Bunge Ltd

Good morning, everyone, and welcome to the Bungie Global SA second quarter 2024 earnings release conference call. All participants will be in a listen-only mode. Should you need assistance, please say no to 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 and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ruthann Wisner. Ma'am, please go ahead.

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 at the Investor Center on our website at buggy.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 Bungie's current view with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risks and uncertainties. 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.

Good morning, everyone. I want to start by thanking the team for their dedication and focus. They continue to effectively deliver on our commercial and operational priorities, making excellent progress on integration planning. I'm so impressed by this team's passion and drive. excited by the opportunities to grow our existing business and look forward to the future combination with VITERA. Two teams are working very well together in the planning process and are identifying the many ways we'll be a more complete company post-close. The regulatory approval process is continuing to progress. While we have the bulk of the approvals required, we are continuing to constructively engage with relevant authorities in the remaining jurisdictions. Based on ongoing discussions, we see no issues that would be material to the economics of the deal, and we expect to receive the remaining approvals and close the transaction in the next several months. Turning to our results, we delivered solid adjusted EBIT, reflecting improved margin environment in some regions during the second half of the quarter, partially offset by more muted conditions than others. A more balanced market requires a different approach We're very proud of the team for their ability to adapt and deliver. The rest of 2024, the dynamics we have discussed are still in place. Demand is good. Customers at both ends of the supply chain, and largely in the spot market, limits visibility later in the year. We're controlling what we can amid the evolving supply-demand environment in markets around the world. while tapping into the tremendous work we've done over the past several years to strengthen our business. Based on what we see in the markets and the forward curves today, we now expect full-year adjusted EPS of approximately $9.25. I'll now hand the call over to John to walk through our financial results and outlook in more detail, and then we'll close with some additional thoughts. John? Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on slide five. 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 combinations by Terra. Adjusted EPS was $1.73 in the quarter versus $3.72 in the prior year. Adjusted core segment earnings before interest in taxes, or EBIT, was $519 million in the quarter, versus $893 million last year. Agribusiness, processing results of $265 million in the quarter, were down from last year, as higher results in Europe's soy, its soft seed crush, were more than offset by lower results in North and South America and Asia. Merchandising, lower results were primarily driven by global grains. Higher volumes were more than offset by lower margins. Minus specialty oils performed well, but down from 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. Results in the U.S. were in line with the prior year. Corporate and other improved from last year. Increasing corporate expenses is largely due to lower performance-based compensation. Higher 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 increase is primarily due to lower pre-tax income. The interest expense of $86 million in the quarter was in alignment last year. Let's turn to slide six where you can see adjusted EPS and EBIT trend over the past four years along with the thrilling 12 months. Strong performance over the period reflects a combination of favorable market environment and execution by our team. 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 and productivity-related CapEx, about half of which relates to our large multi-year Greenfield investments. We purchased $400 million of Bungie shares. This resulted in the use of $229 million of previously retained cash flow. Depending on the progress on our Greenfield projects, we could end the year toward the higher end of our CapEx range of $1.2 to $1.4 billion, or perhaps slightly above. However, this would reduce our 2025 expectations. Moving to slide eight, quarter-end readily marketable inventories, or RMI, seeded 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 nine highlights our liquidity positions. quarter end, we had committed credit facilities of approximately $8.7 billion, which includes $3 billion that will become available to draw upon at the close of the VITERA transaction. But the $5.7 billion available to us currently, all was unused at the end of the quarter, providing a 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 VITERA transaction. Let me turn to slide 10. In the early 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. In the early 12 months, we produced discretionary cash flow, approximately $1.5 billion, cash flow yield of 13.7% compared to our cost of equity of 8.2%. Please turn to slide 12 in our 2024 outlook. As Greg mentioned in his remarks, taking into account first half results, the current margin environment for our 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 agribusiness, full-year results are forecasted to be in line with our previous outlook. Collecting higher results in processing largely offset my lower results in merchandising. Results are expected to be down compared to last year. In refined and specialty oils, full-year results are expected to be up from our previous outlook to a better than expected second quarter, but down compared to last year's record performance. In 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 from last year. Additionally, the company expects it falling for 2024. Adjusted annual effective tax rate of 22% to 25%, and interest expense in the range of $280 to $310 million. Capital expenditures in the range of $1.2 to $1.4 billion, as I mentioned earlier. And depreciation and amortization are approximately $450 million. With that, I'll turn things back over to Greg for some closing comments. Thanks, John. So before we go to Q&A, I just want to offer a few closing thoughts. As we look ahead, the fundamental drivers of our business remain strong. long-term demand for our food, feed, and fuel products and services continues to increase. With our global platform, we're very well positioned to find solutions that meet the needs of our customers at both ends of the value chain, regardless of the market environment. Our strategic combination with VITERA will help us accelerate our diversification across assets, geographies, and crops, providing us with even more capabilities and optionality to address the world's most pressing food security needs. As I mentioned earlier, both teams have been hard at work planning our integration, and we look forward to unlocking this additional organizational capacity close-close. We're also progressing on a range of other strategic initiatives that will strengthen our company for the future, including the sale of our interest in the sugar and bioenergy joint venture in Brazil to our partner BP. We've been pleased with the great work the team has done to become a leader in the industry. However, this business is not core to Bungie's long-term strategy. Investing it will allow us to focus those resources on our core businesses. We also recently completed a commercial pilot season in our effort to provide lower carbon solutions for farmers and consumers. Working with our partners, Cortiva and Chevron, farmers planted over 5,000 acres of winter canola in the southern U.S. For a successful harvest, the plan is to significantly increase acreage to 35,000 for the next crop year. We hope to build on these promising results to meet consumers' growing demand for energy, creating a more environmentally sustainable future, driving additional revenue sources for farmers. In addition, we jointly tested a traceability platform using blockchain technology for sustainable soy with CP Foods. global leader in food and feed committed to nutritious, safe, and traceable products. We successfully shipped several vessels of deforestation-free soybean meal from Brazil to Asia, allowing CP Foods to trace the product from farm through processing and transportation all the way to destination. This is another example of the work Bunge is doing to increase transparency and reliability in end-to-end traceability to help our customers fulfill their sustainability commitments. Our focus remains on delivering great value to all stakeholders while investing to strengthen our business so that we can provide customers with solutions, not only today but over the longer term. And while we always look for opportunities to improve, we're well positioned to deliver on our critical mission of connecting farmers to consumers to deliver essential food, feed, and fuel to the world. And with that, we'll turn to Q&A.

Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the questions. Our first question today comes from Ben Thier from Barclays. Please go ahead with your question.

Good morning, Greg, John. Thanks for the presentation. My first question really is just around understanding the drivers behind the guidance and as you look at it. If we go back three months, you said around $9, roughly 50-50 split. which obviously if we just do the math, we take 450 for the second half at the 470 something now gets us to 925. But clearly from three months ago, we've seen a complete different environment and crush nearby. Just conditions have changed. So I wanted to understand what are you seeing in the market to what feels to be coming out with a rather conservative guidance, just given where crush is right now, what have you been able to lock in or not, how the volume is, and how we should think about this usual fourth quarter skew that seems to be not as pronounced this year as maybe in prior years. So just conceptually, if you could explain that to us.

Sure. Let me start. And good morning. But yes, as you kind of laid it out, we overperformed in the first half to what we had talked about since we were together last time. Crush margins 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, you know, margin curves are very inverted. We've got very little visibility. And while the demand for oil and meal remains strong, The end customers, as everyone knows, the farmer varies spot as well as the consumer varies spot. We just don't have much visibility in that Q4, and as you called out, it's historically an important one for us. I think we had the confidence to roll it through and call it, but that's what we see now, and that's why we said the approximately 925. I think, Ben, maybe just to add on, when you look at the second half, while the overall forecast for second half didn't change. We've shifted a little bit more toward Q3 where we were, you know, 40, 60 before, but not a lot of shift, but probably more like 45, 55 at this point. So slight shift to Q3 from Q4.

Okay. That's a 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 YTERA and at 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.

Sure. You know, the team's been doing great work and we have the majority of the jurisdictions have all issued clearances. We are currently engaging with the EU, Canada, China, and then just a handful of others as we're kind of getting to the end of the process. The team's done a great job on the integration plans, on preparing for the financing, the capital structure, and the plans around the leadership team. Those plans are in place. As we know, we have to continue to operate as separate companies until we're able to close the transaction. But as I said, we're making progress and we expect to conclude that in the next several months. Any of the current conversations that are going on are confidential. But, you know, some of those timelines are rolling up on us pretty quick. And as things become public, then we'll be able to share those. Okay.

Thank you very much.

Our next question comes from Adam Samuelson from Goldman Sachs. Please go ahead with your question.

Uh, yes. Thank you. Good morning, everyone. Um, maybe first question, um, on the, the merchandising side of agribusiness. And so as you alluded, the question set crush margin environment has improved in the nearby. Um, like the comments on, 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, um, 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.

Okay, sure. Yeah, so if you look at Argentina, you know, the crop definitely has, you know, recovered, right? 23 crop was about half of what we're going to get this year, but the selling's been very slow. And part of that, of course, is the shift to lower prices as the producers don't like that. And then, you know, with government policy, there really hasn't been the economic catalyst to drive them to come selling. So it's been a very, very slow pace there. And the second half is really going to be about, you know, the effects in the government policy to see how that develops in Argentina. In Brazil, You ended up with a combined bean and corn crop that was about 30 million metric tons lower than I think what the industry expected. And I think the industry had logistics in place to be able to handle that larger crop, you know, as we saw last year and some of the tightness and constraints in that. And then you end up with that 30 million metric tons smaller crop and the farmer selling, again, being very spot and very opportunistic as a farmer doesn't like the lower prices. That smaller crop then drove a lot of pressure around the logistics, and that's hurt margins, and especially in the merchandising. And then when you take the other piece, that globally, while the demand is good for meal and oil, the consumer's been rewarded for moving to the spot, right? There aren't the same challenges in the supply chain on worried about deliveries. So they've pulled down inventories. They've pulled down the length of their supply chain. And they've been rewarded for buying in the spot if prices have become lower. And so that's been a little bit tougher for the environment in merchandising as well. And then North America, again, slower farmer selling. Again, don't like the lower prices as markets become more balanced on the S&D, although we have seen the livestock margins improving there. This will really be about weather in the northern hemisphere. We've got soybeans entering kind of a critical window, and the producer generally is when they're looking out their door and what they see and how they see that develop here in North America, then we can see how the marketing will continue. And then, of course, we're also watching in the northern hemisphere the weather and temps on the canola crop there in Canada.

That's some 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 own 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.

We received a little bit of help on the tight cocoa butter supply and our cocoa butter equivalents on our tropical oil side in the RSO. That was somewhat helpful. And then we did see some stronger energy demand, some additional energy demand come in late that we weren't expecting in the U.S. So that was constructive. And I think when we look at the balance of the year, we don't have that visibility, but you know, we're calling that out in the puts and takes. And I think the lower prices always drive demand, and that's, I think, true not only in the inclusion side on soybean meal, but we're seeing that drive demand on soybean oil for both food and especially on the energy side here.

All right. I appreciate that, Collar. I'll pass it on. Thank you.

Our next question comes from Heather Jones from Heather Jones Research. Please go ahead with your questions.

Thanks for taking the question. Good morning. I just wanted to ask about your coverage going into Q3 and for Q4. Greg, you mentioned the customers and the farmers have been very slow to buy or sell, but just wondering, you know, because we had the soy crush of the U.S. has been marketly lower than people expected. And so you've 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?

I think if you look at Q2 and kind of the global setup, We were pretty well edged, and a lot of that strength came very late in the quarter. Now, I'll say the team also did a great job of executing as they executed the crush we have on and then closing out the balance of the open capacity that we had. As we've seen that run up late Q2, we have been able to go ahead and hedge some of Q3 and lock that in, and that's what gave us some of the confidence there. you know, to roll the overperformance there in the first half to roll it through the year when we went to nine and a quarter. You know, that being said, in Q3 and Q4, there's really no liquidity yet and very low visibility. So I think those are the keys that we'll be watching here as things develop for the late Q3 and the bounce Q4. Yeah, 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 coverage there, but pretty heavily covered on soy as well here as of the end of July.

Okay. And then on the Argentina side, just was wondering if you could help us understand not only more the outlook, but also what happened in Q2, because I repeatedly heard from those in the industry and just read that there were periods during the quarter where cash margins were some of the best that industry's ever experienced. And it was around times when the farmer would sell. But clearly, y'all are talking, your commentary is very different from that. So I was just wondering if you could help me to understand the difference between those and then how you're thinking about that business for the second half.

I think you're right on the fact that the farmer selling came in some sporadic. It was slow, and it kind of dribbled 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 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.

Okay. All right. Thank you so much.

Our next question comes from Salvatore Chiano from Bank of America. Please go ahead with your question.

Thank you very much. So personally on merchandising, I'm wondering, I think it was two years ago when you said that your normalized merchandising earnings should be around 75 to 100 million per quarter. So we've been below the low end for a few quarters now and even more so this Q2. Has this made you change your your normalized earnings outlook, or is it simply that the ag situation is so bad that your earnings are so much below normalized? And when do you expect us to go back to the 75 to 100 million figure?

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. We've been in a pretty interesting time of transition, right? And when these markets generally transition, you know, from higher prices 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. It puts 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 as opportunities develop. I think that's really what you've seen the transition of the market going through, and that's what we've been seeing.

Okay, perfect. Thank you. And also, I want to ask a little bit about refined products. It continues to be the one segment that quarter after quarter, it looks like you're topping your own expectations. And if you can say to why and where did things go better than you expected? And also, is it mostly on the fuel side? Is it mostly on the edible oil side?

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 the 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 You know, 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 you know, solve problems on the supply side and or, you know, lowering their cost as they reformulate into our products. So, team's been doing a great job, the technical team and the execution team working with our customers as they're dealing with a little bit of a challenging environment.

Thank you very much.

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

Good morning. Thanks for the question. I wanted to ask on capital allocation. Are you done with share repo until the Viterra transaction closes or might we see something sooner just given the slightly extended timeline? And if not repo, what's kind of the use of the excess free cash flow? Would it just be for debt?

Thanks, Tom. This is John. Yeah, I think, look, we're not going to probably commit to any share repurchases prior to Viterra closed. mainly because we've got leveraged commitments and targets that we want to hit going into the close process, as 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. I would just add that, you know, with the announcement of sugar, you know, we're hoping to close that maybe late this year. Certainly, proceeds from that could play a meaningful role in the repurchase program, increasing it by some meaningful amount of those proceeds.

Oh, great. Thanks for the color there. Just wanted to ask on kind of capital plans over the next couple of years, you've got this multi-year CapEx cycle. I think we're getting a little bit longer in the tooth here in terms of projects will start opening next year. Just any early thoughts on how to think about 2025 CapEx and how it might compare to what we're seeing this year? And again, this is, I understand, before Viterra.

Yeah, so... 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, depending on how things play out here toward the end of the year on some bigger CapEx expenditures. But we do expect next year to be up from that, probably closer to the $2 billion range, 1.92, just given all of these projects are going to really be in full swing in terms of development. Then, you know, 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, you know, as of today, absent any other opportunities coming along, we do expect CapEx to drop, you know, potentially up to 50%. This is all excluding Viterra, but we could see a 50% drop in CapEx in 2026. versus 25.

Great. Thank you. Our next question comes from from UBS.

Good morning. My first question is, Since the time you announced the VITERA transaction until now, there has been like some financials reported via VITERA. And I'm just trying to understand if those numbers that were reported met your expectations or maybe even exceeded the expectations.

Yeah, as you know, we've got to run the companies separately until closed. So, you know, the VITERA team, I think, continues to do a very good job in running their business. They definitely got the extra strain, as our team does, of the integration planning as well as all the work being done on the regulatory side. And we're doing that all during, you know, a pretty challenging environment. But it's a great platform. The engagement that we have had with their people will 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.

Perfect. My quick follow-up is the divestment of the non-core business. It had been marked for non-core for some time. So how did this particular deal come about and were you happy with the transaction price?

I'll start and John can finish. But look, we very early on when we got here and were able to put Sugar into the joint venture with BP, you know, declared then that we would eventually exit the business when we thought that it 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, you know, we're very proud of them, but that didn't change our long-term strategy. And so when the timing was right and the values lined up, then we've done the second part of that transaction and to exit. So we do look, 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. And Manal, I'd just add that, yeah, we were pretty happy with where we ended up from a value standpoint.

Thank you so much.

Our next question comes from Stephen Haynes from Morgan Stanley. Please go ahead with your question.

Hey, good morning. Thanks for taking my question. I wanted to ask a quick one on farmer selling. You alluded, I think, before to 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 where you think we are in the evolution of farmer selling slowing down through the course of the year. And I guess what kind of gives you confidence that it's not going to be kind of a more prolonged you know, slow farmer selling cycle like we might have seen in some past down cycles. Thank you.

Sure. I think if you look at the overall setup, been making that transition right to lower price environment, I think the producers are getting used to that. At the same time, as we said, they've definitely built some inventories And then as the next crops get produced, right? Much bigger crop in Argentina. We still have got to develop the crop here in North America, but the weather looks good. And I think as you see that North American crop develop, we'll see some more farmer marketing there. And then as we also know, South American farmers are often watching North American price development and what's happening in the futures market to drive some of those. still a driver, of course, in Brazil and mostly in Argentina, where the farmers are watching the government very closely for what their policy action will be in any FX activity. So I think it's all unfolding kind of as would be expected. And what I feel good about is, you know, the team remains strong. very focused on executing and ensuring that we manage the risk that's appropriate for the environment that we're in, and pretty proud of how we're executing.

Thank you.

Our next question comes from Andrew Strzelczyk from BMO. Please go ahead with your question.

Hey, good morning. Excuse me. 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, you know, 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, you know, plays out potentially in that inverted way?

I would just say, I mean, the one thing that we've seen the last five years with all the different things that have been thrown at us, we love that we're running a very global platform because if we would be way overweighted in one region versus another, this would have been much more challenging. And I don't think that's going to change going forward. So the optionality and the flexibility that we have in our system to run you know, hardest where the margins are there and to be able to react to whether it's farmer selling or whether it's demand. And then I think the change that we've made in the company and the operating model just allowed the execution and discipline to be much better, which is really key when you get in these tougher markets. So the team's doing a great job staying focused on the things that we can control as the market develops. And I've got the confidence that as we see the balance of the year play out, that we'll get those opportunities to the bottom line.

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 improvements 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.

I think one, we're never done, right? We're constantly thinking about continuous improvement. So whether it's, you know, the assets that are getting the capital, whether it's the de-bottlenecking or the brownfields or the greenfields, but also thinking about over the long term what we believe and what assets may not fit the footprint. It's the investments we're making in our systems and digitalization and some of the things in the crushing plants that are improvements in the metrics that are a multi-year program. So I think it's just you know, a very different company than we were in the way that we approach things. And so, you know, these are the times as the markets kind of reset in these transitions that you really find out how good you're executing. And so we're very, very, very pleased with the team. But, you know, we're never focused. And, you know, we're doing it in a challenging external environment. and while renewing an enormous amount of integration planning and providing an enormous amount of information on the regulatory front. So really, you know, really proud of the execution. I would just add here, Andrew, that we still feel, you know, we set out an 850 baseline a couple years ago, and we're still performing above that, even in a little bit more challenged environment we're in this year. So to Greg's point earlier, I think we're a different organization. We're a different machine than we were. And I think it's, you know, we're going to be able to show that here despite a little bit more challenging environment. I think we're performing pretty well versus what we had set out as a baseline.

Great. Absolutely. Thank you very much.

And our next question is from Carla Casella from J.P. Morgan. Please go ahead with your question.

Hi. My question relates to financing. You got the question about the dividends and buybacks ahead of the Viterra transaction. But 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 until you get full approvals?

Yeah, we've already syndicated out the debt on that. And so we've got the commitments in place to finance the transaction itself. There's some obvious nuances that will take place around some of the VITERA bonds and things ahead of close, but we're pretty much set in terms of the initial allocation of financing and the commitments are all in place. There'll be some fine-tuning post-close, I'm sure, you know, and then when we decide exactly how much we need, that could have an effect on the total amount, but it's all pretty much ready to go.

Okay, great. Thank you.

And, ladies and gentlemen, with that, we'll be ending today's question and answer session. I'd like to turn the floor back over to CEO Greg Heckman for any closing comments.

Thanks 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 Bungie and Viterra together. We're going to be a more complete company. 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 and will per capita continuing to increase, climate volatility making things more challenging, and what looks like a policy environment that 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.

Ladies and gentlemen, that does conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.