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) July 26, 2022
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 July 26, 2022, Archer-Daniels-Midland Company (ADM) issued a press release announcing second 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:
99.1 Press release dated July 26, 2022 announcing second 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: | July 26, 2022 | By | /s/ D. Cameron Findlay |
| --- | --- | --- | --- |
| D. Cameron Findlay | |||
| Senior Vice President, General Counsel, and Secretary |
EXHIBIT INDEX
Exhibit Description
99.1 Press release dated July 26, 2022 announcing second 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 Second Quarter Earnings per Share of $2.18,
$2.15 on an Adjusted Basis
•Net earnings and adjusted earnings of about $1.2 billion
•Adjusted ROIC of 11.6%
CHICAGO, July 26, 2022—ADM (NYSE: ADM) today reported financial results for the quarter ended June 30, 2022.
“Our second quarter adjusted earnings per share of $2.15 reflect our team’s strong execution, delivering nutrition to billions of people around the globe,” said Chairman and CEO Juan Luciano. “In addition, our productivity initiatives are improving our capabilities and mitigating the impact of inflation, while our innovation projects are powering profitable growth, as we leverage our unique portfolio and globally integrated network to meet demand driven by the three enduring global trends of food security, health and well-being, and sustainability.
“Looking forward, we expect the combination of our strategic actions and continued good demand for our products to propel very strong earnings in the second half of 2022, with strong cash flows enabling us to accelerate approximately $1 billion in share repurchases into the back half of the year. Beyond that, we will continue to execute the growth plan we laid out at our Global Investor Day, while maintaining our focus on balanced capital allocation and optimizing ROIC.”
Second Quarter 2022 Highlights
| (Amounts in millions except per share amounts) | 2022 | 2021 | ||
|---|---|---|---|---|
| Earnings per share (as reported) | $ | 2.18 | $ | 1.26 |
| Adjusted earnings per share1 | $ | 2.15 | $ | 1.33 |
| Segment operating profit | $ | 1,840 | $ | 1,145 |
| Adjusted segment operating profit (loss)1 | $ | 1,849 | $ | 1,160 |
| Ag Services and Oilseeds | 1,119 | 570 | ||
| Carbohydrate Solutions | 473 | 383 | ||
| Nutrition | 239 | 201 | ||
| Other Business | 18 | 6 |
•Q2 2022 EPS as reported of $2.18 includes a $0.01 per share net charge related to impairments and restructuring and a $0.04 per share gain related to the mark-to-market adjustment on the Wilmar exchangeable bond. Adjusted EPS, which excludes these items, was $2.15.1
1 Non-GAAP financial measures; see pages 3, 5, 10, 11 and 12 for explanations and reconciliations, including after-tax amounts.
Quarterly Results of Operations
Ag Services & Oilseeds delivered substantially higher year-over-year results.
•Ag Services results more than doubled versus the year-ago quarter. Global Trade had an outstanding quarter: The destination marketing team’s ability to meet customer demand around the globe helped drive strong volumes and margins, and good execution in global freight, as well as net timing gains of about $65 million for the quarter, contributed to significantly higher year-over-year profits. North America had a solid performance as export volumes remained strong in a good global demand environment, though year-over-year results were lower due to the prior-year’s insurance settlement and strong positioning gains. South America results were higher, based on stronger origination volumes and better margins driven by strong global grain demand.
•Crushing delivered substantially higher results. Strong soy crush margins drove improved performance in all three regions, as meal and oil demand remained robust. Positive net timing effects of approximately $90 million for the quarter, versus the $70 million of negative timing in the year-ago period, helped drive higher year-over-year results.
•Refined Products and Other results were similar to the prior-year period, as strong demand for biofuels and food oils drove refining premiums and biodiesel margins, offset by approximately $150 million of negative timing effects versus negative $30 million in the prior-year quarter.
•Equity earnings from Wilmar were significantly higher versus the second quarter of 2021.
Carbohydrate Solutions results were substantially higher versus the prior-year period.
•The Starches and Sweeteners subsegment, including ethanol production from our wet mills, delivered much better results due to solid demand as food service volumes reached close to pre-pandemic levels. Corn co-products, including strong demand for corn oil, and effective risk management drove higher ethanol and sweetener margins.
•Vantage Corn Processors results were slightly higher in an environment of good gasoline demand and strong ethanol blending economics. A $50 million recovery from the USDA Biofuel Producer Recovery Program helped offset the prior year’s strong industrial alcohol results from the now-sold Peoria facility as well as valuation losses on ethanol inventory as prices fell late in the quarter.
Nutrition delivered 16% revenue growth — 20%1 on a constant currency basis — and 19% higher year-over-year operating profit.
•Human Nutrition delivered higher year-over-year results as demand across its diverse product portfolio remained robust. Flavors grew revenue in North America, EMEA and South America, though profits were lower due to negative currency effects in EMEA as well as weaker results in APAC. Healthy demand for alternative proteins resulted in strong soy protein volumes and margins, as contributions from the Sojaprotein acquisition, as well as good demand for texturants, drove higher results in Specialty Ingredients. Strength across probiotics, including in the recently acquired Deerland business, as well as robust demand for fibers, contributed to a stronger quarter in Health and Wellness.
•Animal Nutrition profits were up substantially year over year, driven by continued strong volumes and margins in amino acids.
Other Business results increased from the prior-year quarter, driven primarily by higher ADM Investor Services earnings due to higher interest rates.
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 $1.8 billion for the quarter includes net charges related to impairment of $9 million ($0.01 per share).
.
In Corporate results, interest expense increased year over year on higher rates and higher short-term borrowings to support working capital needs, as well as higher expense for long-term debt. Unallocated corporate costs were higher year over year due primarily to higher IT operating and project-related costs and higher costs in the company’s centers of excellence. Other Corporate was unfavorable to the prior year primarily due to an ADM Ventures investment revaluation gain in the prior-year quarter. Corporate results also included a loss related to the mark-to-market adjustment on the Wilmar exchangeable bond of $19 million ($0.04 per share).
The effective tax rate for the quarter was approximately 18%, compared to approximately 14% in the prior year. The increased rate was driven primarily by changes in the geographic mix of pretax earnings in addition to the impact of discrete tax items.
Note: Additional Facts and Explanations
Additional facts and explanations about results and industry environment can be found at the end of the ADM Q2 Earnings Presentation at www.adm.com/webcast.
1 FX adjusted revenue is ADM's GAAP revenue adjusted for the impact of fluctuations in foreign currency exchange rates. The Company calculates FX adjusted revenue by converting its current period revenue using the prior period exchange rates and comparing the adjusted amount to its prior period reported results. Management believes providing FX adjusted revenue provides valuable supplemental information regarding its revenue and facilitates period-to-period comparison. FX adjusted revenue is a non-GAAP measure and is not intended to replace or be an alternative to GAAP revenues, the most directly comparable GAAP financial measure.
Conference Call Information
ADM will host a webcast on July 26, 2022, 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
ADM unlocks the power of nature to enrich the quality of life. We’re a premier global human and animal nutrition company, delivering solutions today with an eye to the future. We’re blazing new trails in health and well-being as our scientists develop groundbreaking products to support healthier living. We’re a cutting-edge innovator leading the way to a new future of plant-based consumer and industrial solutions to replace petroleum-based products. We’re an unmatched agricultural supply chain manager and processor, providing food security by connecting local needs with global capabilities. And we’re a leader in sustainability, scaling across entire value chains to help decarbonize our industry and safeguard our planet. From the seed of the idea to the outcome of the solution, we give customers an edge in solving the nutritional and sustainability challenges of today and tomorrow. Learn more at www.adm.com.
| Media Relations | Investor Relations |
|---|---|
| Jackie Anderson | Michael Cross |
| 312-634-8484 | 217-451-4647 |
Financial Tables Follow
Source: Corporate Release
Source: ADM
Segment Operating Profit, Adjusted Segment Operating Profit (a non-GAAP financial measure)
and Corporate Results
(unaudited)
| Quarter ended | Six months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | June 30 | |||||||||||
| (In millions) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
| Segment Operating Profit | $ | 1,840 | $ | 1,145 | $ | 695 | $ | 3,379 | $ | 2,250 | $ | 1,129 |
| Specified items: | ||||||||||||
| Gain on sale of assets | — | (22) | 22 | (1) | (22) | 21 | ||||||
| Impairment, restructuring, and settlement charges | 9 | 37 | (28) | 27 | 131 | (104) | ||||||
| Adjusted Segment Operating Profit | $ | 1,849 | $ | 1,160 | $ | 689 | $ | 3,405 | $ | 2,359 | $ | 1,046 |
| Ag Services and Oilseeds | $ | 1,119 | $ | 570 | $ | 549 | $ | 2,127 | $ | 1,347 | $ | 780 |
| Ag Services | 407 | 190 | 217 | 665 | 399 | 266 | ||||||
| Crushing | 468 | 150 | 318 | 896 | 532 | 364 | ||||||
| Refined Products and Other | 130 | 130 | — | 328 | 231 | 97 | ||||||
| Wilmar | 114 | 100 | 14 | 238 | 185 | 53 | ||||||
| Carbohydrate Solutions | $ | 473 | $ | 383 | $ | 90 | $ | 790 | $ | 642 | $ | 148 |
| Starches and Sweeteners | 393 | 306 | 87 | 709 | 528 | 181 | ||||||
| Vantage Corn Processors | 80 | 77 | 3 | 81 | 114 | (33) | ||||||
| Nutrition | $ | 239 | $ | 201 | $ | 38 | $ | 428 | $ | 355 | $ | 73 |
| Human Nutrition | 183 | 162 | 21 | 324 | 290 | 34 | ||||||
| Animal Nutrition | 56 | 39 | 17 | 104 | 65 | 39 | ||||||
| Other Business | $ | 18 | $ | 6 | $ | 12 | $ | 60 | $ | 15 | $ | 45 |
| Segment Operating Profit | $ | 1,840 | $ | 1,145 | $ | 695 | $ | 3,379 | $ | 2,250 | $ | 1,129 |
| Corporate Results | $ | (321) | $ | (320) | $ | (1) | $ | (589) | $ | (601) | $ | 12 |
| Interest expense - net | (87) | (70) | (17) | (163) | (134) | (29) | ||||||
| Unallocated corporate costs | (267) | (248) | (19) | (476) | (450) | (26) | ||||||
| Other | 13 | 49 | (36) | 49 | 59 | (10) | ||||||
| Specified items: | ||||||||||||
| Expenses related to acquisitions | — | — | — | (2) | — | (2) | ||||||
| Gain on debt conversion option | 19 | 30 | (11) | 4 | 10 | (6) | ||||||
| Loss on sale of assets | — | — | — | (3) | — | (3) | ||||||
| Restructuring and settlement charges | 1 | (81) | 82 | 2 | (86) | 88 | ||||||
| Earnings Before Income Taxes | $ | 1,519 | $ | 825 | $ | 694 | $ | 2,790 | $ | 1,649 | $ | 1,141 |
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 | Six months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30 | June 30 | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| (in millions, except per share amounts) | ||||||||
| Revenues | $ | 27,284 | $ | 22,926 | $ | 50,934 | $ | 41,819 |
| Cost of products sold (1) | 25,184 | 21,463 | 46,937 | 38,808 | ||||
| Gross profit | 2,100 | 1,463 | 3,997 | 3,011 | ||||
| Selling, general, and administrative expenses (2) | 814 | 739 | 1,643 | 1,488 | ||||
| Asset impairment, exit, and restructuring costs (3) | 1 | 23 | 2 | 82 | ||||
| Equity in (earnings) losses of unconsolidated affiliates | (192) | (163) | (396) | (288) | ||||
| Investment income | (32) | (50) | (91) | (63) | ||||
| Interest expense (4) | 73 | 40 | 165 | 127 | ||||
| Other (income) expense - net (5,6) | (83) | 49 | (116) | 16 | ||||
| Earnings before income taxes | 1,519 | 825 | 2,790 | 1,649 | ||||
| Income tax expense (benefit) (7) | 279 | 113 | 486 | 244 | ||||
| Net earnings including noncontrolling interests | 1,240 | 712 | 2,304 | 1,405 | ||||
| Less: Net earnings (losses) attributable to noncontrolling interests | 4 | — | 14 | 4 | ||||
| Net earnings attributable to ADM | $ | 1,236 | $ | 712 | $ | 2,290 | $ | 1,401 |
| Diluted earnings per common share | $ | 2.18 | $ | 1.26 | $ | 4.03 | $ | 2.48 |
| Average diluted shares outstanding | 568 | 566 | 568 | 565 |
(1) Includes charges related to inventory writedown of $14 million and $25 million in the current quarter and YTD respectively, and $13 million in the prior year quarter and YTD. Current YTD was partially offset by an insurance settlement of $2 million.
(2) Includes a $7 million reversal of a charge related to receivable impairment in the current quarter and a legal settlement of $38 million in the prior YTD.
(3) Includes net charges related to the impairment of certain assets and restructuring of $1 million and $2 million in the current quarter and YTD, respectively, and $23 million and $82 million in the prior year quarter and YTD, respectively.
(4) Includes gains related to the mark-to-market adjustment of the conversion option of the exchangeable bond issued in August 2020 of $19 million and $4 million in the current quarter and YTD, respectively, and gains of $30 million and $10 million in the prior year quarter and YTD, respectively.
(5) Includes net losses related to the sale of certain assets of $2 million in the current YTD and gains of $22 million in the prior year quarter and YTD.
(6) Includes a pension settlement charge of $82 million in the prior year quarter and YTD. Also, includes exit costs of $2 million in the prior YTD.
(7) Includes the tax benefit impact of the above specified items and tax discrete items totaling $3 million and $11 million in the current quarter and YTD, respectively, and $24 million and $49 million in the prior year quarter and YTD, respectively.
Summary of Financial Condition
(unaudited)
| June 30,<br>2022 | June 30,<br>2021 | |||
|---|---|---|---|---|
| (in millions) | ||||
| Net Investment In | ||||
| Cash and cash equivalents (a) | $ | 906 | $ | 869 |
| Operating working capital (b) | 14,537 | 11,628 | ||
| Property, plant, and equipment | 9,680 | 9,873 | ||
| Investments in and advances to affiliates | 5,464 | 5,113 | ||
| Goodwill and other intangibles | 6,547 | 5,266 | ||
| Other non-current assets | 2,490 | 2,202 | ||
| $ | 39,624 | $ | 34,951 | |
| Financed By | ||||
| Short-term debt (a) | $ | 2,352 | $ | 1,289 |
| Long-term debt, including current maturities (a) | 9,166 | 8,432 | ||
| Deferred liabilities | 3,419 | 3,556 | ||
| Temporary equity | 261 | 71 | ||
| Shareholders’ equity | 24,426 | 21,603 | ||
| $ | 39,624 | $ | 34,951 |
(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)
| Six months ended | ||||
|---|---|---|---|---|
| June 30 | ||||
| 2022 | 2021 | |||
| (in millions) | ||||
| Operating Activities | ||||
| Net earnings | $ | 2,304 | $ | 1,405 |
| Depreciation and amortization | 514 | 492 | ||
| Asset impairment charges | 4 | 54 | ||
| (Gains) losses on sales/revaluation of assets | (42) | (79) | ||
| Other - net | 438 | 330 | ||
| Other changes in operating assets and liabilities | (3,893) | 805 | ||
| Total Operating Activities | (675) | 3,007 | ||
| Investing Activities | ||||
| Purchases of property, plant and equipment | (500) | (427) | ||
| Net assets of businesses acquired | — | (5) | ||
| Proceeds from sale of business/assets | 12 | 58 | ||
| Investments in and advances to affiliates | (58) | (8) | ||
| Other investing activities | (101) | (12) | ||
| Total Investing Activities | (647) | (394) | ||
| Financing Activities | ||||
| Long-term debt borrowings | 751 | 595 | ||
| Long-term debt payments | — | (2) | ||
| Net borrowings (payments) under lines of credit | 1,414 | (752) | ||
| Share repurchases | (200) | — | ||
| Cash dividends | (453) | (417) | ||
| Other | (21) | — | ||
| Total Financing Activities | 1,491 | (576) | ||
| Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 169 | 2,037 | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period | 7,454 | 4,646 | ||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period | $ | 7,623 | $ | 6,683 |
Segment Operating Analysis
(unaudited)
| Quarter ended | Six months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30 | June 30 | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| (in ‘000s metric tons) | ||||||||
| Processed volumes (by commodity) | ||||||||
| Oilseeds | 8,208 | 8,778 | 16,699 | 17,738 | ||||
| Corn | 4,776 | 5,042 | 9,588 | 8,692 | ||||
| Total processed volumes | 12,984 | 13,820 | 26,287 | 26,430 | ||||
| Quarter ended | Six months ended | |||||||
| June 30 | June 30 | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| (in millions) | ||||||||
| Revenues | ||||||||
| Ag Services and Oilseeds | $ | 21,429 | $ | 18,271 | $ | 39,682 | $ | 33,278 |
| Carbohydrate Solutions | 3,751 | 2,820 | 7,117 | 5,043 | ||||
| Nutrition | 2,003 | 1,733 | 3,927 | 3,296 | ||||
| Other Business | 101 | 102 | 208 | 202 | ||||
| Total revenues | $ | 27,284 | $ | 22,926 | $ | 50,934 | $ | 41,819 |
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
| Quarter ended June 30 | Six months ended June 30 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| In millions | Per share | In millions | Per share | In millions | Per share | In millions | Per share | |||||||||
| Net earnings and fully diluted EPS | $ | 1,236 | $ | 2.18 | $ | 712 | $ | 1.26 | $ | 2,290 | $ | 4.03 | $ | 1,401 | $ | 2.48 |
| Adjustments: | ||||||||||||||||
| Loss (gains) on sales of assets and businesses (a) | — | — | (17) | (0.03) | 2 | — | (17) | (0.03) | ||||||||
| Impairment, restructuring, and settlement charges (b) | 6 | 0.01 | 90 | 0.16 | 20 | 0.04 | 164 | 0.29 | ||||||||
| Expenses related to acquisitions (c) | — | — | — | — | 1 | — | — | — | ||||||||
| Loss (gain) on debt conversion option (d) | (19) | (0.04) | (30) | (0.06) | (4) | (0.01) | (10) | (0.02) | ||||||||
| Tax adjustment (e) | (1) | — | (1) | — | (5) | (0.01) | (1) | — | ||||||||
| Sub-total adjustments | (14) | (0.03) | 42 | 0.07 | 14 | 0.02 | 136 | 0.24 | ||||||||
| Adjusted net earnings and adjusted EPS | $ | 1,222 | $ | 2.15 | $ | 754 | $ | 1.33 | $ | 2,304 | $ | 4.05 | $ | 1,537 | $ | 2.72 |
(a)Current YTD loss on sale of assets of $2 million pretax ($2 million after tax), tax effected using the Company’s U.S. income tax rate. Prior year quarter and YTD gains of $22 million pretax ($17 million after tax) were related to the sale of certain assets, tax effected using the Company’s U.S. income tax rate.
(b)Current quarter and YTD charges of $8 million and $25 million pretax ($6 million and $20 million after tax), respectively, were primarily related to the impairment of certain assets partially offset by a restructuring adjustment, tax effected using the applicable tax rates. Current YTD charges were also partially offset by an insurance settlement, tax effected using the applicable tax rate. Prior year quarter and YTD charges of $118 million and $217 million pretax, respectively, ($90 million and $164 million after tax, respectively) were related to the impairment of certain assets, restructuring, and legal and pension settlements, tax effected using the applicable tax rates.
(c)Current YTD expenses of $2 million pretax ($1 million after tax) were related to the Deerland and Sojaprotein acquisitions, tax effected using the applicable tax rates.
(d)Current quarter and YTD gain on debt conversion option of $19 million and $4 million pretax, respectively, ($19 million and $4 million after tax, respectively) and prior year quarter and YTD gain on debt conversion option of $30 million and $10 million pretax, respectively, ($30 million and $10 million after tax, respectively), were 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.
(e)Tax adjustment due to certain discrete items totaling $1 million and $5 million in the current quarter and YTD, respectively, and $1 million in the prior year quarter and YTD.
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 | ||||||||||
| Sep. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | June 30, 2022 | June 30, 2022 | |||||||
| Net earnings attributable to ADM | $ | 526 | $ | 782 | $ | 1,054 | $ | 1,236 | $ | 3,598 | |
| Adjustments: | |||||||||||
| Interest expense | 61 | 77 | 92 | 73 | 303 | ||||||
| Other adjustments | 39 | 66 | 17 | 7 | 129 | ||||||
| Total adjustments | 100 | 143 | 109 | 80 | 432 | ||||||
| Tax on adjustments | (24) | (14) | (26) | (19) | (83) | ||||||
| Net adjustments | 76 | 129 | 83 | 61 | 349 | ||||||
| Total Adjusted ROIC Earnings | $ | 602 | $ | 911 | $ | 1,137 | $ | 1,297 | $ | 3,947 | |
| Adjusted Invested Capital (in millions) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Trailing Four | ||||||||||
| Sep. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | June 30, 2022 | Quarter Average | |||||||
| Equity (1) | $ | 21,969 | $ | 22,477 | $ | 23,722 | $ | 24,393 | $ | 23,140 | |
| + Interest-bearing liabilities (2) | 8,941 | 9,546 | 13,079 | 11,524 | 10,773 | ||||||
| Other adjustments | 29 | 70 | 13 | 5 | 29 | ||||||
| Total Adjusted Invested Capital | $ | 30,939 | $ | 32,093 | $ | 36,814 | $ | 35,922 | $ | 33,942 | |
| Adjusted Return on Invested Capital | 11.6 | % |
(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 June 30, 2022.
| Four Quarters | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Ended | |||||||||
| Sep. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | June 30, 2022 | June 30, 2022 | ||||||
| (in millions) | ||||||||||
| Earnings before income taxes | $ | 653 | $ | 1,011 | $ | 1,271 | $ | 1,519 | $ | 4,454 |
| Interest expense | 61 | 77 | 92 | 73 | 303 | |||||
| Depreciation and amortization | 247 | 257 | 257 | 257 | 1,018 | |||||
| Losses (gains) on sales of assets and businesses | — | (55) | 2 | — | (53) | |||||
| Asset impairment, exit, restructuring, and settlement charges | 3 | 80 | 17 | 8 | 108 | |||||
| Railroad maintenance expense | 31 | 33 | — | 9 | 73 | |||||
| Debt extinguishment charges | 36 | — | — | — | 36 | |||||
| Expenses related to acquisitions | 3 | 4 | 2 | — | 9 | |||||
| Adjusted EBITDA | $ | 1,034 | $ | 1,407 | $ | 1,641 | $ | 1,866 | $ | 5,948 |
| Four Quarters | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Ended | |||||||||
| Sep. 30, 2021 | Dec. 31, 2021 | Mar. 31, 2022 | June 30, 2022 | June 30, 2022 | ||||||
| (in millions) | ||||||||||
| Ag Services and Oilseeds | $ | 711 | $ | 902 | $ | 1,096 | $ | 1,207 | $ | 3,916 |
| Carbohydrate Solutions | 297 | 510 | 396 | 550 | 1,753 | |||||
| Nutrition | 230 | 220 | 254 | 304 | 1,008 | |||||
| Other Business | (3) | 17 | 44 | 24 | 82 | |||||
| Corporate | (201) | (242) | (149) | (219) | (811) | |||||
| Adjusted EBITDA | $ | 1,034 | $ | 1,407 | $ | 1,641 | $ | 1,866 | $ | 5,948 |
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
