Bunge Global SA

Good morning and welcome to the Bungie Limited second quarter 2019 earnings release and conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Ruth Ann Weisner, Vice President of Investor Relations. Please go ahead.

Thank you, Andrew, and thank you for joining us this morning. Before we get started, I want to let you know that we have slides to accompany our discussions. These can be found in the investor section of our website at bungie.com under investor presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well. I'd like to direct you to slide two and remind you that today's presentation includes forward-looking statements that reflect Bungie's current view with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risk and uncertainty. Bungie 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, Bungie's Chief Executive Officer, and John Nepple, Chief Financial Officer. I'll now turn the call over to Greg.

Thank you, Ruthann, and good morning, everyone. We have a lot to discuss today, so let's turn to slide three. Before we dive in, I want to introduce John Nepple, our new Chief Financial Officer, who joined Bungie in May. His perspective and leadership, along with his industry experience, will be a great benefit for us, and I'm delighted to welcome John to the Bungie team. I also want to welcome our new Chief Risk Officer, Robert Wagner, who joined us last month. I worked with both Robert and John for well over a decade at Gavilan and ConAgra, and they're already making substantial contributions here at Bungie. Now, to the other items on our agenda, shown on slide four, I'm going to provide a high-level view of developments and results in the quarter, progress against our strategic priorities, and our outlook for the balance of the year. Then I'll hand it over to John for a deeper dive into the financials. And finally, we'll open up the line for your questions. Let's go ahead and get started turning to slide five. Second quarter 2019 results benefited from timing differences and the contribution from a venture investment. Core business results were generally in line with our outlook. Soy crush was helped by higher volumes, but also impacted by lower structural margins this year. In grains, our South American results were higher, while our North American team managed through extreme weather conditions. which impacted both our operations and former marketing patterns. Results in edible oils were better in North America and South America, and essentially flat year over year in Europe and Asia. Sugar and bioenergy benefited from lower costs and better ethanol volumes and prices, while fertilizer results also improved in the quarter. The net unrealized gain related to our investment in Beyond Meat sits within Bungie Ventures, our venture capital unit. We haven't discussed ventures often, but it's an important vehicle as the competitive landscape and consumer preferences drive change and as technology continues to accelerate innovation and transparency in our industry. I continue to feel very good about our focus and our progress on the key priorities, including strengthening financial discipline and risk management, and our ability to optimize the performance of our physical flows. As we work towards our new global operating model announced last quarter, We're seeing an engaged and energized team, improved speed of execution, and risk management that better supports our commercial decision-making. As we announced earlier this month, slide six lays out our agreement with BP to contribute our sugar and bioenergy business to a new 50-50 joint venture in Brazil. We will receive $75 million in cash at closing and will transfer $700 million in debt to the JV on a non-recourse basis. Turning to slide seven, with this JV, we will own 50% of an entity that will be number two in Brazil by actual crush volume and operating with a conservative capital structure. On slide eight, we have a strong partner in BP and we also retain flexibility for further monetization. So we're very excited about this transaction. It meets all of our strategic criteria and enables us to reduce leverage. We expect closing before year-end, subject to regulatory approvals. Following the close, we will no longer consolidate this business. In addition, we anticipate an impairment charge of between $1.5 and $1.7 billion in Q3. And last, on the next slide, our view on 2019 full-year consolidated results has not changed from what we originally shared with you in February. That results will be similar to last year, but with a change in the mix given materially lower forward soy crush margins, plus a slight improvement in soft seed crush. We also expect improvements in grains and food and ingredients this year, while fertilizer results will be flat. In addition, the macro factors that we called out last quarter remain a major source of uncertainty for all market participants. African swine fever continues to impact Chinese demand for soy meal. Combined with the unresolved U.S.-China trade situation, This has altered both typical trade flows and producer marketing patterns. We continue to monitor these factors, and we'll leverage our global footprint as needed to ensure uninterrupted supply for our customers, while managing margins and physical flows to optimize our own results. We expect to finish the year as we had projected, but given timing and cyclicality, second half results will be largely weighted to the fourth quarter. I'll now turn the call over to John to go through the numbers in greater detail.