million. How should we think kind of the earnings power of that segment is today?

Yeah. I think, Farha, if we maybe recast it into pro forma in terms of our new segment called Origination, right, maybe that's a better way to think through it because that excludes milling. I think how you want to be able to think about it is last year we finished up Origination roughly $400 million, but we also had some favorable benefits in the fourth quarter related to settlements. And so you take out some of the favorable settlement impact, you're probably in the low 300s, like $320 million or so. We don't expect we're going to have these favorable settlements this year. And so the way we kind of look at it is for 2018 Origination, we're going to have strong improvements off that $320 million base. Now, as Juan indicated, we will take about a $30 million provision in the second quarter related to sorghum, okay? And I kind of view that as kind of a one-off contained in the second quarter. I got to get that behind us. So after you take that into account, then we do expect that Origination will register strong profit improvement versus where we delivered last year.

Okay. Thanks for the added color.

Your next question comes from the line of Eric Larson from Buckingham Research. Your line is now open.

Okay. Thanks, guys. I know we're running really late. I have just a couple of really quick questions. This morning, the focus has really been on your forward book of business for 2018, but – and there's questions about sustainability, but I've started to see some positive bookings. Your buyers seem to be willing to go out as far as second quarter next year. Is that what you're seeing as well in the market? It seems like we're starting to get even further out building of a book of business.

Yes, Eric. Good morning. Yes, you're right and you heard me saying it before in my comments. So we see that that's a big difference versus last year and the previous year, but prices were coming down. Everybody was destocking and that was an impact on demand that we couldn't see. And then it limits our ability and our optionality to position ourselves better. Now that the market – the buyers are building the book, that allows us to excel into using all the ADM optionality that we have based on our assets and our different locations. So, yeah, we see that and that's a big positive for us.

Yes. I certainly see that, too. So then the final question is we've had a meaningful change in the grain market. And I'm just going to use corn as an example where your forward curve on corn is quite positive. You're at $416 million on the harvest (01:07:18) contract. Farmers for the first time in quite some time can sell forward 2018 production above their cost of production. And I suspect that this is meaningfully changing how farmers will go to market – the speed at which they'll go to market, I would assume that this is going to encourage faster and more selling. What are you hearing from your farmer customers regarding kind of the new pricing environment for grain?

We haven't heard the significant change at this point in time. Hopefully, this is going to come back to more normal commercialization of the crop during the crop year, but at this point in time, we haven't seen a significant shift.

Okay. Thank you, everyone.

Thank you, Eric. So...

Thank you.

Yeah, Lindsey, so I just want to finish saying thank you for joining us today. The slide 16 notes some of the upcoming investor events where we will be participating. So, as always, please feel free to follow up with Mark if you have any other questions, and have a good day and thanks for your time and interest in ADM.

This concludes today's conference call. You may now disconnect.