10-QPeriod: Q1 FY2023

Archer-Daniels-Midland Co Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 25, 2023For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) reported solid financial results for the first quarter of 2023, with revenues increasing to $24.1 billion from $23.7 billion in the prior year period. Net earnings attributable to controlling interests also saw a healthy rise to $1.17 billion, up from $1.05 billion in the first quarter of 2022. This performance was driven by higher sales prices across segments, particularly in Ag Services and Oilseeds, and improved operational execution. Despite some headwinds such as softer demand in certain Nutrition categories and elevated ethanol stocks, ADM demonstrated resilience. The company continued to invest in its strategic pillars of Productivity, Innovation, and Culture, including opening a new probiotics facility in Spain and announcing a joint venture for an innovation center. ADM's liquidity remains strong, with ample cash and unused credit facilities, supporting ongoing capital expenditures, share repurchases, and dividend payments.

Financial Highlights

49 data points
Beta

Revenue

$24.07B

8.6% Gross Margin

Net Income

$1.17B

4.9% Net Margin

EPS (Diluted)

$2.12

Total Assets

$58.80B

Cash & Equivalents

$899.00M

Free Cash Flow

-$1.94B

Financial Statements
Beta
Revenue$24.07B
Cost of Revenue$21.99B
Gross Profit$2.08B
SG&A Expenses$881.00M
Interest Expense$147.00M
Net Income$1.17B
EPS (Basic)$2.13
EPS (Diluted)$2.12
Shares Outstanding (Basic)550.00M
Shares Outstanding (Diluted)551.00M

Key Highlights

  • 1Revenue increased by 1.7% to $24.1 billion for the three months ended March 31, 2023, compared to $23.7 billion in the prior year period.
  • 2Net earnings attributable to controlling interests grew by 11.2% to $1.17 billion ($2.12 per diluted share) from $1.05 billion ($1.86 per diluted share) in the same period last year.
  • 3Segment operating profit increased by 11.7% to $1.72 billion, primarily driven by strong performance in Ag Services and Oilseeds.
  • 4The company repurchased $351 million of its stock during the quarter, reflecting a commitment to returning capital to shareholders.
  • 5Cash flow from operating activities was a use of $1.61 billion, impacted by significant changes in working capital, particularly a decrease in trade payables.
  • 6The company maintained a strong liquidity position with $9.8 billion in total available liquidity, comprising cash and unused lines of credit.
  • 7Capital expenditures for the quarter were $327 million, supporting ongoing investments in the business.

Frequently Asked Questions

ADM's revenue growth was primarily driven by higher sales prices across its segments, amounting to $1.3 billion. This was partially offset by a decrease in sales volumes of $0.9 billion. The Ag Services and Oilseeds segment saw revenues increase due to higher prices for biodiesel, oils, and soybeans, while Carbohydrate Solutions benefited from higher sales prices for starches and sweeteners.

The Nutrition segment experienced a revenue decrease of 4% to $1.9 billion, attributed to lower sales volumes ($0.2 billion) partially offset by higher sales prices ($0.1 billion). Management noted softer demand in some food and beverage categories due to inflation and destocking. Animal Nutrition also faced pressure from increased competition and production cost inflation.

ADM reported a strong liquidity position with $9.8 billion in total available liquidity, which includes cash and cash equivalents of $0.9 billion and unused lines of credit totaling $8.9 billion. Cash used in operating activities was $1.61 billion for the quarter, largely due to significant working capital changes, particularly a decrease in trade payables. The company expects to fund its operations, capital expenditures, and shareholder returns through operating cash flow and its credit facilities.

While the report does not detail new risk factors, it reiterates that ADM is subject to risks inherent in the agricultural commodity business, including fluctuations in commodity prices, weather conditions, geopolitical developments (like the ongoing conflict in Ukraine), changes in government policies, and global economic conditions. The report also mentions specific challenges like softer demand in certain Nutrition categories and elevated ethanol stocks.