Good morning, and welcome to the ADM Third Quarter 2022 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, Megan Britt, Vice President, Investor Relations for ADM. Ms. Britt, you may begin.

Thank you, Alex. Good morning, and welcome to ADM’s third quarter earnings webcast. Starting tomorrow, a replay of today’s webcast will be available at adm.com. Please turn to slide 2, the Company’s safe harbor statement, which says that some of our comments and materials constitute forward-looking statement that reflects management’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. These statements and materials 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 assumptions and factors that could cause actual results to differ materially from those in this presentation. To the extent permitted under applicable law, ADM assumes no to update any forward-looking statements as a result of new information or future events. On today’s webcast, our Chairman and Chief Executive Officer, Juan Luciano, will provide an overview of the quarter and how we’re continuing to advance our strategy. Our Chief Financial Officer, Vikram Luthar, will review the drivers of our performance as well as corporate results and financial highlights. Then Juan will make some final comments, and he and Vikram will take your questions. Please turn to slide 3. I’ll now turn the call over to Juan.

Thank you, Megan. This morning, we reported a strong third quarter adjusted earnings per share of $1.86. Adjusted segment operating profit was $1.6 billion. Our trailing four-quarter adjusted EBITDA approached $6.6 billion, and our trailing four-quarter average adjusted ROIC was 13%. Throughout the quarter, our 40,000 colleagues around the globe continued to deliver on our purpose by supporting the global food system and providing needed nutrition to billions. Global demand for our products remained robust, and our ability to meet customer needs demonstrated our team’s expertise in managing dynamic market conditions as well as the unique benefits of our integrated global value chain and product portfolio. We continue to generate strong cash flows, which support the continued advancement of our strategy, including investments in new capabilities and growth engines across our three businesses and the return of capital to our shareholders. Next slide, please. Even as the team demonstrated superb day-to-day execution in the third quarter, we continued to make great progress on driving our strategic growth priorities. In each of our business segments, we’ve created and are continuing to build new growth engines that are aligned with enduring global trends. As demand for more sustainable produced low carbon intensity products continues to drive growth across our portfolio, our AS&O team signed a groundbreaking long-term strategic agreement with PepsiCo to enroll up to 2 million regenerative agricultural acres over the next 7.5 years. I’ll be talking more about our regen ag efforts in a moment. Sustainability from demand for sustainable package into the ongoing energy transformation supported by policies like the inflation Reduction Act in the U.S. is also driving the evolution of our Carbohydrate Solutions business. In the third quarter, for example, we formally signed two joint ventures with LG Chem for U.S. production of lactic acid and polylactic…

Thanks, Juan. Slide 7, please. The Ag Services and Oilseeds team delivered substantially higher year-over-year results. Ag Services results were significantly higher than the third quarter of 2021. The short crops in South America supported U.S. exports, driving improved volumes and margins in North American origination, which had significant negative impacts from Hurricane Ida in the prior year. Better margins in global ocean freight, driven by good execution amid dynamic global trade flows, powered better results in global trade. South American origination saw improved volumes and margins driven by increased farmer selling in addition to higher volumes through our export facilities. Crushing results were significantly higher with margins driven by resilient global demand for both meal and oil. Strong rapeseed margins in EMEA, driven by robust oil demand and continued market dislocations along with positive impacts from an insurance settlement helped drive improved results. North American soy crush margins continued to benefit from renewable diesel demand. Also, net positive timing effects in the quarter were about $175 million as compared to the approximately $70 million in the prior year quarter. Positive results were partially offset by lower crush volumes, including impacts from idle facilities in Ukraine and Paraguay. Refined products and other results were higher year-over-year in a strong margin environment for both refined oil and biodiesel. Robust performance in global refined oils was driven by healthy demand and elevated refined oil margins amid supply chain disruptions. Equity earnings from Wilmar were much higher versus the third quarter of 2021. Looking ahead to Q4, we expect AS&O to deliver much better results in the fourth quarter of 2021. We expect continued strength in crush margins to more than offset the adverse impact of low water conditions on U.S. export volumes. Slide 8, please. The Carbohydrate Solutions team delivered significantly higher…

Thank you, Vikram. Slide 12, please. So to recap, our team delivered another outstanding quarter. And thanks to our execution and the advancement of our strategy, we are well positioned to end 2022 strong. Last quarter, we said we were expecting full year earnings higher than $6.50 per share. Based on where we are today, we now clearly expect to exceed $7 per share. Looking ahead, there are several externalities that we are monitoring going into 2023. We anticipate ongoing resilient demand for our products, a strong crush margin environment, a positive outlook for starches and sweeteners, and a continuation of our growth trajectory in Nutrition. There is also significant uncertainty in the global economy and geopolitical environment. We expect to carry our strong momentum into the first quarter of 2022. And beyond that, we are confident that our scenario planning and execution will give us the ability to effectively manage through a dynamic environment. We’re also going to continue to benefit from our strategic work, and we’ll continue to deliver on those priorities throughout 2023. We’ll advance productivity initiatives to improve operations and processes, optimize costs and enhance efficiencies. We’ll drive innovation, expanding and creating new growth engines across our entire business portfolio, Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition. And we’ll advance those strategic objectives as we always have, alongside our team’s exceptional day-to-day execution, delivering for our colleagues, consumers, customers and stakeholders. With that, operator, please open the line for questions.

Thank you. [Operator Instructions] Our first question for today comes from Ben Bienvenu from Stephens Inc.

I want to ask about your process volumes in the quarter. You cited lower crush volume utilization in Ukraine as well as Paraguay. Could you talk a little bit about what you expect your go-forward process volumes to look like? And is the lion’s share of the decline in oilseeds processed year-over-year, that 10% decline, is that from those two regions? Were there any other contributing factors?

Yes. Thank you, Ben. Yes, as you noted, we had lower volumes, and part of that were coming from Europe in soil and rape. We had some adverse weather and some logistical constraints in Europe in terms of navigation, some of the rivers. We also have a reduction in South America, in soy crush because of Paraguay shutdown, mostly because of lack of beans. We had also some reductions in North America due to canola seed availability. And certainly, we have our Ukraine sun crush facility down, as you know, since last March. So, we have 850 facilities around the world, as you know. And we deal with logistics, with adverse weather with manpower issues like every company out there. So, that what was the decline in volumes at this point in time. As some of those one-off issues subside, I mean, we will see those volumes coming back to normal rates.

Thank you. Our next question comes from Ben Theurer of Barclays.

Juan, Vikram, congrats on the results. I wanted to follow up on Nutrition. As you’ve talked about some of the logistics bottlenecks that you plan to overcome, could you elaborate a little more in detail those issues are and what you may have to do in terms of investments to get this right. And then also aligned with that, what is actually your kind of FX assumption because you stretched the constant currency terms commentary on the outlook for the fourth quarter. So, just to understand a little bit the regional breakdown as well and what FX headwinds we should expect into the short-term period, just given the euro weakness. Thank you.

Yes. Thank you, Ben. Listen, as Vikram mentioned in his commentary, we are exceptionally proud of how the team is generating demand, how our value proposition in Nutrition continues to resonate and attract customers. Our pipeline has never been bigger and our growth rates continue to be -- our winning rates continue to be off the chart. So, the problem with that is that it catches up with your production pretty quickly. And although we have plans to expand those, some of the supply chain issues in delivery equipment and all that, sometimes don’t play exactly in our favor. When you look at where specifically those issues have impacted us the most, it has been in flavors, I would say, and mostly in North America, but some of that in Europe. On the other hand, the facility that we inaugurated last year, Pinghu in China has suffered from lack of volumes because of the lockdowns due to COVID restrictions in China. So, I would say, we had a little bit upset in the sense that we couldn’t bring all that demand that we have generated into the P&L. And certainly, those things are, to a certain degree, now under control. And as you can imagine, everybody in the Company is driving very hard to bring extra capacity. As you know, on the last quarter or a couple of quarters ago, we bought FISA precisely to alleviate a little bit that. Of course, we’re using contract manufacturing. So, we are pulling everything. But in a very tight environment with also some shifting of demand based on consumer demand, customers are shifting some of that demand, our ability to react promptly to that given the high growth rates caught up with us in the quarter. There is a lot of capacity coming for next year. So first of all, all this is an upside for next year. Hopefully, we’re going to be able to fulfill all that demand next year. But there is also expansions. If you think about -- we have a new line in soya protein, we also have the Biopolis expansion in Valencia. We have PetDine expansion coming up. So, the business is -- has a long list of organic growth capacity that will come to help next year. But again, it’s all the problem of maybe a strong successful sales and marketing organization, driving double-digit growth rates.

Yes. And Ben, on the FX side, just a reminder for everyone, right. In 2020, we grew operating profit 37%, in 2021 nutrition profit was 20%. If you look at the FX over that two-year period, it was almost flat, went up one year, went down the other year. But the European part of our business, EMEA, and we referenced this in our Global Investor Day, the revenue contribution from Europe is about 40% of the Human Nutrition side and about 20% on the Animal Nutrition side, and that’s getting bigger because of the event. So consequently, given the profitability there and the significant move in the dollar this year, we thought it was appropriate to highlight the growth on a like-for-like basis, which basically means on a constant currency basis. So, it’s a significant strengthening of the dollar. That basically called this out and the underlying growth in the European region.

Our next question comes from Adam Samuelson from Goldman Sachs.

Alex, maybe we skip to the next question. Maybe, Alan, come back later.

We will move on. Our next question comes from Tom Palmer of JP Morgan.

I wanted to ask on the barge delays on the Mississippi River. Does this have much effect on your business as we look towards the fourth quarter? Is it -- if there is impact, should we mainly think about it being in Ag Services, or just given the diversity of your business, are there offsets to consider?

Yes. Of course, we have an unprecedented situation and especially in the Lower Mississippi River that will reduce the volume of exports for Ag Services North America. As it’s going to be a negative impact in Ag Services North America, of course, that -- part of that is because of soy and we’re going to lose that volume. In the corn side, we’re probably going to extend the window of exports from North America into the first quarter. So part of the offset is you’re going to see that in the first quarter. I think also part of the offset is South America will be able to export more. We are a large exporter in South America, of course, and you’re going to see that. And then normally, what we noticed or we expect to happen because we’ve seen it before, is when you export less from North America, where destination marketing sometimes get a little bit of a pop in margins, the products and destination become naturally more valuable, if you will. That was part of the original strategy of going into destination marketing. And then, the other impact is that as beans are not exported that matters not that much demand, local values come down, local bases come down and that may be a boost for crush that you may be able to crush lower-priced beans or maybe eventually lower-priced corn for Carbohydrate Solutions. So, we see some puts and takes. So probably negative for North America Ag Services and Oilseeds, maybe neutral for Ag Services and positive overall maybe for the whole.

Our next question comes from Ken Zaslow from Bank of Montreal.

Just a couple of questions. One is, can you give a little bit more color on Ag Services and Oilseeds outlook as well as carb guidance? I know you said significantly up and significantly lower, some parameters to that? And then, can you also talk about your nutrition outlook, if your supply chain gets repaired, demand is there, do you think that your long-term growth algorithm is intact? And I’ll leave it there, and I appreciate your time, as always.

Thank you, Ken. Yes, let me address maybe the outlook of Ag Services and Oilseeds, Q4. So, first of all, very dynamic environment, but very positive environment. The teams continue to manage exceptionally well. And demand continues to be very robust. So, as we go forward, Q4 again in Ag Services, I was mentioning, maybe a little bit lower for North American exports, but that will be offset for other things that I explained in the question before. So, we still expect significantly better results in the Q4, barring any big mark-to-market, that’s our expectation at this point in time. Crush margins continue to strengthen. That’s on the strength of feeding animals around the world, but also on the extra demand for oil from all the renewable green diesel or biodiesel around the world. We expect continued strength in global trade and destination market. And as I explained before, I would say the business at this point in time is hitting in all cylinders. So, I would say, the 3 parts of the business will be very robust into bigger than last year, certainly. Maybe Vikram can give a little bit of an update on the other two.

Yes. So on Carbohydrate Solutions, you’re right, we did say significantly lower. But if you look at the two independent parts, S&S, sweeteners and starches, we continue to expect that to be strong. We’re seeing robust volumes and margins with obviously, the corn oil benefits we are seeing. So net corn costs are attractive as well as margins continue to be attractive. The issue is on ethanol. Lastly, if you remember, we actually had $1-plus ethanol margins. This year, we clearly do not anticipate margins to be that high. We still expect to be healthy given continued strong gasoline demand, the discount that ethanol has versus RBOB as well as the reasonable inventory levels. So, it’s really the ethanol side that is going to drive the significantly lower performance in Carbohydrate Solutions Q4 to Q4. On the nutrition side, yes, as Juan said, we are working and prioritizing unlocking capacity. We anticipate much of that to get unlocked over the course of 2023. And on a constant currency basis, we continue to expect growth going forward to be in that 15-plus-percent range. It’s important to highlight constant currency because that part of the business in Europe, as I mentioned, is becoming bigger and bigger. And that’s clearly -- and currency is not something we can control and important therefore for us to call that out.

Our next question comes from Steven Haynes of Morgan Stanley.

I just wanted to ask on the Brazil-China corn export agreement and see if you could get a little bit of color on any impact you think you’ll see in your businesses? And if you can just kind of remind us of how big your export origination footprint is in Brazil versus North America? Thank you.

Yes. Good morning. So first thing you need to understand is we are living in a very tight global corn environment. So, if you put yourself in the foot of China, China finds itself with lower production, lower domestic production of corn with certainly higher feed demand lower barley and sorghum imports. So naturally, it will have to import more corn. So in my mind, they are just building origin optionality. Again, you have still the La Niña effect in Argentina. So they are planting less corn there. Certainly, our last check up here, yields for corn in North America were going to be lower. And of course, there’s always the uncertainty of Ukraine ability to export. So I think that from a Chinese perspective, this is nothing more than just risk management and expanding open up another optionality. Of course, we are a large exporter from South America as well. We have a very robust Ag Services business in Brazil. And I remind you, we are the largest exporter of corn from Argentina. So, as always, we will offer Black Sea, we will offer North America, we will offer Brazil, and we will offer Argentine origins to China. So, as long as demand remains tight, we will see a lot of activity within the trade flow because naturally people want optionality, so.

Thank you. Our next question comes from Rob Dickerson of Jefferies.

I guess, just first question, kind of a broad question. There are a number of times you said in the commentary upfront that should be ongoing momentum kind of going into 2023, and it sounds like more specifically kind of in Q1. If we think about just kind of the general macro backdrop, right, all the tailwinds that are benefiting the business, and maybe this is a little dumb down for some, but not for me. Maybe you could just kind of touch on what could be some drivers that could loosen the overall tightness in the supply chain as we get through next year? Then I have a follow-up.

Okay. So, let me talk a little bit. As I said, we are finishing a very strong 2022, and that will get us into a strong -- with good momentum into 2023. What are the things that we are seeing because of course, I mean, it’s difficult place to prognosticate these days. But we anticipate ongoing resilient demand for our products. We have not seen, maybe with the exceptions of some tiny businesses in Animal Nutrition. We have not seen a deceleration of demand across ADM at this point in time. We foresee also a strong crush margin environment based on the two legs. We have a strong pork and poultry feeding demand across the world. And we see tight soybean oil stocks and RGD and biodiesel demand that continues to be strong and growing. We see, as Vikram expressed before, a positive outlook for starches and sweeteners. We have finished some of our contracting, and we see the volume, and we see the margins holding or slightly expanding there. And we see a continuation of our growth trajectory in Nutrition. When I talk about the pipeline, that’s the business in which we have the biggest visibility into the future because these are projects that, barring any supply issues, we will bring to the P&L. So, I would say that is what gives us some positive momentum or positive expectations for ‘23. You have to remember also that we dealt with a lot of weather issues, logistical issues, whether it is the river, whether there is hurricanes -- many issues. And we had, as I explained before, some manufacturing volumes impact here and there. We expect that all to be corrected and to be potentially a plus into next year. And as I explained in the Nutrition question, we have new capacity coming on stream. We have -- we are expanding Biopolis probiotics capacity by a factor of 5. We are bringing a new line for plant-based proteins in soya protein. We are expanding our PetDine capacity. So, we are bringing a lot of new capacity to bear because we have the pipeline to actually transfer them into profit. So, from what we can see here, and again, in a very uncertain world, is we have good -- very good momentum going into 2023.

Thank you. Our next question comes from Steve Byrne of Bank of America.

Yes. Thank you. I’d like to better understand this regenerative ag outlook you have for $100 million of operating profit in five years. Would it be reasonable to assume that that’s roughly 10 million acres of $10 an acre operating profit? Is that kind of where you’re thinking? And maybe more broadly, do you see the value here more on generating grain that has been produced in some kind of sustainable way i.e., that a CPG customer of yours would be willing to pay a premium for that grain? Or do you see this as really the generation of carbon credits that could be sold on various exchanges? I welcome your thoughts on that.

Yes. Thank you. Very good question and something that is very close to our heart and tied to our strategy. The Regen Ag programs and acres are certainly in high demand. We have made public one announcement, but we have been working on what we call the differentiated bushel, if you will, for like three or four years already. And ADM naturally sits in a unique place in the value chain, and we have the global scale to drive improvements in agriculture, and we have the ability to tie both the farmer with the CPG companies, and so this is a privileged position. We are working very hard to simplify the process for the farmer. And as you described, there are many ways to potentially create value here. When we thought about the differentiated bushel, one is as you described, eventually, and we’re seeing more evidence of that, there’s going to be a premium price for bushels that are grown or metric tons that are grown in a certain way. And I think that the whole society is looking for that. It’s looking for agriculture to actually do their part in creating a more sustainable world. One is that. The second, and that’s where we’re working with FBN, with Gradable and all that, is to simplify the collection of data and all that in the preparation, we’re working with the government on that, on the protocols to be able to have carbon offsets or carbon credits based on that. So, it’s a little bit of both. The economics that you described are not as simple as $10 per ton or whatever. But to a certain degree, that they are also not that much more complicated than that. We just have a portfolio of different accounts and different contracts, and they’re all slightly different, but it is conceptually aligned to what you described is converting more acres, it’s signing more acres. That’s where we leverage the relationship we have with farmers globally. ADM has 220,000 farmers portfolio in the world that we are engaged in discussing this. Of course, the customer -- the farmers will embrace these as they see more demand for this. That’s why it’s important to have the CPG companies aligned to this. And that’s why we make these agreements because, of course, the farmer will generate the production in order to satisfy the demand. So, both lines need to grow together. So again, I think we are just leveraging our incredible farmer network and the desire of CPG companies and consumer in general, to see bushels or metric tons grown in a differentiated way. So, we’re very excited about the future of this.

Thank you. Our next question comes from Eric Larson of Seaport Research Partners.

Congratulations on a good quarter, everyone. So, the question I have is -- and thank you for all your regen comments, Juan, it’s pretty dear to our heart to result. I’m looking forward to even having more discussions on that. The question I would have this morning is, could you give us a little more detail on the situation in Ukraine? What you folks are seeing? We’re hearing that there are only plant -- only able to plant enough winter wheat this year to even meet kind of their own domestic needs for next year? It seems that maybe Ukraine is going to be an even smaller contributor to global exports, both on the oil season and grains next year. I guess, it’s just hard to get all the information put together. Could you just share some thoughts on what you see developing in that region of the world?

Yes. Thank you, Eric. And also, it gives me an opportunity to emphasize the message we sent to our employees in Ukraine to -- for strength and ADM is doing everything possible to make their lives as bearable as possible through all these. And hopefully, one day, we will be talking about the rebuilding of Ukraine and all of them coming back to their land. So listen, we’ve been involved. As you know, we have more than 650 employees. So, we’ve been deeply involved in that. A vast majority of them are in their jobs, in their positions right now. So we’ve been able to export from Ukraine and the industry has worked together with governments and through this corridor agreement, we’ve been able to, in September, to reach the same level of exports almost that Ukraine used to have last year, so about 7 million tons. October, starting with a little bit more of wrinkles, if you will. We are having an issue, which is this joint group that is supposed to inspect the vessels have been a little bit overwhelmed by the number of vessels that we have. So they are adding more people to that group in order to continue to move material. We need to move material. There are like 100 vessels, give or take, in a queue right now. We need to take that material out because storage in Ukraine is becoming full. And then, there’s going to be a harvest and we need to be able to use that storage to harvest the material and to store the material there. So, my point to all this is dynamic. This continues to be a very dynamic environment. Certainly, there are still shelling in the area sometimes, hitting some of the soybean oil, sunseed oil tanks,…

Next question comes from Robert Moskow of Credit Suisse.

I was hoping you could give a little more color on the outsized performance in Ag Services in the quarter. I mean, this is the strongest third quarter I think I’ve seen from ADM in many years. And it’s not what I would have expected given the challenges on the Mississippi River. So, of these factors that you mentioned, the short crop in South America, the better margins in ocean freight, can you give us kind of some sizing as to what were the biggest factors for the outperformance? And also, was there any kind of positioning benefit from your -- from how you hedged your grain in the quarter?

Yes. So, it was a great performance, as you described, very proud of the team. Traditionally, our Q3s have lower volumes because we are getting out of the end of the season and waiting for the next harvest. What happened this time is I think given the short South American crop, we’ve been able to move more volumes, especially exports in North America. Exports were down Q3 to Q2, but not down as much as maybe you see in other years. The same has been a little bit for origination volumes. And when exports go, we have benefits in our transportation businesses, our barges and all that. Also, do not forget, it’s not just North America, but it’s also the global nature. The global trades have done a spectacular performance. And I think we have benefits in ocean freight. It was a very good quarter from that perspective, and also destination market. In destination market that we started four or five years ago, I don’t remember exactly, has continued to grow volumes and expanding margins. So that, I would say, is what created this great Ag Services in Q3. So, great performance by the team.

Thank you. Our final question is from Adam Samuelson from Goldman Sachs.

So, a lot of ground has been covered today. I wanted to maybe come to capital allocation on the balance sheet. And first, just to clarify on repurchase because you did a very sizable amount of buybacks in the third quarter. The incremental $1 billion was over the next five quarters. Did I understand that right from the earlier comments? And then just more broadly, Juan, Vikram, any way to frame CapEx over the -- into 2023 kind of -- you got a lot of capacity actions underway. Just help frame kind of the internal investments. And relatedly, help us think about maybe the M&A optionality in the current marketplace, especially with rising interest rates that might put some more working capital strain on smaller players in the market? Thank you.

Yes. Adam, thanks for the question. So, in terms of the share buybacks, yes, we -- as you rightly noted, we did execute the entire $1 since we announced it in -- the buyback in Q2. Looking forward, you’re right, in terms of the additional buyback, that is anticipated to be completed over the next five quarters through the end of 2023. But I also want to emphasize, partially getting to one of your questions that we see a rich pipeline of opportunities even on the M&A side. And it is, as always, our responsibility to continue evaluating that. And if we find the right acquisition with the right set of capabilities at the right price, absolutely, we would divert potential capital to that in lieu of buybacks. But absent that, we anticipate to complete this by the end of 2023. In terms of CapEx, we had signaled about $1.3 billion for this year. We remain on track to be around that, maybe slightly under. And we anticipate that similar level of spend to continue over the next couple of years as well, given the significant need for adding capacity as Juan mentioned, but also some of the additional high-return projects we see on the horizon, such as the analytics and digital automation of our facilities. So, we see rich opportunities to reinvest in the business as well as potentially explore more M&A. One other point that’s very important to highlight, and this really underscores our emphasis on driving returns, which is not just focusing on the profitability but also on the asset, on the denominator is a $1 billion challenge. Even in the face of this outstanding performance this year, the teams are rigorously focused on reducing the assets deployed to produce that profit. And the $1 billion challenge, we actually anticipated to -- we’ve actually got -- we’ve got cash in hand as of last week of $1 billion, as Juan noted. So, I think it’s important to note that we are very focused on driving returns and hence that 13% that we are very proud of we achieved in 3Q. So, I’ll pause there.

Thank you. We have no further questions for today. So, I’ll hand back to Megan Britt for any further remarks.

Thank you for joining us today. Please feel free to follow up with me if you have any other questions. Have a good day, and thanks for your time and interest in ADM.

Thank you for joining today’s call. You may now disconnect.