Bunge Ltd

Good day and welcome to the Banking Global SA First Quarter 2025 earnings release and conference call. Today all participants will be in listen-only mode. Should you need assistance during today's call, please sign up for a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask your questions. To ask a question you might press star and then one on your telephone keypad. To withdraw your question you might press star and then two. Please note that today's event is being recorded. I would now like to turn the conference over to Ruth Ann Weisner. Please go ahead, madam.

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 at the Investor Center on our website at bungie.com under events and presentations. Reconciliation of our 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.

Thank you, Ruth Ann, and good morning, everyone. I want to start by thanking our team for their hard work and adaptability in what has already been a highly dynamic 2025. Their continued focus and great execution delivered a strong start to the year. It demonstrated once again that we can navigate market environments, agility and speed, harnessing a truly global platform and strength in our core markets. We continue to believe in the strategic merits of our planned combination with Viterra and expect to close the transaction in the near term. While the timing of regulatory approvals has not been what we anticipated, we've engaged in constructive conversations with the relevant authorities prepared to close in very short order once received. We recently chose to execute our rights to terminate the definitive share purchase agreement with CJ Selecta pursuant to its terms. However, soy protein concentrate for beans and attractive market with promising growth prospects nicely complements our soy origination crushing capabilities in Brazil. At the same time, made great progress in other key areas, further sharpening our portfolio, strengthening our business, positioning Bungie for the future. We recently announced the sale of our European margins and spreads business and our North American corn milling business. Both of these transactions allow us to further align around our global value chains. We also closed our previously announced partnership with Repsol and announced the key milestone with the incorporation of intermediate novel crops in the production of renewable fuels in Europe. This alliance furthers our long-term strategy to create alternative paths towards meeting our customers' demand, lower carbon agricultural and oil supply chains. Shifting to operating results, first quarter exceeded our expectations driven in part by some pull forward of activity from Q2 into Q1. Later in the quarter, shifts in trade dynamics, including tariff and regulatory uncertainty, prompted some farmers and consumers to act ahead of potential changes. Looking ahead, we're reaffirming our full year 2025 adjusted EPS guidance, approximately $7.75, and remain confident in our ability to continue to execute despite the current market environment. As we mentioned last quarter, we expect to provide an outlook for the combined company once we've closed the Viterra transaction. With that, I'll turn it over to John for a deeper look at our financials and outlook.

John? Thanks Greg and good morning everyone. Let's turn to the earnings highlights on slide five. As Greg mentioned, the first quarter exceeded our expectations. As tariff and regulatory uncertainty increased later in the quarter, some farmers and customers moved ahead of potential changes, which pulled earnings from Q2 into Q1. Our reported first quarter earnings per share was $1.48, compared to $1.68 in the first quarter of 2024. Our reported results included an unfavorable -to-market timing difference of 8 cents per share to a negative impact of 25 cents per share, notable items related to the transaction integration costs associated with Viterra. Adjusted EPS was $1.81 in the first quarter, versus $3.04 in the prior year. Adjusted segment earnings before interest in taxes, or EBIT, was $406 million in the quarter versus $719 million last year. In processing, our results in the Brazil, Europe, and Asia story crushed value chains, more than offset by lower results in North America, Argentina, and European soft seeds. Merchandising improved performance in global grains, financial services business, more than offset by lower results in ocean freight. With the exception of Asia, refined especially oils results were down in all regions, reflecting more balanced global supply and demand environment, driven in part by the uncertainty in US biofuel policies. In milling, slightly higher results in North America, more than offset by lower results in South America. The milling margins were pressured by a more competitive pricing environment. In corporate and other, the decrease in corporate expenses was primarily driven by lower performance-based compensation. Our other results include $24 million from the Sugar and Bioenergy Joint Venture that we divested in the fourth quarter of last year. The interest expense of $45 million was down in the quarter compared to last year, due to increased capitalized interest, higher interest income on investments and interest-bearing instruments, and interest received on Brazilian tax refunds. Decrease in income tax expense for the quarter was primarily due to lower pre-tax income in 2025. And prior to your unfavorable adjustments related to foreign currency fluctuations in South America. Let's turn to slide six, where you can see our adjusted EPS and EBIT trends over the past four years, along with the trailing 12 months. Throughout this period, our team has excelled in navigating the complexities of dynamic markets while simultaneously executing various internal initiatives. The recent trend indicates a more balanced supply and demand environment, and the impact of trade and biofuel uncertainty, translating into less volatility and lower earnings. Slide seven details our capital allocation. In the first quarter, we generated $392 million adjusted funds from operations. After allocating $54 million to sustaining capbacks, which includes maintenance, environmental health and safety, we had $338 million of discretionary cash flow available. Of this amount, we paid $91 million in dividends, which tends to $256 million in growth and productivity-related capbacks. We also received $306 million of cash proceeds related to the sale of an interest in our soy crush footprint in Spain to Repsol as part of our newly formed joint venture. And a final payment for the sale of our interest in the sugar and bioenergy joint venture. This resulted in approximately $300 million in retained cash flow. Moving to slide eight, a 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, is 0.6 times at the end of the quarter. Slide nine highlights our liquidity position. At quarter end, we had committed credit facilities of approximately $8.7 billion, all of which were unused, providing ample liquidity to maintain ongoing capital needs. In addition, we had a cash balance of approximately $3.2 billion accumulated in large part from the U.S. public debt offering that we closed last September in support of the Viterra transaction. Slide ten, we had a cash balance of approximately $2.5 billion. There were no amounts outstanding on our $2 billion commercial paper. Please turn to slide ten. The trailing 12 months adjusted ROIC was .4% and ROIC was 8.2%. Adjusting for construction in progress on our large multi-year projects not yet operating and the excess cash on our balance sheet from the Viterra closing, adjusted ROIC would increase by 1.5 percentage points and ROIC by approximately 1 percentage. Returns have declined recent highs, made above our adjusted weighted average cost of capital of 7.7%. Moving to slide 11. In trailing 12 months, we produced discretionary cash flow of approximately $1.2 billion and a cash flow yield of .2% compared to our cost of equity of 8.2%. Slide 12. As Greg mentioned in his remarks, taking into account Q1 results, current margin and macro environment and forward curves, we continue to expect full year 2025 adjusted EPS of approximately $7.75. This forecast excludes the impact of announced acquisitions and investitures that are expected to close during the year. In agribusiness, full year results are forecasted slightly lower than our previous outlook and down from last year primarily due to lower results in processing. Finest specialty oils, full year results are expected to be similar to our previous outlook and down from the prior year, primarily driven by a more balanced supply and demand environment in North America. Milling, full year results are expected to be lower than previous outlook and up from last year. Incorporated in other, full year results are expected to be favorable than our previous outlook and the prior year. Additionally, the company expects the following for 2025. Adjusted annual effective tax rate in the range of 21 to 25%. The interest expense in the range of $220 to $250 million, which is down from our previous expected range of $250 to $280 million. Capital expenditures in the range of $1.5 to $1.7 billion, depreciation approximately $490 million. With that, I'll turn things back over to Greg for some closing comments.

Thanks, John. We're trying to Q&A and I want to offer a few closing thoughts. In today's uncertain global environment, we can be certain of the strength of our team, global footprint, and our operating model. Our purpose of connecting farmers to consumers to deliver essential food, feed, and fuel is something the world depends on regardless of external circumstances. For the last few years, our team has consistently risen to the challenge, navigating an ever-changing world, exceeding expectations, and faced with global pandemic, trade wars, geopolitical uncertainty. Confident that the same focus, discipline, and ability to execute continue to drive our success. Our business is built on a resilient global infrastructure that ensures an efficient supply, staple crops, and food and feed products that has proven its ability to withstand volatility. We have the right systems and strategies in place to manage risk, adapt to external challenges, and remain focused on what truly matters. Planned combination with Viterra will only enhance our diversification across assets, geographies, and crops, fighting us with more optionality to help address the world's food security needs. It's core business is resilient. Track record proves this. I have no doubt that we'll continue to deliver value for customers at both ends of the value chain. With that, it's turn to Q&A.

First question from the phone comes from Salvatore Tiano with Bank of America. Please go ahead.

Thank you very much. Firstly, I want to ask to follow up a little bit on acquisitions. With Viterra, you make it very clear that the approval is very, very imminent. Obviously, China seems to be the holdup here, and there's always limited visibility in what they do. So how confident are you that actually they will approve the transaction soon? If actually there is a chance that this may not happen, what is your backup plan there? Also, CJ Selecta, can you provide a little bit more commentary on why the transaction didn't go through? It seems to indicate that you chose to terminate it, but at least by our math, it was a pretty nice, very accretive transaction. So why did you make this decision?

Let me start with Viterra. Of course, number one, look, the strategic merits of this transaction still remain in place, and it accelerates everything that we're doing strategically. We've had very constructive interaction with the authorities as we've submitted additional information as needed. They've done a really excellent job engaging with all the parties and advancing the process. So we're confident that traction is going to be improved. When you look at the merits, it's very, very clear. We're purpose-built to create a resilient supply chain, and that's to serve China and the rest of the key demand markets globally. So in times of some of the extreme market disruptions that we've seen and one like we're experiencing now, the reliability that comes from a company like ourselves that's operating every major origin is even more important. So timing, we don't know, but the process moves and we feel very good about the ultimate destination. And then as far as CJ, look, we went through the long stop date. We passed that, and we just kind of looked at the circumstances of currently where things were at, where the business, and it just made sense at this point to terminate the transaction. So now, as I said in the comments, look, the market for CSPC on the feed market, that continues to be attractive and it really fits well with our Brazilian business. So we'll continue to look for the right opportunity to expand in that market.

Maybe just to clarify, Salvatore on CJ, going through the end date was a result of not having all the regulatory approvals. And at that point, we could have chose to extend it. We felt it was appropriate, but as Greg mentioned, we just felt at that time the right thing to do was terminate the agreement.

Great. Thank you. And I also want to ask about your processing business and specifically, can you break down your margins for US SOI and Canadian Canola versus the margins you have in the rest of the world? How did they trend Q1 versus Q4? And also, how are they on an absolute base? Because I guess US SOI has historically been a much stronger performer, but that may not necessarily be the case in Q1.

Yeah, I guess hit the high spots here quickly. We definitely saw, if you look at the fact on SOI that we're holding the year, you've kind of got to look down into the quarters. So Q1 was better. That caused the overperformance, but unfortunately, things have gotten softer here on the curves as we've gone into Q2, and some of that definitely is on open capacity. So SOI will be lower in Q2, and then with the crop coming off, the curves are telling us it should be better again in Q4. The net of that is the year will be flat, but as often happens in this business, when you've got two crops a year coming off, you look at the 12-month cycle, the timing can move around a little bit. And really in SOI, the spot crush margins are pretty good, are better everywhere. And then the outlook is definitely tougher in the curves except for North America, where we see it getting better with crops. Now, in the soft seeds, North America, canola in Canada, much the same. We had a tighter crop there, and the curves get better as we look out to Southeast for new crop. And then in soft seeds in Europe and the Black Sea, both Sunseed and rapeseed production was tighter last year. So we got slow farmer selling, and then of course, with soybean oil being very competitive globally, that has been tough on soft seed crush margins. So again, we look to new crop in the Southeast period for that to improve.

And maybe to put a finer point on that, looking at Q1 versus a year ago, the US, the SOI crush margins weren't dramatically different than they were a year ago for Q1, a little bit lower. The big impact in North America was the soft seed margins were much lower in Q1 versus last year. And then in terms of SOI globally, as Greg mentioned, probably strongest in Europe in Q1, and then US is number two, and then we had really weak margins in Argentina in Q1. And of course, that seemed to be proven there in the spot in Q2, given farmer activity in Argentina. So we're running harder down there now.

Perfect. Thank you very much.

Okay. The next question comes from Tom Palmer with Citi. Please go ahead.

Hi, and thanks for the question. Maybe just to follow up on the last question, on cadence of earnings, you did indicate the pull forward and kind of the one-queue, two-queue dynamics, and then how maybe it, especially in North America, ramps up a bit to close out the year. But you provided some specificity last quarter, talking about 40% of annual earnings coming in the first half of the year. I guess just any updated thoughts on thinking about the cadence of earnings as we move through this year, just given the one-queue dynamics?

Tom, I think, this is John, the look at the year 40-60 really hasn't changed first half, second half. What we saw was really a flip between Q1 and Q2. Instead of 40-60, it came out more 60. It looks to be more 60-40. So we pulled earnings forward from Q2 and expect a little bit of softness in Q2 from our prior forecast. So about half that overperformance in Q1 was pulled forward from Q2. The other half we're seeing, we had some other things go well in Q1, but see a little bit of softness in Q2. So we're looking at 60, maybe 62-38 if I wanted to put a really fine point on it from Q1 to Q2. But the broader first half, second half is the same look as we had last quarter. All right, thank you.

And then just on the assumptions embedded in guidance, you did note new crop better crush margins late in the year as normal. I wondered about kind of what you're embedding for other items such as US biofuels policy and potential clarity on the RVO for next year. And then just any, what you're embedding for US kind of China trade relations and how that might impact you as the year progresses. Thanks.

Yeah, so just as a reminder, we don't have any M&A or share repurchases factored in, and we only assume what's kind of we can see in the current tariff situation and the forward curves. So to the point what the market believes about RVO in kind of the current trade tensions is reflected in the curves. It's in our forecast and outlook. We're not making any calls that are different from what the market is telling us. I think it's that.

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

Good morning. I just wanted to focus a little bit on this development with Repsol. Looks like you're moving forward with it. Help us understand the benefits and why does it make strategic sense to move ahead with Repsol on this kind of a JV?

We're really excited. Repsol is a great partner. They're making investments in their infrastructure as they're moving to lower carbon fuels. And we're excited to form the joint venture to be able to help that not only with the soy processing assets that went into the JV but in the origination of the lower carbon intensity feedstocks. And of course, some of that is the announcement we made at the same time to bring novel crops to be part of that solution of lower carbon intensity oils to then go into their global diesel and SAF process. So we're at the front end of that, but we're excited. We really want to be the partner of choice in every space that we operate. And that includes working with the fuel industries as they look to put lower carbon fuels into their portfolios.

Manav might just add that while there's a lot of discussion around uncertainty in US biofuel policy, there's a lot more certainty than that in Europe and other places. So Europe seems very committed to it. And Repsol is part of that commitment. And we want it to be, as Greg pointed out, partnered with someone that we think is great positioned to take advantage of the growing biofuels opportunity in Europe.

Perfect. My quick follow up is I understand it's not in your guidance, but there's a lot of chatter that in the next two or three weeks, you could get a much higher revised RVO with a stronger biomass. Diesel volumes. So in the event you do get a higher RVO, which is significantly better, how is Pangee going to benefit from it probably in the second half or in 2026, if you could provide some thoughts on it?

That would definitely strengthen the oil leg of the crush here in North America. And North America as an exporter of oil, of course, that would help the oil leg globally. So that would be good for crush margins.

We're not very locked for Q3 and Q4. So to the extent the second half, margin environment improves, we should be well positioned to take advantage of that. And right now, energy customers are relatively low percentage of our fine oil volume. So any demand there will be certainly good for our power plant.

Thank you so much.

The next question comes from Heather Jones with Heather Jones Research. Please go ahead.

Thanks for the question. I wanted to stick with the RVO. So I recently, and this was from a conference as well as other things, recently I've heard from some industry watchers that the five and a quarter billion gallon D4 headline number that's been in media reports, etc., that it may not be that high, it may be more in the mid-fours with the backfill opportunity taking you into the fives. So just wanted to get your thoughts on that. And a follow-up to that is do you think that would be enough to make the domestic market much tighter given the limitations that we have on feedstock imports and biofuel imports this year that we didn't have previously?

Demand is good, but what I'd like to start with is we are really proud to be part of that first of a kind coalition where we've got farmers, water segment, the petroleum refiners, and the crushing industry, right? Driving to consensus and then advocating for an RVO that's aligned with what the U.S. can produce. And when I say the U.S., I mean think about the investments that have been made that are already in place to help the U.S. achieve energy security and dominance and provide a lot of support for rural communities. The farmers have invested, right? They've invested in the land and the machinery, the know-how around the inputs and the crop production. The oil companies invested in converting their plants to biofuels. The crushing industry, we've added production capacity to provide the inputs. So the infrastructure's in place in every part of supply chain. We can serve the demand right now. This is unused capacity. So this is not aspirational. And that's been the message. So we remain, you know, I think encouraged and optimistic that we'll get to the right number. And if it doesn't, right off the bat, the coalition's going to continue to advocate, continue to explain the facts, the impact that the RVO has on rural America and what it really does to drive value at the farm gate and all the way through the local economies by adding that domestic demand.

Okay, thank you for that. And then I wanted to move on to the tariff situation and clearly it's a very dynamic environment and who knows, it might be very different by next week. But as it sits right now with the tariffs in place with China and the impacts on U.S. beans, etc., how are you thinking about how that impacts Brazilian crush, Brazilian crush margins? And could that potentially, if those dynamics don't shift quickly, could that potentially affect, slow down the build out of crush down there?

Yeah, look, to start with, the policy is going to work itself out. You know, we like policies that are good for farmers because that's good for the entire ag value chain. And, you know, the markets do work and they send the right signal to farmers and they send the right signal to industry. One of the things we like about our footprint is that whether, you know, we're going to crush more in the U.S. domestically if exports are lower, the same would be offset in Brazil if exports are higher, then we'll crush less. So, you know, we're going to flex our system not only by regions globally, but within those regions between crush and export and other domestic demand. So, I think that's what we love about our balanced footprint.

Heather, when you think about it, there are three things we do in any origin, storage, export, and processing. And so, depending on what the global markets are telling us from any of those origins, we can either choose to store it and ultimately process or export it, whatever the market is telling us to do. So, to Greg's point, we have, you know, ultimately good flexibility around whatever the tariff situation ends up being.

Awesome. Thank you so much.

Thank

you. The next question comes from Puran Sharman with Stepans. Please go ahead.

Great. Thanks for the question. Just wanted to ask about South America. Do you expect accelerated farmer selling out of South America in the coming months, out of Argentina in the coming months? What would this mean for kind of global crush margins in your footprint?

Yeah, in Argentina, I think we talked about pretty slow farmer selling there in Q1. Now, we've seen a recent pickup in the farmer selling, and that's been better for margins there in Argentina. And then we've adjusted the global footprint a little bit. You know, you've got a temporary lower export tax window that closes late June. You've got better weather, which is telling the farmers what their beliefs are, and they lifted some of the capital controls. So, you know, that's driving the farmer selling today. We'll see how long the duration of that goes and how that will affect. And then in Brazil, the driver, you know, another record soybean crop, there's no take or pay this year, which should help improve the value chain performance versus 24. And then if you think about it, we've got a big total corn crop coming behind that. So, from the farmer selling of beans, historically, you know, the farmer has marketed more regularly to get ready for the Sabrina harvest, to free up the bin space and to deal with some of, you know, any of the logistical timing and coordination that needs to happen.

I appreciate that detail. My follow-up was actually going to be on the take or pay, so I appreciate you getting ahead of that. I guess I wanted to maybe hone in on some of the divestitures you've announced. With the divestiture of corn milling, just wanted to A, ask, does this just leave you with wheat milling in your milling business? Is this a business that you're working with? Do we think about that business when it comes to kind of your core operations as you look ahead?

Yeah, correct. We've got a real nice South American wheat milling business there in Brazil. Viterra also has some Brazilian wheat milling. Those footprints fit together very nicely to serve our customers there. We like our position there in Brazil in the wheat milling business, you know, because not only the local crop, but we feed that from our Argentine wheat value chain, as well as other global wheat markets as they make sense to import into Brazil, which happens quite often. So, you know, that business is a good fit and we are in a very competitive position for the long term to serve our customers.

Yeah, just to clarify the first part of your question, our South American wheat milling will be the only thing left from a milling perspective once we close the transaction.

Great. Appreciate the details.

The next question comes from the line of Derek Whitefield with Texas Capital. Please go ahead.

Good morning, all, and thanks for taking my questions. I wanted to ask a follow-up on Repsol with my first. Could you speak to the amount of camelina and sasflower that could be processed as feedstock for their biorefinery, or the mix that they're solving for through this partnership?

It's probably too early to give the exact numbers on that, but, you know, basically what we want to do with our energy companies are give them the different choices of the lower CI feedstocks. And having, you know, multiple novel crops, you know, and even use the cooking oil and the other things that we're sourcing in our portfolio, we can then give them the choice on what works in their machinery for cost, the quality, and the carbon intensity that works for them. So, what we want to be able to provide is that optionality of feedstocks, and even in the novel crops, then it becomes building the programs and continuing to build the volumes. And that's like winter canola in the U.S. We got started last year, and then we've seen great uptake by the farmers. We've got a lot more acres out there, and so we'll build these programs in partnership with the demand and with the growers.

Yeah, and maybe just one thing, Derek. We're not targeting any specific mix of inputs. It's going to be whatever the market tells us is the most economic. It could be, as Greg mentioned, mixing novel seeds, soy oil, soybean oil, yuko. All those things, Greg mentioned, are part of the portfolio, and ultimately the economics are going to drive what the most logical combination of inputs is.

Great. That makes sense. And for my follow-up, I wanted to stay on biofuels. Do you expect a more favorable assessment for SBO and winter canola based on industry feedback and your interaction with the administration on 45Z? There seems to be quite a bit of energy around the inclusion of CSA practices for seed oils.

We're optimistic, and we're engaged in that and trying to bring the facts forward and bring in the economics forward and to do what's good for farmers as well as the entire value chain there.

That's great. Thanks for your time.

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

Good morning, and thanks for taking my question. Just on US industry crush capacity, I think one of your peers has announced the shutdown of the plant. So really, maybe just two questions. It doesn't sound like it, but is there anything in your portfolio that you'd be looking to rationalize in the US or North America more broadly? And then how do you expect the rest of the industry to respond to some of the new capacity that's come online over the last 12, 18 months? Thank you.

We've been very thoughtful about our portfolio, really everything we've been doing over the last six years. It's always continuous improvements. So where we've made our investments, whether it's been bottlenecking or brownfields or greenfields, it's to get our footprint to be the most competitive. So we're running the assets that we're running now because we plan to. We'll constantly evaluate that globally, and that's part of having that global system. Our goal, of course, is to have a cost structure and capabilities that are built for any point in the cycle. And yeah, during the cycle, the tougher parts of the cycle, it sends signals. And certain people with cost structures may be shutting down some of these standalone plants and that. They could be different economics than us running it as part of a network here in the US and also as part of our global network. So we're just focused on having the most competitive footprint and system for really any point in the cycle. That's kind of our responsibility.

Okay, thank you.

The next question from the phone comes through Andrew Streltsnyk with DMO. Please go ahead.

Hey, good morning. Thanks for taking the questions. My first one, you mentioned being open on the majority of your capacity for the back half of the year. And I guess I'm just curious if you're managing or how you're managing your forward book right now in an environment that's relatively soft and could look a lot different later in the year. So have you changed that approach at all? I'm just curious how that compares maybe to normal. Any comment on that would be great.

Sure. Our team is constantly focusing on our customers on both ends of the value chain and what they're doing to manage their risk. I will tell you in this environment, we have seen everybody go to more spot. So there is less done on the forward curve because people don't know what to do with some of this uncertainty. And so they pulled in the farmers have been more spot sellers, the end consumers, whether it's feed, food or fuel, unless they've got margins, they've been more spot buyers. So that's led to less of a forward book. Now we've got different ways to manage our risk and we're always evaluating what the supply and demand tells us what the outlook looks like and where globally we want to be placing our hedges and locking in margins as they occur versus how we believe they will and as they have versus history based on what the supply and demand numbers are telling us. But there's less on right now, one because we're looking at what the curves are telling us and what we believe and then part of it is driven from customers on both sides. When you get in that close in 30 to 90 days, that's when the logistics really start driving the activity really for all the participants in the market. And of course, that's why you've got more visibility on the front end, you think on the books and maximize those logistics to serve everyone.

Right. Okay. Okay. That makes sense. And my second question, and I don't know if you'll be able to answer this with any specificity, but I'm just trying to think about the right earnings base for the core business. And obviously this year has a ton of disruption that maybe is abnormal, right? And depressing numbers this year. Is there way to frame how much you think that that is impacted relative to your 775 outlook? Yeah. Is there any way to think about how much that's impacting the year and what maybe a more normal earnings base would look like? Thanks.

Yeah. Look, I think, this is John, certainly we're in a little bit more challenging environment this year, just given all the mid cycle. And when we look at that, it's really driven by a more challenging merchandising environment. This year is one of the big drivers. And as we look at, just take us back to our original mid cycle modeling. At this point in time, a couple of years later, a lot of the projects that we had slated are still under construction. And so those haven't contributed yet. And we didn't expect those to yet at this point in time, but we made some divestments along the way in Russia, Ukraine impact, those things have kind of pulled our results down from the mid cycle. And then certainly on margins have largely held in versus kind of how we'd see mid cycle. Other than the refining side, those have actually been better, more longer, but merchandising has been more challenging for us. And on the cost side, we experienced a couple years of high inflation. So overall offset to some degree a little bit by some of the actions we've taken around share buybacks and things. But ultimately, it's hard to gauge what the 775 would be without the current environment we're in. Certainly, if things improve here in the back half of the year, we'll have a better sense next year of kind of earnings power going forward, excluding by here. Of course, that will have a big impact on our outlook as we integrate that business. And then we've got capital projects are going to be coming online, 25 and 26 and 26. It will have a further impact ongoing. But it's, you know, you can imagine pretty hard to put a fine point on what the 775 would have been had we not had all this volatility this year. And we're going to get every dollar we can.

Sure. I absolutely appreciate that and appreciate the perspective.

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

Hi, this is Rahi going on for Ben. I have some questions for timeline questions. So first, milling business, what do you see as a timeline to close? What regulatory processes are we still waiting on? And do you foresee any risk? And also for biofuel, thank you so much for the color on the call. When do you expect an update on that? Thanks so much.

In terms of corn milling, we're hoping it's purely a US business. So it'll just need to go through the domestic regulatory process. But we feel like we've got a chance to get that closed by the end of Q2. Latest early Q3 is kind of our view right now. Can you maybe clarify your second question on biofuels?

To kind of predict when you're going to get an update on the EPA or any other body. But do you, I mean, we were talking about the volume that were estimated, do you would kind of expect something from the EPA on volumes?

On the RDO update?

Yeah, on the RDO.

Could it be any day we're thinking by end of May, is a good chance that we'll hear something? Of course, they're not obligated to come out with anything until later in the year. But they've indicated as near as we can tell, they can do something as early as sometime in mid-March. And we'll see. They're anxiously watching just like everybody else. And ultimately, I think they're being very thoughtful. They're listening. Greg talked about the coalition that was put together with farmers and the energy companies, the ag companies. They're listening. And so hopeful that they're formulating the right approach and we'll look at that soon.

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

I'd like to thank everyone for joining us today. Thank you for your interest in Bungie. We continue to have great confidence in our team to be able to deliver for our customers, both farmers and consumers, whatever challenging environment that we're in. We look forward to speaking with you again soon. Have a great day.

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