Archer-Daniels-Midland Co (ADM) (Q3 2026) Earnings Call Highlights: Third EPS Guidance Raise ...

Negative Points

• Ag Services operating profit declined 9% year over year to $172 million, pressured by softer results in certain markets like Ukraine.

• Nutrition segment revenues fell 4% year over year, with human nutrition down 2% due to pressure on wholesome ingredients and animal nutrition down 6% from portfolio actions.

• Human nutrition operating profit decreased 3% sequentially, impacted by unplanned downtime, inflation, market softness in biotics, and prior-year insurance proceeds.

• Liquid sweetener margins and volumes remained under pressure, and global wheat milling faced competitive pricing, partially offsetting ethanol strength.

• South American crush margins were pressured by delays in Brazil's biofuels policy changes, and Ukraine operations faced export disruptions requiring inventory revaluation.

• Corporate expenses are expected to remain higher than 2025 due to performance-based compensation and increased investments in R&D, automation, and digitalization.

• Interest costs are expected to rise year over year, and the company remains cautious about macroeconomic, geopolitical, and trade uncertainties.

Q & A Highlights

Q: With two months left in the year, what could push results toward the midpoint versus the top end of the raised 2026 EPS guidance, and how are you thinking about 2027? A: CEO Juan Luciano said the third guidance raise to $5.50-$5.80 reflects strong year-over-year execution and a constructive biofuels environment, with better visibility after one month of Q4 but still meaningful market and execution variables. The high end assumes recovery of the majority of mark-to-market impacts carried from the first nine months, continued Chinese soybean purchases, and normal seasonality. CFO Monish Patolawala noted Q4 faces seasonal lows in flavors and ethanol and the non-repeat of a one-time insurance reserve release. For 2027, Luciano expects a market structure substantially similar to 2026, with favorable biofuel demand and margins, continued investment in R&D, automation and digitalization, and prudent capital allocation.

Q: Some investors believe board crush margins are well off the highs and the crush cycle may be over. What is your view on US crush margins and where we are in the cycle? A: Luciano said that while crush margins may have peaked in Q3, ADM sees no collapse. Strong RVO-driven biofuels policy, soybean oil demand and soybean meal demand remain intact, and the industry is not yet producing enough to match the RVOs. He expects very strong margins in Q4 continuing into 2027, with only normal fluctuations.

Q: Nutrition faced several headwinds in Q3. How much continues into Q4 and 2027, and what is the underlying outlook? A: Luciano said nutrition will cap off a very good 2026 versus 2025 and is expected to grow in 2027. Adjusting for last year's insurance recovery, nutrition operating profit grew 13% in Q3, driven by flavors and the animal nutrition recovery. The issue at one plant has been identified and is being fixed and should not linger significantly in the P&L. Flavors performed well in Europe and the Middle East, and Asia continues to win customers; only smaller lines such as wholesome ingredients remain soft.

Q: What is the outlook for Ag Services and trade flows in Q4, particularly given the North American harvest and global disruptions? A: Luciano said Ag Services had a good quarter in North America and South America, partly offset by Ukraine, where inventory was revalued due to shipping constraints. For Q4, ADM still expects soybeans to flow to China and corn to Europe, Mexico and neighboring countries, with Europe's corn crop very low again and Ukraine largely shut for meaningful exports. Global production of corn and wheat may be slightly lower, but discontinuities create opportunities where ADM's assets and team excel.

Q: Why did you lower 2026 capital expenditure guidance, and how should we think about CapEx in 2027? A: Patolawala said the reduction to $1.2-$1.3 billion reflects disciplined capital allocation and prioritization of the highest-return projects, such as the recently announced North American crush and ethanol debottlenecking, rather than delays. Luciano added that projects are sometimes staggered because the same teams cannot execute multiple initiatives simultaneously. For the future, investors should model roughly $1.2-$1.5 billion annually to develop the growth program.

Q: Should full-year 2027 be better than 2026, given that much of the biofuel policy support only took effect around mid-2026? A: Luciano said 2027 should be a continuation of current conditions, with multi-year biofuel policies under the RVOs, Brazil's biofuel policy, strong global ethanol export demand of about 2.4 billion gallons, and another year of nutrition growth. He declined to forecast a big discontinuity, noting there will be items that do not repeat from 2026 and new opportunities in 2027, so results should land in the range of 2026 plus or minus depending on conditions. Patolawala added that investment levels in growth pathways, data and analytics, and interest costs will depend on the macro environment.

Q: What is behind the higher 45Z net benefit guidance, and is the implied quarterly run rate of roughly $100 million-$125 million correct? A: Patolawala said the 45Z net benefit guidance was raised to approximately $350 million for 2026 from about $250 million, reflecting the team's success expanding the program and lowering the CI score. The net benefit depends on base ethanol pricing, prevailing wages, CI score and asset depreciation, and will vary by quarter depending on CO2 captured. He credited the team's execution and growing confidence through the year for the repeated guidance raises.

Q: Can you provide more detail on the voluntary carbon removal initiative at Columbus, Nebraska, including financial impact and how credits are shared with partners? A: Luciano said the Columbus corn processing complex can capture and permanently store more than 800,000 tons per year of biogenic CO2, which ADM believes is one of the largest carbon removal credit offerings of its kind. Certification and verification are underway, with initial credit issuance expected by year-end 2026. He declined to size the 2027 financial impact given the nascent market but said participation positions ADM to benefit from growing demand for high-quality carbon removals, with minimal capital required.

Q: Guidance implies Q4 EPS below Q3. What are the mechanical versus operational moving parts between the quarters? A: Patolawala said Q4 implied EPS of $1.17-$1.47 would still be up 35%-70% year over year. Constructive markets continue, and Ag Services, especially North America, is seasonally stronger in Q4, but ethanol and flavors face seasonal lows. Net 45Z could be slightly lower than Q3 after the program expansion, nutrition faces a seasonal flavors low with a gradual ramp of the plant that had unplanned downtime, and the majority of Q3 mark-to-market should reverse in Q4. Q3 also included a one-time $40 million-$50 million insurance reserve release that does not repeat.

Q: What metrics can you share on the precision fermentation opportunity, including addressable market, spending, timing and potential multiple impact? A: Luciano said ADM is de-risking the opportunity by leveraging existing fermentation capacity, its integrated supply chain and customer relationships, and by securing sponsoring customers for applications such as egg white alternatives, pet food meat-like proteins and whey alternatives. The opportunity

For the complete transcript of the earnings call, please refer to the full earnings call transcript .