ADM - NYSE

Good morning, and welcome to ADM Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on a listen-only mode to prevent any background noise. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Megan Britt, Vice President, Investor Relations for ADM. Ms. Britt, you may begin.

Welcome to the fourth quarter earnings conference call for ADM. Our prepared remarks today will be led by Juan Luciano, Chair of the Board and Chief Executive Officer; and Monish Patolawala, our EVP and Chief Financial Officer. We have prepared presentation slides to supplement our remarks on the call today, which are posted on the Investor Relations section of the ADM website and through the link to our webcast. Some of our comments and materials may constitute forward-looking statements that reflect management's current views and estimates of future economic circumstances, industry conditions, company performance, and financial results. These statements and materials are based on many assumptions and factors that are subject to numerous risks and uncertainties. ADM has provided additional information in its reports on filed with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation and the materials. Unless otherwise required by law, ADM assumes no obligation to update any forward-looking statements due to new information or future events. In addition, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available on our earnings press release and presentation slides, which can be found in the Investor Relations section of the ADM website. I'll now turn the call over to Juan.

Thank you, Megan. Hello, and welcome to all of who have joined the call. Please turn to slide four where we have captured our fourth quarter and full-year performance highlights. Today, ADM reported fourth quarter adjusted earnings per share of $1.14, and full-year adjusted earnings per share of $4.74, in line with the midpoint of our guidance for the full-year. Total segment operating profit was $1.1 billion for the fourth quarter and $4.2 billion for the full-year. Our trailing four-quarter adjusted ROIC was 8.3%. And cash flow from operations before working capital changes was $3.3 billion. Though 2024 presented a variety of challenges, our diligent focus on improving operation has made a positive impact across the network. We achieved strong crush volumes in canola and rapeseed, as well as our -- in our LATAM region. We made progress in addressing challenges in North America in soy assets, reducing unplanned downtime, and improving crush volumes in the month of December. We successfully ramped up run rates to meet demand at our Spiritwood facility over the course of 2024. We achieved a strong year in Starches & Sweeteners, where improved plant performance led to 3% higher production volume year-over-year, helping several product lines in our North America business set operating profit records. We made progress in addressing demand fulfillment challenges in EMEA flavors, while successfully integrating two new flavors acquisitions announced in early 2024. We improved our safety record significantly with a more than 35% year-over-year reduction in Tier 1 and 2 process safety incidents across our global network. In addition, we advanced key innovation initiatives in areas such as biosolutions and health & wellness, continuing to support growing customer demand in these parts of the business. And through this, we were able to maintain a strong balance sheet to ensure continued investment in the business and return of cash to shareholders and earlier today we announced an increase in our quarterly dividend making our 93rd consecutive year of uninterrupted dividends. As we wrap up 2024, we are encouraged that we're gaining operational momentum and we see opportunities to drive additional value. But we also recognize that the external environment continues to pose uncertainties and challenges. Please turn to slide five. We've entered 2025 knowing that we need to remain agile to manage through shifts in both trade and regulatory policy around the world along with the related impacts on geographic supply and demand. With a global asset base and constantly evolving product innovation, our team is prepared to pivot as needed to support the resiliency of the Ag, food, energy and industrial sectors we serve. We're taking these factors into account as we define our business priorities for 2025 with an emphasis on continuing to improve in the areas we control. First, we are focused on execution and cost management. Having made progress on the issues that impacted North American soy operations, we are applying that experience to the broader global network to drive further operational improvement and cost reductions. Similarly, we are applying what we learned from addressing demand fulfillment challenges in EMEA flavors to drive improvements in similarly challenged areas such as pet nutrition. We're actively managing our sourcing efforts to take advantage of lower pricing in many of our core input costs such as chemicals and energy. This cost agenda has also supported realigning our focus on data analytics to identify and assess new savings opportunities quickly. We're aggressively managing our SG&A and corporate cost as we make shifts in the business portfolio and lean into our strengthening digital capabilities. We have been diligent in finding ways to prioritize our own organization's work which has highlighted opportunities to eliminate non-critical third-party spend and structurally align our organization against our most critical efforts. As part of this prioritization effort, we announced that we're taking targeted action across both business and corporate functions to reduce approximately 600 to 700 roles including approximately 150 unfilled positions. Decisions impacting our team members are never easy to make and we are ensuring these colleagues are receiving transition support and an opportunity to apply for other critical roles within the company. In total, we anticipate the result of these cost actions to deliver in the range of $500 million to $750 million over the next three to five years with $200 million to $300 million in 2025. In conjunction with improving our cost position, our second focus is on strategic simplification. As a company that has grown substantially over the past decade, we are continually evaluating how our portfolio balances the evolving needs of our customers, our expectations to achieve our returns objectives, and our ability to be the most efficient operators of each part of the business. Both the current external environment and our performance in specific business segments and geographies over the past few years have highlighted additional opportunities to strategically assess how we are focusing our operational capabilities. With this, we are considering a phased approach to areas of potential simplification looking at our business through a variety of lenses with a particular focus on places where we see a history of performance challenges, deteriorating demand and or excess capacity that do not have a clear path to improvement, assets that may require capital investment that does not meet our expected returns objectives, opportunities for targeted synergy acceleration including potential closures and divestiture where we see an overlapping capabilities and asset footprint, determining who is the best owner/operator for assets that might not be assessed as critical to ADM's future growth trajectory. And along with these, we are ensuring our organization, both our colleagues and strategic partners, are aligned and focused on the most critical sources of value. We have currently identified a pipeline of approximately $2 billion in portfolio opportunities. And we will execute on this over time with the objective of maximizing value for ADM shareholders. Please turn to slide six, where we will talk about two more areas of focus in 2025 associated with capital management. First, as we look at the strategic growth opportunities, we will continue to invest in value drivers. Our strategy continues to be based on the balance of both productivity and innovation, And growth-oriented organic investment remains part of that equation. We've highlighted areas where investments have been paying off over the past year, from our modernization and digitization efforts across our facilities, to the ramp-up of additional capacities such as Spiritwood to support renewable diesel demand, to the global partnerships we have announced in regen ag, supporting farmers' resiliency. All of these represent targeted areas where our business segments are evolving with our customers and finding ways to deliver a strong return on our investments. Looking now to 2025 and beyond, we will continue to make targeted investments in part of the portfolio where we can drive further growth and differentiation, whether that's continuing plant digitization and upgrading our equipment to enhance operating leverage, expanding destination marketing volumes in targeted markets, continuing to build out our decarbonization solution portfolio, or supporting the continued evolution of the biofuels and energy sector. Investments in areas such as biosolutions, destination marketing, and biotics have helped us to drive double-digit growth and serves as a model for new investments. The portfolio above represents proven winners that are not only organically improving ADM, but also helping us establish foundations for the next wave of growth. We will also continue to return cash to shareholders through our traditional channels. In 2024, we kept our focus on returning capital to shareholders through repurchases and dividends, all while maintaining our leverage ratio at our desired target. We have extended our existing share repurchase program by 100 million shares, which we will approach opportunistically and to address dilution. We've announced another dividend increase, continuing the cycle of annual increases for over 50 consecutive years. And through this, we expect to maintain a leverage ratio of approximately 2.0 times. To summarize, looking across the focus areas for 2025, we are committed to continuing to improving the areas we control, and we feel confident that this will allow ADM to deal with external uncertainties and challenges while positioning the company for long-term success. Our team has managed our business through multiple challenging windows of time over nearly 125 years. And I fully expect us to rise to the occasion again in 2025. With that, I will hand it over to Monish to share a deeper dive on 2024 financial results and our 2025 outlook.

Thank you, Juan. Please turn to slide seven. Before jumping into segment performance, let me quickly recap some of the financial highlights for the fourth quarter and full-year 2024. While the fourth quarter played out largely as expected, we experienced negative pressure from market conditions later in December. For the full-year, we finished within our previously guided adjusted earnings per share range. The team remained focused on key self-help actions to finish the year and enter into 2025 on a stronger footing. Now, transitioning into highlights on segment performance and starting with AS&O. To start, let me provide some perspective on the broader market environment and the dynamics that shaped the fourth quarter. The operating landscape was challenging in the fourth quarter, with biofuel and trade policy uncertainty at the forefront. Ample global supplies, higher crush rates from Argentina, and uncertainty in biofuel and trade policy negatively impacted the crush environment. We also experienced high manufacturing costs. As a result, soybean and canola crush execution margins were approximately $10 per ton and $20 per ton lower respectively versus the prior period. Also included in the fourth quarter results for our crushing subsegment were $52 million of insurance proceeds related to the partial settlement of the Decatur East and Decatur West insurance claims. Increased pretreatment capacity at renewable diesel facilities as well as the continued elevated import levels of used cooking oil also weighed on both biodiesel and refining margins during the quarter. From a food oil perspective, we continue to experience softer demand from customers as they looked to cut costs. The origination environment was supportive in North America as the logistical challenges related to the U.S. river level eased compared to the prior year. Overall, against this backdrop, AS&O segment operating profit for the fourth quarter was $644 million, down 32% compared to the prior year period. For the full-year, AS&O's segment operating profit for the fourth quarter was $644 million down 32% compared to the prior year period. For the full-year AS&O segment operating profit of $2.4 billion was 40% lower versus the prior year. Looking at subsegment performance for the full-year, Ag Services' subsegment operating profit of $715 million was 39% lower versus the prior year, driven primarily by lower South American origination volumes and margins, in part due to industry take or pay contracts. The stabilization of trade flows also led to fewer opportunities in our global trade business. Crushing subsegment operating profit of $844 million was 35% lower versus the prior year as ample global supplies drove more balanced supply and demand conditions, which negatively impacted margins throughout the year. Executed crush margins were approximately $10 per ton lower versus the prior year in soybean and approximately $15 per ton lower in canola versus the prior year. There were net negative timing impacts of approximately $165 million year-over-year. The full-year also included $76 million of insurance proceeds for the partial settlement of the Decatur East and Decatur West claims related to the incidents in 2023. Refined products and other subsegment operating profit of $552 million was 58% lower compared to the prior year as increased pretreatment capacity at renewable diesel facilities, higher imports of used cooking oil, aggressive competition among food oil suppliers to serve customer demand, and biofuel policy uncertainty negatively impacted margins. There were net negative timing impacts of approximately $430 million year-over-year. Equity earnings from the company's investment in Wilmar was $336 million for the full-year, 11% higher compared to the prior year. Turning to slide eight, carbohydrate solutions unfolded as expected in the fourth quarter as operating profit was largely in line with the prior year. The results reflected robust demand for ethanol; however, higher industry production drove a lower margin environment. Results also reflected strong North American starches and sweeteners performance, as well as $37 million of insurance proceeds related to both the partial settlement of the Decatur East and Decatur West insurance claims. For the full-year 2024, carbohydrate solution segment operating profit of $1.4 billion was flat compared to the prior year. Starches and sweeteners subsegment operating profit of $1.3 billion was slightly higher compared to the prior year, as strong volumes and margins in North America were offset by weaker co-product values and lower margins in EMEA and ethanol. The full-year also included $84 million of insurance proceeds for the partial settlement of the Decatur East and Decatur West claims related to the incidents in 2023. Vantage Corn Processes subsegment Operating profit of $33 million was 28% lower compared to the prior year as lower margins due to the higher industry production more than offset robust demand for ethanol exports. Turning to slide nine, in the fourth quarter in the nutrition segment, weaker consumer demand and ongoing headwinds from unplanned downtime at Decatur East drove lower organic revenues. Operating profit was $88 million in the fourth quarter, higher year-over-year due to improved mix, lapping the negative non-recurring items in the prior year and insurance recoveries of $46 million related to the partial settlement of the Decatur East insurance claim. The quarter also included a negative impact due to higher cost of goods sold associated with the termination of an unfavorable supply agreement. Fully on nutrition revenues was $7.3 billion up 2% compared to the prior year. On an organic basis, revenue was down 3%. Human nutrition revenue was roughly flat organically as headwinds related to the unplanned downtime and down time at Decatur East and texturants pricing offset improved mix and volumes in flavors and health and wealth. Animal nutrition revenue declined due to unfavorable mix, negative currency impacts in Brazil and lower volumes due to demand fulfillment challenges. Full-year nutrition segment operating profit of $386 million was 10% lower versus the prior year. Human nutrition subsegment operating profit of $327 million was 22% lower compared to the prior year, primarily driven by unplanned downtime at Decatur East and higher manufacturing costs, partially offset by improved performance in the health and wellness business, favorable mix in the flavors business, and M&A contributions. The human nutrition subsegment full-year results also included $71 million of insurance proceeds for the partial settlement of the Decatur East claim related to an incident in 2023. Animal nutrition subsegment operating profit of $59 million was higher than the prior year due to higher margins supported by cost optimization actions to improve mix and an increase in volume. Please turn to slide 10. In 2024, the company generated cash flow from operations before working capital of approximately $3.3 billion, down 30% relative to the prior year due to lower total segment operating profit. Despite the decline, solid cash generation supported our ability to invest in our business and return excess cash to shareholders. In 2024, the company returned $3.3 billion in the form of dividends and share repurchases allocated $1.6 billion to capital expenditures to support the reliability of our assets and cost efficiencies, and approximately $1 billion to M&A announced in 2023 and completed in January 2024. Our strong capital structure remains a critical differentiator for the company. We will continue to seek opportunities to further strengthen our balance sheet to provide us financial flexibility to organically invest in the business to enhance returns and create long-term value. As Juan mentioned, targeted portfolio simplification actions, including consolidation and divestitures, will help align our focus on value creation. At the same time, we remain committed to returning cash to shareholders and will look to offset dilution and opportunistically seek share repurchases. We recently announced an increase in our quarterly dividend as well as an extension of our share repurchase program which is up to an additional 100 million shares over the next five-year period. Please turn to slide 11. We have already touched on some of the external market dynamics that we navigated in December, and several of these dynamics are expected to persist and create pressure on our first-half results for 2025, particularly for our AS&O segment. These include market headwinds related to U.S. biofuel policy uncertainty that had negatively impacted U.S. vegetable oil demand and biodiesel margins, higher global soybean stock levels and an increase in Argentinian crush rates, which have pressured global soybean meal values, and trade policy uncertainty with Canada and China, which has driven volatility for canola crush margins. Taken together, these factors are driving significantly lower meal and vegetable oil values, which is reflected by replacement crush margins in North America near $40 per metric ton for soybean and $50 per metric ton for canola. In both cases, these are well below the levels that we experienced in the first-half of last year. As we look to the second-half of 2025, we see signs that make us optimistic about margin improvement over the course of the year. One clear indication is board crush value signaling a carry in the market in the second-half. Additionally, as we progress through the year, we expect policy uncertainty to clear and strong fundamentals to support better crush and biodiesel margins. In particular, we expect clarity on 45

Thanks, Monish. I'll briefly close by recapping our focus as we continue the path into 2025. With the uncertainty we've noticed in the external environment, ADM is prioritizing an internal focus on the areas we can best control. While administering this self-help we'll remain agile and ready for opportunities that may present themselves along the way. Our focus on execution and cost management will drive savings to the bottom line while ensuring that we're managing our assets and overall network as effectively as possible. Our focus on strategic simplification will deliver opportunities to optimize our portfolio and organization around those areas that deliver strongest returns and where we are the strongest operators. Our focus on strategic growth will allow us to organically invest in proven winners while also ensuring our business are ready for the future. And our focus on capital discipline will position us to continue the return of cash to shareholders through dividends and selective share repurchases. We are confident that this equation sets ADM up for success in 2025 and ensures we have necessary optionality in both the short and medium term while keeping our eyes on longer term opportunities ahead. With that, we'll take your questions now. Operator, please open the line.

Thank you. [Operator Instructions] Our first question for today comes from Tom Palmer of Citi. Your line is now open. Please go ahead.

Good morning, and thanks for the question.

Good morning, Tom.

Just on the nutrition segment, I wanted to make sure I understood the expected profit recovery. It implies a pretty big inflection as the year progresses. You noted 1Q has some maybe heightened headwinds. It sounds like at least for the second quarter, I wasn't sure if it was second quarter or for the full-year, the start up at Decatur's noted as a headwind. And then, you've got the insurance headwind, especially in the second-half. So, just trying to understand what really drives that inflection. Is it the belief that end markets get better? Is this cost savings plan maybe more concentrated in this part of the business? Thanks.

Yes. Thank you, Tom, for the question. Listen, nutrition has a big self-help story inside themselves as we have in ADM of course. But I think the main issue for Nutrition is you need to think about like three different buckets. There is one bucket that is the Decaturist plant, which is Specialty Ingredients, that is a big headwind and until we can bring the plant back that will continue to be. So, that is going to happen in the first quarter. Hopefully the plant will be back in the second quarter we expect, and that will naturally bring an improvement to the results. The other bucket is a bucket that it continues to go very well, which is, if you think about flavors and if you think about biotics, those businesses are going very well. They are growing. They have grown 7% and 10% respectively in revenue in 2024. So that's going to continue and that's basically execution of their pipeline, and their pipeline is very robust and very good. And I would say, the third bucket is you have this steady improvement month-over-month, quarter-after-quarter of animal nutrition, which is not a revenue story, but it's a margin improvement story. So, you have three different things, and when you put them altogether, we see a strong recovery in the last-half of the year for nutrition.

Tom, just to add, and I know you already picked it up, but just for math, when you look at it sequentially, so you're right, Q1 starts softer. Sequentially, after adjusting for the insurance recovery, which we have $46 million, we expect those results to be pretty much in line, Q1 equals Q4. And as Juan mentioned, the manufacturing cost, all the self-help starts kicking in, in the second quarter to fourth quarter.

Understood. Thank you.

Thank you. Our next question comes from Andrew Strelzik of BMO. Your line is now open. Please go ahead.

Hey, good morning. Thanks for taking the question. I wanted to ask now that we've got the -- hey, how are you? I wanted to ask about your view on vegetable oil demand, soybean oil demand in particular. Now that we have the 45

Yes, thank you, Andrew. A lot to unpack there, so yes, we received guidance from 45

Great. Thank you very much.

Thank you. Our next question comes from Ben Theurer of Barclays. Your line is now open. Please go ahead.

Perfect. Thank you very much and good morning. Just wanted to follow-up on your guidance cadence for Ag Service and Oilseeds, similar to what Tom had on Nutrition. But as we look at it, obviously, Q1 is very tough comp and you already indicated that to be 50% down. But then in order to get to just slightly below 25 levels as your guidance indicates, that would mean that 2Q onwards; we should see improving trends on a year-over-year basis. And I just would like to understand if you can help us reconcile that with lower insurance proceeds, but then at the same time you assume canola and soybean crush to be lower for the year? So, I just wanted to understand what is else in there that helps us to get those profits in line to below versus '24 with such a tough start in 1Q?

Yes, I think the -- then -- part of the tough start in the Q is because although you see some canola margins maybe rebounded recently, when we put our book, we put our book at lower numbers, because we put itthere in Q4. So, maybe our Q1 is even lower than maybe what current conditions may indicate. When we think about crush margins approximately around $40 in Q1, we are expecting full-year crush margins in the range of $45 to $55 per ton for soy. That's about $5 lower than the average of last year, and canola $50 to %70 that's probably 20 bucks lower than last year. And again, you have to include here all the improvements that we expected in manufacturing for the business. If you recall, last year we were doing a lot of project automation and digitization in the carb solutions area. And I mentioned before that we have run an experiment with the oil seed plant in Brazil. And now, we have the result of that experiment. And we are bringing some of those learning. So, we expect a lot of self-help coming to Ag services and oil seed. And we also expect destination marketing to grow our internal -- our direct farming procurements also to improve or to grow this year. So, -- and as I said, mill is going to be strong. And soybean oil should become significantly better in the second-half of the year so.

And Ben, I would add to Juan's comments. Just when you think about RPO or biofuels and what clarity that gets. That should allow the second-half to be far stronger than the first-half. And Juan already mentioned, when you look at the forward curve that carries is pretty strong in the second-half. And we are open for business quite a lot in the second-half. So, hopefully, we are positioned to take advantage--

To capture that, yes.

To capture as that goes, so, all that put together, why you start pretty soft in Q1. And then, you move yourself up. But you're right. It's a second-half story. And that's what we'll have to watch. Multiple factors -- as you're watching, we are watching the same. Whether it's weather whether it is the crop yields et cetera. So, as we know more, we'll keep you posted. But that's how we see it right now.

One of the things also, Ben, as I forgot is we don't have the negative takeoff pace that we had last year in Brazil. So, we don't expect them this year. So, that would be a positive also for this year.

Okay.

Thank you. Our next question comes from Heather Jones of Heather Jones Research. Your line is now open. Please go ahead.

Morning. Thanks for the question.

Good morning, Heather.

I wanted to ask I -- good morning. Just wanted to first of all clarify that your guidance doesn't include any expected impact from tariffs, and then secondly, even if it doesn't include it, if you could just flesh out how that would look for you guys? How you have to be thinking about the impact from operations, particularly in North America? Thanks.

The China retaliatory measures doesn't include agricultural products at this point in time. So, it's difficult to know. I think in the short term, our teams are making sure that they are doing everything possible to avoid the short-term impact. I think medium-term and long-term trade flows seem to stabilize. But of course, we saw in 2018 how the corn imports from China were reduced by almost like 9 million tons from the U.S. Whether that's going to be something that's going to happen again or not, we'll have to see. Again, when you think about the power of ADM in terms of our origination in so many parts of the world and our destination marketing in so many parts of the world, it provides an optionality that few companies have in order to be able to capitalize on any environment. We don't know if net-net it will be a positive or a negative, but we will go through as we went in 2018.

Thanks so much.

You're welcome.

Thank you. Our next question comes from Steven Haynes of Morgan Stanley. Your line is now open. Please go ahead.

Hey, good morning, and thank you for taking my question. I wanted to come back to Argentina and their recent export tax revision across the soy crush complex, and if you could just briefly, I guess, talk about how you think that's going to impact your businesses and then how maybe you see that policy evolving after turn because I think that's kind of when they had framed the current revision period for. So, thank you.

Yes, thank you for the question, Steven. So, let me -- this policy was implemented, as you said, effective until June 30. Very difficult what's going to happen after that, because it depends more on microeconomics of Argentina, so it will depend on many, many factors. I would say, until then, we haven't seen a big impact yet, mostly because they are still going through the harvest and through the planting. Second, because and I'm a farmer in Argentina, we're all worried about the weather in Argentina and the crop in certain places doesn't look terrific. We need rains that are expected to come, but those rains may just stabilize the yields but not being able to turn around that. And then, there are details about the implementation of this regulation that we need to be observing. Before all this, you needed to bring the dollars into Argentina 30 days after your shipment. Right now, if you want to qualify for this reduction in exports, you need to commit that you're going to bring the dollars of 95% of all the amount within 15 days of issuing the license. So, before you have 30 days from shipment, now you have to bring the money 15 days after you get the export license. So that's a big financing change in the thing that I don't know how it's going to impact. So we will have to see in April with the farmer's seeds on top of their harvest and they have from April to May to June to be able to play this how much it's going to be. At this point in time, we haven't felt much.

Thank you.

Welcome.

Our next question comes from Pooran Sharma of Stephens. Your line is now open. Please go ahead.

Great. Thanks for the question. I wanted to see if we could unpack 45

Yes, let's see if I can provide some clarity to that. First of all, this is preliminary guidance and of course it needs to be ratified after the comment period and then we need to see what the Trump administration will decide on this. So this still needs to be played out. I would say with the removal the blenders tax credit, margins have been significantly impacted. And so, you may see some small producers that in the absence of all these, when they are not integrated and are isolated plants, they have shut down. We were expecting to do that. Our integrated facilities, all our facilities are integrated, have allowed us to continue to operate, although we see the impact in Q1 margins that we're going to have as we have Q4 margins. So the industry definitely needs to bring some margin back into it. More importantly, we need to bring clarity because lack of clarity has pulled people off the market. What we know is the administration of President Trump strongly supports the farmers and having an output for the farmers' production. And I think that in that sense, a strong biofuel policy, a strong export policy, a strong bio-solutions type of product are all going to be very supportive.

Great. I appreciate the color.

Thank you.

Thank you. Our next question comes from Manav Gupta of UBS. The line is now open. Please go ahead.

Good morning. I'm sorry I dropped off briefly. So if somebody has already asked this, I apologize. But Monish, your key priorities when you took over, your focus was one on operational rigor and second, ensuring there are no material weakness in financial reporting, and what's the progress been on those two fronts? Thank you.

Yes, thank you, Manav. I would say on both, and I'll start with the material weakness. As I said at the end of my prepared remarks, that is one item that we are very heavily focused on, which I am focused on. And the progress on that, and I'll start by just saying, when we talked to you three call, and you had asked the question, I said the company had enhanced the design and controls and documentation of inter-segment sales. So we have continued to do that this quarter. We have continued to provide a lot of training to our personnel around the reporting and recognition of inter-segment sales. We have enhanced and tested a lot of controls, and we need to continue to make sure that is sustained for a period of time before we can lift the material weakness. And that's what the teams are focused on. We also made an announcement where we've got Carrie Nichol who's joining us, the Chief Accounting Officer, who was from a similar role in Cargill. And I'm excited to have her on board and my partner to help me continue this journey that we have started on remediating our material weakness. To answer your question on operating rigor, you can see that we've made progress. In Juan's comments, you can hear that some of the items where we have done root cause in our manufacturing facilities have given yielded results. In December, we saw good outputs in some of our plants in North America. We also saw progress in EMEA, in our flavors business, in nutrition. And as a part of that whole thing, Manav, and as we look at the opportunities, Juan and I announced that we have a plan to get $500 million to $750 million of cost out over the next three to five years. It's going to come from multiple places. Number one is driving efficiencies in our manufacturing facilities. Number two is going after costs with our third parties. And number three is controlling SG&A and some of the actions we're going to take there. Adding on to that on the other side is the simplification agenda. So as we continue to drive portfolio simplification, we see an opportunity to continue to drive margin enhancement in there too. At some of these facilities, whether you talk about consolidations or targeted divestiture, should allow us also benefit in there. We are going to do all of this while at the same time battling a lot more around the inflationary environment, whether it's the energy complex, as well as labor inflation or general inflation that continues to stay. So, focused on it, Juan said it, I've said it, it's a big self-help agenda. We know the environment that we are going into 2025. And I think the team is quite confident that we can execute this cost-out plan that we have got over the next three to five years.

Thank you so much for the update.

Thank you. Our next question comes from Salvator Tiano from Bank of America. Your line is now open. Your line is now open. Please go ahead.

Yes, thank you very much. I want to go back to nutrition specifically for Q4. So your commentary was pretty positive in that human nutrition had higher volume and pricing versus last year. But if we adjust for last year's write-down, I think you would have made 39 million human nutrition, whereas this year without the insurance, you would have made only 15 million. So it looks like the performance even with M&A was quite worse, so I cannot reconcile the two. Can you provide a little bit more color on why margins were so lower and perhaps quantify the impact of this contract cancellation in Q4?

Yes, I think when you look at it, yes, we've made progress on the growth in human nutrition, but the biggest piece that still continues to be a headwind is the specialty ingredients business. When you look at the continued inefficiencies from the downtime at Decatur East, the higher insurance premiums that we are seeing, as well as the lower pricing for texturants and demand, all put together is where we landed up for the fourth quarter. And going into 2025, we look at the same and say, when you look at Q1 and we say it's sequentially flat when you adjust for the insurance proceeds, the biggest driver there again on a year-over-year basis is the specialty ingredients. And so getting that plant back online in Q2 2025 and then doing all the self-help actions that Ian and his team are doing in nutrition will help us continue to grow nutrition's P&L in 2025.

Thank you. Just to understand though here, the fire indicator happened I think August or September last year, meaning that you should have lapsed, at least in my understanding, you should have lapsed the inefficiencies and the problems already in Q4. So that shouldn't have been an issue versus Q4 of '24 or it shouldn't be an issue in Q1 '25 versus what you posted this year?

Well, we had inventory going into Q4 of '23, and that allowed to reduce some of the impact that was there on a year-over-year basis. But also prices and the kind of tech spend that have come down, yes.

Okay, perfect. Thank you very much.

Thank you. Due to time, we'll take no further questions, so I'll hand back to Megan Britt for any further remarks.

Thank you so much for joining the call today. If you have additional questions, please feel free to reach out directly to me. Have a wonderful rest of your day.