Pooran Sharma

Pooran Sharma sought clarification on the EBITDA contribution from Murphy USA's new-to-industry (NTI) stores, specifically the $35 million to $40 million figure for a 50-store class at maturity, and how this translates into cumulative contributions by 2027 and 2028. He also asked about the higher-than-expected PS&W and RINs contribution in Q4, the dynamics at play, and whether PS&W margins in Q1 should be expected to stay above the $0.02-$0.025 per gallon range due to rising RIN prices.

Answer

Mindy West, President and CEO, clarified that each 50-store NTI class is expected to generate $35 million to $40 million in EBITDA after a three-year ramp. She explained that by 2027, contributions from the 2024, 2025, and 2026 NTI classes will cumulatively move the needle, even without fuel environment normalization, with 2026 being an inflection point for sustained EBITDA. She cautioned that a $120 million cumulative contribution by 2028 is extreme due to the initial drag from new stores. For Q4 PS&W, she attributed the strength to stronger arbitrage and line-space values, noting more volatility than Q3. She stated it's too early to predict Q1 PS&W due to winter storms but expects the full-year to remain within the previously guided band unless prolonged volatility occurs. She reiterated that RIN prices are generally baked into the gas price, balancing out over time despite temporary dislocations.

Pooran Sharma asked for clarification on the EBITDA contribution from new-to-industry (NTI) stores in their third year, specifically the cumulative contribution from the 2024, 2025, and 2026 build classes by 2027 and 2028. He also inquired about the higher-than-expected PS&W and RINs contribution in Q4, the dynamics at play, and the expectation for Q1 PS&W margins given the run-up in RIN prices.

Answer

Mindy West, President and Chief Executive Officer, clarified that each 50-store NTI class is expected to generate $35M-$40M EBITDA at maturity after a three-year ramp. She explained that by 2027, the 2024 (32 stores), 2025 (51 stores), and 2026 (45-55 stores) classes will cumulatively contribute to EBITDA growth, marking 2026 as an inflection point. However, she noted that $120M by 2028 is extreme due to the drag from new stores in their first year. For Q4 PS&W, Ms. West attributed it to stronger arbitrage and line-space values, with more volatility than Q3. She stated it's too early to predict Q1 PS&W due to winter storms but expects the full-year to remain within the previously mentioned band, and that RIN prices are generally baked into gas costs.

Pooran Sharma of Stephens Inc. inquired about the increased confidence in achieving the 40-store build target for the year and the changes in the store development program. He also asked about the overall demand environment and the company's flexibility to manage costs in the second half of the year.

Answer

President, CEO & Director Andrew Clyde attributed the confidence in store builds to clearing supply chain and permitting bottlenecks and having a robust pipeline with many stores already under construction. EVP & CFO Gallagher Jeff noted the total pipeline now exceeds 250 stores. Regarding costs, Andrew Clyde and EVP & COO Mindy West detailed multiple levers for cost control, including optimizing labor rates, improving maintenance efficiency, and managing loss prevention, emphasizing that these efforts are sustainable and core to their low-cost operating model.

Pooran Sharma of Stephens Inc. inquired about the company's confidence in achieving its 40-store build target for the year and what has changed in the store build program. He also asked about the degree of cost flexibility available in the second half to offset a weaker demand environment.

Answer

President, CEO & Director, Andrew Clyde, attributed confidence in the store build to clearing bottlenecks and having a large number of stores already under construction. EVP & CFO, Gallagher Jeff, highlighted that the new store pipeline exceeds 250 sites and recent builds are outperforming pro forma. Regarding cost flexibility, Andrew Clyde and EVP & COO, Mindy West, detailed multiple levers, including optimizing labor rates and hours, improved loss prevention, and maintenance efficiencies, which are already yielding results and are expected to be sustainable.

Pooran Sharma questioned if the new store build pace would be more evenly distributed this year and asked about the company's confidence in increasing promotional spending in the second half.

Answer

CEO Andrew Clyde stated that the store build plan will remain significantly second-half weighted in 2024, with a goal for a more even pace next year. He and CFO Galagher Jeff expressed high confidence in promotional effectiveness, citing strong results from targeted digital offers that create a 'win-win-win' for Murphy, consumers, and CPG manufacturers.

Pooran Sharma with Stephens Inc. inquired about the interest from counterparties for Green Plains' 2026 45Z credits, asking how the engagement has influenced potential pricing or structures compared to 2025. He also asked for more granularity on the potential upside to the $188 million total carbon earnings, specifically regarding CI reduction projects.

Answer

Chris Osowski, President and CEO, stated that Green Plains is actively marketing the 2026 credits and feels confident in the platform's ability to deliver them, expecting to share more details on the sale process soon. Regarding the carbon earnings upside, Mr. Osowski mentioned numerous plant efficiency projects in the $5-$10 million capital range with fast returns, especially in Nebraska, and larger investments to lower energy consumption (electrical and natural gas) to drive returns beyond 45Z. He confirmed confidence in the provided numbers, noting all five carbon compressors are online and capturing over 90% of CO2.

Pooran Sharma with Stephens asked about the engagement and potential pricing/structures for Green Plains' 2026 45Z credits compared to 2025, and sought more granularity on the upside potential for the $188 million total carbon earnings, including specific CI reduction projects.

Answer

Chris Osowski, President and CEO, stated that Green Plains is actively marketing 2026 45Z credits and expects to share more details on the sale process soon. He detailed plant efficiency projects in the $5-$10 million range, primarily in Nebraska, with fast returns, and mentioned larger investments to reduce electrical and natural gas consumption. Osowski confirmed all five carbon compressors are online, capturing over 90% of CO2, expressing confidence in the provided carbon earnings figures with potential upside.

Pooran Sharma inquired about the carbon monetization plan, specifically how cash flows would be distributed between the company and project partners. He also asked about the potential for further cost savings beyond the already achieved $50 million target.

Answer

CFO Phil Boggs and Interim Principal Executive Officer Michelle Mapes clarified that while the project is financed, significant free cash flow will accrue directly to Green Plains, as it is a credit monetization, not a tax equity structure. CHRO Jamie Herbert, EVP Chris Osowski, and Michelle Mapes detailed that further savings will come from a culture of continuous improvement, process elimination, and a zero-based approach to all expenses.

Pooran Sharma inquired about the carbon monetization structure, asking what portion of cash flow would reach the company, and also asked about the potential for cost savings beyond the $50 million target already achieved.

Answer

CFO Phil Boggs and Interim CEO Michelle Mapes clarified that significant cash flow from carbon credits will accrue directly to the company after financing costs, as it is a credit monetization, not a tax equity structure. CHRO Jamie Herbert and EVP Chris Osowski stated that cost savings are driven by a continuous improvement culture across all functions, with further opportunities being identified.

Pooran Sharma inquired about the rationale for reinstating a formal hedging framework, asking for details on the strategy, instruments used, and whether longer-dated positions were being layered in. He also requested an update on the CEO search and the desired attributes for the next leader.

Answer

Imre Havasi, SVP, Head of Trading and Commercial Operations, explained that hedging is a standard risk management practice, driven by market opportunities and supported by deep analysis. He confirmed they hedge crush margins and co-products with strict limits. Michelle Mapes, Interim Principal Executive Officer, added that a new board-level Risk Committee has been formed. Regarding the CEO search, Ms. Mapes stated the process is in its final stages and an announcement is expected in the near future.

Pooran Sharma requested more granularity on Bunge's commercial synergy opportunities following the Viterra combination, asking for details on uncovered opportunities and ongoing initiatives.

Answer

CEO Greg Heckman highlighted key commercial synergies, including increasing direct purchases from farmers to improve control over pipelines, capacity utilization, and quality. He also mentioned optimizing the total combined footprint to make different decisions on timing and flow, and connecting previously unconnected origins and destinations for soft seed meals. Greg Heckman noted the development of new markets due to combined capabilities and expressed satisfaction with the teams' integration and collaboration.

Pooran Sharma requested more granularity on Bunge's commercial synergy opportunities, specifically what has been uncovered and what the teams are currently working on.

Answer

CEO Greg Heckman highlighted increasing direct purchases from farmers, optimizing the combined footprint for processing plants and origination, and connecting previously unconnected origins and destinations in soft seed crushing. He also mentioned developing new markets due to trade disruptions and praised the seamless integration and collaboration of the combined teams.

Pooran Sharma of Stephens Inc. inquired about Bunge's Q2 soy crush performance by region, the outlook for the second half considering the recent RVO, and any updates on potential Small Refinery Exemptions (SREs).

Answer

CEO Greg Heckman attributed the Q2 outperformance to strong processing margins in South and North America in late June, driven by higher vegetable oil values. He provided a global soy outlook, noting expectations for a better second half in Brazil. CFO John Neppl added that a decision on SREs is anticipated in August or September, expressing confidence that the administration understands their potential impact on the RVO.

Pooran Sharma asked about the outlook for farmer selling in South America and its impact on crush margins, as well as the strategic fit of the remaining wheat milling business after the corn milling divestiture.

Answer

CEO Greg Heckman noted that farmer selling has recently picked up in Argentina, improving margins, while a large crop in Brazil should support value chain performance. He confirmed the remaining business will be South American wheat milling, which he described as a competitive, long-term fit that integrates well with the Viterra assets and Bunge's global supply chain. CFO John Neppl affirmed this would be the only remaining milling operation.

Pooran Sharma requested more detail on the timing of the 2024 take-or-pay impacts in South America and asked how Bunge is positioned for potential trade disruptions compared to the 2018 trade war.

Answer

CEO Gregory Heckman clarified that the take-or-pay issue was an industry-wide headwind throughout 2024, accelerating in Q4. He asserted that Bunge is a 'very different company' today than in 2018, with a more agile global operating model and an improved asset platform, making it much better positioned to react to and manage trade flow shifts.

Pooran Sharma sought an update on broader industrial starch demand trends and the expected benefits and cadence from the Indianapolis Starch Modernization project. He also asked for commentary on the impact of GLP-1s on consumer behavior and Ingredion's business, specifically if it's driving more spot purchases.

Answer

James P. Zallie, President and CEO, noted that industrial starch has performed exceptionally well, with strong margin and operating income contributions, despite softer H2 2025 volumes. He mentioned a $50 million investment in Cedar Rapids for capacity expansion, completing in H2 2026, and efforts in advanced packaging materials. James D. Gray, EVP and CFO, described the Indianapolis modernization as debottlenecking, improving flow, and upgrading drying, leading to lower costs and expanded capacity. He also highlighted the Q3 2026 commissioning of a cogeneration unit at Indy for sustainability and energy savings. Regarding GLP-1s, James P. Zallie stated it's having a positive impact on the protein fortification business, which saw double-digit sales growth (40% revenue increase) and a greater than $20 million reduction in operating income loss in 2025, with 2026 fully contracted.

Pooran Sharma asked for an update on broader industrial starch demand trends and the expected benefits and cadence from the Indianapolis Starch Modernization project. He also inquired whether GLP-1s came up in consumer discussions, if their growth or interest is driving people to spot markets, and sought commentary on their impact, particularly on the protein fortification business.

Answer

Jim Zallie, President and CEO, noted that industrial starch performed exceptionally well in recent years, but 2025 contracting was more intense, and H2 volumes were softer. He mentioned a $50 million investment in Cedar Rapids for capacity expansion/modernization, completing in H2 2026, and efforts to capitalize on advanced packaging materials. Jim Gray, EVP and CFO, clarified that the Indianapolis project, completed in Q4 2025, debottlenecked, lowered costs, and slightly expanded capacity for *food* products. He also mentioned a cogeneration unit at Indianapolis commissioning in Q3 2026 for energy savings. Regarding GLP-1s, Jim Zallie stated they are having a positive impact on the protein fortification business, which saw a 40% revenue growth and over $20 million reduction in operating income loss in 2025. He added that the business is fully contracted for 2026, anticipating notable revenue growth and operating income improvement.

Pooran Sharma of Stephens Inc. asked about the sustainability of the high operating margins in the Texture and Healthful Solutions segment and inquired about the dynamics and customer conversations regarding the industrial starch business.

Answer

President & CEO Jim Zallie and EVP & CFO Jim Gray affirmed that the higher margin level in Texture and Healthful Solutions is sustainable and will not revert to 2024 levels, supported by procurement efficiencies and improved mix. Regarding industrial starch, Zallie noted the Q2 results were impacted by a one-off plant issue and that they anticipate stronger sales in the second half based on customer feedback, despite tariff-related uncertainty.

Pooran Sharma of Stephens Inc. inquired about the drivers of the updated Q2 guidance, seeking details on segment-level strengths and weaknesses. He also asked for management's perspective on how favorable corn planting forecasts might impact unhedged raw material costs.

Answer

CFO Jim Gray explained that the Q2 guidance laps a record Q2 2024, particularly in the U.S./Canada Food & Industrial (F&I) segment. He noted LATAM is seasonally weaker in Q2, while Texture and Healthful Solutions (THS) is expected to perform in line with full-year guidance. Gray added that while lower corn costs could be a slight Q4 upside, the company is over 80-85% hedged, which reduces volatility and improves pricing predictability for customers.

Pooran Sharma asked for more detail on the specific levers that drove the 'Cost to Compete' program's outperformance in its first year and the biggest opportunities for 2025. He also inquired about the outlook for net corn costs given recent market volatility and drought concerns.

Answer

President and CEO Jim Zallie explained that year-one savings were driven by organizational streamlining aligned with the new strategy, while year-two savings will primarily come from strategic network optimization, including the closure of three smaller facilities. EVP and CFO Jim Gray added that their extensive hedging practices for firm, flat-rate price contracts have significantly reduced value-at-risk from corn price movements, providing good visibility for the first half of 2025.

Pooran Sharma asked for more color on Tyson Foods' Beef segment guidance and cadence, specifically regarding the midpoint of a $375 million loss, expected improvements from facility closures, current packer margins, and the expectation for sequential improvements or a step-up next quarter.

Answer

CFO Curt Calaway reminded that the Beef business typically experiences seasonality, with Q2 often presenting challenges due to weather. He noted the widened loss range of $500 million-$250 million, suggesting Q2 challenges and a potentially better back half due to grilling season, with animal availability being a key determinant. COO Devin Cole reiterated that Q1 issues included regional disparity and cattle movement, and that the recent footprint changes are intended to position the business for success in the back half and beyond, though no quarterly guidance was provided. Pooran Sharma then inquired about Prepared Foods' seasonality, given past input cost challenges, and whether a more even pace is expected throughout the year. Curt Calaway explained that while last year saw a more balanced front-half/back-half due to operational execution, the business is generally more front-half loaded. He added that some higher raw material costs carried in inventory into Q1 might make Q1/Q2 performance closer to 50/50.

Pooran Sharma followed up on Prepared Foods seasonality, noting past challenges with input costs and asking if a more even pace throughout the year is expected or how seasonality should be considered.

Answer

CFO Curt Calaway confirmed that last year's more balanced first-half/second-half performance was due to operational execution. He suggested a reversion to a more normalized, slightly front-half loaded seasonality, but noted that higher inventory carried into Q1 might have altered the Q1/Q2 split slightly closer to 50/50.

Pooran Sharma of Stephens Inc. inquired about the supply outlook for the Pork segment, given recent Hogs and Pigs reports, and asked about the potential for a normalized operating margin in the Chicken segment, questioning if profitability has peaked.

Answer

President & CEO Donnie King attributed strong Pork results to execution and cited USDA projections for modest supply growth in 2025 and 2026. Group President Brady Stewart added that producer profitability supports expansion. Regarding Chicken, King asserted that profitability has not peaked, citing ongoing operational execution, innovation, strategic partnerships, and a mix shift to value-added products as drivers for future growth.

Pooran Sharma of Stephens Inc. asked if the cold winter weather had a material impact on operations. He also inquired about pork supply trends, questioning if lighter-than-expected supplies were due to industry rationalization or temporary factors.

Answer

CEO Donnie King and CFO Curt Calaway confirmed that while there were weather disruptions, the impact was not materially different from historical norms, and the company managed through them effectively. On pork, Group President Brady Stewart noted that producer profitability is now stable, and productivity gains are supporting supply. He does not foresee large disruptions and expects operational improvements to offset any minor issues.

Pooran Sharma of Stephens Inc. requested an update on the self-help opportunity in the Chicken segment and asked if higher projected hog supplies in the second half could materially improve Pork segment margins.

Answer

Wes Morris, Group President of Poultry, indicated that ongoing operational efficiencies are positioning the segment to offset cost inflation, effectively confirming the continuation of self-help gains. On the Pork segment, Brady Stewart, Group President of Beef and Pork, acknowledged the favorable supply outlook but emphasized the team's focus on operational execution and noted they will continue to monitor the margin environment.

Pooran Sharma of Stephens Inc. requested clarification on the Beef segment's guidance, particularly how potential herd rebuilding is factored in. He also asked for an update on the company's network optimization and plant closure initiatives.

Answer

CEO Donnie King explained the Beef guidance assumes a market similar to FY24, as significant herd rebuilding is not yet evident, with factors like heavier weights providing some offset. Brady Stewart, Group President of Beef, added that Tyson is focused on controllable factors like operating costs and yield. Regarding network optimization, King described a continuous evaluation process based on asset profitability, scale, and competitiveness, suggesting it remains a strategic focus.

Pooran Sharma inquired about the gross margin outlook for Cal-Maine Foods' prepared foods segment, specifically asking if the Q2 2026 level of 19.6% is sustainable given ongoing adjustments, lighter volumes, and higher costs associated with expansion initiatives.

Answer

President and CEO Sherman Miller confirmed the company's confidence in achieving a 19% EBITDA margin for Echo Lake Foods for the full year, acknowledging temporary margin slippage in Q2 and Q3 due to strategic preparations for future growth. Regarding M&A, Mr. Miller stated that the stability of the prepared foods business insulates it from commodity egg market fluctuations, and Cal-Maine Foods continues to pursue a broad, egg-centric M&A pipeline with a disciplined approach.

Pooran Sharma inquired about the monetization of non-core assets, specifically water rights, asking about the valuation per acre-foot compared to expectations and potential pushback from local governments.

Answer

Harold Edwards, President and CEO, explained that water value varies with scarcity. He detailed monetization opportunities in the Santa Paula Basin for conserved pumping rights due to municipal urban growth mandates, and for Class 3 Colorado River riparian water rights in Yuma, Arizona, through fallowing programs expected to be finalized by the end of 2026, which pay farmers not to use water for higher and better uses.

Pooran Sharma inquired about the breakdown of the $40 million CapEx for the next year between growth and maintenance, specific regions or facilities offering the most upside for growth within the existing footprint, and the timeline and impact of a lower pricing environment on achieving higher avocado household penetration goals.

Answer

CFO Bryan Giles estimated that approximately $20 million of the upcoming year's CapEx would be for maintenance and $20 million for growth, including investments in farming operations and commercial expansion in Europe. President and COO John Pawlowski highlighted significant growth opportunities in the North American market by leveraging existing infrastructure and deeper penetration into the European marketplace with Peruvian production. He also explained that lower pricing environments accelerate avocado household penetration by enabling more promotions, aiming for 73-75% penetration in the next two to three years, building towards 80% in subsequent years.

Pooran Sharma from Stephens asked about Mission Produce's avocado household penetration goals, aiming for 80-90% from the current 70%, the expected timeline, and how a lower pricing environment might accelerate this process.

Answer

John Pawlowski, President and Chief Operating Officer, explained that lower-priced environments, like the one anticipated for Fiscal 2026, create opportunities for promotions and increased household penetration. He suggested a two-to-three-year goal to reach 73-75% penetration, building towards the 80% mark in subsequent years.

Pooran Sharma requested an update on Casey's cheese hedging strategy, specifically the percentage locked for the year, and asked if a 3Q-weighted split for the second half's fuel margin is a fair assumption given November's favorable fuel margins.

Answer

Steve Bramlage, Chief Financial Officer, reported that Casey's is approximately 80% locked for cheese for the next four quarters (second half of current fiscal year and first half of fiscal 2027), only locking in prices that are neutral or favorable year-over-year. Regarding fuel margins, Mr. Bramlage declined to prognosticate beyond November's low 40s CPG, advising to look at historical Q3 and Q4 weightings. Darren Rebelez, Chairman, President, and Chief Executive Officer, added that the fuel market is subject to commodity fluctuations, making November's performance an unreliable indicator for future months.

Pooran Sharma with Stephens Inc. inquired about the benefit from lower cheese costs and the percentage of future cheese needs already booked for the fiscal year. He also asked for an update on the Fuel 3.0 initiative and its contribution to the overall fuel procurement.

Answer

CFO Steve Bramlage stated that cheese costs were nearly flat year-over-year in the quarter, with about 70% of forward cheese requirements for Q2, Q3, and Q4 locked at favorable rates. CEO Darren Rebelez added that Fuel 3.0 now accounts for 8.8% of total fuel procured, primarily from the Fikes Wholesale acquisition, with 3% from the base business.

Pooran Sharma inquired about the benefit from lower cheese costs and the extent of Casey's hedging for the year, as well as an update on the Fuel 3.0 initiative and its contribution to the fuel business's strength.

Answer

Darren Rebelez, President, CEO & Board Chair, explained that cheese costs were less than 10 basis points different from the prior year. Casey's has approximately 70% of its forward cheese requirements locked for Q2, Q3, and Q4 at comparable or slightly favorable rates. Regarding Fuel 3.0, Mr. Rebelez noted it now accounts for about 8.8% of total fuel procured, with the majority coming from the Fikes Wholesale acquisition, and about 3% from the base business.

Pooran Sharma requested clarification on the operating expense guidance for fiscal 2026, specifically the cadence following the expected mid-teens increase in Q1. He also asked about the strategy for store expansion, questioning the preference for M&A versus new builds given the current cost environment.

Answer

CFO Steve Bramlage explained the OpEx cadence is driven by lapping the FICS acquisition; Q1 and Q2 will see mid-teens growth, while Q3 will be low-single-digit as it cycles one-time deal costs from the prior year. CEO Darren Rebelez stated that M&A has recently been more effective due to high construction costs, allowing Casey's to acquire and remodel stores below replacement cost. However, he affirmed the company maintains flexibility with a developed land bank to lean into organic growth if conditions change.

Pooran Sharma requested an explanation for the expected cadence of operating expenses in FY26, given the high Q1 growth forecast versus the lower full-year guidance. He also asked about the strategic preference between M&A and new store construction for unit growth.

Answer

CFO Steve Bramlage explained that the OpEx cadence is driven by lapping the FICS acquisition, with mid-teens growth in H1 and low-single-digit growth in H2 as one-time deal costs are cycled. President and CEO Darren Rebelez stated that M&A has recently been more effective due to high construction costs, but the company's base plan assumes a 50/50 split between acquisitions and new builds, allowing for flexibility.

Pooran Sharma asked about Hormel's planned investment back into the business, specifically regarding the Transform & Modernize (T&M) initiative and overall reinvestment plans, and then inquired about the expected cadence of recovery for fiscal 2026 after Q1.

Answer

Interim CEO Jeff Ettinger explained that T&M is in its final year, with benefits spread across marketing enhancement, offsetting inflation, and margin expansion, rather than being reported separately. President John Ghingo detailed concentrated spending on focus brands and innovation to drive positive mix and support pricing actions. Jeff Ettinger expects an acceleration of benefits after Q1, with Q4 showing more substantial increases due to lapping one-time incidents.

Pooran Sharma from Stephens Inc. asked for insights into Hormel Foods' planned investment back into the business, specifically how much of the Transform and Modernize (T&M) savings, previously targeted at $75 million in FY24 and $100-$150 million in FY25, would be reinvested. He also sought clarification on the expected earnings cadence for fiscal 2026, particularly the recovery pattern from Q2 through Q4 following the anticipated Q1 decline.

Answer

Interim CEO Jeff Ettinger explained that while T&M is in its final year and financial benefits won't be reported separately, they are expected in 2026 and will be spread across marketing enhancement, offsetting inflation, and margin expansion. President John Ghingo added that reinvestment is concentrated behind focus brands like Planters, SPAM, and Jennie-O, and critical innovation, to drive positive mix and support brands through pricing actions. Jeff Ettinger clarified that after Q1 challenges, an acceleration of benefits is expected, with Q4 showing more substantial increases due to lapping one-time incidents from the prior year, while middle quarters will see more modest increases.

Pooran Sharma from Stephens Inc. asked for Hormel's perspective on hog supply prospects given recent production trends. He also inquired if the company is seeing market share or margin benefits from the tightening supply in the turkey industry.

Answer

CFO Jacinth Smiley noted that long-term supply agreements provide confidence in securing pork supply. Regarding turkey, President John Ghingo confirmed that Hormel is gaining market share with its Jennie-O brand, growing at a double-digit rate and outpacing the category, while also successfully implementing pricing to recover margins.

Pooran Sharma asked if Foodservice margins, which have been flat, are expected to improve in the second half. He also inquired if the temporary negative impact from the export customer mix in the International segment has been resolved.

Answer

CEO Jim Snee confirmed that the company expects segment profit growth for Foodservice in the second half, driven by top-line momentum, Planters, innovation, and favorable year-over-year comps. He also stated that the international export mix issue was a timing matter that has been resolved, and the China business continues to be a key growth driver.

Pooran Sharma inquired about the rationale for divesting the South Farm operation to reduce commodity exposure and asked for an update on the company's overall position in this area. He also requested color on the progress of the Transform & Modernize (T&M) initiatives and the ramp-up of the new Memphis distribution center.

Answer

CEO James Snee explained the divestiture was a strategic move to exit their last vertically integrated hog production asset, as it is not a core capability and adds volatility. He confirmed Hormel is now out of hog production but remains in hog harvesting. CFO Jacinth Smiley stated the T&M initiative is on track to deliver its $100M-$150M benefit target for FY25, with a second-half ramp. She noted the Memphis DC is part of this work, designed to improve inventory flow and reduce logistics costs.

Pooran Sharma asked about the key drivers of growth within the Foodservice segment and how the company plans to achieve its mid-single-digit growth target for the upcoming year.

Answer

CEO Jim Snee stated that the Foodservice playbook remains consistent, relying on its position of strength. He highlighted the direct sales team, a portfolio of innovative product solutions that address operator pain points, and diversified channels (commercial, lodging, C-stores) as key drivers. Snee expressed confidence that this differentiated model will deliver strong, broad-based growth in 2025 despite the macro environment.

Pooran Sharma followed up on previous discussions about hedges, asking how much of the $250 million loss from Q2 2025 rolled off in Q3 and what to expect for Q4. He also inquired about the U.S. pork business, specifically why there are no signs of expansion despite constrained hog supplies and current hog production margins, and whether the shorter hog supply benefits or negatively impacts JBS's integrated operations.

Answer

Guilherme Cavalcanti, Global CFO of JBS, explained that the Q2 derivative impact is being offset by cash release in Q4 due to decreasing futures, noting that derivatives offset physical purchases on a margins basis. Wesley Batista Filho, CEO of JBS USA, stated that while 2025 saw lower kills, 2026 might see higher kills if health improves. He explained that JBS raises about 25% of its processed hogs, and its balanced hog procurement strategy minimizes volatility, acting as a hedge if one segment (production vs. processing) performs worse.

Pooran Sharma followed up on previous discussions about hedges, asking how much of the $250 million loss from hedges rolled off in Q3 and how much is expected to roll off in Q4. He also asked about the U.S. pork business, specifically why there are no signs of expansion despite current hog production margins, and whether the shorter hog supply benefits JBS's integrated business or negatively impacts its packer side.

Answer

Guilherme Cavalcanti (Global CFO, JBS) explained that the negative cash impact from derivatives in Q3 is being offset by decreasing future markets in Q4, but the final amount depends on market behavior. Wesley Batista Filho (CEO, JBS USA) stated that JBS expects higher hog kills next year if health improves. He noted that JBS raises about 25% of the hogs it processes, and its balanced hog procurement strategy, which hedges against volatility in hog, corn, and cut-out prices, minimizes impacts, acting almost as a hedge between hog production and processing.

Pooran Sharma from Stephens Inc. sought more detail on the Australian business, asking if the strong margins were expected to improve sequentially. He also inquired if the Brazilian beef tariff situation could positively impact the U.S. chicken business (Pilgrim's Pride) by reducing beef supply.

Answer

Global CEO Gilberto Tomazoni stated that he expects Australian margins to remain in the double-digits, supported by favorable livestock availability and normalized operations. Regarding the tariff impact, he believes the global protein market is interconnected and will rebalance, making it too early to estimate a specific benefit for U.S. chicken.

Pooran Sharma asked for qualitative insights into Dole's ongoing annual contracting season negotiations with customers, particularly how discussions are progressing given current tight supply conditions. He also sought more color on the underlying drivers of strength in the diversified fresh produce segment, specifically EMA, and consumer health trends in those regions.

Answer

CEO Rory Byrne and COO Johan Linden indicated that negotiations are ongoing and delicate, but customers are aware of the supply situation (Panama, Honduras, Costa Rica impacts), and Dole is effectively communicating its position, leading to optimism. Rory Byrne highlighted Dole's strong market position in EMA, leveraging the integration of Dole Food Company and Total Produce strengths to offer comprehensive packages to major customers. He cited consolidation efforts in Northern Europe, development in France, a strong platform in Spain (avocado ripening, exotic products), and robust performance in Scandinavia. For North America, he mentioned the API platform, regrouping after the pandemic, expansion in Chile/Peru, and streamlining Dole direct North America into API for efficiency. Head of Investor Relations James O'Regan added that healthy consumer demand, focusing on affordability and health, benefits Dole's product offerings across various channels.

Pooran Sharma with Stephens inquired about the progress of annual contracting season negotiations with customers, seeking qualitative insights into discussions given current tight supply conditions. He also asked for more color on the underlying drivers and consumer health contributing to the strong performance in the Diversified EMA segment.

Answer

CEO Rory Byrne and COO Johan Linden indicated that while negotiations are ongoing and tough, customers are aware of the industry's supply challenges (Panama, Honduras, Costa Rica), and they feel optimistic about getting their story across. Mr. Byrne detailed the strength of the Diversified EMA segment, citing strong market positions across Europe, benefits from the integration of Dole Food Company and Total Produce, and strategic developments in various regions like Spain and Scandinavia. Head of Investor Relations James O'Regan added that healthy consumer demand, focusing on affordability and health, also contributes to performance.

Pooran Sharma sought clarity on the timing of biofuel policy, referencing reports of EPA prioritization, potential OMB review by early to mid-December, and a 2025 compliance date by the end of Q1, asking if this suggests an early to mid-Q1 event and how obligated parties might respond. He also inquired about the Starches and Sweeteners contracting season, noting buyers pushing for lower prices amid a larger carryout and softer demand, while exports remain strong, and asked if negotiations might be stretched out like last year.

Answer

Juan Luciano, Chairman and CEO of ADM, stated that EPA is aligned with the agricultural industry to support domestic demand and is committed to resolving policy quickly, but he refrained from speculating on exact timing. He expects RINs to pop first, followed by crush margins, once clarity emerges. Regarding Starches and Sweeteners, Mr. Luciano noted that negotiations are ongoing, with results expected in 20-30 days. He mentioned plentiful corn supply globally but robust demand, including for ethanol exports. He acknowledged some softness in sweeteners and starches demand but expressed confidence in ADM's balanced portfolio of contracts and negotiation process, expecting a normal contracting season with more details to be shared in February.

Pooran Sharma asked for an update on the timing of biofuel policy clarity, specifically regarding reports of EPA prioritizing RVOs and potential OMB review by mid-December, leading to a Q1 2026 compliance date. He also inquired about the ongoing Starches and Sweeteners contracting season, considering buyer pressure for lower prices amid high corn carryout and soft demand, balanced by good export volumes.

Answer

Juan Luciano, Chairman and CEO, ADM, stated that EPA is aligned with the agricultural industry to support domestic demand and energy dominance, and ADM is prepared for RINs and crush margins to increase once the policy is enacted, but he refrained from speculating on specific timelines. Regarding Starches and Sweeteners, Juan Luciano noted that negotiations are ongoing, with results typically reported in February. He highlighted plentiful global corn supply but robust demand, including for ethanol exports. He acknowledged some softness in sweeteners and starches demand but expressed confidence in ADM's balanced contract portfolio.

Pooran Sharma of Stephens Inc. requested more detail on ADM's network optimization plan, asking where the greatest opportunities for improvement lie and how to quantify the potential operational expense benefits.

Answer

CEO Juan Luciano explained that network optimization is a continuous process focused on improving the entire footprint rather than individual plants. He highlighted recent successes in reducing unscheduled downtime and mentioned specific actions like facility shutdowns and a new joint venture. He described it as an ongoing 'trickle down of optimization' but declined to provide a specific per-metric-ton cost improvement target at this time.

Pooran Sharma of Stephens Inc. requested more details on ADM's network optimization plan, asking where the greatest opportunities for improvement lie and how these actions might impact processing operating expenses.

Answer

CEO Juan Luciano explained that the optimization strategy involves a holistic network view, focusing on expanding low-cost facilities and retiring or divesting challenged assets, such as the recent Kershaw plant shutdown and the Lubbock cottonseed JV. He stated that these efforts are preparing ADM's footprint for higher crush rates. However, he declined to provide a specific cost-per-ton improvement target, preferring to wait for more stability in plant run rates.

Pooran Sharma asked about the soy crush industry, questioning if there are signs of capacity rationalization or project delays given the new capacity coming online amid a weak fundamental backdrop.

Answer

CEO Juan Luciano stated that ADM is managing what it can control, citing the company's own shutdown of its Kershaw plant as an example of its network optimization efforts. He emphasized that the new industry capacity was built in anticipation of RVO mandates for renewable green diesel, highlighting the importance of policy clarity to justify the investments.

Pooran Sharma asked for more detail on the 45Z guidance, the implications of its interim status, and the overall state of the biofuels industry, noting reports of smaller producers shutting down.

Answer

CEO Juan Luciano clarified that the guidance is preliminary and subject to change, creating market uncertainty. He confirmed that the removal of the blenders tax credit has pressured margins, causing some smaller, non-integrated producers to shut down as ADM had anticipated. He stated that ADM's integrated facilities continue to operate, and emphasized that policy clarity is crucial for the industry's health.

Pooran Sharma asked for a quantification of the RINs range needed for the industry to meet the 2026 mandate, considering foreign feedstocks receiving half a RIN and no Production Tax Credit (PTC). He also inquired about Darling's plans to pay off debt and its leverage ratios relative to debt covenants.

Answer

CFO Bob Day estimated that RINs would need to increase by approximately $0.40 to incentivize sufficient production for the 2026 mandate if SRE reallocation is 50%. Regarding debt, Day stated that Darling is well within its covenants, committed to debt reduction, and expects the bank covenant ratio to be around 3x by year-end, with a long-term target of 2.5x.

Pooran Sharma asked for a quantification of the RINs price range needed for the industry to meet the 2026 mandate, assuming no Production Tax Credit (PTC) and half a RIN for foreign feedstocks. He also inquired about Darling's plans to pay off debt, leverage ratios, and debt covenant restrictions.

Answer

Robert Day (CFO) estimated that RINs would need to increase by approximately $0.40 to incentivize sufficient production for the 2026 mandate under the specified conditions. Regarding debt, Robert Day (CFO) and Randall Stuewe (CEO) affirmed that the company is well within its covenants, committed to debt reduction, and expects the debt coverage ratio to be around three times by year-end, with a long-term target of 2.5 times.

Pooran Sharma of Stephens Inc. sought more detail on the updated guidance, specifically the assumed contribution from DGD in the second half, and asked about the SAF market opportunity and operational challenges in Europe.

Answer

CEO Randall Stuewe explained that guidance reflects an accelerating core ingredients business, while the DGD contribution remains a 'timing issue' dependent on the RIN market's reaction to regulatory clarity. On European SAF, CFO Robert Day acknowledged the complexities of varying feedstock and certification requirements but noted the upcoming DGD turnaround provides an opportunity to optimize the supply chain for these markets.

Pooran Sharma requested insight into the Diamond Green Diesel dividend outlook for 2025, given the JV is debt-free and had a large January distribution. He also asked for more details on the SAF opportunity, including production costs and commercial progress.

Answer

Retiring CFO Brad Phillips stated that while monthly distributions are variable, he expects total 2025 distributions, including monetized tax credits, to exceed 2024 levels. COO of North America Matt Jansen affirmed Darling's strong cost position in SAF production and noted robust demand from the U.S. and Europe for 2025-2026, with many contracts not publicly announced.

Pooran Sharma of Stephens Inc. asked for details on the revenue contribution and updated EBITDA outlook for the Skyland acquisition, clarification on the potential impact of 45Z tax credits, and context for the $1.54 per gallon acquisition price for the ethanol assets.

Answer

President & CEO William Krueger acknowledged Skyland's first-half results were below expectations but is optimistic for the second half. EVP & CFO Brian Valentine provided a revised full-year EBITDA forecast of $25M-$30M for Skyland. Krueger deferred providing specifics on the 45Z tax credit impact, pending more clarity on the new legislation. He also clarified the ethanol acquisition price was closer to $1.70/gallon with working capital, stating it was a fair price for a known, high-quality asset.

Pooran Sharma of Stephens Inc. asked if the strong year-to-date ethanol export momentum to Canada was a pull-forward effect or sustainable, and also questioned how the large prospective corn plantings might impact grain storage income opportunities later in the year.

Answer

President and CEO William Krueger suggested the strong Q1 ethanol exports were likely 'a little bit of a pull forward,' projecting full-year exports to be stable with the prior year at around 1.85 to 1.9 billion gallons, with tariffs as a key variable. Regarding grain storage, Krueger expressed optimism that a potentially large wheat crop and over 95 million corn acres could create opportunities in the second half of the year to offset Q1 shortfalls, contingent on crop outcomes and sustained export demand.

Pooran Sharma from Stephens Inc. asked about the potential impact of trade tariffs, the integration progress and financial outlook for the Skyland Grain investment, and the expected benefit to the Nutrient business from a shift to more corn acreage.

Answer

President and CEO William Krueger explained that the company's domestic focus limits its exposure to trade tariffs, with no material impact expected for 2025. On the Skyland Grain acquisition, Krueger noted that commercial integration is ahead of schedule, while EVP and CFO Brian Valentine reaffirmed the $30M-$40M annual EBITDA contribution target, citing a strong start. Krueger also confirmed that corn requires substantially more nutrient inputs than other crops, making an expected increase in corn acreage a significant positive for the new Agribusiness segment.

Pooran Sharma from Stephens Inc. requested a breakdown of the drivers behind the strong ethanol results and the outlook for the segment. He also asked about the company's strategy to lower its carbon intensity (CI) score in anticipation of the 45Z tax credit and inquired about the current M&A pipeline.

Answer

President and CEO William Krueger attributed the record ethanol performance to strong export demand, higher blend rates, and significantly lower corn basis costs. EVP and CFO Brian Valentine added that the company's strategy focuses on large, efficient, well-located plants with the ability to lower CI scores, which underpins their optimism. Krueger confirmed a dual focus on reducing CI through regenerative agriculture programs and carbon sequestration projects. Valentine described the M&A pipeline as robust, with a disciplined focus on core businesses and logical extensions like the Skyland acquisition.

Pooran Sharma sought clarification on the limits of egg set growth without new hatchery investments. He also asked if the industry would need deeper seasonal production cuts in the fall and winter compared to the previous year.

Answer

President & Global CEO Fabio Sandri reiterated that hatchery capacity is the main bottleneck, and the industry is focused on improving hatchability with the current, higher-performing breeds rather than reverting to older ones. He stated that expected Q4 seasonal production cuts would be normal and in line with historical patterns, matching production to customer demand, especially as beef and pork availability is expected to tighten.

Pooran Sharma questioned the market dynamics for chicken wings, asking why prices were weak compared to other parts of the bird. He also asked if management was concerned about the recent increase in cold storage levels for breast meat.

Answer

CEO Fabio Sandri attributed weak wing prices to the consumer shift from foodservice to retail and menu substitutions away from high-priced wings last year. He expects prices to normalize with seasonal promotions. On cold storage, he noted the increase in breast meat was partly due to foodservice operators building inventory ahead of anticipated price hikes, while inventories for other items remain low. He added that overall production growth remains constrained by industry-wide hatchability and mortality issues.

Pooran Sharma asked for an update on the ongoing industry-wide hatchability and livability challenges, including potential fixes and timelines. He also inquired about the impact of recent arctic weather on Q1 production.

Answer

CEO Fabio Sandri explained the hatchability issue stems from a new, higher-yielding breed that is difficult to manage on the live side. He stated there is 'no silver bullet' for a quick fix, as it requires significant, time-consuming changes to animal handling and housing structures. He characterized the recent cold weather as a temporary disruption without a significant long-term impact, thanks to the company's geographic diversification.

Pooran Sharma asked for a review of the typical seasonality in the Mexico business and current market trends. He also inquired about Pilgrim's specific operational efficiency improvements in the U.S. and if they are outpacing industry hatch rates.

Answer

President and CEO Fabio Sandri explained that Q3 is a seasonally weaker quarter in Mexico, and this year's results reflected a return to those normal trends. CFO Matthew Galvanoni added that the nearly 10% EBITDA margin was still a strong result. Regarding U.S. efficiency, Sandri noted that Pilgrim's is testing new breeder management techniques, like separating birds by weight, which is yielding hatchability improvements slightly ahead of the industry average.