01—Abstract
Summary
Summary of the 10-Q/A filed November 18, 2024. Cited figures are marked; the original filing is the authoritative source.
Archer-Daniels-Midland Co. (ADM) reported a decrease in revenues and net earnings for the three and six months ended June 30, 2024, compared to the same periods in the prior year.
This decline is primarily attributed to lower pricing and execution margins across its Ag Services and Oilseeds segment, as well as softer demand in certain Nutrition product categories. Despite the revenue decline, ADM made strategic acquisitions in the Nutrition segment, adding capabilities and expanding its portfolio.
The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. ADM is actively working to remediate a previously identified material weakness in its internal control over financial reporting related to intersegment sales, with an ongoing focus on strengthening these controls.
02—Key points
Key Highlights
- Revenues for the three and six months ended June 30, 2024, declined by 11.3% and 10.5%, respectively, year-over-year, primarily due to lower sales prices.
- Net earnings attributable to controlling interests decreased significantly to $486 million for the three months ended June 30, 2024 (from $927 million in the prior year) and $1,215 million for the six months (from $2,097 million in the prior year).
- The Ag Services and Oilseeds segment experienced a notable revenue decrease of 13% for the quarter and 10.5% for the six months, impacted by lower sales prices and, in some areas, slower farmer selling.
- The Nutrition segment showed resilience with a 3% revenue increase for the quarter, driven by slightly higher sales volumes, though overall segment operating profit decreased.
- ADM completed several strategic acquisitions in the Nutrition business during the first half of 2024, including Revela Foods, FDL, PT Trouw Nutrition Indonesia, and Totally Natural Solutions.
- The company is actively addressing a material weakness in internal controls related to intersegment sales disclosures and is implementing remediation plans.
- Share repurchases increased to $2.3 billion for the six months ended June 30, 2024, compared to $1.0 billion in the prior year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-Q/AQ2 FY2024filed November 18, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $22.25B$25.19B | −11.7% |
| Cost of Revenue | $20.85B$23.31B | −10.5% |
| Gross Profit | $1.40B$1.88B | −25.9% |
| SG&A Expenses | $907.00M$841.00M | +7.8% |
| Interest Expense | $187.00M$180.00M | +3.9% |
| Net Income | $486.00M$927.00M | −47.6% |
| EPS (Basic) | $0.99$1.70 | −41.8% |
| EPS (Diluted) | $0.98$1.70 | −42.4% |
| Shares Outstanding (Basic) | 492.00M545.00M | −9.7% |
| Shares Outstanding (Diluted) | 493.00M546.00M | −9.7% |
05—Questions
Frequently Asked Questions
What is the primary reason for the decrease in revenues?
The decrease in revenues for the three and six months ended June 30, 2024, compared to the prior year, is primarily driven by lower sales prices across various segments, particularly in Ag Services and Oilseeds, with a notable impact of $3.6 billion for the quarter and $8.5 billion for the six months from price declines.
How has the company's profitability been affected?
Profitability has been significantly impacted, with Net Earnings Attributable to Controlling Interests decreasing from $927 million to $486 million for the three-month period and from $2,097 million to $1,215 million for the six-month period. This is due to lower pricing, execution margins, and higher corporate costs.
What is the status of the material weakness identified in internal controls?
ADM has identified a material weakness related to its accounting practices and procedures for intersegment sales. The company is implementing a remediation plan to enhance its accounting policies, pricing guidelines, and control execution for these sales. While progress is being made, it will take time to demonstrate the sustained effectiveness of the new controls.
Has the company made any strategic acquisitions recently?
Yes, during the first six months of 2024, ADM completed several acquisitions, including Revela Foods, FDL, PT Trouw Nutrition Indonesia, and Totally Natural Solutions, primarily to enhance its capabilities within the Human and Animal Nutrition businesses.
06—Continue