10-QPeriod: Q2 FY2023

Archer-Daniels-Midland Co Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 25, 2023For Securities:ADM

Summary

Archer-Daniels-Midland Company (ADM) reported a decrease in revenues and net earnings for the second quarter and first half of 2023 compared to the same periods in the prior year. Revenues for the second quarter declined to $25.19 billion from $27.28 billion in Q2 2022, while net earnings attributable to controlling interests fell to $927 million from $1,236 million. This decline was primarily driven by lower sales prices across various segments, particularly in Ag Services and Oilseeds, and softer demand in some Nutrition product categories. Despite the year-over-year decrease, ADM's performance in the quarter showed sequential improvement in certain areas, with higher results in Refined Products and Other, and Ag Services segments. The company also continued to invest in strategic growth initiatives, including new facilities and innovation centers, and maintained a strong liquidity position. Management highlighted ongoing efforts focused on Productivity, Innovation, and Culture to drive future growth and efficiencies.

Financial Highlights

49 data points
Beta

Revenue

$25.19B

7.5% Gross Margin

Net Income

$927.00M

3.7% Net Margin

EPS (Diluted)

$1.70

Total Assets

$55.50B

Cash & Equivalents

$1.43B

Free Cash Flow

$2.22B

Financial Statements
Beta
Revenue$25.19B
Cost of Revenue$23.31B
Gross Profit$1.88B
SG&A Expenses$841.00M
Interest Expense$180.00M
Net Income$927.00M
EPS (Basic)$1.70
EPS (Diluted)$1.70
Shares Outstanding (Basic)545.00M
Shares Outstanding (Diluted)546.00M

Key Highlights

  • 1Total revenues for the second quarter of 2023 decreased by 7.7% to $25.19 billion, down from $27.28 billion in the prior year's second quarter.
  • 2Net earnings attributable to controlling interests for the second quarter decreased by 25.0% to $927 million ($1.70 per diluted share), compared to $1,236 million ($2.18 per diluted share) in the same period last year.
  • 3Ag Services and Oilseeds segment operating profit saw a slight decrease of 6.0% to $1,054 million, impacted by lower results in Crushing and Ag Services, although Refined Products and Other showed significant improvement.
  • 4Carbohydrate Solutions segment operating profit declined substantially by 36.0% to $303 million, primarily due to lower ethanol margins and the absence of a prior-year government payment.
  • 5Nutrition segment operating profit decreased by 23.0% to $185 million, reflecting softer demand in certain food and beverage categories and pressure in Animal Nutrition.
  • 6The company reported strong operating cash flow of $0.9 billion for the first six months of 2023, but cash used in financing activities increased significantly due to higher share repurchases.
  • 7ADM continued to invest in its strategic growth initiatives, including opening a new production facility in Spain for probiotics and announcing a joint venture for a food processing innovation center.

Frequently Asked Questions

The primary driver for the revenue decline was lower sales prices across multiple segments, particularly in Ag Services and Oilseeds, due to factors like lower soybean, oil, biodiesel, and corn prices. Additionally, softer demand and lower sales volumes in certain Carbohydrate Solutions and Nutrition product categories contributed to the decrease.

The Ag Services and Oilseeds segment saw a slight operating profit decrease, with Crushing and Ag Services performing lower year-over-year, but Refined Products and Other showing significant improvement. Carbohydrate Solutions experienced a substantial decline in operating profit, largely due to lower ethanol margins. The Nutrition segment's operating profit also decreased, affected by softer demand in food categories and pressures in animal nutrition.

ADM maintained a strong liquidity position with $1.4 billion in cash and cash equivalents and $11.3 billion in unused lines of credit as of June 30, 2023. The company also reported total available liquidity of $12.7 billion. The ratio of long-term debt to total capital remained conservative at 25%.

ADM's strategic focus remains on three pillars: Productivity, Innovation, and Culture. Recent developments include opening a new probiotics production facility in Spain, announcing a joint venture for a food processing innovation center, and launching an expansion of its regenerative agriculture program. These initiatives aim to drive growth, improve efficiency, and meet growing consumer demand for sustainable and healthy products.