- Net earnings of $536 million, up significantly year over year
- Trailing four-quarter ROIC of 8.3 percent, more than 200 bps over WACC
- Growing benefits from strategic actions lead to confidence in ongoing earnings growth
CHICAGO--(BUSINESS WIRE)--Archer Daniels Midland Company (NYSE: ADM) today reported financial
results for the quarter ended September 30, 2018.
“The team delivered another strong quarter, capitalizing on robust
global demand with good execution and great utilization of our global
footprint,” said ADM Chairman and CEO Juan Luciano.
“For the last several years, through good conditions and bad, we’ve
remained focused on serving our customers and delivering our strategic
plan — optimizing our core, driving efficiencies, and expanding
strategically. Now, as we look forward to 2019, we are continuing to
enhance our earnings power, both through our growth investments and our
Readiness initiative, which is beginning to drive fundamental changes in
the way we run our company.
“Thanks to the team’s great work and the growing benefits of our
strategic actions, we expect a solid end to 2018, as well as continued
momentum for growth in earnings and returns in 2019 and the years to
follow.”
Third Quarter 2018 Highlights
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(Amounts in millions except per share data)
|
Earnings per share (as reported)
|
|
|
$
|
0.94
|
|
|
|
$
|
0.34
|
Adjusted earnings per share
1
|
|
|
$
|
0.92
|
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
Segment operating profit
|
|
|
$
|
881
|
|
|
|
$
|
485
|
Adjusted segment operating profit
1
|
|
|
$
|
861
|
|
|
|
$
|
541
|
Origination
|
|
|
129
|
|
|
|
39
|
Oilseeds
|
|
|
349
|
|
|
|
113
|
Carbohydrate Solutions
|
|
|
288
|
|
|
|
300
|
Nutrition
|
|
|
67
|
|
|
|
68
|
Other
|
|
|
28
|
|
|
|
21
|
|
|
|
|
|
|
|
|
-
EPS as reported of $0.94 includes a $0.01 per share charge related to
LIFO, a $0.04 per share gain related to the sale of a business and an
equity investment, and a $0.01 per share tax expense related to U.S.
tax reform and certain discrete items. Adjusted EPS, which excludes
these items, was $0.92.1
1 Non-GAAP financial measures; see pages 4, 9, 10, and 11 for
explanations and reconciliations, including after-tax amounts.
Results of Operations
Origination results were up substantially
year over year.
Merchandising and Handling was significantly higher versus the weak
third quarter of 2017. In North America, the business managed risk well
in a volatile price environment, and capitalized on its asset base to
deliver higher volumes and margins, including strong export sales to
customers in markets outside of China. In Global Trade, good utilization
of the company’s global network of origination assets and continued
expansion of destination marketing volumes and margins drove solid
results.
Transportation results more than doubled year over year, driven by
higher volumes and margins in ARTCO.
Oilseeds results were also up significantly
over the prior-year period.
Crushing and Origination set a new record for crush volumes, leveraging
its strong global asset base and the company’s growing destination
marketing capabilities to capitalize on higher global crush margins.
Soybean crush was the major driver of earnings growth, with North
America, EMEA and South America all delivering substantially higher
results year over year. Softseeds results had a significant improvement
from the third quarter of 2017, with particularly good results in EMEA.
Refining, Packaging, Biodiesel and Other was down versus the third
quarter of 2017. Biodiesel was up substantially year over year, and
edible oils continued to perform well. Peanut shelling margins were
significantly lower, primarily caused by large peanut inventories and
difficult market conditions.
Asia was higher on strong Wilmar results.
Carbohydrate Solutions results were
slightly lower than the year-ago quarter.
Starches and Sweeteners delivered solid results, slightly below the
strong prior-year period. EMEA sweeteners continued to benefit from
recent acquisitions, delivering good results despite sugar oversupply in
the region. Flour milling was higher, benefiting from strong wheat
procurement results and timing effects. North American liquid sweeteners
were negatively impacted by higher input and manufacturing costs.
Bioproducts results were down, as positive results from effective
ethanol risk management as well as beverage and industrial alcohols were
offset by an extremely weak ethanol industry margin environment.
Decatur plant downtime issues continued to impact North American results.
Nutrition results were in line with the
prior-year period, with very strong WFSI results offset by a weaker
performance in Animal Nutrition.
WFSI results were significantly higher year over year. The business
delivered 10 percent year-over-year sales growth on a constant currency
basis, and more than 30 percent growth in operating profit. WILD EMEA
and North America results were substantially higher on portfolio mix and
improved volumes. In Specialty Ingredients, emulsifiers and proteins
continued to perform well. The Health & Wellness business continued to
grow with the addition of Protexin.
In Animal Nutrition, issues that developed during the quarter
constrained lysine production volumes and increased manufacturing costs,
contributing to lower year-over-year results. Lower premix margins also
impacted results.
Other results increased due to improved
captive performance underwriting performance.
Other Items of Note
ADM made changes to its segment reporting in the first quarter of 2018
to reflect the company’s new operating structure. To assist in
reconciling the new segment results to the prior presentation, the table
on page 11 provides financial information under the historical
segmentation.
As additional information to help clarify underlying business
performance, the table on page nine includes reported earnings and EPS
as well as adjusted earnings and EPS.
Segment operating profit of $881 million for the quarter includes gains
of $21 million ($0.04 per share) related to the sale of a business and
an equity investment, as well as a $1 million charge related to a
settlement.
In Corporate results, unallocated corporate costs for the quarter
increased principally due to performance-related compensation accruals.
Higher project spending in information technology and growth-related
projects also contributed to the increase.
Other charges for the quarter in Corporate improved due to better
results from the company’s investment in Compagnie Industrielle et
Financiere des Produits Amylaces SA (CIP).
The effective tax rate for the quarter was approximately 15 percent, up
from approximately 13 percent in the prior year. The current quarter
rate includes the effects of U.S. tax reform and the 2017 biodiesel tax
credit recorded in the first quarter, along with certain favorable
second quarter discrete tax items which impact the Company’s overall
calendar-year rate.
Conference Call Information
ADM will host a webcast on November 6, 2018, 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 31,000 employees serving customers in more than 170
countries. With a global value chain that includes approximately 500
crop procurement locations, 270 food and feed ingredient manufacturing
facilities, 44 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
|
|
|
|
|
Nine months ended
|
|
|
|
|
|
September 30
|
|
|
|
|
September 30
|
|
|
(In millions)
|
|
|
2018
|
|
2017
|
|
Change
|
|
|
2018
|
|
2017
|
|
Change
|
|
Segment Operating Profit
|
|
|
$
|
881
|
|
|
$
|
485
|
|
|
$
|
396
|
|
|
|
$
|
2,487
|
|
|
$
|
1,803
|
|
|
$
|
684
|
|
Specified items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on sales of assets and businesses
|
|
|
(21
|
)
|
|
(12
|
)
|
|
(9
|
)
|
|
|
(21
|
)
|
|
(20
|
)
|
|
(1
|
)
|
Impairment, restructuring, and settlement charges
|
|
|
1
|
|
|
63
|
|
|
(62
|
)
|
|
|
36
|
|
|
98
|
|
|
(62
|
)
|
Hedge timing effects
|
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
|
—
|
|
|
(4
|
)
|
|
4
|
|
Adjusted Segment Operating Profit
|
|
|
$
|
861
|
|
|
$
|
541
|
|
|
$
|
320
|
|
|
|
$
|
2,502
|
|
|
$
|
1,877
|
|
|
$
|
625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination
|
|
|
$
|
129
|
|
|
$
|
39
|
|
|
$
|
90
|
|
|
|
$
|
363
|
|
|
$
|
143
|
|
|
$
|
220
|
|
Merchandising and handling
|
|
|
93
|
|
|
25
|
|
|
68
|
|
|
|
293
|
|
|
94
|
|
|
199
|
|
Transportation
|
|
|
36
|
|
|
14
|
|
|
22
|
|
|
|
70
|
|
|
49
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oilseeds
|
|
|
$
|
349
|
|
|
$
|
113
|
|
|
$
|
236
|
|
|
|
$
|
1,042
|
|
|
$
|
624
|
|
|
$
|
418
|
|
Crushing and origination
|
|
|
221
|
|
|
36
|
|
|
185
|
|
|
|
493
|
|
|
192
|
|
|
301
|
|
Refining, packaging, biodiesel, and other
|
|
|
48
|
|
|
61
|
|
|
(13
|
)
|
|
|
308
|
|
|
196
|
|
|
112
|
|
Asia
|
|
|
80
|
|
|
16
|
|
|
64
|
|
|
|
241
|
|
|
236
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbohydrate Solutions
|
|
|
$
|
288
|
|
|
$
|
300
|
|
|
$
|
(12
|
)
|
|
|
$
|
748
|
|
|
$
|
793
|
|
|
$
|
(45
|
)
|
Starches and sweeteners
|
|
|
245
|
|
|
251
|
|
|
(6
|
)
|
|
|
699
|
|
|
705
|
|
|
(6
|
)
|
Bioproducts
|
|
|
43
|
|
|
49
|
|
|
(6
|
)
|
|
|
49
|
|
|
88
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nutrition
|
|
|
$
|
67
|
|
|
$
|
68
|
|
|
$
|
(1
|
)
|
|
|
$
|
277
|
|
|
$
|
239
|
|
|
$
|
38
|
|
WFSI
|
|
|
80
|
|
|
59
|
|
|
21
|
|
|
|
259
|
|
|
223
|
|
|
36
|
|
Animal Nutrition
|
|
|
(13
|
)
|
|
9
|
|
|
(22
|
)
|
|
|
18
|
|
|
16
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
$
|
28
|
|
|
$
|
21
|
|
|
$
|
7
|
|
|
|
$
|
72
|
|
|
$
|
78
|
|
|
$
|
(6
|
)
|
|
|
Segment Operating Profit
|
|
|
$
|
881
|
|
|
$
|
485
|
|
|
$
|
396
|
|
|
|
$
|
2,487
|
|
|
$
|
1,803
|
|
|
$
|
684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Results
|
|
|
$
|
(249
|
)
|
|
$
|
(260
|
)
|
|
$
|
11
|
|
|
|
$
|
(739
|
)
|
|
$
|
(737
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense - net
|
|
|
(80
|
)
|
|
(72
|
)
|
|
(8
|
)
|
|
|
(236
|
)
|
|
(232
|
)
|
|
(4
|
)
|
Unallocated corporate costs
|
|
|
(161
|
)
|
|
(109
|
)
|
|
(52
|
)
|
|
|
(487
|
)
|
|
(359
|
)
|
|
(128
|
)
|
Other charges
|
|
|
(4
|
)
|
|
(24
|
)
|
|
20
|
|
|
|
(28
|
)
|
|
(92
|
)
|
|
64
|
|
Specified items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO credit (charge)
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
|
14
|
|
|
4
|
|
|
10
|
|
Adjustments related to acquisitions
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Loss on debt extinguishment
|
|
|
—
|
|
|
(11
|
)
|
|
11
|
|
|
|
—
|
|
|
(11
|
)
|
|
11
|
|
Restructuring charges
|
|
|
(1
|
)
|
|
(44
|
)
|
|
43
|
|
|
|
(6
|
)
|
|
(47
|
)
|
|
41
|
|
Earnings Before Income Taxes
|
|
|
$
|
632
|
|
|
$
|
225
|
|
|
$
|
407
|
|
|
|
$
|
1,748
|
|
|
$
|
1,066
|
|
|
$
|
682
|
|
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 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
|
|
|
Nine months ended
|
|
|
|
September 30
|
|
|
September 30
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
15,800
|
|
|
$
|
14,827
|
|
|
|
$
|
48,394
|
|
|
$
|
44,758
|
|
Cost of products sold (1)
|
|
|
14,742
|
|
|
14,015
|
|
|
|
45,266
|
|
|
42,182
|
|
Gross profit
|
|
|
1,058
|
|
|
812
|
|
|
|
3,128
|
|
|
2,576
|
|
Selling, general, and administrative expenses
|
|
|
534
|
|
|
478
|
|
|
|
1,607
|
|
|
1,519
|
|
Asset impairment, exit, and restructuring costs (2)
|
|
|
1
|
|
|
107
|
|
|
|
41
|
|
|
140
|
|
Equity in (earnings) losses of unconsolidated affiliates
|
|
|
(131
|
)
|
|
(46
|
)
|
|
|
(378
|
)
|
|
(327
|
)
|
Interest income
|
|
|
(40
|
)
|
|
(27
|
)
|
|
|
(115
|
)
|
|
(75
|
)
|
Interest expense
|
|
|
87
|
|
|
79
|
|
|
|
267
|
|
|
246
|
|
Other (income) expense - net (3,4)
|
|
|
(25
|
)
|
|
(4
|
)
|
|
|
(42
|
)
|
|
7
|
|
Earnings before income taxes
|
|
|
632
|
|
|
225
|
|
|
|
1,748
|
|
|
1,066
|
|
Income tax expense (5)
|
|
|
96
|
|
|
30
|
|
|
|
250
|
|
|
256
|
|
Net earnings including noncontrolling interests
|
|
|
536
|
|
|
195
|
|
|
|
1,498
|
|
|
810
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net earnings (losses) attributable to noncontrolling interests
|
|
|
—
|
|
|
3
|
|
|
|
3
|
|
|
3
|
|
Net earnings attributable to ADM
|
|
|
$
|
536
|
|
|
$
|
192
|
|
|
|
$
|
1,495
|
|
|
$
|
807
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
$
|
0.94
|
|
|
$
|
0.34
|
|
|
|
$
|
2.64
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares outstanding
|
|
|
568
|
|
|
569
|
|
|
|
567
|
|
|
574
|
|
(1) Includes a charge (credit) related to changes in the
Company’s LIFO reserves of $7 million and ($14 million) in the current
quarter and YTD, respectively, and $0 and ($4 million) in the prior
quarter and YTD, respectively.
(2) Includes restructuring charges of $1 million in the
current quarter and charges related to impairment of certain assets and
restructuring charges of $41 million in the current YTD and $107 million
and $140 million, in the prior quarter and YTD, respectively.
(3) Includes current quarter and YTD gains of $21 million
related to the sale of a business and an equity investment, prior
quarter gains of $12 million related to the sale of an asset and an
adjustment of the proceeds of the 2015 sale of the cocoa business, and
prior YTD gains related to the sale of the crop risk services business
($77 million) and the sale of an asset ($6 million), partially offset by
an adjustment of the proceeds of the 2015 sale of the cocoa business of
$63 million.
(4) Includes a settlement charge of $1 million in the current
quarter and YTD and a debt extinguishment charge of $11 million related
to the early redemption of the Company’s $559 million notes due on March
15, 2018 and a settlement charge of $5 million in the prior YTD.
(5) Includes the tax expense (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 ($40 million)
and ($13 million) in the prior quarter and YTD, respectively.
|
Summary of Financial Condition
|
(unaudited)
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
2018
|
|
|
2017
|
|
|
(in millions)
|
Net Investment In
|
|
|
|
|
|
Cash and cash equivalents (a)
|
|
$
|
915
|
|
|
|
$
|
518
|
Short-term marketable securities (a)
|
|
—
|
|
|
|
261
|
Operating working capital (b)
|
|
8,024
|
|
|
|
7,229
|
Property, plant, and equipment
|
|
9,885
|
|
|
|
9,956
|
Investments in and advances to affiliates
|
|
5,293
|
|
|
|
4,972
|
Long-term marketable securities
|
|
26
|
|
|
|
207
|
Goodwill and other intangibles
|
|
4,065
|
|
|
|
3,939
|
Other non-current assets
|
|
930
|
|
|
|
755
|
|
|
$
|
29,138
|
|
|
|
$
|
27,837
|
Financed By
|
|
|
|
|
|
Short-term debt (b)
|
|
$
|
532
|
|
|
|
$
|
728
|
Long-term debt, including current maturities (b)
|
|
7,320
|
|
|
|
6,608
|
Deferred liabilities
|
|
2,240
|
|
|
|
2,871
|
Temporary equity
|
|
46
|
|
|
|
53
|
Shareholders’ equity
|
|
19,000
|
|
|
|
17,577
|
|
|
$
|
29,138
|
|
|
|
$
|
27,837
|
(a)
|
|
Net debt is calculated as short-term debt plus long-term debt,
including current maturities less cash and cash equivalents and
short-term marketable securities.
|
(b)
|
|
Current assets (excluding cash and cash equivalents and short-term
marketable securities) less current liabilities (excluding
short-term debt and current maturities of long-term debt).
|
|
|
|
Summary of Cash Flows
|
(unaudited)
|
|
|
|
|
Nine months ended
|
|
|
|
September 30
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(in millions)
|
Operating Activities
|
|
|
|
|
|
|
Net earnings
|
|
|
$
|
1,498
|
|
|
|
$
|
810
|
|
Depreciation and amortization
|
|
|
706
|
|
|
|
684
|
|
Asset impairment charges
|
|
|
33
|
|
|
|
81
|
|
Gains on sales of assets
|
|
|
(45
|
)
|
|
|
(66
|
)
|
Other - net
|
|
|
(286
|
)
|
|
|
91
|
|
Change in deferred consideration in securitized receivables(a)
|
|
|
(5,413
|
)
|
|
|
(5,404
|
)
|
Other changes in operating assets and liabilities
|
|
|
(173
|
)
|
|
|
555
|
|
Total Operating Activities
|
|
|
(3,680
|
)
|
|
|
(3,249
|
)
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(555
|
)
|
|
|
(696
|
)
|
Net assets of businesses acquired
|
|
|
(324
|
)
|
|
|
(187
|
)
|
Proceeds from sale of business/assets
|
|
|
177
|
|
|
|
172
|
|
Investments in retained interest in securitized receivables(a)
|
|
|
(3,391
|
)
|
|
|
(3,089
|
)
|
Proceeds from retained interest in securitized receivables(a)
|
|
|
8,804
|
|
|
|
8,493
|
|
Marketable securities - net
|
|
|
—
|
|
|
|
73
|
|
Investments in and advances to affiliates
|
|
|
(127
|
)
|
|
|
(281
|
)
|
Other investing activities
|
|
|
(9
|
)
|
|
|
(14
|
)
|
Total Investing Activities
|
|
|
4,575
|
|
|
|
4,471
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
Long-term debt borrowings
|
|
|
762
|
|
|
|
509
|
|
Long-term debt payments
|
|
|
(13
|
)
|
|
|
(840
|
)
|
Net borrowings (payments) under lines of credit
|
|
|
(317
|
)
|
|
|
558
|
|
Share repurchases
|
|
|
—
|
|
|
|
(676
|
)
|
Cash dividends
|
|
|
(568
|
)
|
|
|
(544
|
)
|
Other
|
|
|
32
|
|
|
|
4
|
|
Total Financing Activities
|
|
|
(104
|
)
|
|
|
(989
|
)
|
|
|
|
|
|
|
|
Increase (decrease) in cash, cash equivalents, restricted cash,
and restricted cash equivalents
|
|
|
791
|
|
|
|
233
|
|
Cash, cash equivalents, restricted cash, and restricted cash
equivalents - beginning of period
|
|
|
1,858
|
|
|
|
1,561
|
|
Cash, cash equivalents, restricted cash, and restricted cash
equivalents - end of period
|
|
|
$
|
2,649
|
|
|
|
$
|
1,794
|
|
(a) Cash flows related to the Company’s retained interest in securitized
receivables as required by ASU 2016-15 which took effect January 1,
2018. Prior period amounts have been restated to conform to the current
presentation.
|
Segment Operating Analysis
|
(unaudited)
|
|
|
|
|
Quarter ended
|
|
|
Nine months ended
|
|
|
|
September 30
|
|
|
September 30
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
(in ‘000s metric tons)
|
Processed volumes (by commodity)
|
|
|
|
|
|
|
|
|
|
|
Oilseeds
|
|
|
9,181
|
|
|
8,265
|
|
|
|
27,303
|
|
|
25,602
|
Corn
|
|
|
5,599
|
|
|
5,467
|
|
|
|
16,708
|
|
|
16,851
|
Total processed volumes
|
|
|
14,780
|
|
|
13,732
|
|
|
|
44,011
|
|
|
42,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
Nine months ended
|
|
|
|
September 30
|
|
|
September 30
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
(in millions)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Origination
|
|
|
$
|
5,850
|
|
|
$
|
5,502
|
|
|
|
$
|
18,671
|
|
|
$
|
17,152
|
Oilseeds
|
|
|
6,410
|
|
|
5,735
|
|
|
|
18,760
|
|
|
17,013
|
Carbohydrate Solutions
|
|
|
2,534
|
|
|
2,607
|
|
|
|
7,782
|
|
|
7,627
|
Nutrition
|
|
|
922
|
|
|
885
|
|
|
|
2,890
|
|
|
2,673
|
Other
|
|
|
84
|
|
|
98
|
|
|
|
291
|
|
|
293
|
Total revenues
|
|
|
$
|
15,800
|
|
|
$
|
14,827
|
|
|
|
$
|
48,394
|
|
|
$
|
44,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share
|
A non-GAAP financial measure
|
(unaudited)
|
|
|
|
|
Quarter ended
|
|
|
Nine months ended
|
|
|
|
September 30
|
|
|
September 30
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
In millions
|
|
Per share
|
|
In millions
|
|
Per share
|
|
|
In millions
|
|
Per share
|
|
In millions
|
|
Per share
|
Net earnings and fully diluted EPS
|
|
|
$
|
536
|
|
|
$
|
0.94
|
|
|
$
|
192
|
|
|
$
|
0.34
|
|
|
|
$
|
1,495
|
|
|
$
|
2.64
|
|
|
$
|
807
|
|
|
$
|
1.41
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO charge (credit) (a)
|
|
|
5
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
|
(11
|
)
|
|
(0.02
|
)
|
|
(2
|
)
|
|
—
|
Losses (gains) on sales of assets and businesses (b)
|
|
|
(20
|
)
|
|
(0.04
|
)
|
|
(10
|
)
|
|
(0.02
|
)
|
|
|
(20
|
)
|
|
(0.04
|
)
|
|
12
|
|
|
0.02
|
Asset impairment, restructuring, and settlement charges (c)
|
|
|
2
|
|
|
—
|
|
|
69
|
|
|
0.12
|
|
|
|
30
|
|
|
0.05
|
|
|
98
|
|
|
0.17
|
Loss on debt extinguishment (d)
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
0.01
|
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
0.01
|
Adjustments related to acquisitions (e)
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
Tax adjustment (f)
|
|
|
3
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
|
(4
|
)
|
|
(0.01
|
)
|
|
4
|
|
|
0.01
|
Sub-total adjustments
|
|
|
(13
|
)
|
|
(0.02
|
)
|
|
66
|
|
|
0.11
|
|
|
|
(8
|
)
|
|
(0.02
|
)
|
|
119
|
|
|
0.21
|
Adjusted net earnings and adjusted EPS
|
|
|
$
|
523
|
|
|
$
|
0.92
|
|
|
$
|
258
|
|
|
$
|
0.45
|
|
|
|
$
|
1,487
|
|
|
$
|
2.62
|
|
|
$
|
926
|
|
|
$
|
1.62
|
(a)
|
|
Current quarter and YTD changes in the Company’s LIFO reserves of $7
million and $14 million pretax, respectively ($5 million and $11
million after tax, respectively), tax effected using the Company’s
U.S. income tax rate. Prior quarter and YTD changes in the Company’s
LIFO reserves of $0 and $4 million pretax, respectively ($0 and $2
million after tax, respectively), tax effected using the Company’s
U.S. income tax rate.
|
(b)
|
|
Current quarter and YTD gains of $21 million pretax ($20 million
after tax) related to the sale of a business and an equity
investment, tax effected using the applicable tax rates. Prior
quarter gains of $12 million pretax ($10 million after tax) related
to an adjustment of the proceeds of the 2015 sale of the cocoa
business and a gain on sale of asset, tax effected using the
applicable tax rates. Prior YTD gain of $20 million pretax ($12
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.
|
(c)
|
|
Current quarter charges of $2 million pretax and after tax related
to restructuring charges and a settlement charge, tax effected using
the applicable tax rates. YTD charges of $42 million pretax ($30
million after tax) related to impairment of certain assets,
restructuring charges and a settlement charge, tax effected using
the applicable tax rates. Prior quarter charges of $107 million
pretax ($69 million after tax) related to impairment of certain
long-lived assets and restructuring charges, tax effected using the
applicable tax rates. Prior YTD charges of $145 million pretax ($98
million after tax) related to impairment of certain long-lived
assets, restructuring charges, and a settlement charge, tax effected
using the applicable tax rates.
|
(d)
|
|
Debt extinguishment charge of $11 million pretax ($7 million after
tax) related to the early redemption of the Company’s $559 million
notes due on March 15, 2018.
|
(e)
|
|
Acquisition adjustment of $4 million pretax ($3 million after tax)
related to net gains on foreign exchange derivative contracts to
economically hedge certain acquisitions.
|
(f)
|
|
Tax adjustment due to changes in the provisional tax amount related
to the enactment of the Tax Cuts and Jobs Act and certain discrete
items totaling $3 million in the current quarter and $4 million YTD
and a discrete tax adjustment of $4 million in the prior YTD period.
|
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
|
|
|
|
Dec. 31, 2017
|
|
Mar. 31, 2018
|
|
June 30, 2018
|
|
Sep. 30, 2018
|
|
Sep. 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to ADM
|
|
|
$
|
788
|
|
|
$
|
393
|
|
|
$
|
566
|
|
|
$
|
536
|
|
|
$
|
2,283
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
84
|
|
|
91
|
|
|
89
|
|
|
87
|
|
|
351
|
|
LIFO
|
|
|
2
|
|
|
(8
|
)
|
|
(13
|
)
|
|
7
|
|
|
(12
|
)
|
Other adjustments (3)
|
|
|
(303
|
)
|
|
2
|
|
|
31
|
|
|
(20
|
)
|
|
(290
|
)
|
Total adjustments
|
|
|
(217
|
)
|
|
85
|
|
|
107
|
|
|
74
|
|
|
49
|
|
Tax on adjustments
|
|
|
(55
|
)
|
|
(24
|
)
|
|
(26
|
)
|
|
(21
|
)
|
|
(126
|
)
|
Net adjustments
|
|
|
(272
|
)
|
|
61
|
|
|
81
|
|
|
53
|
|
|
(77
|
)
|
Total Adjusted ROIC Earnings
|
|
|
$
|
516
|
|
|
$
|
454
|
|
|
$
|
647
|
|
|
$
|
589
|
|
|
$
|
2,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Invested Capital (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Trailing Four
|
|
|
|
Dec. 31, 2017
|
|
Mar. 31, 2018
|
|
June 30, 2018
|
|
Sep. 30, 2018
|
|
Quarter Average
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity (1)
|
|
|
$
|
18,313
|
|
|
$
|
18,732
|
|
|
$
|
18,710
|
|
|
$
|
18,987
|
|
|
$
|
18,686
|
|
+ Interest-bearing liabilities (2)
|
|
|
7,493
|
|
|
9,000
|
|
|
7,630
|
|
|
7,857
|
|
|
7,995
|
|
+ LIFO adjustment (net of tax)
|
|
|
46
|
|
|
49
|
|
|
39
|
|
|
44
|
|
|
45
|
|
Other adjustments (3)
|
|
|
(326
|
)
|
|
(2
|
)
|
|
23
|
|
|
(18
|
)
|
|
(81
|
)
|
Total Adjusted Invested Capital
|
|
|
$
|
25,526
|
|
|
$
|
27,779
|
|
|
$
|
26,402
|
|
|
$
|
26,870
|
|
|
$
|
26,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Return on Invested Capital
|
|
|
|
|
|
|
|
8.3
|
%
|
(1)
|
|
Excludes noncontrolling interests
|
(2)
|
|
Includes short-term debt, current maturities of long-term debt,
capital lease obligations, and long-term debt
|
(3)
|
|
Includes the impact of U.S. tax reform
|
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.
|
Segment Operating Profit, Adjusted Segment Operating Profit (a
non-GAAP measure) as Currently Reported vs Previous Segments
|
(unaudited)
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
September 30, 2018
|
|
|
September 30, 2018
|
|
|
|
|
|
|
As
|
|
|
|
|
|
As
|
|
|
|
|
|
|
|
|
|
Currently
|
|
|
|
|
|
Currently
|
|
|
|
As Currently Reported
|
|
|
Pro Forma
|
|
|
Reported
|
|
|
Pro Forma
|
|
|
Reported
|
|
|
Pro Forma
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
Segment Operating Profit
|
|
|
Segment Operating Profit
|
|
|
$
|
881
|
|
|
|
$
|
881
|
|
|
|
$
|
2,487
|
|
|
|
$
|
2,487
|
|
Specified items:
|
|
|
Specified items:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on sales of assets and businesses
|
|
|
(Gains) losses on sales of assets and businesses
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
Impairment and restructuring charges
|
|
|
Impairment and restructuring charges
|
|
|
1
|
|
|
|
1
|
|
|
|
36
|
|
|
|
36
|
|
Adjusted Segment Operating Profit
|
|
|
Adjusted Segment Operating Profit
|
|
|
$
|
861
|
|
|
|
$
|
861
|
|
|
|
$
|
2,502
|
|
|
|
$
|
2,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination
|
|
|
Agricultural Services
|
|
|
$
|
129
|
|
|
|
$
|
198
|
|
|
|
$
|
363
|
|
|
|
$
|
517
|
|
Merchandising and handling
|
|
|
Merchandising and handling
|
|
|
93
|
|
|
|
83
|
|
|
|
293
|
|
|
|
274
|
|
Transportation
|
|
|
Transportation
|
|
|
36
|
|
|
|
36
|
|
|
|
70
|
|
|
|
70
|
|
|
|
|
Milling and Other
|
|
|
—
|
|
|
|
79
|
|
|
|
—
|
|
|
|
173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oilseeds
|
|
|
Oilseeds
|
|
|
$
|
349
|
|
|
|
$
|
349
|
|
|
|
$
|
1,042
|
|
|
|
$
|
1,058
|
|
Crushing and origination
|
|
|
Crushing and origination
|
|
|
221
|
|
|
|
221
|
|
|
|
493
|
|
|
|
496
|
|
Refining, packaging, biodiesel, & other
|
|
|
Refining, packaging, biodiesel, & other
|
|
|
48
|
|
|
|
46
|
|
|
|
308
|
|
|
|
320
|
|
Asia
|
|
|
Asia
|
|
|
80
|
|
|
|
82
|
|
|
|
241
|
|
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carbohydrate Solutions
|
|
|
Corn Processing
|
|
|
$
|
288
|
|
|
|
$
|
208
|
|
|
|
$
|
748
|
|
|
|
$
|
598
|
|
Starches and sweeteners
|
|
|
Sweeteners and Starches
|
|
|
245
|
|
|
|
174
|
|
|
|
699
|
|
|
|
541
|
|
Bioproducts
|
|
|
Bioproducts
|
|
|
43
|
|
|
|
34
|
|
|
|
49
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nutrition
|
|
|
Wild Flavors & Specialty Ingredients
|
|
|
$
|
67
|
|
|
|
$
|
78
|
|
|
|
$
|
277
|
|
|
|
$
|
257
|
|
WFSI
|
|
|
Wild Flavors & Specialty Ingredients
|
|
|
80
|
|
|
|
78
|
|
|
|
259
|
|
|
|
257
|
|
Animal Nutrition
|
|
|
|
|
|
(13
|
)
|
|
|
—
|
|
|
|
18
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Other
|
|
|
$
|
28
|
|
|
|
$
|
28
|
|
|
|
$
|
72
|
|
|
|
$
|
72
|
|
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 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.
Archer Daniels Midland Company
Media Relations
Jackie Anderson
312-634-8484
or
Investor Relations
Victoria de la Huerga
312-634-8457