8-K
Archer-Daniels-Midland Co (ADM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 27, 2021
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
| Delaware | 1-44 | 41-0129150 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
| 77 West Wacker Drive, Suite 4600 | |||
| Chicago, | Illinois | 60601 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (312) 634-8100
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, no par value | ADM | NYSE |
| 1.000% Notes due 2025 | NYSE |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§230.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02Results of Operations and Financial Condition.
On April 27, 2021, Archer-Daniels-Midland Company (ADM) issued a press release announcing first quarter results. A copy of such press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
ADM is making reference to non-GAAP financial measures in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Item 9.01Financial Statements and Exhibits.
(d) ExhibitsThe following exhibits are furnished or filed, as applicable, herewith:
99.1Press release dated April 27, 2021 announcing first quarter results
101 Interactive Data File
104 Cover Page Interactive Data File (formatted as Inline XBRL and incorporated by reference to Exhibit 101)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARCHER-DANIELS-MIDLAND COMPANY | |||
|---|---|---|---|
| Date: | April 27, 2021 | By | /s/ D. Cameron Findlay |
| --- | --- | --- | --- |
| D. Cameron Findlay | |||
| Senior Vice President, General Counsel, and Secretary |
EXHIBIT INDEX
Exhibit Description
99.1 Press release dated April 27, 2021 announcing first quarter results
101 Interactive Data File
104 Cover Page Interactive Data File (formatted as Inline XBRL and incorporated by reference to Exhibit 101)
Document
Exhibit 99.1
ADM Reports First Quarter Earnings of $1.22 per Share,
$1.39 per Share on an Adjusted Basis
•Q1 net earnings of $689 million; adjusted net earnings of $783 million
•Adjusted segment operating profit up 86 percent year over year
•Calendar year outlook for 2021 substantially improved; expect significant EPS growth and another record year
CHICAGO, April 27, 2021—ADM (NYSE: ADM) today reported financial results for the quarter ended March 31, 2021.
“ADM delivered an outstanding first quarter, building on our great 2020 performance. As expected, we achieved strong earnings spanning all three of our businesses, and a sixth consecutive quarter of year-over-year adjusted operating profit growth,” said Chairman and CEO Juan Luciano.
“Our team executed well across the board, as we continued to find new and innovative ways to meet the evolving needs of our customers. We are seeing clear, favorable demand trends for many of our products, and we expect that pattern to continue as vaccine rollouts accelerate and restrictions ease.
“We are also moving into the next phase of our strategic transformation, which will sharpen our focus on two key pillars — Productivity and Innovation — to enhance our capabilities to deliver outstanding execution, serve customer needs, and power growth and profitability.
“Taking all of these factors into account, our outlook today is even more optimistic than what we shared at the beginning of the year. We expect significant year-over-year growth in earnings across all three of our businesses in 2021, and continued sustainable growth in the years to come.”
First Quarter 2021 Highlights
| (Amounts in millions except per share amounts) | 2021 | 2020 | ||
|---|---|---|---|---|
| Earnings per share (as reported) | $ | 1.22 | $ | 0.69 |
| Adjusted earnings per share1 | $ | 1.39 | $ | 0.64 |
| Segment operating profit | $ | 1,105 | $ | 599 |
| Adjusted segment operating profit1 | $ | 1,199 | $ | 643 |
| Ag Services and Oilseeds | 777 | 422 | ||
| Carbohydrate Solutions | 259 | 68 | ||
| Nutrition | 154 | 142 | ||
| Other Business | 9 | 11 |
•Q1 2021 EPS as reported of $1.22 includes a $0.13 per share charge related to asset impairment, restructuring, and legal settlements, and a $0.04 per share charge related to the mark-to-market adjustment on the Wilmar exchangeable bond. Adjusted EPS, which excludes these items, was $1.39.1
Quarterly Results of Operations
Ag Services & Oilseeds achieved a record Q1, with operating profits 84 percent higher year over year.
•Ag Services results were significantly higher versus the first quarter of 2020. In North America, great execution helped capitalize on strong Chinese demand, resulting in an outstanding performance. South American origination results were down significantly due to lower farmer selling versus the prior year. Lower margins, including impacts from the slightly delayed harvest and higher freight costs, also affected South American results. Results for the quarter were impacted by approximately $75 million in negative timing effects related to ocean freight positions; those impacts will reverse in the coming quarters.
•Crushing delivered its best quarter ever, as the business leveraged its diversified global footprint to capture strong execution margins in both soybean and softseed crushing, driven by robust vegetable oil demand and tight soybean stocks. Net timing impacts for the quarter were minimal.
•Refined Products and Other results were higher year over year. While overall volumes were down due to pandemic impacts, margins were stronger in both North America and EMEAI refined oils. Global biodiesel results were lower year over year.
•Equity earnings from Wilmar were lower versus the prior-year period.
1 Non-GAAP financial measures; see pages 5, 10, 11 and 12 for explanations and reconciliations, including after-tax amounts.
Carbohydrate Solutions results were significantly higher than the prior-year period.
•Starches and Sweeteners, including ethanol production from our wet mills, achieved significantly higher results. The business managed risk exceptionally well, capitalizing on rising prices in the ethanol complex and favorable co-product values in an industry environment of improving margins and falling inventories. Corn oil results were significantly higher than the previous year, which had been impacted by substantial mark-to-market effects. In general, though demand for sweeteners and flour by the foodservice sector remained below the prior year, there were signs of acceleration in March.
•Vantage Corn Processors results were substantially higher, driven by improved margins on the distribution of fuel ethanol and strong performance in USP-grade industrial alcohol.
Nutrition delivered solid year-over-year operating profit growth.
•Human Nutrition results were significantly higher than the prior-year quarter. Flavors had an exceptional quarter, driven by strong sales across various market segments, especially beverages. Favorable product mix in North America, improved margins in EMEAI, and accelerated income from a customer agreement also contributed to results, partially offset by certain specific expenses. Specialty Ingredients results were lower, primarily driven by demand factors, including the effect of pantry loading in the previous-year quarter and shifts in demand for texturants. Health and Wellness had a strong start to the year, with robust demand driving higher results in probiotics and fibers.
•Animal Nutrition results were lower versus the first quarter of 2020, driven primarily by lower demand and higher input costs as a result of pandemic effects, primarily in South America. This was partially offset by favorable results in amino acids, driven by improved product mix.
Other Business results were lower than the prior-year period, driven by lower Captive Insurance underwriting results, partially offset by more favorable ADMIS earnings.
Other Items of Note
As additional information to help clarify underlying business performance, the table on page 10 includes reported earnings and EPS as well as adjusted earnings and EPS.
Segment operating profit of $1.1 billion for the quarter includes charges related to asset impairment, restructuring, and legal settlements of $94 million ($0.12 per share).
In Corporate results, interest expense decreased from the prior year on lower interest rates and the favorable liability management actions taken in the prior year. Unallocated corporate costs were slightly higher year over year due primarily to the continued investments in IT and business transformation, and transfers of costs from business segments into the centralized centers of expertise in supply chain and operations. Other charges decreased due primarily to the absence of railroad maintenance expenses in the prior-year quarter. Corporate results also included restructuring charges of $5 million ($0.01 per share) and a charge related
to the mark-to-market adjustment on the Wilmar exchangeable bond of $20 million ($0.04 per share).
The effective tax rate for the quarter was approximately 16 percent compared to a benefit of approximately 4 percent in the prior year.
Note: Additional Facts and Explanations
Additional facts and explanations about results and industry environment can be found at the end of the ADM Q1 Earnings Presentation at www.adm.com/webcast.
Conference Call Information
ADM will host a webcast on April 27, 2021, at 8 a.m. Central Time to discuss financial results and provide a company update. To listen to the webcast, go to www.adm.com/webcast. A replay of the webcast will also be available for an extended period of time at www.adm.com/webcast.
Forward-Looking Statements
Some of our comments and materials in this presentation 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 risk and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements as a result of new information or future events.
About ADM
At ADM, we unlock the power of nature to provide access to nutrition worldwide. With industry-advancing innovations, a complete portfolio of ingredients and solutions to meet any taste, and a commitment to sustainability, we give customers an edge in solving the nutritional challenges of today and tomorrow. We’re a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company. Our breadth, depth, insights, facilities and logistical expertise give us unparalleled capabilities to meet needs for food, beverages, health and wellness, and more. From the seed of the idea to the outcome of the solution, we enrich the quality of life the world over. Learn more at www.adm.com.
| Media Relations | Investor Relations |
|---|---|
| Jackie Anderson | Victoria de la Huerga |
| 312-634-8484 | 312-634-8457 |
Financial Tables Follow
Source: Corporate Release
Segment Operating Profit, Adjusted Segment Operating Profit (a non-GAAP financial measure)
and Corporate Results
(unaudited)
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| March 31 | ||||||
| (In millions) | 2021 | 2020 | Change | |||
| Segment Operating Profit | $ | 1,105 | $ | 599 | $ | 506 |
| Specified items: | ||||||
| Impairment, restructuring, and settlement charges | 94 | 44 | 50 | |||
| Adjusted Segment Operating Profit | $ | 1,199 | $ | 643 | $ | 556 |
| Ag Services and Oilseeds | $ | 777 | $ | 422 | $ | 355 |
| Ag Services | 209 | 164 | 45 | |||
| Crushing | 382 | 70 | 312 | |||
| Refined Products and Other | 101 | 81 | 20 | |||
| Wilmar | 85 | 107 | (22) | |||
| Carbohydrate Solutions | $ | 259 | $ | 68 | $ | 191 |
| Starches and Sweeteners | 222 | 99 | 123 | |||
| Vantage Corn Processors | 37 | (31) | 68 | |||
| Nutrition | $ | 154 | $ | 142 | $ | 12 |
| Human Nutrition | 128 | 113 | 15 | |||
| Animal Nutrition | 26 | 29 | (3) | |||
| Other Business | $ | 9 | $ | 11 | $ | (2) |
| Segment Operating Profit | $ | 1,105 | $ | 599 | $ | 506 |
| Corporate Results | $ | (281) | $ | (224) | $ | (57) |
| Interest expense - net | (64) | (77) | 13 | |||
| Unallocated corporate costs | (202) | (189) | (13) | |||
| Other | 10 | (52) | 62 | |||
| Specified items: | ||||||
| LIFO credit (charge) | — | 91 | (91) | |||
| Loss on debt conversion option | (20) | — | (20) | |||
| Restructuring (charges) adjustment | (5) | 3 | (8) | |||
| Earnings Before Income Taxes | $ | 824 | $ | 375 | $ | 449 |
Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit, a non-GAAP financial measure, is segment operating profit excluding specified items. Management believes that segment operating profit and adjusted segment operating profit are useful measures of ADM’s performance because they provide investors information about ADM’s business unit performance excluding corporate overhead costs as well as specified items. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes, the most directly comparable GAAP financial measure, or any other measure of consolidated operating results under U.S. GAAP.
Consolidated Statements of Earnings
(unaudited)
| Quarter ended | ||||
|---|---|---|---|---|
| March 31 | ||||
| 2021 | 2020 | |||
| (in millions, except per share amounts) | ||||
| Revenues | $ | 18,893 | $ | 14,970 |
| Cost of products sold (1) | 17,345 | 14,019 | ||
| Gross profit | 1,548 | 951 | ||
| Selling, general, and administrative expenses | 749 | 664 | ||
| Asset impairment, exit, and restructuring costs (2) | 59 | 41 | ||
| Equity in (earnings) losses of unconsolidated affiliates | (125) | (140) | ||
| Interest income | (13) | (40) | ||
| Interest expense (3) | 87 | 83 | ||
| Other (income) expense - net (4,5) | (33) | (32) | ||
| Earnings before income taxes | 824 | 375 | ||
| Income tax (benefit) expense (6) | 131 | (16) | ||
| Net earnings including noncontrolling interests | 693 | 391 | ||
| Less: Net earnings (losses) attributable to noncontrolling interests | 4 | — | ||
| Net earnings attributable to ADM | $ | 689 | $ | 391 |
| Diluted earnings per common share | $ | 1.22 | $ | 0.69 |
| Average diluted shares outstanding | 564 | 564 |
(1) Includes a credit related to changes in the Company’s LIFO reserves of $91 million in the prior quarter.
(2) Includes charges related to impairment of certain assets and restructuring of $59 million in the current quarter and $41 million in the prior quarter.
(3) Includes charges related to the mark-to-market adjustment of the conversion option of the exchangeable bond issued in August 2020 of $20 million in the current quarter.
(4) Includes gains of $12 million related to the sale of certain assets and a step-up gain on an equity investment in the prior quarter.
(5) Includes a legal settlement charge of $38 million and exit costs of $2 million in the current quarter.
(6) Includes the current quarter tax expense impact of the above specified items of $25 million and the prior quarter tax expense impact of the above specified items and certain discrete items totaling $20 million.
Summary of Financial Condition
(unaudited)
| March 31,<br>2021 | March 31,<br>2020 | |||
|---|---|---|---|---|
| (in millions) | ||||
| Net Investment In | ||||
| Cash and cash equivalents (a) | $ | 694 | $ | 4,734 |
| Operating working capital (b) | 12,841 | 7,985 | ||
| Property, plant, and equipment | 9,799 | 9,883 | ||
| Investments in and advances to affiliates | 4,998 | 5,143 | ||
| Goodwill and other intangibles | 5,249 | 5,194 | ||
| Other non-current assets | 2,148 | 2,029 | ||
| $ | 35,729 | $ | 34,968 | |
| Financed By | ||||
| Short-term debt (a) | $ | 2,763 | $ | 3,382 |
| Long-term debt, including current maturities (a) | 8,437 | 9,121 | ||
| Deferred liabilities | 3,586 | 3,418 | ||
| Temporary equity | 82 | 71 | ||
| Shareholders’ equity | 20,861 | 18,976 | ||
| $ | 35,729 | $ | 34,968 |
(a) Net debt is calculated as short-term debt plus long-term debt (including current maturities) less cash and cash equivalents.
(b) Current assets (excluding cash and cash equivalents) less current liabilities (excluding short-term debt and current maturities of long-term debt).
Summary of Cash Flows
(unaudited)
| Three months ended | ||||
|---|---|---|---|---|
| March 31 | ||||
| 2021 | 2020 | |||
| (in millions) | ||||
| Operating Activities | ||||
| Net earnings | $ | 693 | $ | 391 |
| Depreciation and amortization | 249 | 245 | ||
| Asset impairment charges | 31 | 44 | ||
| (Gains) losses on sales of assets | (11) | — | ||
| Other - net | 240 | 159 | ||
| Change in deferred consideration in securitized receivables(a) | — | (2,045) | ||
| Other changes in operating assets and liabilities | (904) | 551 | ||
| Total Operating Activities | 298 | (655) | ||
| Investing Activities | ||||
| Purchases of property, plant and equipment | (174) | (194) | ||
| Net assets of businesses acquired | — | (8) | ||
| Proceeds from sale of business/assets | 14 | 7 | ||
| Investments in retained interest in securitized receivables(a) | — | (1,271) | ||
| Proceeds from retained interest in securitized receivables(a) | — | 3,316 | ||
| Marketable securities - net | 1 | 5 | ||
| Investments in and advances to affiliates | (4) | (3) | ||
| Other investing activities | (6) | 1 | ||
| Total Investing Activities | (169) | 1,853 | ||
| Financing Activities | ||||
| Long-term debt borrowings | 593 | 1,481 | ||
| Long-term debt payments | — | (1) | ||
| Net borrowings (payments) under lines of credit | 729 | 2,188 | ||
| Share repurchases | — | (112) | ||
| Cash dividends | (208) | (203) | ||
| Other | (37) | (11) | ||
| Total Financing Activities | 1,077 | 3,342 | ||
| Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 1,206 | 4,540 | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period | 4,646 | 2,990 | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period | $ | 5,852 | $ | 7,530 |
(a) Cash flows related to the Company’s retained interest in securitized receivables as required by ASU 2016-15 which took effect January 1, 2018.
Segment Operating Analysis
(unaudited)
| Quarter ended | ||||
|---|---|---|---|---|
| March 31 | ||||
| 2021 | 2020 | |||
| (in ‘000s metric tons) | ||||
| Processed volumes (by commodity) | ||||
| Oilseeds | 8,960 | 9,163 | ||
| Corn | 3,650 | 5,534 | ||
| Total processed volumes | 12,610 | 14,697 | ||
| Quarter ended | ||||
| March 31 | ||||
| 2021 | 2020 | |||
| (in millions) | ||||
| Revenues | ||||
| Ag Services and Oilseeds | $ | 15,007 | $ | 11,079 |
| Carbohydrate Solutions | 2,223 | 2,316 | ||
| Nutrition | 1,563 | 1,471 | ||
| Other Business | 100 | 104 | ||
| Total revenues | $ | 18,893 | $ | 14,970 |
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
| Quarter ended March 31 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| In millions | Per share | In millions | Per share | |||||
| Net earnings and fully diluted EPS | $ | 689 | $ | 1.22 | $ | 391 | $ | 0.69 |
| Adjustments: | ||||||||
| LIFO charge (credit) (a) | — | — | (69) | (0.12) | ||||
| Impairment, restructuring, and settlement charges (b) | 74 | 0.13 | 32 | 0.06 | ||||
| Loss on debt conversion option (c) | 20 | 0.04 | — | — | ||||
| Tax adjustment (d) | — | — | 7 | 0.01 | ||||
| Sub-total adjustments | 94 | 0.17 | (30) | (0.05) | ||||
| Adjusted net earnings and adjusted EPS | $ | 783 | $ | 1.39 | $ | 361 | $ | 0.64 |
(a)Prior quarter changes in the Company’s LIFO reserves of $(91) million pretax ($69 million after tax), tax effected using the Company’s U.S. income tax rate.
(b)Current quarter charges of $99 million pretax ($74 million after tax) related to the impairment of certain assets, restructuring, and legal settlement, tax effected using the applicable rates. Prior quarter charges of $41 million pretax ($32 million after tax), related to the impairment of certain assets and restructuring, tax effected using the applicable tax rates.
(c)Current quarter loss on debt conversion option of $20 million pretax ($20 million after tax) related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020, tax effected using the applicable tax rate.
(d)Tax adjustment due to certain discrete items totaling $7 million in the prior quarter.
Adjusted net earnings reflects ADM’s reported net earnings after removal of the effect on net earnings of specified items as more fully described above. Adjusted EPS reflects ADM’s fully diluted EPS after removal of the effect on EPS as reported of specified items as more fully described above. Management believes that Adjusted net earnings and Adjusted EPS are useful measures of ADM’s performance because they provide investors additional information about ADM’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. These non-GAAP financial measures are not intended to replace or be alternatives to net earnings and EPS as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s diluted shares outstanding for each respective period in order to arrive at an adjusted EPS amount for each specified item.
Adjusted Return on Invested Capital
A non-GAAP financial measure
(unaudited)
| Adjusted ROIC Earnings (in millions) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Four Quarters | |||||||||||
| Quarter Ended | Ended | ||||||||||
| June 30, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2021 | |||||||
| Net earnings attributable to ADM | $ | 469 | $ | 225 | $ | 687 | $ | 689 | $ | 2,070 | |
| Adjustments: | |||||||||||
| Interest expense | 87 | 100 | 69 | 87 | 343 | ||||||
| Other adjustments | 8 | 355 | 1 | 99 | 463 | ||||||
| Total adjustments | 95 | 455 | 70 | 186 | 806 | ||||||
| Tax on adjustments | (23) | (120) | (22) | (45) | (210) | ||||||
| Net adjustments | 72 | 335 | 48 | 141 | 596 | ||||||
| Total Adjusted ROIC Earnings | $ | 541 | $ | 560 | $ | 735 | $ | 830 | $ | 2,666 | |
| Adjusted Invested Capital (in millions) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Trailing Four | ||||||||||
| June 30, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Mar. 31, 2021 | Quarter Average | |||||||
| Equity (1) | $ | 19,293 | $ | 19,322 | $ | 20,000 | $ | 20,841 | $ | 19,864 | |
| + Interest-bearing liabilities (2) | 9,181 | 8,141 | 9,937 | 11,208 | 9,617 | ||||||
| Other adjustments | 6 | 259 | (5) | 74 | 84 | ||||||
| Total Adjusted Invested Capital | $ | 28,480 | $ | 27,722 | $ | 29,932 | $ | 32,123 | $ | 29,565 | |
| Adjusted Return on Invested Capital | 9.0 | % |
(1) Excludes noncontrolling interests
(2) Includes short-term debt, current maturities of long-term debt, finance lease obligations, and long-term debt
Adjusted ROIC is Adjusted ROIC earnings divided by adjusted invested capital. Adjusted ROIC earnings is ADM’s net earnings adjusted for the after-tax effects of interest expense and specified items. Adjusted invested capital is the sum of ADM’s equity (excluding noncontrolling interests) and interest-bearing liabilities adjusted for the after-tax effect of specified items. Management believes Adjusted ROIC is a useful financial measure because it provides investors information about ADM’s returns excluding the impacts of specified items and increases period-to-period comparability of underlying business performance. Management uses Adjusted ROIC to measure ADM’s performance by comparing Adjusted ROIC to its weighted average cost of capital (WACC). Adjusted ROIC, Adjusted ROIC earnings and Adjusted invested capital are non-GAAP financial measures and are not intended to replace or be alternatives to GAAP financial measures.
Adjusted Earnings Before Taxes, Interest, and Depreciation and Amortization (EBITDA)
A non-GAAP financial measure
(unaudited)
The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the trailing four quarters ended March 31, 2021.
| Four Quarters | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Ended | |||||||||
| June 30, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2021 | ||||||
| (in millions) | ||||||||||
| Earnings before income taxes | $ | 552 | $ | 200 | $ | 756 | $ | 824 | $ | 2,332 |
| Interest expense | 87 | 100 | 69 | 87 | 343 | |||||
| Depreciation and amortization | 244 | 238 | 249 | 249 | 980 | |||||
| Losses (gains) on sales of assets and businesses | (23) | (57) | (10) | — | (90) | |||||
| Asset impairment, exit, restructuring, and settlement charges | 16 | 8 | 27 | 99 | 150 | |||||
| Railroad maintenance expense | — | 28 | 37 | — | 65 | |||||
| Loss (gain) on debt extinguishment | 14 | 396 | (1) | — | 409 | |||||
| Expenses related to acquisitions | — | — | 4 | — | 4 | |||||
| Adjusted EBITDA | $ | 890 | $ | 913 | $ | 1,131 | $ | 1,259 | $ | 4,193 |
| Four Quarters | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Ended | |||||||||
| June 30, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2021 | ||||||
| (in millions) | ||||||||||
| Ag Services and Oilseeds | $ | 502 | $ | 527 | $ | 926 | $ | 871 | $ | 2,826 |
| Carbohydrate Solutions | 274 | 323 | 284 | 342 | 1,223 | |||||
| Nutrition | 217 | 201 | 185 | 209 | 812 | |||||
| Other Business | 39 | 21 | (14) | 11 | 57 | |||||
| Corporate | (142) | (159) | (250) | (174) | (725) | |||||
| Adjusted EBITDA | $ | 890 | $ | 913 | $ | 1,131 | $ | 1,259 | $ | 4,193 |
Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation and amortization, adjusted for specified items. The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense and depreciation
and amortization to earnings before income taxes. Management believes that adjusted EBITDA is a useful measure of the
Company’s performance because it provides investors additional information about the Company’s operations allowing better
evaluation of underlying business performance and better period-to-period comparability. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace or be an alternative to earnings before income taxes, the most directly comparable GAAP financial measure.
12
