Archer-Daniels-Midland Company (ADM) Earnings

Management highlights

- Core Quarterly Performance * Reported adjusted EPS of $1.84, trailing four-quarter adjusted ROIC of 7.8%, and $1.8 billion in operating cash flow (before working capital changes) for H1 2026 * Paid the 378th consecutive quarterly dividend, maintaining a long track record of returning value to shareholders * Two North American facilities received Workplace Safety Awards and were inducted into the Illinois Manufacturing Association's Hall of Fame * Sequestered 337,000 metric tons of carbon in Q2 2026 - Market and Operational Execution * Finalized 2026 and 2027 renewable volume obligations (RVO) created a constructive margin environment for North American biofuels, with elevated global energy prices further supporting crush and biofuel margins * Global oilseed processing volumes increased nearly 5% year-over-year on higher asset utilization; U.S. and Brazilian soybean meal exports hit a record quarter on strong global demand * Ag Services leveraged ADM's global asset network to deliver strong results in a volatile environment; the Bacarena, Brazil grain export terminal returned to full operations, boosting South American soybean exports * Flavor sales grew across all key regions, with a record quarter for flavors in Asia Pacific; Decatur East plant progress and 2025 animal nutrition portfolio actions also lifted nutrition results - Capital Allocation and Growth Strategy * Maintains disciplined capital allocation, prioritizing dividends and organic growth, with selective bolt-on M&A * Full-year 2026 CapEx is projected to remain in the $1.3 billion to $1.5 billion range; net leverage at quarter-end was 1.6x, with full-year leverage expected to hit ~2x * Is evaluating a return to opportunistic share repurchases later in 2026, supported by a strong balance sheet and cash flow * Launched phase one of brownfield crush capacity expansion at four U.S. facilities, with total projected investment of ~$100 million; capital intensity is roughly one-fourth that of greenfield expansion, and higher throughput reduces per-unit manufacturing costs * Targets growth in high-potential structural opportunities: natural colors (estimated $1 billion total addressable U.S. market, targeting $80-$100 million in long-term operating profit), precision fermentation, and expanded plant protein solutions * On track to deliver $500 million to $750 million in cumulative enterprise cost savings over 2025-2030, with progress already achieved in transaction cost reduction and platform consolidation in finance and technology - Organizational Update * Jeff Rowe will join ADM as Executive Vice President and Chief Operating Officer, effective August 17, 2026, bringing deep agricultural industry experience to support long-term growth

Guidance

- Full-year 2026 adjusted EPS guidance was raised to $5.15 to $5.60, up from the prior guidance range of $4.15 to $4.70 - The guidance increase is based on three core expectations: continued successful operational execution through the second half, sustained favorable margin conditions for crushing and ethanol businesses, and continued operating performance improvement and growth capture in nutrition - The expected net benefit from the 45Z biofuel policy was raised to ~$250 million for full-year 2026, up from the prior estimate of ~$150 million, as operational process improvements and clearer carbon intensity verification have increased visibility into benefits - H1 2026 results contributed ~$2.55 to adjusted EPS, so the second half of 2026 is expected to deliver more than half of full-year 2026 operating profit; Q3 is projected to be higher than Q4, which is a seasonal low for the flavors business - Guidance assumes China will continue purchasing U.S. soybeans, and is on track to meet its 25 million ton 2026 purchase commitment - Guidance assumes the constructive biofuels margin environment will continue through the second half, and that the negative Q2 2026 mark-to-market impacts will reverse in H2 2026 - Corporate costs are expected to be higher than 2025, driven by higher performance-based compensation and increased investments in R&D, automation, and digitization

Segment performance

1. Ag Services, Oilseeds and Other (AS&O): Segment operating profit was $867 million, up 129% year-over-year, representing ~58% of total segment operating profit. Within AS&O: Ag Services subsegment operating profit was $293 million, up 159% year-over-year; Crushing subsegment operating profit was $363 million, an increase of ~$330 million year-over-year, with global crush volumes up nearly 5% year-over-year; Refined products and other subsegment operating profit was $151 million, down 3% year-over-year; Equity earnings from Wilmar investment were $60 million, down 22% year-over-year. 2. Carbohydrate Solutions: Segment operating profit was $411 million, up 22% year-over-year, representing ~27% of total segment operating profit. Within Carbohydrate Solutions: Starches and sweeteners operating profit was $326 million, up 7% year-over-year; Vantage corn processor subsegment operating profit was $85 million, a $52 million increase year-over-year. 3. Nutrition: Segment revenues were $1.9 billion, down 5% year-over-year (including foreign exchange impacts). Human nutrition revenue decreased 4% year-over-year (the prior year quarter included a $55 million contract cancellation benefit); animal nutrition revenue decreased 6% year-over-year, reflecting 2025 portfolio actions and the Akrolos joint venture formation. Segment operating profit was $172 million, up 51% year-over-year, representing ~11% of total segment operating profit. Human nutrition operating profit was $139 million, up 51% year-over-year; animal nutrition operating profit was $33 million, up 50% year-over-year. Total ADM segment operating profit for Q2 2026 was $1.5 billion.

Risks & headwinds

- Escalation of the Russia-Ukraine conflict has disrupted Black Sea grain exports, damaging ADM and industry infrastructure and making vessel operations difficult; while the direct financial impact to ADM is limited, further disruption could reduce global grain stocks and increase global food price volatility - The ongoing conflict in the Middle East creates daily volatility in global oil prices, which increases energy, packaging, and input costs for ADM, particularly for the nutrition segment - Unusual weather patterns, including the projected El Nino event, threaten global crop output and create supply and price volatility for agricultural commodities - Commodity price volatility can create unforeseen mark-to-market impacts in future quarters, which are not included in forward guidance - Liquid sweetener volume and margins remain under pressure in North America, offset partially by strong ethanol results in the Carbohydrate Solutions segment - The transition to natural ingredients requires product reformulation, which creates extended implementation timelines as customers test and roll out changes

Analyst Q&A

• Q: Management confirmed that brownfield de-bottlenecking expansions at existing crush facilities have lower per-ton costs than greenfield projects. Can you discuss the returns and capital plans for this expansion strategy?

  A: ADM has identified 10 U.S. plants with capacity expansion potential, and capital intensity for brownfield projects is only one-fourth the cost of new greenfield builds. The company is moving forward with the four highest-return projects in phase one, for a total investment of ~$100 million, which stays within the existing full-year CapEx range. Higher throughput also reduces per-unit fixed manufacturing costs, further lifting returns, and expansions are focused on North America and Brazil, which have strong domestic biofuel markets and favorable margins.

• Q: What scenario would push full-year 2026 results to the high end of the new guidance range, and what would push results to the low end? What are your preliminary thoughts on 2027 growth?

  A: Results would hit the high end if China continues purchasing ~1 million tons of U.S. soybeans per week, strong biofuel margins hold, and the nutrition segment maintains its current margin momentum; 90% of North American Q3 crush margins are already locked in, supporting strong near-term results. Downside risk comes from further geopolitical disruption, weather volatility, and unforeseen commodity price swings, particularly for Q4 where only 30% of North American crush margins are locked in. For 2027, ADM enters the year with strong momentum, and capacity expansions and long-term growth platforms will drive growth through the end of the decade.

• Q: What is the timeline for customer adoption of natural colors in the U.S., and can ADM leverage its European experience to gain market share?

  A: Natural color replacement is not one-to-one, as it requires reformulation to address pH and stability differences, so customers implement changes gradually across product lines, which creates a steady, multi-year growth trajectory. ADM already completed this transition in Europe over a decade ago, giving it deep technical expertise to support customers, and the gradual rollout avoids sudden supply chain strain. The $1 billion total U.S. market opportunity is expected to deliver $80-$100 million in annual operating profit for ADM over time, and adoption could accelerate as successful product launches build customer confidence.

• Q: How fast is human nutrition expected to grow durably, and what are the key growth drivers beyond natural colors?

  A: ADM has seen 20% year-over-year flavor growth in Asia Pacific, driven by wins with local customers across the region, which is a faster growth rate than the medium-term target. Beyond natural colors, key drivers include recovering volumes at the Decatur East plant, growing demand for postbiotics and fiber for functional food and beverage applications, and improving performance in specialty emulsifiers. The core flavor business is expected to grow at a mid-single-digit medium-term rate, with operating profit growing faster than revenue due to operational leverage.