•Net earnings of $0.9 billion, adjusted net earnings of $1.0 billion

•Trailing four-quarter average adjusted ROIC of 13.8%

•Repurchased $1 billion of shares through first half of 2023

CHICAGO, July 25, 2023—ADM (NYSE: ADM) today reported financial results for the quarter ended June 30, 2023.

“Through our second quarter results, ADM has once again shown that the diversity of our business portfolio and our integrated value chain have enabled our team to consistently deliver excellent results, even in very dynamic market conditions. Our pursuit of trend-based innovation and our relentless focus on driving efficiencies across the enterprise continue to create value for our customers and shareholders,” said Chairman and CEO Juan Luciano.

“Ag Services & Oilseeds leveraged recent investments in infrastructure and operations to achieve record origination volumes in Brazil, while Carbohydrate Solutions delivered excellent results across global starches and sweeteners. Nutrition achieved strong results in Flavors and drove continued expansion of the customer base and opportunity pipeline, while actively addressing softer demand within other parts of the segment. We continued to make progress advancing our strategic initiatives connected to decarbonization, which are helping us build additional earnings power and growth for ADM. Based on our strong first-half results, increased confidence in second-half performance, and our team’s demonstrated ability to execute, we are raising our earnings expectations for full-year 2023.”

•Q2 2023 EPS as reported of $1.70 includes a $0.17 per share charge related to impairments, restructuring, and a contingency loss provision related to import duties; a $0.02 per share gain on the sale of certain assets; and a $0.04 per share tax expense related to certain discrete items. Adjusted EPS, which excludes these items, was $1.89.1

1 Non-GAAP financial measures; see pages 5, 10, 11 and 12 for explanations and reconciliations, including after-tax amounts.    

Ag Services & Oilseeds results were strong, but slightly lower than the second quarter of 2022.

•Ag Services results were in-line with the strong second quarter of 2022. South American origination results were higher year-over-year, as the team delivered record volumes and higher margins on strong export demand, leveraging our strategic investments in port capacity to capitalize on the record Brazilian soybean crop. Results for North America origination were slightly lower year-over-year, driven by lower export volumes due to large South America supplies. Our execution in Destination Marketing as well as effective risk management continued to deliver strong Global Trade results, though, lower than last year’s record quarter.

•Crushing results were much lower than the record result from the second quarter last year. Global soy crush margins remained strong, but were lower year over year in all regions due to softer demand for both meal and oil, and a tight US soybean carryout. This was partially offset by strong softseed margins and higher volumes, supported by a strong Canadian canola crop and use of our flex capacity in EMEA. Additionally, there were approximately $195 million of negative mark-to-market timing effects in the current quarter that are expected to reverse as contracts execute in future periods.

•Refined Products and Other results were significantly higher than the prior-year period, achieving a record second quarter. North America results were higher, driven by strong food oil demand and improved biodiesel volumes. In EMEA, strong export demand for biodiesel and domestic food oil demand supported stronger margins. Additionally, there were approximately $90 million of positive mark-to-market timing effects in the current quarter that are expected to reverse as contracts execute in future periods.

•Equity earnings from Wilmar were lower versus the second quarter of 2022.

Carbohydrate Solutions delivered strong results in Q2, but lower than the record second quarter of last year.

•The Starches and Sweeteners subsegment, including ethanol production from our wet mills, capitalized on a solid demand environment during the quarter. North America starches and sweeteners delivered volumes and margins similar to the prior year and ethanol margins were solid as industry stocks moderated, though lower relative to prior year. Q2 results were negatively impacted due to unplanned downtime at one of our corn germ plants. In EMEA, the team effectively managed margins to deliver improved results. The global wheat milling business posted higher margins, supported by steady customer demand.

•Vantage Corn Processors results were lower due to lower year-over-year ethanol margins. The prior year period also included a one-time $50 million benefit from the USDA Biofuel Producer Recovery Program.

Nutrition results were significantly lower year-over-year versus the record prior-year quarter.

•Human Nutrition results were in-line with the second quarter of 2022, as the team effectively managed a challenging demand environment. Flavors results were significantly higher than the prior year due to improved mix and pricing in EMEA and improving demand in North America. Specialty Ingredients results were lower year over year due to softer demand for plant-based proteins, particularly in the meat alternatives category in North America and Europe, partially offset by strong performance in texturants. Health & Wellness results were similar versus the prior year as lower demand for fibers offset lower SG&A costs.

•Animal Nutrition results were much lower compared to the same quarter last year due to significantly lower contribution from amino acids, pockets of softer global feed demand affecting volumes, and continued demand fulfillment challenges and inventory losses in Pet Solutions.

Other Business results were significantly higher than the prior-year quarter due to improved ADM Investor Services earnings on higher net interest income. Captive insurance results improved on premiums from new programs partially offset by increased claim settlements.

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 $1.5 billion for the quarter includes charges of $114 million ($0.16 per share) related to impairments, restructuring, and a contingent loss provision related to import duties, and gains of $11 million ($0.02 per share) related to the sale of certain assets.

In Corporate results, net interest expense for the quarter increased year-over-year primarily on higher short-term interest rates. Unallocated corporate costs were similar versus the prior year as lower health insurance costs were offset by increased global technology spend. Other Corporate was unfavorable versus the prior year primarily due to foreign currency hedges.

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.

ADM will host a webcast on July 25, 2023, 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.

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.

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.

(unaudited)

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.

(unaudited)

(1) Includes a net reversal of charges related to inventory writedowns of $5 million and a contingency loss provision of $62 million related to import duties in the current quarter and YTD. Includes charges related to inventory writedowns of $14 million and $25 million in the prior-year quarter and YTD, respectively, partially offset by an insurance settlement of $2 million in the prior-year YTD.

(2) Includes acquisition-related expenses of $3 million in the current quarter and YTD. Includes a $7 million reversal of a charge related to receivable impairment in the prior-year quarter.

(3) Includes charges related to the impairment of certain assets and restructuring of $60 million and $67 million in the current quarter and YTD, respectively, and $1 million and $2 million in the prior-year quarter and YTD, respectively.

(4) Includes (gains) losses related to the mark-to-market adjustment of the conversion option of the exchangeable bond issued in August 2020 of $(1) million and $(6) million in the current quarter and YTD, respectively, and ($19) million and ($4) million in the prior-year quarter and YTD, respectively.

(5) Includes net (gains) losses related to the sale of certain assets of $(11) million and $(12) million in the current quarter and YTD, respectively, and $2 million in the prior-year YTD.

(6) Includes the tax benefit impact of the above specified items and tax discrete items totaling $1 million and $21 million in the current quarter and YTD, respectively, and $3 million and $11 million in the prior-year quarter and YTD, respectively.

(unaudited)

 

(unaudited)

 

(unaudited)

(unaudited)

(a)Current quarter and YTD gain of $11 million and $12 million pretax ($8 million and $9 million after tax), respectively, was related to the sale of certain assets, tax effected using the applicable tax rate. Prior-year YTD loss of $2 million pretax ($2 million after tax) was 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 $117 million and $124 million pretax ($93 million and $98 million after tax), respectively, were related to the impairment of certain assets, restructuring, and a contingency loss provision related to import duties, tax effected using the applicable tax rates. Prior-year quarter and YTD charges of $8 million and $25 million pretax ($6 million and $20 million after tax), respectively, were related to the impairment of certain assets, partially offset by a restructuring adjustment, tax effected using the applicable tax rates. Prior-year YTD charges were also partially offset by an insurance settlement, tax effected using the applicable tax rate.

(c)Current quarter and YTD expenses of $3 million ($2 million after tax) were related to certain acquisitions, tax effected using the Company’s U.S. income tax rate. Prior-year 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 $1 million and $6 million pretax ($1 million and $6 million after tax), respectively, and prior-year quarter and YTD gain on debt conversion of $19 million and $4 million pretax ($19 million and $4 million after tax), respectively, was 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 expense (benefit) adjustment due to certain discrete items totaling $21 million and $3 million in the current quarter and YTD, respectively, and ($1) million and ($5) million in the prior-year 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.

(unaudited)

(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 on borrowings, 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.

(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, 2023.

Adjusted EBITDA is defined as earnings before taxes, interest on borrowings, 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 on borrowings 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.