10-QPeriod: Q3 FY2023

Archer-Daniels-Midland Co Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 24, 2023For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported revenues of $21.7 billion for the three months ended September 30, 2023, a decrease from $24.7 billion in the prior year period. Net earnings attributable to controlling interests were $821 million ($1.52 per diluted share), down from $1.03 billion ($1.83 per diluted share) in the same period last year. This decline was primarily driven by lower segment operating profit across Ag Services and Oilseeds, and Nutrition, influenced by factors such as reduced sales prices for key commodities and softer demand in certain food and beverage categories. Despite the year-over-year decline in earnings, ADM demonstrated resilience with stable gross profit and a continued focus on strategic initiatives. The company's Carbohydrate Solutions segment saw improved operating profit, and overall cash flow from operations remained substantial. ADM continues to invest in innovation and sustainability, exemplified by its regenerative agriculture program and new facility openings. The company maintains a strong liquidity position with significant unused credit facilities, supporting its ongoing capital allocation priorities including dividends and share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$21.70B

8.3% Gross Margin

Net Income

$821.00M

3.8% Net Margin

EPS (Diluted)

$1.52

Total Assets

$55.09B

Cash & Equivalents

$1.50B

Free Cash Flow

$551.00M

Financial Statements
Beta
Revenue$21.70B
Cost of Revenue$19.89B
Gross Profit$1.81B
SG&A Expenses$815.00M
Interest Expense$155.00M
Net Income$821.00M
EPS (Basic)$1.52
EPS (Diluted)$1.52
Shares Outstanding (Basic)540.00M
Shares Outstanding (Diluted)540.00M

Key Highlights

  • 1Revenues for the third quarter of 2023 decreased by 12.1% to $21.7 billion compared to $24.7 billion in the third quarter of 2022.
  • 2Net earnings attributable to controlling interests declined by 20.4% to $821 million ($1.52 per diluted share) from $1.03 billion ($1.83 per diluted share) year-over-year.
  • 3Segment operating profit decreased by 8.9% to $1.42 billion from $1.56 billion, primarily due to weaker performance in Ag Services and Oilseeds and Nutrition.
  • 4Gross profit remained stable at $1.81 billion for both periods, indicating effective cost management despite lower revenues.
  • 5The company repurchased approximately 1.57 million shares for $127.5 million during the quarter.
  • 6ADM maintained strong liquidity with $1.5 billion in cash and cash equivalents and $11.7 billion in unused lines of credit as of September 30, 2023.

Frequently Asked Questions

The decrease in net earnings was primarily driven by lower segment operating profit, particularly in the Ag Services and Oilseeds and Nutrition segments. Factors contributing to this included lower sales prices for key commodities, reduced sales volumes in certain product categories within Nutrition, and lower earnings from unconsolidated affiliates like Wilmar and Skyland Grain, LLC.

The Ag Services and Oilseeds segment saw a decrease in operating profit, mainly due to lower Ag Services results influenced by a shift in exports to South America and weaker global trade performance compared to a strong prior year. The Carbohydrate Solutions segment showed improved operating profit, driven by strong performance in Starches and Sweeteners and Vantage Corn Processors. The Nutrition segment's operating profit declined, impacted by softer demand in food and beverage categories, lower plant-based protein demand, and challenges in animal nutrition markets.

ADM maintains a strong liquidity position, with $1.5 billion in cash and cash equivalents and $11.7 billion in unused credit facilities as of September 30, 2023. The company plans capital expenditures of approximately $1.5 billion for 2023, along with significant cash outlays for dividends ($1.0 billion expected) and opportunistic share repurchases ($2.0 billion expected). The company also has a remaining stock repurchase authorization for approximately 73.2 million shares.

ADM is involved in several legal proceedings, including class action lawsuits related to ethanol pricing, which the company is vigorously defending and does not expect to have a material adverse effect on its financial condition. Regarding tax matters, ADM faces ongoing challenges and audits in various jurisdictions, particularly concerning transfer pricing. While the company has accrued its best estimate for certain significant tax assessments, the ultimate outcomes are uncertain but not anticipated to have a material impact on the effective income tax rate in the near term.