10-QPeriod: Q1 FY2021

Archer-Daniels-Midland Co Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 28, 2021For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) reported a strong first quarter for 2021, with net earnings attributable to controlling interests increasing significantly to $689 million, or $1.22 per diluted share, compared to $391 million, or $0.69 per diluted share, in the same period of 2020. This substantial earnings growth was driven by a robust increase in revenues, up 26% to $18.9 billion, and a substantial improvement in segment operating profit, which more than doubled to $1.1 billion. The company's Ag Services and Oilseeds segment was a key driver of this performance, demonstrating significant operating profit growth due to strong execution in North America capitalizing on Chinese demand, alongside robust crushing margins from tight soybean stocks. The Carbohydrate Solutions segment also saw a marked improvement, benefiting from favorable ethanol complex prices and co-product values. While the Nutrition segment showed solid growth, the overall company performance was particularly bolstered by these strong results in its core agricultural processing and trading businesses. ADM's financial position remains solid, with ample liquidity and manageable debt levels, positioning it well for continued operational execution and strategic initiatives.

Financial Highlights

49 data points
Beta

Revenue

$18.89B

8.2% Gross Margin

Net Income

$689.00M

3.6% Net Margin

EPS (Diluted)

$1.22

Total Assets

$51.48B

Cash & Equivalents

$694.00M

Free Cash Flow

$124.00M

Financial Statements
Beta
Revenue$18.89B
Cost of Revenue$17.34B
Gross Profit$1.55B
SG&A Expenses$749.00M
Interest Expense$87.00M
Net Income$689.00M
EPS (Basic)$1.22
EPS (Diluted)$1.22
Shares Outstanding (Basic)563.00M
Shares Outstanding (Diluted)564.00M

Key Highlights

  • 1Net earnings attributable to controlling interests surged by 76% to $689 million ($1.22 per diluted share) in Q1 2021, from $391 million ($0.69 per diluted share) in Q1 2020.
  • 2Total revenues increased by 26% to $18.9 billion in Q1 2021, up from $15.0 billion in the prior year period, driven by higher sales prices and volumes across segments.
  • 3Segment operating profit more than doubled, rising 84% to $1.1 billion in Q1 2021, compared to $0.6 billion in Q1 2020, significantly boosted by strong performance in Ag Services and Oilseeds.
  • 4Ag Services and Oilseeds segment operating profit grew substantially, up 84% to $777 million, benefiting from strong North American origination and robust crushing margins.
  • 5Carbohydrate Solutions segment operating profit saw a significant increase of 281% to $259 million, driven by favorable ethanol complex prices and co-product values.
  • 6The company ended the quarter with a strong liquidity position, reporting $5.85 billion in cash, cash equivalents, restricted cash, and restricted cash equivalents.
  • 7The company's debt-to-capital ratio remained well-managed at 29% as of March 31, 2021.

Frequently Asked Questions

ADM's revenue and earnings growth were primarily driven by higher sales prices and volumes across its key segments, particularly in Ag Services and Oilseeds, which benefited from strong export demand and favorable crushing margins. The Carbohydrate Solutions segment also contributed significantly due to improved ethanol prices and co-product values. These factors led to a substantial increase in net earnings and segment operating profit compared to the prior year period.

The Ag Services and Oilseeds segment showed exceptionally strong performance, with operating profit more than doubling due to favorable market conditions and execution. Carbohydrate Solutions also demonstrated significant improvement, driven by higher ethanol and co-product prices. The Nutrition segment experienced solid growth, although Animal Nutrition faced headwinds from higher input costs and weaker demand in South America. Overall, the strong performance in Ag Services and Oilseeds and Carbohydrate Solutions was the primary contributor to the company's robust financial results.

ADM's financial health remains strong. The company reported $5.85 billion in cash, cash equivalents, restricted cash, and restricted cash equivalents as of March 31, 2021, indicating ample liquidity. The debt-to-capital ratio was a manageable 29%, and the company has access to significant unused lines of credit, underscoring its financial flexibility to meet operating and capital needs and pursue strategic growth.

The company is involved in routine legal proceedings, including a class-action lawsuit related to alleged ethanol price manipulation, which ADM denies liability for and is vigorously defending. Additionally, there was a class-action lawsuit concerning peanut pricing where ADM's subsidiary, Golden Peanut, reached a settlement. ADM is not currently a party to any legal proceeding or environmental claim that it believes would have a material adverse effect on its financial position, results of operations, or liquidity.