Ismael Roig
Interim Chief Financial Officer at Archer-Daniels-Midland
Thank you, Juan. Let me begin by sharing my own thanks and congratulations for what our finance team has accomplished over the first six months of this year. As a 20-plus-year employee of the company, I have seen amazing things our colleagues can accomplish when we work collectively to achieve them. And this was again the reality as I stepped in as interim CFO. I'm proud to have served the company in this capacity over the last several months, and I'm excited to welcome and support Monish as he joins the team.
For the second quarter ended June 30, 2024, earnings per share on a GAAP basis were $0.98. Segment operating profit on a GAAP basis was $1 billion and included charges of $7 million, or approximately $0.01 per share related to impairments. Adjusted segment operating profit was $1 billion for the second quarter, a 37% decrease versus the prior year period. Adjusted earnings per share were $1.03. Lower pricing and execution margins led to a decline of $1.03 per share versus the prior year period, largely reflecting the impact of lower crush origination margins.
Volume improvement represented a $0.19 per share increase versus the prior year period, primarily reflecting higher volumes in AS&O and carbohydrate solutions. Higher costs of $0.07 per share were primarily related to $0.06 per share of unplanned downtime at the Decatur East. Share repurchases represented a $0.10 per share increase versus the prior year. During the quarter, there was approximately a $0.02 per share negative impact from mark-to-market timing in the AS&O segment.
Please turn to Slide seven. For the second quarter, the Ag Services and Oilseeds team delivered $459 million in operating profit. Reflecting on a challenging operating environment compared to the prior year. On a year-over-year basis, mark-to-market timing for the segment was relatively muted. As Juan mentioned, strong supplies out of South America have led to a rebalancing of the supply and demand environment, while also shifting export market competitiveness from North America to South America.
These ample supplies have also pressured commodity prices compared to the past two years. Resulting in slower than expected farmer selling relative to last year and the five year averages. From the demand side, inclusion rates for meal continue to be robust. Supporting domestic and export demand. Oil values were pressured during the quarter as imports of used cooking oil as a feedstock for renewable diesel continued to grow.
Ag Services results were lower than the prior year, primarily driven by lower results in South American origination at slower farmer selling due to a smaller-than-expected crop in Mato Grosso, and higher logistic costs related to industry take-or-pay contracts led to lower margins. North America originations saw lower volumes and margins as strong crop yields out of both Brazil and Argentina led to a shift in export competitiveness to South America as well as limited carriers and trading opportunities.
As we began the quarter, global demand for both meal and oil remains strong. However, the return of Argentinian crush combined with the increased imports of used cooking oil also weighed on crush margins. As we progress later in the quarter, slower farmers selling Argentina brought tighter S&D dynamics, driving an improvement in board crush. The team performed well in this environment, leading to an executed soy crush margin of approximately $45 per metric ton for the quarter. While fundamentals supported improving crush margins as we expected, the more balance S&D environment led to lower margins versus the prior year, translating to lower results.
During the quarter there were approximately $15 million of negative timing impact, versus negative timing impacts of approximately $195 million in the comparable period. In Refined Products and Other results were lower due primarily to the reversal of prior positive mark-to-market timing impacts. In North America, increased pretreatment capacity at renewable diesel plants and higher imports of used cooking oil caused refining margins to ease relative to the record levels of last year. The biodiesel margin structure has also come off of record levels versus the prior year as a result of lower LCFS credits and RIN values.
During the quarter, there were approximately $90 million of negative timing impacts versus positive timing impacts of approximately $90 million in the comparable period. Equity earnings from Wilmar of $68 million were lower compared to the prior year quarter.
Moving to Slide 8. The Carbohydrated solutions team executed well, delivering $357 million in operating profit for the second quarter which was higher versus the prior year. Industry fundamentals in the starches and sweeteners space continue to be supported by strong sweetener demand and an improving starch market. Within ethanol, markets became more constructive as we advanced later in the quarter and stocks moved lower, firming up both domestic and export margins. Demand for ethanol remained robust, supported by summer driving season in the U.S. solid domestic blending rates and export demand.
The starches and sweeteners subsegment results were higher year-over-year as strong margins and volumes in North America were partially offset by lower margins in the EMEA region as they came off historically high levels. And our operational excellence efforts have helped streamline our processes and overall efficiencies, leading to improved cost positions. In the Vantage Corn Processing subsegment, strong export demand for ethanol supported solid ethanol margins, leading to higher year-over-year results.
Moving to Slide nine. Nutrition revenues were $1.9 billion for the second quarter, up 3% on a year-over-year basis and sequentially improved from the first quarter. Our Human Nutrition subsegment grew 10% year-over-year as strong M&A revenue contributions as well as improved volumes and mix in flavors, combined with strong growth in our Health & Wellness business, more than offset headwinds from lower pricing in the texturants market and lower plant-based protein demand. Our Animal Nutrition subsegment had lower revenues versus the prior year as lower pricing and mix was partially offset by improved volumes in the base business.
Please turn to Slide 10. The second quarter marked another quarter of progress with sequential improvement in operating profit for the Nutrition business when comparing to the prior year quarter, Human Nutrition results were lower, primarily driven by unplanned downtime at Decatur East and lower texturants pricing in the Specialty Ingredients business. Within Flavors, we have continued to improve operations, which has led to higher shipments sequentially.
In Animal Nutrition results were higher versus the prior year as improved execution in the base business has led to higher volumes and cost optimization actions and lower commodity prices helped support margins, partially offset by lower pet solutions performance in North America and Brazil.
Turning to Slide 11. For the second quarter, other segment operating profit was $96 million, up 12% compared to the prior year period. Supported by higher captive insurance results due to lower claim activity. ADM Investor Services results decreased on lower interest income. In corporate for the second quarter and allocated corporate costs increased on higher global technology investments to support digital transformation efforts, increased legal fees and increased securitization fees.
Turning to our balance sheet and cash flows on Slide 12. Through the second quarter, the company has continued to generate healthy cash flows with $1.7 billion of operating cash flow before working capital. Our current leverage ratio is now within our targeted range, reflecting our disciplined approach to balance sheet management and robust cash flow generation. With robust financial flexibility, we have been able to support both strategic initiatives to support long-term growth and also leverage excess cash for enhanced shareholder returns.
During the quarter, we repurchased over 16 million shares through our open market repurchase program, returning approximately $1 billion of capital that's making the completion of our targeted $2.3 billion of share repurchases for the year. In total, we have returned $2.8 billion of capital to shareholders through repurchases and dividends so far in 2024. We also continue to invest in the business with an enhanced focus on the reliability of our ADM's performance allocating $700 million to capital expenditures.
Now breaking down our expectations for the third quarter by segment on Slide 13. In AS&O, we anticipate the third quarter to be lower versus the prior year but improved from the cyclical low margin environment from the second quarter. We anticipate demand for both meal and oil to remain robust and support crush margins, however, likely lower than the levels in the prior year. We anticipate improved process volumes in the third quarter as we enhance our focus on operational excellence across our network, and as our Green Bison JV achieves full run rate. It is also important to note the prior year period also included a $48 million insurance recovery related to damages from Hurricane IDA.
In Carbohydrate Solutions, we anticipate a strong third quarter, but lower than the prior year as wheat milling margins moderate off elevated levels. Network optimization and operational excellence will continue to support strong earnings in the second half. We anticipate solid demand for ethanol, both domestically and in the export markets and upside opportunities could be presented if fundamentals hold.
In Nutrition, we expect the third quarter to be higher than the prior year period. The team is systematically optimizing the organizational and operational structure across both human and animal nutrition, which are expected to continue to yield cost benefits throughout the year. Coupling this with our efforts to convert pipeline opportunities and drive improved volumes, we anticipate to see continued sequential improvement in the nutrition business throughout the year.
Turning to Slide 14 to discuss our full year guidance assumptions. We anticipated increased crop production in South America would lead to lower margins across the AS&O segment in 2024. And the global soybean crush margins would likely be in the range of $35 per metric ton to $60 per metric ton for the year, with performance around the midpoint determined by the strength of soybean meal and oil demand.
Though the larger crop production in South America did materialize, we experienced lower-than-average farmer selling in that region as well as here merchandising opportunities in North America through the first half which weighed negatively on margins in Ag Services. We expect these dynamics to continue to pressure margins in our third quarter. On soybean crush margins, we continue to see robust soybean meal demand based on solid livestock margins and some supply tightness among competing feedstocks.
From the soybean oil side. We expect that as renewable diesel production continues to grow in the second half. The demand for vegetable oil will remain well supported. And with the prospect of a large crop in North America, we perceive increased opportunities for our interior elevator network and processing plants within oilseeds and carbohydrate solutions in the second half. Taking this all together, our expected crush margin remains unchanged, from $35 per metric ton to $60 per metric ton. With recent fundamentals supporting margins above the midpoint.
With the first half results largely in line and balancing an improving crush environment with less opportunities in merchandising in the second half, our 2024 earnings per share range remains unchanged. Looking at the other metrics included in our total consolidated guidance, our full year 2024 indications remain unchanged.
Back to you, Juan.
