10-QPeriod: Q1 FY2010

Archer-Daniels-Midland Co Quarterly Report for Q1 Ended Feb 4, 2010

Filed February 8, 2010For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported its financial results for the three and six months ended December 31, 2009. For the three-month period, net sales were $15.9 billion, a decrease from $16.7 billion in the prior year, with net earnings attributable to controlling interests at $567 million, down slightly from $578 million in the same period last year. The six-month period saw a more significant decline in net sales to $30.8 billion from $37.8 billion, with net earnings attributable to controlling interests dropping to $1.06 billion from $1.62 billion. The company experienced a notable decrease in operating profit for its Agricultural Services segment, primarily driven by the absence of the favorable market and credit conditions seen in the prior year. Conversely, the Corn Processing segment showed substantial improvement, largely due to better ethanol margins and increased volumes. The Oilseeds Processing segment saw mixed results, with improved Asia operations offsetting declines in other areas. Corporate results were significantly impacted by changes in LIFO inventory valuations and higher interest expenses. ADM maintained a strong liquidity position with $1.6 billion in cash, cash equivalents, and short-term marketable securities, and a current ratio of 2.1:1. The company's long-term debt to total capital ratio remained healthy at 33%, indicating financial flexibility. Management highlighted the company's focus on sufficient liquidity and balance sheet strength to support its capital-intensive operations.

Financial Highlights

47 data points
Beta

Revenue

$15.14B

5.9% Gross Margin

Net Income

$421.00M

2.8% Net Margin

EPS (Diluted)

$0.65

Total Assets

$32.33B

Cash & Equivalents

$1.66B

Free Cash Flow

$1.54B

Financial Statements
Beta
Revenue$15.14B
Cost of Revenue$14.25B
Gross Profit$891.00M
SG&A Expenses$355.00M
Interest Expense$101.00M
Net Income$421.00M
EPS (Basic)$0.65
EPS (Diluted)$0.65
Shares Outstanding (Basic)643.00M
Shares Outstanding (Diluted)645.00M

Key Highlights

  • 1For the three months ended December 31, 2009, Net Sales were $15.9 billion, a decrease from $16.7 billion in the prior year.
  • 2Net Earnings Attributable to Controlling Interests for the three months ended December 31, 2009, were $567 million, a slight decrease from $578 million in the prior year.
  • 3For the six months ended December 31, 2009, Net Sales decreased to $30.8 billion from $37.8 billion in the prior year.
  • 4Net Earnings Attributable to Controlling Interests for the six months ended December 31, 2009, decreased to $1.06 billion from $1.62 billion in the prior year.
  • 5The Corn Processing segment showed significant operating profit improvement, driven by better ethanol margins and volumes.
  • 6The Agricultural Services segment experienced a substantial decrease in operating profit due to the absence of prior-year favorable market conditions.
  • 7The company maintained strong liquidity with $1.6 billion in cash, cash equivalents, and short-term marketable securities at December 31, 2009.
  • 8The ratio of long-term debt to total capital was 33% at December 31, 2009.

Frequently Asked Questions

The primary driver for the 18% decrease in net sales to $30.8 billion for the six-month period was lower average selling prices, which were in line with year-over-year declines in underlying commodity costs. Sales volumes remained comparable overall.

The Corn Processing segment saw a significant increase in operating profit ($331 million increase to $478 million), driven by improved ethanol margins and volumes due to lower corn costs and favorable blending economics. The Agricultural Services segment experienced a substantial decline in operating profit ($565 million decrease to $325 million) as the favorable market and credit conditions of the prior year did not recur. The Oilseeds Processing segment's operating profit decreased by 23% to $636 million, impacted by lower margins and prior year favorable raw material positioning. The 'Other' segment showed a significant increase in operating profit ($180 million increase to $305 million), driven by equity earnings and improved processing margins.

As of December 31, 2009, ADM had $1.6 billion in cash, cash equivalents, and short-term marketable securities, with a current ratio of 2.1 to 1. The company's net worth was $14.8 billion, and its long-term debt to total capital ratio was a healthy 33%, indicating strong financial flexibility and adequate resources to fund operations.

During the period, ADM adopted several new accounting standards, including ASC Topic 805 (Business Combinations), ASC Topic 470-20 (Debt with Conversion and Other Options), and ASC Topic 810 (Consolidation) related to noncontrolling interests. While these required retrospective application and restatements for certain periods, management indicated that the adoption of these standards generally had no material effect on the consolidated financial statements, with the exception of reclassifications related to noncontrolling interests and adjustments to interest expense and equity components for convertible debt instruments as detailed in the notes.