10-QPeriod: Q3 FY2018

Archer-Daniels-Midland Co Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 6, 2018For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported strong financial results for the nine months ended September 30, 2018, with net earnings attributable to controlling interests increasing significantly to $1.5 billion, up from $807 million in the prior year period. This growth was driven by robust performance across its key segments, particularly Origination and Oilseeds, which benefited from favorable market conditions, increased volumes, and improved margins. The company also saw positive contributions from its Nutrition segment, despite some headwinds in Animal Nutrition. ADM's strategic acquisitions and joint ventures, such as the integration of Protexin and Rodelle Inc., and the formation of GrainBridge LLC with Cargill, demonstrate a continued focus on expanding its value-added product portfolio and digital offerings for farmers. The company maintained a strong liquidity position, with significant unused lines of credit and a healthy current ratio, positioning it well to fund ongoing operations and strategic growth initiatives, including the anticipated acquisition of Neovia.

Financial Highlights

50 data points
Beta

Revenue

$15.80B

6.7% Gross Margin

Net Income

$536.00M

3.4% Net Margin

EPS (Diluted)

$0.94

Total Assets

$39.66B

Cash & Equivalents

$915.00M

Free Cash Flow

-$677.00M

Financial Statements
Beta
Revenue$15.80B
Cost of Revenue$14.74B
Gross Profit$1.06B
SG&A Expenses$534.00M
Interest Expense$87.00M
Net Income$536.00M
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)565.00M
Shares Outstanding (Diluted)568.00M

Key Highlights

  • 1Net earnings attributable to controlling interests surged to $1.495 billion for the nine months ended September 30, 2018, a substantial increase from $807 million in the same period of 2017.
  • 2Total revenues for the nine months increased by $3.6 billion to $48.4 billion, driven by both higher sales volumes and prices across key segments.
  • 3The Oilseeds segment showed strong growth, with revenues up 10% to $18.8 billion for the nine months, benefiting from higher volumes and prices.
  • 4Origination segment revenues increased 9% to $18.7 billion for the nine months, driven by higher sales prices and volumes.
  • 5The company completed several strategic acquisitions during the period, including Protexin and Rodelle Inc., and announced the intended acquisition of Neovia.
  • 6ADM maintained a strong liquidity position with $0.9 billion in cash, cash equivalents, and short-term marketable securities and $6.8 billion in unused lines of credit as of September 30, 2018.
  • 7The effective tax rate decreased to 14.3% for the nine months ended September 30, 2018, primarily due to the impacts of the Tax Cuts and Jobs Act.

Frequently Asked Questions

The significant increase in net earnings was primarily driven by strong performance in the Origination and Oilseeds segments, which benefited from favorable market conditions, higher sales volumes, and improved margins. Strategic initiatives and contributions from equity investments also played a role.

ADM's Origination and Oilseeds segments showed substantial year-over-year improvement in operating profit. The Nutrition segment also saw growth, while the Carbohydrate Solutions segment experienced a slight decrease. These shifts reflect varying market dynamics and strategic execution across the business.

ADM maintains a strong financial position with a healthy current ratio of 1.7 to 1 and significant liquidity. As of September 30, 2018, the company had $0.9 billion in cash and cash equivalents and $6.8 billion in unused lines of credit, indicating ample resources to fund operations and growth initiatives.

ADM has announced strategic acquisitions, including the intended purchase of Neovia, and has launched new ventures like GrainBridge LLC with Cargill. These initiatives underscore ADM's commitment to expanding its animal nutrition business, enhancing digital farmer tools, and pursuing growth opportunities.