- Net earnings of $284 million
- Market conditions began to turn in the quarter, presenting improved opportunities for second half
CHICAGO--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE: ADM) today reported financial
results for the quarter ended June 30, 2016.
“After a challenging start to the year, general market conditions began
to turn at the end of the second quarter, providing us with improved
opportunities for the second half of the year,” said ADM Chairman and
CEO Juan Luciano. “Weak grain handling margins and merchandising results
continued for Ag Services. Results for Corn included strong performance
in sweeteners and starches offset by lower ethanol results. Our Oilseeds
operations leveraged their flex capacity to crush record volumes of
soybeans in the second quarter as global protein demand continues to
grow. WFSI saw strong growth in flavors and systems, with operating
profit in line with the year-ago quarter.
“During the quarter, we continued to advance our strategic plan,
acquiring full ownership of Amazon Flavors, a leading Brazilian
manufacturer of natural extracts, emulsions and compounds. We added
soybean crushing capability to our facility in Straubing, Germany,
allowing us to utilize flex capacity while also meeting growing customer
demand for non-GMO soybean meal and oil in Western Europe. We continued
to invest in Asia’s growing and evolving food demand by further
increasing our strategic ownership stake in Wilmar from 20 percent to 22
percent. In addition, we continue to make progress in the strategic
review of our ethanol dry mills. We have implemented almost $150 million
of new run-rate savings actions in the first half of the year and remain
on track to meet our $275 million target by the end of the calendar
year. Also, we repurchased about $500 million of shares in the first
half as we continue to execute on our balanced capital allocation
framework.
“The first half of the year was very challenging. However, with improved
fundamentals, we anticipate a more favorable second half of the year.”
Second Quarter 2016 Highlights:
|
|
|
Quarter ended June 30
|
|
|
|
2016
|
|
2015
|
|
|
|
As Reported
|
|
Adj
|
|
Adjusted1
|
|
As Reported
|
|
Adj
|
|
Adjusted1
|
|
|
|
(in millions, except per share amounts)
|
|
Earnings per share
|
|
$
|
0.48
|
|
$
|
(0.07
|
)
|
|
$
|
0.41
|
|
|
$
|
0.62
|
|
$
|
(0.02
|
)
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Services
|
|
$
|
97
|
|
$
|
(40
|
)
|
|
$
|
57
|
|
|
$
|
152
|
|
$
|
(25
|
)
|
|
$
|
127
|
|
Corn Processing
|
|
219
|
|
(56
|
)
|
|
163
|
|
|
204
|
|
(16
|
)
|
|
188
|
|
Oilseeds Processing
|
|
234
|
|
1
|
|
|
235
|
|
|
344
|
|
(43
|
)
|
|
301
|
|
WFSI
|
|
106
|
|
(12
|
)
|
|
94
|
|
|
104
|
|
—
|
|
|
104
|
|
Other
|
|
24
|
|
—
|
|
|
24
|
|
|
4
|
|
—
|
|
|
4
|
|
Total
|
|
$
|
680
|
|
$
|
(107
|
)
|
|
$
|
573
|
|
|
$
|
808
|
|
$
|
(84
|
)
|
|
$
|
724
|
|
|
|
1 Non-GAAP financial measures; see pages 4 and 9 for
explanations and reconciliations, including after-tax amounts.
|
|
|
Second Quarter 2016 Highlights (continued):
-
EPS as reported of $0.48 includes a $0.09 per share charge related to
LIFO, $0.17 per share of gains related to sales or revaluation of
assets, and other charges of $0.01 per share. Excluding these items,
adjusted EPS is $0.411.
-
Trailing four-quarter-average adjusted ROIC was 5.7 percent1,
90 basis points below our annual WACC of 6.6 percent.
-
The effective tax rate for the quarter was 29 percent compared to 27
percent in the year-ago quarter. This quarter’s taxes included about
$20 million of discrete tax items (about $0.03 per share).
-
During the first six months of 2016, the company returned $0.8 billion
to shareholders through dividends and share repurchases.
|
1
|
|
Non-GAAP financial measures; see pages 9 and 10 for explanations and
reconciliations, including after-tax amounts.
|
|
|
|
|
Results of Operations:
In Ag Services, merchandising and handling earnings declined primarily
due to compressed margins across the U.S. grain handling network.
Excluding the valuation gain booked last year related to the acquisition
of the company’s Romanian port, international merchandising results were
up due to stronger origination results in Argentina and the addition of
destination marketing in Egypt through the Medsofts joint venture.
Transportation results declined due to weak barge demand and lower
freight rates.
In Milling and other, ADM Milling had a strong second quarter on solid
volumes and margins.
In Corn Processing, sweeteners and starches results increased as the
business continued to perform well with higher volumes and pricing, and
improved margins from optimizing product grind in the company’s corn wet
mills. The integration of the recent Eaststarch and Morocco acquisitions
has gone better than planned, contributing to the company’s global
sweeteners and starches portfolio and results.
Bioproducts results were down in the quarter. With ethanol margins
continuing to be weak coming into the quarter due to high industry
inventory levels, the company decreased production.
Lysine results continued to be pressured by large global production,
particularly early in the quarter. However, results improved late in the
quarter as global inventories declined and strong demand continued.
In Oilseeds Processing, crushing and origination operating profit
declined driven primarily by continued weak canola margins as well as
lower soy crush margins, which were historically high last year. The
company achieved record soy crush volumes in North America and Europe
through increased utilization of new flex capacity. Throughout the
quarter, the company effectively managed through unprecedented crush
margin volatility.
Refining, packaging, biodiesel and other results were down from one
year-ago mainly due to biodiesel timing effects, despite strong results
in Specialty Fats and Oils and Golden Peanut.
Oilseeds results in Asia for the quarter improved slightly from the
year-ago period, partially due to Wilmar’s first quarter equity earnings.
WFSI results included approximately $4 million of operational start-up
costs related to Tianjin and Campo Grande. WFSI saw strong growth in
flavors and systems offset by weaker sales of functional specialty
proteins and fibers.
Other financial operating profit increased on higher ADM Investor
Services customer volumes and improved results from captive insurance
operations.
Other Items of Note
As additional information to help clarify underlying business
performance, the tables on page 9 include both reported EPS as well as
adjusted EPS excluding significant timing effects.
Segment operating profit of $680 million as reported for the quarter
includes a gain of $48 million in Ag Services related to the receipt of
final additional sales proceeds for Gruma; a gain of $63 million in Corn
Processing related to the sale of the Brazilian sugar-ethanol business;
and a gain in WFSI of $12 million related to purchasing the remaining
equity interest in Amazon Flavors.
Adjusted segment operating profit was $573 million.
The effective tax rate for the quarter was 29 percent compared to 27
percent in the year-ago quarter, due to $20 million of negative discrete
tax items in the quarter.
Wilmar issued a profit warning in July, announcing that it expects to
report net losses of approximately $230 million for its second
quarter. Because ADM records its share of Wilmar’s results on a one
quarter lag basis, ADM expects to report about $50 million of equity
losses in its third quarter results.
Conference Call Information
ADM will host a webcast on Aug. 2, 2016, at 8 a.m. Central Time to
discuss financial results and provide a company update. A financial
summary slide presentation will be available to download approximately
60 minutes prior to the call. To listen to the webcast or to download
the slide presentation, 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 the above statements constitute forward-looking statements.
These statements 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.
About ADM
For more than a century, the people of Archer Daniels Midland Company
(NYSE: ADM) have transformed crops into products that serve the vital
needs of a growing world. Today, we’re one of the world’s largest
agricultural processors and food ingredient providers, with more than
32,300 employees serving customers in more than 160 countries. With a
global value chain that includes 428 crop procurement locations, 280
ingredient manufacturing facilities, 39 innovation centers and the
world’s premier crop transportation network, we connect the harvest to
the home, making products for food, animal feed, industrial and energy
uses. Learn more at www.adm.com.
Financial Tables Follow
|
|
|
Segment Operating Profit and Corporate Results
|
|
A non-GAAP financial measure
|
|
(unaudited)
|
|
|
|
|
|
Quarter ended
|
|
|
|
Six months ended
|
|
|
|
|
|
June 30
|
|
|
|
June 30
|
|
|
|
(In millions)
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Services Operating Profit
|
|
$
|
97
|
|
|
$
|
152
|
|
|
$
|
(55
|
)
|
|
$
|
172
|
|
|
$
|
346
|
|
|
$
|
(174
|
)
|
|
Merchandising and handling (excl. specified items)
|
|
(14
|
)
|
|
41
|
|
|
(55
|
)
|
|
10
|
|
|
148
|
|
|
(138
|
)
|
|
Milling and other (excluding specified item)
|
|
56
|
|
|
67
|
|
|
(11
|
)
|
|
104
|
|
|
122
|
|
|
(18
|
)
|
|
Transportation (excluding specified item)
|
|
15
|
|
|
19
|
|
|
(4
|
)
|
|
19
|
|
|
51
|
|
|
(32
|
)
|
|
Gains on sales of assets/revaluation*
|
|
43
|
|
|
27
|
|
|
16
|
|
|
43
|
|
|
27
|
|
|
16
|
|
|
Impairment and restructuring charges*
|
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corn Processing Operating Profit
|
|
$
|
219
|
|
|
$
|
204
|
|
|
$
|
15
|
|
|
$
|
350
|
|
|
$
|
317
|
|
|
$
|
33
|
|
|
Sweeteners and starches (excl. specified items)
|
|
182
|
|
|
145
|
|
|
37
|
|
|
323
|
|
|
230
|
|
|
93
|
|
|
Bioproducts (excluding specified items)
|
|
(19
|
)
|
|
43
|
|
|
(62
|
)
|
|
(31
|
)
|
|
85
|
|
|
(116
|
)
|
|
Gains on sales of assets*
|
|
63
|
|
|
6
|
|
|
57
|
|
|
63
|
|
|
6
|
|
|
57
|
|
|
Corn hedge timing effects*
|
|
(1
|
)
|
|
11
|
|
|
(12
|
)
|
|
1
|
|
|
(3
|
)
|
|
4
|
|
|
Impairment and restructuring charges*
|
|
(6
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oilseeds Processing Operating Profit
|
|
$
|
234
|
|
|
$
|
344
|
|
|
$
|
(110
|
)
|
|
$
|
494
|
|
|
$
|
813
|
|
|
$
|
(319
|
)
|
|
Crushing and origination (excl. specified items)
|
|
135
|
|
|
198
|
|
|
(63
|
)
|
|
255
|
|
|
532
|
|
|
(277
|
)
|
|
Refining, packaging, biodiesel, and other (excluding specified items)
|
|
53
|
|
|
64
|
|
|
(11
|
)
|
|
132
|
|
|
145
|
|
|
(13
|
)
|
|
Asia (excluding specified item)
|
|
47
|
|
|
39
|
|
|
8
|
|
|
109
|
|
|
107
|
|
|
2
|
|
|
Gain on sale of assets*
|
|
—
|
|
|
68
|
|
|
(68
|
)
|
|
—
|
|
|
68
|
|
|
(68
|
)
|
|
Impairment and restructuring charges*
|
|
(1
|
)
|
|
(28
|
)
|
|
27
|
|
|
(2
|
)
|
|
(28
|
)
|
|
26
|
|
|
Cocoa hedge timing effects*
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
(11
|
)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wild Flavors & Specialty Ingredients Operating Profit
|
|
$
|
106
|
|
|
$
|
104
|
|
|
$
|
2
|
|
|
$
|
176
|
|
|
$
|
172
|
|
|
$
|
4
|
|
|
Wild Flavors and Specialty Ingredients (excluding specified item)
|
|
94
|
|
|
104
|
|
|
(10
|
)
|
|
164
|
|
|
172
|
|
|
(8
|
)
|
|
Gain on revaluation*
|
|
12
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating Profit
|
|
$
|
24
|
|
|
$
|
4
|
|
|
$
|
20
|
|
|
$
|
61
|
|
|
$
|
15
|
|
|
$
|
46
|
|
|
Financial
|
|
24
|
|
|
4
|
|
|
20
|
|
|
61
|
|
|
15
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit
|
|
$
|
680
|
|
|
$
|
808
|
|
|
$
|
(128
|
)
|
|
$
|
1,253
|
|
|
$
|
1,663
|
|
|
$
|
(410
|
)
|
|
*Memo: Adjusted Segment Operating Profit
|
|
$
|
573
|
|
|
$
|
724
|
|
|
$
|
(151
|
)
|
|
$
|
1,146
|
|
|
$
|
1,607
|
|
|
$
|
(461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Results
|
|
$
|
(273
|
)
|
|
$
|
(282
|
)
|
|
$
|
9
|
|
|
$
|
(540
|
)
|
|
$
|
(447
|
)
|
|
$
|
(93
|
)
|
|
LIFO credit (charge)
|
|
(88
|
)
|
|
(61
|
)
|
|
(27
|
)
|
|
(102
|
)
|
|
(59
|
)
|
|
(43
|
)
|
|
Interest expense - net
|
|
(63
|
)
|
|
(80
|
)
|
|
17
|
|
|
(131
|
)
|
|
(158
|
)
|
|
27
|
|
|
Unallocated corporate costs
|
|
(116
|
)
|
|
(128
|
)
|
|
12
|
|
|
(232
|
)
|
|
(231
|
)
|
|
(1
|
)
|
|
Minority interest and other charges
|
|
(6
|
)
|
|
(13
|
)
|
|
7
|
|
|
(75
|
)
|
|
1
|
|
|
(76
|
)
|
|
Earnings Before Income Taxes
|
|
$
|
407
|
|
|
$
|
526
|
|
|
$
|
(119
|
)
|
|
$
|
713
|
|
|
$
|
1,216
|
|
|
$
|
(503
|
)
|
Segment operating profit is ADM’s consolidated income from operations
before income tax excluding corporate items. Adjusted segment operating
profit is segment operating profit adjusted, where applicable, for
specified items and timing effects (see items denoted*). Timing effects
relate to hedge ineffectiveness and significant mark-to-market hedge
timing effects. 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 and significant timing effects. Segment operating profit
and adjusted segment operating profit are non-GAAP financial measures
and are not intended to replace earnings before income tax, the most
directly comparable GAAP financial measure. 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 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
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
15,629
|
|
|
$
|
17,186
|
|
|
$
|
30,013
|
|
|
$
|
34,692
|
|
|
Cost of products sold
|
|
14,872
|
|
|
16,222
|
|
|
28,460
|
|
|
32,626
|
|
|
Gross profit
|
|
757
|
|
|
964
|
|
|
1,553
|
|
|
2,066
|
|
|
Selling, general, and administrative expenses
|
|
520
|
|
|
525
|
|
|
1,014
|
|
|
1,031
|
|
|
Asset impairment, exit, and restructuring costs
|
|
12
|
|
|
31
|
|
|
25
|
|
|
31
|
|
|
Equity in (earnings) losses of unconsolidated affiliates
|
|
(90
|
)
|
|
(87
|
)
|
|
(155
|
)
|
|
(226
|
)
|
|
Interest income
|
|
(23
|
)
|
|
(21
|
)
|
|
(45
|
)
|
|
(39
|
)
|
|
Interest expense
|
|
65
|
|
|
85
|
|
|
135
|
|
|
166
|
|
|
Other (income) expense - net
|
|
(134
|
)
|
|
(95
|
)
|
|
(134
|
)
|
|
(113
|
)
|
|
Earnings before income taxes
|
|
407
|
|
|
526
|
|
|
713
|
|
|
1,216
|
|
|
Income taxes
|
|
(119
|
)
|
|
(143
|
)
|
|
(195
|
)
|
|
(340
|
)
|
|
Net earnings including noncontrolling interests
|
|
288
|
|
|
383
|
|
|
518
|
|
|
876
|
|
|
Less: Net earnings (losses) attributable to noncontrolling interests
|
|
4
|
|
|
(3
|
)
|
|
4
|
|
|
(3
|
)
|
|
Net earnings attributable to ADM
|
|
$
|
284
|
|
|
$
|
386
|
|
|
$
|
514
|
|
|
$
|
879
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
0.48
|
|
|
$
|
0.62
|
|
|
$
|
0.87
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares outstanding
|
|
594
|
|
|
627
|
|
|
595
|
|
|
633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense - net consists of:
|
|
|
|
|
|
|
|
|
|
Gains on sales of assets/revaluations (a)
|
|
$
|
(121
|
)
|
|
$
|
(101
|
)
|
|
$
|
(124
|
)
|
|
$
|
(104
|
)
|
|
Other - net
|
|
(13
|
)
|
|
6
|
|
|
(10
|
)
|
|
(9
|
)
|
|
|
|
$
|
(134
|
)
|
|
$
|
(95
|
)
|
|
$
|
(134
|
)
|
|
$
|
(113
|
)
|
(a) Current period gain in Ag Services (Q2 $45 million, YTD $47 million)
related to realized contingent consideration from the sale of the
Company’s equity investment in Gruma S.A.B de C.V. in December 2012
partially offset by a $5 million loss on sale of assets, Corn (Q2 & YTD
$63 million) related to recovery of loss provisions and gain on the sale
of the Company’s Brazilian sugar ethanol facilities, Wild (Q2 & YTD $12
million) related to the revaluation of the remaining interest to
settlement value in conjunction with the acquisition of the remaining
interest in Amazon Flavors, and individually insignificant disposals in
Oilseeds (Q2 $1 million; YTD $2 million). Prior period gain in Ag
Services (Q2 $27 million, YTD $28 million) related to the revaluation of
the Company’s previously held investments in North Star Shipping and
Minmetal in conjunction with the acquisition of the remaining interest,
Corn (Q2 and YTD $6 million) related to the sale of the lactic business,
and Oilseeds (Q2 $68 million, YTD $70 million) related to the Barcarena
export terminal transaction.
|
|
|
Summary of Financial Condition
|
|
(Unaudited)
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
NET INVESTMENT IN
|
|
|
|
|
|
Cash and cash equivalents (b)
|
|
$
|
334
|
|
|
$
|
867
|
|
Short-term marketable securities (b)
|
|
396
|
|
|
309
|
|
Operating working capital (a)
|
|
8,184
|
|
|
8,282
|
|
Property, plant, and equipment
|
|
9,802
|
|
|
9,806
|
|
Investments in and advances to affiliates
|
|
4,429
|
|
|
3,930
|
|
Long-term marketable securities
|
|
487
|
|
|
492
|
|
Goodwill and other intangibles
|
|
3,865
|
|
|
3,347
|
|
Other non-current assets
|
|
648
|
|
|
405
|
|
Net current assets held for sale
|
|
—
|
|
|
1,229
|
|
|
|
$
|
28,145
|
|
|
$
|
28,667
|
|
FINANCED BY
|
|
|
|
|
|
Short-term debt (b)
|
|
$
|
1,554
|
|
|
$
|
157
|
|
Long-term debt, including current maturities (b)
|
|
5,832
|
|
|
6,766
|
|
Deferred liabilities
|
|
3,049
|
|
|
3,186
|
|
Temporary equity
|
|
41
|
|
|
—
|
|
Shareholders’ equity
|
|
17,669
|
|
|
18,558
|
|
|
|
$
|
28,145
|
|
|
$
|
28,667
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Current assets (excluding cash and cash equivalents, short-term
marketable securities, and current assets held for sale) less
current liabilities (excluding short-term debt, current maturities
of long-term debt, and current liabilities held for sale).
|
|
(b)
|
|
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.
|
|
|
|
|
|
Summary of Cash Flows
|
|
(unaudited)
|
|
|
|
|
|
Six months ended
|
|
|
|
June 30
|
|
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
Operating Activities
|
|
|
|
|
|
Net earnings
|
|
$
|
518
|
|
|
$
|
876
|
|
|
Depreciation and amortization
|
|
452
|
|
|
441
|
|
|
Asset impairment charges
|
|
20
|
|
|
31
|
|
|
Gains on sales of assets/revaluations
|
|
(121
|
)
|
|
(104
|
)
|
|
Other - net
|
|
169
|
|
|
(50
|
)
|
|
Changes in operating assets and liabilities
|
|
(1,404
|
)
|
|
(787
|
)
|
|
Total Operating Activities
|
|
(366
|
)
|
|
407
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(396
|
)
|
|
(540
|
)
|
|
Net assets of businesses acquired
|
|
(120
|
)
|
|
(69
|
)
|
|
Proceeds from sale of business/assets
|
|
96
|
|
|
135
|
|
|
Marketable securities - net
|
|
63
|
|
|
190
|
|
|
Other investing activities
|
|
(456
|
)
|
|
(123
|
)
|
|
Total Investing Activities
|
|
(813
|
)
|
|
(407
|
)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
Long-term debt borrowings
|
|
—
|
|
|
1,244
|
|
|
Long-term debt payments
|
|
(8
|
)
|
|
(28
|
)
|
|
Net borrowings (payments) under lines of credit
|
|
1,454
|
|
|
50
|
|
|
Purchases of treasury stock
|
|
(487
|
)
|
|
(1,164
|
)
|
|
Cash dividends
|
|
(353
|
)
|
|
(350
|
)
|
|
Other
|
|
(3
|
)
|
|
16
|
|
|
Total Financing Activities
|
|
603
|
|
|
(232
|
)
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
(576
|
)
|
|
(232
|
)
|
|
Cash and cash equivalents - beginning of period
|
|
910
|
|
|
1,099
|
|
|
Cash and cash equivalents - end of period
|
|
$
|
334
|
|
|
$
|
867
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Analysis
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Six months ended
|
|
|
|
June 30
|
|
June 30
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(in ‘000s metric tons)
|
|
Processed volumes
|
|
|
|
|
|
|
|
|
|
Oilseeds
|
|
8,468
|
|
8,438
|
|
16,749
|
|
17,287
|
|
Corn
|
|
5,087
|
|
5,709
|
|
10,829
|
|
11,011
|
|
Total processed volumes
|
|
13,555
|
|
14,147
|
|
27,578
|
|
28,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
Six months ended
|
|
|
|
June 30
|
|
June 30
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
(in millions)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Agricultural Services
|
|
$
|
6,387
|
|
$
|
7,005
|
|
$
|
12,867
|
|
$
|
15,050
|
|
Corn Processing
|
|
2,352
|
|
2,579
|
|
4,559
|
|
5,045
|
|
Oilseeds Processing
|
|
6,099
|
|
6,822
|
|
11,096
|
|
13,115
|
|
Wild Flavors and Specialty Ingredients
|
|
680
|
|
682
|
|
1,272
|
|
1,288
|
|
Other
|
|
111
|
|
98
|
|
219
|
|
194
|
|
Total revenues
|
|
$
|
15,629
|
|
$
|
17,186
|
|
$
|
30,013
|
|
$
|
34,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share
|
|
A non-GAAP financial measure
|
|
(unaudited)
|
|
|
|
|
|
Quarter ended
|
|
Six months ended
|
|
|
|
June 30
|
|
June 30
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
EPS (fully diluted) as reported
|
|
$
|
0.48
|
|
|
$
|
0.62
|
|
|
$
|
0.87
|
|
|
$
|
1.39
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
LIFO (credit) charge (a)
|
|
0.09
|
|
|
0.06
|
|
|
0.11
|
|
|
0.06
|
|
|
Gains on sales of assets/revaluations (b)
|
|
(0.17
|
)
|
|
(0.11
|
)
|
|
(0.17
|
)
|
|
(0.11
|
)
|
|
Asset impairment and restructuring charges (c)
|
|
0.01
|
|
|
0.04
|
|
|
0.02
|
|
|
0.04
|
|
|
Effective tax rate adjustment (d)
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
Sub-total adjustments
|
|
(0.07
|
)
|
|
(0.02
|
)
|
|
(0.04
|
)
|
|
(0.01
|
)
|
|
Adjusted earnings per share (non-GAAP)
|
|
$
|
0.41
|
|
|
$
|
0.60
|
|
|
$
|
0.83
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Memo: Timing effects (gain) loss
|
|
|
|
|
|
|
|
|
|
Corn (e)
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
Cocoa (f)
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
0.01
|
|
|
Sub-total timing effects
|
|
—
|
|
|
(0.02
|
)
|
|
—
|
|
|
0.01
|
|
|
Adjusted EPS excluding timing effects (non-GAAP)
|
|
$
|
0.41
|
|
|
$
|
0.58
|
|
|
$
|
0.83
|
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Current quarter and YTD changes in the Company’s LIFO reserves of
$88 million pretax ($55 million after tax), and $102 million pretax,
($63 million after tax), respectively, tax effected using the
Company’s U.S. effective income tax rate. Prior quarter and YTD
changes in the Company’s LIFO reserves of $61 million pretax ($38
million after tax) and $59 million pretax ($37 million after tax),
respectively, tax effected using the Company’s U.S. effective income
tax rate.
|
|
(b)
|
|
Current period gain of $118 million pretax ($101 million after tax),
primarily related to recovery of loss provisions and gain related to
the sale of the Company’s Brazilian sugar ethanol facilities,
realized contingent consideration on the sale of the Company’s
equity investment in Gruma S.A. de C.V. in December 2012, and
revaluation of the remaining interest to settlement value in
conjunction with the acquisition of the remaining interest in Amazon
Flavors, partially offset by a $5 million pretax ($3 million after
tax) loss on sale of assets, tax effected using the applicable tax
rates. Prior period gain of $101 million pretax ($71 million after
tax), primarily related to the revaluation of the Company’s
previously held investments in North Star Shipping and Minmetal in
conjunction with the acquisition of the remaining interest, the sale
of assets to the new Barcarena export terminal joint venture in
Brasil, and sale of the lactic business, tax effected using the
applicable tax rates.
|
|
(c)
|
|
Current quarter and YTD charges of $12 million pretax ($8 million
after tax) and $25 million pretax ($16 million after tax),
respectively, primarily related to impairment of certain long-lived
assets and restructuring charges, tax effected using the applicable
tax rates. Prior period charges of $31 million pretax ($28 million
after tax), primarily related to certain long-lived assets, tax
effected using the applicable tax rates.
|
|
(d)
|
|
Impact to EPS due to the change in annual effective tax rate.
|
|
(e)
|
|
Corn timing effects for corn hedge ineffectiveness gains (Q2’15 $11
million pretax, $7 million after tax), tax effected using the
Company’s U.S. effective income tax rate.
|
|
(f)
|
|
Cocoa timing effects (Q2’15 gains of $3 million pretax, $2 million
after tax; YTD’15 losses of $11 million pretax, $8 million after
tax), tax effected using the Company’s effective income tax rate.
|
Adjusted EPS and adjusted EPS excluding timing effects reflect ADM’s
fully diluted EPS after removal of the effect on EPS as reported of
certain specified items and timing effects as more fully described
above. Management believes that these 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 an alternative to
EPS as reported, the most directly comparable GAAP financial measure, 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 quarter in order to arrive at an
adjusted EPS amount for each specified item and timing effect.
|
|
|
Adjusted Return on Invested Capital
|
|
A non-GAAP financial measure
|
|
(unaudited)
|
|
|
|
Adjusted ROIC Earnings (in millions)
|
|
|
|
|
|
|
|
|
|
Four Quarters
|
|
|
|
Quarter Ended
|
|
Ended
|
|
|
|
Sep. 30, 2015
|
|
Dec. 31, 2015
|
|
Mar. 31, 2016
|
|
June 30, 2016
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to ADM
|
|
$
|
252
|
|
|
$
|
718
|
|
|
$
|
230
|
|
|
$
|
284
|
|
|
$
|
1,484
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
69
|
|
|
73
|
|
|
70
|
|
|
65
|
|
|
277
|
|
|
LIFO
|
|
(75
|
)
|
|
14
|
|
|
14
|
|
|
88
|
|
|
41
|
|
|
Other adjustments
|
|
222
|
|
|
(260
|
)
|
|
13
|
|
|
(106
|
)
|
|
(131
|
)
|
|
Total adjustments
|
|
216
|
|
|
(173
|
)
|
|
97
|
|
|
47
|
|
|
187
|
|
|
Tax on adjustments
|
|
(71
|
)
|
|
(135
|
)
|
|
(37
|
)
|
|
(43
|
)
|
|
(286
|
)
|
|
Net adjustments
|
|
145
|
|
|
(308
|
)
|
|
60
|
|
|
4
|
|
|
(99
|
)
|
|
Total Adjusted ROIC Earnings
|
|
$
|
397
|
|
|
$
|
410
|
|
|
$
|
290
|
|
|
$
|
288
|
|
|
$
|
1,385
|
|
|
|
|
Adjusted Invested Capital (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Trailing Four
|
|
|
|
Sep. 30, 2015
|
|
Dec. 31, 2015
|
|
Mar. 31, 2016
|
|
June 30, 2016
|
|
Quarter Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity (1)
|
|
$
|
17,863
|
|
|
$
|
17,899
|
|
|
$
|
17,899
|
|
|
$
|
17,655
|
|
|
$
|
17,829
|
|
|
+ Interest-bearing liabilities (2)
|
|
6,783
|
|
|
5,877
|
|
|
6,646
|
|
|
7,386
|
|
|
6,673
|
|
|
+ LIFO adjustment (net of tax)
|
|
26
|
|
|
35
|
|
|
44
|
|
|
99
|
|
|
51
|
|
|
Other adjustments
|
|
149
|
|
|
(362
|
)
|
|
8
|
|
|
(91
|
)
|
|
(74
|
)
|
|
Total Adjusted Invested Capital
|
|
$
|
24,821
|
|
|
$
|
23,449
|
|
|
$
|
24,597
|
|
|
$
|
25,049
|
|
|
$
|
24,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Return on Invested Capital
|
|
|
|
|
|
|
|
5.7
|
%
|
|
(1)
|
|
Excludes noncontrolling interests
|
|
(2)
|
|
Includes short-term debt, current maturities of long-term debt,
capital 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.
Archer Daniels Midland Company
Media Relations
Steve Schrier
312-634-8484
or
Investor Relations
Mark Schweitzer
217-451-8286