Earnings Call Transcript - BG Q3 2020

Operator, Operator

Good morning and welcome to the Bunge Limited Third Quarter 2020 Earnings Release and Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Ruth Wisener. Please go ahead.

Ruth Wisener, Investor Relations

Thank you, Elisa, and thank you for joining us this morning for our third quarter earnings call. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found in the Investors section of our website at bunge.com under Investor Presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well. I'd like to direct you to Slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current view with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors. On the call this morning are Greg Heckman, Bunge's Chief Executive Officer; and John Neppl, Chief Financial Officer. I'll now turn the call over to Greg.

Gregory Heckman, CEO

Thank you, Ruth Ann, and good morning, everyone. Turning to Slide 3. You can see the agenda for today's call. I'll start with an overview of the third quarter, then hand it over to John, who will go into more details on our performance. I'll then share how we're thinking about the rest of the year in 2021 before opening the line for your questions. So let's start with the quarter, turning to Slide 4. We had an exceptional quarter, and I couldn't be more proud of our team's outstanding execution. We achieved record crush utilization across our global footprint, and we remain agile, identifying opportunities and moving quickly to capture them as market conditions evolved. These results and our performance over the past few quarters reflect the meaningful changes we've made with a more global integrated operating model, improved portfolio, and increased financial discipline. This is even more impressive considering our COVID protocols and how many members of the team have been working remotely. During the quarter, we continued rewiring the way we do business, and we made further progress on our portfolio initiative with additional announcements expected before the end of the year. With most of the work to divest of our non-core assets behind us, we're now able to look ahead and effectively address our business needs down the road. On an ongoing basis, we'll look for opportunities to continuously improve our portfolio to ensure we're well positioned over the long term. Last quarter, we called out a number of drivers that could change our outlook for the third quarter. In most cases, the movements were positive. The team did a great job of adjusting as things developed. On crush margin curves, we noted they've begun to increase. That improvement continued through the quarter in several regions, and margins ended the quarter much higher than the forward curves indicated in July. The tightening of vegetable oil across the complex we noted last quarter continued, particularly in South America and Europe. We've seen the demand for oil improve in the food channel as we move through the COVID environment and has been widely noted. Biofuels are creating incremental demand. We noted China was purchasing aggressively in the U.S., and we saw continued strong soybean flows to China, which helped to further tighten global supplies. We also saw China start buying corn. The impact of the situation in Argentina on our business is largely unchanged from last quarter. While the current environment does not allow us to fully utilize our Argentine system, we have flexed our global platform to meet customer demands. Finally, we noted that many customers were in the spot market. As we moved through the third quarter, customers began to lock in their needs. And as I said, our ag and food teams did a great job executing as we helped customers at both ends of the value chain manage their risks. Our teams continue to do an excellent job collaborating with our customers to find solutions to their evolving needs related to COVID. We believe this quarter fully demonstrates that we have the right portfolio and the right team focused on the right things. Internally, we're faster, more efficient, and more data-driven than ever. We've internalized our approach to risk management over the past 18 months, and it's become ingrained in the way our teams do their jobs on a day-to-day basis throughout our value chains. Before handing it over to John, I just want to stress that in our view, the team's execution was nearly flawless this quarter. Based on Q3 results and improving market trends, we now expect that we'll end the year with adjusted EPS in the range of $6.25 to $6.75. And while we can't assume everything will always go perfectly given the inherent volatility in the global agriculture business, we are confident in our ability to protect our margins on the downside, manage our earnings at risk and expand on both when the opportunity exists. And with that, I'll hand the call over to John now to walk through the financial results in detail, and we'll then close with some additional thoughts on the rest of the year and 2021.

John Neppl, CFO

Thanks, Greg. Good morning, everyone. You may have noticed that we made an additional change to the format of our earnings press release. We have included a line item for mark-to-market timing differences that will provide a clearer assessment of company quarterly and year-to-date results. Note that our adjusted results, which in the past have excluded certain gains and charges, will now also exclude mark-to-market timing differences. We also adjusted the prior year accordingly. We think this change further improves transparency and will help your understanding of our financial performance. Now let's turn to the earnings highlights on Slide 5. Our reported third quarter earnings per share was $1.84 compared to a loss of $10.57 in the third quarter of 2019. Adjusted EPS was $2.47 in the third quarter versus $1.28 in the prior year. Our reported results included a $0.14 income tax benefit related to the reversal of a deferred tax valuation asset and $0.85 of negative mark-to-market timing differences that were excluded to arrive at adjusted EPS. Adjusted core segment earnings before interest and taxes, or EBIT, was $581 million in the quarter versus adjusted EBIT of $287 million in the prior year primarily driven by results in agribusiness where adjusted EBIT was $467 million compared to $174 million last year. As Greg noted, higher agribusiness results in the quarter reflected strong execution throughout the value chains, especially in managing the capacity of our assets, global trade flows and risks. In Oilseeds, soy crush results were higher in South America, Europe, and Asia where margins expanded from strong meal and vegetable oil demand, partially offset by slightly lower results in the U.S. Softseed processing results increased in all regions driven by the increase in vegetable oil prices and record capacity utilization. Lower variable per unit costs also contributed to improved performance. Results in our oilseeds trading and distribution operations were up compared to last year due to increased margins and favorable positioning. Results in Grains improved, primarily driven by origination in South America, which benefited from strong execution and farmer selling as crop prices in local currency increased during the quarter. In Edible Oils, results of $67 million trended favorably and were up $16 million or about 30% from the second quarter, but results were down from a strong year ago period. Higher earnings in Brazil and Asia, which benefited from improved demand in food processor and consumer retail channels, were more than offset by lower earnings in North America and Europe. Year-to-date adjusted EBIT was higher than last year, reflecting our broad diverse portfolio and the excellent execution of our teams during this challenging period of COVID-19-related lockdowns and restrictions. In Milling, higher results in Brazil, primarily driven by increased volumes, were slightly offset by lower margins in Mexico. Results in our U.S. operations were comparable to last year. In Fertilizer, higher segment results reflected improved performance in our Argentine operation driven by higher margins, partially offset by lower volumes. In Corporate and Other, total adjusted segment EBIT included expenses of $94 million from corporate and income of $2 million from other. This compared to expenses of $65 million from corporate and a loss of $4 million in other from the prior year. The increase in corporate expenses during the quarter was driven by higher performance-based compensation accruals on strong financial performance. Results for our 50-50 joint venture with BP benefited from higher year-over-year average sugar and ethanol prices in local currency as well as improved industrial efficiency and costs. Earnings in the third quarter of last year benefited from no depreciation as those assets were classified as held for sale. For the 3 and 9 months ended September 30, 2020, income tax expense was $38 million and $151 million, respectively, compared to a tax benefit of $28 million and an expense of $70 million for the 3 and 9 months ended September 30, 2019, respectively. The increase in income tax expense during 2020 is driven by higher pretax income. Net interest expense of $51 million was in line with our expectations. Now let's turn to Slide 6. Here, you can see our positive earnings trend adjusted for notable items and timing differences over the past 3 full years along with the trailing 12-month performance for the 3 most recent quarter ends. Slide 7 compares our Q3 SG&A to the prior year. Adjusting for notable items, our SG&A this quarter was up $66 million, a significant increase in performance-based compensation accruals due to our improved financial performance as well as other specified items, such as inflation and foreign currency fluctuations, accounted for a net increase of $82 million, partially offset by underlying SG&A savings of $16 million. Moving to Slide 8. For the trailing 12-month period, our cash generation, excluding notable items and mark-to-market timing differences, was strong with approximately $1.6 billion of adjusted funds from operations. The cash flow generation enabled us to comfortably fund our cash obligations over the last 12 months and fund approximately $800 million of our increase in readily marketable inventories. As you can see on Slide 9, this allowed us to strengthen our balance sheet. At the end of the third quarter, 89% of our net debt was used to finance readily marketable inventories. This compares to about 70% last year. Turning to Slide 10. At the end of the quarter, we had committed credit facilities of approximately $4.3 billion with $3.6 billion available. Last week, we closed on a $1.25 billion revolving credit facility, of which $250 million is committed and $1 billion is uncommitted. This facility further strengthens our liquidity. In addition, we had a cash balance of $291 million at the end of the third quarter. Slide 11 summarizes our capital allocation. Year-to-date adjusted funds from operations, which excludes notable items and mark-to-market timing differences, was approximately $1.3 billion. After allocating $160 million to sustaining CapEx to include maintenance, environmental, health and safety and $25 million to preferred dividends, we had approximately $1.1 billion of discretionary cash flow available. Of this amount, we paid $212 million in common dividends to shareholders, invested $70 million in growth and productivity CapEx and during Q2, bought back $100 million of our stock. The remaining cash flow of approximately $730 million was used to strengthen our balance sheet. Please turn to Slide 12. On our business update in June, we introduced 2 complementary return metrics that we believe reflect the performance of our business. One of those metrics is adjusted ROIC, which recognizes merchandising RMI as a tool to generate incremental profit. For the trailing 12 months, adjusted ROIC was 13.8%, or 7.2 percentage points over our RMI adjusted weighted average cost of capital of 6.6%. ROIC was 10.9%, 4.9 percentage points over our weighted average cost of capital of 6% and well above our stated target of 9%. Detailed calculations of these metrics are in the appendix of this presentation. Moving to Slide 13. The second complementary metric we introduced was cash flow yield, which is a ratio of discretionary cash flow to adjusted book equity. This measure emphasizes cash generation and complements other earnings and return metrics. Here, you can see cash flow yield over the last 3 full years as well as for the trailing 12 months for the 3 most recent quarter ends measured against our cost of equity of 7%. For the trailing 12-month period ending September 30, 2020, we produced a cash flow yield of 22%. Please turn to Slide 14 and our 2020 outlook. As Greg mentioned in his remarks, we now expect full year adjusted earnings, excluding notable items and mark-to-market timing differences, of between $6.25 and $6.75 a share. In Agribusiness, our improved outlook reflects our third quarter year-to-date results, the current market environment and forward curves. In Edible Oils, we now expect adjusted full year results to be up compared to last year due to strong performance of our consumer businesses and growing biofuel demand. Expected full year adjusted results in Milling continue to be in line with last year. In Fertilizer, we now expect full year adjusted results to be slightly higher than last year. Corporate and Other is expected to be comparable to last year when excluding Bunge Ventures. We also expect an adjusted annual effective tax rate in the range of 20% to 22%, net interest expense of approximately $230 million, capital expenditures in the range of $375 million to $400 million and depreciation and amortization of approximately $430 million. With that, I'll turn things back over to Greg for some closing comments.

Gregory Heckman, CEO

Thanks, John. Before turning to Q&A, I want to give you a few closing thoughts. While we can't fully predict how the markets will evolve, based on what we see now, we expect many of the favorable trends to carry through the balance of 2020 and into 2021. Looking longer-term, we expect underlying demand for our core products to remain strong. We also expect additional global demand for vegetable oil due to the growth of biofuels, both from conventional biodiesel as well as incremental growth in renewable diesel, which is a drop-in fuel chemically identical to crude-based diesel. With our strength in oilseed processing, in addition to our worldwide origination and distribution capabilities, we're well positioned to meet market demands and capitalize on this growth. So in closing, we can tell you we're confident in all changes we've made at Bunge. We're confident in our global platform, our operating model, and our financial approach. And most importantly, we're confident in our team and their continuing ability to identify and capture the opportunities ahead of us. And with that, I'll open the call to your questions.

Operator, Operator

The first question today comes from Ben Bienvenu of Stephens Inc.

Benjamin Bienvenu, Analyst

Congratulations on the results. So if we rewind back to this summer at your Investor Day, you outlined a $5 mid-cycle earnings number and embedded within that was a return to an average crush environment and $1 of self-help. I think your guidance clearly suggests, as with the fundamental environment more broadly, that you're above mid-cycle fundamentals. But I'm curious where you are in your journey to deliver against that $1 of self-help. And within that, I know deleveraging and repositioning the balance sheet is an important component of that self-help story. With these results, how do you think about getting to an investment-grade-rated debt profile? And what does that milestone mean for you in terms of capital allocation flexibility?

John Neppl, CFO

Thanks, Ben. This is John. I think we're well underway on the $1 of self-help. A couple of things yet to close, the grain sale, of course, the proceeds from that and the proceeds from the merger in the mayo deal, neither of those are closed yet, which is part of the dollar balance sheet as we firm up the balance sheet. In terms of the cost savings side, I think we're well on our way there. We've shown good progress both on the SG&A side and on the industrial side. So we feel very confident that we'll get the 50% to 60% we talked about there. And then we're continuing to improve our underlying business in a number of ways. One of those was in specialty that we were focused on as part of that improvement. In terms of going forward and thinking about how we're performing relative to investment-grade credit rating, I think we are definitely heading in the right direction. I think our metrics continue to improve. We're having good dialogue with the rating agencies, and I think they're pleased with the progress. And so our goal, of course, is to get back to solid BBB with S&P on stable outlook and get an upgrade with Moody's. And again, I can't predict when that will happen, but I think we're doing all the right things. And ultimately, from a capital allocation standpoint, with the cash generation that we've been able to produce, we're taking a hard look at what we need to do going forward here.

Benjamin Bienvenu, Analyst

Okay. Great. My second question is related to the Sugar & Bioenergy business, which I know is not core to your business and by definition is noncore per your release. It wasn't included in the outlook. I know part of that is because it's noncore, but the results are materially improved. And I'm curious what you think that portends as it relates to the prospect of divesting that business and kind of how you think about your remaining business and kind of reallocation of funds if you were to consummate sale of the sugar business.

John Neppl, CFO

Well, I don't think the recent improvement, certainly, while we're very happy with that, obviously, I don't think it changes our long-term plans with that business. The team that is running it, it's a very solid team. We've got a great partner in BP. So we're very happy with the current arrangement. But our goal long term, again, it hasn't changed, which is to divest that business over time, whether through a sale to BP or an IPO or some other ultimate exit. But in the meantime, we'll continue to support them as best we can. Long term, we'll see what the opportunities are when that occurs. It's going to be at least 12 to 18 months out before something happens there most likely. And we'll see what opportunity we have with that capital at that point in time.

Benjamin Bienvenu, Analyst

Okay. Great. And best of luck with the remainder of the year.

John Neppl, CFO

Thank you very much.

Operator, Operator

The next question comes from Adam Samuelson of Goldman Sachs.

Adam Samuelson, Analyst

My first question is about the current operating environment and your performance in the third quarter. It seems that the fourth quarter outlook suggests the Agribusiness unit will be about flat year-on-year. Is that correct? Is this due to your hedging strategy? How should I consider the strong crush margins that have been observed in the U.S., Europe, and particularly in Brazil, in relation to your outlook?

Gregory Heckman, CEO

Sure. Yes. The nearby spot replacement margins definitely are very robust. And you're correct on your analysis of the fourth quarter, so a little less than last year right now. And we're looking at what the curves are telling us, right? We've seen an increase in crush margins, of course, higher oil demand, and higher meal demand. With prices up, it has moved the buyers' back spot, and the curves reflect that. So as it unfolds, we'll see how that works. If it continues to improve kind of a week and a month at a time here, sure, there's upside in Q4, absolutely, but that's not what it's telling us right now. And then, of course, the concern is, as COVID is kind of rearing its head again, what impact that will have. Now while we're watching it closely because, as we've talked about, it does affect demand for both food and fuel. We do think that as we've been through the cycle, once people adjust their supply chains, we still have people eating more at home than away from home, that the shift won't be as dramatic and that people are more prepared. So even with the roll-in, we're hoping that it doesn't have the same impact, but we are watching it closely.

Adam Samuelson, Analyst

Okay. That's helpful color. And then I guess my second question, something you alluded to in the prepared remarks, just on the opportunity with the growth in renewable diesel. And I was hoping if you can elaborate a little bit more on that and how you think Bunge is positioned to benefit there and assets in particular that might be advantaged and how you would think about or how the industry would think about crush capacity in the U.S. to sell that oil needs.

Gregory Heckman, CEO

Yes. I think Bunge is very well positioned. I mean the fact that this need will be met with vegetable oil and there'll be some adjustment depending on which oils are needed, there'll be adjustment in the food market as well as the market reformulates on those that can in the food and fuel to decide which oils they're going to use, but the bottom line is more demand, and that will be positive. And the fact that we work across the soy, all the soft oils and then also have palm in our portfolio, we think we're in a great position with our global platform to serve not only the growing fuel demand, but to continue to serve all of our food customers as well.

Operator, Operator

Next question is from Ben Theurer of Barclays.

Benjamin Theurer, Analyst

Greg, John, first of all, congrats on the results. Clearly, that was a strong quarter. Just I had one question. It goes in line a little bit of what Adam was just asking about the dynamics into the fourth quarter and just to understand a little bit. We're seeing that strong demand, and obviously, we're still trying to basically work through now through the crop from the U.S., and there's obviously going to be strong market dynamics. So how should we think of that carrying over and that profitability with the demand looking a little bit beyond the fourth quarter and what you're guiding with that $1 to $1.50 EPS for the quarter? But if we look into 2021, where do you think the market is going to head to considering the strength in the more recent quarter and what continues to likely be the fourth quarter in terms of crush margin?

Gregory Heckman, CEO

Yes, you're right. The environment is very favorable right now. I would suggest that it’s probably best to maintain this momentum into the fourth quarter. We are monitoring the situation closely. The current trends may not fully align with predictions, but as we progress through Q4 in the next 30 to 60 days, if we continue to see positive momentum, I believe that will carry over into Q1. This means entering 2021 with a strong foundation. At this moment, we are pleased with the way the environment appears. While we remain cautiously optimistic, things look very promising right now, which is why we increased our guidance overall. Our confidence in the current environment leads us to believe this momentum will extend into Q1, and then we will evaluate where things go from there.

Operator, Operator

Next question comes from Tom Simonitsch of JPMorgan.

Tom Simonitsch, Analyst

What was the Q3 contribution from the 35 U.S. grain elevators you're looking to divest? I was just curious if you still view that divestment as accretive to 2021 earnings at current run rates.

John Neppl, CFO

The business did not perform well in Q3, resulting in a slight loss. However, it will still be accretive at the time of divestiture based solely on the transaction itself, without any reinvestment of the capital.

Tom Simonitsch, Analyst

Okay. And can you elaborate on your expectations for Argentina crush into 2021? Have export tax cuts through January moved the needle at all in terms of farmer selling or crush capacity utilization?

Gregory Heckman, CEO

Argentina continues to be really, really bound up, right? The farmer being very reluctant marketer. There's a lot of discussion, a lot of guesses about how it might unfold, but the producer has been very resilient. And that, of course, as you've seen, has been tough on margins and tough on utilization rates. So I'm sure glad we're running a global system. And the team in Argentina is doing a great job in a very tough environment. We've been there decades, and we've got a lot of experience. But right now, we don't see that situation improving until there's some clear direction.

Tom Simonitsch, Analyst

If I could just tag on one last question. You're now excluding mark-to-market impacts from your results. Can you just elaborate on why you're making that change now?

John Neppl, CFO

Yes. We have been trying to provide better clarity on how we view mark-to-market. Although we have discussed it over the years, it has often caused confusion. Therefore, we decided it was more straightforward to include it in our adjusted results instead of presenting adjusted results separately and then mentioning the mark-to-market impact separately.

Gregory Heckman, CEO

I think it's just consistent with our promise to continue with more transparency and granularity about the results to try to help everyone understand the Bunge earnings power better.

Operator, Operator

The next question comes from Vincent Andrews of Morgan Stanley.

Vincent Andrews, Analyst

Congratulations on the results and thank you for the mark-to-market adjustment. This will simplify things for everyone going forward. There have been many headaches over the years trying to reconcile what was happening with our numbers. This is a good move. I want to finish a thought from earlier. Greg, it seems you imply that you don't want to own or operate or construct a new renewable diesel facility, but instead, you prefer to focus on the service and supply sides. Is that correct?

Gregory Heckman, CEO

Yes, that's correct. We want to be there to serve that growth, but we want to do what we're core and what we're best at. And so we'll work with our customers. We'll look at places where it makes sense. If it's debottlenecking a refinery or adding storage and handling capabilities to help manage customer supply chains. But we'll look at the context of anything we do with our network that it serves all of our food and fuel customers. So, as we improve our network, we get that optionality. So we definitely want to work hand in glove, but we'll be very disciplined about putting capital to work in long-lived assets and make sure it's an area where we have the right to win.

Vincent Andrews, Analyst

Okay. I wanted to clarify your comments about Q4 and next year regarding customers returning to the spot market. Does this suggest that there isn't much liquidity in the later months to secure pricing, or am I misunderstanding?

Gregory Heckman, CEO

No. That's correct. And as that's kind of the nature generally of this industry is that there's always more liquidity in the near quarter and the following quarter. And the curves kind of reflect that not only liquidity, but you're going to have to show me that these margins are going to stay here. And so that's what's reflected in our outlook.

Vincent Andrews, Analyst

Okay. If I could quickly ask one last question, could you clarify the situation? You mentioned that Argentine farmers are not selling, while Brazilian farmers have been selling quite a bit this year. Can you help us understand how that relates to what you've already purchased, how much has been processed, and what remains for them to sell and process? I'm trying to grasp this as we approach the fourth quarter, as it seems this might explain the decrease in activity with Brazilian farmers for the remainder of the year until next year's harvest.

Gregory Heckman, CEO

Yes, you're absolutely correct. Some of the business purchased from the Brazilian farmer has been accelerated compared to typical selling patterns. They are currently about 50% sold and have even begun to sell a small portion of the 2022 crop. The shift in the real has made this a profitable situation, and the timing has indeed been moved up.

Vincent Andrews, Analyst

Okay. Great. Congratulations again.

Gregory Heckman, CEO

Thank you very much.

Operator, Operator

The next question comes from Robert Moskow of Crédit Suisse.

Robert Moskow, Analyst

Great news today.

Gregory Heckman, CEO

Thank you.

John Neppl, CFO

Thank you, Rob.

Robert Moskow, Analyst

Sure. Regarding the parabolic move in soybean meal demand, can you talk a little bit about the fundamentals driving that? Do you have a sense of where China is in terms of rebuilding its pig herd? And what have you seen in response at your crush facilities in China?

Gregory Heckman, CEO

Our crush facilities have performed very well in China this year, which is largely due to the recovery in oil demand as well as the quicker-than-expected rebuilding of the hog herd. We also anticipated that inclusion rates would rise as professional operations increased, and we observed that happening. The market seems to believe that they're about halfway back to pre-COVID levels, so there is still room for improvement, but this has significantly contributed to meal demand. Global pork production has increased about 4%, with China leading, alongside growth in the U.S., EU, and Brazil.

Robert Moskow, Analyst

Right.

Gregory Heckman, CEO

And then on the global chicken was up just a bit as well, but China put that in place early. That demand is still there as the pork comes back. And then also, some increase in Brazil, EU, U.S. and India. So it's good broad demand.

Robert Moskow, Analyst

Right. Okay. Great. And then a follow-up. At the start of COVID, I think your company and several others were thinking about the possibility of just a lower demand for food because when you shift from the foodservice channel to the retail channel, people just kind of naturally eat a little bit less. Are we past that kind of situation now? And if so, do you think it's because just people have returned to closer to normal patterns? Or is there something else? Do we not have to worry about that anymore I guess is my question.

Gregory Heckman, CEO

Yes. Demand has rebounded more quickly than anticipated. With people dining at home, sales in the center of grocery stores have remained very strong. Quick service restaurants have also recovered rapidly. However, smaller food service businesses have been significantly impacted, which has dragged down the overall food service sector. Despite this, the strength in consumer packaged goods has exceeded our expectations and has helped offset some of the losses. As we monitor the ongoing situation with COVID, we are less concerned now than before, having already experienced this cycle once.

Operator, Operator

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

Kenneth Zaslow, Analyst

So when you think about the $5 number, you guys use the average 5 year. And I think everybody thinks of that as a mid-cycle number. But is it really a mid-cycle number? Or is it something that's just an average of 5 years? And the reason I say that is, as I look forward, I mean would you say that's representative of the future not just for this year, but going forward, when you have a rebuild in China, a renewable diesel change as well? Is that really considered mid-cycle? Or is it just considered over the last 5 years, and that's what we should capture it as?

Gregory Heckman, CEO

Yes, we definitely analyzed historical data, which spans about six years. It's important to note that we did not include Imcopa in our calculations, nor did we factor in growth in food, plant protein, or renewable diesel. That's the reasoning behind calling it the baseline; it's not reflective of our earnings power, just baseline earnings. Additionally, we examined the historical crush margins, which were around 34. To provide some context, on a year-to-date basis, we're currently at approximately 40, compared to that benchmark of 34. This improvement is evident in our earnings, which we've adjusted upward for the year. As we carry this momentum into 2021, it will serve as a reference point for our outlook.

Kenneth Zaslow, Analyst

My follow-up to that is, also, when you were thinking about that, my sense is you probably didn't think that China would be buying or that there would be a free market because, right, we haven't had a free market in, call it, 8, 10 years. So when you think about that, how does elevation margins or export margins play into that as well? I'm assuming that's excluded from the 34 and that's just something that kind of ebbs and flows. But with China demand, is that something that's more structural? Or how do you think about that? And I have one more after that, and I'll leave it there.

Gregory Heckman, CEO

Yes. Yes. That definitely wasn't in our numbers. That's been an increase, and that's been a positive increase. As that continues, I'd say the entire underlying feels a lot more sustainable than at the time we talked about it.

Kenneth Zaslow, Analyst

My final question is, you previously mentioned that once you reach a certain margin level and get your business in order, you would be in a position to engage in new business opportunities that the previous Bunge couldn't pursue. Can you elaborate on what businesses you now have the opportunity to enter, and what your outlook is for the future? I'll stop there.

Gregory Heckman, CEO

Sure. Thanks, Ken. Sure. And I think we're at that point. As we talk about, we're finishing the portfolio work. We've got a couple more deals. We'll probably announce before the end of the year one small one, one a little more sizable. And we've really turned to look at the growth. As we start to have the cash from earnings and closing the deals to invest, that's the fun. The attention in the system, the team competing for that capital because we're going to be very disciplined about how we put that capital to work. But we'll continue to think about where we improve to protect or improve our footprint in our Agribusiness. So any regional consolidation that makes sense. The other is we'll continue to build on our specialty fats and oils footprint. That's a business we believe that there'll be some tuck-in and bolt-on acquisitions to improve either our product or our geography offerings to customers. Again, we'll be disciplined about those values. We announced one deal in the plant protein side, and it's an exciting place. That trend in plant protein growth, that is in place. That's a place where we have a right to win. We've got a great team that's working on that. We've got a real nice pipeline of projects. You'll be hearing more about that in the future as we roll things out, but we're working with customers, customers that we already have relationships with on the fats and oil side broadly and that we have specifically in providing the fats and oils that make those plant proteins taste good and have the mouthfeel and the bite that we all love so much. And then on the renewable diesel side, as we talked about, the benefit of that demand, it lifts the entire oil market across our food and fuel platform, and we'll look for those opportunities to serve those customers. Again, that thinking through that lens as we make improvements in our Agribusiness footprint to serve all our customers. So we're really excited about the performance of the team. We're excited about having the earnings at this point where we're really at the inflection point, starting to move into growth and excited to have some real new opportunities in this industry around growth in plant proteins and renewable diesel, which is new demand as well as just good demand continues to be up and to the right. So excited about what we're doing here, Ken, and really, really proud of the team. Looking forward to talking to you again after the next quarter.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Ruth Wisener for any closing remarks.

Ruth Wisener, Investor Relations

Thanks for joining the call today. And if you have any questions, please feel free to reach out. Have a good day.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.