10-Q/APeriod: Q1 FY2024

Archer-Daniels-Midland Co Quarterly Report (Amendment) for Q1 Ended Mar 31, 2024

Filed November 18, 2024For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported a decrease in net earnings attributable to controlling interests for the first quarter of 2024 to $729 million, or $1.42 per diluted share, compared to $1,170 million, or $2.12 per diluted share, in the same period of 2023. This decline was primarily driven by lower revenues across its Ag Services and Oilseeds, and Carbohydrate Solutions segments, influenced by reduced sales prices and volumes, alongside softer demand in certain Nutrition product categories. Despite the overall earnings decline, ADM completed several strategic acquisitions in its Nutrition segment during the quarter, adding capabilities in dairy flavor ingredients and animal nutrition solutions. The company also continued its share repurchase program, authorizing a significant accelerated share repurchase transaction. Management highlights a focus on productivity and innovation to navigate market challenges, including headwinds in the agriculture cycle and softer demand in some consumer segments.

Financial Highlights

49 data points
Beta

Revenue

$21.85B

7.6% Gross Margin

Net Income

$729.00M

3.3% Net Margin

EPS (Diluted)

$1.42

Total Assets

$54.83B

Cash & Equivalents

$830.00M

Free Cash Flow

$372.00M

Financial Statements
Beta
Revenue$21.85B
Cost of Revenue$20.19B
Gross Profit$1.66B
SG&A Expenses$951.00M
Interest Expense$166.00M
Net Income$729.00M
EPS (Basic)$1.42
EPS (Diluted)$1.42
Shares Outstanding (Basic)513.00M
Shares Outstanding (Diluted)514.00M

Key Highlights

  • 1Net earnings attributable to controlling interests decreased by 37.7% to $729 million for the three months ended March 31, 2024, compared to $1,170 million in the prior year period.
  • 2Diluted earnings per share (EPS) fell to $1.42 from $2.12 in the year-ago quarter, reflecting the decline in net earnings.
  • 3Total revenues decreased by 9.2% to $21.8 billion, primarily due to lower sales prices and volumes in the Ag Services & Oilseeds and Carbohydrate Solutions segments.
  • 4The company completed three strategic acquisitions (Revela Foods, FDL, and PT Trouw Nutrition Indonesia) for an aggregate of $915 million, strengthening its Nutrition business.
  • 5ADM initiated an accelerated share repurchase (ASR) agreement for $1.0 billion during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 6A material weakness in internal control over financial reporting related to intersegment sales disclosures was identified and remediation efforts are underway, impacting segment reporting accuracy.
  • 7The Ag Services and Oilseeds segment, while experiencing revenue declines, processed increased volumes of oilseeds due to improved crush rates.

Frequently Asked Questions

The primary reason for the decrease in net earnings is the decline in revenues, particularly in the Ag Services and Oilseeds and Carbohydrate Solutions segments. This was driven by lower sales prices and, in some cases, lower sales volumes, alongside softer demand in certain Nutrition product categories. The company also noted headwinds in the agriculture cycle and elevated industry ethanol stocks.

During the first quarter of 2024, ADM completed three acquisitions (Revela Foods, FDL, and PT Trouw Nutrition Indonesia) for $915 million, primarily to enhance its Human and Animal Nutrition businesses. The financial impact of these acquisitions on the consolidated statement of earnings for the quarter was immaterial, but they are expected to add capabilities and contribute to future growth.

The company identified a material weakness in its internal control over financial reporting related to the accounting practices and procedures for intersegment sales, which has led to restatements of segment information. This indicates a need for improved controls to ensure the accuracy and completeness of financial reporting, particularly concerning how sales between different business segments are recorded and disclosed. ADM is implementing remediation plans to address this weakness.

ADM is actively returning capital to shareholders through its share repurchase program. During the first quarter, the company entered into a $1.0 billion accelerated share repurchase (ASR) agreement. As of March 31, 2024, it had approximately 38.5 million shares remaining under its repurchase program, with plans for further repurchases and dividend payments throughout the year.