Bunge Limited (NYSE:BG) today reported second quarter 2022 results

• Q2 GAAP EPS of $1.34 vs. $2.37 in the prior year; $2.97 vs. $2.61 on an adjusted basis excluding certain gains/charges and mark-to-market timing differences
• In Agribusiness higher Processing results were more than offset by lower results in Merchandising versus a particularly strong prior year
• Refined and Specialty Oils performance improved in all regions with particular strength in North America and Europe
• Increasing full-year adjusted EPS outlook to at least $12 per share
• Introducing earnings framework of ~$11 per share by end of 2026 building on increased earnings baseline of $8.50, plus future investments and share repurchases
  

• Overview

Greg Heckman, Bunge’s Chief Executive Officer, commented, “In the face of significant market shifts, our team successfully delivered another quarter of year-over-year earnings improvement in our core segments. Our results reflect the adaptability of our business and strength of our operating model.

“Our focus on continuous improvement across everything we do allows us to be agile and to consistently create value in a variety of market environments. We are confident in our ability to successfully navigate volatility and effectively deploy capital, while continuing to help our customers on both ends of the value chains find solutions to the opportunities and challenges they face.”

• Financial Highlights

• Second Quarter Results

Core Segments

Agribusiness

Processing ⁽²⁾

Higher results in the quarter were primarily driven by U.S. and Brazil soy crush due to strong meal and oil demand. Results in softseed crush were also higher than last year primarily driven by North America.

Merchandising ⁽²⁾

Merchandising had a good quarter, however, results were down compared to a particularly strong prior year, as a higher contribution from global grains was more than offset by lower results in ocean freight.

Refined & Specialty Oils

Refined & Specialty Oils Summary

Results were higher in all regions led by strength in North America and Europe refining, both benefiting from strong food demand, as well as strong fuel demand in the U.S.

Milling

Milling Summary

Higher results in the quarter were driven by improved margins in North and South America wheat milling. Results also reflected effective risk management of our supply chains.

Corporate and Other

Corporate

Other

Corporate and Other Summary

The increase in Corporate expenses in the quarter was primarily related to investments in growth initiatives and timing of performance-based compensation accruals. The increase in Other was primarily related to our captive insurance program and gains on investments in Bunge Ventures.

Non-core Segments

Sugar & Bioenergy

Sugar & Bioenergy Summary

Higher ethanol and sugar prices were more than offset by the combination of lower ethanol volumes and increased costs.

Cash Flow

Cash used for operations in the six months ended June 30, 2022 was $4,457 million compared to cash used of $1,436 million in the same period in the prior year. Adjusting for the net proceeds from beneficial interest in securitized trade receivables, cash used for operating activities was $1,146 million compared with cash provided by operating activities of $436 million in the prior year. Cash used for operating activities was driven by an increase in working capital primarily as a result of higher commodity prices. Funds from operations (FFO) adjusted for notable items and mark-to-market timing differences was $1,239 million compared to $900 million in the prior year.⁽⁴⁾

Income Taxes

For the six months ended June 30, 2022, income tax expense was $144 million compared to $242 million in the prior year. The decrease was primarily due to lower pre-tax income.

• COVID-19 Update

Bunge continues to closely monitor developments related to the pandemic to ensure the health and safety of its employees. While most facilities have been able to return at or near normal operations, the Company’s internal task force is prepared to re-establish safety measures and protocols should infection rates increase.

Bunge continues to monitor local, regional and national governmental actions that could limit or restrict the movement of agricultural commodities or products or otherwise disrupt physical product flows or its ability to operate in the future.

• Outlook

We are increasing our full-year 2022 EPS outlook to reflect second quarter results and the current market environment. We are now forecasting full-year 2022 adjusted EPS of at least $12 per share, with potential upside depending on the market environment and supply and demand balance.

In Agribusiness, full-year results are expected to be slightly higher than our previous outlook, but remain down from last year due to lower expected performance in Merchandising, which had a particularly strong 2021.

In Refined and Specialty Oils, full-year results are expected to be up from our previous outlook and higher than last year, driven by strong demand in our North American and European businesses.

In Milling, full-year results are expected to be up from our previous outlook and significantly higher than prior year, driven by our strong first half of the year results.

In Corporate and Other, results are now expected to be less favorable than our previous outlook and more in line with the prior year.

In Non-Core, full-year results in the sugar and bioenergy joint venture are expected to be in line with prior year.

Additionally, the Company now expects the following for 2022: an adjusted annual effective tax rate in the range of 14% to 16%; net interest expense in the range of $310 to $330 million; capital expenditures in the lower end of the range of $650 to $750 million; and depreciation and amortization of approximately $400 million.

• Introducing Earnings Growth Framework

The Company has also introduced an earnings framework of approximately $11 per share by the end of 2026, which builds on its increased mid-cycle earnings baseline of $8.50 per share, plus approximately $3.3 billion of projected future investments in growth capex and M&A, and approximately $1.25 billion of share repurchases through the period. Additional information on the earnings framework is provided in the Q2 2022 slide presentation and will be discussed on the Company’s earnings conference call and webcast, as detailed below.

• Conference Call and Webcast Details

Bunge Limited’s management will host a conference call at 8:00a.m. Eastern (7:00a.m. Central) on Wednesday, July 27, 2022 to discuss the company’s results.

Additionally, a slide presentation to accompany the discussion of results will be posted on www.bunge.com.

To listen to the call, please dial 1 (844) 735-3666. If you are located outside the United States or Canada, dial +1 (412) 317-5706. Please dial in five to 10 minutes before the scheduled start time.

The call will also be webcast live at www.bunge.com. To access the webcast, go to “Events and presentations” in the “Investors” section of the company’s website. Select “Q2 2022 Bunge Limited Earnings Conference Call” and follow the prompts. Please go to the website at least 15 minutes prior to the call to register and download any necessary audio software.

A replay of the call will be available later in the day on July 27, 2022, continuing through August 7, 2022. To listen to it, please dial 1 (877) 344-7529 in the United States, 1 (855) 669-9658 in Canada, or +1 (412) 317-0088 in other locations. When prompted, enter confirmation code 1101612. A replay will also be available in "Past events" at "Events and presentations" in the "Investors" section of the company's website.

• About Bunge

At Bunge (NYSE: BG), our purpose is to connect farmers to consumers to deliver essential food, feed and fuel to the world. With more than two centuries of experience, unmatched global scale and deeply rooted relationships, we work to put quality food on the table, increase sustainability where we operate, strengthen global food security, and help communities prosper. As the world’s leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats, we value our partnerships with farmers to improve the productivity and environmental efficiency of agriculture across our value chains and to bring quality products from where they’re grown to where they’re consumed. At the same time, we collaborate with our customers to create and reimagine the future of food, developing tailored and innovative solutions to meet evolving dietary needs and trends in every part of the world. Our Company is headquartered in St. Louis, Missouri, and we have more than 22,000 dedicated employees working across approximately 300 facilities located in more than 40 countries.

• Website Information

We routinely post important information for investors on our website, www.bunge.com, in the "Investors" section. We may use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

• Cautionary Statement Concerning Forward-Looking Statements

This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward looking statements by using words including “may,” “will,” “should,” “could,” “expect,” “anticipate,” “believe,” “plan,” “intend,” “estimate,” “continue” and similar expressions. These forward looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward looking statements. The following important factors, among others, could cause actual results to differ from these forward-looking statements: the impact on our operations and facilities from the military conflict in Ukraine and the resulting economic and other sanctions imposed on Russia, including the impact on Bunge resulting from a continuation and/or escalation of the conflict and sanctions against Russia; industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products used in our business, fluctuations in energy and freight costs; competitive developments in our industries; the effects of weather conditions and the outbreak of crop and animal disease on our business; global and regional economic, agricultural, financial and commodities market, political, social and health conditions; the impacts of pandemic outbreaks, including COVID-19; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, dispositions, joint ventures and strategic alliances; the impact of government policies and regulations; changes in government policies, laws and regulations affecting our business, including agricultural and trade policies and environmental, tax and biofuels regulation; the impact of seasonality; our capital allocation plans, funding needs and financing sources; changes in foreign exchange policy or rates; the effectiveness of our risk management strategies; our ability to attract and retain executive management and key personnel; the impact of our dependence on third parties; operational risks, including industrial accidents, natural disasters and cybersecurity incidents; and other factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

• Additional Financial Information

Certain gains and (charges), quarter-to-date

The following table provides a summary of certain gains and (charges) that may be of interest to investors, including a description of these items and their effect on Net income (loss) attributable to Bunge, Earnings per share diluted and Segment EBIT for the three month periods ended June 30, 2022 and 2021.

Core Segments

Agribusiness

EBIT for the three months ended June 30, 2022 included $69 million of charges, recorded in Cost of goods sold, resulting from the Ukraine-Russia conflict, primarily related to losses associated with inventories physically located in occupied territories in Ukraine, or in difficult to access locations with high costs of recovery.

Refined and Specialty Oils

EBIT for the three months ended June 30, 2022 included a reversal of $1 million of bad debt provisions, recorded in SG&A, previously recorded in conjunction with the Ukraine-Russia conflict but for which the underlying receivables were subsequently recovered.

Certain gains and (charges), year-to-date

The following table provides a summary of certain gains and (charges) that may be of interest to investors, including a description of these items and their effect on Net income (loss) attributable to Bunge, Earnings per share diluted and Segment EBIT for the six month periods ended June 30, 2022 and 2021.

Core Segments

Agribusiness

EBIT for the six months ended June 30, 2022 included $80 million of charges, recorded in Cost of goods sold, resulting from the Ukraine-Russia conflict, primarily related primarily related to losses associated with inventories physically located in occupied territories in Ukraine, or in difficult to access locations with high costs of recovery.

Refined and Specialty Oils

EBIT for the six months ended June 30, 2021 included $170 million in gains on sales of assets, comprised of a $151 million gain on sale of our Rotterdam Oils Refinery, at Bunge's 70% share, and a $19 million gain on sale of an oils packaging facility in Mexico, both recorded in Other income (expense) - net.

Corporate and Other

EBIT for the six months ended June 30, 2022 included a $29 million gain, at Bunge's 70% share, related to the settlement of one of the Company’s international defined benefit pension plans, recorded in Other income (expense) - net.

Net income for the six months ended June 30, 2022 also included $39 million of expense (net of $8 million in tax benefits) related to the early redemption of the Company's 4.350% unsecured senior notes due March 15, 2024. In connection with the early redemption, the Company recorded a $47 million pre-tax charge within Interest expense, comprising a $31 million "make-whole" payment and a $16 million loss on the termination and de-designation of related interest rate hedges.

• Consolidated Earnings Data (Unaudited)

• Condensed Consolidated Balance Sheets (Unaudited)

• Condensed Consolidated Statements of Cash Flows (Unaudited)

• Definition and Reconciliation of Non-GAAP Measures

This earnings release contains certain "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934. Bunge has reconciled these non-GAAP financial measures to the most directly comparable U.S. GAAP measures below. These measures may not be comparable to similarly titled measures used by other companies.

Total Segment EBIT and Adjusted Total Segment EBIT

Bunge uses segment earnings before interest and tax (“Segment EBIT”) to evaluate the operating performance of its individual segments. Segment EBIT excludes EBIT attributable to noncontrolling interests. Bunge also uses Core Segment EBIT, Non-Core Segment EBIT and Total Segment EBIT to evaluate the operating performance of Bunge’s Core reportable segments, Non-Core reportable segments, and Total reportable segments together with its corporate and other activities, respectively. Core Segment EBIT is the aggregate of the earnings before interest and taxes of each of Bunge’s Agribusiness, Refined and Specialty Oils, and Milling segments. Non-Core Segment EBIT is the earnings before interest and taxes of Bunge’s Sugar & Bioenergy segment. Total Segment EBIT is the aggregate of the earnings before interest and taxes of Bunge’s Core and Non-Core reportable segments, together with its corporate and other activities.

Adjusted Core Segment EBIT, Adjusted Non-Core Segment EBIT, and Adjusted Total Segment EBIT, are calculated by excluding temporary mark-to-market timing differences, as defined in note 3 below, and certain gains and (charges), as described in "Additional Financial Information" above, from Core Segment EBIT, Non-Core Segment EBIT, and Total Segment EBIT, respectively.

Core Segment EBIT, Non-Core Segment EBIT, Total Segment EBIT, Adjusted Core Segment EBIT, Adjusted Non-Core Segment EBIT, and Adjusted Total Segment EBIT are non-GAAP financial measures and are not intended to replace Net income (loss) attributable to Bunge, the most directly comparable U.S. GAAP financial measure. Bunge's management believes these non-GAAP measures are a useful measure of its reportable segments' operating profitability, since the measures allow for an evaluation of segment performance without regard to their financing methods or capital structure. For this reason, operating performance measures such as these non-GAAP measures are widely used by analysts and investors in Bunge's industries. These non-GAAP measures are not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to net income (loss) or any other measure of consolidated operating results under U.S. GAAP.

Net Income (loss) attributable to Bunge to Adjusted Net Income (loss) available for common shareholders

Adjusted Net Income (loss) excludes temporary mark-to-market timing differences, as defined in note 3 below, and certain gains and (charges), as described in "Additional Financial Information" above, and is a non-GAAP financial measure. This measure is not a measure of Net income (loss) attributable to Bunge, the most directly comparable U.S. GAAP financial measure. It should not be considered as an alternative to Net Income (loss) attributable to Bunge, Net Income (loss), or any other measure of consolidated operating results under U.S. GAAP. Adjusted Net income (loss) is a useful measure of the Company's profitability.

We also have presented projected adjusted net income per common share for 2022 in the Outlook section of this earnings press release, above. This information is provided only on a non-GAAP basis without reconciliation to projected net income per common share for 2022, the mostly directly comparable GAAP measure, due to the inability at this time to quantify certain amounts necessary for such reconciliation, including but not limited to future market price movements over the remainder of the year.

Below is a reconciliation of Net income attributable to Bunge, to Total Segment EBIT, and Adjusted Total Segment EBIT: