Archer-Daniels-Midland Company

Good morning and welcome to the Archer Daniels Midland Company fourth quarter 2018 earnings conference call. All lines have been placed on a listen-only mode to prevent background noise. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Victoria De La Huerga, Vice President, Investor Relations for Archer Daniels Midland Company. Ms. De La Huerga, you may begin.

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

Thank you, Victoria. Good morning, everyone. Thank you all for joining us today. Last week, we were in France welcoming our Neovia colleagues to ADM as we closed on that truly transformational acquisition for our animal nutrition business. This morning, we're speaking to you from our Wild Flavors facility in Heidelberg, Germany. is a state-of-the-art complex, and we are excited to talk to our colleagues here about the great work they are doing to serve customers and grow our flavors and system business. This morning, we reported fourth quarter adjusted earnings per share of 88 cents, up from 82 cents in the prior year quarter. Our adjusted segment operating profit was $860 million. The team did an excellent job to deliver stronger year-over-year profits in a volatile global environment in the quarter and completed an extremely impressive 2018 overall for ADM. Throughout the year, we focused on executing our strategy and pulling delivers under our control. The result was a year in which we delivered full-year adjusted segment operating profit of $3.4 billion 26% higher than 2017. Adjusted EPS, 44% higher year over year. Strong operating cash flows, up more than 40%. And four quarter trailing ROIC of 8.3%, 200 basis points above our annual WAC. Given those extremely strong results, earlier this morning, we announced a quarterly dividend increase of 1.5 cents per share or 4.5%. Our Q1 dividend is our 349th consecutive quarterly payment and an interrupted record of 87 years. 2018 was a year in which regardless of market conditions, we continued to execute, improve and grow. resulting in a range of impressive accomplishments. In our optimized pillar, we divested our Bolivian oilseeds business, took important steps to optimize our U.S. origination footprint, and engineered significant turnarounds in our global trade and South American origination businesses. In our drive pillar, for the year we delivered cost savings of more than $300 million on a run rate basis. far outpacing our target of $200 million. In our growth pillar, we opened, expanded, and enhanced multiple facilities around the globe, including five new and renovated ingredient manufacturing facilities and three labs and customer innovation centers. We announced GrainBridge, an important joint venture with Cargill in the digital innovation space. We launched the Soyben crash joint venture in Egypt and expanded into the Russian starters and sweeteners market with our Aston joint venture. We grew our Brazilian oilseed crash and value-added footprint with the Algar acquisition, and we expanded our taste and wellness portfolios with the acquisitions of Rodel and Protexing. We are also now adding citrus flavor capabilities via our acquisition of Florida Chemical Company. And of course, we just closed on our Novia acquisition, creating a true global leader in value-added products and solutions for both production and companion animals. We also continued to improve on our safety record in 2018. This was our 18th consecutive year of reducing recordable injuries, and December overall was our safest month ever for our employees, though some incidents at the turn of the year reinforced the importance of continued relentless focus on safety. We made important progress in our sustainability goals, beating our own deadlines to meet our 15 by 20 objectives for energy, greenhouse gases, water and waste reduction. And we continue to lead the industry on the important issue of diversity and inclusion. Together We Grow, the consortium ADM began in 2016 to focus on educating, recruiting, and retaining a more diverse workforce in the agricultural sector, was recently recognized with the 2018 Innovations in Diversity Award by Profiles in Diversity Journal. And just last week, we announced our membership in Paradigm for Parity, a global coalition of business leaders dedicated to addressing the gender gap in corporate leadership. All of these accomplishments have been supported by our accelerating readiness efforts. Please turn to slide four. One of my goals as CEO of ADM is not just to deliver good results quarter after quarter. but to enact lasting change that will allow ADM to continue improving year after year. That's what our company-wide readiness efforts offers, a reinvention of our business from the bottom up that provides a structure for ongoing continuous improvement and gives us the tools to deliver a consistently excellent customer experience at the lowest cost. Tools like data and analytics which under our 1ADM program, we are collecting, centralizing, and utilizing as a strategic asset that will help us improve our decision-making. We're also conducting systematic reviews and improvements of processes around the company with an eye to simplification and standardizations that will make us more efficient and more nimble and reduce waste and defects. And the line and driving readiness and critical to its long-term success is fundamental behavioral and cultural change and more effective and productive employees, which are supporting through our ADM ability to execute training or A2E. We are all in on readiness, and our efforts are accelerating. Last year, our team identified thousands of initiatives to standardize, centralize, and digitize how we do business. By the end of the year, we had analyzed those initiatives and prioritized about 525 that, as we said last quarter, will allow us to generate more than $1 billion of run rate benefits by the end of 2020. Today, we're proud to report that as of the end of 2018, we've already completed 120 of those initiatives. which together have generated $300 million in new run rate benefits. We're also continuing to roll out our A2E training, which will help guide fundamental change in how we do our work every day. Approximately 2,000 team members have already completed two-day in-person training sessions. By the end of 2019, we expect every ADM colleague to have taken the comprehensive A2E course. I will be talking more later in the call about the importance of readiness to our value creation strategy. But now, I would like to turn the call over to Ray.