10-QPeriod: Q1 FY2019

Archer-Daniels-Midland Co Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 26, 2019For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported its first quarter results for 2019, showing a decrease in net earnings attributable to controlling interests to $233 million from $393 million in the same period of the prior year. This decline was primarily driven by lower segment operating profit, impacted by factors such as severe weather conditions, global trade tensions, and pressures in the Carbohydrate Solutions segment, particularly in bioproducts. The company also saw an increase in selling, general, and administrative expenses and corporate costs. Despite the year-over-year earnings decline, ADM made strategic acquisitions in January and March 2019, including Neovia and Florida Chemical Company, which contributed to a significant increase in the Nutrition segment's revenue. The company maintained a strong liquidity position with $9.0 billion in credit lines, $6.2 billion of which was unused, and a current ratio of 1.5 to 1. Management remains focused on optimizing core operations, driving efficiencies, and expanding strategically.

Financial Highlights

51 data points
Beta

Revenue

$15.30B

6.1% Gross Margin

Net Income

$233.00M

1.5% Net Margin

EPS (Diluted)

$0.41

Total Assets

$43.15B

Cash & Equivalents

$926.00M

Free Cash Flow

-$2.23B

Financial Statements
Beta
Revenue$15.30B
Cost of Revenue$14.38B
Gross Profit$928.00M
SG&A Expenses$659.00M
Interest Expense$101.00M
Net Income$233.00M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)565.00M
Shares Outstanding (Diluted)566.00M

Key Highlights

  • 1Net earnings attributable to controlling interests decreased to $233 million from $393 million year-over-year.
  • 2Total revenues decreased slightly to $15.3 billion from $15.5 billion, impacted by lower sales prices.
  • 3The Nutrition segment saw significant revenue growth (35%) driven by acquisitions, while Carbohydrate Solutions revenue declined by 8%.
  • 4Selling, general, and administrative expenses increased significantly, primarily due to new acquisitions and higher spending.
  • 5The company completed two strategic acquisitions in January and March 2019: Neovia and Florida Chemical Company, strengthening its Nutrition segment.
  • 6Cash used in operating activities was $2.0 billion, a decrease from $3.6 billion in the prior year, indicating improved working capital management.
  • 7ADM maintained a strong liquidity position with $9.0 billion in credit lines, $6.2 billion of which was unused.

Frequently Asked Questions

The decrease in net earnings was primarily due to a lower segment operating profit, which was impacted by several factors including severe weather conditions, global trade tensions affecting Origination, and pressured margins in Carbohydrate Solutions, particularly in bioproducts. Additionally, selling, general, and administrative expenses and corporate costs increased.

The acquisitions of Neovia and Florida Chemical Company in early 2019 significantly boosted the Nutrition segment's revenue, which increased by 35% year-over-year. While these acquisitions contributed to higher SG&A expenses, they align with ADM's strategy to expand in the nutrition space.

ADM maintains a strong liquidity position with $9.0 billion in credit lines, of which $6.2 billion was unused as of March 31, 2019. The company also had a current ratio of 1.5 to 1. The ratio of long-term debt to total capital remained healthy at 29%, indicating financial flexibility.

Key challenges highlighted include severe weather conditions impacting operations, ongoing global trade tensions, and specific pressures within the Carbohydrate Solutions segment due to ethanol margins and production issues. Fluctuations in agricultural commodity prices and foreign currency exchange rates also pose ongoing market risks.