10-Q/APeriod: Q2 FY2023

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

Filed September 11, 2023For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported net earnings attributable to controlling interests of $927 million ($1.70 diluted EPS) for the three months ended June 30, 2023, a decrease from $1,236 million ($2.18 diluted EPS) in the prior-year period. For the six months ended June 30, 2023, net earnings were $2,097 million ($3.82 diluted EPS), down from $2,290 million ($4.03 diluted EPS) in the same period of 2022. The decline in profitability was primarily driven by lower results in the Ag Services and Oilseeds segment, particularly in Crushing and Ag Services, along with a notable decrease in the Carbohydrate Solutions segment. Despite the year-over-year earnings decrease, ADM demonstrated resilience in its liquidity position. Cash provided by operating activities was $0.9 billion for the first six months of 2023, a significant improvement from a cash usage of $0.7 billion in the prior-year period. The company maintained a strong balance sheet with total assets of $55.5 billion and shareholders' equity of $25.0 billion as of June 30, 2023. ADM also returned capital to shareholders through share repurchases totaling $1.0 billion and dividends of $0.5 billion in the first six months of 2023, and has approximately $12.7 billion in total available liquidity.

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

  • 1Net earnings attributable to controlling interests decreased by 25% to $927 million for the three months ended June 30, 2023, compared to $1,236 million in the prior year.
  • 2Diluted EPS for the quarter was $1.70, down from $2.18 in the same period last year.
  • 3For the six months ended June 30, 2023, net earnings decreased to $2,097 million ($3.82 EPS) from $2,290 million ($4.03 EPS) in the prior year.
  • 4Operating profit for the Ag Services and Oilseeds segment, the company's largest, saw a decrease, driven by lower results in Crushing and Ag Services.
  • 5Cash provided by operating activities was $0.9 billion for the first six months of 2023, a significant improvement from $0.7 billion used in the same period of 2022.
  • 6The company returned $1.0 billion to shareholders through share repurchases and $0.5 billion through dividends in the first six months of 2023.
  • 7ADM maintained substantial liquidity with $12.7 billion in total available liquidity as of June 30, 2023.

Frequently Asked Questions

The decrease in net earnings for the three months ended June 30, 2023, compared to the prior year, was primarily driven by lower operating profit in the Ag Services and Oilseeds segment, specifically within the Crushing and Ag Services sub-segments. The Carbohydrate Solutions segment also contributed to the decline due to lower volumes and the absence of a prior-year benefit.

ADM's cash flow from operations improved significantly, with $0.9 billion generated in the first six months of 2023, compared to $0.7 billion used in the same period of 2022. The company ended the quarter with robust liquidity, reporting $12.7 billion in total available liquidity, consisting of cash and cash equivalents and unused lines of credit.

ADM's capital allocation strategy includes returning capital to shareholders. In the first six months of 2023, the company repurchased $1.0 billion of its stock and paid $0.5 billion in dividends. ADM has a remaining authorization of approximately 74.8 million shares for future repurchases, with a plan to potentially spend $2.0 billion on opportunistic share repurchases in 2023.

ADM is involved in several legal proceedings, including class action lawsuits related to ethanol pricing. While the company is vigorously defending itself and believes the outcomes will not have a material adverse effect on its financial condition, results of operations, or cash flows, these matters require ongoing monitoring due to the inherent uncertainties in litigation.