- First quarter net earnings and adjusted earnings of about $1.1
billion
ADM (NYSE: ADM) today reported financial results for the quarter
ended March 31, 2022.
“I’m very proud of how our team lived our culture and fulfilled
our purpose over the last quarter, as they continued to serve the
world’s need for nutrition in a dynamic global environment,” said
Chairman and CEO Juan Luciano. “Our first quarter financial
results, including adjusted earnings per share of $1.90, reflect an
extension and amplification of the factors that drove our 2021
performance: great execution by our team, including exceptional
growth in Nutrition and effective risk management; a tighter supply
environment, especially with the smaller South American crop; and
robust and resilient demand. Importantly, I’m also very
appreciative of how our company has rallied to support our
colleagues in Ukraine and the country’s agriculture industry.
“Looking forward, we expect reduced crop supplies — caused by
the weak Canadian canola crop, the short South American crops, and
now the disruptions in the Black Sea region — to drive continued
tightness in global grain markets for the next few years. Longer
term, markets continue to reflect the importance of the enduring
global trends that are fueling performance across our portfolio by
driving demand for our products. And within ADM, our productivity
and innovation efforts are continuing to help us deliver on the
evolving needs of our customers. Considering these factors, we
expect 2022 results to exceed 2021's.”
First Quarter 2022 Highlights
(Amounts in millions except per share
amounts)
2022
2021
Earnings per share (as
reported)
$
1.86
$
1.22
Adjusted earnings per share1
$
1.90
$
1.39
Segment operating profit
$
1,539
$
1,105
Adjusted segment operating profit
(loss)1
$
1,556
$
1,199
Ag Services and Oilseeds
1,008
777
Carbohydrate Solutions
317
259
Nutrition
189
154
Other Business
42
9
- Q1 2022 EPS as reported of $1.86 includes a $0.02 per share net
charge related to impairments, restructuring, and settlement; a
$0.03 per share loss related to the mark-to-market adjustment on
the Wilmar exchangeable bond; and a $0.01 per share tax benefit
related to certain discrete items. Adjusted EPS, which excludes
these items, was $1.90.1
1 Non-GAAP financial measures; see pages
5, 10, 11 and 12 for explanations and reconciliations, including
after-tax amounts.
Quarterly Results of Operations
Ag Services & Oilseeds
delivered substantially higher year-over-year results, effectively
managing risk and executing exceptionally well in a dynamic
environment of robust global demand and tight supply, driven
primarily by the short South American crop, to deliver
substantially higher year-over-year results.
- Ag Services results were significantly higher versus the first
quarter of 2021. Global Trade results were higher, driven by strong
performances in destination marketing and global ocean freight.
North American origination margins and volumes were lower year over
year, including approximately $75 million in negative timing
effects, which will reverse in the coming quarters.
- Crushing was higher year over year in a strong global margin
environment driven by robust protein and vegetable oil demand.
Improving margins in the quarter resulted in approximately $60
million in negative timing effects — which will reverse in the
coming quarters — versus approximately $50 million in positive
timing in the prior-year quarter.
- Refined Products and Other results were much higher than the
prior-year period, driven by healthy refining premiums and good
refined oils demand in North America, as well as strong biodiesel
margins in EMEA.
- Equity earnings from Wilmar were significantly higher versus
the first quarter of 2021.
Carbohydrate Solutions
delivered results that were substantially higher year over
year.
- The Starches and Sweeteners subsegment, including ethanol
production from our wet mills, delivered much higher results versus
the prior-year quarter, driven by higher corn co-product revenues
and improved citric acid profits in North America; higher volumes
and margins in EMEA; and higher volumes and margins in wheat
milling. Sales volumes for starches and sweeteners continued their
recovery.
- Vantage Corn Processors delivered solid execution margins, but
position losses on ethanol inventory as prices fell early in the
quarter drove lower results versus the prior year. The prior-year
quarter’s results also benefited from demand for USP-grade
industrial alcohol from the Peoria facility, which was divested in
Q4 2021.
Nutrition delivered
extremely strong revenue growth of 23% and maintained healthy
margins, driving substantially higher results.
- Human Nutrition delivered higher year-over-year results.
Flavors continued to deliver solid revenue growth, offset by some
higher costs. Strong sales growth in alternative proteins,
including accretion from our Sojaprotein acquisition, and positive
currency timing impacts in South America, offset some higher
operating costs to help deliver better year-over-year results in
Specialty Ingredients. Health & Wellness was also higher year
over year, powered by probiotics, including contributions from our
late-2021 Deerland Probiotics acquisition, and robust demand for
fiber.
- Animal Nutrition profits were nearly double the year-ago
period, due primarily to strength in amino acids, which was driven
by a combination of product mix changes, improved North American
demand and global supply chain disruptions.
Other Business results were
substantially higher, driven primarily by better performance in
captive insurance, including reduced claim settlements versus the
prior year.
Other Items of Note
As additional information to help clarify underlying business
performance, the table on page 10 includes reported earnings and
EPS as well as adjusted earnings and EPS.
Segment operating profit of $1.5 billion for the quarter
includes net charges related to gains, impairments, restructuring
and settlement of $17 million ($0.02 per share).
In Corporate results, interest expense increased year over year
on higher expense for long-term debt, higher short-term borrowings
to support working capital needs, and interest related to a tax
item. Unallocated corporate costs were higher year over year due
primarily to higher IT operating and project-related costs and
higher costs in the company’s centers of excellence, partially
offset by incentive compensation accrual adjustments. Other
Corporate was favorable to the prior year primarily due to an ADM
Ventures investment revaluation gain. Corporate results also
included a loss related to the mark-to-market adjustment on the
Wilmar exchangeable bond of $15 million ($0.03 per share).
The effective tax rate for the quarter was 16%, in line with the
prior year.
Note: Additional Facts and Explanations
Additional facts and explanations about results and industry
environment can be found at the end of the ADM Q1 Earnings
Presentation at www.adm.com/webcast.
Conference Call Information
ADM will host a webcast on April 26, 2022, at 8 a.m. Central
Time to discuss financial results and provide a company update.
To listen to the webcast, go to www.adm.com/webcast. A replay of
the webcast will also be available for an extended period of time
at www.adm.com/webcast.
Forward-Looking Statements
Some of our comments and materials in this presentation
constitute forward-looking statements that reflect management’s
current views and estimates of future economic circumstances,
industry conditions, Company performance and financial results.
These statements and materials are based on many assumptions and
factors that are subject to risk and uncertainties. ADM has
provided additional information in its reports on file with the SEC
concerning assumptions and factors that could cause actual results
to differ materially from those in this presentation, and you
should carefully review the assumptions and factors in our SEC
reports. To the extent permitted under applicable law, ADM assumes
no obligation to update any forward-looking statements as a result
of new information or future events.
About ADM
ADM unlocks the power of nature to enrich the quality of life.
We’re a premier global human and animal nutrition company,
delivering solutions today with an eye to the future. We’re blazing
new trails in health and well-being as our scientists develop
groundbreaking products to support healthier living. We’re a
cutting-edge innovator leading the way to a new future of
plant-based consumer and industrial solutions to replace
petroleum-based products. We’re an unmatched agricultural supply
chain manager and processor, providing food security by connecting
local needs with global capabilities. And we’re a leader in
sustainability, scaling across entire value chains to help
decarbonize our industry and safeguard our planet. From the seed of
the idea to the outcome of the solution, we give customers an edge
in solving the nutritional and sustainability challenges of today
and tomorrow. Learn more at www.adm.com.
Financial Tables Follow
Source: Corporate Release Source: ADM
Segment Operating Profit, Adjusted
Segment Operating Profit (a non-GAAP financial measure)
and Corporate Results
(unaudited)
Quarter ended
March 31
(In millions)
2022
2021
Change
Segment Operating Profit
$
1,539
$
1,105
$
434
Specified items:
Gain on sale of assets
(1
)
—
(1
)
Impairment, restructuring, and settlement
charges
18
94
(76
)
Adjusted Segment Operating
Profit
$
1,556
$
1,199
$
357
Ag Services and Oilseeds
$
1,008
$
777
$
231
Ag Services
258
209
49
Crushing
428
382
46
Refined Products and Other
198
101
97
Wilmar
124
85
39
Carbohydrate Solutions
$
317
$
259
$
58
Starches and Sweeteners
316
222
94
Vantage Corn Processors
1
37
(36
)
Nutrition
$
189
$
154
$
35
Human Nutrition
141
128
13
Animal Nutrition
48
26
22
Other Business
$
42
$
9
$
33
Segment Operating Profit
$
1,539
$
1,105
$
434
Corporate Results
$
(268
)
$
(281
)
$
13
Interest expense - net
(76
)
(64
)
(12
)
Unallocated corporate costs
(209
)
(202
)
(7
)
Other
36
10
26
Specified items:
Expenses related to acquisitions
(2
)
—
(2
)
Loss on debt conversion option
(15
)
(20
)
5
Loss on sale of assets
(3
)
—
(3
)
Restructuring adjustment (charges)
1
(5
)
6
Earnings Before Income Taxes
$
1,271
$
824
$
447
Segment operating profit is ADM’s consolidated income from
operations before income tax excluding corporate items. Adjusted
segment operating profit, a non-GAAP financial measure, is segment
operating profit excluding specified items. Management believes
that segment operating profit and adjusted segment operating profit
are useful measures of ADM’s performance because they provide
investors information about ADM’s business unit performance
excluding corporate overhead costs as well as specified items.
Segment operating profit and adjusted segment operating profit are
not measures of consolidated operating results under U.S. GAAP and
should not be considered alternatives to income before income
taxes, the most directly comparable GAAP financial measure, or any
other measure of consolidated operating results under U.S.
GAAP.
Consolidated Statements of
Earnings
(unaudited)
Quarter ended
March 31
2022
2021
(in millions, except per share
amounts)
Revenues
$
23,650
$
18,893
Cost of products sold (1)
21,753
17,345
Gross profit
1,897
1,548
Selling, general, and administrative
expenses (2)
829
749
Asset impairment, exit, and restructuring
costs (3)
1
59
Equity in (earnings) losses of
unconsolidated affiliates
(204
)
(125
)
Investment income
(59
)
(13
)
Interest expense (4)
92
87
Other (income) expense - net (5,6)
(33
)
(33
)
Earnings before income taxes
1,271
824
Income tax expense (benefit) (7)
207
131
Net earnings including noncontrolling
interests
1,064
693
Less: Net earnings (losses) attributable
to noncontrolling interests
10
4
Net earnings attributable to
ADM
$
1,054
$
689
Diluted earnings per common
share
$
1.86
$
1.22
Average diluted shares outstanding
568
564
(1) Includes net charges of $9 million
related to inventory writedown partially offset by an insurance
settlement of $2 million in the current quarter.
(2) Includes charges of $7 million related
to receivable impairment in the current quarter.
(3) Includes charges related to the
impairment of certain assets and restructuring of $1 million and
$59 million in the current quarter and prior year quarter,
respectively.
(4) Includes losses related to the
mark-to-market adjustment of the conversion option of the
exchangeable bond issued in August 2020 of $15 million and $20
million in the current quarter and prior year quarter,
respectively.
(5) Includes net losses related to the
sale of certain assets of $2 million in the current quarter.
(6) Includes a legal settlement charge and
exit costs of $40 million in the prior year quarter.
(7) Includes the tax benefit impact of the
above specified items and tax discrete items totaling $8 million
and $25 million in the current quarter and prior year quarter,
respectively.
Summary of Financial Condition
(unaudited)
March 31, 2022
March 31, 2021
(in millions)
Net Investment In
Cash and cash equivalents (a)
$
1,079
$
694
Operating working capital (b)
15,171
12,841
Property, plant, and equipment
9,794
9,799
Investments in and advances to
affiliates
5,404
4,998
Goodwill and other intangibles
6,750
5,249
Other non-current assets
2,465
2,148
$
40,663
$
35,729
Financed By
Short-term debt (a)
$
3,777
$
2,763
Long-term debt, including current
maturities (a)
9,295
8,437
Deferred liabilities
3,574
3,586
Temporary equity
262
82
Shareholders’ equity
23,755
20,861
$
40,663
$
35,729
(a)
Net debt is calculated as
short-term debt plus long-term debt (including current maturities)
less cash and cash equivalents.
(b)
Current assets (excluding cash
and cash equivalents) less current liabilities (excluding
short-term debt and current maturities of long-term debt).
Summary of Cash Flows
(unaudited)
Three months ended
March 31
2022
2021
(in millions)
Operating Activities
Net earnings
$
1,064
$
693
Depreciation and amortization
257
249
Asset impairment charges
1
31
(Gains) losses on sales/revaluation of
assets
(34
)
(11
)
Other - net
328
240
Other changes in operating assets and
liabilities
(2,822
)
(904
)
Total Operating Activities
(1,206
)
298
Investing Activities
Purchases of property, plant and
equipment
(217
)
(174
)
Proceeds from sale of business/assets
5
14
Marketable securities - net
—
1
Investments in and advances to
affiliates
(36
)
(4
)
Other investing activities
(94
)
(6
)
Total Investing Activities
(342
)
(169
)
Financing Activities
Long-term debt borrowings
750
593
Net borrowings (payments) under lines of
credit
2,824
729
Cash dividends
(226
)
(208
)
Other
(30
)
(37
)
Total Financing Activities
3,318
1,077
Increase (decrease) in cash, cash
equivalents, restricted cash, and restricted cash
equivalents
1,770
1,206
Cash, cash equivalents, restricted
cash, and restricted cash equivalents - beginning of period
7,454
4,646
Cash, cash equivalents, restricted
cash, and restricted cash equivalents - end of period
$
9,224
$
5,852
Segment Operating Analysis
(unaudited)
Quarter ended
March 31
2022
2021
(in ‘000s metric tons)
Processed volumes (by
commodity)
Oilseeds
8,491
8,960
Corn
4,812
3,650
Total processed volumes
13,303
12,610
Quarter ended
March 31
2022
2021
(in millions)
Revenues
Ag Services and Oilseeds
$
18,253
$
15,007
Carbohydrate Solutions
3,366
2,223
Nutrition
1,924
1,563
Other Business
107
100
Total revenues
$
23,650
$
18,893
Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)
Quarter ended March 31
2022
2021
In millions
Per share
In millions
Per share
Net earnings and fully diluted
EPS
$
1,054
$
1.86
$
689
$
1.22
Adjustments:
Loss on sales of assets and businesses
(a)
2
—
—
—
Impairment, restructuring, and settlement
charges (b)
14
0.02
74
0.13
Expenses related to acquisitions (c)
1
—
—
—
Loss on debt conversion option (d)
15
0.03
20
0.04
Tax adjustment (e)
(4
)
(0.01
)
—
—
Sub-total adjustments
28
0.04
94
0.17
Adjusted net earnings and adjusted
EPS
$
1,082
$
1.90
$
783
$
1.39
(a)
Loss on sale of assets of $2
million pretax ($2 million after tax).
(b)
Current quarter charges of $17
million pretax ($14 million after tax) were primarily related to
the impairment of certain assets partially offset by a
restructuring adjustment and an insurance settlement, tax effected
using the applicable tax rates. Prior quarter charges of $99
million pretax ($74 million after tax) were related to the
impairment of certain assets, restructuring, and a legal
settlement, tax effected using the applicable tax rates.
(c)
Expenses of $2 million pretax ($1
million after tax) related to the Deerland and Sojaprotein
acquisitions.
(d)
Loss on debt conversion option of
$15 million pretax ($15 million after tax) in the current quarter
and $20 million pretax ($20 million after tax) in the prior
quarter, 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 adjustment totaling $4
million in the current quarter was related to certain discrete
items.
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
June 30, 2021
Sep. 30, 2021
Dec. 31, 2021
Mar. 31, 2022
Mar. 31, 2022
Net earnings attributable to ADM
$
712
$
526
$
782
$
1,054
$
3,074
Adjustments:
Interest expense
40
61
77
92
270
Other adjustments
95
39
66
17
217
Total adjustments
135
100
143
109
487
Tax on adjustments
(32
)
(24
)
(14
)
(26
)
(96
)
Net adjustments
103
76
129
83
391
Total Adjusted ROIC Earnings
$
815
$
602
$
911
$
1,137
$
3,465
Adjusted Invested Capital (in
millions)
Quarter Ended
Trailing Four
June 30, 2021
Sep. 30, 2021
Dec. 31, 2021
Mar. 31, 2022
Quarter Average
Equity (1)
$
21,582
$
21,969
$
22,477
$
23,722
$
22,438
+ Interest-bearing liabilities (2)
9,729
8,941
9,546
13,079
10,324
Other adjustments
72
29
70
13
46
Total Adjusted Invested Capital
$
31,383
$
30,939
$
32,093
$
36,814
$
32,808
Adjusted Return on Invested
Capital
10.6
%
(1) Excludes noncontrolling interests
(2) Includes short-term debt, current
maturities of long-term debt, finance lease obligations, and
long-term debt
Adjusted ROIC is Adjusted ROIC earnings divided by adjusted
invested capital. Adjusted ROIC earnings is ADM’s net earnings
adjusted for the after-tax effects of interest expense and
specified items. Adjusted invested capital is the sum of ADM’s
equity (excluding noncontrolling interests) and interest-bearing
liabilities adjusted for the after-tax effect of specified items.
Management believes Adjusted ROIC is a useful financial measure
because it provides investors information about ADM’s returns
excluding the impacts of specified items and increases
period-to-period comparability of underlying business performance.
Management uses Adjusted ROIC to measure ADM’s performance by
comparing Adjusted ROIC to its weighted average cost of capital
(WACC). Adjusted ROIC, Adjusted ROIC earnings and Adjusted invested
capital are non-GAAP financial measures and are not intended to
replace or be alternatives to GAAP financial measures.
Adjusted Earnings Before Taxes, Interest, and Depreciation
and Amortization (EBITDA) A non-GAAP financial measure
(unaudited)
The tables below provide a reconciliation of earnings before
income taxes to adjusted EBITDA and adjusted EBITDA by segment for
the trailing four quarters ended March 31, 2022.
Four Quarters
Quarter Ended
Ended
June 30, 2021
Sep. 30, 2021
Dec. 31, 2021
Mar. 31, 2022
Mar. 31, 2022
(in millions)
Earnings before income taxes
$
825
$
653
$
1,011
$
1,271
$
3,760
Interest expense
40
61
77
92
270
Depreciation and amortization
243
247
257
257
1,004
Losses (gains) on sales of assets and
businesses
(22
)
—
(55
)
2
(75
)
Asset impairment, exit, restructuring, and
settlement charges
118
3
80
17
218
Railroad maintenance expense
3
31
33
—
67
Debt extinguishment charges
—
36
—
—
36
Expenses related to acquisitions
—
3
4
2
9
Adjusted EBITDA
$
1,207
$
1,034
$
1,407
$
1,641
$
5,289
Four Quarters
Quarter Ended
Ended
June 30, 2021
Sep. 30, 2021
Dec. 31, 2021
Mar. 31, 2022
Mar. 31, 2022
(in millions)
Ag Services and Oilseeds
$
661
$
711
$
902
$
1,096
$
3,370
Carbohydrate Solutions
467
297
510
396
1,670
Nutrition
253
230
220
254
957
Other Business
7
(3
)
17
44
65
Corporate
(181
)
(201
)
(242
)
(149
)
(773
)
Adjusted EBITDA
$
1,207
$
1,034
$
1,407
$
1,641
$
5,289
Adjusted EBITDA is defined as earnings before taxes, interest,
and depreciation and amortization, adjusted for specified items.
The Company calculates adjusted EBITDA by removing the impact of
specified items and adding back the amounts of interest expense and
depreciation and amortization to earnings before income taxes.
Management believes that adjusted EBITDA is a useful measure of the
Company’s performance because it provides investors additional
information about the Company’s operations allowing better
evaluation of underlying business performance and better
period-to-period comparability. Adjusted EBITDA is a non-GAAP
financial measure and is not intended to replace or be an
alternative to earnings before income taxes, the most directly
comparable GAAP financial measure.
View source
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Media Relations Jackie Anderson 312-634-8484
Investor Relations Michael Cross 217-451-4647
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