10-Q/APeriod: Q2 FY2024

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

Filed November 18, 2024For Securities:ADM

Summary

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.

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

  • 1Revenues 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.
  • 2Net 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).
  • 3The 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.
  • 4The Nutrition segment showed resilience with a 3% revenue increase for the quarter, driven by slightly higher sales volumes, though overall segment operating profit decreased.
  • 5ADM 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.
  • 6The company is actively addressing a material weakness in internal controls related to intersegment sales disclosures and is implementing remediation plans.
  • 7Share repurchases increased to $2.3 billion for the six months ended June 30, 2024, compared to $1.0 billion in the prior year.

Frequently Asked Questions

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.

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.

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.

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.