Archer-Daniels-Midland Co
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
ADM$69.97-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-30.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 111 current paragraphs.
38 unchanged; 37 reworded; 19 added; 2 removed; 0 previous and 17 current paragraphs rearranged.
Tables are not compared: 6 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Interest and investment income decreased $2 million to $140 million due primarily to lower interest income.
Current report
Segment operating profit and adjusted segment operating profit (both non-GAAP measures) are reconciled to earnings before income taxes, the most directly comparable GAAP measure, for the quarter as follows:
Current report
Corporate unallocated results for the quarter were as follows:
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Earnings before taxes decreased $1.0 billion to $1.5 billion due to lower pricing and execution margins as well as higher corporate unallocated costs. Segment operating profit (a non-GAAP measure) decreased $0.9 billion to $2.3 billion and included a net charge of $13 million consisting of asset impairment charges totaling $13 million. Included in segment operating profit in the prior period was a net charge of $109 million consisting of charges totaling $121 million related to the impairment of certain assets, restructuring, and a contingency/settlement, partially offset by gains on the sale of certain assets of $12 million. Adjusted segment operating profit (a non-GAAP measure) decreased $1.0 billion to $2.3 billion due primarily to lower results in Crushing, Refined Products and Other, Ag Services, Human Nutrition, and Starches and Sweeteners, partially offset by higher results in Wilmar, Vantage Corn Processors, Animal Nutrition, and Other Business. Corporate unallocated results in the current period were a net charge of $0.8 billion. Corporate unallocated results in the prior period were a net charge of $0.7 billion and included a mark-to-market gain of $6 million on the conversion option of the exchangeable bonds issued in August 2020. The bonds were paid off in full, as scheduled, in August 2023.
Current report
Analysis of Statements of Earnings
Current report
Revenues by segment for the six months ended June 30, 2024 and 2023 were as follows:
Current report
Revenues decreased $5.2 billion to $44.1 billion due to lower sales prices ($8.5 billion), partially offset by higher sales volumes ($3.4 billion). Lower sales prices of oils, soybeans, corn, and meal, and lower sales volumes of milled rice and alcohol, were partially offset by higher sales volumes of soybeans, wheat, oils and corn. Ag Services and Oilseeds revenues decreased 10% to $34.6 billion due to lower sales prices ($7.4 billion), partially offset by higher sales volumes ($3.6 billion). Carbohydrate Solutions revenues decreased 19% to $5.6 billion due to lower sales prices ($1.2 billion) and lower sales volumes ($0.2 billion). Nutrition revenues increased 1% to $3.7 billion due to higher volumes ($0.1 billion), partially offset by lower prices ($0.1 billion).
Current report
Cost of products sold decreased $4.3 billion to $41.0 billion due principally to lower average commodity costs. Manufacturing expenses decreased $0.1 billion to $3.7 billion due principally to decreases in energy costs, and operating supplies, partially offset by increases in salaries and benefits, legal, professional, and other fees, and commercial services.
Current report
Foreign currency translation decreased revenues and cost of products sold by $50 million and $32 million, respectively.
Current report
Selling, general, and administrative expenses increased $0.1 billion to $1.9 billion due primarily to higher salaries and benefit costs, increased expenses for contracted outside labor, and higher legal and financing fees, partially offset by decreased provisions for bad debt.
Current report
Equity in earnings of unconsolidated affiliates increased $39 million to $364 million due primarily to higher earnings from the Company’s investments in Almindones Mexicanos S.A., Wilmar, Skyland Grain, LLC, and Hungrana Kft., partially offset by lower earnings from ADM’s investment in SoyVen, Olenex Sarl, and Stratas.
Current report
Interest expense increased $26 million to $353 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services. Interest expense in the prior period included a $6 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020. The exchangeable bonds were paid off in full in August 2023.
Current report
Segment operating profit (loss) and adjusted segment operating profit (both non-GAAP measures) are reconciled to earnings before income taxes, the most directly comparable GAAP measure, for the six months ended June 30, 2024 and 2023 as follows:
Current report
Ag Services and Oilseeds operating profit decreased 42%. Ag Services results are down from the prior period. South America Origination margins have compressed due to slower farmer selling and increased freight costs. North America Origination continues to see weak export demand and a carry market has contributed to slow farmer selling limiting trade opportunities. Execution in destination marketing as well as effective risk management continued to deliver strong Global Trade results, though lower than the prior year. Crushing results were lower than the prior period, particularly in North America. Increased industry capacity pressured Crush margins and increased supply of competing low carbon intensity feedstocks affected margins. Board crush rallied the end of the quarter due to industry downtime, strong product demand and ample supply. Refined Products and Other results are down from the prior period. North America margins compressed due to increased used cooking oil imports. Europe biodiesel benefited from high spot margins due to supply shortage. Wilmar earnings are higher versus the prior period.
Current report
Other Business operating profit increased $34 million. Captive insurance results were higher due to lower claim activity. ADM Investor Services profits were lower on higher operating costs.
Current report
Corporate unallocated results for the six months ended June 30, 2024 and 2023 were as follows:
Current report
Corporate unallocated results were a net charge of $0.8 billion in the current period compared to a net charge of $0.7 billion in the prior period. Interest expense-net increased $10 million due primarily to increased short-term rates on the Company’s commercial paper borrowing programs and increased interest expense from new debt issuances. Unallocated corporate costs increased $86 million due primarily to increases in legal and professional fees, global technology spend, and securitization fees. Gain on debt conversion option in the prior period was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current period included the non-service components of net pension benefit income of $9 million and foreign exchange gains of $27 million, partially offset by railroad maintenance expenses of $4 million. This was offset by valuation losses of approximately $18 million in the Company’s ADM Ventures portfolio. Other income in the prior period included the non-service components of net pension benefit income of $9 million, and foreign exchange gains, partially offset by railroad maintenance expenses.
Current report
Non-GAAP Financial Measures
Removed paragraphs (2)
Previous report
Segment operating profit (loss), adjusted segment operating profit (a non-GAAP measure), and earnings before income taxes for the quarter are as follows:
Previous report
Corporate results for the quarter are as follows:
Reworded paragraphs (37)
Previous wording
Because each sale to be adjusted occurred between the Company’s reporting segments, the adjustments had no impact on the Company’s previously-reported consolidated balance sheets and statements of earnings, comprehensive income (loss), or cash flows. The Company determined the adjustments are not material to the Company’s consolidated financial statements taken as a whole for any period.
Current wording
Because each sale adjusted occurred between the Company’s reporting segments, the adjustments had no impact on the Company’s previously-reported consolidated balance sheets and statements of earnings, comprehensive income (loss), or cash flows. The Company determined the adjustments are not material to the Company’s consolidated financial statements taken as a whole for any period.
Previous wording
Additional information about such error corrections is set forth in Note 13, Segment Information of “Notes to Consolidated Financial Statements” included in Part I, Item 1 herein. Note 13 also includes adjustments to certain corresponding segment-specific historical financial information for the three months ended March 31, 2023 to reflect these immaterial error corrections. The information in this MD&A reflects the corrections to the historical financial information for the three months ended March 31, 2023.
Current wording
Additional information about such error corrections is set forth in Note 13, Segment Information of “Notes to Consolidated Financial Statements” included in Part I, Item 1 herein. Note 13 also includes adjustments to certain corresponding segment-specific historical financial information for the three and six months ended June 30, 2023 to reflect these immaterial error corrections. The information in this MD&A reflects the corrections to the historical financial information for the three and six months ended June 30, 2023.
Previous wording
Net earnings attributable to controlling interests decreased $0.4 billion from $1.2 billion to $0.7 billion. Segment operating profit decreased $0.4 billion from $1.7 billion to $1.3 billion and included asset impairment and restructuring charges totaling $6 million. Included in segment operating profit in the prior-year quarter was a net charge of $6 million consisting of charges totaling $7 million related to asset impairment and restructuring, partially offset by a gain on the sale of certain assets of $1 million. Adjusted segment operating profit (a non-GAAP measure) decreased $0.4 billion to $1.3 billion due primarily to lower results in Refined Products and Other, Ag Services, Crushing, Human Nutrition, and Starches and Sweeteners, partially offset by higher results in Wilmar, Vantage Corn Processors, Other Business, and Animal Nutrition. Corporate results in the current quarter were a net charge of $426 million and included restructuring charges of $12 million. Corporate results in the prior-year quarter were a net charge of $322 million and included a mark-to-market gain of $5 million on the conversion option of the exchangeable bonds issued in August 2020.
Current wording
Earnings before taxes decreased $0.5 billion to $0.6 billion due to lower pricing and execution margins as well as higher corporate unallocated costs. Segment operating profit (a non-GAAP measure) decreased $0.5 billion from $1.5 billion to $1.0 billion and included asset impairment and restructuring charges totaling $7 million. Included in segment operating profit in the prior-year quarter was a net charge of $103 million consisting of charges totaling $114 million and a gain on the sale of certain assets of $11 million. Adjusted segment operating profit (a non-GAAP measure) decreased $0.6 billion to $1.0 billion due primarily to lower results in Ag Services and Oilseeds, and Human Nutrition, partially offset by higher results in Carbohydrate Solutions, Other Business, and Animal Nutrition. Corporate Unallocated results in the current quarter were a net charge of $418 million. Corporate unallocated results in the prior-year quarter were a net charge of $393 million and included a mark-to-market gain of $1 million on the conversion option of the exchangeable bonds issued in August 2020.
Previous wording
Income tax expense decreased $59 million to $166 million. The effective tax rate for the quarter ended March 31, 2024 was 18.8% compared to 16.1% for the quarter ended March 31, 2023. The increase in the rate was primarily due to changes in the geographic mix of forecasted pretax earnings and the impact of discrete tax items.
Current wording
Income tax expense decreased $89 million to $115 million. The effective tax rate for the quarter ended June 30, 2024 was 19.3% compared to 18.0% for the quarter ended June 30, 2023. The increase in the rate was primarily due to the impact of discrete tax items, partially offset by the change in the geographic mix of forecasted pretax earnings.
Previous wording
Processed volumes by product for the quarter are as follows (in metric tons):
Current wording
Processed volumes by product for the quarter were as follows (in metric tons):
Previous wording
Revenues by segment for the quarter are as follows:
Current wording
Revenues by segment for the quarter were as follows:
Previous wording
Revenues decreased $2.2 billion to $21.8 billion due to lower sales prices ($5.0 billion), partially offset by higher sales volumes ($2.8 billion). Lower sales prices of oils, corn, soybeans, and meal and lower sales volumes of alcohol, rapeseed, and farming materials, were partially offset by higher sales volumes of corn, soybeans, wheat, and meal. Ag Services and Oilseeds revenues decreased 7% to $17.2 billion due to lower sales prices ($4.3 billion), partially offset by higher sales volumes ($3.0 billion). Carbohydrate Solutions revenues decreased 24% to $2.7 billion due to lower sales prices ($0.7 billion) and lower sales volumes ($0.2 billion). Nutrition revenues of $1.8 billion was comparable to the prior-year quarter.
Current wording
Revenues decreased $2.9 billion to $22.2 billion due to lower sales prices ($3.6 billion), partially offset by higher sales volumes ($0.7 billion). Lower sales prices of emulsifiers and thickeners, biodiesel, and corn and lower sales volumes of meal and farming materials, were partially offset by higher sales volumes of animal feeds, oils, soybeans and rapeseed. Ag Services and Oilseeds revenues decreased 13% to $17.3 billion due to lower sales prices ($3.1 billion), partially offset by higher sales volumes ($0.6 billion). Carbohydrate Solutions revenues decreased 14% to $2.9 billion due to lower sales prices ($0.5 billion). Nutrition revenues increased 3% to $1.9 billion due to slightly higher sales volumes ($0.2 billion), partially offset by lower prices ($0.1 billion).
Previous wording
Cost of products sold decreased $1.8 billion to $20.2 billion due principally to lower average commodity costs. Manufacturing expenses decreased $86 million to $1.8 billion due principally to lower energy costs, partially offset by higher salaries and benefit costs and commercial service fees.
Current wording
Cost of products sold decreased $2.5 billion to $20.9 billion due principally to lower average commodity costs. Manufacturing expenses increased $20 million to $1.9 billion due principally to higher salaries and benefit costs, maintenance costs, and commercial services, partially offset by lower energy costs.
Previous wording
Foreign currency translation increased revenues by $64 million and cost of products sold by $64 million.
Current wording
Foreign currency translation decreased revenues by $114 million and cost of products sold by $95 million.
Previous wording
Selling, general, and administrative expenses increased $70 million to $951 million due primarily to higher legal and professional fees, increased amortization of intangibles, and higher salaries and benefit costs.
Current wording
Selling, general, and administrative expenses increased $66 million to $907 million due primarily to increased legal and professional fees, increased amortization of intangibles, and higher salaries and benefit costs.
Previous wording
Equity in earnings of unconsolidated affiliates increased $38 million to $212 million due primarily to higher earnings from the Company’s investment in Wilmar.
Current wording
Equity in earnings of unconsolidated affiliates increased $1 million to $152 million due primarily to higher earnings from the Company’s investments in Hungrana, Almindones Mexicanos S.A., and Stratas, partially offset by lower earnings from the Company’s investment in Wilmar.
Previous wording
Interest expense increased $19 million to $166 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services. Interest expense in the prior-year quarter also included a mark-to-market gain adjustment of $5 million related to the conversion option of the exchangeable bonds issued in August 2020.
Current wording
Interest expense increased $7 million to $187 million due primarily to increased short-term rates on customer deposit balances in ADM Investor Services. Interest expense in the prior-year quarter also included a mark-to-market gain adjustment of $1 million related to the conversion option of the exchangeable bonds issued in August 2020.
Previous wording
Other income-net decreased $18 million to $26 million. Income in the current quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and net other income. Income in the prior-year quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and net other income.
Current wording
Other income-net decreased $28 million to $9 million. Income in the current quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and net other income. Income in the prior-year quarter included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and net other income.
Previous wording
Ag Services and Oilseeds operating profit decreased 29%. Ag Services results were lower than the first quarter of 2023 due to the stabilization of trade flows leading to lower global trade and risk management results. Crushing results were lower than the prior-year quarter as increased imports of used cooking oil and the anticipation of large South American supplies negatively impacted North American soy crush margins. Significant positive mark-to-market timing impacts that contributed to the prior-year quarter results also drove lower results in the current quarter. Refined Products and Other results were lower than the prior-year quarter as the increased imports of used cooking oil negatively impacted refining margins in North America. Negative mark-to-market timing impacts affected current quarter results versus positive impacts in the prior-year quarter. Equity earnings from Wilmar were higher versus the first quarter of 2023.
Current wording
Ag Services and Oilseeds operating profit decreased 56%. Ag Services results were lower than the second quarter of 2023 due to the stabilization of trade flows leading to lower global trade and risk management results. In South America, slower farmer selling led to much lower margins. North American results were lower due to strong supplies out of Brazil and Argentina shifting export demand to South America. Crushing results were lower than the prior year quarter as global soy crush margins moderated due to more balanced supply and demand conditions and lower oil values caused by an increase in imports of used cooking oil. During the quarter, negative mark-to-market timing impacts were significantly lower than in the prior-year quarter. Refined Products & Other (RPO) results were lower, as the margin structure in North America and EMEA has eased from historically high levels in the prior year period. RPO negative mark-to-market timing impacts affected current quarter results versus positive impacts in the prior-year quarter. Equity earnings from Wilmar were lower versus the second quarter of 2023.
Previous wording
Nutrition operating profit decreased 39%. Human Nutrition results were lower than the first quarter of 2023 as impacts related to unplanned downtime at Decatur East and a normalizing texturants market negatively impacted margins. Animal Nutrition results were higher compared to the same quarter last year as cost optimization efforts and lower input costs bolstered margins.
Current wording
Nutrition operating profit decreased 36%. Human Nutrition results were lower than the second quarter of 2023 as impacts related to unplanned downtime at Decatur East, a normalizing texturants market, and higher manufacturing costs negatively impacted margins. Animal Nutrition results were higher compared to the same quarter last year as cost optimization efforts and lower input costs bolstered margins.
Previous wording
Other Business operating profit increased $24 million. Captive insurance results were higher due to higher program premiums and lower claims. ADM Investor Services results improved on higher net interest income.
Current wording
Other Business operating profit increased $10 million. Captive insurance results were higher due to lower claim activity. ADM Investor Services was lower on higher operating costs.
Previous wording
Corporate results were a net charge of $426 million in the current quarter compared to a net charge of $322 million in the prior-year quarter. Interest expense-net increased $7 million due primarily to lower capitalized interest. Unallocated corporate costs increased $56 million due primarily to increases in legal and professional fees, global technology spend, incentive compensation accruals, and financing costs. Gain on debt conversion option in the prior-year quarter was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current quarter includes foreign exchange gains of $15 million and the non-service components of net pension benefit income of $5 million offset by an investment revaluation loss of $18 million. Other income in the prior-year quarter included the non-service components of net pension benefit income of $4 million and foreign exchange gains of $22 million.
Current wording
Corporate unallocated results were a net charge of $418 million in the current quarter compared to a net charge of $393 million in the prior-year quarter. Interest expense-net increased $3 million due to higher borrowings. Unallocated corporate costs increased $30 million due primarily to increases in legal and professional fees, global technology spend, and securitization fees. Gain on debt conversion option in the prior-year quarter was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other income in the current quarter includes foreign exchange gains of $12 million and the non-service components of net pension benefit income of $5 million. Other expense in the prior-year quarter included foreign exchange losses and railroad maintenance expenses, partially offset by the non-service components of net pension benefit income of $5 million.
Previous wording
The Company uses adjusted net earnings, adjusted earnings per share (EPS), adjusted EBITDA, and adjusted segment operating profit, non-GAAP financial measures as defined by the SEC, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.
Current wording
The Company uses adjusted net earnings, adjusted earnings per share (EPS), EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.
Previous wording
Adjusted net earnings is defined as net earnings adjusted for the effects on net earnings of specified items. Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. Adjusted EBITDA is defined as earnings before interest, taxes, 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 income tax expense, interest expense on borrowings, and depreciation and amortization to net earnings. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.
Current wording
Adjusted net earnings is defined as net earnings adjusted for the effects on net earnings of specified items. Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization. Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, 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 income tax expense, interest expense on borrowings and depreciation and amortization to net earnings. Segment operating profit is total operating profit of the Company’s reportable segments. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.
Previous wording
The tables below provide a reconciliation of net earnings to adjusted EBITDA and adjusted EBITDA by segment for the three months ended March 31, 2024 and 2023.
Current wording
The tables below provide a reconciliation of net earnings to EBITDA and adjusted EBITDA for the three months ended June 30, 2024 and 2023.
Previous wording
The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, following two years of very favorable market conditions, several headwinds in the agriculture cycle led to more normalized results throughout the entire value chain. Ag Services experienced slow South American farmer selling, low demand for North American exports, along with low margins in all regions with the move to a carry market. Crushing saw strong run rates, the anticipation of a more normal global supply environment, and new capacity suppressing meal values. In Refined Products and Other, oil values in North America were under pressure due to low carbon intensity feedstocks competing in the renewable diesel market. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Industry ethanol stocks remained elevated. Solid export demand for ethanol helped minimize the imbalance between supply and demand. In Nutrition, demand was softer in a few food and beverage product categories. Human Nutrition was impacted by inflation which drove lower demand and impacted volumes in alternative proteins. Demand has started to recover in the food, beverage, and dietary supplement segment. In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially compensated by a slightly improved market in Europe, Middle East, and Africa (EMEA). The global feed and feed additives market remained challenged on the demand side, with weakness in the Chinese beef and pork business and continued subdued global shrimp prices.
Current wording
The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, following two years of very favorable market conditions, several headwinds in the agriculture cycle led to more normalized results throughout the entire value chain. Ag Services experienced slow South American farmer selling, low demand for North American exports, with good crop prospects in North America. Crushing experienced strong run rates in Europe and South America, the anticipation of a more normal global supply environment, and new capacity suppressing meal and oil values. In Refined Products and Other, oil values in North America were under pressure due to low carbon intensity feedstocks competing in the renewable diesel market, nevertheless the biodiesel mandate increase from B12 to B14 in Brazil had a positive impact on results. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Strong export demand for ethanol helped offset higher industry production to minimize the imbalance between supply and demand. In Nutrition, demand was softer in a few food and beverage product categories driven by shifts in consumer discretionary spend. Human Nutrition was impacted by inflation which drove lower demand and impacted sales volumes in alternative proteins. Demand has started to recover in the food, beverage, and dietary supplement segment. In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially compensated by a slightly improved market in Europe, Middle East, and Africa (EMEA). The global feed and feed additives market remained challenged on the demand side, with weakness in the Chinese beef and pork business and continued subdued global shrimp prices.
Previous wording
The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall increase in oilseeds processed volumes was primarily related to improved crush rates in the current quarter compared to lower crush rates in the prior-year quarter resulting from weather related issues and reduced capacity due to the Russian-Ukraine war.
Current wording
The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall increase in oilseeds processed volumes was primarily related to improved crush rates in South America and EMEA compared to lower crush rates in the prior year due to inclement weather, unplanned downtime, and reduced capacity due to the Russian-Ukraine war. In addition, plant reliability has increased slightly year over year.
Previous wording
Gross profit decreased $0.4 billion or 20% to $1.7 billion. Lower results in Ag Services and Oilseeds ($363 million), Starches and Sweeteners ($58 million), and Human Nutrition ($48 million) were partially offset by higher results in Vantage Corn Processors ($18 million), Animal Nutrition ($17 million), and Other ($17 million). These factors are explained in the segment operating profit discussion on page 42.
Current wording
Gross profit decreased $0.9 billion or 23% to $3.1 billion due principally to lower results in Ag Services and Oilseeds ($870 million), Human Nutrition ($102 million), and Starches and Sweeteners ($35 million), partially offset by Animal Nutrition ($44 million), Vantage Corn Processors ($24 million), and Other ($37 million). These factors are explained in the segment operating profit discussion on page 54.
Previous wording
Asset impairment, exit, and restructuring costs increased $11 million to $18 million. Charges in the current quarter consisted of $3 million of impairments related to certain long-lived assets and $3 million of restructuring, presented as specified items within segment operating profit, and restructuring of $12 million in Corporate. Charges in the prior-year quarter consisted of $3 million of impairments related to certain long-lived assets and $4 million of restructuring, presented as specified items within segment operating profit.
Current wording
Asset impairment, exit, and restructuring costs decreased $42 million to $25 million. Charges in the current period consisted of $10 million of impairments related to certain long-lived assets, and $4 million of restructuring, presented as specified items within segment operating profit, and $11 million of restructuring in Corporate unallocated. Charges in the prior period consisted of $46 million of impairments related to certain long-lived assets and intangible assets and $21 million of restructuring, presented as specified items within segment operating profit.
Previous wording
Interest and investment income decreased $11 million to $123 million due primarily to a valuation loss related to an investment in alternative protein and precision fermentation, partially offset by higher interest income driven by higher interest rates.
Current wording
Interest and investment income decreased $13 million to $263 million due primarily to a valuation loss related to an investment in alternative protein and precision fermentation, partially offset by higher interest income driven by higher interest rates.
Previous wording
Carbohydrate Solutions operating profit decreased 11%. Starches and Sweeteners results were lower year-over-year as strong starches and sweeteners margins were offset by lower domestic ethanol margins due to strong industry production and elevated stocks, as well as moderating margins in the EMEA region. Vantage Corn Processors results improved year-over-year as strong demand for sustainably certified exports of ethanol supported volumes and margins.
Current wording
Carbohydrate Solutions operating profit increased 1%. Starches and Sweeteners results were lower year-over-year on moderating margins in the EMEA region and lower domestic ethanol margins due to strong industry production that were offset in part by strong starches and sweeteners margins. Vantage Corn Processors results improved year-over-year as strong demand for exports of ethanol supported volumes and margins.
Previous wording
Management believes that adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS, net earnings, and segment operating profit, respectively, the most directly comparable amounts reported under GAAP.
Current wording
Management believes that adjusted net earnings, adjusted EPS, EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted net earnings, adjusted EPS, EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS and earnings before income taxes, the most directly comparable amounts reported under GAAP. The table on page 54 provides a reconciliation of segment operating profit and adjusted segment operating profit to earnings before income taxes for six months ended June 30, 2024 and 2023.
Previous wording
Cash provided by operating activities was $0.7 billion for the three months ended March 31, 2024 compared to a use of $1.6 billion for the same period last year. Working capital changes decreased cash by $0.2 billion for the three months ended March 31, 2024 compared to a decrease of $2.9 billion for the same period last year. Segregated investments increased $0.2 billion due to increased trading activity in the Company’s futures commission and brokerage business. Trade receivables decreased $0.1 billion due to lower revenues. Inventories decreased $0.3 billion due to lower inventory prices and volumes. Trade payables decreased $0.7 billion primarily due to lower payables related to grain purchases. Brokerage payables increased approximately $0.3 billion due to increased trading activity in the Company’s futures commission and brokerage business.
Current wording
Cash provided by operating activities was $1.2 billion for the six months ended June 30, 2024 compared to cash provided of $0.9 billion for the same period last year. Working capital changes decreased cash by $0.5 billion for the six months ended June 30, 2024 compared to a decrease of $1.6 billion for the same period last year. Segregated investments increased $0.3 billion due to increased trading activity in the Company’s futures commission and brokerage business. Trade receivables increased $0.2 billion due to timing of sales. Inventories decreased $1.4 billion due to lower inventory prices and volumes. Trade payables decreased $1.3 billion primarily due to lower payables related to grain purchases. Brokerage payables decreased approximately $0.4 billion due to decreased trading activity in the Company’s futures commission and brokerage business.
Previous wording
Cash used in investing activities was $1.2 billion for the three months ended March 31, 2024 compared to $0.3 billion for the same period last year. Capital expenditures for the three months ended March 31, 2024 of $0.3 billion was comparable to the same period last year. Net assets of businesses acquired in the three months ended March 31, 2024 were $0.9 billion compared to none in the same period last year.
Current wording
Cash used in investing activities was $1.6 billion for the six months ended June 30, 2024 compared to $0.6 billion for the same period last year. Capital expenditures for the six months ended June 30, 2024 of $0.7 billion were comparable to the same period last year. Net assets of businesses acquired in the six months ended June 30, 2024 were $0.9 billion compared to none in the same period last year.
Previous wording
Cash used in financing activities was $2 million for the three months ended March 31, 2024 compared to cash provided of $0.6 billion for the same period last year. Long-term debt payments were immaterial for the three months ended March 31, 2024 compared to $2 million for the same period last year. Net borrowings on short-term credit agreements for the three months ended March 31, 2024 were $1.6 billion compared to $1.3 billion for the same period last year. Share repurchases for the three months ended March 31, 2024 were $1.3 billion compared to $0.4 billion for the same period last year. Dividends were $0.3 billion for the three months ended March 31, 2024 compared to $0.2 billion for the same period last year.
Current wording
Cash used in financing activities was $0.7 billion for the six months ended June 30, 2024 compared to cash used of $2.1 billion for the same period last year. Long-term debt payments were immaterial for the six months ended June 30, 2024 compared to $0.7 billion for the same period last year, due to no corporate bond issues coming due in the current year period, compared to one issue coming due in the prior year period. Net borrowings on short-term credit agreements for the six months ended June 30, 2024 were $2.2 billion compared to net payments of $0.4 billion for the same period last year. Share repurchases for the six months ended June 30, 2024 were $2.3 billion compared to $1.0 billion for the same period last year. Dividends were $0.5 billion for the six months ended June 30, 2024 compared to $0.5 billion for the same period last year.
Previous wording
At March 31, 2024, the Company had $0.8 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.5 to 1. Included in working capital was $6.7 billion of readily marketable commodity inventories. At March 31, 2024, the Company’s capital resources included shareholders’ equity of $23.2 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $12.8 billion, of which $8.8 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of long-term debt of $8.2 billion and shareholders’ equity of $23.2 billion in 2024 and the sum of long-term debt of $8.3 billion and shareholders’ equity of $24.1 billion in 2023) was 26% and 25% at March 31, 2024 and December 31, 2023, respectively. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt of $1.7 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.2 billion less the sum of cash and cash equivalents of $0.8 billion and short-term marketable securities of none in 2024 and the sum of short-term debt of $0.1 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.3 billion less the sum of cash and cash equivalents of $1.4 billion and short-term marketable securities of none in 2023) to capital (the sum of net debt of $9.2 billion and shareholders’ equity of $23.2 billion in 2024 and the sum of net debt of $7.0 billion and shareholders' equity of $24.1 billion in 2023) was 28% and 22% at March 31, 2024 and December 31, 2023, respectively. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was $0.9 billion of commercial paper outstanding at March 31, 2024.
Current wording
At June 30, 2024, the Company had $0.8 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of 1.4 to 1. Included in working capital was $5.7 billion of readily marketable commodity inventories. At June 30, 2024, the Company’s capital resources included shareholders’ equity of $22.2 billion and lines of credit, including the accounts receivable securitization programs described below, totaling $12.3 billion, of which $7.8 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of long-term debt of $8.2 billion and shareholders’ equity of $22.2 billion in 2024 and the sum of long-term debt of $8.3 billion and shareholders’ equity of $24.1 billion in 2023) was 27% and 25% at June 30, 2024 and December 31, 2023, respectively. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt of $2.3 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.2 billion less the sum of cash and cash equivalents of $0.8 billion and short-term marketable securities of none in 2024 and the sum of short-term debt of $0.1 billion, current maturities of long-term debt of $1 million, and long-term debt of $8.3 billion less the sum of cash and cash equivalents of $1.4 billion and short-term marketable securities of none in 2023) to capital (the sum of net debt of $9.8 billion and shareholders’ equity of $22.2 billion in 2024 and the sum of net debt of $7.0 billion and shareholders' equity of $24.1 billion in 2023) was 31% and 22% at June 30, 2024 and December 31, 2023, respectively. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was $1.0 billion of commercial paper outstanding at June 30, 2024.
Previous wording
As of March 31, 2024, the Company had $0.8 billion of cash and cash equivalents, $0.7 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested. Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $5.2 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.
Current wording
As of June 30, 2024, the Company had $0.8 billion of cash and cash equivalents, $0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested. Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $5.0 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.
Previous wording
The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers. The Programs provide the Company with up to $3.0 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 15 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of March 31, 2024, the Company had $0.7 billion unused capacity of its facility under the Programs.
Current wording
The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers. The Programs provide the Company with up to $2.8 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 15 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of June 30, 2024, the Company had $0.7 billion unused capacity of its facility under the Programs.
Previous wording
As of March 31, 2024, the Company has total available liquidity of $9.6 billion comprised of cash and cash equivalents and unused lines of credit with a well-diversified group of primarily investment-grade institutions.
Current wording
As of June 30, 2024, the Company has total available liquidity of $8.6 billion comprised of cash and cash equivalents and unused lines of credit with a well-diversified group of primarily investment-grade institutions.
Previous wording
For the three months ended March 31, 2024, the Company spent approximately $0.3 billion in capital expenditures, $0.3 billion in dividends, and $1.3 billion in share repurchases. The Company has a stock repurchase program. On March 12, 2024, the Company entered into an ASR Agreement with Merrill Lynch International, an affiliate of BofA Securities, Inc., to repurchase $1.0 billion of ADM common stock as part of ADM’s existing share repurchase program to repurchase up to 200 million shares through December 31, 2024. On March 28, 2024, the Company received an interim delivery of 8,880,986 shares at an average share price of $60.596 or $538 million. Under the program, the Company had 38.5 million shares remaining as of March 31, 2024 that may be repurchased until December 31, 2024. On April 15, 2024, the Company received a final delivery of 7,325,733 shares as final settlement of the ASR transaction (see Notes 11 and 18 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information). As of the final settlement date, the Company had 31.2 million shares remaining that may be repurchased under the program until December 31, 2024.
Current wording
For the six months ended June 30, 2024, the Company spent approximately $0.7 billion in capital expenditures, $0.5 billion in dividends, and $2.3 billion in share repurchases. The Company has a stock repurchase program. On March 12, 2024, the Company entered into an ASR Agreement with Merrill Lynch International, an affiliate of BofA Securities, Inc., to repurchase $1.0 billion of ADM common stock as part of ADM’s existing share repurchase program to repurchase up to 200 million shares through December 31, 2024. On March 28, 2024, the Company received an interim delivery of 8,880,986 shares at an average share price of $60.596 or $538 million. On April 15, 2024, the Company received a final delivery of 7,325,733 shares as final settlement of the ASR transaction (see Notes 11 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information). As of June 30, 2024, the Company had 14.8 million shares remaining that may be repurchased under the program until December 31, 2024.
Previous wording
In 2024, the Company expects total capital expenditures of approximately $1.3 billion and additional cash outlays of approximately $1.0 billion in dividends and up to $2.3 billion in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.
Current wording
In 2024, the Company expects total capital expenditures of approximately $1.4 billion and additional cash outlays of approximately $1.0 billion in dividends and $2.3 billion in share repurchases, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.
Previous wording
The Company’s purchase obligations as of March 31, 2024 and December 31, 2023 were $12.2 billion and $14.0 billion, respectively. The decrease is primarily related to lower energy commitments and obligations to purchase agricultural commodity inventories at lower prices. As of March 31, 2024, the Company expects to make payments related to purchase obligations of $11.6 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended March 31, 2024.
Current wording
The Company’s purchase obligations as of June 30, 2024 and December 31, 2023 were $12.7 billion and $14.0 billion, respectively. The decrease is primarily related to lower energy commitments. As of June 30, 2024, the Company expects to make payments related to purchase obligations of $11.9 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended June 30, 2024.
Rearranged current paragraphs (17)
Current report — wording carried from elsewhere
The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, following two years of very favorable market conditions, several headwinds in the agriculture cycle led to more normalized conditions throughout the entire value chain. Ag Services experienced slow South American farmer selling, depressed margins, low demand for North American exports along with limited trade opportunities as a carry market has contributed to slow farmer selling. Crushing saw good demand with lower North American meal exports. In Refined Products and Other, despite strong global demand for oil and biodiesel, margins were limited by oil values, particularly in North America, due to low carbon intensity feedstocks competing in the renewable diesel market. In Carbohydrate Solutions, demand for starches and sweeteners remained solid with margins remaining steady across the entire portfolio. Demand for ethanol was strong going into summer driving season. Strong ethanol export demand was due to higher mandates in certain jurisdictions and discretionary blending. Industry ethanol stocks declined and ethanol margins improved. In Nutrition, demand was softer in a few food and beverage product categories driven by shifts in consumer discretionary spend. Human Nutrition was impacted by inflation which drove lower demand and impacted sales volumes in alternative proteins. In Animal Nutrition, a soft amino acids market driven by price weakness in North America was partially compensated by a slightly improved market in Europe, Middle East, and Africa (EMEA). The global feed and feed additives market remained challenged on the demand side, with weakness in the Chinese beef and pork business and continued subdued global shrimp prices.
Current report — wording carried from elsewhere
The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. Oilseeds and corn processed volumes were fairly consistent between the quarters with increases due to more favorable weather and reduced unplanned downtime compared to the previous year.
Current report — wording carried from elsewhere
Gross profit decreased $0.5 billion or 26% to $1.4 billion. Lower results in Ag Services and Oilseeds ($507 million), and Human Nutrition ($54 million) were partially offset by higher results in Carbohydrate Solutions ($32 million), Animal Nutrition ($24 million), and Other ($20 million). These factors are explained in the segment operating profit discussion on page 47.
Current report — wording carried from elsewhere
Asset impairment, exit, and restructuring costs decreased $53 million to $7 million. Charges in the current quarter consisted of $7 million of impairments related to certain long-lived assets presented as specified items within segment operating profit. Charges in the prior-year quarter consisted of $43 million of impairments related to certain long-lived assets and intangibles and $17 million of restructuring, presented as specified items within segment operating profit.
Current report — wording carried from elsewhere
Carbohydrate Solutions operating profit increased 12%. Starches and Sweeteners results were higher year-over-year as strong starches and sweeteners margins and higher volumes were partially offset by lower domestic ethanol margins, as well as moderating margins in the EMEA region. Vantage Corn Processors results improved year-over-year as strong demand for exports of ethanol supported higher margins.
Current report — wording carried from elsewhere
Management believes that adjusted net earnings, adjusted EPS, EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period- to-period comparability. Adjusted net earnings, adjusted EPS, EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit are not intended to replace or be an alternative to net earnings, diluted EPS and earnings before income taxes, the most directly comparable amounts reported under GAAP. The table on page 47 provides a reconciliation of segment operating profit and adjusted segment operating profit to earnings before income taxes for the three months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Market Factors Influencing Operations or Results in the Six Months Ended June 30, 2024
Current report — wording carried from elsewhere
Income taxes of $281 million decreased $148 million. The Company’s effective tax rate for the six months ended June 30, 2024 was 19.0% compared to 17.0% for the six months ended June 30, 2023. The increase in the rate was primarily due to the impact of discrete tax items, partially offset by the change in the geographic mix of forecasted pretax earnings.
Current report — wording carried from elsewhere
Processed volumes by product for the six months ended June 30, 2024 and 2023 were as follows (in metric tons):
Current report — wording carried from elsewhere
Revenues and cost of products sold in a commodity merchandising and processing business are significantly correlated to the underlying commodity prices and volumes. During periods of significant changes in commodity prices, management believes that margins can be a helpful indicator of the Company’s underlying performance because both revenues and cost of products sold, particularly in Ag Services and Oilseeds, generally have a relatively equal impact from commodity price changes, which generally result in an insignificant impact to gross profit.
Current report — wording carried from elsewhere
Other income-net decreased $46 million to $35 million. Income in the current period included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and net foreign exchange gains. Income in the prior period included gains on disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, net foreign exchange gains, and net other income.
Current report — wording carried from elsewhere
Nutrition operating profit decreased 37%. Human Nutrition results were lower than the prior period, as impacts related to unplanned downtime at Decatur East, and a normalizing texturants market negatively impacted margins. Animal Nutrition results were higher compared to the prior period, as amino acids market recovery, cost optimization efforts and lower input costs bolstered margins.
Current report — wording carried from elsewhere
The Company uses adjusted net earnings, adjusted earnings per share (EPS), EBITDA, adjusted EBITDA, segment operating profit, and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.
Current report — wording carried from elsewhere
Adjusted net earnings is defined as net earnings adjusted for the effects on net earnings of specified items. Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. EBITDA is defined as earnings before interest on borrowings, taxes, and depreciation and amortization. Adjusted EBITDA is defined as earnings before interest on borrowings, taxes, 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 income tax expense, interest expense on borrowings and depreciation and amortization to net earnings. Segment operating profit is total operating profit of the Company’s reportable segments. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.
Current report — wording carried from elsewhere
The table below provides a reconciliation of net earnings to adjusted net earnings and diluted EPS to adjusted EPS for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
(1) Tax effected using the U.S. and other applicable tax rates.
Current report — wording carried from elsewhere
The tables below provide a reconciliation of net earnings to EBITDA and adjusted EBITDA for the six months ended June 30, 2024 and 2023.