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) January 26, 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 January 26, 2021, Archer-Daniels-Midland Company (ADM) issued a press release announcing fourth quarter and annual 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 January 26, 2021 announcing fourth quarter and annual 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: | January 26, 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 January 26, 2021 announcing fourth quarter and annual 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 Fourth Quarter Earnings of $1.22 per Share,
$1.21 per Share on an Adjusted Basis, Affirms Earnings Growth Expectation for 2021
•Q4 net earnings of $687 million; adjusted net earnings of $684 million
•Q4 adjusted EPS up 49 percent excluding prior-year impact of retroactive biodiesel tax credit
•Full-year reported EPS of $3.15; record adjusted EPS of $3.59
•Expect growth in operating profit and EPS in 2021
CHICAGO, January 26, 2021—ADM (NYSE: ADM) today reported financial results for the quarter and fiscal year ended December 31, 2020.
“I want to thank our team, which performed exceptionally well during truly unprecedented times to deliver four straight quarters of year-over-year adjusted segment operating profit growth in 2020, along with solid returns and record full-year adjusted EPS of $3.59,” said Chairman and CEO Juan Luciano. “Around the globe, ADM colleagues demonstrated their resourcefulness, creativity and commitment by keeping our work environment safe from COVID-19, maintaining our operations and serving our customers. The team delivered on our strategic objectives, maintained a solid balance sheet, managed a wide variety of risks superbly, and showed the strength of our diversified and global value chain.
“Our Ag Services and Oilseeds team delivered outstanding results in 2020, crossing the $2 billion profit mark by capitalizing on our unparalleled and flexible global footprint to meet strong demand. With continued strong global demand for grains and oilseeds as well as meal and oils, we are confident in another outstanding performance from Ag Services & Oilseeds in 2021.
“In Carbohydrate Solutions,” Luciano continued, “the team achieved higher full-year results, demonstrating the power of our diversified product portfolio by pivoting quickly and effectively to meet incremental demand for industrial starches, retail flour and high-grade alcohol. The Carbohydrate Solutions business is well positioned to generate solid profit growth in 2021 as lockdown impacts dissipate.
“Our Nutrition business continued to harvest investments, lead in consumer growth trend areas, and partner with customers to deliver new products and solutions in 2020, driving 37 percent annual operating profit growth. Based on our current organic growth plans, we expect the Nutrition team to deliver solid revenue expansion and profit growth in 2021.
“For ADM, based on the continued delivery of drivers under our control and improving market conditions as the year progresses, we expect strong growth in segment operating profit and another record year of EPS in 2021. I am extremely proud of our team’s performance: Our momentum is strong, and our future is bright.”
Fourth Quarter 2020 Highlights
| (Amounts in millions except per share amounts) | 2020 | 2019 | ||
|---|---|---|---|---|
| Earnings per share (as reported) | $ | 1.22 | $ | 0.90 |
| Adjusted earnings per share1 | $ | 1.21 | $ | 1.42 |
| Segment operating profit | $ | 1,139 | $ | 934 |
| Adjusted segment operating profit1 | $ | 1,152 | $ | 1,028 |
| Ag Services and Oilseeds | 834 | 739 | ||
| Carbohydrate Solutions | 208 | 174 | ||
| Nutrition | 127 | 102 | ||
| Other Business | (17) | 13 |
•Q4 2019 results included $270 million segment operating profit ($0.61 per share) impact of the retroactive biodiesel tax credit.
•Q4 2020 EPS as reported of $1.22 includes a $0.03 per share charge related to asset impairment, restructuring and settlement; a $0.01 per share charge for acquisition-related expenses; a $0.01 per share credit related to gains on the sale of certain assets; and a $0.04 per share credit related to tax discrete items. Adjusted EPS, which excludes these items, was $1.21.1
Quarterly Results of Operations
Ag Services & Oilseeds achieved substantially higher results year over year, setting a Q4 record for adjusted operating profit.
•Ag Services results were significantly higher than the prior-year period, driven by great execution in North America, where the business capitalized on strong global demand, particularly from China, to deliver higher export volumes and margins. As expected, South American origination was lower year over year after significantly accelerated farmer selling in the first half of 2020. Global Trade contributed to the higher year-over-year results as it continued to utilize its global network and manage risk well to meet customer demand. As anticipated, negative timing impacts from the prior quarter reversed.
•Crushing delivered substantially higher results versus the prior-year period. The business captured significantly higher margins in all regions, driven by tight soybean supplies and strong global demand for both meal and vegetable oils. There was approximately $125 million in net negative timing in the quarter, driven by basis impacts and improving softseed margins.
•Refined Products and Other results were higher year over year absent the recognition of the retroactive biodiesel tax credit in Q4 of 2019, with good results driven primarily by solid South American margins.
•Equity earnings from Wilmar were higher versus the prior-year period.
1 Non-GAAP financial measures; see pages 5, 10, 11 and 13 for explanations and reconciliations, including after-tax amounts.
Carbohydrate Solutions results were higher than the fourth quarter of 2019.
•Starches and Sweeteners achieved significantly higher results versus the prior-year period, driven by lower net corn costs and intra-company insurance settlements. Earnings were partially offset by lower results from corn oil and wet mill ethanol margins.
•Vantage Corn Processors results were better versus the prior-year period, though they continued to reflect the challenged ethanol industry environment. The business delivered higher year-over-year margins as it met increased demand for USP-grade alcohol, partially offset by fixed costs from the two temporarily idled dry mills.
Nutrition delivered 24 percent year-over-year operating profit growth.
•Human Nutrition results were higher versus the prior-year quarter. Flavors delivered a strong quarter, driven by good sales and product mix in North America and EMEAI. Continued strength in plant proteins drove higher results in Specialty Ingredients. Health & Wellness delivered higher sales in probiotics and natural health and nutrition; prior-year results included revenue and income related to the launch of the strategic Spiber relationship. Results for the quarter also included an intra-company insurance settlement.
•Animal Nutrition results were significantly higher year over year, driven by strong performances in Asia and EMEAI and improvement in amino acid results, partially offset by currency effects in Latin America.
Other Business results were substantially lower, driven by lower ADM Investor Services earnings and Captive Insurance underwriting results, including intra-company settlements referenced above in Carbohydrate Solutions and Nutrition results.
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 settlement activities of $16 million ($0.02 per share) and gains on the sale of certain assets of $3 million ($0.00 per share).
In Corporate results, unallocated corporate costs for the quarter were higher year over year due primarily to increased variable performance-related compensation expense accruals, and increased IT and project-related expenses. Other charges decreased due to lower railroad maintenance expenses partially offset by the absence of prior year investment gains. Corporate results also included restructuring charges of $11 million ($0.01 per share).
The effective tax rate for the quarter was approximately 8 percent compared to a positive 1 percent in the prior year. The calendar year 2020 effective tax rate was approximately 5 percent, down from approximately 13 percent in 2019. The decrease for the calendar year was due primarily to changes in the geographic mix of earnings and the impact of U.S. tax credits, mainly the railroad tax credits, which have an offsetting expense in cost of products sold. Absent the effect of EPS adjusting items, the effective tax rate for calendar year 2020 was approximately 9 percent.
Note: Additional Facts and Explanations
Additional facts and explanations about results and industry environment can be found at the end of the ADM Q4 Earnings Presentation at www.adm.com/webcast.
Conference Call Information
ADM will host a webcast on January 26, 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 | Year ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 | December 31 | |||||||||||
| (In millions) | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||
| Segment Operating Profit | $ | 1,139 | $ | 934 | $ | 205 | $ | 3,455 | $ | 2,948 | $ | 507 |
| Specified items: | ||||||||||||
| (Gains) losses on sales of assets and businesses | (3) | — | (3) | (83) | (12) | (71) | ||||||
| Impairment, restructuring, and settlement charges | 16 | 94 | (78) | 76 | 146 | (70) | ||||||
| Adjusted Segment Operating Profit | $ | 1,152 | $ | 1,028 | $ | 124 | $ | 3,448 | $ | 3,082 | $ | 366 |
| Ag Services and Oilseeds | $ | 834 | $ | 739 | $ | 95 | $ | 2,105 | $ | 1,935 | $ | 170 |
| Ag Services | 346 | 176 | 170 | 828 | 502 | 326 | ||||||
| Crushing | 217 | 87 | 130 | 466 | 580 | (114) | ||||||
| Refined Products and Other | 153 | 363 | (210) | 439 | 586 | (147) | ||||||
| Wilmar | 118 | 113 | 5 | 372 | 267 | 105 | ||||||
| Carbohydrate Solutions | $ | 208 | $ | 174 | $ | 34 | $ | 717 | $ | 644 | $ | 73 |
| Starches and Sweeteners | 229 | 206 | 23 | 762 | 753 | 9 | ||||||
| Vantage Corn Processors | (21) | (32) | 11 | (45) | (109) | 64 | ||||||
| Nutrition | $ | 127 | $ | 102 | $ | 25 | $ | 574 | $ | 418 | $ | 156 |
| Human Nutrition | 90 | 83 | 7 | 462 | 376 | 86 | ||||||
| Animal Nutrition | 37 | 19 | 18 | 112 | 42 | 70 | ||||||
| Other Business | $ | (17) | $ | 13 | $ | (30) | $ | 52 | $ | 85 | $ | (33) |
| Segment Operating Profit | $ | 1,139 | $ | 934 | $ | 205 | $ | 3,455 | $ | 2,948 | $ | 507 |
| Corporate Results | $ | (383) | $ | (438) | $ | 55 | $ | (1,572) | $ | (1,360) | $ | (212) |
| Interest expense - net | (67) | (72) | 5 | (313) | (348) | 35 | ||||||
| Unallocated corporate costs | (278) | (193) | (85) | (857) | (647) | (210) | ||||||
| Other charges | (29) | (33) | 4 | (54) | (51) | (3) | ||||||
| Specified items: | ||||||||||||
| LIFO credit (charge) | — | (27) | 27 | 91 | (37) | 128 | ||||||
| Gain (loss) on debt extinguishment | 1 | — | 1 | (409) | — | (409) | ||||||
| Expenses related to acquisitions | (4) | (3) | (1) | (4) | (17) | 13 | ||||||
| Loss on debt conversion option | (2) | — | (2) | (17) | — | (17) | ||||||
| Gains (losses) on sales of assets | 7 | (101) | 108 | 7 | (101) | 108 | ||||||
| Impairment, restructuring, and settlement charges | (11) | (9) | (2) | (16) | (159) | 143 | ||||||
| Earnings Before Income Taxes | $ | 756 | $ | 496 | $ | 260 | $ | 1,883 | $ | 1,588 | $ | 295 |
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 | Year ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31 | December 31 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| (in millions, except per share amounts) | ||||||||
| Revenues | $ | 17,978 | $ | 16,329 | $ | 64,355 | $ | 64,656 |
| Cost of products sold (1) | 16,626 | 15,160 | 59,902 | 60,509 | ||||
| Gross profit | 1,352 | 1,169 | 4,453 | 4,147 | ||||
| Selling, general, and administrative expenses (2) | 749 | 654 | 2,687 | 2,493 | ||||
| Asset impairment, exit, and restructuring costs (3) | 19 | 103 | 80 | 303 | ||||
| Equity in (earnings) losses of unconsolidated affiliates | (176) | (175) | (579) | (454) | ||||
| (Gain) loss on debt extinguishment (4) | (1) | — | 409 | — | ||||
| Interest income | (17) | (50) | (88) | (192) | ||||
| Interest expense (5) | 69 | 95 | 339 | 402 | ||||
| Other (income) expense - net (6,7) | (47) | 46 | (278) | 7 | ||||
| Earnings before income taxes | 756 | 496 | 1,883 | 1,588 | ||||
| Income tax (benefit) expense (8) | 63 | (3) | 101 | 209 | ||||
| Net earnings including noncontrolling interests | 693 | 499 | 1,782 | 1,379 | ||||
| Less: Net earnings (losses) attributable to noncontrolling interests | 6 | (5) | 10 | — | ||||
| Net earnings attributable to ADM | $ | 687 | $ | 504 | $ | 1,772 | $ | 1,379 |
| Diluted earnings per common share | $ | 1.22 | $ | 0.90 | $ | 3.15 | $ | 2.44 |
| Average diluted shares outstanding | 563 | 563 | 563 | 565 |
(1) Includes a charge (credit) related to changes in the Company’s LIFO reserves of $(91) million in the current YTD and $27 and $37 million in the prior quarter and YTD, respectively.
(2) Includes acquisition-related expenses of $4 million in the current quarter, acquisition-related expenses and a settlement charge totaling $8 million in the current YTD, and acquisition-related expenses of $3 million and $17 million in the prior quarter and YTD, respectively.
(3) Includes charges related to impairment of certain assets and restructuring of $19 million and $80 million in the current quarter and YTD, respectively, and charges related to impairment of certain assets, restructuring, and pension settlement of $103 million and $303 million in the prior quarter and YTD, respectively.
(4) Includes a (gain) loss on debt extinguishment of ($1 million) in the current quarter and $409 million in the current YTD primarily related to the early repurchase of certain of the Company’s debentures.
(5) Includes charges related to the mark-to-market adjustment of the conversion option of the exchangeable bond issued in August 2020 of $2 million and $17 million in the current quarter and YTD, respectively. Includes tax interest related to the sale of an equity investment of $12 million in the prior quarter and YTD.
(6) Includes gains related to the sale of certain assets in the current quarter of $10 million in the current quarter, gains related to the sale of Wilmar shares and certain other assets of $90 million in the current YTD, a loss on sale of an equity investment of $101 million in the prior quarter and YTD, and gains related to the sale of certain assets and a step-up gain on an equity investment of $12 million in the prior YTD.
(7) Includes a settlement charge of $8 million in the current quarter and YTD and $2 million in the prior YTD.
(8) Includes the tax expense (benefit) impact of the above specified items and certain discrete items totaling $(25) million and $(94) million, in the current quarter and YTD, respectively, and $60 million and $3 million in the prior quarter and YTD, respectively.
Summary of Financial Condition
(unaudited)
| December 31,<br>2020 | December 31,<br>2019 | |||
|---|---|---|---|---|
| (in millions) | ||||
| Net Investment In | ||||
| Cash and cash equivalents (a) | $ | 666 | $ | 852 |
| Short-term marketable securities (a) | 1 | — | ||
| Operating working capital (b) | 10,481 | 7,970 | ||
| Property, plant, and equipment | 9,951 | 10,106 | ||
| Investments in and advances to affiliates | 4,913 | 5,132 | ||
| Goodwill and other intangibles | 5,413 | 5,476 | ||
| Other non-current assets | 2,156 | 1,936 | ||
| $ | 33,581 | $ | 31,472 | |
| Financed By | ||||
| Short-term debt (a) | $ | 2,042 | $ | 1,202 |
| Long-term debt, including current maturities (a) | 7,887 | 7,679 | ||
| Deferred liabilities | 3,556 | 3,308 | ||
| Temporary equity | 74 | 58 | ||
| Shareholders’ equity | 20,022 | 19,225 | ||
| $ | 33,581 | $ | 31,472 |
(a) Net debt is calculated as short-term debt plus long-term debt (including current maturities) less cash and cash equivalents and short-term marketable securities.
(b) Current assets (excluding cash and cash equivalents and short-term marketable securities) less current liabilities (excluding short-term debt and current maturities of long-term debt).
Summary of Cash Flows
(unaudited)
| Year ended | ||||
|---|---|---|---|---|
| December 31 | ||||
| 2020 | 2019 | |||
| (in millions) | ||||
| Operating Activities | ||||
| Net earnings | $ | 1,782 | $ | 1,379 |
| Depreciation and amortization | 976 | 993 | ||
| Asset impairment charges | 54 | 142 | ||
| (Gains) losses on sales of assets | (161) | 39 | ||
| Loss on debt extinguishment | 409 | — | ||
| Other - net | 69 | (267) | ||
| Change in deferred consideration in securitized receivables(a) | (4,603) | (7,681) | ||
| Other changes in operating assets and liabilities | (912) | (57) | ||
| Total Operating Activities | (2,386) | (5,452) | ||
| Investing Activities | ||||
| Purchases of property, plant and equipment | (823) | (828) | ||
| Net assets of businesses acquired | (15) | (1,946) | ||
| Proceeds from sale of business/assets | 728 | 293 | ||
| Investments in retained interest in securitized receivables(a) | (2,121) | (5,398) | ||
| Proceeds from retained interest in securitized receivables(a) | 6,724 | 13,079 | ||
| Marketable securities - net | 4 | 77 | ||
| Investments in and advances to affiliates | (5) | (13) | ||
| Other investing activities | (27) | (5) | ||
| Total Investing Activities | 4,465 | 5,259 | ||
| Financing Activities | ||||
| Long-term debt borrowings | 1,791 | 8 | ||
| Long-term debt payments | (2,136) | (626) | ||
| Net borrowings (payments) under lines of credit | 837 | 919 | ||
| Share repurchases | (133) | (150) | ||
| Cash dividends | (809) | (789) | ||
| Other | 27 | (22) | ||
| Total Financing Activities | (423) | (660) | ||
| Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 1,656 | (853) | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period | 2,990 | 3,843 | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period | $ | 4,646 | $ | 2,990 |
(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 | Year ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31 | December 31 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| (in ‘000s metric tons) | ||||||||
| Processed volumes (by commodity) | ||||||||
| Oilseeds | 9,329 | 9,269 | 36,565 | 36,271 | ||||
| Corn | 4,168 | 5,782 | 17,885 | 22,079 | ||||
| Total processed volumes | 13,497 | 15,051 | 54,450 | 58,350 | ||||
| Quarter ended | Year ended | |||||||
| December 31 | December 31 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| (in millions) | ||||||||
| Revenues | ||||||||
| Ag Services and Oilseeds | $ | 14,369 | $ | 12,359 | $ | 49,716 | $ | 48,741 |
| Carbohydrate Solutions | 2,078 | 2,477 | 8,472 | 9,886 | ||||
| Nutrition | 1,441 | 1,414 | 5,800 | 5,677 | ||||
| Other Business | 90 | 79 | 367 | 352 | ||||
| Total revenues | $ | 17,978 | $ | 16,329 | $ | 64,355 | $ | 64,656 |
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
| Quarter ended December 31 | Year ended December 31 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| In millions | Per share | In millions | Per share | In millions | Per share | In millions | Per share | |||||||||
| Net earnings and fully diluted EPS | $ | 687 | $ | 1.22 | $ | 504 | $ | 0.90 | $ | 1,772 | $ | 3.15 | $ | 1,379 | $ | 2.44 |
| Adjustments: | ||||||||||||||||
| LIFO charge (credit) (a) | — | — | 20 | 0.04 | (69) | (0.12) | 28 | 0.05 | ||||||||
| Losses (gains) on sales of assets and businesses (b) | (8) | (0.01) | 133 | 0.24 | (80) | (0.14) | 124 | 0.22 | ||||||||
| Impairment, restructuring, and settlement charges (c) | 20 | 0.03 | 93 | 0.16 | 69 | 0.12 | 249 | 0.44 | ||||||||
| Expenses related to acquisitions (d) | 3 | 0.01 | 2 | — | 3 | 0.01 | 11 | 0.02 | ||||||||
| Loss (gain) on debt extinguishment (e) | (1) | — | — | — | 310 | 0.55 | — | — | ||||||||
| Loss on debt conversion option (f) | 2 | — | — | — | 17 | 0.03 | — | — | ||||||||
| Tax adjustment (g) | (19) | (0.04) | 46 | 0.08 | (3) | (0.01) | 39 | 0.07 | ||||||||
| Sub-total adjustments | (3) | (0.01) | 294 | 0.52 | 247 | 0.44 | 451 | 0.80 | ||||||||
| Adjusted net earnings and adjusted EPS | $ | 684 | $ | 1.21 | $ | 798 | $ | 1.42 | $ | 2,019 | $ | 3.59 | $ | 1,830 | $ | 3.24 |
(a)Current YTD 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. Prior quarter and YTD changes in the Company’s LIFO reserves of $27 million and $37 million pretax, respectively ($20 million and $28 million after tax, respectively), tax effected using the Company’s U.S. income tax rate.
(b)Current quarter gains of $10 million pretax ($8 million after tax) related to the sale of certain assets and YTD gains of $90 million pretax ($80 million after tax), respectively, primarily related to the sale of Wilmar shares and certain other assets, tax effected using the applicable tax rates. Prior quarter and YTD loss of $101 million pretax ($133 million after tax) related to a loss on sale of an equity investment and prior YTD gains of $12 million pretax ($9 million after tax) related to the sale of certain assets and a step-up gain on an equity investment, tax effected using the applicable tax rates.
(c)Current quarter and YTD charges of $27 million pretax ($20 million after tax) and $92 million pretax ($69 million after tax), respectively, related to the impairment of certain assets, restructuring, and settlement, tax effected using the applicable rates. Prior quarter and YTD charges of $103 million and $305 million pretax, respectively ($93 million and $249 million after tax, respectively), related to the impairment of certain assets, restructuring, and pension settlement, tax effected using the applicable tax rates.
(d)Current quarter and YTD charges of $4 million pretax ($3 million after tax) related to a target acquisition, tax effected using the Company’s U.S. income tax rate. Prior quarter and YTD acquisition expenses of $3 million pretax ($2 million after tax) and $17 million pretax ($11 million after tax), respectively, consisted of expenses primarily related to the Neovia acquisition, tax effected using the applicable tax rates.
(e)Current quarter gain of $1 million pretax ($1 million after tax) related to the early repayment of certain debt, tax effected using the applicable tax rates. YTD loss on debt extinguishment of $409 million pretax ($310 million after tax), primarily related to the early repurchase of certain of the Company’s debentures, tax effected using the applicable tax rates.
(f)Current quarter and YTD loss on debt conversion option of $2 million pretax ($2 million after tax) and $17 million pretax ($17 million after tax), respectively, 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.
(g)Tax adjustment due to certain discrete items totaling $(19) million and $(3) million in the current quarter and YTD, respectively, and $46 million and $39 million in the prior quarter and YTD, respectively.
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 | ||||||||||
| Mar. 31, 2020 | June 30, 2020 | Sep 30, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | |||||||
| Net earnings attributable to ADM | $ | 391 | $ | 469 | $ | 225 | $ | 687 | $ | 1,772 | |
| Adjustments: | |||||||||||
| Interest expense | 83 | 87 | 100 | 69 | 339 | ||||||
| LIFO | (91) | — | — | — | (91) | ||||||
| Other adjustments | 48 | 8 | 355 | 1 | 412 | ||||||
| Total adjustments | 40 | 95 | 455 | 70 | 660 | ||||||
| Tax on adjustments | (7) | (23) | (120) | (22) | (172) | ||||||
| Net adjustments | 33 | 72 | 335 | 48 | 488 | ||||||
| Total Adjusted ROIC Earnings | $ | 424 | $ | 541 | $ | 560 | $ | 735 | $ | 2,260 | |
| Adjusted Invested Capital (in millions) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Trailing Four | ||||||||||
| Mar. 31, 2020 | June 30, 2020 | Sep 30, 2020 | Dec. 31, 2020 | Quarter Average | |||||||
| Equity (1) | $ | 18,952 | $ | 19,293 | $ | 19,322 | $ | 20,000 | $ | 19,392 | |
| + Interest-bearing liabilities (2) | 12,512 | 9,181 | 8,141 | 9,937 | 9,943 | ||||||
| + LIFO adjustment (net of tax) | — | — | — | — | — | ||||||
| Other adjustments | 39 | 6 | 259 | (5) | 75 | ||||||
| Total Adjusted Invested Capital | $ | 31,503 | $ | 28,480 | $ | 27,722 | $ | 29,932 | $ | 29,410 | |
| Adjusted Return on Invested Capital | 7.7 | % |
(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, changes in the LIFO reserve and other 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 the LIFO reserve, and other specified items. Management believes Adjusted ROIC is a useful financial measure because it provides investors information about ADM’s returns excluding the impacts of LIFO inventory reserves and other 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 December 31, 2020.
| Four Quarters | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Ended | |||||||||
| Mar. 31, 2020 | June 30, 2020 | Sep 30, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | ||||||
| (in millions) | ||||||||||
| Earnings before income taxes | $ | 375 | $ | 552 | $ | 200 | $ | 756 | $ | 1,883 |
| Interest expense | 83 | 87 | 100 | 69 | 339 | |||||
| Depreciation and amortization | 245 | 244 | 238 | 249 | 976 | |||||
| LIFO charge (credit) | (91) | — | — | — | (91) | |||||
| Losses (gains) on sales of assets and businesses | — | (23) | (57) | (10) | (90) | |||||
| Asset impairment, restructuring, and settlement charges | 41 | 16 | 8 | 27 | 92 | |||||
| Railroad maintenance expense | 73 | — | 28 | 37 | 138 | |||||
| Loss (gain) on debt extinguishment | — | 14 | 396 | (1) | 409 | |||||
| Expenses related to acquisitions | — | — | — | 4 | 4 | |||||
| Adjusted EBITDA | $ | 726 | $ | 890 | $ | 913 | $ | 1,131 | $ | 3,660 |
| Four Quarters | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Ended | |||||||||
| Mar. 31, 2020 | June 30, 2020 | Sep 30, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | ||||||
| (in millions) | ||||||||||
| Ag Services and Oilseeds | $ | 514 | $ | 502 | $ | 527 | $ | 926 | $ | 2,469 |
| Carbohydrate Solutions | 148 | 274 | 323 | 284 | 1,029 | |||||
| Nutrition | 199 | 217 | 201 | 185 | 802 | |||||
| Other Business | 15 | 39 | 21 | (14) | 61 | |||||
| Corporate | (150) | (142) | (159) | (250) | (701) | |||||
| Adjusted EBITDA | $ | 726 | $ | 890 | $ | 913 | $ | 1,131 | $ | 3,660 |
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 December 31, 2019.
| Four Quarters | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Ended | |||||||||
| Mar. 31, 2019 | Jun. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | ||||||
| (in millions) | ||||||||||
| Earnings before income taxes | $ | 315 | $ | 274 | $ | 503 | $ | 496 | $ | 1,588 |
| Interest expense | 101 | 109 | 97 | 95 | 402 | |||||
| Depreciation and amortization | 245 | 248 | 249 | 251 | 993 | |||||
| LIFO charge (credit) | 1 | 25 | (16) | 27 | 37 | |||||
| Losses (gains) on sales of assets and businesses | (12) | — | — | 101 | 89 | |||||
| Asset impairment, restructuring, & settlement charges | 11 | 138 | 53 | 103 | 305 | |||||
| Railroad maintenance expenses | — | — | — | 51 | 51 | |||||
| Expenses related to acquisitions | 14 | — | — | 3 | 17 | |||||
| Adjusted EBITDA | $ | 675 | $ | 794 | $ | 886 | $ | 1,127 | $ | 3,482 |
| Four Quarters | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Ended | |||||||||
| Mar. 31, 2019 | Jun. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | ||||||
| (in millions) | ||||||||||
| Ag Services and Oilseeds | $ | 510 | $ | 457 | $ | 511 | $ | 833 | $ | 2,311 |
| Carbohydrate Solutions | 178 | 274 | 264 | 258 | 974 | |||||
| Nutrition | 134 | 173 | 175 | 160 | 642 | |||||
| Other Business | 24 | 18 | 55 | 20 | 117 | |||||
| Corporate | (171) | (128) | (119) | (144) | (562) | |||||
| Adjusted EBITDA | $ | 675 | $ | 794 | $ | 886 | $ | 1,127 | $ | 3,482 |
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.
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