Ruth Ann Wisener:

Thank you, operator and thank you for joining us this morning for our second 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 Investor Center on our website at bunge.com, under Events & Presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measures 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.

John Neppl:

Thanks Greg and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Reported second quarter earnings per share was $0.48 compared to $4.09 in the second quarter of 2023. Reported results included an unfavorable mark-to-market timing difference of $0.82 per share and a negative impact of $0.43 per share related to transaction and integration costs associated with our announced business combination with Viterra. Adjusted EPS was $1.73 in the quarter versus $3.72 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT, was $519 million in the quarter, which is $893 million last year. Agribusiness, processing results of $265 million in the quarter or down from last year as higher results in Europe soy and soft seed crush, but more than offset by lower results in North and South America and Asia. Merchandising, lower results were primarily driven by global grains. Our volumes were more than offset by lower margins. Refined and specialty oils performed well, but down from a strong prior year. Higher results in Asia were more than offset by lower results in North and South America and Europe. Milling, higher results were primarily driven by South America, reflecting higher volumes and margins, both [ph] in the U.S. were in line with the prior year. Corporate and other improved from last year. The decrease in corporate expenses is largely due to lower performance-based compensation. Our results in other were primarily related to our Captive insurance program. In our non-core sugar and bioenergy joint venture, core results were due to lower Brazil ethanol prices, which more than offset higher sugar prices. Results were also negatively impacted by approximately $15 million in foreign exchange translation losses with U.S. dollar-denominated debt. Results in the prior year included a $39 million benefit, reversal of a tax valuation allowance. The first six months of the year, reported income tax expense was $147 million compared to $381 million in the prior year. The decrease is primarily due to lower pre-tax income. Net interest expense of $86 million in the quarter was in line with last year. Let's turn to Slide 6, where you can see adjusted EPS and EBIT trend over the past four years, along with the trailing 12 months. Strong performance over the period reflects a combination of favorable market environment and full execution by our team. The more recent trend reflects more balanced and less volatile markets, translating into lower earnings. Slide 7 details our capital allocation. First half of the year, we generated $895 million of adjusted funds from operations. After allocating $191 million to sustaining CapEx, which includes maintenance, environmental, health, and safety, we had $704 million of discretionary cash flow available. Of this amount, we paid $191 million in dividends, invested $342 million in growth in productivity related CapEx, half of which relates to our large multiyear greenfield investments, and repurchased $400 million of Bunge shares. This resulted in a use of $229 million of previously retained cash flow. We are in progress on our greenfield products. We could end the year with the higher end of our CapEx range of $1.2 billion to $1.4 billion, or perhaps slightly above. However, this would reduce our 2025 expectations. Moving to Slide 8. Quarter end readily marketable inventories, or RMI, exceeded our net debt by approximately $3 billion. Our adjusted leverage ratio, which reflects our adjusted net debt to adjusted EBITDA, was 0.5 times at the end of the quarter. Slide 9 highlights our liquidity position. At quarter end, we have committed credit facilities of approximately $8.7 billion, which includes $3 billion that will become available to draw upon at the close of the Viterra transaction. With the $5.7 billion available to us currently, all was unused at the end of the quarter, providing sample liquidity to manage on our ongoing capital needs. These amounts are in addition to the $8 billion of term loan commitments that we have secured to fund the Viterra transaction. Please turn to Slide 10. Trailing 12 months adjusted ROIC was 15.2%, well above our RMI adjusted weighted average cost of capital of 7.7%. ROIC was 12.2%, well above our weighted average cost of capital of 7%. Moving to Slide 11. For the trailing 12 months, we produced discretionary cash flow approximately $1.5 billion, a cash flow yield of 13.7% compared to our cost of equity at 8.2%. Please turn to Slide 12 and our 2024 outlook. As Greg mentioned in his remarks, taking into account first half results and the current margin environment forward curves, we now expect full year 2024 adjusted EPS of approximately $9.25. Note that this forecast excludes any pending transactions that are expected to close during the year. In the Agribusiness, full year results are forecasted to be in line with our previous outlook, reflecting higher results and processing, largely offset by lower results in merchandising. Notes [ph] are expected to be down compared to last year. The refined and specialty oils full year results are expected to be up from our previous outlook, due to a better-than-expected second quarter, but down compared to last year's record performance. The milling, full year results are expected to be similar to our previous outlook and up from last year. In corporate and other, full year results are expected to be similar to our previous outlook. In non-core, full year results in our sugar and bioenergy joint venture are expected to be down slightly from our previous outlook and down significantly last year. Additionally, company expects the following for 2024; adjusted annual effective tax rate of 22% to 25%; net interest expense in the range of $280 million to $310 million; capital expenditures in the range of $1.2 billion to $1.4 billion, as I mentioned earlier; and depreciation and amortization of approximately $450 million. With that, I'll turn things back over to Greg for some closing comments.

Operator:

Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions] Our first question today comes from Ben Theurer from Barclays. Please go ahead with your question.

Greg Heckman:

Sure. Let me start and good morning. But yes, as you kind of laid out, we overperformed in the first half to what we had talked about since we were together last time. Gross margin did improve late in Q2 and that also gave us visibility into Q3 and where we have been able to lock some margins, and that gave us the confidence to roll it through. Now, that being said, Q4 margin curves are very inverted. We've got very little visibility. And while the demand oil and meal remains strong, the end customers, as everyone knows, the farmer vary spot, as well as the consumer vary spot. So, we just don't have much visibility in that Q4. And as you called out, it's historically an important one for us. So, I think had the confidence to roll it through and call it, but that's what we see now and that's why we said the approximate $9.25 million.

Ben Theurer:

Okay, and that's good color. And then just on -- I know you might not be able to talk too much about it, but you've made some comments on the pending regulatory approvals with Viterra, and your conversations imply not any meaningful financial adversities as you potentially have to look into divestitures. Just wanted to see if you could give us a little bit more color on how the negotiations are going and what's like the kind of things you might be asked to do in order to get this deal over the finish line?

Ben Theurer:

Okay. Thank you very much.

Adam Samuelson:

Yes, thank you and good morning everyone. Maybe first question on the merchandising side Agribusiness. And so you kind of as you alluded crush margin environment has improved in the nearby, but the comments on the merchandising piece were a little bit more tempered. I guess I'd love some additional color on what you're seeing in terms of farmer selling in Brazil, in Argentina, and how those are influencing kind of your outlook for merchandising over the balance of the year. And then I got a follow-up question on the Refined Oil side.

Adam Samuelson:

That's really helpful color. And then just on the refined oil side, you talked about raising the outlook largely to reflect the second quarter performance, which the release you cited, Asia being kind of the area of year-on-year strength. Was that what surprised you relative to your expectations three months ago? And just help us think about the forward for why you don't think that strength would be persisting in the second half at quite the same level?

Adam Samuelson:

I appreciate that color. I'll pass it on. Thank you.

Heather Jones:

Morning. Thanks for taking the question.

Heather Jones:

I just wanted to ask about your coverage going into Q3 and Q4. Greg, you mentioned the customers and the farmers have been very slow to buy or sell. But just wondering -- because we had the soy crush in the U.S. has been markedly lower than people expected and so you had these rallies. And so as we're thinking about your Q3 and Q4, but particularly Q3, how much of that is covered? And so do you have any exposure to the robust margins that we're seeing at present?

John Neppl:

Yes. Maybe just to add there, Heather, that we're largely covered for Q3 at this point, especially on the canola side. Sun is affected a little bit by crop, so maybe not as much cover there. But really covered on soy as well here as of the end of July.

Greg Heckman:

Yes, I think you're right on the fact that the farmer selling came in some as -- it was slow and it came in kind of drilled out in different surges. That did provide some ability to crush above fixed costs, but I would not say we saw the robust margins that you're -- that you may have picked up. That being the case, it really depends on how the farmer reacts on the second half. Now, the offset of that, right, was lower soybean meal exports that were moving into Europe. And so we continue to see strong margins there in Europe with good demand and less meal imports. That was kind of the other side of the sword.

Operator:

Our next question comes from Salvator Tiano from Bank of America. Please go ahead with your question.

Greg Heckman:

Yes. Remember, those were our assumptions in the model for our baseline, and we are operating below baseline today. Now, that's always the toughest one to predict. And as those opportunities come up, I think the team does a good job of capitalizing on those. But we've been in a pretty interesting time of transition, right? And when these markets generally transition from higher price into a more balanced S&D, that's when you see this adjustment and the pressure on margins, right? The farmers have good, strong balance sheets. They have a lot of storage available and they don't like selling lower prices. So, they're building inventory, if you will, and seeing how the weather plays out and how the S&Ds play out. And then you've got the consumer, which is actually reducing inventories, shrinking their supply chains and their patience is also being rewarded. So, the market gets much more spot to put pressure on the margins until we get back in balance. And I think we're getting pretty close there now, where some of the puts and takes around what could happen from a weather and what could happen from a demand start to be more of an upside on -- as opportunities develop. But I think that's really what you've seen in the transition of the market going through, and that's what we've been seeing.

Greg Heckman:

It's been both. Our food customers -- while we're seeing the customers trade down some on the brands and things that they're on -- eating at home as well as the shift of where they're eating away from home, we've probably been maybe a little bit of a beneficiary to that favorable mix for oil demand. And then also when you think about oil demand, it doesn't go one-for-one with the food demand. So, that's been pretty resilient on the food side. And then with the lower price, we've seen some improvement on the energy demand as well. And then lastly, as I was talking about on the tropical side, we've definitely been a benefit of the tighter cocoa butter supply with our cocoa butter equivalents, and helping some of our customers solve problems on the supply side and/or lowering their cost for -- when they reformulate into our products. So, the team has been doing a great job, the technical team and the execution team, working with our customers as they're deal with a little bit of a challenging environment.

Operator:

Our next question comes from Tom Palmer from Citi. Please go ahead with your question.

John Neppl:

Thanks Tom, this is John. Yes, I think -- look, we're not going to probably commit to any share repurchases prior to Viterra close, mainly because we've got leverage commitments and targets that we want to hit going into the close process, because we're expecting a ratings upgrade relative to the -- is related to the transaction. But we are still very committed to that program and expect to execute that post close. We did give ourselves an 18-month window post close, but we'll obviously do what makes sense when it makes sense. And I would just add that with the announcement of sugar, we're hoping to close that maybe late this year. Certainly, proceeds from that will -- could play a meaningful role in the repurchase program, increasing it by some meaningful amount of that those proceeds.

John Neppl:

Yes. So, our range -- I think we're going to be at the high end of our range this year. It could be a little bit above the $1.4 billion, depending on how things play out here toward the end of the year on bigger CapEx expenditures. But we do expect next year to be up from that, probably closer to the $2 billion range, $1.9 billion to $2 billion, just given all of these projects are going to really be in full swing in terms of development. Then -- and we should make great progress next year on getting those close to commissioning. But commissioning will really be probably in 2026 on the four major projects that we're working on today, but we'll see a significant drop off. Probably as of today, absent any other opportunities coming along, we do expect CapEx to drop potentially up to 50%. This is all excluding Viterra, but we could see a 50% drop in CapEx in 2026 versus 2025.

Operator:

Our next question comes from Manav Gupta from UBS. Please go ahead with your question.

Greg Heckman:

Yes. As you know, we've got to run the companies separately until close. So, the Viterra team, I think, continues to do a very good job in running their business. Definitely got the extra strain, as anyone does, of the integration planning as well as all the work being done on the regulatory side. And we're doing that all during a pretty challenging environment. But it's a great platform, the engagement that we have had with their people. We continue to just be very impressed by the quality of their people and the capabilities, and their ability to really step-up with the challenges of all the work that's being done. So, we continue to feel very good about the transaction and really look forward to the future.

Greg Heckman:

Yes, I'll start and John can finish. But look, we -- very early on when we got here and we're able to put sugar into the joint venture with BP, declared then that we would eventually exit the business when we thought that was the right time for our shareholders and for the stakeholders. And in the meantime BP and ourselves supported that team, which did a fantastic job of really improving that business with the combination that we did there and really becoming an industry leader. And we're very proud of that, but that didn't change our long-term strategy. And so when the timing was right and the values lined up, than we've done the second part of that transaction and to exit. So, we do look to -- as John said, we look forward to closing that transaction hopefully later this year, and releasing those resources, not only the capital but even some of our folks that are focused there in supporting the JV.

Manav Gupta:

Thank you so much.

Steven Haynes:

Hey good morning. Thanks for taking my question. Wanted to ask a quick one on farmer selling. You alluded, I think, before you -- the idea that it might be a source of upside going forward. I was just hoping maybe you could put it in a little bit of a broader context of like where you think we are in the evolution of farmer selling slowing down through the course of the year. I guess what kind of gives you confidence that it's not going to be kind of a more prolonged slow farmer selling cycle, like we might have seen in some past down-cycles? Thank you.

Steven Haynes:

Thank you.

Andrew Strelzik:

Hey good morning. Thanks for taking the questions. You talked about the inverted curves. And so I was curious, are there internal levers you can pull in an environment where U.S. crush margins get more challenged across operations or, I guess, growth CapEx would probably be more delayed? But any other levers that we should think about that you might have at your disposal as the environment plays out potentially in that inverted way?

Andrew Strelzik:

Okay, that's helpful. And then I guess kind of related to that, as you've gotten a little bit farther out from the really elevated crush margin environment, I know there's been obviously some recent strength, but are you better able to decouple the internal events to the business from the last several years away from kind of the operating environment and the strength of that over the last couple of years? And do you think you've kind of appropriately captured that in the baseline assumptions? Or has your thinking evolved at all? Thanks.

Andrew Strelzik:

Thank you.

Andrew Strelzik:

Great, absolutely. Thank you very much.

Carla Casella:

Hi. My question relates to financing. You got the question about the dividends and buybacks ahead of the Viterra transaction, but are you -- what are you thinking in terms of pre-financing that transaction and how much you may want to come to market for? Or would you wait--

Carla Casella:

Okay, great. Thank you.

Greg Heckman:

Thank you very much. Thanks everybody for joining us today. And we'd just like to say we're really excited about the longer term here, bringing the post-close, and bringing Bunge and Viterra together. We're going to be a more complete company. And we're going to have more capabilities to serve our customers in what continues to be a more complex environment. With the population continuing to grow, load and per capita continuing to increase, climate volatility making things more challenging, and what looks like a policy environment to continues with more uncertainty. And customers that all want more transparent and sustainable feedstocks. So, we feel we're very well-positioned and uniquely focused on this space and we really look forward to the future. So, thanks for joining us. Have a great week.

Gregory Heckman:

Thank you, Ruth Ann, and good morning, everyone. I want to start by thanking the team for delivering another quarter of strong results, which reflect continued focus and great execution. We're off to a good start in 2024 amid a more balanced market environment than we've experienced over the past few years.

John Neppl:

Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Our reported first quarter earnings per share was $1.68 compared to $4.15 in the first quarter 2023. Our reported results included an unfavorable mark-to-market timing difference of $0.94 per share and a negative impact of $0.42 per share related to transaction and integration costs associated with our announced business combination with Viterra. Adjusted EPS was $3.04 in the quarter versus $3.26 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT was $719 million in the quarter versus $756 million last year.

Adam Samuelson:

So Greg, John, I guess, first question, just thinking about the first quarter results in the context of the full year and an unchanged outlook. Would you characterize the forward kind of environment for the balance of the year is actually weaker than what you had been looking at 3 months ago? Or would you just view this as a just appropriate level of conservatism given limited forward book and kind of where the curve sits today? And kind of with that, can you just maybe give us your view on oilseed processing margins just around the world as you see them today?

Gregory Heckman:

Yes. And I might start at a slightly higher level on the oil. If you look at palm, some of the benefit on the strength in the soft oil is coming. Palm from a supply has really been flat. And so that growth in palm supply has stopped while domestic demand has continued to grow. So the exportable volumes of palm have been going down globally. So that from a high level is some of the support for oil.

Operator:

The next question comes from Ben Bienvenu with Stephens.

Gregory Heckman:

Yes. You're correct. There's definitely less visibility into this year than we've had for a couple of years. So not much at all kind of beyond 3 months. I think that will change as we see the farmer behavior as things kind of sort out and send the signals, whether that's the progress of the North American crop that then changes the marketing behaviors of the farmer here in North America as they think about that next crop coming off and rolling their stocks and from a marketing.

Ben Bienvenu:

Very good. Makes sense. John, you made a lot of progress on the share repurchase program, $400 million of stock repurchased during 1Q, $1 billion in the last 3 quarters. I believe your goal was to repurchase half of the $2 billion of stock to expected to repurchase by middle of 2024. Given that you're ahead of schedule of it, does that mean we pull forward the timing of the $2 billion repurchase or we pause here in the short term? What's your expectation to the best you can communicate around cadence of the remaining buyback activity?

Salvator Tiano:

So firstly, I wanted to ask about Canada, I guess, announcement yesterday about their view that the transaction of Viterra would be anticompetitive. I think they said negative for procurement on the west side of Western Canada and anticompetitive on the Eastern side on the production of canola oil and meal. So given their -- I guess, their view, can you talk a little bit firstly about what are the milestones here? And what could be -- how do this impact the transaction's timeline?

Gregory Heckman:

Yes. I might start kind of at a higher level, we are pleased with the progress we're making. I mean if you look, we got to file in a little 40 jurisdictions and 28 of those have issued unconditional clearances at this point. Of the remaining 13, of course, we've got some of the big ones, U.S., Canada, Brazil, China and the EU. If you remember, Argentina is post-closing review. So while overall, we don't know exactly when we'll get the green light, but we sure haven't seen anything that indicates any material risk to the economics of the deal.

Gregory Heckman:

You broke up right at the beginning. Was the question on winter canola?

Gregory Heckman:

Yes. Look, we were in the trial phase, running the pilots on winter canola, and we've been very pleased with the producer reaction. We've been pleased with the production and the performance of the winter canola. And so the plan now will be to scale that up in the coming campaign. And as we get visibility to the uptake by the producer and our ability to scale that up, then we'll eventually get to the point to be able to talk about any, any impact to the financials, but it's a little bit early for that.

Operator:

The next question comes from Steven Haynes with Morgan Stanley.

Gregory Heckman:

No. Thank you. So far here in '24, soybean, meal demand appears pretty good. I mean the lower prices are doing their work. And I think you called it out there, seeing a higher inclusion. The other thing it feels like profitability for the animal segment has bottomed, and as profitability gets better, we probably expect some expansion there. Right now, global animal numbers are stable. When you look at pork and poultry together, they're roughly flat, with poultry up maybe a little and pork down a little bit. And then if you look globally, the hog margins really are up in all regions except China and the poultry margins are better.

Thomas Palmer:

I wanted to just ask on the second quarter, you did note maybe a little bit of incremental softness. Just what's driving that, in particular? Is it certain segments we should be thinking about or certain regions where maybe it's come down a bit?

Gregory Heckman:

A couple of things on Q4, of course, historically in North America. If you look at where our planted acres are, you assume that soybean crop gets grown, you've got new crop coming off. And also with the amount of stock that U.S. producers carrying, the marketing coming up as close to that new crop being harvested and then the new crop harvest.

Heather Jones:

I want to stick with oil demand. So Greg, you mentioned about the Chinese UCO. And yes, it seems like that [ arb ] is closed? And also you have soybean oil that seems to be trading at a unusually -- just out of whack relative to historical values relative to palm oil and canola and the animal fats. And so just wondering if you think there is an opportunity for soy to price itself back into food rations or will that take a longer period?

Gregory Heckman:

Yes. I think there'll be a little bit of a balance, right? Of course, we've put all this in our outlook currently. But some of what we talked earlier with animal profitability, a little bit of an uptake on the meal demand side from some expansion on the animal side. And then we've got on the oil side, we talked about palm situation from a tightness, some demand growth on feed and food side from the lower price. And then RD continuing to come on. And then the other is seeing whether these other low CI feedstocks at what pace they can continue to be competitive.

Operator:

The next question comes from Ben Theurer with Barclays.

John Neppl:

Sure. Yes. And so Ben, as you know, we've got a number of projects, obviously, going on globally. Greg mentioned the Krishna plant, which is a relatively small one that was commissioned here recently. But in addition to the Destrehan plant expansion that we announced a groundbreaking finally on that a few weeks ago. We've got the other ones that we've mentioned, Morristown SPC plant in Morristown, Indiana underway. Of course, our greenfield oil, specialty oils plant in the Netherlands in Rotterdam, or in Amsterdam, specifically that's underway. And barge unloading expansion in the port in Destrehan, that's going to complement the expansion at Destrehan at the facility.

Andrew Strelzik:

I know we've talked a lot about the soybean oil side, but I just wanted to go back to that one more time. And I guess I'm just trying to think about outlets from a demand perspective, given the market seems to be -- investors seem to be a little bit concerned about inclusion in renewable diesel as a feedstock moving forward.

Gregory Heckman:

Yes. The U.S. does have the ability to switch quickly. I mean if you think about it, prior to RD, we held the residual stocks for the world, and we're there to export as the world needed it and called on oil from the U.S. And then as we were building capacity on the crush side as well as building capacity to import other oils and other low CI feedstocks, right? We pulled stocks down and then drove imports into North America. So I think when you think about the U.S., it will continue to be probably the most dynamic on the oil side to help balance things globally.

Andrew Strelzik:

Got it. Okay. That's helpful. And then I guess I just wanted to ask about the crush capacity expansions that have been announced over the last several years. Obviously, when those announcements were made, for a number of players, the margin environment was much stronger.

Gregory Heckman:

Look, I -- when I look at it through our lens, I mean, things definitely got more expensive to build for a period of time, and that's why we slowed down our Destrehan project. Did the work and we're patient to get the cost down before we did build that.

Operator:

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

Operator:

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

Gregory Heckman:

Thank you, Ruth Ann, and good morning, everyone. 2023 was a significant year for Bunge with both our continued strong financial performance and progress on our long-term strategy. I want to thank the team for their exceptional execution on our day-to-day business while also focusing on key projects for the future.

Operator:

[Operator Instructions] The first question is from Ben Bienvenu of Stephens.

Gregory Heckman:

Yes, sure. Thanks, Ben. I think as usual, the first quarter is where we have the most visibility and then it starts to kind of reduce as we go out. Having the global platform, of course, is very helpful. And so as we look across crush today and as we said and we look at the curves and what they give us, they're all inverted with some pretty limited liquidity beyond Q1. And then, we're in that, what we do, have visibility to and you kind of think about history, we're in that transition as markets get a little more balanced on supply and demand, that producers generally don't like selling lower prices, and they've got room to storage. So you see a little bit generally reluctant selling as we transition from the farmer.

Ben Bienvenu:

Okay. Very good. My second question is related to a similar dynamic as we kind of have shifting wins in the cycle, operationally, organizationally, tactically, you all have positioned the business to maximize earnings power as the cycle was accelerating to the upside over the last number of years. Externally, you've done a masterful job of managing expectations, and I think your track record of guiding conservatively as well established at this point. As we get to a slightly different backdrop, how does your focus internally change, if at all?

Gregory Heckman:

Well, I just would start by saying the same things that we've been focused on really work in all environments. And I think we talked as we were going, we were always thinking about trying to build the company for the bottom of the cycle, which you hope you never experienced. But if we have that mindset and we have our costs in position to be the most efficient regardless of where you are in the cycle, that we have our business organized in our operating model to have the most nimble and agile and ability to react to whatever the external factors that we can't control in the market. And that we ensure that we have got our rewards systems in alignment with our stakeholders and with our investors and with our customers at both ends of the value chain that we're kind of -- we're going to operate the same on the things that we can control.

Operator:

The next question is from Manav Gupta with UBS.

John Neppl:

Sure, Manav. This is John. I think what we've communicated in the past, I think, our view is on Viterra close in 2024 will be mildly accretive to flat. In the first year, we've got a lot of synergy costs, a lot of integration costs to incur. And certainly for the first 6 to 12 months, there'll be a lot of work around integration and focus on that. I think we love the business, and I think the long term is outstanding, especially when you look at environment like we're going into. But I wouldn't expect a significant impact on the $9 in this year.

Manav Gupta:

My quick follow-up here is it looks like the discretionary CapEx for 2024 is going -- probably going to be somewhere between $720 million to $840 million. Help us understand where this money is being spent, the kind of returns? And when do we start seeing these projects come online, so we can start giving you the benefit of earnings associated with this CapEx?

Operator:

The next question is from Ben Theurer with Barclays.

Gregory Heckman:

Thank you.

Benjamin Theurer:

Okay. Perfect. And then a quick follow-up. As we think about the guidance for this year and maybe the magnitude of changes that you're foreseeing right now? I know and Ben brought this up early on about the visibility, and I know about the challenges 2Q onwards. But as you look at it today, where do you think the biggest downside versus 2023 is within, call it, maybe a key for processing merchandising and Refined and Specialty Oils?

Adam Samuelson:

So maybe continuing along that kind of line of questioning. As we think about kind of the approximately $9 EPS, it would seem to imply, give or take $1 billion of segment profit reduction on a year-on-year basis. And just helping -- can you help dimensionalize the segments where that's coming? Presumably merchandising processing is the largest contributor, but at least frame kind of what kind of year-on-year decline you're currently kind of thinking about for Refined Specialty Oils, Sugar just to help put the decline in processing in better context? And then I got a follow-up.

Adam Samuelson:

Okay. That's helpful. So I mean within that Processing, if it's 80% or so percent, that implies something like a $70 to $80 -- sorry, $15 to $20 a ton lower kind of global kind of crush margin decline on your footprint. Can you help frame kind of regions where that is kind of a larger kind of headwind versus not and how more North America crush and soy meal and the return of Argentina to the export market in the second quarter, kind of is factoring into your kind of the regional balance of your network?

Steven Haynes:

If I could just come back to the guidance for '24 real quick. I was hoping maybe you could just give a bit more color on how you see that maybe phasing out over the course of the year. I would imagine that 1Q maybe has some favorability in it still from the back half of 2024. So I know you don't give quarterly guidance, but if you can maybe help size like your expectations for the first quarter versus the balance of the year, that would be helpful.

Steven Haynes:

Okay. And then maybe just another quick follow-up on the back half and what you're kind of assuming for the size of the U.S. crop and how to think about maybe what some of the different scenarios are there. I think you alluded to 4Q being a little bit better because of the U.S. crop, but maybe if we have a larger-than-expected crop in the back half, like what do you think that would mean for the outlook that you've currently laid out?

Operator:

The next question is from Salvator Tiano of Bank of America.

Gregory Heckman:

Well, I think that's why we've been consistent about using the forward curves and what we currently see in the environment when we do give the outlook because that way, it kind of doesn't flop around depending on our forecasting of what we see in the markets and versus what the public forecasters are saying they see in the market. But that's why I do think those flags that we've called out. Right?

Gregory Heckman:

Yes. So I think we call merch should be slightly down here in '24 versus '23. And right now, that's probably got it slightly below where we're at in our baseline model. But again, merchandising is the toughest 1 to forecast and is the first 1 to react if we get some policy changes that affect flows and/or weather -- any weather issues that affect production. And I'll tell you, as we continue to grow more yield on the same amount of acres, and we're seeing more volatile weather patterns, both dry and wet that affect production and logistics that probably just long term leads to more volatility. So the merchandising will be the 1 that absorbs that on the short-term changes.

Thomas Palmer:

I wanted to ask a little more on the demand pull you're seeing from renewable diesel. I mean, it really has been a kind of key driver over the last couple of years in terms of crushing refined oil. The industry, obviously, responding on the crush side with added capacity in part to support this industry. I guess, what's the visibility in terms of that demand pull at this point in terms of absorbing some of this increased supply that's coming from the added crush capacity? Are we still a little bit in waiting mode? At different points, you've kind of noted that maybe curves aren't showing it, but you are at least in touch with customers who are showing optionality for that increased demand pull on a forward basis?

John Neppl:

Yes. I think -- well, our expectation is between now and, let's say, midyear, we'll have the other $400 million, but timing on close of Viterra is yet to be determined. But I think we won't wait around until we have news for that. I think we'll put it on a pace here to make sure that we're completed by midyear.

Sam Margolin:

My question is on refining because it seems like that's the segment where the commodity headwinds are probably the most visible, but it sounds like there's a technology story there for you where you're either gaining share or maybe potentially getting some pricing power. And I wonder if you could just talk about the attributes of the yields in the new refineries that are adding value and how they accrue to the segment growth? And how should we think about that contribution?

Sam Margolin:

Okay. That's super helpful. And then just a follow-up on capital allocation and the discretionary CapEx component. I think this year, it feels like it has more of the characteristics of sort of a trough year than maybe something structurally problematic. And so it makes sense that discretionary CapEx is still at the top of your Q. But I mean, is there anything that, the scenario that you can imagine that might cause you to decelerate growth CapEx or any market conditions specifically that you're watching for that could change -- maybe change the mix of your capital allocation and move growth CapEx kind of lower on the priority list?

Operator:

The next question is from Davis Sunderland with Baird.

John Neppl:

Sure. This is John. Look, I think, we have not been immune to the inflation that we saw over the last few years relative to kind of started during COVID and worked its way through. But what we've seen recently is energy prices coming off quite a bit, especially in Europe, which has lowered our variable costs over there quite a bit. I think our belief is that we're probably or probably close to the most efficient in the industry are certainly on par with others. And it's as you can imagine, higher cost areas generally is going to be U.S. with inflation and Europe with energy costs and inflation.

Operator:

The next question is from Andrew Strelzik with BMO.

John Neppl:

Yes, I can start, and Greg can jump in. I think actually, our margin assumptions right now for 2024 are better than the baseline -- marginally better than where we were in the 850 baseline assumptions. So we think that will hold for the year, if not improve. Where we're seeing a little -- and that's probably more on the soft side than the soy side, the higher assumption around margin structure and what we're seeing today. I think where we see the downside versus our baseline is really in merchandising.

John Neppl:

Yes. And maybe just 1 other thing to add, too. As you're thinking through this share buyback, certainly as we've done more of that than we had in our original baseline model, I think we modeled $250 million a year in our baseline assumption, and we of course, we've accelerated that with the Viterra transaction coming.

Gregory Heckman:

Yes. I think, probably the same key ones, China, always a big factor their economy and if it would speed up from a demand and then how China is going to think about any stock building, because they can definitely make it change on these markets that are really still pretty close in the supply and demand balance, any type of weather situation at all.

Operator:

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

Ruth Wisener:

Thank you, operator, 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 Events and Presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measures are posted on our website as well.

Gregory Heckman:

Thanks, John. Before turning to Q&A, I want to offer a few thoughts. So looking at the longer term, the fundamental drivers of our business remain in place. Global population continues to grow and the need for sustainable solutions to meet that demand means the world will continue to look to Bunge to supply essential products and services to the feed, food and fuel industries.

Andrew Strelzik:

So I guess my first one, you alluded to some of the upside opportunities for the year. And when you talked last quarter about some of them, I believe there was the thinking was that there's even more upside really was more in 4Q than in 3Q. You talked about merchandising opportunities, dislocations, potentially China. Can you talk about how those are shaping up relative to what you were thinking 3 months ago or some of those opportunities have evolved at all where you're seeing the upside potential?

Gregory Heckman:

You bet. I think what will be similar is until we get another look at the South American crop. And while the weather patterns look like they're setting up favorable for South America with an El Nino. That's really not how the planning is starting. So we do need to see that weather happen and see a good crop. But if you can get strong crops. We had a record in Brazil. If we see another record crop in Brazil and then see the crop, I think the U.S. data think that we could see a crop in Argentina on soybeans even back above 22 levels, but that would be about twice what we saw for production this year. That starts to make South America, again, very competitive globally on soy exports as well as exports to China, but it's on meal and oil. So that will be the one we watch, but remember, we're not going to get that until April or later. So this tightness will continue through Q1.

Operator:

Next question is from Ben Bienvenu with Stephens Inc.

John Neppl:

Yes. Look, I think as of now, we're keeping the time line fairly steady. Now that could certainly accelerate given the steps we've made already. But when you look at 2024, we've got a pretty robust pipeline of CapEx projects to execute. We had significant increases here in CapEx and a lot of that relates to some big greenfield projects that are underway, and we'll have similar or maybe even slightly higher CapEx next year related to that. We announced CJ Selecta, that will close in 2024. That's going to be a draw as well. We'll see how things shake out on the cash generation side as we go into the year. And then we'll balance that, obviously, with share buybacks and other M&A opportunities that might come up. But ultimately, as we get near the close of the Viterra transaction, we do want to try to target certain leverage ratio at close, and so that might impact timing as well. But whether we pull it forward or not, we still remain committed to hitting the $2 billion.

Gregory Heckman:

Sure. I'd say in the first half, the tightness that we expect and then we talked about the size of the South American crop. Of course, remember what we saw this year and that is kind of good for our global footprint. And while being pretty balanced globally has helped us deliver our most complete footprint is South America and especially Brazil. So the record crop there was good for our export system as well as our crushing system. It made South America more competitive versus North America on bean exports, which kept some more beans at home in the U.S., which actually -- our crush franchise is bigger than our export franchise in North America. So again, that was positive for our crush franchise.

Gregory Heckman:

Thank you so much.

Manav Gupta:

I wanted to ask you -- I understand you're still negotiating your way through the Viterra deal. But have you had a chance to speak with the bigger shareholders and present a proposition where they could become long-time shareholders of Bunge so they can hold on to the stock even once the lock-in period is over.

John Neppl:

Yes. This is John. I think we have anticipated over the long run that producer -- RD producers would shift ultimately to crude soybean oil away from refined, but it has been slower than expected. And I think that it's really more right now about there is new -- as the new RD production comes on, it may have pretreatment capability, but the existing units haven't necessarily transitioned. So the demand we have today for refined as we expect to be fairly steady for a while, even if there's growth as the new production comes on and has pretreatment. But certainly, we've heard some similar things and we believe we can be a great solution either way, whether it's refined or crude soybean oil. And also, as we've said before, we think we have a place in the supply chain around low CI feedstocks as well, and we'll be -- continue to work on that, so that we can provide our energy customers with everything they need.

Operator:

The next question is from Ben Theurer with Barclays.

John Neppl:

Thank you, Ben.

John Neppl:

Yes, it's about $600 million, Ben.

John Neppl:

Well, I don't think we're ready to say that yet. I think we are committed to our dividend as an important part of our return to shareholders. And as we look forward, we'll assess that with everything we have going on and with our outlook, timing of the share buyback. We mentioned that our goal is to get the other $400 million done by the time we close the transaction, but that gives us some time to take a hard look. And historically, we review that in Q1, and then we had generally adjust that when we get toward May. So we'll do the same thing this year.

Benjamin Theurer:

Okay. Perfect. And then on Argentina, you've mentioned it a couple of times with like the expectation of, well, hopefully getting maybe better supply, et cetera. But obviously, there's also the political risk lingering in with the upcoming elections and a little bit of the surprise outcome over the last weekend. Can you help us understand in between the 2 extremes, what the potential impact could be for the industry as a whole and for Bunge in specific?

Benjamin Theurer:

Okay. I guess, that's as much you can say for now. Congrats.

Operator:

Thank you. The next question comes from Adam Samuelson with Goldman Sachs.

Gregory Heckman:

Yes. I think it's a great fit, right, for us to run our programs, whether it's working with producers to add value on the -- running the non-GMO programs or even on the GMO programs that allows us -- Selecta is a big supplier to the feed industry and the aquaculture, which continues to have nice growth. So we see them definitely as complementary. And then, of course, as we bring Morristown up. And what we want to do strategically, right, is have a great footprint in North America and South America with a low-cost position with that direct connection to farmers to build those transparent, verifiable supply chains for our customers and ultimately lower CI products and grow with that market because it's going to grow, all meats been soft, but the kind of traditional use of as extending in traditional meat continues to be strong.

Operator:

The next question comes from Salvator Tiano with Bank of America.

John Neppl:

Yes. First thing, Salvator is the Korean owners that announced only own 65% of the JV. So they were just reporting on their proceeds they were going to receive in the transaction. With respect to the overall, how to think about it, we're expecting early on low teens return, but getting to mid-teen returns on that project, and it will be accretive day 1. In terms of what we can do with it, I mean, I think our goal is to grow that over time, as Greg kind of talked about the markets that we should be able to serve out of that asset. It's very complementary to what we do today, but also a growing European market, for example, has been a destination for that plant, in that operation. And so we're pretty optimistic about it. But it will be -- we think day 1, a very good accretive project for us.

Gregory Heckman:

Sure. If you look at China, crush margins have been volatile all year there. It's very spot. But our team has done a fantastic job. We've had a very good year in China, a better year than last year. And Q3, we actually a great coordination between our industrial and commercial logistics team ran record volumes for us. And so animal numbers continue to hold in China. So while it continue to be very spot, it looks like some of that will carry into Q4. We talked about Argentina. Of course, you've got about 0 farmer selling right now there. So until we get to new crop. Argentina continues to be a nonevent, very tough situation. And then we've seen margins improve in Brazil, and that's really good global demand and the back end of what was that record crop. Now the farmer has been a little sporadic on old crop selling South American farmers were watching and the weather situation developed in North America to ensure that there was going to be a crop there. But then as that crop kind of came home in North America, then we saw some better selling and new crop selling has been pretty slow. So that will be the key to watch there as well.

Operator:

The next question comes from Thomas Palmer with JPMorgan.

Gregory Heckman:

Yes. As we said, I think the long-term fundamental drivers there of more demand. Food has held in there. In fuel, we know that demand is going to grow as we see RD projects continue to come online. It will be a little choppy depending on how things are running. Crush is running hard. We've got some new crush coming online and the market will have to do some adjustment. But global stocks of oil are fairly balanced. If you look palm still from a production on how is producing probably going to get tighter in first half and tighten up the global oil situation. And the nearby softness, some of that was driven around RINs in that, and then the meal demand stepped in. And so they will continue to be a bit of a battle on whether meal or oil is going to carry the crush. I don't think it's going to be a straight line to either one as we move forward.

Gregory Heckman:

Well, I'd just say, look, we're going to stay really disciplined, right? And we're so not going to do anything that would create any slowdown or conflict to get the Viterra deal closed and through the regulatory process. So that's number one. But otherwise, our targets continue to be in those areas where we need to fill in some strengths where we see the long-term growth and where we have a right to win. And that's why CJ Selecta was a great example. It's been a target for years. And quite frankly, it's how we think about things. Our team, we're constantly updating and challenging our list and developing those relationships. That when those right assets do come available at the right price, we want to do those deals. And we've had a chance to do deals along the way that weren't at the right price, and we've stayed patient and we will continue to be disciplined and then do them when they're available at the right price.

Sam Margolin:

I want to go back to Viterra, if I could, to start in the grains market. You said -- you mentioned that there's some opportunities right now. I think you're maybe referring to like market structure of corn. It's pretty significantly in contango. And it seems like Viterra has an opportunity to generate a lot of cash between now and when the deal closes and might be material to their capital structure at the time of the close. And I wonder if you can talk about whether Viterra's operations within this dynamic are part of your conversations with them as you talk about the merger that you referenced.

Sam Margolin:

Okay. Sorry, that was a little bit of a tough one. This one might be more straightforward. You could probably sense that there's a lot of attention and maybe even investor anxiety just around board crush and the volatility. I mean board crush is always volatile, right? Sometimes it's higher than it is now. But recently, when it has been, it's sort of in a really deep backwardation. And now the crush curve is actually pretty stable, and that seems like it might be kind of a better operating environment for you as opposed to kind of a really high front month crush and then and then lower out on the curve. I mean can you talk about how market structure might be influencing your outlook for crush here and some of your earlier comments?

Steven Haynes:

Wanted to just come back to maybe the soy oil part of the equation for a second and the kind of some of the weakness in the D4 RINs. And maybe if you could just provide some thoughts on why right now, it seems like some of the weakness in the RINs market is kind of flowing back into soybean oil rather than kind of compression like compressing RD margins? And then you also talked about the possibility of some policy. Can you just maybe help balance some of this out. I mean do you have a rough time line for when you think that could take shape? And what kind of yes, policy adjustments, which you expect?

Gregory Heckman:

All right. Thank you. I'd like to thank everyone for joining us today, and I appreciate your interest and support of Bunge. Again, I'd like to thank the team for great execution and just the focus on the things that we can't control and what continues to be a complicated world. But we continue to be confident in our ability to execute. Look forward to seeing you again. Have a great day.

Ruth Ann Wisener:

Thank you, operator and thank you for joining us this morning for our second 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 Events and 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.

John Neppl:

Thanks, Greg, and good morning, everyone. Let’s turn to the earnings highlights on slide 5. Our reported second quarter earnings per share was $4.09 compared to $1.34 in the second quarter of 2022. Our reported results included a positive mark-to-market timing difference of $0.59 per share and a negative impact of $0.22 per share related to one-time items. Adjusted EPS was $3.72 in the quarter versus $2.97 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT, was $893 million in the quarter versus $709 million last year. Agribusiness adjusted results of $674 million were up compared to last year. In processing, higher results in the quarter reflected better year-over-year performance across all value chains, driven in part by strong Brazil soybean origination, which contributed to higher crush results in Brazil and our destination crush operations in Europe and Asia. In the U.S., results were also higher as we entered the quarter with a significant portion of our capacity locked in at higher margins. In merchandising, higher results in global oils and grains were more than offset by lower results in our financial services and ocean freight operations, which had difficult comparisons to a particularly strong prior year. Refined and Speciality oils continued its trend of strong performance though results were slightly lower than last year. Our results in North America driven by food service and fuel demand were offset by slightly lower results across Europe, South America and Asia. In Milling, low results in the quarter were primarily driven by our South American operations, which were negatively impacted by the small Argentine wheat crop. Segment results in the prior year benefited from effective risk management of our supply chains during a period of high market volatility. The increase in corporate expenses in the quarter primarily reflected planned investments in growth and productivity related initiatives that will pay off in future periods. Lower other results related to our captive insurance program and Bunge Ventures. Results on our non-core sugar and bioenergy joint venture included a $39 million benefit from the reversal of evaluation allowance. In addition, improved results reflected higher sugar prices that more than offset lower ethanol prices. Adjusting for notable items, net interest expense is $78 million in the quarter was down slightly compared to last year, as higher average variable rates were offset by higher interest income. For the six months of the year, income tax expense was $381 million compared to $144 million in the prior year. The increase was primarily due to higher pre-tax income in 2023, as well as a change in geographic earnings mix. Let’s turn to slide 6 where you can see our adjusted EPS and EBIT trends over the past four years, along with the trailer 12 months. Our team continues to deliver excellent performance, especially when considering the rapidly changing market conditions we have faced, while also executing on a variety of internal initiatives to improve our capabilities. Slide 7 details our capital allocation of the approximately $1.4 billion of adjusted funds from operations that we have generated year-to-date. After allocating $181 million to sustaining CapEx, which includes maintenance, environmental health and safety, we had approximately $1.2 billion of discretionary cash flow available. Of this amount, we paid $180 million in common dividends, and invested $360 million in growth and productivity related CapEx, leaving approximately $630 million in retain cash flow. We have not purchased any shares this year as a result of our discussions to combine with Viterra. However, we recently announced that our board has expanded our existing share repurchased program to $2 billion. We want to be in the market as soon as possible, and we expect that a meaningful portion of these repurchases will be executed prior to the close of the Viterra transaction, with remainder to be completed within 18 months of that date. As shown in Slide 8, at quarter-end Readily-Marketable Inventories, or RMI, exceeded our net debt by approximately $3.6 billion. This reflects our use of retained cash flow to fund working capital while reducing debt. Slide 9 highlights our liquidity position. At quarter-end all $5.7 billion of our committed credit facilities was unused and unavailable, providing a sample liquidity to manage our on-going capital needs. And working with our key banking partners, we also recently secured $8 billion in the form of term loan commitments to fund our combination with Viterra. Please turn to Slide 10. The trailing 12 months suggested ROIC was 20.3%, well above our RMI adjusted weighted average cost to capital 7.7%. ROIC was 15.1%, also well above our weighted average cost to capital 7%. Moving to Slide 11, for the trailing 12 months, we produced discretionary cash flow of approximately $2.1 billion and a cash flow yield of 19.2%. Please turn to Slide 12 and our 2023 outlook. As Greg mentioned in his remarks, taking into account the first half of the year results and the current margin environment in four curves, we have increased our full year 2023 adjusted EPS outlook to at least $11.75 per share. In Agribusiness, full year results are forecasted to be down from last year, though slightly better than our prior outlook, as higher results in processing are more than offset by low results in merchandising. However, depending on how market conditions evolve over the remainder of the year, there could be upside to our segment outlook. In Refined Specialty Oils, full year results are expected to be up from our prior outlook and in line with last year’s record performance. In Milling, full year results are expected to be lower than our prior outlook and significantly down from a strong prior year. In Corporate and other results are expected to be in line with last year. In Non-Core full year results in our sugar and bioenergy joint venture are expected to be in line with the last year. Additionally, the company expects the following for 2023; an adjusted annual effective tax rate in the range of 20% to 24%, net interest expense in the range of $350 million to $370 million dollars, which is down from our prior outlook of $360 million to $390 million. Capital expenditures in the range are $1 billion to $1.2 billion, which is up to $200 million from our prior outlook reflecting the purchase of a U.S. oil refinery during the second quarter and depreciation amortization of approximately $415 million. With that, I’ll turn things back over to Greg for some closing comments.

Operator:

Thank you. [Operator Instructions] Today’s first question comes from Ben Theurer with Barclays. Please go ahead.

Gregory Heckman:

Thanks, Ben.

Gregory Heckman:

Sure. Let me start here and John can add in if I miss anything here. Look, I think we feel good about the at least $11.75. And, we’re also trying to evaluate the landscape on what’s the size of the plus as we go forward. But if you look, the meal and oil demand drivers continue to be intact. You look globally and between pork and poultry, the numbers are stable. It looks like wheat is not going to be as competitive as it’s a little tighter. So that should help meal as far as inclusion in the rations. And just generally, food and fuel demand for oil both remain solid. So when you think about the upside rate, merchandising is always the one that’s tough to forecast. Not only the timing of it, but where within the value chain and within those opportunities are going to happen. But look, I think what we’ve seen the last four years and the challenges and again here in this last quarter that this team does a heck of a job when the opportunities there on bringing it home and executing. And so we’ll continue to focus on that. China, I think there’s still the opportunity for improved demand there with the recovery. So that’s one we’re watching. And then we’re now seeing the dislocation from the small crop in Argentina start to play out here in the second half. And we’re having to call on capacity in the rest of the world. So with that dislocation really, how will crush margins play out? So that’ll be a key to watch with a little bit possible upside there. And then lastly, I think we saw it just starting the last time we all talked was the RD capacity starting to run better, seeing a little stronger demand for oil here in the U.S. And that’s continued. So we’ll be watching closely how they run in the second half. So I think those are some of the key flags. And of course, weather is always out there. We’ve got to make this crop in North America. That’s important. And then, of course, the humanitarian corridor now closed again, making it more difficult to get those supplies out of Ukraine and creating more volatility in dislocation. Of course, the market will do its job and try to bring what it can out over land. But that situation could change, pretty, pretty rapidly. So that’s another one we continue to watch.

Benjamin Theurer:

Okay. And then just one quick follow up. You talked about the renewable diesel capacity. I mean, obviously, we got the final decision from EPA. How do you feel about like the final decision, no major change to what came out back November, December, but just like the market itself and how that’s going to play a role for the demand go forward for the feedstock you’re providing?

Benjamin Theurer:

Perfect. Thanks. I’ll pass it on.

Salvator Tiano:

Yes, thank you very much. So firstly, I just wanted to ask about the processing business performed extremely well. If you can tell us a little bit about your expectations, was this, did this performance come more from higher crush margins? Or was it the better trading environment in Brazil for oilseeds that helps you there?

Salvator Tiano:

Perfect. Thank you. And I also wanted to ask a little bit about the Refining Speciality Oils business I just feel demand was good, can you especially North America can you let us know a little bit how does your end market, how do you end markets look today versus a few years ago when we think about the food versus fuel demand?

Salvator Tiano:

Perfect. And if I may just ask a little bit also for more clarity on as we think about your oil volumes that do go into renewable diesel in general and renewable fuels, how do you compare the volumes that are sold as crude oil versus the volume that you’ll sell as refined and is there a shift in the positive quarters to what’s selling more refined oil towards fuel versus crude oil.

Salvator Tiano:

Thank you very much.

Ben Bienvenu:

Hey thanks good morning and congrats on the exceptional quarter. I want to ask a little bit about the kind of another follow-up question on the processing business just because 2Q was so exceptional. When you looked at the back half of the year the curves are quite constructive it looks as though as you said the Spider-Man factors from meal and oil are positive, can you tease out a little more as you look to the back half, what in the second quarter was kind of unique to the second quarter that’s maybe inherently difficult to predict recurring in the back-half versus just uncertainty broadly for the segment.

Ben Bienvenu:

Okay. Fair enough. My second question is a little bit longer term oriented. You guys filed your proxy statement late last week there were a number of interesting things in there. The long-term forecast that you presented, I’m curious, if you could give us some context around kind of the, the confidence level in those forecast, recognizing it’s hard to forecast the business of a long time period, but presumably, those were presented to the board, as justification for the, the value of the criteria deal. Can you talk a little about the assumptions that went into those forecast, they, they look pretty constructive. And then second in the proxy, there were some incremental synergies that you called out as well, and kind of to the extent that you can shed light on how you arrived at the synergies above and beyond the 250 million would be of interest as well.

Ben Bienvenu:

Well, that’s great. Thanks so much, Greg, John I appreciate you taking my questions.

Operator:

Thank you .And our next question comes from Manav Gupta with UBS. Please go ahead.

Gregory Heckman:

Yes. We love our partnership with Chevron. It has -- we’re just at the beginning of that relationship. But we’re very like-minded about each leveraging our strengths individually as well as collectively. And I think that’s an example of an opportunity that we identified to invest in another novel seed that could create a low CI feedstock for, as you say, not only renewable diesel, but maybe long-term sustainable aviation fuel. And so you’ll see us continue to look for those opportunities, not just in North America, but globally, as shown by the Argentine investment, to do things that meet the needs of the marketplace because we can serve both food and fuel. The market will work. There will continue to be innovation. And we’re just really pleased to have a partner like Chevron to look at a number of these opportunities with.

Manav Gupta:

We agree. It looks like a great partnership. My quick follow-up is we have seen a very strong rebound in the soy cost spread in the U.S. The other regions are responding, but at a slower pace. So help us understand a little bit better why has the U.S. crush spread rebounded so much faster than other places?

Manav Gupta:

Thank you for the detailed responses.

Adam Samuelson:

Yes. Thank you, good morning, everyone. Maybe just following up on Manav’s last question and you alluded to in the prepared remarks about Brazil crush margins and maybe still being not the forward curves being a little bit less robust. What do you think is holding back Brazil at this juncture from seeing the margin -- the crush margin strength that you’re seeing in North America? Argentina export competition won’t be there. The oil demand seems to be healthy. So what’s holding back Brazil in particular because it does seem to be an important source of upside to or the plus in the second half guidance?

John Neppl:

Yes. I think on top of that, Adam, we have really good strong farm origination in Q2. And since then that has slowed down a bit, and we’ll see how it transpires as we go through the balance of the year, whether liquidity will be there or not in Q4. And to Greg’s point earlier, soybean oil is a little heavy in Brazil right now. But demand to B12, we’ll see how that plays out the balance of the year. But certainly an area where things line up, there could be some upside.

Gregory Heckman:

Yes, it was definitely helped contribute there in Q2. And then, of course, we saw some of the demand shift to Brazil from the U.S. as that as that corn crop was harvested and the markets adjusted. That, of course, is in our forecast for the book that we’ve got on and what we expect from execution is in our forecast for the second half, although as always with merchandising, we’re forecasting what we can see. And as things shift around, there could be some continued upside that the team will take advantage of as we get other dislocations. And as things play out in the Ukraine as well and as we get the final development of what’s the size of that U.S. crop going to be.

Gregory Heckman:

Thanks, Adam.

Steven Haynes:

Hey thanks for taking my question. I wanted to ask a question on your JV on the West Coast with plans to triple mill capacity in the coming years and given that it’s on the West Coast probably eliminates some destinations. But where are you kind of expecting that soy yield to end up? And more specifically, is it kind of targeting China? Or just kind of any thoughts generally on where you see some excess soymeal production from the U.S. finding its way overseas.

Steven Haynes:

Okay, thank you.

Thomas Palmer:

Good morning and thanks for the question. Your tone has been quite positive I think today with a few call-outs about what could drive upside to guidance. So I don’t think there are any major concerns maybe in the second half. But at the same time, you just beat by over $1 on the EPS side. Low end of your guidance was boosted by $0.75. So I thought I’d at least ask, relative to your expectations, are there emerging risks that we should be monitoring as we look towards the second half of the year?

John Neppl:

Yes. And I think Tom, given how we came into the quarter coming into Q3 with quite a bit of our crush locked in Q3, probably won’t get the upside maybe if the market tightens and crush margins move up. Of course, Q4 is fairly open, but that’s been where there’s been the least amount of liquidity. And Brazil is still not super strong there. But again, areas where we take the curves and then if things improve, it’s going to provide us some upside.

John Neppl:

Yes, we’re weighted a little more towards fourth quarter today. So just the way we put the forecast in today, it’s already weighted a bit to Q4 just given what we know about Q3 and what we see. It’s probably close to 40, 60, maybe low 40s, high 50s between Q3 and Q4 is kind of how we think about it.

Operator:

Thank you. And our next question today comes from Andrew Strelzik with BMO. Please go ahead.

John Neppl:

Yes, Andrew, I can start, and Greg can pop in here. Look I think yes, last year we were a little closer to 50-50. We were weighted still a little bit more toward the first half of the year. But every year is different. I think the dynamics are we feel really good about the first half that we had, and it’s really probably more an indication of uncertainty in the second half than it is any sort of an unusual trend of earnings between first half, second half. I think just looking at, as Greg alluded to the geopolitical uncertainty, crops playing out, weaker forward curves in some parts of the world that we’re hoping firm up. That’s just kind of how things look today. But I think I wouldn’t point to or I don’t know that we can point to any shift sort of in the global market that caused us to earn more in the first half other than to Greg’s point, we pulled a little bit probably forward just given the strong origination results in Brazil and how that impacted our crush in Europe and China. But we’ll see. I think that we hope to have some upside, and we’ll keep watching things.

John Neppl:

Yes. I would say -- I’ll start and then Greg can hop in here. But I would say our capital, our CapEx pipeline, our growth capital is still pretty much on track in terms of timing. It is going to be 2025, 2026 as we start to realize those projects, a lot of them are big multiyear builds, but we still feel very good about those. We’re constantly challenging our assumptions and our view of those projects and still feel very good about what we have in the pipeline. In terms of the M&A side, obviously, our number one priority is Viterra, getting ready for Viterra on the integration planning side and thinking about how the organizations are going to run together. We’re doing some preplanning on our side, getting ready for that. That’s our number one priority. But at the same time, we’re still finding a good pipeline of smaller bolt-on M&A things. And as we said before, that hasn’t changed our view of the CapEx and growth pipeline on the smaller bolt-on M&A. Viterra is going to be additive to that. So we continue to be active there. There’s a lot of things going on, maybe not all of them actionable. But certainly, we continue to be pretty busy on that front as well.

Andrew Strelzik:

Great. Thank you very much.

Operator:

Thank you. And our next question today comes from Sam Margolin with Wolfe Research. Please go ahead.

Gregory Heckman:

Yes. I think the demand historically, right, oil has kind of been the laggard and meal in North America and Meal has been the driver for a long time. And with this switch and additional demand from energy now, biofuels in general, but renewable diesel specifically, we’re now seeing oil carry a higher share and we kind of think that is there to -- that’s there to stay. But the market is going to do its work as that crop comes on. And the global market, we’re already seeing, it will probably be more fed that demand from South American beans where more of the U.S. beans will probably stay at home, and that will help balance the crush and the demand for the meal and the oil.

Gregory Heckman:

Yes. Look, I’m really proud of the team being very thoughtful, right on the earnings at risk in the assets. And that’s not only the crushing, but the milling as well as our export assets. And when those margins are there, and we’re constantly evaluating this, not only the public information, but our proprietary information and looking at the S&Ds. And you’re right, there is more liquidity close in than there is further out. But when those margins are there, we’ll hedge them out. And I feel like the team is very focused on managing our risk, and we continue to stay focused. It depends on our earnings power, and it also depends on the environment that we’re operating in. And we always push everything through those two lenses. So real proud of the team staying absolutely focused on managing the risk in these assets.

Sam Margolin:

Understood. Thank you.

Robert Moskow:

Hi, there. Maybe just a couple of follow-ups. You mentioned the demand outlook in China is still kind of up in the air. I want to know, do you have any more color on what you see in demand in China currently, restaurant versus just packaged food demand or livestock, and then a quick follow-up.

Robert Moskow:

Got it. And I don’t know if I’ve heard you talk about this recently, but in a higher interest rate environment, I would imagine your balance sheet is a real competitive advantage. And I was wondering if you could talk a little bit about how you’ve used it in your procurement practices in Brazil, how it’s helped you maybe even in second quarter. And also, how does it impact the growers? Are their balance sheets impacted by rising debt costs? And does it make them more willing sellers?

John Neppl:

Yes. I would just add, Rob, that as we’ve strengthened our credit profile over the last couple of years, the industry, it’s helped us from an advantage standpoint because the industry and the market structure is ultimately going to be on average interest rates. And to the extent that we can borrow money cheaper than others, it should and does give us somewhat of an advantage in terms of being able to fund the RMI that Greg talked about and as well provide the financing to the producers with the appropriate spread on it. And ultimately, we feel like through the Viterra acquisition, obviously, we’ve -- that’s been -- that’s also viewed as very credit positive for us. So again, should extend that advantage that we have in the market to borrow money cheaper and maintain that liquidity that we need.

John Neppl:

Well, they’re ultimately economic animals, and the cost of carry certainly is important to them. And the market structure, we’ll have that cost to carry in it. But certainly, I think what it’s done for us is tighten our relationship with the farmers. I don’t know Greg, do you want to add anything else there?

Robert Moskow:

That’s great. Thank you.

Operator:

Thank you. And our next question today comes from Brian Wright at Roth MKM. Please go ahead.

Gregory Heckman:

So yes, we’re early on. I think we talked about we just filed the proxy, and we are doing the regulatory filings. So early on in the process. But we continue to engage, and the asset bases are very highly complementary. So we look forward to engaging on the facts.

Operator:

Thank you. And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Greg Heckman for any closing remarks.

Operator:

Thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.

Ruth Ann Wisener:

Thank you, operator and thank you for joining us this morning for our first 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 Events and 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.

John Neppl:

Thanks, Greg and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Our reported first quarter earnings per share was $4.15 compared to $4.48 in the first quarter of 2022. Our reported results included a positive mark-to-market timing difference of $0.84 per share and a positive impact of $0.05 per share related to onetime items. Adjusted EPS was $3.26 in the quarter versus $426 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT, was $756 million in the quarter versus $858 million last year. Agribusiness started the year off well. However, results were down from last year's particularly strong performance. In processing, lower results in the quarter were primarily driven by soy crush. Improved performances in North America and Brazil which benefited from strong protein and oil demand and reduced Argentine exports were more than offset by lower results in Argentina, Europe and Asia. In merchandising, results were lower in the quarter as margins declined from last year's levels which were impacted by market disruptions due to tight supplies and the war in Ukraine. Refined and specialty oils also started the year off on a strong note. All regions performed well with notable year-over-year improvements in North America and South America, both of which benefited from strong food and renewable fuel demand as well as effective utilization of our distribution network. In Milling, lower results were driven by South America where the small Argentine wheat crop negatively impacted our local upstream merchandising. This was partially offset by stronger structural margins in our milling operations in Brazil. Results in the U.S. were down slightly. Segment results in the prior year benefited from very strong South American origination margins during a period of high market volatility. The increase in corporate expenses in the quarter was largely driven by growth-related initiatives, offset in part by an increase in other results primarily related to Bunge Ventures. Lower results in our noncore sugar and bioenergy joint venture were primarily driven by lower Brazilian ethanol prices and higher costs. Adjusting for notable items, net interest expense of $69 million in the quarter was up compared to last year, primarily due to higher variable interest rates, partially offset by higher investments in interest-bearing cash instruments and lower average debt levels. For the quarter, reported income tax expense was $183 million compared to $108 million in the prior year. The increase was primarily due to a change in geographic earnings mix as well as higher tax benefits in 2022 from releases of valuation allowances in Europe and Asia. Let's turn to Slide 6, where you can see our adjusted EPS and EBIT trends over the past 4 years, along with the trailing 12 months. This performance trend not only reflects the strength and resiliency of our global network of integrated assets and capabilities but also demonstrates the outstanding performance and agility of our team to adjust to the changing market conditions. Slide 7 details our capital allocation of the $625 million of adjusted funds from operations that we generated in the first quarter. After allocating $86 million of sustaining CapEx which includes maintenance, environmental health and safety. We had approximately $540 million of discretionary cash flow available. Of this amount, we paid $94 million in common dividends and invested $87 million in growth in productivity CapEx, leaving approximately $360 million of retained cash flow. During the first quarter, we did not repurchase shares. As we have discussed previously, we have a balanced approach to capital allocation and share repurchases are absolutely a component of that mix. However, they have been on hold over the last 2 quarters as we've been actively engaged in a variety of discussions to expand our global platform, scale and core capabilities. As we have been in the past, we will be disciplined and make the right decisions as quickly as possible. We believe our stock is undervalued and look forward to getting back in the market to continue our share repurchase program as soon as possible. As shown on Slide 8, at quarter end, readily marketable inventories, or RMI, exceeded our net debt by approximately $4.5 billion. This reflects our use of retained cash flow and proceeds from portfolio actions to fund working capital while reducing debt. Slide 9 highlights our liquidity position. At quarter end, all $5.7 billion of our committed credit facilities was unused and available, providing us ample liquidity to manage our ongoing capital needs. Please turn to Slide 10. For the trailing 12 months, adjusted ROIC was 19.8%, well above our RMI adjusted weighted average cost of capital of 7.7%. ROIC was 14.4%, also well above our weighted average cost of capital of 7%. At the end of the quarter, we had an unusually large cash balance of approximately $3 billion most of which is expected to be used toward repayment of upcoming debt maturities and increased working capital during the second quarter. When adjusting for this, the trailing 12-month ROIC and adjusted ROIC for the quarter were more in line with the previous 12-month period. Note that we increased both our WACC and adjusted WACC from 6% and 6.6%, respectively, to 7% to 7.7%, respectively, reflecting the current higher interest rate environment. Moving to Slide 11. For the trailing 12 months, we produced discretionary cash flow of over $1.9 billion and a cash flow yield of 18.2%. Similarly, we increased our cost of equity from 7% to 8.2%, reflecting the more recent market environment. Please turn to Slide 12 and our 2023 outlook. As Greg mentioned in his remarks, taking into account first quarter results and the current margin environment of forward curves. We continue to expect full year 2023 adjusted EPS of at least $11 per share. In Agribusiness, full year results are forecasted to be down from last year with slightly higher results in processing but more than offset by lower results in merchandising. However, depending on how market conditions evolve over the remainder of the year, there could be upside to our segment outlook. In Refined specialty oils, based on our stronger-than-expected first quarter performance, full year results are expected to be up from our prior outlook but still below last year's record performance. In Milling, full year results are now expected to be down from our prior forecast, reflecting a more challenging than expected first quarter. In Corporate and Other, results are expected to be in line with last year. In noncore, full year results in our Sugar & Bioenergy joint venture are expected to be in line with last year. Additionally, the company expects the following for 2023

Operator:

[Operator Instructions] The first question comes from Ben Bienvenu with Stephens.

Greg Heckman:

Okay. Maybe I'll let John talk to the shape of it and then I'll kind of talk to the opportunity.

Greg Heckman:

Yes. And I'd say, if you kind of step back and why we feel good about the at least $11. I think it's really the size of the plus is what we'll be trying to figure out the rest of the year. If you look at the meal and oil demand drivers are definitely continue to be in place for the full year. If you look at global poultry and pork, those numbers are stable and in total, a little higher. The food and fuel demand for oil continues to remain very solid. And then when you think about the upside, right, merchandising, that's always the toughest 1 for us to forecast. We're not exactly sure of the timing or where along the value chain that, that's going to fall. But what we are confident in is that our team has the ability when those opportunities are there to execute against them. And it continues to be a pretty complicated placed globally, right? We've got a real crop problem in Argentina which is going to cost some dislocations and tighten things up globally in merchandising flows as well as in crushing. And then, of course, we still -- we're off to a good start but very early in the soybean planning here in North America. We still need to make a big crop in North America. And then the other right, China is the demand is improving. So we'll continue to watch that and see how much better that gets. And then I mentioned Argentina on crush, that dislocation is in place. It is going to call on crush around the globe and I think it will really be how those margins play out over the year. And then lastly, the U.S. R&D capacity, we're starting to see them catch up where they had been a little bit slow, bringing online some of the capacity that's in place. But those orders are starting to come in as well as some of the new RD capacity that is coming up here in the second half. And we're starting that position with a better book of sales on in our refining specialty oils in not only in the fuel side but in the food side as well as that continues to develop. And then you look at B12 just kicked off. We went from B10 to B12 in Brazil here in April as that begins to play out. And then the big Brazil bean crop, of course, that's helped margins in China. It's a crushing margins in Brazil and it's helping crushing margins in Europe as well as the less pressure from oil and meal shipping out of Argentina. And then as far as our merchandising and port business, it looks like we've got a big corn crop coming in Brazil. So that could be pretty favorable, too. So there's just a lot of moving pieces. We don't have visibility to exactly what they'll be. But frankly, versus when we talked 90 days ago, I think we feel definitely more confident in the at least $11 today than we did last time we rolled together.

John Neppl:

Yes, Ben, it's hard to predict timing. We continue to work on that business. We've made it clear that long term, it's not core. And so we are still actively working on that; sometimes it just takes time, a lot of nuances when you have a partner and others involved. But fortunately, in the near term, margins are very good. Sugar prices are high and we think the business is going to perform extremely well until we don't own it. And we're hopeful to be able to pull some cash dividends out of that here going forward and continue to manage it and run it like we own it until we don't.

Benjamin Theurer:

Congrats on the results. Just following up on the guidance piece and maybe digging a little bit into the refinement specialty oils. It was clearly a very strong start to the year, around about $50 million, up just in absolute terms but you're still guiding for like results to come in softer for the year. So help us understand what you're seeing in the market where you see the risks to not reach that a little over $800 million level you basically have in the last year. So what are the risks within that? And how realistic do you think those risks are? That would be my first question.

Benjamin Theurer:

Okay, perfect. And then my second question is just around CapEx. And I mean, obviously, you reiterated the $800 million to about $1 billion guidance. You're running a little behind on a quarterly basis but clearly up versus last year. So how should we think about the CapEx throughout the year? And what are like kind of the scenarios to get to the higher versus the lower end of these CapEx plans? And what's the focus of that CapEx?

Operator:

Our next question comes from Salvator Tiano with Bank of America.

John Neppl:

Yes. I think, look, from a working capital standpoint, usually, Q2 is our peak. And so as we see the harvest in Brazil and kind of things getting full swing and farmers get paid. We should see a working capital increase over the second quarter and typically peak. But you can see we were down year-over-year in terms of working capital usage and a lot of that is driven by prices. And so that's the big driver really of even more than volume generally is our commodity prices. We do, I would say, at this point, probably expect to be lower year-over-year overall for the year. And post Q2, it will taper off in Q3 and -- and then in Q4, typically, it can taper off a little bit because we pay a lot of the U.S. farmers even during harvest, they defer payments into the following year. But again, I would say year-over-year right now, our bias would be that working capital is going to be down a bit. So it will be a net cash generation for us from a cash flow from operations standpoint, although when we talk about funds from operations and free cash flow, we set aside the changes in working capital and we don't include that in our FFO calculation.

Greg Heckman:

Sure. I think it starts with the global footprint that we've got and the team, the job they're doing executing. So if you look at our global crush footprint, while it's going to be definitely tough in Argentina with the size of that crop down from last year at 4 million metric tons to what could be $27 million that's going to call on capacity to run in the rest of the world to provide that meal and oil and we're well positioned there. And then the big crop in Brazil allows us to feed that crushing and has helped those margins. The other thing I want to make the comment versus 90 days ago, the other thing that we know, right, we executed very well during Q1. And then if you remember, we're always more liquidity in the next quarter and especially in the next 30 days. So while things are softer here, our team did a good job of managing the risk, managing the earnings at risk in our assets in getting this nearby softness hedged up. So we have some visibility on how we'll perform through here in the second quarter. And then, the curves have actually improved in the back half, especially in Q4. And so as we replenish the beans in North America and we've got to make that crop but I think that's expected and the acres will be there. And then what we're seeing from demand and what the markets are telling us and occurs in demand for meal and oil improving that, that outlook has improved as well. So -- and then, of course, the big corn crop that's going to need to be handled right on the back of a big bean crop in South America for our distribution, merchandising system that, that should also be -- put us in a good position. So, just we've got more visibility to not only what has been executed, what we have hedged and what we expect to be coming.

Steven Haynes:

I wanted to ask a follow-up on, I guess, the comment about kind of in lieu share repurchases, maybe reinvesting back in the business and building out the platform a bit more. I mean, can you give us a little bit of color about how you're kind of thinking about the various buckets that you've broken out in terms of sizing that? And then maybe from a geographic perspective also, where you would be looking to invest more and less.

Operator:

Our next question comes from Manav Gupta with UBS.

Greg Heckman:

We're really excited to be working with those 2 great partners. I think it's a great example of us connecting the value chain to really help make change at scale in developing renewable feedstocks. So this -- like many of these programs will develop as these seed varieties become available, then we commercialize them with the farmers. And then, of course, we've announced that we're expanding our crushing facility at Destrehan and of course, we have the investment in cover Crest as well. So these novel seeds and as you know, soft seed has a higher percent oil, we'll have switch capacity industry so that not only to feed it, whether it makes sense with soy or whether it makes sense with CoverCress or whether it makes sense with softseed canola domestically or being there on the port if it makes sense globally to be able to bring softseed globally. That's the kind of flexibility we want to build into our system when we invest. And that's not only on feeding it with the seed but also to the point that the exports that meal is calling on demand globally as meal is buying its way into the rations more heavily that we are setting there at the port, so we can feed those customers globally. So, it won't be a light switch or a big stair step. It will be continually and we'll continue to report on that as we move forward over time. And then, of course, the other project we talked about with Corteva which we're very excited and that's a multiyear program that has been going on for a period of time and it's getting to the point where we and Corteva decided it was time to talk a little bit about it. But that could be really exciting. Again, it's a profit opportunity for the farmers to grow a soybean that has a different amino acid profile when we then turn it into meal and that will create value for the farmer and it will create value for the feed manufacturer versus the synthetic amino acid. So that one is a little further out but really exciting on the magnitude that it can be. But I think it just shows the investment that we're making in the business for the long term and it's in our core strength. It's where we really deserve to win and we're excited that our great partners have recognized that and we're committed to helping them be successful and the end customers be successful.

Greg Heckman:

Sure. We're super excited about this. And as we said, we plugged it right into the network. There's a great team down there that's now part of our team and we're already serving customers out of that plant we had already -- we're out of capacity domestically on the tropical oil side. So this was a great fit for our network just to continue to grow with customers and serve them with additional solutions and alternatives. We already have plans to expand that plant. We had some equipment already ordered that was headed for a different location that we are going to point in there and we're going to significantly expand that plant and much faster than we could with a greenfield. So that's how it fits in. And if you think all the oil flows that are changing because of biofuels in general and renewable diesel specifically, that that's going to be needed to continue to import some of these different oils on the tropical side and serve our customers as they reformulate; so really excited about the role that will play in our solutions.

Thomas Palmer:

Based on your volume disclosures, I think a challenge both merchandising and in milling has been the availability of corn and wheat in your regions. Just any visibility as to when the volume picture might get a little better for those products. I mean you just alluded to a better corn crop, for instance? Do we start seeing benefits of this in the second quarter? Or is it a bit more second half weighted?

Greg Heckman:

Yes. I think in Brazil, right, the initial shock here in Q1 from the smaller Argentine crop and some of the challenges that we expect to see on the quality there as well, where our South American wheat milling business is set up, Argentina is a real important supplier to that so that can make a difference year-to-year. But we reflected the challenge in Q4 and then are rolling that forward in the balance of the year. So the big change, of course, won't be next year until that crop comes off and seeing where that opportunity comes. As far as in North America, our core milling business did have good demand and good yields. And then, of course, we'll the quality of the new crop in North America will be key later in the year. But they've done a great job in our North America core billing business with lower unplanned downtime. And then we had some nice key customer wins and getting some new business. So kind of plugging along and continue to feel good about that.

Greg Heckman:

Sure. If you take soy in total, right now, '23 structural margins in total look in line with '22. So while we see U.S., it's down slightly versus an exceptional year last year. China, the curve looks similar. Now that's been a bit of a roller coaster right. Last year was tough. Margins were better early in China and then start to get soft but now with the new Brazilian bean crop coming off, those margins are improving again. Now there's not much liquidity in the China market. It's always pretty spot and fairly volatile. But the team is doing a good job. So I think that that's similar with maybe some upside. Brazil, the curve is up versus last year. And of course, that's on the back of both the record Brazilian bean crop as well as the lower Argentine production. And then, of course, Argentina is the drag by itself. The curve is much lower with what's going on there with the small crop hurt by weather. And so volumes will be lower there all year that has to be picked up by the rest of the system. And then the EU definitely looks better than last year. Energy prices have moderated. And then, of course, there's less exports of Argentine meal into that market which helps help margins there as well. And then in softseed, the curves are up versus 2022 and that's in both North America and Europe. So improvement in the soft seed side; that's really unseed supply is really a driver.

Andrew Strelzik:

Maybe my first one to start. I heard your comments on the renewable diesel demand that you're seeing. I'd love if you could elaborate on that. I think you said you're seeing some catch-up and maybe some demand from new capacity. So anything else you can share on that? And in light of that, do you think that the futures curves are accurately reflecting where crush margins could go in the back half? I mean you mentioned some improvement in 4Q. We know what's going on in Argentina. I mean do you think that whether or not that was a fair representation?

John Neppl:

Yes. In terms of Andrew, the R&D side, renewable diesel side, things have probably been a little slower in terms of the ramp-up of some of that. There have been some operational issues at some of the renewable diesel facilities some of the transformation of some of the plants has taken a little bit longer. But we think the long-term fundamentals are still there and the long-term trend is still there. We've got revised RVO coming out here in June and we'll see where that goes. But I think we're hopeful that's favorable to the industry. But again, we're starting to feel some tightness on the oil demand side. It's been I think first quarter reflected a little bit of heaviness on the oil side. Not that the demand wasn't there. There was just a lot of oil in the market. But I think the view is that we're going to see some improvement here as we go forward.

Greg Heckman:

Yes. I think if you take the chunks, right, we don't expect as much volatility in milling as we talked on refined and specialty oils, we feel that's pretty conservative based on the momentum we've had and the setup of how much we have on the books for the balance of the year here in North America and what we expect to come on in R&D. And then on the crush, I mean I mentioned Argentina but what really makes this year different and it's hard to get at the magnitude of it is that crop is under 30 million metric tons, right? They're saying now maybe 27 and there's some quality problems in Argentina. So that's going to run here during harvest and then really pull back in Argentina and that's going to be worse than we've seen. And then we still haven't seen how farmer retention is going to play out. The farmer is seeing a shrinking crop, they're watching the government to see what the soy dollar 3.0 or what next are there going to be larger government incentives. And that's -- even with a small crop, that's changing how they're commercializing that crop which has a big impact. So this is going to play out until the next Argentine crop comes out. I mean we even saw beans moving from Brazil to Argentina, early, that's going to stop. So that makes the second half really tough there. So I think that's the 1 that's tough to call. And then as we said, China, demand improving? And how much will that demand improve and not only for the soybean demand but on the corn demand. And then even their demand outside of the ag commodities will have an effect on the ocean freight market which can kind of bleed over and have a big fact on dislocation in margins and opportunity in the ag commodities business from the ocean flows; so lot of moving pieces. And generally, some of that dislocation and uncertainty ends up creating problems that we've got to help solve for our customers; so that's how we're seeing it.

Operator:

Our next question is from Adam Samuelson with Goldman Sachs.

John Neppl:

Yes. Look, Adam, I don't think our long-term model is to be sitting on such a low leverage ratio and so much cash availability. I think the -- what we've been as disciplined about how we how we look at it. Certainly, from a share buyback standpoint, when we looked at our 5-year plan, we were going to commit to at least $250 million a year, $250 million worth of a year. I think certainly, if the opportunities are will exceed that when we can. We've got a lot of capital projects underway. We're continuing to look at a lot of M&A opportunities and growth opportunities. We have some -- just one small thing. We have some bonds we're going to pay off here shortly, utilize a little bit of that capital and we expect working capital to grow here in Q2. But as you look over the long run, for sure, I think we're well below where we think we'll operate long term from a leverage standpoint. But again, it's staying disciplined in putting that money to work in the right places which, again, will be a combination of M&A, the big pipeline of CapEx that we have underway that we'll see -- you'll see continued higher than historical CapEx over the next couple of years. And then there's small bolt-on things and debottlenecking, all those things where we'll invest. So -- but again, share buyback, an important part of that and will continue to be as we go forward.

Greg Heckman:

We've seen a little bit. But net-net, if you look at the increase in poultry numbers and pork basically flattish. We believe the demand is there. And soybean meal and protein meals in total. They're a big part of the ratio and the market does its work to get it priced in to where it needs to be on the volume. So we feel comfortable with it.

Salvator Tiano:

I just want to go back a little bit before you mentioned a little bit that in terms of where you want to expand and you had already given some indications with your prior presentation last summer. Mainly you want to expand, if I heard correctly, in origination because to the farmer in North and South America and generally remain the Americas. So as we're thinking, you mentioned that you are in active discussions on M&A. And I know you cannot talk about specifics but when you think about a bigger move, how important would it be to how -- to expand your crushing actually footprint or refining footprint which has been the focus of growth for a couple of years versus just the origination. Is it important for any big moves to have such assets or it doesn't -- or it's not a deal breaker?

Salvator Tiano:

Perfect. And just one last one. You made the comment that you're investing in a crushing facility to make it more flexible, Take, for example, the pennies are Crest will be producing at some point? I'm just wondering, as you invest more into making your crushing plants more feedstock flexible, how does this affect margins overall, perhaps it makes it a little bit more capital intensive? I don't know if it has an impact on margins. And also as we think about crops overall, including the one Cabrera developing. What do you -- how do you think the new market will play out in terms of margins versus traditional oil is like an all and soybeans.

Operator:

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Greg Heckman for closing remarks. Thank you.

Operator:

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

Ruth Ann Wisener:

Thank you, Drew [ph], and thank you for joining us this morning for our fourth 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 Events and 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 two 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.

John Neppl :

Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on Slide five. Our reported fourth quarter earnings per share was $2.21 compared to $1.52 in the fourth quarter of 2021. Our reported results included a negative mark-to-market timing difference of $0.56 per share and a negative impact of $0.47 per share related to onetime items. Adjusted EPS was $3.24 in the fourth quarter versus $3.49 in the prior year. Full year results for 2022 were $10.51 versus $13.64 in 2021. Adjusted full year EPS was $13.91 versus $12.93 in the prior year, an increase of nearly $1 per share. Adjusted core segment earnings before interest and taxes, or EBIT, was $804 million in the quarter versus $766 million last year. Agribusiness finished with an outstanding year with another strong quarter that was in line with last year. In processing, results were primarily driven by North America, which benefited from the combination of large soy and canola crops and strong meal and oil demand. Partially offsetting this strong performance were lower results in Europe and South America. Europe was negatively impacted by higher energy costs and lower volume that included increased planned downtime and the idling of our operations in Ukraine. In South America, tight bean supplies reduced margins. In merchandising, higher results in global grains were more than offset by lower results in global oils marketing, which had a particularly strong prior year. Refined and Specialty Oils finished another record year with strong fourth quarter results of $222 million, up $68 million compared to last year. All regions performed well in the fourth quarter, benefiting from strong food and renewable fuel demand with notable year-over-year improvements in Europe, Asia and South America. In Milling, the loss in the quarter was primarily driven by lower origination volume and high supply chain costs, reflecting the small Argentine wheat crop that negatively impacted our merchandising operations. Results in the prior year benefited from contributions from our Mexico wheat mills, which we sold in the third quarter of 2022. Corporate and Other was in line with last year. A decrease in corporate expense is primarily related to the timing of performance-based compensation accruals, was offset by results in our captive insurance program and lower results in Bunge Ventures. Improved results in our noncore Sugar & Bioenergy joint venture were primarily driven by higher sugar prices, which more than offset lower ethanol margins. For the quarter, reported income tax expense was $131 million compared to $64 million for the prior year. The increase was due to higher pretax income and a year-to-date adjustment in actual geographic earnings mix. Adjusting for notable items and mark-to-market timing, the effective tax rate for the full year was 17% compared to approximately 16% for the prior year. Net interest expense of $76 million in the quarter was up compared to last year due to higher interest rates, partially offset by lower average debt levels. Also impacting the quarter were foreign currency borrowings in certain countries where interest rates were high. However, the incrementally higher borrowing costs were fully offset with currency hedges reported in gross margin. Let's turn to Slide six, where you can see our positive EPS and EBIT trends adjusted for notable items and timing differences over the past five years. This not only demonstrates the power of our global asset networking capabilities, but also the continued outstanding performance by our team. Each of these years brought a different set of rapidly changing circumstances and the team successfully navigated through them, while also executing on numerous company initiatives. As shown on Slide seven, our full year addressable SG&A increased modestly year-over-year, reflecting a resumption of more normal business activities as well as increasing investments to strengthen our capabilities and to drive growth, particularly in technology. We expect higher SG&A in 2023 related to these initiatives, which we have considered in our outlook. Slide eight details our capital allocation of the approximately $2.4 billion of adjusted funds from operations that we generated in 2022. After allocating $306 million to sustaining CapEx, which includes maintenance, environmental, health and safety and $8 million to preferred dividends on shares now converted to common equity, we had approximately $2 billion of discretionary cash flow available. Of this amount, we paid $341 million in common dividends, invested $249 million in growth and productivity CapEx and repurchased $200 million of common shares. The approximately $1.3 billion of retained cash flow was invested in additional working capital and toward reducing debt. As we laid out in our earnings growth framework in the second quarter of last year, we expect to repurchase about $250 million of stock each year, but actual amounts could vary. During 2023, we expect to deplete the remaining $300 million of our existing $500 million program which was announced in October 2021 and approve an additional share repurchase program. Moving to Slide nine. We finished 2022 with a total CapEx spend of $555 million, which was about $50 million lower than we expected in our Q3 forecast. The primary drivers of the reduction were supply chain delays on long lead time equipment as well as additional project planning time, as we look more closely for opportunities to offset inflationary pressures. We expect continued delays in 2023, which are reflected in our current outlook. Lead times for simpler equipment and parts are showing signs of normalizing. However, due to increased project costs, we are reassessing the scope and timing of certain discretionary investments. As shown on Slide 10, at year-end, readily marketable inventories, or RMI, exceeded our net debt by approximately $3.2 billion. This reflects our use of retained cash flow and proceeds from portfolio actions to fund working capital while reducing debt. Slide 11 highlights our liquidity position. At year-end, all $6.7 billion of our committed credit facilities was unused and available. This provides us ample liquidity to manage our ongoing capital needs. Please turn to Slide 12. For the trailing 12 months, adjusted ROIC was 21.6%, well above our RMI adjusted weighted average cost of capital of 6.6%. ROIC was 15%, also well above our weighted average cost of capital of 6%. The spread between ROIC and adjusted ROIC reflects how we use RMI in our operations as a tool to generate incremental profit. Moving to Slide 13. For the year, we produced discretionary cash flow of approximately $2.1 billion and a cash flow yield of 20%. Please turn to Slide 14 and our 2023 outlook. As Greg mentioned in his remarks, taking into account the current margin environment and forward curves, we expect full year 2023 adjusted EPS of at least $11 per share. In Agribusiness, full year results that are forecasted to be down from last year as slightly higher results in processing are more than offset by lower results in merchandising, which had a very strong prior year. While we are not forecasting the same magnitude of margin-enhancing opportunities that we captured in the past year, we do see potential upside to our outlook if strong demand and tight commodity supplies continue throughout the year. In Refined and Specialty Oils, we expect a favorable environment to continue in 2023. However, we expect segment results to be modestly down from 2022's record year, which reflect very strong results in all regions. In Milling, full year results are expected to be down from last year, but in line with historical performance. In Corporate and Other, results are expected to be in line with last year. In Non-core, full year results in our Sugar & Bioenergy joint venture are expected to be in line with last year. Additionally, the company expects the following for 2023

Operator:

[Operator Instructions] The first question comes from Adam Samuelson with Goldman Sachs. Please go ahead.

John Neppl:

Yes, I think, Adam, as we look forward and kind of back to my comments, we do expect to -- we didn't get all of the $250 million bought last year that we kind of laid out in our strategic plan. But we absolutely expect to be caught up on that this year and seek authorization for an additional plan. We are committed to share buyback. As I said, we didn't -- obviously, didn't get it done last year at the 250 level. But that is going to continue to be an important part of our allocation, and we do expect to make up some ground here in 2023.

John Neppl:

Yes. Well, we're always looking at opportunities and have been for a number of years. And I think as we were in fourth quarter, looking at a lot of opportunities, we just thought it was prudent not to step into the market at that point. But again, I mean, going forward, I agree with you, we think our balance sheet is extremely strong, and we're well positioned to get more aggressive on the buyback side.

Greg Heckman:

And I'd just add, we're looking at a bigger portfolio of opportunities than we've seen in a long time. And yes, some of them are going to happen and some of them aren't, but we're going to stay disciplined. I think that's the point I wanted to make.

Greg Heckman:

Sure. Yes, let me start here. Yes, if you look at the outlook of at least $11, that's up $1.50 from the call we made at the same time last year. And so I think if we frame that up, it's the favorable environment that we saw in '22 is carrying in with continued strong demand for both meal and oil. We continue to see tight S&Ds, and we expect the volatility to continue here this year. So the other thing is we've continued to get more reps in our operating model, right? We continue to improve the data transparency. And what we've got with the tight Argentine crop with the dryness there, that crop is probably going to be in the mid-30s versus 44 last years and that tightness will continue all year and the curves are reflecting that. And so as you know, in the outlook, we're always looking at the curves, and so they've given us more visibility this year because of the Argentine situation. And then we've got more done in our RSO book in both food and fuel than we did a year ago. So I think that's the visibility versus a year ago that gave us the confidence to call the at least 11 at this point.

Operator:

The next question comes from Ben Theurer with Barclays. Please go ahead.

Greg Heckman:

Yes. The RS&O segment continues to be very strong. And what we saw was really driven by all regions globally. Now North America, of course, has been the big driver with what we're seeing in the renewable green diesel. But really biofuels globally continue to grow, and I think that's why we saw improvement from all regions. So the food demand has stayed strong and that is even without -- China coming out of COVID, we're starting to see a little bit of improvement in oil demand there that could improve throughout the year from a global S&D. But know, the teams continue to do a very nice job. And even on the food side, where there's been some inflation, you think about our tech services people working with customers as they reformulate to try to work with inflation. So there's just a lot going on there, both with the food and the fuel demand.

Benjamin Theurer:

Perfect. Very clear. Thank you very much. And then second question is really just about the general flex, obviously, that we're going to have within the guidance. And one of that is that if you could elaborate maybe a little more detail on the tax rate, which obviously is a relatively wide range, but also significantly higher than in the last two years. Is that all geographic mix or what's behind that higher, call it, midpoint 5% to 6% higher tax rate that you're seeing for this year versus the last two years?

Benjamin Theurer:

Perfect. Well, thank you very much and congrats on a very strong 2022.

John Neppl:

Thank you.

Manav Gupta:

So I just have 1 quick question. On December 15, you made an announcement that you are looking to invest in a new protein concentrate facility. I think $550 million was the CapEx. Help us understand why this investment? Why is it a good strategic fit? And then what kind of earnings uplift can you expect from this investment? And I'll turn it off over after that.

John Neppl:

Yes. And in terms of returns, any projects like this, we look for a minimum of 12% to 15% return. So you can kind of model that in. But this project won't be completed until roughly sometime in 2025. So it's going to take a bit of time from a development standpoint, getting that all wrapped up and then getting the construction actually completed.

John Neppl:

Thank you very much.

Thomas Palmer:

Thanks and good morning. I wanted to ask on just the expected cadence of earnings in '23. Does the outlook you kind of lay out assume stronger earnings, for instance, in the first half of the year and then some erosion in the back half? Are there segments where earnings might be more lumpy than in others?

Thomas Palmer:

Okay. Thank you for finding that. And then I just wanted to maybe ask on the CapEx piece. So the presentation and then your comments, you noted the reassessment of scope and timing of some projects due to a recent spike in costs. A couple of quarters ago, you laid out this longer-term CapEx -- I guess it's combined CapEx and M&A ultimately of $3.3 billion. Is that number still intact? Does that need to have moving pieces where the M&A component maybe is less? I'm just trying to understand if that longer-term investment is also adjusted given that reference spike in costs?

Greg Heckman:

And I think the other thing you want to keep in mind, I don't think it's specific to Bunge or even specific to this industry. It's more expensive to build things, whether it's the labor or the equipment and the interest cost or and it's taking longer to build things. But what that has done for our installed asset base, right, is keeping margins higher and it's keeping the environment stronger for a longer period of time. So I think that allows us to have the discipline, do these projects the right way and still build them. So it's probably pushed out the amount of time that we're able to kind of over earn versus the model because of the environment and then the projects will just come in a little bit later.

Thomas Palmer:

Okay. Thanks for the details.

Operator:

The next question comes from Salvator Tiano with Bank of America. Please go ahead.

John Neppl:

Sure. No, you're exactly right. You've got to look at the entire global setup. And I think that's one of the things that's allowed us to perform in a variety of different situations the last few years is the great diversification and it's the best risk management is the geographical footprint of Bunge. So as we look at Argentina, you're right, the curves are going to be much lower it's going to be very stressed from a crush margins and volumes are going to be lower because of the weather, right? That crop is small all year. To your comment, you're hearing some beans moving into Argentina. We've heard those rumors as well that some people getting positioned when it's close, that they're securing supplies for safety. So I think that's how tight people think the S&Ds are going to be. What that means to the rest of the world is that we see soy margins in total going to be about the same in '23 as is in '22. We think the U.S. could be down slightly. The curve is currently down, right, versus last year, but that will continue to play out. China was a very tough last year with the COVID zero policy, and as it started to come out of COVID, we've seen a little better oil demand. We've seen the curves start to improve as well as the spot margins. So we'll watch that. That will be a key one to watch how that demand accelerates here for the balance of the year as they come out of COVID, but it definitely looks better than last year. Brazil is up versus last year, very big bean crop coming in there. And then in the EU, the curve looks better than last year. Part of that is less soybean meal imports, of course, coming out of South America and the other is we had a warm winter luckily, and we've got lower energy prices. And that will not only benefit soy, but that lower energy costs will benefit soft as well. And if you look at soft why we're thinking about it on a year-over-year, those margins will be up versus '22 in both North America and Europe on seed supply and then on better energy outlook in Europe. So a pretty good setup really for the Bunge portfolio here as we look at '23.

John Neppl:

Yes. It's certainly inflation is playing into just about everything on the CapEx side. But it's also because of the timing of some of these bigger projects and our decision to reassess some of those, it's given us an opportunity to maybe accelerate some of the maintenance work that we would have maybe pushed off for another year or two.

Operator:

The next question comes from Steven Haynes with Morgan Stanley. Please go ahead.

John Neppl:

Yes. We haven't heard, our conversations with industry participants is, we haven't heard of anything around delaying projects specifically. Certainly, there have been, in the past year, some slowdowns in terms of the build, primarily driven more by the margins on the oil and gas side. But as far as we can see from our side, everybody is still committed with moving forward, as I've discussed before.

John Neppl:

Yes. Look, we're pleased with the way it's been operating. But as we said before, we still don't expect to hold that long term, and we continue to look at our options there. And we -- hopefully, at some point down the road here, we have something to announce, but again, in the meantime, we're focused on running it.

Operator:

The next question comes from Robert Moskow with Credit Suisse. Please go ahead.

John Neppl :

And you're talking about overall interest expense increase, I didn't catch the first part? But yes, some of it will be, not all of it. I mean some of that is just indicative of -- when we went into 2022, three-month LIBOR was less than 0.5% and now it's hovering around 4%-or-so. So, we're starting the year on much higher rates, and so that will have an impact. There will be some higher rates in countries where we're borrowing where we're hedging against that. So, part of that will be offset in margin, but not all of it. Some of it will just be a symptom of starting out with higher rates this year.

John Neppl:

Yes, I think, look, it's a reasonably modest decline from what was a really strong record year. And I think, I wouldn't say we don't believe there's a way we could get back there. I think we're just not -- we're not forecasting it at this point. We have a little bit better visibility into the U.S. S&Ds, and we feel stronger about that remaining strong. The rest of it, we'll see. I mean we'll certainly take the opportunity if it's there, but it's just hard to forecast that at this point.

Robert Moskow:

Thank you.

Ben Kallo:

Great. Thanks for taking my question. And all the detail here. Just a question on the JV with Chevron. Could you just talk a little bit about any kind of requirements for capacity offtakes? I think you probably already said this before, but just the ACAP [ph] firm agreements on the offtake. And then has anything changed in your plans with the JV based on the IRA and whether renewable diesel incentives there or SAF incentives there? Thank you.

Greg Heckman:

And we do supply them in the commercial relationship from our entire system, not just those two assets. We were supplying them even before the JV. And so, it's a very holistic relationship.

Greg Heckman:

Well, I think in total that you've got a new industry that's developing, right? And net-net, it's more demand. It's positive, the renewable green diesel. We don't think it's going to be a straight line. And I think some of the things around the IRA, everyone's trying to understand where there's leverage there for a number of things and not just around renewable green diesel, but around lower carbon opportunities because ultimately, with all of our customers in feed, food and fuel are looking for lower carbon intensity products, and we've got to find that value and drive that back to the farm gate to the producer to the farmer, the one who's ultimately going to have to make that happen with those farmer-grown crops.

Ben Kallo:

Thank you, guys.

Operator:

The next question comes from Ben Bienvenu with Stephens. Please go ahead.

Greg Heckman:

Yes. Look, let me start by -- yes, we're forecasting the same way we have been, right? It's what we can see, it's what the curve show. And as we talk about calling at $1.5 higher than we did a year ago, because we do have more visibility with what's booked on the RSO side for feed and fuel as well as with the tight Argentine crop, the curves are reflecting that. And so that's given us the confidence for -- and to feel really good about the at least $11. And I think the question really is going to be around what's the size of the plus? And there are a number of moving pieces. But you look, meal and oil demand, those drivers continue to be intact, right? You've got good global poultry and pork numbers, and there's good food and fuel demand for oil. So that's in place. The sources of upside, of course, are the merchandising, right, which is always the toughest one to call. It's when we have the least visibility to. And I think that one is most driven by dislocations, tight S&Ds globally and volatility. And so that's one where we talked there is opportunity and upside for that, and that's kind of always the case in the merch, even if you remember how we talk about it in the model and how we've talked about it in the outlooks in the past. And then you've got China, right? The improved demand coming from China. We're starting to see just a little bit of that on the oil demand side, but that will be key to watch. And I think there's a lot of belief that, could come back maybe faster and stronger than some thought. And then the dislocation is not only matter to the merch business, but they matter to the crush margins, right, as we have to turn crush on to meet the customer demands in different parts of the world, and it looks right now like our crush is going to run really hard outside of everywhere, except Argentina. And then as John said, we're seeing the capital be deployed in the RD space. So, it looks like that demand will be coming online in the second half of the year in North America. And then we've got a really large Brazil crop setting up on the bean crop as well as a good corn crop. And then you've got what we believe will be a gradual build back to B15 in Brazil. So that demand coming probably starting in April and building as they kind of try to match versus inflation. So, we think the dollars are going to be there. Exactly which value chain they're going to fall in or exactly which quarter they're going to fall in, that's always different in this business. What I do have the confidence is with our geographic platform our team is that we'll capture that and that's what we've tried to continue to prove that we can do. And as I said earlier, this is a good setup for Bunge globally. We like how it's set up, and we've got to watch the crops in North America to develop and watch things continue to play out.

John Neppl :

Yes. I think -- look, the answer is we're going to do both going forward. I think we've had a lot of opportunities that we've been assessing including share buyback. But I think we're very committed to share buyback as part of the program. And I think we're highly confident we'll get the remaining $300 million done this year in our current program and get a new program in place and as we move forward, we fully intend on doing a mix of both growth -- mix of all growth, M&A and our share buyback.

Greg Heckman:

Thanks, Ben.

Greg Heckman:

Thank you. So, thanks again for joining us today and for your interest in Bunge. We're really proud of the team and the performance we've delivered in 2022 and our call for '23, and we're absolutely committed to continuously improving Bunge and serving our customers. So, we look forward to speaking with you again soon.

Ruth Ann Wisener:

Thank you, Keith, 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. This can be found in the Investors section of our website at bunge.com under Events and 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.

John Neppl:

Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Our reported third quarter earnings per share was $2.49 compared to $4.28 in the third quarter of 2021. Our reported results include a negative mark-to-market timing difference of $0.19 per share and a net negative impact of $0.70 per share related to onetime items. Adjusted EPS was $3.45 in the third quarter versus $3.72 in the prior year. Adjusted core segment earnings before interest and taxes or EBIT was $740 million in the quarter versus $698 million last year. The higher results were driven by our Refined and Specialty Oils segment. In total, Agribusiness results of $528 million compared to $533 million last year. In Processing, results were essentially flat with the last year as increases in North and South America were offset by lower results in Europe were a combination of a sharp rise in energy costs and increased mil imports pressured margins. Results in China were down primarily due to the impact of pandemic-related lockdowns. Merchandising results of $108 million were down slightly compared to last year as higher contributions from global grains and financial services were offset by lower results in global oils marketing. In Refined and Specialty Oils, higher results reflect strong performances in our refined oil operations in South America, Europe and North America. In Milling, higher results in North America were more than offset by lower results in South America. The decrease in corporate expenses was primarily related to the timing of performance-based compensation accruals. The decrease in Other was primarily related to lower gains on investments in Bunge Ventures. Lower results in our non-core Sugar & Bioenergy joint venture were primarily driven by the combination of lower ethanol volumes and increased costs. Net interest expense was up compared to last year due to higher interest rates partially offset by lower average debt levels. Also impacting the quarter were foreign currency borrowings in certain countries where interest rates were high. However, the incrementally higher borrowing costs were fully offset with currency hedges that are reported in gross margin. Let's turn to Slide 6, where you can see our positive EPS and EBIT trends adjusted for notable items and timing differences over the past four years along with the trailing 12 months. This performance trend demonstrates our team's ability to successfully manage through rapidly changing markets and also the strength of our global platform. As shown on Slide 7, year-to-date addressable SG&A has increased modestly year-over-year, reflecting resumption of more normal business activities such as employee travel and related expenses as well as increasing investment to strengthen our capabilities and drive growth. Slide 8 details our capital allocation of approximately $1.8 billion of adjusted funds from operations that we generated year-to-date. After allocating $184 million to sustaining CapEx, which includes maintenance, environmental, health and safety, and $8 million to preferred dividends on shares now converted to common equity, we had approximately $1.6 billion of discretionary cash flow available. Of this amount, we paid $248 million in common dividends, invested $168 million in growth and productivity CapEx and repurchased $200 million of common shares during the third quarter. This left us with approximately $1 billion of retained cash flow, which we invested in additional working capital during the year while also reducing our net debt. We will continue to maintain a disciplined and balanced approach to capital allocation. Moving to Slide 9. At quarter end, readily marketable inventories, or RMI, exceeded our net debt by approximately $2.3 billion. As commodity prices have moderated recently, the cash that has been invested in inventory has been released and deployed toward debt reduction. To provide additional understanding of how commodity price movements and other factors impact our cash flow from operations, we have posted a presentation in the Investors section on our website this morning. Should you have any questions, feel free to reach out to our IR team. Slide 10 highlights our liquidity position, which remains strong. At quarter end, approximately $6.7 billion of our committed credit facilities was unused and available. This provides us ample liquidity to manage our ongoing capital needs in this volatile commodity price environment. As shown on Slide 11, our trailing 12 months adjusted ROIC was 22.2%, 15.6 percentage points over our RMI adjusted weighted average cost of capital of 6.6%. ROIC was 15.2% or 9.2 percentage points over our weighted average cost of capital of 6%. The spread between these two metrics reflects how we use RMI in our operations as a tool to generate incremental profit. Moving to Slide 12. For the trailing 12 months, we produced discretionary cash flow of approximately $2.2 billion and a cash flow yield of 21.7%. Please turn to Slide 13 and our 2022 outlook. As Greg mentioned in his remarks, taking into account our third quarter results, the current margin environment and forward curves, we've increased our full year 2022 adjusted EPS outlook to at least $13.50 per share, a $1.50 per share increase over our previous outlook. In Agribusiness, full year results are expected to be higher than our previous outlook but down from last year as stronger results in processing are more than offset by lower expected performance in Merchandising, which had a particularly strong prior year. In Refined and Specialty Oils, full year results are expected to be up from our previous outlook and significantly higher than last year, driven by our refining operations. In Milling, full year results are expected to be in line with our previous outlook and significantly higher than last year. In Corporate and Other, results are expected to be in line with our previous outlook and last year. In non-core, full year results in our Sugar & Bioenergy joint venture are expected to be lower than our previous forecast and down slightly from last year. Additionally, the Company now estimates the following for 2022

Operator:

[Operator Instructions] And the first question comes from Ben Theurer with Barclays.

Greg Heckman:

Okay. Thanks, Ben. Let me talk about Bunge first and then talk a little bit about the environment. Look, we're running a very different company. If you think about the significant changes that we made here starting with the portfolio, the number of investments that we've made, we've optimized the footprint. We protected the fact that we have a very global footprint, and that's shown to be very important here. We're approaching how we operate with a completely different level of discipline, and that's not only on the day-to-day risk management of how we operate, how we think about investments and how we make investments. We focus really on the assets. And these big fixed asset businesses, you need to really be excellent operationally and the way our commercial teams work with our industrial teams. I mean you can look at our volumes, our capacity utilization, and the unplanned downtime continues to get lower, just the focus around the operational improvements are fantastic and very important, the focus, of course, on the balance sheet, strengthening that, our credit ratings and liquidity. And then the operating model, right, the operating model and the reward system to support it, that's really led to the agility that allows us to take advantage of a better environment. And it's the agility and the alignment of our global team and the speed to act. And I think you saw some of that even here in the fourth quarter -- or in the third quarter. If you look externally, we've got a lot of -- a lot that's changed, right? If you look back here in what we've done here in the last three years that we were in control of, there are a lot of things we weren't, right? But renewable diesel, that is definitely a tailwind in biofuels in general globally. And with -- so I think the energy prices and the volatility we expect going forward, that doesn't look like that's going to change. Global S&Ds have remained tight, and that's led to more volatility. And then, of course, we've had the dislocation from the Ukraine-Russia conflict, and that's going to carry on as well going forward on the dislocation even if the war ended today because of the lack of trust and because of infrastructure that's been damaged. And then you've just got geopolitical tension and uncertainty. Again, the climate and the weather extremes and then add in all the supply chain challenges that started with the pandemic but seem to not be able to get cured even as the pandemic winds down in most parts of the world. So, what that leads to is, it's more complexity for all. And our business is really helping our customers at both ends of the supply chain manage that complexity and helping solve problems. And I think our global footprint and our way of operating it are showing them in a number of different conditions that we can continue to deliver, and we're really proud of that.

Greg Heckman:

Yes. I'd start by saying just reminding you what we do in our outlook is we look at, one, what the curves are. And then of course, we look at what we have on the books already. What we are seeing in the Refined and Specialty Oils is a higher percentage booked here for Q4 and even starting out into 2023. And of course, that's the most stable part of the P&L., so that gives us some of the confidence in the at least $13.50. And then, we're seeing no doubt an environment that has been very hard to predict. So it's fairly risk off, I think, globally if you look at the macros. And so, we're definitely operating with lower levels of risk, and it's very uncertain how it will play out. But I think that's what's in our outlook, that in the curves.

Operator:

Thank you. And your next question comes from Ben Bienvenu from Stephens.

Greg Heckman:

Yes, we agree it's very undervalued, Ben, so thanks for calling that out. Look, we don't see an environment here in the next couple of years which is looking out fairly far for these businesses. If you look at the structural setup on what needs to be done from a production standpoint globally to continue to build the crops to what we see coming on demand, so I think S&Ds continue to stay tight. And we talked about the tailwinds from biofuels generally and renewable diesel specifically. So, we don't see a way back to baseline here for the next couple of years. That's just -- that's not in the cards.

Greg Heckman:

I think the other thing we're personally struggling with, and I don't think ourselves, our industry are specific to that, I think it's kind of broad-based. It's more expensive to build things, to build capacity, and it takes longer to get things done. And that also extends the cycle. And then as we've talked about, I think globalization is done for a period of time. How long, we'll see. And what that means is that when we had a supply problem or a demand surge globally. Every origin and every destination was available to solve that problem in the past. And that's no longer true based on what's happened with the war and with geopolitical tensions. So with that not changing, there are fewer ways to solve and which means more volatility. And that also is -- creates the opportunity as we have to help people solve problems, to help with food security, and all of that sustains the cycle as well.

John Neppl:

Yes, Ben, we've talked about kind of in our go-forward planning that we're going to buy back $1.25 billion worth of stock over the next five years. And it's really just part of our normal allocation plan. And as we look forward and we looked at the amount of cash we're generating and our forward pipeline of projects, both CapEx and M&A, we felt like we -- it was a good time to buy. And we're continuing to generate cash, and this won't be a one and done. It's going to be a normal part of it going forward. We've said we'll kind of be opportunistic around timing and pricing. And as you know, we have windows where we're blacked out around quarter ends and things like that, so we have to -- we have time, sometimes a limited amount of time to do it in any given quarter, but it just -- we just felt like it was the right time to step in and do some. And we'll continue to look at it every quarter like we always do.

Adam Samuelson:

So maybe the first question, just thinking on the fourth quarter outlook a little bit and maybe in Agribusiness I wanted to just think about some of the pieces because full year Agribusiness down to date. You're basically flat in the whole segment. Obviously, you talked about Merchandising had a good fourth quarter, and you don't always -- don't assume that as a baseline. But do we infer just from -- on the processing and crushing side? I mean margins especially in North America remain excellent right now and would be -- I think I had last year's levels that kind of thinking processing higher year-over-year merchandising assumption lower as you see what the market gives you is kind of the starting assumption? Or am I missing something in that buildup?

John Neppl:

Yes. Adam, I just -- I'd add to that, that when you look at kind of where we'll end up for the year based on our current forecast, we are going to be up in processing, which when you look at the environment with COVID impact in China, it's been a relatively tough year, high energy costs in Europe, and the fact that we'll finish up in processing is pretty exceptional. And Merchandising, we just had a phenomenal last year. We're going to have a good year this year in Merchandising. We just had a really unusually strong year last year. It doesn't mean we couldn't repeat it going forward at some point, but we certainly don't predict that here for the remainder of the year. But again, that's where some of the upside is. And then, of course, on the Refined and Specialty Oils side, significant overachievement versus a year ago. And then Milling is with the strong first half we had, we're going to finish well ahead of last year. So all in all, other than Merchandising, which is the piece that inherently is most difficult to predict and maybe the most opportunistic, the base part of the business, the rest of it is looking to be very strong year-over-year.

John Neppl:

Yes. I mean if you look at it today, we're -- we've got -- if you just look at today where our credit metrics are with the rating agencies, a 1.3x for Moody's, for example, that would imply $3 billion to $4 billion of dry powder and debt capacity alone, not to mention what we expect to continue to generate in cash. So, we do have a lot of dry powder. And obviously, we're going to -- as we said before, we're going to maintain discipline in our approach to capital projects and the timing of those, with M&A and the timing of that. And certainly, we don't expect to maintain these conservative levels forever. That's not what we want to do. We want to deploy the capital in one way or another. Certainly, M&A is opportunistic, and timing of that is very difficult to predict. But we're certainly -- we have an eye on that area. CapEx, things are a little slower than what we'd like to see just given supply chain constraints, but we do expect the next couple of years to be significantly above our historical levels of CapEx. And then, of course, buybacks, we -- that's going to be a big part of the mix as well.

Operator:

Thank you. And the next question comes from Rob Moskow with Credit Suisse.

John Neppl:

Yes. Thanks, Rob. Yes, first of all, operationally, when we look at the quarter from a refining and from a processing standpoint, actually, the two places we were down, one was Argentina, we were down slightly year-over-year for the quarter; and then in China. But everywhere else, we were flat to up. So actually, very strong volume in the U.S. around processing. In Brazil, we were ahead of last year. And in Europe, despite the difficulty, we were basically flat year-over-year in terms of volume on processing. With respect to cash flow, in part why we put a deck out on our portal this morning on our website is to try to help eliminate some of the confusion around the impact of our AR securitization program and how that impacts cash flow. It doesn't really impact cash flow. It impacts the presentation of cash flow. And...

John Neppl:

And in fact, we're working on a redesign of that program right now and hopeful that if we can do that, it's going to eliminate the way we have to report it externally, which will make -- will go a long way in clarifying our real underlying cash flow. Then you really have to just look at our change in working capital and kind of set that aside to get to our underlying cash flow. So our underlying cash flow, we do, do an adjusted FFO, and there's a reconciliation in the back of our investor presentation to get to those numbers. That's how we look at it. And ultimately, the other way to look at it is look at the trend in our working capital or inventory levels versus our debt, where we've been able to decrease debt over time, but yet we still continue to increase working capital when it's opportunistic. And our RMI, our inventory levels have been up because of prices, but yet we've been able to maintain or reduce our debt over that time period. And ultimately, obviously, that capital will be available to deploy elsewhere, but a big part of why our leverage ratios have gone down so much. And then on share repurchases, there's -- share repurchase is going to be opportunistic for us. We haven't -- we don't really view it as just by systematically every week or every month X amount of shares. We're going to look at times when we think it makes sense to step in and do it. We are committed to it, as we've said before, and I would expect that to -- especially given our strong cash flow history and expectations going forward, that will be a part of the mix.

John Neppl:

Yes. Look, that's a fair question. I think we just looked at it as where we were at the time where we -- it just was a number we picked. I don't know if there's any real heavy science behind it other than it's just going to be part of -- we've committed to 250 million a year minimum, and we may not do that on one fell swoop, but there could be times going forward where we have a bigger chunk like what you've mentioned. But it just -- no particular reason other than we just felt like that was a good number for the quarter.

Operator:

Thank you. And the next question comes from Tom Palmer with JPMorgan.

Greg Heckman:

Yes, it's definitely adding more complexity to an already complex situation. Of course, it's not unique to us, and that is part of having a global system. Of course, it's shifted things to the P&W. It has also shifted things to South America. I mean this is one of the things that with what's happening in the Black Sea and now with the logistical problems with the river here in North America, our strong South American footprint, which is always really important to us, but it's never been more important. And we saw that even when the farmer in Argentina was liquidating soybeans earlier through the soy dollar that those exports then were able to get to China when things were tight in North America. So, it is about flexing that global system. And then the margins are already good in North America. So of course, where product can't move to export, we're running as hard as we can to process and to be able to continue to have the bids out there for the farmers.

John Neppl:

Yes, I can take that, Tom, to start. Yes, we haven't really seen any decline even on the food side. Energy continues to inch up a little bit as a percentage of the total refined that we're selling, but it hasn't been a dramatic shift yet. And -- but what's more interesting is there's more demand further out on the curve for soybean oil. And so when you look out and typically look at where we lock in the crush going forward X amount per quarter, and usually, there's not a lot locked out beyond, say, one quarter or two, there's been a lot of interest in soybean oil pricing out beyond the next quarter or two and probably more than we've seen. And obviously, we're being very deliberate about what we're willing to price when, but the demand is out there. And it does continue to grow steadily. And we haven't seen any decline or lack of interest from either the energy or the food industry at this point. So we're pretty optimistic about the trend where we're at here.

Salvador Tiano:

This is Salvador Tiano filling in for Steve. So my first question is a little bit following up on the renewable fuels. Inflation reduction is kind of changing the credit structure from 2025. I think moving to a more CI-based credit as opposed to flat amount for renewable fuels, do you think that this will change the demand for different vegetable oils like soybean or even incentivized ethanol as an option? How do you see this changing the landscape for demand in the next few years?

John Neppl:

Yes. And I would just add that the lower CI feedstocks, if you think about primarily used cooking oil and animal fats, tallow, things like that. There is a limited amount of that. And ultimately, as all this renewable diesel ramps up, the one certainty that they have would be supply of soybean oil on a large scale. And ultimately, everything will price probably off of CI score, but soybean oil is going to be a big demand -- a big supply base for the industry. And to Greg's point, canola oil finds a pathway that's good for us because we are a big canola processor in Canada and we handle a lot of canola oil. And ultimately, the consistency of supply to be able to provide large volume to these massive renewable diesel production facilities is going to be important. And we're positioned obviously very well to take advantage of that.

Greg Heckman:

Well, I think as we do look at our outlook, right, we're not going to say we're smarter than the market. The market is the market. Now you do need to look not only at the future, but you need to look at what the cash markets are doing. And ag markets in general are always more liquid and probably a better predictor in the 90- to 180-day market as the economics become more clear. And as there's less certainty, the market reflects that at times, but the market is the market.

Operator:

Thank you. And the next question comes from Steven Haynes with Morgan Stanley.

Greg Heckman:

Sure. Look, I think it makes complete sense for China to add another origin of being able to have Brazil corn available, and the corn crop continues to grow in grow in Brazil. And I think we believe those volumes will grow long term. We really -- we love our South American footprint in Brazil and Argentina. And so, we'll be prepared to serve them from there when the market works. And as part of a global system, we want every origin and every destination to be available because that's what's best for both the farmers and the consuming customers. So that will be a positive over the long term, and we think it makes sense.

Sam Margolin:

What I wanted to ask about processing and more on the RD theme and sort of an unusual environment going on two years now with soybeans and processing, where the oil is really carrying a lot of the value and mill is almost sort of subsidized by oil. And I want to know if you think that's sustainable or if meal has to catch up and bridge and even higher crush margin? Or if this is kind of a new normal because the energy market is now such a big demand center for the commodity?

Sam Margolin:

Okay. And then I was wondering if I could ask for a little more detail about China since it's come up a couple of times in the call and specifically with Merchandising. And you mentioned that Merchandising had a really strong fourth quarter last year, and incidentally, China was experiencing kind of a very rapid reopening throughout the second half of '21. And so, I was wondering if maybe if China really accounts for the entirety of your sort of year-over-year view on Merchandising and maybe a little more caution into the end of this year. And if so, what does that mean for Merchandising if we get China reopening next year and a faster pace of demand recovery.

Operator:

Thank you. And the next question comes from Chris Shaw with Monness, Crespi, Hardt.

Greg Heckman:

Yes. It definitely had a big impact, right? The farmer had not been commercializing their soybeans. That had been hard on volume. So what we saw with the soy dollar program was that the farmer commercialized a lot more beans than anyone expected. And that allowed not only ourselves and the industry to reestablish the quantities we needed for crushing here going forward, but that also saw them move into the export, some export of beans happened. So that was helpful on the near term. Of course, now the farmer, once they've had that opportunity, now they've completely quit selling. We're a little dry over there. That also will have them holding on across, but now they'll wait and see what's next. So we pulled forward some of that selling. We've got ourselves positioned to be able to crush here for a while. But if you look at the replacement margins, they're, of course, not good right now. So, we'll see when the next wave of selling comes, and that will either be government-driven or something improving in the weather and the farmer feeling better about overall S&Ds going forward.

Greg Heckman:

There's always a little interplay between Argentina and Brazil, but that was kind of right at the time where things were tightening up in North America and the concerns about North America because of the dryness in the Mississippi River system. I think we saw river levels the lowest or lower than actually back in 2012. And so, some of that export that got pushed out actually was filling that gap where some of that North American export now may be pushed out later. So, things kind of actually fell -- from a global standpoint, kind of fell in the line, although I don't think there was any careful planning. It was a little bit fortuitous.

Ken Zaslow:

To touch base on the refined oil margin, can you talk about how that progresses over the next couple of years? And then, when I think about it, I look at your baseline number of $400 million, and you're at a run rate of $750 million to $800 million. Trying to figure out how those two kind of align. It just seems like I would actually think that there's a possibility that, that margin can actually go higher, but you're kind of indicating that $400 million baseline. So, I was just trying to figure that out.

Greg Heckman:

Yes. I think we talked a little -- John talked a little bit about it, but yes, costing more to build pretreatment and taking longer to build, so one costs more, the economics are different on whether they should build it or not. Those are some of the rumors we've heard of projects being at least delayed if not stopped. That's what gives us some of the confidence and pushes that out into the future. And then I think this is really a new industry that's developing. And I think as they figure out how these different feedstocks work and work in their refineries and affect their catalysts and affect their economics, that we'll continue to see the market develop. And we've got all the oils. We've got the mac quantity. We're working with multiple parties. So, we like where we're positioned.

Greg Heckman:

Well, I don't think of the fuel customers, you think about them a lot different than feed customers or food customers, right? I think it depends on the Company, on whether they're more comfortable buying spot or whether they want to lock in the overages or whether they want to lock in flat price or how far out on the curve they are. So, I don't think we can generalize. It's really company by company. So you've constantly got business rolling. At times, sometimes it will extend depending on their end markets and/or our markets on feedstock, where it can go shorter and be more spot or go out further. But it's kind of continually -- continually going forward. And what we have right now is on the Refined and Specialty Oils side is slightly more than normal booked here in Q4. And we've got more volumes and price booked out into 2023 than normal. And so, that's some of our confidence in calling the at least $13.50.

Greg Heckman:

Yes. We look at the total in global. So globally, yes, we're proud of the total volume we ran the total capacity utilization. But yes, sure, it can always be better, right? We're shut down in the Ukraine. Margins have been tough in China. We've got more capacity we could have run there if margins had been better. And we're seeing animal margins start to return there in China, so we do expect that to be better and that demand we'll see coming into '23. And then in Argentina, right, as we talked about because of the farmer marketing, we had not run quite as hard. And then managing some of the energy volatility in Europe, we didn't run quite as hard. But that being said, when you add it up in total, I think the way our team executed and took advantage of the opportunities that were there was fantastic. And so, we're proud of that, and we'll continue to stay focused in what's a very dynamic and challenging world to help people manage food security and help our customers at both ends of the value chain be successful.

Greg Heckman:

Thank you. I'd just say we continue to be so proud of the team's commitment and their execution especially in light of the current market environment. So very proud of the model we've got here at Bunge and our ability to continue to capitalize on the opportunities. So thank you very much, and everyone, have a great day.

Ruth Ann Wisener:

Thank you, Jason. And thank you for joining us this morning for our second 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 Events and 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.

John Neppl:

Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Our reported second quarter earnings per share was $1.34 compared to $2.37 in the second quarter of 2021. Our reported results include a negative mark-to-market timing difference of $1.26 per share and a negative impact of $0.37 per share related to onetime items. Adjusted EPS was $2.97 in the quarter versus $2.61 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT, was $709 million in the quarter versus $550 million last year, reflecting higher results in ag processing, refined specialty oils and milling. In total, Agribusiness results of $386 million were down compared to last year. The higher results in processing were primarily driven by U.S. and Brazil soy crush due to strong meal and oil demand. Results in softseed crush were also higher, primarily driven by North America. Merchandising had a good quarter managing market volatility well. However, results were down compared to a very strong prior year, as a higher contribution from global grains was more than offset by lower results in ocean freight. In Refined and Specialty Oils results were higher in all regions, with particular strength in North America and Europe refining, both benefiting from strong food demand, as well as strong U.S. fuel demand. In Milling, higher results in the quarter were driven by North and South America wheat milling, reflecting higher margins and effective risk management of our supply chains. The increase in corporate expenses in the quarter was primarily related to expenditures on growth initiatives and timing of performance-based compensation accruals. The increase in Other, primarily related to our captive insurance program and gains on investments in Bunge Ventures. In our non-core Sugar & Bioenergy joint venture, higher ethanol and sugar prices were more than offset by the combination of lower ethanol volumes and increased costs. For the six months ended June 30, income tax expense was $144 million compared to $242 million in the prior year. The decrease was primarily due to lower pretax income. Net interest expense was up compared to last year due to both higher interest rates and higher average debt levels. Also impacting the quarter were foreign currency borrowings in certain countries where interest rates were high. However, the incrementally higher borrowing costs were fully offset with currency hedges reported in gross margin. Let's turn to Slide 6, where you can see our positive EPS and EBIT trends adjusted for notable items and timing differences over the past 4 years, along with the trailing 12 months. In addition to validating the resilience of our global platform and operating model over time, it also demonstrates continuing strong performance by our team that has successfully managed different and rapidly changing market environments over this time period. As shown on Slide 7, addressable SG&A increased modestly year-over-year. After 2 years of COVID-related impacts, employee travel and related expenses have picked up. And as we have discussed on previous earnings calls, we are increasing investments in people, processes and technology to strengthen our capability and drive growth. Slide 8 details our capital allocation of the approximately $1.2 billion of adjusted funds from operations that we generated in the first half of the year. After allocating $101 million to sustaining CapEx, which includes maintenance, environmental health and safety, and $8 million to preferred dividends on shares now converted to common equity, we had approximately $1.1 billion of discretionary cash flow available. Of this amount, we paid $154 million in common dividends and invested $111 million in growth and productivity CapEx, leaving approximately $865 million of retained cash flow, which was invested in additional working capital. Our strong balance sheet and cash flow generation puts us in a position to allocate capital to the best value-creating opportunities, which I will discuss later in the presentation. As we have demonstrated in the past, we will continue to maintain a disciplined and balanced approach. As you can see on Slide 9, at quarter end, readily marketable inventories, or RMI, exceeded our net debt by approximately $2.7 billion, a significant change from a year ago. Year-to-date, our underlying cash flow has allowed us to invest significantly in inventory with only a small increase in debt. Over time, as commodity prices moderate, the cash invested in inventory will be released and available for deployment for debt reduction and/or other uses. Slide 10 highlights our liquidity position, which remains strong. At quarter end, we had just under $6 billion of committed credit facilities unused and available. This provides us ample liquidity to manage our ongoing working capital needs in this volatile commodity price environment. As shown on Slide 11, our trailing 12 months adjusted ROIC was 22%, 15.4 percentage points over our RMI adjusted weighted average cost of capital of 6.6%. ROIC was 14.9% or 8.9 percentage points over our weighted average cost of capital of 6%. The spread between these return metrics reflects how we use RMI and our operations as a tool to generate incremental profit. Moving to Slide 12. For the trailing 12 months, we produced discretionary cash flow of just over $2 billion and a cash flow yield of 20.8%. Please turn to Slide 13 and our 2022 outlook. As Greg mentioned in his remarks, taking into account our Q2 results, the current margin environment and forward curves, we've increased our full year adjusted EPS outlook to at least $12 per share, a $0.50 [ph] per share increase over our previous outlook with potential upside depending on market environment and supply and demand balance. In Agribusiness, full year results are expected to be slightly higher than our previous outlook, but remained down from last year to lower expected performance in merchandising, which had a particularly strong prior year. In Refined & Specialty Oils, full year results are expected to be up from our previous outlook and higher than last year, driven by strong demand in North American and European businesses. In Milling, full year results are expected to be up from our previous outlook and significantly higher than last year, driven by strong first half results. We expect results in the second half of the year to be more reflective of historical performance. In Corporate and Other, results are now expected to be less favorable than our previous outlook and more in line with the prior year. In non-core, full year results in our Sugar & Bioenergy joint venture are expected to be in line with last year. Additionally, the company now expects the following for the year, an adjusted annual effective tax rate of 14% to 16%, net interest expense in the range of $310 million to $330 million, capital expenditures at the lower end of the range of $650 million to $750 million and depreciation and amortization of approximately $400 million. With that, I'd like to now shift to an overview of our new earnings growth framework. The waterfall chart on Slide 14 shows a change from our baseline of $7 a share, which we established last year to an updated baseline of approximately $8.50. We are also introducing an earnings growth framework that shows an increase in our mid-cycle baseline to approximately $11 per share by year-end 2026. We see potential upside of $1-plus through additional investments in growth CapEx, bolt-on M&A and/or share repurchases from the deployment of additional retained cash. Let's turn to Slide 15 and the drivers supporting this framework. The increase in our baseline to approximately $8.50 primarily reflects structural improvement in the oilseed market environment and greater benefits from our operating model. Consistent with our previous approach, we are defining our long-term average oilseed crush margin range by using the weighted average of our footprint for the past 4 years plus the trailing 12 months. We also have adjusted for returns likely needed to incent the addition of crush capacity, especially in North America to meet the growing demand for renewable diesel. [Author ID1

Operator:

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tom Palmer from JPMorgan. Please go ahead.

Greg Heckman:

Good morning.

Greg Heckman:

Yeah. Thanks. And no, that's a good setup. The - we feel really good about the quarter. Look, it was a solid quarter. You got to kind of think about our footprint, right? North America, of course, is very, very strong. Brazil performed well. We had Europe, of course, the complexity is around energy. We've still got our footprint in Ukraine, which is basically not running. The complexity in Argentina probably as high as we've seen it. And then China, the COVID lockdowns absolutely killed demand, and it's been a very spot market there. All that being said, thought the team did a fantastic job and probably one of the more volatile quarters that we've seen, which really drove our customers towards the end of the quarter, both the producer not selling any crops, as well as the consumer absolutely stop buying, kind of trying to see where the market would sort of self out. But as we look at the second half, really a pretty interesting setup with the strong oil and meal demand really continuing. And you look at - for the crush margins for the Bunge footprint, we're really about the same place we were when we were together for the Q1 call. But it looks really interesting. If you start in the U.S., you've got smaller South American crops, and we should have good bean availability to support that strong oil and meal demand in North America. Now we need a good U.S. crop, but it looks like we're on the way there. We talked about China, no doubt the curves are challenged there. It's hard to imagine a situation where China could look worse than it has, and we think it will start to recover from COVID. It's been a very spot market, but the team has done a great job managing our footprint there. And I think we don't all want to forget that China has been the driver for the last couple of years in demand around the world, and they will be back at some point. Brazil, we've seen the Q3 curves improve. Even though slower farmer selling impacted Q4, but with China bean imports down, the beans have been available for crush and the meal and oil demand has been good. And then Argentina, of course, complexity there high. The producer really not selling, are very reluctant to protect themselves against devaluation, and we saw margins decline toward the end of the curve - toward the end of the quarter and the curves are weak for the second half. But of course, it does benefit our broader global franchise. And then in the EU, we've seen great oil demand and with less meal out of Argentina and the Black Sea area that's been supportive there to be able to overcome those higher energy costs on the margins. So it's really an interesting setup for the second half. And while the curves don't show it today, we are encouraged with the outlook.

Greg Heckman:

Yeah. In CapEx, we've called the low end of the range really just driven by some supply chain constraints. It's not shortage of opportunity. It's just a shortage of suppliers right now, but we do expect that to improve. And I think you'll really see a ramp-up next year on the CapEx side. From a share repurchase standpoint, we're gearing up for that. And I think our expectation is we're going to be more active in that area going forward. And then on the M&A side, it really depends on when the opportunities are ready to engage. We've got - we have a list of things we're working on there. Of course, sometimes those things can move quickly. Sometimes they take time, so it's hard to predict. But - but I would expect the balance of this year and certainly over next year for our allocation to ramp up in all three of those areas.

Operator:

The next question comes from Stephen Byrne from Bank of America. Please go ahead.

Greg Heckman:

Sure. Let me start as far as the cost to build. Look as the largest global housing crusher, we better be able to build things as competitively as anyone. The other benefit that we get is plugging them into our global system for our origination, as well as the granularity of our marketing and distribution that's set up regionally. And the other thought, as we make these decisions on expanding capacity for the long term, we're very thoughtful about our current footprint and where we want our footprint to be long term to make sure that we've got the lowest cost footprint in place to be competitive in any industry cycle. Around the origination and the M&A, look, we're always have our list together and our priorities in place and when the opportunity is right with the returns, we know where we want to continue to strengthen some of our great franchises, and we know to continue to be relevant to all of our customers at both ends of supply chain. And we've also got some targets where we'd like to be stronger on the origination side. And I'm surprising enough, the Ukraine is one of the areas that we had targeted for growing our origination. And of course, that's not happening now. But long term, we expect to be part of rebuilding that because long term, that's an important origin as well. So we'll look at where the long term the origination is going to be key to feed a growing world and treat [ph] the demand that continues to move up into the right.

Greg Heckman:

One other finer point on where you did ask me on origination. I don't know if you've seen, but some of the things we've been doing, you know, a great example in Brazil is strengthen our great franchise down there and some of that through partnerships, minority investors with resellers. And helping them be more effective, but basically giving us a broader reach on our origination down there. So we use a variety of - a variety of ways to do that through partnerships, JVs, as well as outright 100% acquisitions.

Greg Heckman:

Yeah. And I should have mentioned when I was talking about the second half outlook, right? Softseeds those curves improved since Q1 and you look at North America, we expect that to be real strong due to more seed supply with new crop and good oil demand. And then in the Black Sea, we're seeing lower seed prices and that's supportive of the curves in the second half. And so if you look at those drivers, right, it's around seed supply and it's around strong oil demand. That will continue for the long term. So as we look at changing the footprint, absolutely where it makes more sense to build soft capacity or switch capacity you'll see us do that. And then as you think about cover crops being developed, things like CoverCrest long term, is being thoughtful about where that soft crush is in place to handle some of these crops that are being developed, which will be more of a soft crush probably a technology needed. So absolutely a big part of thinking about the future and whether it's winter canola or what other softseeds to help meet the demand for renewable diesel and biofuels in general, which will continue to grow.

Operator:

The next question comes from Ben Bienvenu from Stephens. Please go ahead.

Greg Heckman:

Hey, Ben.

Greg Heckman:

Yeah. Thanks, Ben. Thinking about the mid-cycle, what we – we started with very simply and updating to the 850. The first thing we did was just update the averages. And so the first step was math. And then we looked more closely at what we believe the go-forward margin environment is going to need to be not only to incent the right kind of capacity expansion, but also what we believe is probably a longer-term structural change in the market. And - and that's how we landed on the margin environment, what we believe will be pretty sustainable going forward for the 850. What that also tells us is, as we continue to increase the baseline earnings is that we should have higher highs and higher lows in terms of performance. And so establishing - I'm not going to say a floor because that's - it's really hard to predict. But ultimately, we feel confident that in any given environment, our low should be higher than they were in the past. And then in terms of going forward on the growth side, really thinking about the opportunity, where it can be invested. I think our outlook is that we will focus on those areas that can provide us the best return. And thinking about also the allocation between share repurchases and growth to try to get a balanced portfolio going forward.

Ben Bienvenu:

Okay. Makes sense. Yeah. It's a great update, and it seems like you'll have a nice step out from here. The second question is more housekeeping. John, the $3.3 billion of CapEx and M&A, what is the start date on that? Is that including this year? Or is that starting in 2023, just to think about kind of the cash flow as we pop [ph] those into buckets over the next few years?

Ben Bienvenu:

Yeah, okay. Thanks very much.

Operator:

Thank you. The next question comes from Adam Samuelson from Goldman Sachs. Please go ahead.

Greg Heckman:

Morning.

John Neppl:

Yeah. No, I think that's right. And here's how we've done it. So the $12 plus - the $1 plus in the out year is really driven by in the model, looking at our available additional capital that's not deployed today. And so you take that and we looked at over time what we - what available capital we would have if we were targeting more of a BBB leverage ratio sort of range. So say, let's say, 2.5 times, and that implies a considerable amount of available capital. But the way we model it out very conservatively is assuming that as we deploy that capital, it's going to ramp up kind of evenly over a 4-year period to get to 100% contribution from those investment. So early on capital being deployed, but not really seeing the benefits. In fact, a lot benefits beyond 2026. So the $1-plus in 2026 becomes a bigger number in later years as that capital is deployed in longer-term projects. But you're absolutely right. We - that was part of that upside potential is taking our available excess, I'll say, capital and deploying that as well. Speaker 7

Adam Samuelson:

And maybe just on that point, Greg, as we think about where the stock is now or has been over the course of the past kind of year. How do you - if you think about the cadence of repurchase going forward, should we expect a more ratable cadence? Should we think about you being opportunistic in periods of stock weakness or maybe holding cash and reserve and depending on M&A pipeline? I'm just trying to get a sense of how we should - because again, there's a pretty significant amount of excess capital that you're kind of - at your disposal to deploy? And I'm just trying to think about how we should be layering that in, especially in a moment where your stock does not seem to be reflecting any of this kind of long-term earnings potential?

Adam Samuelson:

Okay. And if I could just squeeze a clarifying question on the guidance because I think in response to your - to the market outlook question, you talked about being kind of seeing kind of upside to the curves and being encouraged kind of about the way the market is being set up. But I want to clear that the 12 plus really just assumes the forward crush curves as they sit today, which you might yet think is conservative. Is that the right – if I am understanding that right?

Adam Samuelson:

Okay…

Adam Samuelson:

Perfect. I'll pass it on. Thank you.

Ben Theurer:

Thank you very much. Good morning, Greg. Good morning, John.

John Neppl:

Morning, Ben.

Greg Heckman:

Sure. Yeah. The team did a fantastic job here in the quarter, and I think it's a great example of managing our end-to-end value chain. I mean, if you look at the South American business, the Brazilian wheat milling, we not only feed that origination with Brazilian wheat but with out of [Author ID1

Greg Heckman:

Yeah. Yeah, thanks for that, Ben. We continue to look at that JV as not permanent. We modeled that in because we don't - until there's a deal, we didn't want to assume something like that in our modeling. But I think our expectation would be that any proceeds we get from that will either be - will be used in some combination of M&A growth and share buyback. And so I think whatever we do there should be net neutral to accretive to the model. So we just left it in the way it is.

Operator:

The next question comes from Steven Haynes from Morgan Stanley. Please go ahead.

Greg Heckman:

Yeah. I'll start. John can fill in. But I think it's cultural. It's not unlike the financial discipline and the focus on risk management that we use to help our customers both into the supply chain, be successful. It cuts through the business. It's not unlike sustainability, which goes runs all the way through the business. And as we work with our customers, whether it's feed, food or fuel, they want lower carbon intensity products. Now it's about taking digital and a focus on continuous improvement because we're now in a position to do that and to make those investments and whether that's improving our supply chain, making it easier to do business with using you know, the sensing, as well as analytics to drive efficiency into our facilities where we've got tests going where we can now get that - the machine can now outperform our best operator in our plants, and those are things that we'll continue to work forward that will be multiyear improvements that we can work against. So it just becomes part of the thread that runs through the entire company and the culture.

Operator:

The next question comes from…

Operator:

Sorry. Next comes from Robert Moskow from Credit Suisse. Please go ahead.

Greg Heckman:

Hi…

Greg Heckman:

Yeah. I think it's a little tricky to say right now. The project list we have today is across a number of different things. And I would say a 10% increase in our crush is probably a little high from where it's modeled. But on the origination side, it's not so much about maybe the amount we're originating, but how we're originating it. Certainly, there'll be some addition to origination, but it's getting more direct to the farmer. It's less reliance on other commercials, for example, or finding other ways to - to have a financial relationship with a producer. There's a lot of what we're doing on the origination side. But ultimately, over time, there will be an increase certainly in volume, particularly in North America as we look at the expansion in - with Chevron, for example, that we've announced other projects, potentially we're looking at on - that side with greenfield and brownfield. We've got some debottlenecking in there, which typically is kind of adding, I'll say, low single-digit capacity over time through multiple projects. So,[Author ID1

Greg Heckman:

Yeah. And we do have modeled in over time to lever a little - lever to some degree because right now, we're I'd tell you we're under levered certainly. Some - a big part of the increase in interest, there is certainly some from higher debt levels on average year-over-year and higher interest rates. But there's also a component in the where we've borrowed in local currency in other countries where interest rates are high. And that interest has to be reported obviously in interest expense, but the offsetting currency hedges end up in gross margin based on the way GAAP requires us to report it. So you don't get a really fair look at net interest expense on our financials. But I would say half of the increase we've seen year-over-year in interest expense, half that increase is related more to high interest rate loans in local currencies where we've offset it with currency hedges.

Greg Heckman:

And going forward, that will continue to be part of our strategy going forward if it makes sense, wondered if it makes sense.

Operator:

The next question comes from Ben Kallo from Baird. Please go ahead.

Greg Heckman:

Yeah. We continue to see excellent demand from the fuel side. But the majority of our volume is still going to food. So the fuel and renewable diesel demand in North America continues to ramp. Also from an overall, this pullback in price that we've seen globally in palm and vegetable oils in general have really slotted it back into the biofuels rations, which I think is pretty productive and constructive for the mid and long term as well.

Ken Zaslow:

Hey, good morning, guys.

Ken Zaslow:

A couple of questions. What creates a disconnect between the curve and what will happen in the future? Is it simply the crop comes in? Or are there things that you're seeing that would improve the environment - besides what the inefficient curve would do at this point?