- Net earnings of $276 million
- Adjusted EPS up 39 percent over prior-year quarter
Archer Daniels Midland Company (NYSE: ADM) today reported financial
results for the quarter ended June 30, 2017.
“We continued to deliver on our strategic plan and capitalize on
improving conditions in some markets to achieve strong 39 percent
year-over-year earnings growth,” said ADM Chairman and CEO Juan Luciano.
“Our actions in the first half of the year reflect ADM’s continuous
efforts to create shareholder value. We are diversifying our
capabilities and geographic reach through acquisitions and organic
expansions. We are aggressively managing costs and capital, and taking
additional portfolio actions; and we are ahead of pace to meet our 2017
target of $225 million in run-rate savings.
“With these collective actions, we expect to deliver solid
year-over-year earnings growth and returns in 2017, and we are poised to
be an even stronger company in 2018.”
Second Quarter 2017 Highlights
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(Amounts in millions except per share data)
|
Earnings per share (as reported)
|
|
|
|
$
|
0.48
|
|
$
|
0.48
|
Adjusted earnings per share
1
|
|
|
|
$
|
0.57
|
|
$
|
0.41
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
|
$
|
642
|
|
$
|
680
|
Adjusted segment operating profit
1
|
|
|
|
$
|
658
|
|
$
|
573
|
Agricultural Services
|
|
|
|
109
|
|
57
|
Corn Processing
|
|
|
|
224
|
|
163
|
Oilseeds Processing
|
|
|
|
206
|
|
235
|
WFSI
|
|
|
|
92
|
|
94
|
Other
|
|
|
|
27
|
|
24
|
-
EPS as reported of $0.48 includes a $0.04 per share charge related to
asset impairments, restructuring and settlement activities; a $0.04
per share net loss on the sale of assets and businesses; and a $0.01
per share LIFO charge. Adjusted EPS, which excludes these items, was
$0.571.
-
Trailing four-quarter-average adjusted ROIC was 6.8 percent1,
80 basis points above annual WACC of 6.0 percent.
-
During the first half of 2017, the company returned $875 million to
shareholders through dividends and share repurchases.
1
|
|
Non-GAAP financial measures; see pages 4, 9 and 10 for explanations
and reconciliations, including after-tax amounts.
|
|
|
|
Results of Operations
Ag Services delivered its fourth consecutive quarter of year-over-year
increases in operating profits.
In Merchandising and Handling, North America Grain results increased
significantly over the prior year with strong carries in wheat, corn and
soybeans. Global Trade generated solid results and was up over the
year-ago quarter, benefiting from improved margins, favorable timing
effects and actions to improve performance.
Transportation decreased from the prior-year period, primarily due to
river conditions and lower freight rates.
Milling and Other delivered solid results on steady margins and
favorable merchandising.
Corn Processing results were up from the year-ago quarter. Higher
volumes and improved margins in North America Sweeteners and Starches
contributed to another strong performance. Bioproducts results increased
over a weak prior year, with an improvement in ethanol margins.
Oilseeds Processing benefited from the diversity of its feedstocks,
products and geographies; however, overall results were down compared to
the second quarter of 2016. Weak margins in both global soybean crush
and South American origination impacted Crushing and Origination
results. Softseeds earnings were higher as a result of leveraging the
business’s global flex capacity to capitalize on margin opportunities.
Refining, Packaging, Biodiesel and Other had solid results in all
regions, with South America refined and packaged oils and the global
peanut business contributing to strong performance in the quarter. North
America Biodiesel results also improved over the prior-year quarter,
which was impacted by unfavorable timing effects.
Asia experienced another good quarter, growing significantly over the
prior-year period due both to ADM’s increased ownership stake in, and
strong results from, Wilmar.
WFSI was in line with the prior-year quarter. WILD Flavors delivered
double-digit operating profit growth with strong sales globally.
Specialty Ingredients was down for the quarter.
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 $642 million for the quarter includes
charges of $26 million related to asset impairment, restructuring and
settlement activities, and a net pretax gain on the sale of assets and
businesses of $8 million. Prior-year segment operating profit included
asset impairment and restructuring charges of $10 million and a net
pretax gain on the sale of assets and businesses of $118 million.
In Corporate results, Minority Interest and Other charges increased from
the prior year primarily due to updated portfolio investment valuations
in CIP, and Unallocated Costs were up due to continued investments in
ADM’s business transformation program and related IT costs, and in
research and development.
The 28 percent effective tax rate reflects an approximately 1 percent
decrease due primarily to changes in the forecast geographic mix of
earnings and the effect of changes in discrete items year over year,
partially offset by the expiration of U.S. tax credits including the
biodiesel tax credit.
Conference Call Information
ADM will host a webcast on August 1, 2017, 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
approximately 32,000 employees serving customers in more than 160
countries. With a global value chain that includes approximately 500
crop procurement locations, 250 ingredient manufacturing facilities, 38
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, Adjusted Segment Operating Profit (a
non-GAAP measure) and Corporate Results
(unaudited)
|
|
|
|
|
|
|
|
Quarter ended June 30
|
|
|
Six months ended June 30
|
|
(In millions)
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
|
|
|
|
|
|
|
|
Segment Operating Profit
|
$
|
642
|
|
$
|
680
|
|
$
|
(38
|
)
|
|
$
|
1,318
|
|
$
|
1,253
|
|
$
|
65
|
|
Less specified items:
|
|
|
|
|
|
|
|
(Gains) losses on sales of assets and businesses
|
(8
|
)
|
(118
|
)
|
110
|
|
|
(8
|
)
|
(118
|
)
|
110
|
|
Impairment, restructuring, and settlement charges
|
26
|
|
10
|
|
16
|
|
|
35
|
|
12
|
|
23
|
|
Hedge timing effects
|
(2
|
)
|
1
|
|
(3
|
)
|
|
(9
|
)
|
(1
|
)
|
(8
|
)
|
Adjusted Segment Operating Profit
|
$
|
658
|
|
$
|
573
|
|
$
|
85
|
|
|
$
|
1,336
|
|
$
|
1,146
|
|
$
|
190
|
|
|
|
|
|
|
|
|
|
Agricultural Services
|
$
|
109
|
|
$
|
57
|
|
$
|
52
|
|
|
$
|
197
|
|
$
|
133
|
|
$
|
64
|
|
Merchandising and handling
|
40
|
|
(14
|
)
|
54
|
|
|
59
|
|
10
|
|
49
|
|
Milling and other
|
58
|
|
56
|
|
2
|
|
|
103
|
|
104
|
|
(1
|
)
|
Transportation
|
11
|
|
15
|
|
(4
|
)
|
|
35
|
|
19
|
|
16
|
|
|
|
|
|
|
|
|
|
Corn Processing
|
$
|
224
|
|
$
|
163
|
|
$
|
61
|
|
|
$
|
395
|
|
$
|
292
|
|
$
|
103
|
|
Sweeteners and starches
|
198
|
|
182
|
|
16
|
|
|
359
|
|
323
|
|
36
|
|
Bioproducts
|
26
|
|
(19
|
)
|
45
|
|
|
36
|
|
(31
|
)
|
67
|
|
|
|
|
|
|
|
|
|
Oilseeds Processing
|
$
|
206
|
|
$
|
235
|
|
$
|
(29
|
)
|
|
$
|
520
|
|
$
|
496
|
|
$
|
24
|
|
Crushing and origination
|
38
|
|
135
|
|
(97
|
)
|
|
158
|
|
255
|
|
(97
|
)
|
Refining, packaging, biodiesel, and other
|
83
|
|
53
|
|
30
|
|
|
142
|
|
132
|
|
10
|
|
Asia
|
85
|
|
47
|
|
38
|
|
|
220
|
|
109
|
|
111
|
|
|
|
|
|
|
|
|
|
Wild Flavors & Specialty Ingredients (WFSI)
|
$
|
92
|
|
$
|
94
|
|
$
|
(2
|
)
|
|
$
|
167
|
|
$
|
164
|
|
$
|
3
|
|
WFSI
|
92
|
|
94
|
|
(2
|
)
|
|
167
|
|
164
|
|
3
|
|
|
|
|
|
|
|
|
|
Other
|
$
|
27
|
|
$
|
24
|
|
$
|
3
|
|
|
$
|
57
|
|
$
|
61
|
|
$
|
(4
|
)
|
Financial
|
27
|
|
24
|
|
3
|
|
|
57
|
|
61
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Profit
|
$
|
642
|
|
$
|
680
|
|
$
|
(38
|
)
|
|
$
|
1,318
|
|
$
|
1,253
|
|
$
|
65
|
|
|
|
|
|
|
|
|
|
Corporate Results
|
$
|
(259
|
)
|
$
|
(273
|
)
|
$
|
14
|
|
|
$
|
(477
|
)
|
$
|
(540
|
)
|
$
|
63
|
|
LIFO credit (charge)
|
(9
|
)
|
(88
|
)
|
79
|
|
|
4
|
|
(102
|
)
|
106
|
|
Interest expense - net
|
(81
|
)
|
(63
|
)
|
(18
|
)
|
|
(160
|
)
|
(131
|
)
|
(29
|
)
|
Unallocated corporate costs
|
(134
|
)
|
(116
|
)
|
(18
|
)
|
|
(267
|
)
|
(232
|
)
|
(35
|
)
|
Minority interest and other charges
|
(35
|
)
|
(6
|
)
|
(29
|
)
|
|
(54
|
)
|
(75
|
)
|
21
|
|
Earnings Before Income Taxes
|
$
|
383
|
|
$
|
407
|
|
$
|
(24
|
)
|
|
$
|
841
|
|
$
|
713
|
|
$
|
128
|
|
Segment operating profit is ADM’s consolidated income from
operations before income tax excluding corporate items. Adjusted
segment operating profit, a non-GAAP measure, is segment operating
profit excluding specified items and timing effects. 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 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 June 30
|
|
Six months ended June 30
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
14,943
|
|
|
$
|
15,629
|
|
|
$
|
29,931
|
|
|
$
|
30,013
|
|
Cost of products sold
|
|
|
14,056
|
|
|
14,892
|
|
|
28,176
|
|
|
28,495
|
|
Gross profit
|
|
|
887
|
|
|
737
|
|
|
1,755
|
|
|
1,518
|
|
Selling, general, and administrative expenses
|
|
|
531
|
|
|
500
|
|
|
1,052
|
|
|
979
|
|
Asset impairment, exit, and restructuring costs
|
|
|
23
|
|
|
12
|
|
|
33
|
|
|
25
|
|
Equity in earnings of unconsolidated affiliates
|
|
|
(109
|
)
|
|
(90
|
)
|
|
(281
|
)
|
|
(155
|
)
|
Interest income
|
|
|
(25
|
)
|
|
(23
|
)
|
|
(48
|
)
|
|
(45
|
)
|
Interest expense
|
|
|
86
|
|
|
65
|
|
|
167
|
|
|
135
|
|
Other (income) expense - net
|
|
|
(2
|
)
|
|
(134
|
)
|
|
(9
|
)
|
|
(134
|
)
|
Earnings before income taxes
|
|
|
383
|
|
|
407
|
|
|
841
|
|
|
713
|
|
Income taxes
|
|
|
(108
|
)
|
|
(119
|
)
|
|
(226
|
)
|
|
(195
|
)
|
Net earnings including noncontrolling interests
|
|
|
275
|
|
|
288
|
|
|
615
|
|
|
518
|
|
Less: Net earnings (losses) attributable to noncontrolling interests
|
|
|
(1
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
Net earnings attributable to ADM
|
|
|
$
|
276
|
|
|
$
|
284
|
|
|
$
|
615
|
|
|
$
|
514
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.48
|
|
|
$
|
0.48
|
|
|
$
|
1.07
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares outstanding
|
|
|
574
|
|
|
594
|
|
|
576
|
|
|
595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense - net consists of:
|
|
|
|
|
|
|
|
|
|
Gains on sales of assets (a)
|
|
|
$
|
(35
|
)
|
|
$
|
(121
|
)
|
|
$
|
(51
|
)
|
|
$
|
(124
|
)
|
Other - net (b)
|
|
|
33
|
|
|
(13
|
)
|
|
42
|
|
|
(10
|
)
|
|
|
|
$
|
(2
|
)
|
|
$
|
(134
|
)
|
|
$
|
(9
|
)
|
|
$
|
(134
|
)
|
(a) Current period gain includes gains related to the sale of the
crop risk services business in Other and individually insignificant
disposals in Ag Services and Corporate partially offset by an
adjustment of the proceeds of the 2015 sale of the cocoa business in
Oilseeds. Prior period gain 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 loss on
sale of assets in Ag Services, recovery of loss provisions and gain
on the sale of the Company’s Brazilian sugar ethanol facilities in
Corn, revaluation of the remaining interest to settlement value in
conjunction with the acquisition of the remaining interest in Amazon
Flavors in WFSI, and individually insignificant disposals in
Oilseeds.
|
|
(b) Other - net in the current period includes provisions for
contingent losses related to certain settlement items in Oilseeds
and WFSI and foreign exchange losses. Other - net in the prior
period includes foreign exchange gains and other income.
|
|
|
Summary of Financial Condition
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
June 30, 2016
|
|
|
|
|
(in millions)
|
Net Investment In
|
|
|
|
|
|
|
Cash and cash equivalents (b)
|
|
|
|
$
|
433
|
|
|
$
|
334
|
Short-term marketable securities (b)
|
|
|
|
237
|
|
|
396
|
Operating working capital (a)
|
|
|
|
7,034
|
|
|
8,184
|
Property, plant, and equipment
|
|
|
|
9,945
|
|
|
9,802
|
Investments in and advances to affiliates
|
|
|
|
4,856
|
|
|
4,429
|
Long-term marketable securities
|
|
|
|
199
|
|
|
487
|
Goodwill and other intangibles
|
|
|
|
3,866
|
|
|
3,865
|
Other non-current assets
|
|
|
|
750
|
|
|
648
|
|
|
|
|
$
|
27,320
|
|
|
$
|
28,145
|
Financed By
|
|
|
|
|
|
|
Short-term debt (b)
|
|
|
|
$
|
353
|
|
|
$
|
1,554
|
Long-term debt, including current maturities (b)
|
|
|
|
6,627
|
|
|
5,832
|
Deferred liabilities
|
|
|
|
2,895
|
|
|
3,049
|
Temporary equity
|
|
|
|
27
|
|
|
41
|
Shareholders’ equity
|
|
|
|
17,418
|
|
|
17,669
|
|
|
|
|
$
|
27,320
|
|
|
$
|
28,145
|
(a)
|
|
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).
|
|
|
|
(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
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
(in millions)
|
Operating Activities
|
|
|
|
|
|
|
Net earnings
|
|
|
|
$
|
615
|
|
|
$
|
518
|
|
Depreciation and amortization
|
|
|
|
452
|
|
|
452
|
|
Asset impairment charges
|
|
|
|
19
|
|
|
20
|
|
Gains on sales of assets
|
|
|
|
(51
|
)
|
|
(121
|
)
|
Other - net
|
|
|
|
(35
|
)
|
|
169
|
|
Changes in operating assets and liabilities
|
|
|
|
314
|
|
|
(1,407
|
)
|
Total Operating Activities
|
|
|
|
1,314
|
|
|
(369
|
)
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
|
(452
|
)
|
|
(396
|
)
|
Net assets of businesses acquired
|
|
|
|
(180
|
)
|
|
(120
|
)
|
Proceeds from sale of business/assets
|
|
|
|
149
|
|
|
96
|
|
Marketable securities - net
|
|
|
|
106
|
|
|
63
|
|
Other investing activities
|
|
|
|
(189
|
)
|
|
(456
|
)
|
Total Investing Activities
|
|
|
|
(566
|
)
|
|
(813
|
)
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
Long-term debt borrowings
|
|
|
|
17
|
|
|
—
|
|
Long-term debt payments
|
|
|
|
(269
|
)
|
|
(8
|
)
|
Net borrowings (payments) under lines of credit
|
|
|
|
195
|
|
|
1,454
|
|
Share repurchases
|
|
|
|
(511
|
)
|
|
(487
|
)
|
Cash dividends
|
|
|
|
(364
|
)
|
|
(353
|
)
|
Other
|
|
|
|
(7
|
)
|
|
(3
|
)
|
Total Financing Activities
|
|
|
|
(939
|
)
|
|
603
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash, cash equivalents, restricted cash,
and restricted cash equivalents
|
|
|
|
(191
|
)
|
|
(579
|
)
|
Cash, cash equivalents, restricted cash, and restricted cash
equivalents - beginning of period
|
|
|
|
688
|
|
|
1,003
|
|
Cash, cash equivalents, restricted cash, and restricted cash
equivalents - end of period
|
|
|
|
$
|
497
|
|
|
$
|
424
|
|
|
|
Segment Operating Analysis
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30
|
|
Six months ended June 30
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(in ‘000s metric tons)
|
Processed volumes
|
|
|
|
|
|
|
|
|
|
|
Oilseeds Processing
|
|
|
|
8,518
|
|
|
8,468
|
|
|
17,337
|
|
|
16,749
|
Corn Processing
|
|
|
|
5,840
|
|
|
5,087
|
|
|
11,384
|
|
|
10,829
|
Total processed volumes
|
|
|
|
14,358
|
|
|
13,555
|
|
|
28,721
|
|
|
27,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30
|
|
Six months ended June 30
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
(in millions)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Agricultural Services
|
|
|
|
$
|
5,848
|
|
|
$
|
6,387
|
|
|
$
|
12,654
|
|
|
$
|
12,867
|
Corn Processing
|
|
|
|
2,274
|
|
|
2,352
|
|
|
4,518
|
|
|
4,559
|
Oilseeds Processing
|
|
|
|
6,072
|
|
|
6,099
|
|
|
11,354
|
|
|
11,096
|
Wild Flavors and Specialty Ingredients
|
|
|
|
648
|
|
|
680
|
|
|
1,210
|
|
|
1,272
|
Other
|
|
|
|
101
|
|
|
111
|
|
|
195
|
|
|
219
|
Total revenues
|
|
|
|
$
|
14,943
|
|
|
$
|
15,629
|
|
|
$
|
29,931
|
|
|
$
|
30,013
|
|
|
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30
|
|
Six months ended June 30
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
EPS (fully diluted) as reported
|
|
|
$
|
0.48
|
|
|
$
|
0.48
|
|
|
$
|
1.07
|
|
|
$
|
0.87
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
LIFO charge (credit) (a)
|
|
|
0.01
|
|
|
0.09
|
|
|
—
|
|
|
0.11
|
|
(Gains) losses on sales of assets and businesses (b)
|
|
|
0.04
|
|
|
(0.17
|
)
|
|
0.04
|
|
|
(0.17
|
)
|
Asset impairment, restructuring, and settlement charges (c)
|
|
|
0.04
|
|
|
0.01
|
|
|
0.05
|
|
|
0.02
|
|
Certain discrete tax adjustments (d)
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Sub-total adjustments
|
|
|
0.09
|
|
|
(0.07
|
)
|
|
0.10
|
|
|
(0.04
|
)
|
Adjusted earnings per share
|
|
|
$
|
0.57
|
|
|
$
|
0.41
|
|
|
$
|
1.17
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
Memo: Hedge timing effects (gain) loss (e)
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
Adjusted EPS excluding timing effects
|
|
|
$
|
0.57
|
|
|
$
|
0.41
|
|
|
$
|
1.16
|
|
|
$
|
0.83
|
|
(a)
|
|
Current quarter and YTD changes in the Company’s LIFO reserves of $9
million pretax ($6 million after tax) and $4 million pretax ($2
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 $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.
|
(b)
|
|
Current period gain of $8 million pretax ($22 million loss after
tax) related to the sale of the crop risk services business
partially offset by an adjustment of the proceeds of the 2015 sale
of the cocoa business, tax effected using the applicable tax
rates. Prior 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.B 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, tax effected using the applicable tax
rates.
|
(c)
|
|
Current quarter and YTD charges of $28 million pretax ($21 million
after tax) and $38 million pretax ($29 million after tax),
respectively, related to impairment of certain long-lived assets,
restructuring charges, and a settlement charge, tax effected using
the applicable tax rates. Prior 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.
|
(d)
|
|
Certain discrete tax adjustments unrelated to current period
earnings related to valuation allowances totaling $4 million.
|
(e)
|
|
Current quarter and YTD timing effect gains of $2 million pretax ($1
million after tax) and $9 million pretax ($5 million after tax),
respectively, tax effected using the Company's U.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 period 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, 2016
|
|
Dec. 31, 2016
|
|
Mar. 31, 2017
|
|
June 30, 2017
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to ADM
|
|
|
|
$
|
341
|
|
|
$
|
424
|
|
|
$
|
339
|
|
|
$
|
276
|
|
|
$
|
1,380
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
78
|
|
|
80
|
|
|
81
|
|
|
86
|
|
|
325
|
|
LIFO
|
|
|
|
(85
|
)
|
|
2
|
|
|
(13
|
)
|
|
9
|
|
|
(87
|
)
|
Other adjustments
|
|
|
|
82
|
|
|
(19
|
)
|
|
10
|
|
|
20
|
|
|
93
|
|
Total adjustments
|
|
|
|
75
|
|
|
63
|
|
|
78
|
|
|
115
|
|
|
331
|
|
Tax on adjustments
|
|
|
|
(22
|
)
|
|
(2
|
)
|
|
(24
|
)
|
|
(13
|
)
|
|
(61
|
)
|
Net adjustments
|
|
|
|
53
|
|
|
61
|
|
|
54
|
|
|
102
|
|
|
270
|
|
Total Adjusted ROIC Earnings
|
|
|
|
$
|
394
|
|
|
$
|
485
|
|
|
$
|
393
|
|
|
$
|
378
|
|
|
$
|
1,650
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Invested Capital (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Trailing Four
|
|
|
|
Sep. 30, 2016
|
|
Dec. 31, 2016
|
|
Mar. 31, 2017
|
|
June 30, 2017
|
|
Quarter Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity (1)
|
|
|
$
|
17,538
|
|
|
$
|
17,173
|
|
|
$
|
17,121
|
|
|
$
|
17,411
|
|
|
$
|
17,311
|
|
+ Interest-bearing liabilities (2)
|
|
|
7,073
|
|
|
6,931
|
|
|
7,207
|
|
|
6,980
|
|
|
7,048
|
|
+ LIFO adjustment (net of tax)
|
|
|
45
|
|
|
47
|
|
|
39
|
|
|
44
|
|
|
44
|
|
Other adjustments
|
|
|
57
|
|
|
10
|
|
|
12
|
|
|
43
|
|
|
31
|
|
Total Adjusted Invested Capital
|
|
|
$
|
24,713
|
|
|
$
|
24,161
|
|
|
$
|
24,379
|
|
|
$
|
24,478
|
|
|
$
|
24,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Return on Invested Capital
|
|
|
|
|
|
6.8
|
%
|
(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
Colin McBean, 312-634-8484
or
Investor Relations
Mark Schweitzer, 217-451-8286