10-QPeriod: Q2 FY2024

Archer-Daniels-Midland Co Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 30, 2024For Securities:ADM

Summary

Archer-Daniels-Midland Co. (ADM) reported a decrease in net earnings attributable to controlling interests for the three months ended June 30, 2024, to $486 million ($0.98 per share), down from $927 million ($1.70 per share) in the same period last year. For the six months ended June 30, 2024, net earnings fell to $1.215 billion ($2.41 per share) from $2.097 billion ($3.82 per share) in the prior year period. This decline was primarily driven by lower pricing and execution margins across its Ag Services and Oilseeds segment, as well as softer demand in certain Nutrition product categories due to shifts in consumer spending and inflationary pressures. Despite the revenue and earnings decline, ADM's liquidity remains strong, with $8.6 billion in total available liquidity as of June 30, 2024, comprising cash and cash equivalents and unused lines of credit. The company also continued its aggressive share repurchase program, buying back approximately $2.3 billion in the first six months of the year. ADM is actively managing its portfolio through strategic acquisitions to enhance its Nutrition businesses and is focused on its three strategic pillars: Productivity, Innovation, and Culture to drive future growth and efficiency.

Financial Highlights

49 data points
Beta

Revenue

$22.25B

6.3% Gross Margin

Net Income

$486.00M

2.2% Net Margin

EPS (Diluted)

$0.98

Total Assets

$52.70B

Cash & Equivalents

$764.00M

Free Cash Flow

$106.00M

Financial Statements
Beta
Revenue$22.25B
Cost of Revenue$20.85B
Gross Profit$1.40B
SG&A Expenses$907.00M
Interest Expense$187.00M
Net Income$486.00M
EPS (Basic)$0.99
EPS (Diluted)$0.98
Shares Outstanding (Basic)492.00M
Shares Outstanding (Diluted)493.00M

Key Highlights

  • 1Net earnings attributable to controlling interests decreased significantly year-over-year for both the three-month and six-month periods, primarily due to lower pricing and execution margins.
  • 2Revenues declined by $2.9 billion (11.7%) to $22.2 billion for the quarter and by $5.2 billion (10.5%) to $44.1 billion for the six months, driven by lower sales prices across key segments.
  • 3The Ag Services and Oilseeds segment experienced a substantial decrease in operating profit, down 56% for the quarter and 42% for the six months, reflecting normalized market conditions after two favorable years.
  • 4The Nutrition segment saw a mixed performance, with Human Nutrition impacted by softer demand and inflation, while Animal Nutrition showed some improvement.
  • 5Despite lower earnings, the company maintained a strong liquidity position with $8.6 billion in total available liquidity as of June 30, 2024.
  • 6ADM repurchased approximately $2.3 billion of its stock in the first six months of the year, indicating continued commitment to returning capital to shareholders.
  • 7The company identified a material weakness in internal controls related to intersegment sales accounting, which is currently being remediated.

Frequently Asked Questions

The primary drivers of the decrease in net earnings were lower pricing and execution margins, particularly in the Ag Services and Oilseeds segment, which is experiencing a return to more normalized market conditions after two favorable years. Additionally, softer demand in some Nutrition product categories due to inflation and shifts in consumer discretionary spending also contributed to the decline.

ADM's liquidity position remains strong. As of June 30, 2024, the company reported total available liquidity of $8.6 billion, comprising cash and cash equivalents and unused lines of credit. This provides ample financial flexibility to fund operations, capital expenditures, and growth initiatives.

ADM continues its robust share repurchase program. In the first six months of 2024, the company repurchased approximately $2.3 billion of its common stock. It also continues to pay quarterly dividends, with $0.5 billion paid in the first six months of 2024.

Yes, the company disclosed a material weakness in its internal control over financial reporting related to accounting practices and procedures for intersegment sales. This issue is being remediated by enhancing accounting policies, pricing guidelines, and control execution.