Good morning and welcome to ADM's Third Quarter 2024 Earnings Conference Call. All lines have been placed on a listen-only mode to prevent any background noise. As a reminder, this conference call is being recorded. I’d now like to introduce your host for today’s call, Megan Britt, Vice President, Investor Relations for ADM. Ms. Britt, you may begin.

Hello and welcome to the third quarter earnings call for ADM. Our prepared remarks today will be led by Juan Luciano, Chair of the Board and Chief Executive Officer; and Monish Patolawala, our EVP and Chief Financial Officer. We have prepared presentation slides to supplement our remarks on the call today, which are posted on the investor relations sections of the ADM website and through the link to our webcast. Some of our comments and materials may 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 and materials are based on many assumptions and factors that are subject to numerous 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 and the materials. To the extent permitted by law, ADM assumes no obligation to update any forward-looking statements due to new information or future events. In addition, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available on our earnings press release and presentation slides, which can be found in the investor relations section of the ADM website. Please turn to slide four. I'll now turn the call over to Juan.

Thank you, Megan. Hello and welcome to all who have joined the call. We sincerely appreciate your patience as we work expeditiously to amend the company's fiscal year 2023 Form 10-K and Form 10-Qs for the first and second quarters of 2024. We are pleased to now be able to share more context about our 2024 year-to-date financial results and our outlook. Even though we are holding this call later than usual, we are also in a position to provide qualitative commentary on how the fourth quarter is progressing. To start, let's recap our financial results for the company. ADM reported third-quarter adjusted earnings per share of $1.09 and a total segment operating profit of $1 billion. This brings adjusted earnings per share to $3.61 and our total segment operating profit to $3.2 billion year-to-date for 2024. Our trailing four-quarter adjusted ROIC was 8.8%. Although we made progress on several important initiatives in 2024, these results are not consistent with the high bar that we have set for our team. While we have seen a decline in our total segment operating profit and a decline in operating cash flow before working capital changes, due to lower net earnings relative to the prior year period, disciplined management of our balance sheet continues to allow us to invest in our business and return cash to shareholders. In total, we have returned $3.1 billion to our shareholders with $744 million in the form of dividends and $2.3 billion in share repurchases year-to-date in 2024. Next slide, please. Entering 2024, we laid out key priorities for value creation based on the year we saw ahead of us. As we moved into the fourth quarter, it's clear that certain expectations have not all played out as anticipated. The global commodity landscape has continued to shift. Stronger-than-expected supply has driven commodity prices down further than anticipated. Canola crash margins have been negatively impacted by regulatory uncertainty and higher seed prices. In addition, China has begun to increase local commodity production and has had a slower pace of demand recovery, negatively impacting the trade of certain commodities and uptake of animal nutrition solutions. We're also seeing the trailing effects of inflation in parts of our business. Some new nutrition projects have been delayed as some customers look for opportunities to manage costs by simplifying their consumer offerings. We have also seen some softness in demand in other end markets such as pet treats and energy drinks, where consumers are prioritizing their discretionary spending. The global regulatory environment has led to additional uncertainties. Programs such as EUDR and the U.S. producers tax credit are still not fully in place, which has left various stakeholders in the agribusiness supply chain without the confidence of a clear path forward. Beyond these external factors creating downward pressure, we're also managing through a balance of both positive and challenging results across our own operational environment. In carbohydrate solutions, we've been able to improve production throughout the network, in part due to advancements in automation and digitization at the plant level, as well as by finding synergies across our milling network. We've seen similar improvements in our crush facilities in Latin America and EMEA, but this has been offset by the fact that opportunities previously identified in some of our U.S. plants have been taking longer-than-expected to be completed. However, in October, we began to see improvements in unplanned downtime in our U.S. facilities. Nutrition has continued to manage through the downtime of our Decatur East facility, where our expected ramp-up has been delayed from the end of 2024 to the first quarter of 2025 as safe restoration of operations is a top priority. And while the integration of our most recent flavor acquisitions has driven positive results, we have experienced demand fulfillment issues due to the complexity of other integration efforts. We believe that our business is well-positioned to grow alongside enduring global trends such as the expansion of functional food and beverage alternatives, the replacement of petroleum-based products across multiple industries and the broader opportunity associated with decarbonization. As we look at the near term into 2025, however, we anticipate that we could still be managing through a challenging cycle, and we have already begun taking necessary productivity actions with a clear focus on cost and cash management. This slide highlights several of the areas we have already taken action on in 2024, along with additional actions we are aggressively driving at the end of the year. As we manage through the current cycle, we've seen success in delivering expansion across strategic initiatives such as regenerative agriculture, BioSolutions and destination marketing, which achieved record volume handled in October, supporting supply and demand needs through increasing capacity. This is exemplified in our Spiritwood facility, which has achieved near full run-rates in the month of October. And in ramping up the drive for execution excellence program, which has already begun to deliver toward our cost-saving goals. Moving forward, as we expand our focus on procurement and execution excellence, we believe that we can double this program's target cost savings over the next few years. Additionally, the automation and digitization efforts that have already achieved millions in cost savings are being scoped and accelerated across the other plants in our footprint. Turning to Nutrition's recovery efforts, we have strengthened our operational leadership, driven simplification and optimization opportunities and continued to expand our pipeline and win rates in parts of our portfolio such as flavors. These efforts are now being supplemented to increase the pace of recovery. We have placed additional focus on demand generation, supply chain improvement and rightsizing our production to better flex to the needs of the dynamic demand environment. And finally, from a strategic capital allocation perspective, we have already accelerated our return of cash to shareholders this year in the form of share repurchases and dividends. Going forward, we're being extremely prudent while focusing our attention on cash generation opportunities, and we are also considering specific portfolio optimization efforts to simplify operations, enhance our focus and drive an improvement in ROIC. Along with all these actions, Monish joining as CFO has already brought new perspectives to the team. We are using his experience to help identify and accelerate paths for continuous recovery. With this, let me pass to Monish for a more detailed financial review.

Thank you, Juan. First, I would like to take a moment to say how excited I am to be joining the ADM team at such an important point in the company's trajectory. While I've only been on the job for a few months, I have enjoyed the opportunity to personally engage with our teams and learn about the company. I want to thank all my ADM colleagues for their warm welcome. Turning to Slide 6. On a year-to-date basis, Ag Services and Oilseeds (AS&O) segment operating profit of $1.8 billion was 42% lower versus the prior year period as ample supplies out of South America have driven lower commodity prices and margins across the segment. The Ag Services sub-segment operating profit of $461 million was 52% lower versus the prior year, driven by lower South American origination margins and volumes, in part due to industry take-or-pay contracts. The stabilization of trade flows has also led to fewer opportunities in our global trade business, leading to lower results. Crushing sub-segment operating profit of $632 million was 30% lower versus the prior year period. Slower farmer selling and lower crush rates in Argentina, coupled with solid demand, have supported soybean crush margins leading to a year-to-date executed soy crush margin of approximately $50 per metric ton, which is lower compared to the prior year. While year-to-date executed canola crush margins are lower by approximately $15 per ton compared to the prior year, margins have moderated significantly in the second half of the year so far, as higher seed prices and regulatory uncertainty drove lower margins. There were net negative timing impacts of approximately $120 million year-over-year. In the refined products and other sub-segment, increased pre-treatment capacity at renewable diesel facilities and higher imports of used cooking oil have negatively impacted both refining and biodiesel margins, leading to sub-segment operating profit that was 58% lower versus the prior year. There were net negative timing impacts of approximately $360 million year-over-year. As we look forward, we anticipate AS&O fourth quarter results to be lower than the prior year quarter. The seasonal shift to our North American weighted footprint and strong North American crop should be supportive of volumes. But recent elevated margins are below the levels we expected when we put our guidance in place in November. In crushing, the ramp-up of our Spiritwood facility is expected to support high-single-digit volume improvement. However, we expect lower results due to lower soybean and canola crush margins versus the prior year. The addition of new pre-treatment capacity has continued to weigh on margins within the RPO business and on the food oil side, margins for free-to-sell opportunities have been under pressure due to increased competition. Based on the information available today, we also anticipate 100% reinsurance proceeds of approximately $50 million in the fourth quarter related to both Decatur West and East. We continue to monitor the impact of uncertainty related to regulation and trade flows on the operating environment as we look forward to the end of the year. Year-to-date, carbohydrate solutions segment operating profit of $1.1 billion in the year-to-date period was roughly in line with the prior year as lower margins in the EMEA region and ethanol were mostly offset by strong volumes and improved manufacturing costs. As we look forward, a strong North American corn supply and robust export demand is expected to support VCP. However, North American ethanol production continues to outpace demand, driving lower margins. We expect to see solid demand and margins in North American starches and sweeteners as we finish the year. Wheat milling margins are expected to moderate from elevated prior-year levels. Based on information available today, we also anticipate 100% reinsured insurance proceeds in the fourth quarter related to both Decatur East and West incident of approximately $35 million. Taken together, we anticipate the carbohydrate solutions fourth quarter results to be in line with the prior year period. Year-to-date nutrition revenues were $5.6 billion, up 2% compared to the prior year. On an organic basis, segment revenue was down 3%. Human nutrition was flat organically as headwinds related to Decatur East and texturants pricing offset growth in flavors and health and wellness. Animal nutrition revenue declined 5%, driven by an unfavorable mix, negative currency impacts in Brazil and low volumes due to demand fulfillment challenges. Year-to-date nutrition sub-segment operating profit of $298 million was 32% lower versus the prior year. Human nutrition results of $265 million were 40% lower compared to the prior year period, primarily driven by unplanned downtime at Decatur East. Animal nutrition results of $33 million were slightly higher compared to the prior year due to an improvement in margins. As we finish the year, we expect continued weak consumer demand, lower texturants prices and ongoing operational challenges to be headwinds. And as Juan previously mentioned, we now anticipate the start-up of our Decatur East facility to be delayed until the first quarter of 2025. We expect the impact of prolonged downtime at Decatur East to be partially offset by 100% reinsurance proceeds in the fourth quarter of approximately $50 million based on the information available today. We expect animal nutrition results in the fourth quarter to be better than the prior year with tailwinds from our turnaround efforts as we continue to work through operational challenges in pet solutions. Taken together, we expect nutrition results for the fourth quarter to likely be lower than the third quarter of 2024, but to be higher than the prior year, which had the negative impact of approximately $64 million in non-recurring items. Please turn to slide seven. Year-to-date in 2024, the company has generated cash flow from operations before working capital of approximately $2.3 billion, down relative to the same period last year due to lower segment operating profit. Despite the decline, solid cash generation has supported our ability to invest in our business and return excess cash to shareholders. Year-to-date, the company has returned $3.1 billion in cash in the form of dividends and share repurchases. Allocated $1.1 billion to capital expenditures and nearly $1 billion to M&A announced in 2023 and completed in January 2024. Our capital structure continues to provide the financial flexibility to invest in our business and return capital to shareholders. We continue to see opportunities to drive enhanced cash generation through operating improvements both in our facilities and through better management of working capital. We believe investing in organic opportunities gives us the best return. While we will always look at opportunistic M&A as a way to enhance return, it is essential that we prioritize maximizing returns from the assets that we have already acquired and also ensure that we are the best owners of all our assets. Now let's transition to a discussion of guidance for 2024 on slide eight. In early November, we announced that we lowered our full-year 2024 adjusted earnings per share guidance to the range of $4.50 per share to $5 per share. The lowering of our guidance takes into account our year-to-date results and headwinds from slow market demand and internal operational challenges. Additionally, we now anticipate our corporate costs to be within the range of $1.7 billion to $1.8 billion, primarily due to lower incentive compensation and our corporate net interest expense to be in the range of $475 million to $525 million. We now expect capital expenditures to be approximately $1.5 billion. We are also increasing our effective tax rate guidance to the range of 20% to 22%, due to the non-deductible impairment of Wilmar taken in the third quarter. Our expectations for our leverage ratio and D&A are unchanged. Let's turn to slide nine to close the call with a reflection on the key priorities that we are driving with our team to deliver improvement and enhance returns. First, my top priority is ensuring integrity and accuracy in our internal controls and financial reporting. I echo Juan's earlier statement and add my particular thanks for the extraordinary efforts of our team to amend and file the restated financials for fiscal year 2023 Form 10-K and Form 10-Qs for the first and second quarters of 2024. We are continuing to focus on implementing enhancements to our internal controls to remediate the previously identified material weakness and are taking action to enhance the integrity and accuracy within internal controls and financial reporting related to intersegment sales. Among other things, the design and documentation of the execution of pricing and measurement and reporting controls for segment disclosure purposes and projected financial information used in impairment analysis have been enhanced and the testing of these controls will continue throughout the balance of the year. Further, training for relevant personnel on the measurement of intersegment sales and application of relevant accounting guidance to intersegment sales has been provided and remains ongoing. In the broader category of improving focus and execution, the team will remain adaptable and focus on items within our control. On the cost side, we are optimizing our cost structure and enhancing operational resilience initiatives. In this vein, we have the opportunity to create a more cohesive digital strategy. Today, we have invested in numerous efforts to improve our systems and enable a more digital footing for our business. However, we have the opportunity to connect these efforts to accelerate outcomes around how we serve our customers, operate our assets and run the enterprise, while also delivering structural cost improvement. Similarly, we have room in our portfolio and broader asset network to optimize through targeted divestitures or rationalization, and we are evaluating numerous actions that we could take to improve our footprint performance and generate cash. We will also maintain a sharp focus on working capital management to further strengthen our cash position. Lastly, we'll remain disciplined in capital allocation, seeking opportunities to drive ROIC and enhance returns. I see maintaining our capital discipline as essential to value creation. We will work to ensure that we maintain a healthy balance sheet that continues to create strong cash flow and that we rigorously investment opportunities appropriately by applying a stage-gated model to ensure that we achieve key milestones and meet our return objectives to continue to invest. In closing, I want to take a moment to thank our ADM colleagues for their hard work and dedication this quarter. I am optimistic that today we can successfully tackle the challenges and seize the opportunities as we continue to execute our strategy and focus on delivering value for our shareholders.

Thank you. The first question comes from Andrew Strelzik with BMO. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking the questions and I appreciate all the color you gave on the outlook and the strategy. I was hoping that you could help reconcile the decline in U.S. crush margins over the last several weeks. You now have a U.S. crush margin curve that's much lower in the nearby than in the spring, which is abnormal. You have soybean meal delivery certificates issued last week by some of the commercials, which I also believe is abnormal. So I guess the question is, what does all of this tell us about where crush margins are headed and how much visibility do you have on crush into next year compared to what you would typically have for this time of year? Thanks.

Yes. Thank you, Andrew. As you said, crush rallied steadily from the lows in Q3, but has come under pressure in November. It's basically a combination of things. First of all, demand for the products has been very good. Demand for meal is good, demand for oil around the world is good. However, we see that during November, Argentine farmers started to sell again. So we've seen higher crush rates in Argentina, higher crush rates in Brazil, and all our plants here in North America have been running well, so we had high crush in October. When you combine that with the regulatory uncertainty we now have in the oil side, that has created the problems that we face. The U.S. is exporting oil, the U.S. is exporting meal, but there is more pressure in the system with more crush being put and less regulatory clarity. So that's why the overall message, Andrew, is as we look forward here, we think that given the soft markets and the regulatory uncertainty, our focus in ADM is on the things that we can control: doubling down on productivity, looking at all our efforts to control costs and cash, and certainly portfolio management. The markets remain robust. Soybean meal is the most competitive feed out there. Demand is strong, and oil is needed for the biofuels market and for human consumption. I think that when we clear the regulatory environment or the regulatory uncertainty, you will see things normalize a bit.

Okay. And sorry, if I could just quickly follow up. Given all of the internal actions that you guys are focused on as you navigate the cycle, and if I were to kind of exclude some of the insurance dynamics from this year and maybe from next year as well, do you think that this is kind of an earnings base from which you would expect those actions to drive earnings growth in 2025, or do you think about it as still navigating through a muddled environment as we get through the regulatory dynamics? How do you think about this year and actions that you're taking in the ability to grow in '25? Thanks.

Yes. I think it's important to never lose an opportunity to get some extra feet. We are taking this decline in margins as an opportunity to review everything from ADM and accelerate all the decisions that were already ongoing. It's too early in the year. There are too many unknowns, especially on the regulatory front, to make a forecast for the year. However, we know that focusing on the things we can control and continuing to drive cash flows is important for our shareholders, which will ultimately help improve returns.

Andrew, I echo what Juan just said. It's back to the basics of cash, cost, and capital. And that's what we are focused on right now. We have a lot of opportunities to keep our heads down, get 2024 closed, and then we'll come back when we're ready to discuss 2025. But we know the environment is going to be soft, and that's why the teams are controlling what they can control.

Our next question comes from Tom Palmer with Citi. Your line is open. Please go ahead.

Good morning. Thanks for the question. I just wanted to inquire about the nutrition side of the business. We've seen some changes in terms of the animal nutrition business, which I think from a cost-saving standpoint has driven some improved profitability. What about on the human nutrition side? Given that some of the end markets may not have progressed the way you once anticipated, are you considering resizing that business? And how much of an opportunity might that be as we think about the coming year? Thanks.

Yes, thank you, Tom, for the question. Listen, I think I'll take it in pieces. If you consider human nutrition, we have a significant issue with the plant that is down. That plant is a significant cost. It was down for a full year; now it's going to be down for the first quarter. So that's an issue that is a little bit extraordinary that we're fixing, and we thank all the engineers and everyone working expeditiously to bring it back safely. In terms of the rest of the business, like the flavors business and health and wellness segment, we continue to see opportunities. On the positive side, we've seen organic growth in flavors in Europe of about 7% year-to-date, and we've seen 5% in North America. These growth rates are not what we expected when we started the year, as there have been some categories like energy drinks where, although still growing, are doing so at lower rates than we expected at the beginning of the year. Some launches have been postponed, but overall, it remains a robust category with growth opportunities. We are, however, adjusting our supply chain to ensure we match the new realities. If you look at health and wellness, specifically in the probiotics segment, it has shown growth of 14% year-over-year in revenue, which is even higher in terms of operating profit. So I believe there are positive signs, but we are working hard to fix the challenges we currently face. On the customer side, there are positive indicators that when we address some of these supply issues, we will see improved results reflected in our P&L.

Okay. Thank you. And just on the capital allocation, it sounds like there was some mention in the prepared remarks of focusing on discipline, but there was also some commentary earlier about the crush side regarding unexpected downtime. Is there maybe an elevated maintenance CapEx cycle needed in the crush operations to get them to the operational levels you desire? And if so, might we expect maybe less of a step-down in CapEx next year just given that, or maybe I'm overstating it?

No. Listen, CapEx for next year will be solid CapEx. We have many plants; we have grown the company and need to ensure those plants remain in good shape. But there are also opportunities for automation and digitization that we are adding to that. If you look at the oilseeds plants in Europe and Latin America, they have been operating very well. We have a handful of plants in North America that encountered challenges over the summer, and I'm happy to report that they are improving in October and November. However, we had some issues that took longer to fix than we expected, and we allocated resources to resolve them.

Our next question comes from Ben Theurer with Barclays. Your line is open. Please go ahead.

Yes, good morning, and thanks for taking my question. I wanted to get your sensitivities around the implied guidance for the fourth quarter and take into account that we're early in December and already two months have passed. Clearly, if we look at the implied low-end versus high-end, it's very widespread? So could you help us understand and frame a bit what the risks are getting closer to the lower end, which would imply a little less than $1 versus the higher piece closer to $1.40, just to better understand where we're shaking out and where you think things are going?

Yes. Thank you, Ben. Let me give you the puts and takes for the quarter, and you can build it from there. If you think about the grain business in Ag Services, of course, this is the quarter in which the volumes come to North America for exports. We see good volumes. China is buying beans for Q4; Europe is buying corn for Q1. However, we have good volumes but have not seen the margin expansion that we may have forecasted a couple of quarters or months ago. River logistics are good for December, and we will have to monitor the weather for Q1, but so far, so good. Calories in the market should support our interior assets. On a global trade perspective, volumes are strong, and lower commodity prices are benefiting animal feeding globally. Our destination marketing margins are stable. On the crush side, I've mentioned the decline in crush margins earlier, and there is a lot of uncertainty about biofuels policy. The margin compression could create timing variability depending on price levels at the end of the year, and we could see positive timing. Unfortunately, with the lack of clarity over next year, you could think that if we continue to crush at these levels, oil inventories will climb, and we may have to navigate an industry slowdown crash in the first quarter. Currently, there isn't much margin for independent non-integrated plants to operate in Q1. So we may see a spike in RINs later in the quarter and have to navigate an industry slowdown as well.

Just to add a couple of more points for you, Ben. For insurance proceeds, this is a partial settlement right now. If you add the three segments I previously discussed, in the fourth quarter, there is an assumption that we will get 100% reinsurance proceeds of $135 million. This is another important variable. And back on nutrition, what Juan mentioned—just for clarity—currently, our team anticipates that with M&A, we are looking at low-single-digit growth in the fourth quarter. On an organic basis, it will be low-single-digit negative growth. That is another key point I wanted to highlight.

We now turn to Heather Jones with Heather Jones Research. Your line is open. Please go ahead.

Good morning. Thanks for the question. You all have talked a lot about the challenging cycle we're in and as far as looking to 2025, but I wanted to get a sense of what could be potential givebacks in 2025. Can you quantify how much the take-or-pay hit you experienced in 2024? And what about the cost impact of all the unplanned downtime? Presumably, as you've gotten these plants running better, you should get that back, separate from the crush curve, so I was just wondering if you could quantify those things for me.

Yes, I'm not sure I have all of them top of my head for the full year, Heather. But let me say the following: I agree with you. In terms of the take-or-pay contracts, we learned our lesson. We will act differently in the future regarding those contracts. Thankfully, the weather in Brazil looks very good as well, so we expect a crop of around 170 million tons next year that should alleviate these issues. In terms of manufacturing, we had issues mostly in Q3, where we had several plants offline due to a combination of reasons. I don't have those numbers off the top of my head, but at least in 2025, we should have limited exposure to take-or-pay contracts. However, Monish, do you have any specifics to add?

Yes, on take-or-pay, year-to-date, it's approximately $40 million of impact. We will have to see what 2025 brings and what the volume and the revised take-or-pay contracts look like. Regarding downtime, it comes down to the teams focusing on getting the operations up. The cost has gone up per ton, but I won't quantify that right now. I would wait until we get more accurate numbers, as it's just a balance of downtime with various operations.

Importantly, we implemented our automation projects in the carbohydrate solutions business first, as we saw solid returns. Now we have concluded our first pilot in the oilseeds plant in one of our Brazilian facilities, and the results are very encouraging. Depending on those results, we may apply similar automation strategies in other areas, resulting in improvements in yields and energy savings. We have approximately 15 projects set to move into 2025, so this should show positive results for us.

I'd also add to what Juan said: everyone generally analyzes downtime in terms of whether it goes up or down. The team is taking a lean-based approach, going into root causes and evaluating equipment failures to drive long-term operational excellence. This would ultimately result in sustained operating leverage in our plants, and we will allocate appropriate CapEx to achieve this.

Okay. Thank you. My follow-up is just, do you have an estimate of how much reinsurance proceeds will be in 2025 and 2026? I believe you mentioned it would continue into 2026. Could you share a rough estimate of those numbers?

Yes, I'll start with an overall possible loss. This is still preliminary; our teams are working through these numbers. We believe Decatur West should account for a loss of approximately $100 million, while Decatur East should incur losses between $300 million to $400 million. We've already received $95 million in Q3 and expect to obtain around $135 million in Q4. For 2025, we should be somewhere in the range of $50 million to $100 million from similar insurance proceeds along the same lines. All this is based on current information and our ongoing talks with actuaries and insurance companies. Our goal is to keep you updated as we learn more.

We now turn to Manav Gupta with UBS. Your line is open. Please go ahead.

My question is directed at you, Monish. You have been in the position for a while now, but looking at the next 12 to 24 months, what are your key priorities? What areas will you focus on to strengthen ADM as a company?

Yes, first, Manav, I'll just start with saying I've been here slightly over 90 days, and it's been an exciting time to be part of the team. My priorities, as I think about them, start with the integrity of our financial statements and remediating the material weaknesses we've identified. The team has already done significant work, but we can continue to improve our processes, internal controls, and systems. That's a top focus for me along with the IT team and finance teams to ensure our reporting aligns well. Second, driving cash cost and capital is crucial. There are many opportunities for us to manage what we can control, and we will work hard on productivity efforts. I want to simplify the business and tap into procurement savings as we navigate a slightly deflationary environment while ensuring we execute operational excellence. For capital allocation, we will implement a stage-gate model for all CapEx decisions. This will mean we will fund projects incrementally, assessing returns and milestones before allocating further funding, which will create internal competition for the available CapEx to drive returns on investment. There is also incredible potential to leverage data analytics in our operations to improve business outcomes. Additionally, there are opportunities to simplify our portfolio, and Juan and I are working closely on evaluating our assets to ensure maximum value creation. Ultimately, back to the basics: drive cash, cost, and capital in this environment where the commodity cycle might not favor us, thus self-help becomes essential.

No, you absolutely did. Just a quick follow-up on the policy side. We saw news about changes in China’s export taxes that could impact UCO, which may potentially lead to less UCO entering global markets. If the new administration imposes tariffs on foreign imports beginning January, do you see immediate opportunities or risks for your business when these tariffs take effect?

Yes, Manav, what happened when there was a flood of UCO coming into the U.S. was that soybean oil and canola oil lost share as feedstocks. There were numerous concerns about verifying the origin, especially from the palm oil-producing countries that exported UCO. Our primary aim is ensuring a level playing field, working within the rules transparently. We just want to continue working on products that align with regulations, and ultimately, once the rules are established, we will operate based on those.

Our next question comes from Steven Haynes with Morgan Stanley. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking my question. It seems that your SG&A expenses have escalated quite a bit this year, perhaps even more than what would be implied by normal inflation. When considering this ramp-up this year, what are some key drivers? And how should we perceive that moving into next year while also keeping in mind your focus on controlling costs?

I'll start by answering what is driving the increase in SG&A. A couple of reasons contribute to this: first, higher litigation costs due to the material weakness we are addressing; second, the company has been investing in digital transformation over recent years, which adds to costs; third, we are facing increased interest costs, but I understand you were just inquiring about SG&A. The higher costs also result partially from normal merit increases, but this is offset by lower incentive compensation due to our less-than-expected results. Looking ahead, we must continue investing in digital transformation. Additionally, we will conduct zero-based budgeting to evaluate if we see value from our expenditures. M&A activity that closed in 2024 provides added costs as we anticipate realizing synergies eventually, emphasizing that we have opportunities to control costs across both SG&A and manufacturing.

We now turn to Tami Zakaria with JP Morgan. Your line is open. Please go ahead.

Hi, good morning. Thank you so much. My question is regarding crush volumes. I believe I saw on your slide that you expect high single-digit percent type volume growth in the fourth quarter. Is that a good starting point for next year, barring any policy developments? Can you share any initial thoughts on how you're thinking about volumes?

Yes. I would say, if you remove the regulatory uncertainty, that level we disclosed seems reasonable under normal conditions. This is largely due to the addition of Spiritwood, which is on track to run at nearly full capacity.

Understood. That's helpful. Following up on that tariff question, are you preparing for either positive or negative impacts should the incoming administration enact tariffs on foreign imports starting in January? Are there immediate opportunities or risks that you anticipate when tariffs go into effect?

Yes, of course. Our business is actively assessing various scenarios regarding potential impacts. Based on historical observations, we often see trade flows adjust in response to tariffs. Demand generally remains constant; it is just satisfied differently. This is where ADM's global footprint and agility allow us to navigate successfully through shifts in trade flows. We’re actively performing scenario planning to be ready. You're welcome.

We now turn to Salvator Tiano with Bank of America. Your line is open. Please go ahead.

Yes, thank you very much. You made a remark early in the call about China increasing production of certain commodities, impacting global trade. Can you elaborate on which commodities you are addressing and whether this is more of a cyclical response to favorable weather or a more structural policy-driven change that could affect global trade long term?

Yes, I think that China has shown this year they want to encourage or incentivize local corn production. They have reduced imports of corn as a response to this. Regarding soybeans, while quantities are about the same, they have been preparing for possible tariffs or related impacts, which keeps imports steady. My main focus is on the corn aspect. You're welcome.

We have no further questions. I'll now hand back to Megan Britt for any final remarks.

Thank you so much for joining the call today and for your interest in ADM. Please feel free to follow up directly with me if you have any additional questions.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.