Archer-Daniels-Midland Company

Good morning and welcome to the Archer Daniels Midland Company second quarter 2019 earnings conference call. All lines have been placed on mute to prevent any 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, Lisa. Good morning, and welcome to ADM's second 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 uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC report. To the extent permitted under applicable law, ADM assumes no obligation to provide updates 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 important actions we are taking to meet our strategic goals. 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. This morning, we reported second quarter adjusted earnings per share of 60 cents, down from $1.02 in the prior year quarter. Our adjusted segment operating profit was $682 million. Over the first half of this year, we faced widespread external headwinds including extreme weather that had a negative impact of $65 million in the second quarter and $125 million in total for the first half of the year. The team executed well to minimize these headwinds, and we undertook a series of aggressive actions that, combined with the absence of severe weather going forward, will help deliver a stronger second half and set us up well for 2020. Just as important, we continue to advance our strategic initiatives to enhance agility, accelerate growth, and strengthen customer service. Our actions this quarter span our three strategic pillars. In our optimized pillar, we completed the significant global organizational changes announced last quarter, including further reductions in management layers, centralization of activities, the elimination of positions, and the early retirement offering for eligible colleagues in the U.S. and Canada. We continued to optimize our U.S. origination footprint, reaching an agreement with Cargill to exchange grain elevators in Illinois and Indiana. And we're seeing the positive results of the turnaround efforts at our peanut and tree nut shelling business. In our drive pillar, we simplified our operational model by combining our origination and oilseeds business segments into a single business, ag services and oilseeds, which will begin reporting in the third quarter. We also centralized our milling management and commercial teams indicator, which will offer efficiencies as we further integrate our flour and corn milling businesses. These actions are part of our wider simplification efforts as we continue to streamline decision-making and management structures in order to drive action and accountability. We announced the realignment of our manufacturing operations, driving standardization and efficiency by moving to a global centralized structure led by a senior vice president of global operations who is reporting directly to me. And we continue to expand our Global Centers of Excellence, or COEs, which are ensuring focus and expertise in key areas such as technology, talent, and growth. In our growth pillar, we completed our acquisition of leading European citrus flavor provider, Ziegler Group, positioned in ADM as a global leader in the growing natural citrus ingredients market. We cut the ribbon of our upgraded nutrition flavor research and customer center in Beijing as we continue to expand and enhance our capabilities in Asia. And we continued to lead the industry with new, innovative solutions for our customers. We introduced BioSpec, a comprehensive system for intensive shrimp production, and unveiled a new line of renewable vegan omega-3 blends. We also secured multiple sales wins in the areas of alternative proteins where our products can now be found in the retail and food service channels on three continents. These actions will help us deliver a stronger second half of the year. And even more importantly, they are helping us advance the transformation of our company to ensure we can capitalize on significant market opportunities and deliver strong results. in 2020 and beyond. Please turn to slide four. All of our strategic work, as well as the processes we use to execute day in and day out, continue to be elevated by our readiness efforts. Last quarter, we reported that we had completed 185 of our prioritized readiness initiatives. At the end of the second quarter, That number has grown to 275. Those completed initiatives will account for $500 million in run rate benefits on an annual basis, keeping us on target for our two-year goal of $1.2 billion in run rate benefits. In terms of accrued benefits, to date Readiness has contributed $130 million. putting us well on track to meet our goal of $250 to $300 million in accrued benefits by the end of this year. Finally, 1,000 more colleagues completed our comprehensive ability to execute training during the quarter, giving them the knowledge they need to lead our efforts to improve the company. I'll discuss readiness more later. Now, Ray will take us through our business performance.